Exhibit 10.3
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
BY AND AMONG
UNIVERSITYCARE, L.L.C.
DOCTORS HEALTH SYSTEM, INC.
GENESIS HEALTH VENTURES, INC.
AND
MED-LANTIC MANAGEMENT SERVICES, INC.
TABLE OF CONTENTS
Page
ARTICLE 1. STOCK PURCHASE AND CLOSING.................................................................... 2
Section 1.1 Purchase of the Shares............................................................... 2
Section 1.2 Purchase Price....................................................................... 2
Section 1.3 Closing.............................................................................. 2
Section 1.4 Abandonment Date..................................................................... 3
Section 1.5 Additional Covenants; Rights of the Series B Stock................................... 3
Section 1.6 Purchase Agreement Assumption........................................................ 4
Section 1.7 Piggyback Registration............................................................... 5
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
OF DOCTORS.................................................................................... 5
Section 2.1 Organization, Qualification and Corporate Power...................................... 5
Section 2.2 No Breach............................................................................ 6
Section 2.3 Title to Properties.................................................................. 6
Section 2.4 Compliance With Law.................................................................. 6
Section 2.5 Ownership of Capital Stock........................................................... 6
Section 2.6 Capital Stock........................................................................ 7
Section 2.7 The Series B Stock................................................................... 7
Section 2.8 Validity............................................................................. 7
Section 2.9 Financial Statements................................................................. 7
Section 2.10 Absence of Undisclosed Liabilities................................................... 8
Section 2.11 Events Subsequent to the Audited Financial Statements................................ 8
Section 2.12 Outstanding Debt..................................................................... 9
Section 2.13 Litigation and Investigations........................................................ 9
Section 2.14 Taxes................................................................................ 10
Section 2.15 Employees............................................................................ 10
Section 2.16 Insurance Coverage................................................................... 10
Section 2.17 Contracts and Other Commitments...................................................... 10
Section 2.18 Fees and Commissions................................................................. 11
Section 2.19 Disclosure........................................................................... 11
Section 2.20 Employee Benefit Plans............................................................... 11
Section 2.21 Certain Agreements of Officers and Employees......................................... 12
Section 2.22 Transactions with Affiliates......................................................... 12
Section 2.23 Securities Act of 1933............................................................... 12
Section 2.24 Insurance............................................................................ 12
Section 2.25 Books and Records.................................................................... 12
Section 2.26 Fraud and Abuse...................................................................... 13
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF MMS......................................................... 14
Section 3.1 Organization, Qualification and Corporate Power...................................... 14
Section 3.2 No Breach............................................................................ 14
Section 3.3 Ownership of Capital Stock........................................................... 14
Section 3.4 Purchase Price of Shares............................................................. 14
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF UNIVERSITYCARE.............................................. 15
Section 4.1 Organization and Standing............................................................ 15
Section 4.2 Validity............................................................................. 15
Section 4.3 Investor Status...................................................................... 15
Section 4.4 No Adverse Law....................................................................... 16
ARTICLE 5. CONDITIONS TO THE OBLIGATION OF UNIVERSITYCARE................................................ 17
Section 5.1 Representations and Warranties of Doctors and MMS to be True and Correct............. 17
Section 5.2 Performance.......................................................................... 17
Section 5.3 All Proceedings to be Satisfactory................................................... 17
Section 5.4 Absence of Adverse Change............................................................ 17
Section 5.5 Approvals............................................................................ 18
Section 5.6 Supporting Documents................................................................. 18
Section 5.7 Board Approvals...................................................................... 19
Section 5.8 Managed Care Contracts............................................................... 19
Section 5.9 Beacon Transaction................................................................... 19
ARTICLE 6. CONDITIONS TO THE OBLIGATIONS OF DOCTORS AND MMS.............................................. 19
Section 6.1 Representations and Warranties of UniversityCare to be True and Correct.............. 19
Section 6.2 Performance.......................................................................... 19
Section 6.3 All Proceedings to be Satisfactory................................................... 19
Section 6.4 Approvals............................................................................ 20
Section 6.5 Supporting Documents................................................................. 20
ARTICLE 7. INTERIM COVENANTS OF DOCTORS BETWEEN THE DATE OF THIS AGREEMENT AND THE CLOSING DATE.......... 20
Section 7.1 Access to Information................................................................ 20
Section 7.2 Notice of Breach..................................................................... 21
ARTICLE 8. JOINT COVENANTS OF THE PARTIES................................................................ 21
Section 8.1 Confidentiality of Business Information.............................................. 21
Section 8.2 Confidentiality of this Agreement.................................................... 21
Section 8.3 Fair Market Value of Shares; No Impermissible Activities............................. 22
ARTICLE 9. TERMINATION................................................................................... 23
Section 9.1 Termination and Abandonment.......................................................... 23
ARTICLE 10. Indemnification and Claims........................................................... 23
Section 10.1 Indemnification by Doctors........................................................... 23
Section 10.2 Indemnification by MMS............................................................... 24
Section 10.3 Indemnification by UniversityCare.................................................... 24
Section 10.4 Limitation on and Expiration of Indemnification. .................................... 24
Section 10.5 Notice and Control of Litigation..................................................... 25
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ARTICLE 11. MISCELLANEOUS........................................................................ 25
Section 11.1 Amendments........................................................................... 25
Section 11.2 Waiver............................................................................... 25
Section 11.3 Notices.............................................................................. 25
Section 11.4 Counterparts......................................................................... 26
Section 11.5 Enforceability and Severability...................................................... 26
Section 11.6 Governing Law........................................................................ 27
Section 11.7 Section Titles....................................................................... 27
Section 11.8 Assignment........................................................................... 27
Section 11.9 Expenses............................................................................. 27
Section 11.10 Survival of Agreements............................................................... 27
Section 11.11 Brokerage............................................................................ 27
Section 11.12 Parties in Interest.................................................................. 27
Section 11.13 Remedies............................................................................. 27
Section 11.14 Third Parties........................................................................ 28
Section 11.15 Entire Agreement..................................................................... 28
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AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (the
"Agreement") is entered into this 9th day of July, 1997, as amended on July 15,
1997 by and among UniversityCare, L.L.C., a Maryland limited liability company,
("UniversityCare"), Doctors Health System, Inc., a Maryland corporation
("Doctors"), Genesis Health Ventures, Inc., a Delaware corporation ("Genesis")
and Med-Lantic Management Services, Inc., a Maryland corporation ("MMS").
WHEREAS, Doctors is a managed care and medical management
company which develops and consolidates individual and groups of primary care
physicians, specialist physicians, hospitals and other health care providers
into primary care-driven, comprehensive managed care health delivery networks;
and
WHEREAS, UniversityCare is a limited liability company formed
for the purpose of creating a joint venture between the University of Maryland
Medical System Corporation and University Physicians, Inc.
WHEREAS, Genesis and MMS have entered into an agreement, dated
May 2, 1997, for the purchase by Genesis from MMS of approximately 408,000
shares of Series B Preferred Stock (the "Series B Stock") held by and/or due in
exchange for interest payments due and payable by Doctors to MMS (or its wholly
owned subsidiary) (the "Purchase Agreement"); and
WHEREAS, UniversityCare wishes to assume, by novation, all of
Genesis's rights and obligations under the Purchase Agreement, and to purchase
the Series B Stock from MMS, subject to the additional terms and conditions
contained herein; and Doctors, MMS and Genesis agree herein to assign and
delegate to UniversityCare, by novation, all of Genesis's rights and obligations
under the Purchase Agreement; and, upon such assignment and assumption, and the
closing of the transactions contemplated by this Agreement, Genesis shall be
released from any and all obligations under the Purchase Agreement;
WHEREAS, Doctors, Genesis and MMS wish to facilitate the
purchase by UniversityCare on the terms and subject to the conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and subject
to the representations, warranties, covenants, and conditions contained herein,
the parties agree as follows:
1.
STOCK PURCHASE AND CLOSING
1.1 Purchase of the Shares. MMS and Genesis hereby agree to the
assignment and delegation of all of Genesis's rights and obligations under the
Purchase Agreement, by novation, to UniversityCare. Upon such assignment,
assumption and closing of the transactions contemplated by this Agreement,
Genesis shall be released from any and all obligations or liability under the
Purchase Agreement; provided, that in the event the Closing does not occur for
any reason, Genesis's obligation under the Purchase Agreement shall continue in
full force and effect. MMS, therefore, agrees to sell to UniversityCare, and
UniversityCare agrees to purchase from MMS all of the right, title, and interest
of MMS in and to the Series B Stock on the terms and subject to the conditions
set forth in this Agreement. The Series B Stock shall be free and clear of any
and all liens, pledges, or encumbrances of any kind, nature, or description
whatsoever, whether legal or equitable.
1.2 Purchase Price. The parties agree that the Purchase Price
shall be an aggregate of $4,659,376, representing $11.25 per share, as of July
1, 1997, to be adjusted to reflect accrued dividends and interest due as of the
Closing Date, and shall be payable in the form of wire transfer or other same
day funds, and shall be paid at the Closing, as defined below.
1.3 Closing.
1.3.1 The closing of the transactions
contemplated by this Agreement shall take place at the same place and
simultaneously with the closing of that certain stock purchase transaction
between Doctors and The Beacon Group III - Focus Value Fund, LP ("Beacon"),
contemplated by that certain letter of intent dated May 2, 1997 (the "Beacon
Offer"), or at such other location, date, and time as may be agreed upon by the
parties (such closing being called the "Closing" and such date being called the
"Closing Date").
1.3.2 At the Closing:
1.3.2.1 Doctors shall deliver to MMS a
stock certificate representing a number of shares of the Series B Stock
respecting payment of the accrued and unpaid dividends and interest thereon,
based on $11.25 per share, then due to MMS;
1.3.2.2 MMS shall deliver to
UniversityCare stock certificates evidencing all of the Series B Stock,
including the shares delivered by Doctors under Section 1.3.2.1, above, all in
definitive form, endorsed for transfer in the name of UniversityCare;
1.3.2.3 Doctors shall deliver to
UniversityCare a new certificate representing the Series B Stock
transferred by MMS to UniversityCare;
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1.3.2.4 UniversityCare shall deliver to
MMS the Purchase Price;
1.3.2.5 The Charter and Bylaws of
Doctors shall be amended to provide for certain changes to the terms and
conditions of the Series B Stock;
1.3.2.6 On or before the Closing Date,
Doctors and MMS shall execute the Amendment of Final Credit Enhancement
Agreement in the form attached hereto as Exhibit 1.3.2.6; and
1.3.2.7 the parties will exchange all
other instruments, documents, certificates, and opinions required by this
Agreement.
1.4 Abandonment Date. Notwithstanding anything herein to the
contrary, if the Closing does not take place by the close of business on or
before August 15, 1997 (the "Abandonment Date"), Doctors, UniversityCare, or MMS
shall have the option to terminate the Agreement on or within five (5) working
days after the Abandonment Date; provided, however, that if the Closing does not
take place as a result solely of any delay in obtaining any necessary regulatory
approval, the Abandonment Date shall be extended for an additional sixty days;
provided further, however, that if such regulatory approval is not obtained
within such extended period, either Doctors or UniversityCare may terminate this
Agreement. The foregoing shall not be construed to terminate or otherwise affect
any claims any party may have against the other for breach of any obligation
arising out of this Agreement, or any other agreement entered into in connection
herewith, prior to the Abandonment Date. The MMS, Doctors, and UniversityCare
will seek and use their best efforts to obtain all governmental and regulatory
approvals for the consummation of the transactions contemplated by this
Agreement, and will cooperate with each other with respect to obtaining such
governmental and regulatory approvals.
1.5 Additional Covenants; Rights of the Series B Stock. Effective
as of the Closing, the Series B Stock shall have the following rights:
1.5.1 The Series B Stock shall have
the rights regarding dividends, conversion, liquidation and redemption
set forth in the Charter of Doctors, which terms shall be in substance
acceptable to UniversityCare.
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1.6 Purchase Agreement Assumption. Effective on the Closing Date,
UniversityCare shall assume, by novation, all of Genesis's rights and
obligations under the Purchase Agreement, subject to the modifications contained
herein, and Doctors, MMS and Genesis shall assign and delegate to
UniversityCare, by novation, all of Genesis's rights and obligations under the
Purchase Agreement. The parties agree that Genesis shall thereby be released
from all obligations pursuant to the Purchase Agreement.
1.7 Piggyback Registration. If, at any time, Doctors proposes or
is required to register any of its equity securities under the Securities Act of
1933, as amended (other than pursuant to registrations on such forms or similar
form(s) solely for the registration of securities in connection with an employee
benefit plan or dividend reinvestment plan or a merger, consolidation or
acquisition) or a registration statement on Form S-1, Form S-2 or Form S-3 (or
an equivalent general registration form then in effect), whether or not for its
own account, Doctors shall give prompt written notice of its intention to do so
to UniversityCare. Upon the written request of UniversityCare, made within
fifteen (15) days following the receipt of any such written notice (which
request shall specify the maximum number of shares of Series B Stock then held
by UniversityCare (the "UniversityCare Stock") intended to be disposed of by
UniversityCare and the intended method of distribution thereof), Doctors shall
use its best efforts to cause such UniversityCare Stock to be registered under
the Securities Act (with the securities that Doctors at the time proposes to
register) and to permit the sale or other disposition by UniversityCare (in
accordance with the intended method of distribution thereof) of the
UniversityCare Stock. UniversityCare shall be entitled to one such piggyback
registration right, except as provided in any separate agreement which limits
its rights to sell all but not less than all of its shares as a result of the
actions of any managing underwriter for Doctors.
2.
REPRESENTATIONS AND WARRANTIES
OF DOCTORS
Doctors hereby represents and warrants to UniversityCare,
except as set forth in the disclosure schedules attached hereto as follows:
2.1 Organization, Qualification and Corporate Power. Doctors is
duly incorporated, validly existing, and in good standing under the laws of the
State of Maryland and is duly licensed or qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business to be transacted by it, or the character of the
properties owned by it or leased by it, requires such licensing or
qualification. Doctors has the corporate power and authority to own and hold its
properties and to carry on its business.
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2.2 No Breach. Except as set forth on Schedule 2.2, neither the
execution and delivery of this Agreement and related agreements contemplated
herein nor compliance with their terms will result in the breach or violation of
the Articles of Incorporation or Bylaws of Doctors or of any provision of any
agreement, indenture, mortgage, lease, or other obligation or instrument, any
judgment, or any order or decree of any court or other agency of government, or
cause any acceleration thereof, to which Doctors, or any of its properties or
assets are bound, or conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement, or other instrument, or result in the creation or imposition of any
lien, charge, restriction, claim or encumbrance of any nature whatsoever upon
any of the properties or assets of Doctors. The execution of this Agreement and,
upon receipt of required state and/or federal approvals, the consummation of the
transactions provided herein will not result in a violation by Doctors of any
federal, state or local laws or regulations.
2.3 Title to Properties. Except as set forth on Schedule 2.3,
Doctors has good and marketable title to its properties and assets reflected on
the financial statements furnished pursuant to Section 2.9 or acquired since the
date of such financial statements (other than properties and assets disposed of
in the ordinary course of business since the date of such financial statements
furnished in accordance with Section 2.9), and all such properties and assets
are free and clear of any and all mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances, except for liens for
current taxes not yet due and payable, and minor imperfections of title, if any,
which liens are not material in nature or amount and not materially detracting
from the value or impairing the use of the property subject thereto or impairing
the operations of Doctors.
2.4 Compliance With Law. Doctors has the lawful authority and all
material state, federal, special or local governmental authorizations, licenses,
or permits required to conduct its businesses as such businesses are presently
being conducted. There are no pending or threatened actions, notices, or
proceedings by any state, federal, special or local government or any
subdivision thereof or any public or private group which would have the effect
of changing the operation of such businesses other than as set forth on Schedule
2.4. Schedule 2.4 contains a list and brief description of all licenses,
including those granted or derived from governmental sources, issued or granted
to Doctors. Except as disclosed on Schedule 2.4, neither Doctors's operations,
nor any of the assets owned, leased, occupied or used by Doctors in the
operation of its businesses materially violates or fails to comply in any
material respect with applicable health, fire, environmental, safety, zoning or
building codes, laws or ordinances, rules or regulations.
2.5 Ownership of Capital Stock. Except as set forth on Schedule
2.5, Doctors warrants and represents that MMS owns, of record, all right, title
and interest in and to the Series B Stock free and clear of any voting trusts,
proxies or other arrangements, restrictions or limitations of any kind imposed
by Doctors or as otherwise listed on the stock ledger of Doctors,and, on the
Closing Date, the delivery by MMS of certificates in the manner set forth in
Section 1.3 will, to the best knowledge of Doctors, transfer good and valid
title to the Series B Stock to UniversityCare, free and clear of any voting
trusts, proxies or other arrangements,
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restrictions or other legal or equitable limitations of any kind, other than any
such legal or equitable limitations created or suffered to exist by
UniversityCare.
2.6 Capital Stock. The authorized capital stock of Doctors (the
"Stock") is set forth on Schedule 2.6, and the number of outstanding shares is
set forth on Schedule 2.6. All of the shares of Doctors's Stock have been duly
authorized and, to the extent issued, are validly issued, fully paid, and
nonassessable. Except as set forth on Schedule 2.6, Doctors has no other equity
securities or securities containing any equity features authorized, issued, or
outstanding. Doctors represents and warrants that MMS is the sole shareholder of
record of the Series B Stock. Except as set forth on Schedule 2.6, there are no
holders of stock appreciation rights, subscriptions, warrants, options,
convertible securities, and other rights (contingent or otherwise) to purchase
or otherwise acquire equity securities of Doctors. Immediately prior to Closing,
except as set forth on Schedule 2.6, there will be no outstanding subscriptions,
options, convertible securities, offers or other agreements or commitments
relating to the Stock of Doctors including, without limitation, any preemptive
rights or rights of first refusal. No shares of the Stock of Doctors are in
escrow or held as security for any obligation of Doctors or any beneficial owner
thereof. None of the securities of Doctors are subject to any voting trusts, nor
has Doctors received notice of any other agreements pertaining to the voting of
such securities and, as of Closing, except as set forth on Schedule 2.6, no
shareholder has any preemptive right or rights of first refusal with respect to
the issuance of any Stock, debt instruments, or other securities of Doctors.
2.7 The Series B Stock. Except for the effect on the Series B
Stock of the transaction contemplated by the sale of Series D Preferred Stock
under the Beacon Offer, the Series B Stock has been duly authorized and when
delivered to UniversityCare pursuant to the terms hereof, will be validly
issued, fully paid, and nonassessable shares of Series B Preferred Stock of
Doctors with no personal liability attaching thereto and will be free and clear
of any and all liens or encumbrances of any kind, nature or description
whatsoever, whether legal or equitable, imposed by Doctors, including,
forfeitures, pledges, penalties charges, tax liens, rights of first refusal,
equities, or claims or rights whatsoever of others.
2.8 Validity. Doctors has the full legal power and authority to
execute and deliver all other agreements and documents necessary to consummate
the contemplated transaction, and all corporate action of Doctors necessary for
such execution and delivery and the performance thereof will have been duly
taken. All agreements related to this transaction to be executed by Doctors have
been duly executed and delivered by Doctors and, when duly executed by the other
parties thereto, constitute the legal, valid, and binding obligation of Doctors
enforceable in accordance with their terms, subject as to enforcement of
remedies to the discretion of courts in awarding equitable relief and to
applicable bankruptcy, reorganization, insolvency, moratorium, and similar laws
affecting the rights of creditors generally.
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2.9 Financial Statements. Doctors has furnished to UniversityCare
(i) the audited financial statements of Doctors as of June 30, 1995 and 1996
(the "Audited Financial Statements"), and the unaudited interim financial
statements for the months ended March 31, 1997 (the "Unaudited Financial
Statements") (collectively referred to as the "Financial Statements"), and, in
connection with the Audited Financial Statements, an unqualified report thereon
from Doctors's independent certified public accounting firm. The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently applied (except, in the case of Unaudited Financial
Statements, for the absence of footnotes and year end adjustments) and fairly
present the financial position of Doctors and the results of operations and
changes in financial position as of the dates and for the periods specified.
Except as set forth in the Financial Statements, there are no liabilities
transferred to Doctors, except those arising in the ordinary course of business
which have been disclosed to UniversityCare or otherwise do not materially
adversely affect the financial condition of Doctors. Except as disclosed on
Schedule 2.9, since the date of the last Audited Financial Statement: (i) there
has been no material change in the assets, liabilities or financial condition of
Doctors from that reflected in the most recent Audited Financial Statement,
except for changes in the ordinary course of business and consistent with past
practice which in the aggregate have not been materially adverse to the
business, prospects, financial condition, operations, property, or affairs of
Doctors, and (ii) none of the business, prospects, financial condition,
operations, property, or affairs of Doctors has been materially adversely
affected by any occurrence or development, individually or in the aggregate,
whether or not insured against.
2.10 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 2.10, Doctors has not incurred any liability of any nature (whether
absolute, accrued, contingent or otherwise) including, without limitation,
liabilities for federal, state, local or foreign taxes and liabilities to
customers or suppliers, other than (i) liabilities for which full provision has
been made on Doctors's Financial Statements referred to in Section 2.9; and (ii)
those which have arisen in the ordinary course of business, which in the
aggregate are not materially adverse to Doctors' financial condition.
2.11 Events Subsequent to the Audited Financial Statements. Except
as set forth on Schedule 2.11, since the date of the last Audited Financial
Statement Doctors has not: (i) issued any stock, bond or other corporate
security other than in connection with physician affiliation transactions; (ii)
borrowed any amount or incurred or become subject to any liability (absolute,
accrued or contingent), except current liabilities incurred, and liabilities
under contracts entered into in the ordinary course of business; (iii)
discharged or satisfied any lien or encumbrance or incurred or paid any
obligation or liability (absolute, accrued or contingent) other than current
liabilities shown on the Audited Financial Statements and current liabilities
incurred since the date of the Audited Financial Statements and reflected on the
Unaudited Financial Statements in the ordinary course of business; (iv) declared
or made any payment or distribution to Shareholders or purchased or redeemed any
share of its capital stock or other security; (v) mortgaged, pledged or
subjected to lien any of its assets, tangible or intangible, other than liens
which arise by operation of law or liens of current real property taxes not yet
due
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and payable; (vi) sold, assigned or transferred any of its tangible assets
except in the ordinary course of business or cancelled any debt or claim; (vii)
sold, assigned, transferred or granted any exclusive license with respect to any
patent, trademark, trade name, service xxxx, copyright, trade secret or other
intangible asset; (viii) suffered any material loss of property or waived any
material right whether or not in the ordinary course of business; (ix) made any
change in officer compensation; (x) made any material change in the manner of
business or operations including any change in accounting principles and
practices; (xi) entered into any transaction except in the ordinary course of
business or as otherwise contemplated hereby; or (xii) entered into any
commitment (contingent or otherwise) to do any of the foregoing.
2.12 Outstanding Debt. Except as set forth in the Financial
Statements and Schedule 2.12, Doctors has not incurred any outstanding
indebtedness for borrowed money nor is it either a guarantor or otherwise
contingently liable for any such indebtedness. There exists no default under the
provisions of any instrument evidencing any indebtedness or otherwise of any
agreement relating thereto. Doctors has no outstanding loans or advances to any
person and is not obligated to make any such loans or advances.
2.13 Litigation and Investigations. Except as set forth on
Schedule 2.13, there is no: (i) action, suit, claim, proceeding, or
investigation pending or, to the best of Doctors's knowledge, threatened against
or affecting Doctors or any of Doctors's employees, by any private party or any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign; or, to the knowledge of
Doctors, pending, threatened against, or affecting persons or entities who
perform professional services under agreement with Doctors before any
professional self-governance, oversight, or regulatory body; (ii) arbitration
proceeding relating to Doctors pending under collective bargaining agreements or
otherwise; or (iii) governmental or professional inquiry pending or threatened
against or directly or indirectly affecting Doctors (including without
limitation any inquiry as to the qualification of Doctors or to hold or receive
any license or permit), and there is no basis for any of the foregoing as to
Doctors, its officers or directors or, to the Shareholders' or Doctors's
knowledge, as to entities or persons who perform professional services for
Doctors. Except as disclosed on Schedule 2.13, Doctors has not received any
opinion, memorandum, or legal advice from legal counsel to the effect that
Doctors is exposed, from a legal standpoint, to any liability which may be
material to the business of Doctors as now conducted. Doctors is not in default
with respect to any order, writ, injunction, or decree known to or served upon
it of any court or of any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign. There is no action or suit by Doctors pending or threatened against
others. Upon receipt of written approval for the transactions contemplated
herein from the applicable state regulatory bodies, if any, Doctors will have
complied in all material respects with all laws, rules, regulations, and orders
applicable to its businesses, operations, properties, assets, products, and
services, and Doctors has all necessary permits, licenses, and other
authorizations required to conduct its businesses as conducted and as proposed
to be conducted. There is no existing law, rule, regulation, or order, or
proposed law, rule, regulation, or order, whether federal, state, local, or
professional, which would prohibit or
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restrict Doctors from, or otherwise materially adversely affect Doctors in
conducting its business in any jurisdiction in which it is now conducting
business or in which it proposes to conduct business.
2.14 Taxes. Doctors has filed all federal, state, county and local
tax returns, including, without limitation, income, sales, single business,
payroll, premium, withholding, informational and personal property tax returns,
required to be filed by it and such returns have been duly prepared and filed
and were true, correct, and complete. All taxes due by reason of the operations
conducted by Doctors have been paid, including, without limitation, all taxes
which Doctors are obligated to withhold from accounts owing to employees,
creditors, and third parties. All such taxes for which any such party has become
obligated pursuant to elections made in accordance with generally accepted
accounting principles have been paid and adequate reserves have been established
for all taxes accrued but not yet payable. The federal income tax returns of
Doctors have never been audited by the Internal Revenue Service. No deficiency
assessment with respect to any proposed adjustment of Doctors's federal, state,
county or local taxes is pending or threatened. There is no tax lien, whether
imposed by any federal, state, county or local taxing authority outstanding
against the assets, properties or businesses of Doctors. There is no pending
examination or proceeding by any authority or agency relating to the assessment
or collection of any such taxes, interest or penalties thereon, nor do there
exist any facts that would provide a basis for any such assessment. Doctors has
not executed or filed any consent or agreement to extend the period for
assessment or collection of any such taxes.
2.15 Employees. Doctors is not a party to any collective
bargaining agreement. There is no labor strike or other disturbance or any
union organizing effort with respect to Doctors. Doctors's relationship with
its employees may be characterized as good.
2.16 Insurance Coverage. Doctors has maintained, with financially
sound and reputable insurers, professional liability, casualty, property loss,
and other insurance coverage of such types and in such amounts as is customary
for companies similarly situated. Schedule 2.16 lists and briefly describes the
policies concerning such insurance coverage, and, except as otherwise provided
on Schedule 2.16, all such policies will continue in effect after the Closing
Date. Doctors has not received any notice of any default with respect to its
obligations under any of such insurance policies.
2.17 Contracts and Other Commitments. Each material contract of
Doctors, including, but not limited to each agreement between Doctors and any
core medical group, individual practice association or other provider of health
care services, is a valid and binding obligation of the parties thereto,
enforceable in accordance with its terms (subject to bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights generally
and except for limitations upon the availability of equitable remedies,
including specific performance). Except as set forth on Schedule 2.17, none of
the transactions contemplated by this Agreement creates in any party to any
material contracts and commitments the right to revise the terms of, to
terminate, to accelerate any obligation of Doctors or otherwise declare that
such contracts or commitments have been breached. Doctors is not aware of any
defaults and do not
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have any reason to believe that a default may occur by Doctors or any other
party to the contracts and commitments to which Doctors may become a party (by
assignment, transfer by operation of law, succession, or otherwise). For
purposes of this Section, the term "material" means having a value of $10,000 or
more, and shall include any and all provider and payor agreements, irrespective
of the dollar value.
2.18 Fees and Commissions. Except as set forth on Schedule 2.18,
Doctors has not agreed to pay or become liable to pay any broker's, finder's, or
originator's fees or commissions by reason of services alleged to have been
rendered for, or at the instance of, Doctors in connection with this Agreement
and the transactions contemplated hereby.
2.19 Disclosure. No representation or warranty by Doctors in this
Agreement, and no exhibit, schedule, or certificate furnished or to be furnished
by Doctors pursuant hereto, contains any untrue statement of a fact, or omits to
state a fact required to be stated herein or therein or necessary to make the
statements contained herein or therein not misleading. There is no fact of which
Doctors is aware, which has not been disclosed in writing to UniversityCare,
which adversely affects Doctors. Neither this Agreement, the business plan of
Doctors, the Financial Statements, nor any other agreement, document,
certificate or written statement furnished to UniversityCare or its counsel by
or on behalf of Doctors in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. Projections made in the Business Plan are not considered to be facts
for the purpose of this Section. There is no fact within the knowledge of
Doctors or any of its executive officers which has not been disclosed herein or
in writing by them to UniversityCare and which materially adversely affects, or
in the future in their opinion may, insofar as they can now foresee, materially
adversely affect the business, properties, assets or condition, financial or
other, of Doctors. Without limiting the foregoing, Doctors has no knowledge that
there exists, or there is pending or planned, any patent, invention, device,
application or principle or any statute, rule, law, regulation, standard or code
which would materially adversely affect the business, operations, affairs or
financial condition of Doctors.
2.20 Employee Benefit Plans. For purposes of this Agreement, the
term "Employee Plan" includes any pension, retirement, savings, disability,
medical, dental or other health plan, life insurance (including any individual
life insurance policy as to which Doctors makes premium payments whether or not
Doctors is the owner, beneficiary or both of such policy) or other death benefit
plan, profit sharing, deferred compensation, stock option, bonus or other
incentive plan, vacation benefit plan, severance plan or other employee benefit
plan or arrangement (whether written or arising from custom), including, without
limitation, any employee pension benefit plan ("Pension Plan") as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and any employee welfare benefit plan as defined in Section 3(1) of
ERISA ("Welfare Plan"), whether or not any of the foregoing is funded, and
whether written or oral, (i) to which Doctors is a party or by which Doctors (or
any of its respective rights, properties or assets) is bound or (ii) with
respect to which
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Doctors has made payments, contributions or commitments or may otherwise have
any liability (including any such plan or arrangement formerly maintained by
Doctors. There are no Employee Plans other than those listed in Schedule 2.20.
2.21 Certain Agreements of Officers and Employees.
2.21.1 To Doctor's best knowledge and belief,
no officer or employee of Doctors is, or is now expected to be, in violation of
any term of any employment contract, patent disclosure agreement, proprietary
information agreement, non-competition agreement, confidentiality agreement, or
any other similar contract or agreement or any restrictive covenant relating to
the right of any such officer or employee to be employed by Doctors because of
the nature of the business conducted or to be conducted by Doctors or relating
to the use of trade secrets or proprietary information of others, and to
Doctors's best knowledge and belief, the continued employment of Doctors's
officers and employees does not subject Doctors or the Purchaser to any
liability with respect to any of the foregoing matters.
2.21.2 To the best knowledge of Doctors, no
officer of Doctors, nor any Key Employee of Doctors whose termination, either
individually or in the aggregate, would have an adverse effect on Doctors, has
any present intention of terminating his employment with Doctors.
2.22 Transactions with Affiliates. Except as set forth in Exhibit
2.22, there are no loans, leases, royalty agreements or other continuing
transactions between (a) Doctors or any of its customers or suppliers, and (b)
any officer, employee or director of Doctors or any Person owning five percent
(5%) or more of the capital stock of Doctors or any member of the immediate
family of such officer, employee, director or stockholder or any corporation or
other entity controlled by such immediate family of such officer, employee,
director or stockholder.
2.23 Securities Act of 1933. Doctors has complied and will comply
with all applicable federal and state securities laws in connection with the
offer, issuance and sale of the Stock, including the Series B Stock. Neither
Doctors nor anyone acting on its behalf has or will sell, offer to sell or
solicit offers to buy the Stock or similar securities to, or solicit offers with
respect thereto from, or enter into any preliminary conversations or
negotiations relating thereto with, any Person, so as to bring the issuance and
sale of the Series B Stock under the registration provisions of the Securities
Act and applicable state securities laws.
2.24 Insurance. Doctors carries insurance covering its properties
and business adequate and customary for the type and scope of the properties,
assets and business, but in any event in amounts sufficient to prevent Doctors
from becoming a co-insurer, up to reasonable deductibles.
2.25 Books and Records. The books of account, ledgers, order
books, records and documents of Doctors accurately and completely reflect all
material information relating to
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the business of Doctors, the location and collection of its assets, and the
nature of all transactions giving rise to the obligations or accounts receivable
of Doctors.
2.26 Fraud and Abuse. Doctors has not engaged in any activities
which are prohibited under federal Medicare and Medicaid statutes, 42 U.S.C. ss.
ss. 1320a-7, 1320a-7(a) and 1320a-7b, the federal CHAMPUS statute, or the
regulations promulgated pursuant to such statutes or state or local statutes or
regulations of similar effect, or which are prohibited by rules of professional
conduct, including but not limited to the following: (i) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (ii) knowingly and willfully
making or causing to be made any false statement or representation of a material
fact for use in determining rights to any benefit or payment; (iii) presenting
or causing to be presented a claim for reimbursement for services under CHAMPUS,
Medicare, Medicaid, or other state health care program that is for an item or
service that is known or should be known to be (a) not provided as claimed, or
(b) false or fraudulent; (iv) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment; (v) knowingly and willfully
offering, paying, soliciting or receiving any remuneration (including any
kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind (a) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by CHAMPUS, Medicare or Medicaid, or
other state health care program, or (b) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or ordering any
good, facility, service, or item for which payment may be made in whole or in
part by CHAMPUS, Medicare or Medicaid or other state health care program; (vi)
knowingly making a payment, directly or indirectly, to a physician as an
inducement to reduce or limit services to individuals who are under the direct
care of the physician and who are entitled to benefits under CHAMPUS, Medicare,
Medicaid, or other state health care program; (vii) providing to any person
information that is known or should be known to be false or misleading that
could reasonably be expected to influence the decision when to discharge a
hospital in-patient from the hospital; (viii) knowingly and willfully making or
causing to be made or inducing or seeking to induce the making of any false
statement or representation (or omits to state a fact required to be stated
therein or necessary to make the statements contained therein not misleading) of
a material fact with respect to (a) the conditions or operations of a facility
in order that the facility may qualify for CHAMPUS, Medicare, Medicaid or other
state health care program certification, or (b) information required to be
provided under ss. 1124A of the Social Security Act (42 U.S.C. ss. 1320a-3);
(ix) knowingly and willfully (a) charging for any Medicaid service money or
other consideration at a rate in excess of the rates established by the state,
or (b) charging, soliciting, accepting or receiving, in addition to amounts paid
by Medicaid, any gift money, donation or other consideration (other than a
charitable, religious or other philanthropic contribution from an organization
or from a person unrelated to the patient) (x) as a precondition of treating the
patient, or (y) as a requirement for the patient's continued treatment.
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3.
REPRESENTATIONS AND WARRANTIES OF MMS
MMS represents and warrants as to itself solely to
UniversityCare as follows:
3.1 Organization, Qualification and Corporate Power. MMS is duly
incorporated, validly existing, and in good standing under the laws of the State
of Maryland. MMS has the corporate power and authority to own and hold its
properties and to carry on its business.
3.2 No Breach. Neither the execution and delivery of this
Agreement and related agreements contemplated herein nor compliance with their
terms will result in the breach or violation of the Articles of Incorporation or
Bylaws or other organizational documents of MMS or of any provision of any
agreement, indenture, mortgage, lease, or other obligation or instrument, any
judgment, or any order or decree of any court or other agency of government, or
cause any acceleration thereof, to which MMS or any of its properties or assets
are bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement,
or other instrument, or result in the creation or imposition of any lien,
charge, restriction, claim or encumbrance of any nature whatsoever upon any of
the properties or assets of MMS which would adversely affect the ability of MMS
to transfer its shares hereunder. The execution of this Agreement and, upon
receipt of required state and/or federal approvals, the consummation of the
transactions provided herein will not result in a violation by MMS of any
federal, state or local laws or regulations which would affect the ability of
MMS to transfer his/her/its Shares hereunder.
3.3 Ownership of Capital Stock. MMS owns, beneficially and of
record, all right, title and interest in and to the Shares set forth on Exhibit
A as being owned by MMS, free and clear of any security interests, claims,
liens, pledges, options, encumbrances, charges, agreements, voting trusts,
proxies or other arrangements, restrictions or limitations of any kind, and, on
the Closing Date, the delivery by MMS of certificates in the manner set forth in
Section 1.3 will transfer good and valid title to the Series B Stock to
UniversityCare, free and clear of any security interests, claims, liens,
pledges, options, encumbrances, charges, agreements, voting trusts, proxies or
other arrangements, restrictions or other legal or equitable limitations of any
kind, other than any such legal or equitable limitations created or suffered to
exist by UniversityCare.
3.4 Purchase Price of Shares. MMS represents and warrants that the
Purchase Price of the Series B Stock hereunder is based upon the purchase price
of $11.25 per
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share paid by MMS to acquire the Series B Stock. MMS represents and warrants
that none of the proceeds being paid to MMS will be paid or become payable to
Doctors.
4.
REPRESENTATIONS AND WARRANTIES OF UNIVERSITYCARE
UniversityCare represents, warrants, and covenants to Doctors
and MMS as follows:
4.1 Organization and Standing. UniversityCare is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Maryland and is duly licensed or qualified to transact
business and is in good standing in each jurisdiction in which the nature of the
business to be transacted by it, or the character of the properties owned by it
or leased by it, requires such licensing or qualification.
4.2 Validity. UniversityCare has full legal power and authority to
enter into this Agreement and to carry out the transactions contemplated hereby,
and all proceedings required to be taken by or on its part to authorize the
execution, delivery, and performance of this Agreement have been duly and
properly taken. This Agreement has been duly executed and delivered by
UniversityCare and is a valid and binding obligation of UniversityCare
enforceable in accordance with its terms (subject to bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights generally
and except for limitations upon the availability of equitable remedies,
including specific performance). Any other agreement contemplated to be entered
into by UniversityCare in connection with this transaction, when executed and
delivered, will constitute the legal, valid, and binding obligation of
UniversityCare enforceable in accordance with its respective terms (subject as
to enforcement of remedies to the discretion of courts in awarding equitable
relief and to applicable bankruptcy, reorganization, insolvency, moratorium, and
similar laws affecting the rights of creditors generally). The execution and
delivery by UniversityCare of this Agreement, and the performance of its
obligations hereunder, and the purchase of the Shares, does not require any
action or consent of any party other than UniversityCare pursuant to any
contract, agreement, or other undertaking of UniversityCare, or pursuant to any
order or decree to which UniversityCare is a party or to which its properties or
assets are subject, and will not violate any provision of law, the Articles of
Incorporation or Bylaws of UniversityCare any order of any court or other agency
of the government or any indenture, agreement, or other instrument to which
UniversityCare or any of its properties or assets are bound, or conflict with,
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement, or other instrument; or result in
the creation or imposition of any lien, charge, restriction, claim, or
encumbrance of any nature whatsoever upon any of the properties or assets of
UniversityCare.
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4.3 Investor Status. UniversityCare represents and warrants to
Doctors that:
4.3.1 it has had an opportunity to discuss
Doctors's business, management, and financial affairs with Doctors's
management;
4.3.2 its present intention is to acquire the
Series B Stock for its own account (and it will be the sole beneficial owner
thereof) and that the Series B Stock are being and will be acquired by it for
the purpose of investment and not with a view to distribution or resale thereof.
UniversityCare further represents that it understands and agrees that, until
registered under the Securities Act or transferred pursuant to the provisions of
Rule 144 as promulgated by the Securities and Exchange Commission (the
"Commission"), all certificates evidencing any of the Series B Stock, whether
upon initial issuance or upon any transfer thereof, will bear a legend,
prominently stamped or printed thereon, reading substantially as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or the securities
laws of any state.
These securities have been acquired for investment and not
with a view to distribution or resale. These securities may
not be offered for sale, sold, delivered after sale,
transferred, pledged or hypothecated in the absence of an
effective registration statement covering such shares under
the Act and any applicable state securities laws, unless the
holder shall have obtained an opinion of counsel satisfactory
to the corporation that such registration is not required."
"These securities are subject to restrictions on transfer as
set forth in the Shareholders and Voting Agreement
among Doctors and certain of its stockholders."
4.3.3 it understands that the Series B Stock
have not been registered under the Securities Act and applicable state
securities laws, and, therefore, cannot be resold unless they are subsequently
registered under the Securities Act and applicable state securities laws or
unless an exemption for such registration is available; UniversityCare is and
must be purchasing the Series B Stock Shares for investment for the account of
UniversityCare and not for the account or benefit of others, and not with any
present view toward resale or other distribution thereof. UniversityCare agrees
not to resell or otherwise dispose of all or any part of the Series B Stock
purchased by it, except as permitted by law, including, without limitation, any
regulations under the Securities Act and applicable state securities laws; and
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4.3.4 it has no present need for
liquidity in connection with its purchase of the Series B Stock.
4.4 No Adverse Law. UniversityCare has no knowledge of any current
law or regulation under the Internal Revenue Code of 1986, as amended, which is
applicable to any tax exempt entity which is an affiliate of UniversityCare, and
which, by its specific terms, would prevent the investment by UniversityCare
hereunder.
5.
CONDITIONS TO THE OBLIGATION OF UNIVERSITYCARE
The obligation of UniversityCare to purchase and pay for the
Series B Stock on the Closing Date and consummate any other transaction
contemplated by this Agreement is, at its option, subject to the satisfaction,
on or before the Closing Date, of the following conditions:
5.1 Representations and Warranties of Doctors and MMS to be True
and Correct. The representations and warranties contained in Articles 2 and 3
shall be true, complete, and correct on and as of the Closing Date with the same
effect as though such representations and warranties had been made by Doctors,
and/or MMS, as applicable, on and as of such date, and appropriate officers of
Doctors and MMS, respectively, shall have certified to such effect to
UniversityCare in writing.
5.2 Performance. Doctors shall have performed and complied with
all agreements contemplated herein that are required to be performed or complied
with by it prior to or at the Closing Date. Doctors will have obtained any
consents or waivers necessary to execute and deliver this Agreement, the Series
B Stock and the other agreements and instruments executed and delivered by
Doctors in connection herewith, including, but not limited to, the consent of
the holders of the outstanding Preferred Stock, and any consents or waivers
necessary to carry out the transactions contemplated hereby and thereby, and
such consents and waivers will be in full force and effect at the Closing. All
corporate and other action and governmental filings necessary to effectuate the
terms of this Agreement, the Series B Stock and the other agreements and
instruments executed and delivered by the Company in connection herewith will
have been made or taken.
5.3 All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by Doctors and MMS in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to UniversityCare, and UniversityCare shall have received all
such counterpart originals or certified or other copies of such documents as it
reasonably may request.
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5.4 Absence of Adverse Change. There shall have been no material
adverse change in the business, assets, financial condition, or operations of
Doctors or any other event that would, with the passage of time or otherwise,
impair or otherwise affect the accuracy of any of the representations and
warranties of Doctors and MMS. Prior to Closing, Doctors shall have promptly
notified UniversityCare in writing of any event of which Doctors's officers have
knowledge or, after due inquiry, should have knowledge, that occurred, or was
likely to occur, and which was likely to result in an adverse change in the
business, assets, financial condition, or operations of Doctors and of any other
event that would, with the passage of time or otherwise, impair or otherwise
affect the accuracy of any of the representations and warranties of Doctors and
MMS contained herein on and as of the Closing Date.
5.5 Approvals. All necessary corporate, including adoption of any
necessary amendments to the Articles of Incorporation, and regulatory approvals
for the transactions contemplated by this Agreement shall have been obtained.
5.6 Supporting Documents. UniversityCare shall have received
copies of the following documents:
5.6.1 (i) The Articles of Incorporation of Doctors,
certified as of a recent date by the Secretary of State of the State of
Maryland; (ii) a certificate of said Secretary dated as of a recent date as to
the due incorporation and good standing of Doctors; and (3) certificates of good
standing as a foreign corporation in jurisdictions, if any, in which Doctors is
qualified to do business;
5.6.2 A certificate of the Secretary or an
Assistant Secretary of Doctors, respectively, dated as of the Closing Date
and certifying: (i) that the Bylaws of Doctors attached thereto are true,
correct and complete; (ii) that attached thereto is a true and complete copy of
all resolutions adopted by Doctors authorizing the execution, delivery, and
performance of this Agreement and all transactions contemplated by this
Agreement and that all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the transactions contemplated by this
Agreement; and (iii) to the incumbency and specimen signature of each officer of
Doctors executing this Agreement and/or any other agreement related hereto, and
a certification by another officer of Doctors as to the incumbency and signature
of the officer signing the certificate referred to in this Section;
5.6.3 The favorable opinion of (i) Xxxx X.
Xxxxxx, Esquire and Xxxxxx Xxxx, Esquire, counsel for Doctors in the form
set forth in Exhibit 5.6.3;
5.6.4 A certificate of the Secretary or an
Assistant Secretary of MMS, dated as of the Closing Date and certifying: (i)
that attached thereto is a true and complete copy of all resolutions adopted by
MMS authorizing the execution, delivery, and performance of this Agreement and
all transactions contemplated by this Agreement and that all such resolutions
are in full force and effect and are all the resolutions adopted in connection
with the transactions
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contemplated by this Agreement; and (ii) to the incumbency and specimen
signature of each officer of MMS executing this Agreement and/or any other
agreement related hereto, and a certification by another officer of MMS as to
the incumbency and signature of the officer signing the certificate referred to
in this Section; and
5.6.5 Such additional supporting documents and
other information with respect to the operations and affairs of Doctors as
UniversityCare reasonably may request.
5.7 Board Approvals. The Board of Managers of UniversityCare and
the respective Board of Directors of the University of Maryland Medical System
Corporation and University Physicians, Inc., to the extent necessary, shall have
approved the Agreement, the funding thereof and the transactions contemplated
hereby, in their sole discretion.
5.8 Managed Care Contracts. Doctors, UniversityCare, University of
Maryland Medical System Corporation and University Physicians, Inc. shall enter
into a comprehensive managed care agreement, consistent with that certain Letter
of Understanding executed by Doctors and UniversityCare, and which agreement or
agreements shall have a ten year term and such additional terms and conditions
as mutually agreed to by the parties.
5.9 Beacon Transaction. The transaction between Beacon and
Doctors, substantially in the form and substance contemplated by the Beacon
Offer, shall close simultaneously with or immediately preceding the Closing.
6.
CONDITIONS TO THE OBLIGATIONS OF DOCTORS AND MMS
The obligation of MMS to sell the Series B Stock to
UniversityCare on the Closing Date and the obligations of Doctors to consummate
any other transaction contemplated by this Agreement is, at its option, subject
to the satisfaction, on or before the Closing Date, of the following conditions:
6.1 Representations and Warranties of UniversityCare to be True
and Correct. The representations and warranties contained in Article 4 shall be
true, complete, and correct on and as of the Closing Date with the same effect
as though such representations and warranties had been made by UniversityCare on
and as of such date, and officers of UniversityCare shall have certified to such
effect to Doctors and MMS in writing.
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6.2 Performance. UniversityCare shall have performed and complied
with all agreements contemplated herein that are required to be performed or
complied with by it prior to or at the Closing Date.
6.3 All Proceedings to be Satisfactory. All corporate and other
proceedings to be taken by UniversityCare in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to MMS and Doctors and MMS shall have received all such
counterpart originals or certified or other copies of such documents as it
reasonably may request.
6.4 Approvals. All necessary corporate and regulatory approvals
for the transactions contemplated by this Agreement shall have been obtained.
6.5 Supporting Documents. Doctors and MMS shall have received
copies of the following documents:
6.5.1 A certificate of the Secretary or an
Assistant Secretary of UniversityCare, dated as of the Closing Date and
certifying: (i) that attached thereto is a true and complete copy of all
resolutions adopted by UniversityCare authorizing the execution, delivery, and
performance of this Agreement and all transactions contemplated by this
Agreement and that all such resolutions are in full force and effect and are all
the resolutions adopted in connection with the transactions contemplated by this
Agreement; and (ii) to the incumbency and specimen signature of each officer of
UniversityCare executing this Agreement and/or any other agreement related
hereto, and a certification by another officer of UniversityCare as to the
incumbency and signature of the officer signing the certificate referred to in
this Section.
6.5.2 UniversityCare shall execute and deliver
the Shareholders and Voting Agreement by and among Doctors, Beacon and other
shareholders, dated as of the Closing, the form and substance of which shall
have been agreed to by the parties thereto.
6.5.3 Such additional supporting documents and
other information with respect to the operations and affairs of UniversityCare
as MMS or Doctors reasonably may request.
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7.
INTERIM COVENANTS OF DOCTORS
BETWEEN
THE DATE OF THIS AGREEMENT AND THE CLOSING DATE
Doctors covenants to UniversityCare that for the period
between the date of this Agreement and the Closing Date that Doctors shall
maintain its properties and business and shall preserve its business,
organization, and the goodwill of customers and suppliers. Except as otherwise
herein provided, without the prior written consent of UniversityCare, which
consent shall not be unreasonably withheld, or in order to consummate the Beacon
Offer, Doctors shall not conduct its business except in the ordinary course.
7.1 Access to Information. Prior to Closing, Doctors shall permit
UniversityCare and its representatives reasonable access during normal business
hours to all of the properties, books, contracts, commitments, and records of
Doctors.
7.2 Notice of Breach. Doctors and shall promptly give notice to
UniversityCare of the occurrence of any event, or the failure of any event to
occur, that results in a breach of any representation or warranty of Doctors or
the Shareholders, or a failure by it or them to comply with any covenant,
condition, or agreement contained herein.
8.
JOINT COVENANTS OF THE PARTIES
8.1 Confidentiality of Business Information. The parties
heretofore have received and hereafter may receive various financial and other
information concerning their respective activities, businesses, assets, and
properties. The parties agree that:
8.1.1 all such information thus
received by the parties shall not at any time, or in any way or manner, be
utilized by the parties for their respective advantage or disclosed by the
parties to others for any purpose whatsoever; and
8.1.2 the parties shall take all
reasonable measures to assure that no employee or agent under their
respective control shall at any time use or disclose any information
described in this Section; and
8.1.3 this Section shall not apply to
MMS, or to: (i) any such information that was known to the parties prior to its
disclosure to the parties in accordance with this Section
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or was, is, or becomes generally available other than by disclosure by the
parties or any of their respective employees or agents in violation of this
Section; or (ii) any disclosure which such party makes to any regulatory
agency pursuant to that parties' obligations of disclosure to such agency.
8.2 Confidentiality of this Agreement.
8.2.1 The existence and contents of this
Agreement and its Schedules and Exhibits and the nature and status of the
transactions described herein and therein are confidential. Without the prior
written consent of the other party, none of the parties will disclose to any
person, other than to its respective directors, officers, and key employees,
affiliates, accounting, investment banking, and legal advisers, any such
confidential information unless, in the written opinion of counsel to the party
seeking to make the disclosure, such a disclosure is required by applicable law.
The timing and content of any announcements, press releases, or other public
statements concerning the transactions contemplated by this Agreement will occur
upon, and be determined by, the mutual agreement and consent of the parties.
8.2.2 Notwithstanding the
restrictions contained in the foregoing Section 8.2.1, the parties agree
that MMS may make the following disclosures:
8.2.2.1 MMS has completed the sale of all
of its Series B Stock;
8.2.2.2 the purchase price received
for the Series B Stock was equal to MMS's original purchase price plus the
agreed upon return on investment; and
8.2.2.3 the sale was to an unrelated
Maryland health care organization, provided that MMS will not disclose the
name of the purchaser;
provided, however, that MMS shall not make any press or other media release
concerning the Agreement or the transactions described herein;
8.2.3 With respect to rating agencies,
MMS may disclose the Closing Date, the actual Purchase Price, and, to the
extent that such rating agencies are bound by an obligation of
confidentiality and non-disclosure, the name of the purchaser and the Xxxx of
Sale described below; and
8.2.4 With respect to the Maryland
Insurance Department (the "Insurance Department"), UniversityCare and MMS
shall execute and deliver at Closing a Xxxx of Sale setting forth the number of
shares sold by MMS and the Purchase Price and that the Purchase Price reflects
MMS's original purchase price plus the agreed upon return on investment.
MMS may submit the Xxxx of Sale to the Insurance Department. MMS agrees that
it will not submit any additional information to the Insurance Department
unless: (i) it has received a request, in writing, from the Insurance
Department; and (ii) it has notified UniversityCare prior
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to filing any response to such request, in order to permit UniversityCare to
obtain such confidentiality treatment of such information as is reasonably
possible under the circumstances.
8.3 Fair Market Value of Shares; No Impermissible Activities.
Doctors and UniversityCare agree that the fair market value of the Series B
Stock was determined in an arms length transaction and is not determined in a
manner that takes into account the volume or value of any referrals or business
otherwise generated between the parties for which payment may be made, in whole
or in part, under Medicare or any State health care program, as defined under
Section 1128B of the Social Security Act. Doctors and UniversityCare further
agree that the purchase of Series B Stock and any related transaction between
the parties or affiliates thereof, do not involve the counseling or promotion of
a business arrangement or other activity that violates any State or federal law.
Doctors and UniversityCare agree that, to the best of its respective knowledge,
none of the proceeds being paid to MMS will be paid or become payable to Doctors
as an inducement to make referrals to UniversityCare or any affiliate thereof.
9.
TERMINATION
9.1 Termination and Abandonment. This Agreement may be terminated
and the transactions abandoned by mutual consent of the parties, or by any of
the parties by notice to the others:
9.1.1 in the event that any of the conditions
precedent to the performance of the obligations of the party giving such notice
shall not have been fulfilled and cannot be fulfilled on or prior to the Closing
Date and shall not have been waived by such party, or if a default shall be made
by another party in the observance or in the due and timely performance of any
of the covenants and agreements herein contained that cannot be cured on or
prior to the Closing Date and shall not have been waived by the party giving
such notice; provided that nothing provided herein shall be construed as
permitting a party to terminate when an affiliate of the party has been in
default;
9.1.2 in the event of the institution or
serious threat by any governmental authority or by any other person of
litigation or proceedings against any of the parties to enjoin, hinder or delay
or to obtain damages or other relief in connection with this Agreement or the
transactions contemplated herein; or
9.1.3 if any consent or approval which is
necessary to the transactions contemplated herein or the continuing
business, properties or prospects of Doctors shall have been refused or
withdrawn by any governmental authority having jurisdiction.
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9.1.4 Any termination pursuant to Section 9.1
shall first be approved by the Board of Directors of the party seeking
termination, to the extent that such approval is required for such action.
10.
Indemnification and Claims.
10.1 Indemnification by Doctors. Doctors shall defend and
indemnify and hold UniversityCare, each of its affiliates, and their respective
officers, directors, employees and agents, and each of their heirs, executors,
successors and assigns wholly harmless from and against any and all liabilities,
losses, damages, costs (including, without limitation, court costs and costs of
appeal), and expenses (including, without limitation, reasonable attorneys'
fees) incurred or maintained by UniversityCare, its affiliates, and their
respective directors, officers, employees and agents, and each of their heirs,
executors, successors and assigns, because of any inaccuracy in, or material
breach or violation of, the representations, warranties, and covenants made by
Doctors in this Agreement.
10.2 Indemnification by MMS. MMS shall defend and indemnify and
hold UniversityCare, each of its affiliates, and their respective officers,
directors, employees and agents, and each of their heirs, executors, successors
and assigns wholly harmless from and against any and all liabilities, losses,
damages, costs (including, without limitation, court costs and costs of appeal),
and expenses (including, without limitation, reasonable attorneys' fees)
incurred or maintained by UniversityCare, its affiliates, and their respective
directors, officers, employees and agents, and each of their heirs, executors,
successors and assigns, because of any inaccuracy in, or material breach or
violation of, the representations, warranties, and covenants made by MMS in this
Agreement.
10.3 Indemnification by UniversityCare. UniversityCare shall
defend and indemnify Doctors and MMS and hold Doctors and MMS, their affiliates,
each of their respective directors, officers, employees and agents, and each of
their heirs, executors, successors and assigns wholly harmless from and against
any and all losses, liabilities, damages, costs (including, without limitation,
court costs and cost of appeal) and expenses (including, without limitation,
reasonable attorneys' fees of one counsel) that either Doctors or MMS incurs as
a result of, or with respect to any inaccuracy in or breach of any
representation, warranty, covenant or agreement of UniversityCare contained in
this Agreement.
10.4 Limitation on and Expiration of Indemnification.
Notwithstanding anything in this ARTICLE 10 to the contrary, Doctors's and MMS's
rights to indemnification from UniversityCare and UniversityCare's rights to
indemnification from Doctors and/or MMS shall be limited as follows:
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10.4.1 all rights of the parties hereto to
indemnification hereunder for breaches of representations and warranties shall
expire two (2) years after the Closing Date; provided, however, if, prior to
such expiration, a state of facts shall have become known which threatens to
give rise to a liability against which any party hereto would be entitled to
indemnification hereunder and the indemnified party shall have given notice of
such facts to the indemnifying party, then the rights of the indemnified party
to indemnification with respect to such liability shall continue until such
liability shall have been finally determined and disposed of; and provided,
however, a party's rights to indemnification upon the other party's failure to
comply with this ARTICLE 10 shall survive until the expiration of the applicable
period of limitations.
10.4.2 No party shall be entitled to
indemnification pursuant to Sections 10.1(a) or 10.2(b) unless and until the
aggregate amount of damages to which the foregoing indemnity relates, sustained
by such party with respect to any individual claim exceeds Ten Thousand Dollars
($10,000), and then only to the extent that such damages exceed in the aggregate
Twenty-five Thousand Dollar ($25,000). Further, a breach of any of the
materiality standards set forth in this Agreement shall be defined as damages
with respect to any individual claim which exceeds Ten Thousand Dollars
($10,000).
10.5 Notice and Control of Litigation. If any claim or liability
is asserted in writing against a party entitled to indemnification under this
ARTICLE 10 (the "Indemnified Party") which would give rise to a claim under this
ARTICLE 10, the Indemnified Party shall notify the person providing the
indemnity ("Indemnifying Party") in writing of the same within fifteen (15) days
of receipt of such written assertion of a claim or liability. The Indemnifying
Party shall have the right to defend a claim and control the defense, settlement
and prosecution of any litigation. If the Indemnifying Party, within ten (10)
days after notice of such claim, fails to defend such claim, the Indemnified
Party will (upon further notice to the Indemnifying Party) have the right to
undertake the defense, compromise or settlement of such claim on behalf of and
for the account and risk of the Indemnifying Party, subject to the right of the
Indemnifying Party to assume the defense of such claim at any time prior to
settlement, compromise or final determination thereof. Anything in this Section
10.5 notwithstanding, (i) if there is a reasonable probability that a claim may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to defend, compromise and settle such claim,
and (ii) the Indemnifying Party shall not, without the written consent of the
Indemnified Party settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant to the Indemnified Party a release from all liability in respect to
such claim. All parties agree to cooperate fully as necessary in the defense of
such matters. Should the Indemnified Party fail to notify the Indemnifying Party
in the time required above, this indemnity shall terminate and be of no further
force and effect with respect to the subject matter of the required notice in
the event that the Indemnified Party's failure to notify in the time
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required above materially adversely affects the Indemnifying Party's ability to
defend such matter.
11.
MISCELLANEOUS
11.1 Amendments. This Agreement may not be amended or modified
without the written consent of the parties hereto.
11.2 Waiver. Failure to insist upon strict compliance with any of
the terms, covenants, or conditions of this Agreement at any one time shall not
be deemed a waiver of such term, covenant, or condition at any other time nor
shall any waiver or relinquishment of any right or power herein at any time be
deemed a waiver or relinquishment of the same or any other right or power at any
other time.
11.3 Notices. All notices, payments, or other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if sent by registered or certified mail, postage prepaid, and
return receipt requested to the parties, by overnight courier service or by
telecopy, addressed as follows (or at such other addresses as designated by the
parties from time to time):
If to Doctors:
Doctors Health System, Inc.
00000 Xxxx Xxx Xxxxxx
00xx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer; and
Executive Vice President and Director of Legal
Services
If to MMS:
Med-Lantic Management Services, Inc.
000 Xxxxxxxxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
If to UniversityCare:
UniversityCare, L.L.C.
University Physicians Professional Building
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000 X. Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxx, M.D.
Chief Executive Officer
If to Genesis:
Genesis Health Ventures, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxxx 00000
Attn: President
11.4 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5 Enforceability and Severability. In the event any provision
of this Agreement or portion thereof is found to be wholly or partially invalid,
illegal, or unenforceable in any proceeding, then such provision shall be deemed
to be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable, or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
11.6 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Maryland.
11.7 Section Titles. The titles of the sections have been inserted
as a matter of convenience and reference only and shall not control or affect
the meaning or construction of this Agreement.
11.8 Assignment. This Agreement shall not be assignable by any
party without the prior written consent of the other.
11.9 Expenses. Each party hereto will pay its own legal,
accounting and other fees and expenses incident to the transactions contemplated
hereby, whether or not such transactions shall be consummated. Each party will
be responsible for its own costs relative to the negotiations of such agreements
and the preparation of any schedules or ancillary documents and agreements
applicable to such party and required by this Agreement.
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11.10 Survival of Agreements. Except as provided in Section 10.4,
all covenants, agreements, representations, and warranties made herein or in any
other agreement, certificate, or instrument delivered to either party pursuant
to or in connection with this Agreement shall survive the execution and delivery
of this Agreement and the sale and delivery of the Shares until the applicable
statute of limitations. All statements contained in any certificate or other
instrument delivered by either party hereunder or in connection herewith shall
be deemed to constitute representations and warranties made by such party. Such
representations and warranties shall survive in full force and effect
notwithstanding any investigation by UniversityCare.
11.11 Brokerage. Each party hereto will indemnify and hold the
others harmless against and in respect of any claim for brokerage or other
commissions relative to this Agreement or to the transactions contemplated
hereby, based in any way on agreements, arrangements, or understandings made or
claimed to have been made by such party with any third party.
11.12 Parties in Interest. All representations, covenants, and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not.
11.13 Remedies. All remedies for breach of this Agreement shall
be cumulative.
11.14 Third Parties. Except as specifically provided herein, this
Agreement does not and is not intended to create any rights in any person or
entity which is not a party to this Agreement.
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11.15 Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, constitutes the sole and entire agreement and
understanding of the parties with respect to the subject matter hereof.
All Schedules and Exhibits hereto are incorporated herein by reference.
INTENDING TO BE LEGALLY BOUND, the parties hereto have duly
executed this Agreement to be effective as of the day and year first written
above.
UNIVERSITYCARE, L.L.C. DOCTORS HEALTH SYSTEM, INC.
By: /s/ Xxxxxx Xxxxxx By: /s/ Stewart B. Gold
_______________________ ______________________
Xxxxxx Xxxxxx Stewart B. Gold
_______________________ ______________________
Print Name Print Name
Chief Executive Officer President
_______________________ ______________________
Title Title
GENESIS HEALTH VENTURES, INC. MED-LANTIC MANAGEMENT
SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxx, Xx. By: /s/ Xxxxx X. Xxxxxx
_________________________ ______________________
Xxxxxx X. Xxxxx, Xx. Xxxxx X. Xxxxxx
_______________________ ______________________
Print Name Print Name
Senior Vice President President
_______________________ ______________________
Title Title
