ASSET PURCHASE AGREEMENT
By and Among
SPECIALTY CARE NETWORK, INC.,
ORTHO-ASSOCIATES, P.A. D/B/A PARK PLACE THERAPEUTIC CENTER,
XXXXXX X. XXXX, M.D.,
XXXX X. XXXXX, M.D.,
and
XXXXXX X. MAY, M.D.
Dated as of July 7, 1997
TABLE OF CONTENTS
-----------------
(This Table of Contents is not a part of the Agreement and is only for
convenience of reference.)
Page
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1. Definitions...............................................................................................- 1 -
2. Basic Transaction.........................................................................................- 4 -
(a) Purchase and Sale of Assets.....................................................................- 4 -
(b) Assumption of Liabilities.......................................................................- 4 -
(c) Purchase Price..................................................................................- 5 -
(d) The Closing.....................................................................................- 5 -
(e) Deliveries at Closing...........................................................................- 5 -
(f) Proration.......................................................................................- 5 -
(g) Taxes and Expenses..............................................................................- 5 -
(h) Allocation......................................................................................- 5 -
(i) Employees.......................................................................................- 5 -
3. Representations and Warranties of PPTC and the Physician Owners...........................................- 6 -
(a) Organization, Qualification, and Power..........................................................- 6 -
(b) Ownership Interest of PPTC......................................................................- 6 -
(c) Authorization of Transaction....................................................................- 6 -
(d) Noncontravention................................................................................- 6 -
(e) Subsidiaries and Investments....................................................................- 7 -
(f) Financial Statements............................................................................- 7 -
(g) Undisclosed Liabilities.........................................................................- 7 -
(h) Brokers' Fees...................................................................................- 7 -
(i) Material Contracts..............................................................................- 7 -
(j) Insurance; Malpractice..........................................................................- 8 -
(k) No Changes Prior to Closing Date................................................................- 8 -
(l) Title; Condition................................................................................- 9 -
(m) Litigation......................................................................................- 9 -
(n) Permits and Licenses............................................................................- 9 -
(o) Tax Matters.....................................................................................- 9 -
(p) Employee Benefit Plans..........................................................................- 9 -
(q) Third-Party Relations..........................................................................- 11 -
(r) Compliance with Applicable Laws................................................................- 11 -
(s) Employee Compensation..........................................................................- 11 -
(t) Environmental Matters..........................................................................- 11 -
(u) Healthcare Compliance..........................................................................- 12 -
(v) Fraud and Abuse................................................................................- 12 -
(w) Practice Compliance............................................................................- 12 -
(x) Rates and Reimbursement Policies...............................................................- 12 -
(y) [intentionally omitted]........................................................................- 12 -
(z) Guaranties.....................................................................................- 12 -
(aa) Powers of Attorney............................................................................- 13 -
(bb) Tangible Assets...............................................................................- 13 -
- ii -
Page
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(cc) SCN Warrant; Investment Intent................................................................- 13 -
4. Representations and Warranties of SCN....................................................................- 14 -
(a) Organization...................................................................................- 14 -
(b) Capitalization.................................................................................- 14 -
(c) Authorization of Transaction...................................................................- 14 -
(d) Noncontravention...............................................................................- 14 -
(e) Brokers' Fees..................................................................................- 14 -
(f) Securities Filings.............................................................................- 14 -
5. Covenants................................................................................................- 15 -
(a) General........................................................................................- 15 -
(b) Notices and Consents...........................................................................- 15 -
(c) Regulatory Matters and Approvals...............................................................- 15 -
(d) Operation of Business..........................................................................- 15 -
(e) Further Acts and Assurances....................................................................- 15 -
(f) Full Access....................................................................................- 15 -
(g) Notice of Developments.........................................................................- 15 -
(h) Exclusivity....................................................................................- 15 -
(i) [intentionally omitted]........................................................................- 16 -
(j) Corporate Authorization........................................................................- 16 -
(i) Securities Law Compliance......................................................................- 16 -
(k) Malpractice Insurance..........................................................................- 16 -
(l) Employee Benefit Plans.........................................................................- 16 -
6. Conditions to Obligation to Close........................................................................- 16 -
(a) Conditions to Obligation of SCN................................................................- 16 -
(b) Conditions to Obligation of PPTC...............................................................- 17 -
7. Items to be Delivered at or Prior to Closing.............................................................- 17 -
(a) By the Physician Owners or PPTC................................................................- 17 -
(b) By SCN.........................................................................................- 18 -
8. Termination..............................................................................................- 18 -
(a) Termination of Agreement.......................................................................- 18 -
(b) Effect of Termination..........................................................................- 19 -
9. Indemnification..........................................................................................- 19 -
(a) Indemnification by PPTC and the Physician Owners...............................................- 19 -
(b) Notice to PPTC and the Physician Owners; Opportunity to Defend.................................- 19 -
(c) General Indemnification by SCN.................................................................- 19 -
(d) Notice to SCN; Opportunity to Defend...........................................................- 19 -
(e) Right of Setoff................................................................................- 19 -
10. Miscellaneous...........................................................................................- 20 -
- iii -
Page
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(a) Survival.......................................................................................- 20 -
(b) No Third-Party Beneficiaries...................................................................- 20 -
(c) Entire Agreement...............................................................................- 20 -
(d) Succession and Assignment......................................................................- 20 -
(e) Counterparts...................................................................................- 20 -
(f) Headings.......................................................................................- 20 -
(g) Notices........................................................................................- 20 -
(h) Governing Law Venue............................................................................- 21 -
(i) Amendments and Waivers.........................................................................- 21 -
(j) Severability...................................................................................- 21 -
(k) Expenses.......................................................................................- 21 -
(l) Construction...................................................................................- 22 -
(m) No Referrals Required..........................................................................- 22 -
(n) Incorporation of Exhibits and Schedules........................................................- 22 -
SCHEDULE 1(a) REAL PROPERTY................................................................Schedule 1(a)-1
SCHEDULE 1(b) FURNITURE, FIXTURES & EQUIPMENT..............................................Schedule 1(b)-1
SCHEDULE 1(d) LEASES OF PERSONAL PROPERTY..................................................Schedule 1(d)-1
SCHEDULE 1(f) ASSIGNED CONTRACTS...........................................................Schedule 1(f)-1
SCHEDULE 2(b) ASSUMED LIABILITIES..........................................................Schedule 2(b)-1
EXHIBIT 2(g) PURCHASE PRICE ALLOCATION AGREEMENT............................................Exhibit 2(g)-1
EXHIBIT 7(a)(ii) XXXX OF SALE...........................................................Exhibit 7(a)(ii)-1
EXHIBIT 7(a)(iii) SERVICE AGREEMENT....................................................Exhibit 7(a)(iii)-1
EXHIBIT 7(a)(iv) ASSIGNMENT AND ASSUMPTION AGREEMENT....................................Exhibit 7(a)(iv)-1
EXHIBIT 7(a)(v) LEASE ASSIGNMENT AND ASSUMPTION AGREEMENTS...............................Exhibit 7(a)(v)-1
EXHIBIT 7(a)(vi) REGISTRATION RIGHTS AGREEMENT..........................................Exhibit 7(a)(vi)-1
EXHIBIT 7(a)(viii) OPINION OF XXXXX, MCCLOSKY, SMITH, XXXXXXXX & XXXXXXX, P.A.........Exhibit 7(a)(viii)-1
EXHIBIT 7(b)(ii) SCN WARRANT............................................................Exhibit 7(b)(ii)-1
EXHIBIT 7(b)(ix) OPINION OF BAKER, DONELSON, BEARMAN & XXXXXXXX, P.C....................Exhibit 7(b)(ix)-1
- iv -
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is entered into as of
July 7, 1997, by and among ORTHO-ASSOCIATES, P.A. D/B/A PARK PLACE THERAPEUTIC
CENTER, a Florida professional service corporation ("PPTC"), and XXXXXX X. XXXX,
M.D., XXXX X. XXXXX, M.D., and XXXXXX X. MAY, M.D., all residents of the State
of Florida (collectively the "Physician Owners") on the one hand and SPECIALTY
CARE NETWORK, INC., a Delaware corporation ("SCN") on the other hand. SCN, PPTC
and the Physician Owners are referred to collectively herein as the "Parties."
W I T N E S S E T H:
WHEREAS, PPTC is a Florida professional association which owns the
assets which are used by and/or result from the Physician Owners' practice of
medicine;
WHEREAS, the Physician Owners are medical doctors practicing medicine
in the State of Florida;
WHEREAS, the Parties anticipate that the transaction contemplated by
this Agreement will further certain of their business objectives; and
WHEREAS, the Parties desire to set forth in writing the terms and
conditions under which said transaction will be consummated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Parties, it is agreed as
follows:
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preface above.
"Applicable Laws" has the meaning set forth in Section 3(r) below.
"Assignment and Assumption Agreement" means that certain Assignment and
Assumption Agreement to be executed by the Parties at Closing, the form of which
is attached hereto as Exhibit 7(a)(iv).
"Assumed Liabilities" has the meaning set forth in Section 2(b) below.
"FPCA" means the Professional Corporation and Limited Liability Company
Act of the State of Florida, as amended.
"Closing Date" has the meaning set forth in Section 2(d) below.
"PPTC" has the meaning set forth in the preface above.
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"Closing" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Employee Benefit Plans" has the meaning set forth in Section 3(p)(i)
below.
"Environmental Laws" means all federal, state, and local laws, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder and other governmental requirements relating to pollution,
control of chemicals, storage and handling of petroleum products, management of
waste (including biohazardous or biomedical waste), discharges of materials into
the environment, health, safety, natural resources, and the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means (a) the Articles of Incorporation,
qualifications to conduct business as a foreign professional association,
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers, seals, minute books, transfer books, and other
documents relating to the organization, maintenance, and existence of PPTC as a
professional association, (b) employment or noncompete agreements between PPTC
and those licensed medical doctors under contract with PPTC to provide medical
services to PPTC patients, (c) all patient records and patient lists, (d) all
insurance policies of PPTC and all claims arising thereunder and all prepaid
expenses on malpractice insurance premiums, (e) the inventories, cash, and
accounts receivable disposed of, canceled, expanded or collected, as the case
may be, by PPTC after the date hereof and prior to the Closing in the Ordinary
Course of Business, (f) personal property of individual Physician Owners and
other employees which is not included on the financial statements of PPTC, (g)
PPTC's cash on hand as of the Closing Date, (h) PPTC's third party payor
agreements, (i) all drugs owned by PPTC, (j) any rights of PPTC under this
Agreement or any related document or under any other agreement between PPTC on
the one hand and SCN on the other hand entered into on or after the date of this
Agreement, (k) all accounts receivable, claims for payments due, unpaid
accounts, notes and sums due or owed to PPTC, and (l) any other property or
asset not included as a Purchased Asset.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Materials" has the meaning set forth in Section 3(t) below.
"IRS" means the Internal Revenue Service.
"Knight Employment Agreement" means that certain Employment Agreement
between SCN and Xxx Xxxxxx dated the Closing Date providing for the continued
employment of Xxx Xxxxxx by SCN on the terms and subject to the conditions
stated therein.
"Knowledge" means actual knowledge.
- 2 -
"Lease Assignment and Assumption Agreements" means those three (3)
Lease Assignment, Assumption and Release Agreements to be executed and delivered
by SCN and the other parties thereto at Closing, the forms of which are attached
hereto as composite Exhibit 7(a)(v).
"May Stock Redemption Agreement" means the Agreement contemplated in
Section 6(b)(v) hereof.
"Medical Waste" includes, but is not limited to, pathological waste,
blood, sharps, wastes from surgery or autopsy, dialysis waste, including
contaminated disposable equipment and supplies, cultures and stock of infectious
agents and associated biological agents, contaminated animals, isolation wastes,
contaminated equipment, laboratory waste, various other biological waste and
discarded materials contaminated with or exposed to blood, excretion or
secretion from human beings or animals, and any substance, pollutant, material
or contaminant listed or regulated under the Medical Waste Tracking Act of 1988,
42 U.S.C. xx.xx. 6992, et seq.
"Medical Waste Law" means the Medical Waste Tracking Act of 1988, as
amended, the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33
U.S.C.A. xx.xx. 2501, et seq., the Marine Protection, Research and Sanctuaries
Act of 1972, 33 U.S.C.A. xx.xx. 1401, et seq., the Occupational Safety and
Health Act, 29 U.S.C.A. xx.xx. 651, et seq., the United States Department of
Health and Human Services, National Institute for Occupational Self-Safety and
Health Infectious Waste Disposal Guidelines, Publication No. 88-119, all
regulations and orders issued pursuant to any of the foregoing, and any other
federal, state, regional, county, municipal or other local laws, regulations and
ordinances insofar as they purport to regulate Medical Waste or impose
requirements relating to Medical Waste.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Parties" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PBGC" has the meaning set forth in Section 3(p)(ii) below.
"Physician Owners" has the meaning set forth in the preface above.
"Purchase Price" has the meaning set forth in Section 2(a) below.
"Purchased Assets" means all of PPTC's right, title, and interest in
and to the following assets of PPTC owned as of the Closing Date:
(a) any and all leaseholds and subleaseholds in real property,
improvements, fixtures, and fittings thereon, and easements, rights-of-way, and
other appurtenances and hereditaments thereto (such as appurtenant rights in and
to public streets), including the assets described on Schedule 1(a) attached
hereto (the "Real Property"),
(b) any and all furniture, fixtures, equipment and other capital assets
of PPTC, including items described on Schedule 1(b) attached hereto,
(c) any and all inventory of supplies, janitorial and office supplies,
and other disposables and consumables on hand at the Closing Date (excluding
drugs),
- 3 -
(d) any and all leases or subleases of equipment or other personal
property, and rights thereunder as described on Schedule 1(d) attached hereto,
(e) any and all Intellectual Property, goodwill associated therewith,
licenses and sublicenses granted and obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to protection of
interests therein under the laws of all jurisdictions,
(f) any and all agreements, contracts, indentures, mortgages,
instruments, Security Interests, guaranties, other similar arrangements, and
rights thereunder described on Schedule 1(f) ("Assigned Contracts"),
The term "Purchased Assets" shall not include any specific item included within
the definition of Excluded Assets below.
"Real Property" has the meaning set forth within the definition of
Purchased Assets in this Section 1.
"Registration Rights Agreement" means that certain letter agreement
among the Parties attached hereto as Exhibit 7(a)(vi).
"Requisite PPTC Approval" means the affirmative vote of the holders of
the requisite percentage of the shares of PPTC which is required by the Florida
Professional Corporation Act to approve the transactions contemplated by this
Agreement.
"Requisite SCN Board of Directors Approval" means the affirmative vote
of the holders of a majority of the SCN Board of Directors in favor of this
Agreement.
"SCN" has the meaning set forth in the preface above.
"SCN Warrants" shall mean those three (3) certain Warrants to Purchase
Common Stock of the Company, in denominations of 272,340 shares, 136,170 shares
and 136,171 shares, respectively, exercisable at any time on or before one year,
two years, and three years, respectively, from the Closing, at an exercise price
of $14 11/16, in substantially the form attached hereto as Exhibit 7(a)(vii).
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest other than (a) mechanic's, materialmen's or
similar lien, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Service Agreement" means that certain Service Agreement dated as of
the Closing Date by and among SCN, PPTC, and the Physician Owners, in
substantially the form attached hereto as Exhibit 7(a)(iii).
- 4 -
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
2. Basic Transaction.
(a) Purchase and Sale of Assets. At the Closing, on and subject to the
terms and conditions of this Agreement, PPTC agrees to transfer, sell, convey
and deliver to SCN, and SCN agrees to purchase, all of the Purchased Assets for
a price equal to Sixteen Million Dollars ($16,000,000.00) (the "Purchase Price")
plus the SCN Warrants, to be paid or satisfied as set forth in Section 2(c).
(b) Assumption of Liabilities. Except as otherwise provided herein, SCN
shall assume at the Closing Date, and shall perform or discharge on or after the
Closing Date, only the contracts, leases, commitments, obligations and
liabilities of PPTC which are listed on Schedule 2(b) attached hereto (the
"Assumed Liabilities"), and shall assume no other liabilities of PPTC.
Notwithstanding any contrary provision contained herein, SCN shall not be deemed
to have assumed, nor shall SCN assume: (i) any liability which may be incurred
by reason of any breach of or default under such contracts, leases, commitments
or obligations which occurred prior to the Closing Date; (ii) any liability for
any employee benefits payable to employees of PPTC, including, but not limited
to, liabilities arising under any Employee Benefit Plan of PPTC; (iii) any
liability based upon or arising out of a violation of any laws by PPTC,
including, without limiting the generality of the foregoing, any such liability
which may arise in connection with agreements, contracts, commitments or
provision of services by PPTC or any Physician Owner; (iv) any liability based
upon or arising out of any tortious or wrongful actions of PPTC or any Physician
Owner, or (v) any liability for the payment of any taxes imposed by law on PPTC
arising from any activities of PPTC prior to the Closing Date or by reason of
the transactions contemplated by this Agreement.
(c) Purchase Price. SCN shall pay or satisfy the Purchase Price at the
Closing by delivering to PPTC the SCN Warrants (together with the duly executed
Registration Rights Agreement) and Sixteen Million Dollars ($16,000,000.00) in
cash, payable by wire transfer or delivery of immediately available funds,
representing the full amount of the Purchase Price.
(d) The Closing. The closing of the transaction (the "Closing") shall
take place at the offices of Xxxxx, McClosky, Smith, Xxxxxxxx & Xxxxxxx, P.A.,
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx 00000, commencing at 9:00
a.m. local time on the second business day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby or such other date as the Parties may mutually
determine (the "Closing Date"). Time is of the essence for this Agreement.
(e) Deliveries at Closing. At the Closing, (i) SCN will deliver to PPTC
the various certificates, instruments, and documents referred to in Section 7(b)
below; (ii) PPTC will deliver to SCN the various certificates, instruments, and
documents referred to in Section 7(a) below.
(f) Proration. The following prorations among the Parties shall be made
as of the Closing Date, with PPTC remaining liable to the extent such items
relate to any time period up to the Closing Date and SCN being liable (solely
pursuant to the terms of the Service Agreement) to the extent such items relate
to periods on and after the Closing Date:
(i) Any ad valorem taxes, including, without limitation,
personal property taxes and assessments, and other taxes, if any, on or
with respect to the Purchased Assets,
- 5 -
(ii) Rents, additional rents, taxes and other items paid or
payable by PPTC under any lease, license, permit, contract or any other
agreement or arrangement to be assigned to or assumed by SCN, and
(iii) The amount of rents, taxes, and charges for sewer,
water, fuel, telephone, electricity, and other utilities; provided,
that if practicable, a meter reading shall be take on the Closing Date
and the respective obligations of the Parties determined in accordance
with such readings.
To the extent possible, the net amount of all such prorations will be
settled in cash at the Closing. If the actual expense of any of the above items
for the billing period in which the Closing Date falls is not known at the
Closing, the proration shall be made based on the expense incurred in the
previous billing cycle, for expenses billed less often than quarterly, and on
the average expense incurred in the preceding three (3) billing periods, for
expense xxxx quarterly or more often.
(g) Taxes and Expenses. PPTC shall be responsible for any business,
occupation, withholding or similar tax or taxes of any kind related to PPTC's
business for any period prior to the Closing Date. All applicable sales, use and
tangible taxes, documentary stamp taxes, filing and recording costs and other
transfer taxes, costs and fees relating to the transfer of title to the
Purchased Assets, and the consummation of the transactions described herein,
shall be paid by PPTC.
(h) Allocation. The Parties agree to allocate the Purchase Price among
the Purchased Assets (and all other capitalizable costs) among the Purchased
Assets for all purposes (including financial accounting and tax purposes) in
accordance with the Purchase Price Allocation Agreement attached hereto as
Exhibit 2(g).
(i) Employees. As of the Closing Date, PPTC shall terminate all the
employees of PPTC other than Physician Employees and Technical Employees (both
as defined in the Service Agreement), and SCN or an Affiliate of SCN shall hire
all such terminated employees at the compensation levels existing as of the
Closing Date. Notwithstanding any other provision herein or in any other
document or instrument to the contrary, each former PPTC employee hired by SCN
shall be given credit, to the extent lawful, for all years of service to PPTC
prior to the Closing for the purpose of determining eligibility for benefits as
employees of SCN. PPTC shall retain responsibility under any and all employment
agreements with respect to terminated employees. PPTC hereby covenants and
agrees that it will take whatever steps are necessary to pay or fund completely
or reserve completely for any accrued benefits, where applicable, or vested
accrued benefits for which PPTC or any entity might have any liability
whatsoever arising from any salary, wage, benefit, bonus, sick leave, insurance,
employment tax or similar liability of PPTC to any employee or other person or
entity (including, without limitation, any Employee Benefit Plan of PPTC and any
liability under employment contracts with PPTC) allocable to services performed
prior to the Closing Date. PPTC acknowledges that the purpose and intent of this
covenant is to assure that SCN shall have no liability whatsoever at any time in
the future with respect to any of PPTC's employees or similar persons or
entities, including, without limitation, any Employee Benefit Plan of PPTC.
3. Representations and Warranties of PPTC and the Physician Owners.
PPTC and the Physician Owners, jointly and severally, represent and warrant to
SCN that the statements contained in this Section 3 are correct as of the date
of this Agreement and will be correct as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3 except where the context otherwise
requires), except as set forth in the disclosure schedule (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Section 3 and Section
4, and will be updated as of the Closing Date.
- 6 -
(a) Organization, Qualification, and Power. PPTC is a professional
service corporation duly organized, validly existing, and in good standing under
the laws of the State of Florida. PPTC is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction in which the
character or location of the properties owned or the business conducted by PPTC
makes such qualification necessary. PPTC has the full power and authority to
carry on the business in which it is engaged and to own and use the properties
owned, leased and used by it.
(b) Ownership Interest of PPTC. PPTC is owned in the manner set forth
in Section 3(b) of the Disclosure Schedule. Except as set forth in Section 3(b)
of the Disclosure Schedule, there are no other shares of any form authorized or
outstanding. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require PPTC to issue, sell, or otherwise
cause to become outstanding any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to PPTC. Notwithstanding anything to the contrary in
this Agreement, SCN acknowledges that PPTC and the Physician Owners, as of the
Closing, shall have entered into the May Stock Redemption Agreement.
(c) Authorization of Transaction. PPTC has the full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of PPTC and
the Physician Owners, enforceable in accordance with its terms and conditions,
subject to applicable bankruptcy reorganization, insolvency, fraudulent
conveyance, moratorium or other laws of general application affecting the
enforcement of creditor's rights.
(d) Noncontravention. To the Knowledge of PPTC and the Physician
Owners, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, (i) violates any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or other restriction of any government, governmental agency,
professional regulatory organization or court to which PPTC is subject or any
provision of the Articles of Incorporation or bylaws of PPTC or (ii) conflicts
with, results in a breach of, constitutes a default under, results in the
acceleration of, creates in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any material agreement, contract,
lease, license, instrument or other arrangement to which PPTC is a party or by
which it is bound or to which any of its assets is subject (or result in the
imposition of any Security Interest upon any of its assets); provided, however,
notwithstanding anything to the contrary in this Agreement, no representation or
warranty is made as to the assignability of the Assigned Contracts or to the
effect of the failure to obtain any consent required for the assignment thereof.
To the Knowledge of PPTC and the Physician Owners, PPTC is not required to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Subsidiaries and Investments. PPTC does not own, directly or
indirectly, any capital stock or other equity ownership or proprietary interest
in any other corporation, partnership, association, limited liability company,
trust, joint venture or other entity, except passive investments in
readily-marketable securities.
(f) Financial Statements. PPTC has furnished SCN with audited financial
statements dated December 31, 1996 and 1995, including the notes thereto, which
were prepared on a basis consistent with past accounting practices of PPTC and,
except as disclosed in the Disclosure Schedule, fairly present the financial
condition of PPTC at the dates thereof, and the results of its operations for
the periods then ended, in accordance with generally accepted accounting
principles. PPTC has also furnished SCN with a Statement of Assets, Liabilities
and Equity - Income Tax Basis as of February 28, 1997, and a Statement of
Revenue and Expenses - Income Tax Basis, for the two months then ended. Except
as set forth on the Disclosure Schedule, such financial statements were compiled
from the accounting records of PPTC and have not been audited, but are
mathematically correct. Except as set forth on the Disclosure Schedule, the
balance sheets of
- 7 -
PPTC delivered by PPTC to SCN reflect all claims against and all debts and
liabilities of PPTC fixed or contingent, as of the dates thereof.
(g) Undisclosed Liabilities. To the Knowledge of PPTC and Physician
Owners, PPTC has no uninsured material liability (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, and whether due or to become due), including any liability for
taxes that would have a material adverse affect on the Purchased Assets, except
for (i) liabilities set forth on the face of the balance sheet dated as of
December 31, 1996 (ii) liabilities which have arisen after December 31, 1996 in
the Ordinary Course of Business (none of which results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement, or violation of law).
(h) Brokers' Fees. PPTC does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement, except PPTC has engaged Practice
Solutions of Boca Raton, Florida, which is entitled to a fee in connection with
the transaction contemplated hereby. SCN hereby agrees to pay such fee, not to
exceed $500,000, when due (and assume any obligation of PPTC [up to such amount]
thereafter) which fee shall be an Assumed Liability.
(i) Material Contracts. Section 3(i) of the Disclosure Schedule lists
the following material contracts and other material agreements to which PPTC is
a party (an agreement described below is required to be listed in Section 3(i)
of the Disclosure Schedule only to the extent it is material):
(i) any agreement (or group of related agreements) for the
lease of real or personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services;
(iii) any agreement concerning a partnership, limited
liability company or joint venture;
(iv) any agreement (or group of related agreements) under
which PPTC has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation
pursuant to which it has imposed a Security Interest in respect of any
of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, option, deferred compensation,
severance, or other plan or arrangement for the benefit of PPTC's
current or former owners, directors, partners, managers, officers,
and/or employees;
(vii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000 or providing severance benefits;
(viii) any agreement pursuant to which PPTC has advanced or
loaned any amount to any of its shareholders, directors, officers, and
employees;
(ix) any agreement pursuant to which the consequences of a
default or termination, to the Knowledge of PPTC and Physician Owners
could have a material adverse effect on the business, financial
condition, operations, results of operations, or future prospects of
PPTC; or
- 8 -
(x) any other agreement (or group of related agreements)
outside the ordinary course of PPTC's business or operations the
performance of which involves consideration in excess of $15,000.
PPTC has delivered or given SCN access to a correct and complete copy of each
written agreement listed in Section 3(i) of the Disclosure Schedule (as amended
through the Closing Date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3(i) of the Disclosure
Schedule. With respect to each such agreement: (A) to the Knowledge of PPTC and
the Physician Owners, no party is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (B) to the Knowledge of PPTC and the Physician Owners, no party
has repudiated any provision of the agreement.
(j) Insurance; Malpractice. Section 3(j) of the Disclosure Schedule
contains a list and brief description of all policies or binders of fire,
liability, product liability, workers compensation, health and other forms of
insurance policies or binders currently in force insuring against risks which
will remain in full force and effect at least through the Closing Date. Section
3(j) of the Disclosure Schedule contains a description of all current
malpractice liability insurance policies of the Physician Owners and PPTC and
all predecessor policies of PPTC in effect since February 1, 1994. Neither PPTC
nor, to the Knowledge of PPTC or the Physician Owners, the Physician Owners, or
present PPTC's professional employees have, in the last seven (7) years, filed a
written application for any insurance coverage relating to PPTC's business or
property which has been denied by an insurance agency or carrier. insured for
professional malpractice claims during the same period. Section 3(j) of the
Disclosure Schedule also sets forth a list of all claims for any insured loss in
excess of Five Thousand Dollars ($5,000.00) per occurrence filed by or against
PPTC or, to the Knowledge of PPTC or the Physician Owners, PPTC's present
professional employees or the Physician Owners, during the three (3) year period
immediately preceding the date hereof, including workers compensation, general
liability, environmental liability and professional malpractice liability
claims. None of PPTC, or, to the Knowledge of PPTC or the Physician Owners, the
Physician Owners, PPTC's present professional employees, is in material default
with respect to any provision contained in any policy listed in Section 3(j) of
the Disclosure Schedule or has failed to give any notice or present any claim
under any such policy in due and timely fashion.
(k) No Changes Prior to Closing Date. During the period from December
31, 1996 through the date hereof, PPTC has not (i) incurred any material
liability or obligation of any nature (whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated and whether due or to become due), except in the Ordinary Course of
Business, except for accrual of bonuses for certain employees, (ii) written off
as uncollectible any notes or accounts receivable, except write-offs in the
Ordinary Course of Business charged to applicable reserves, none of which
individually or in the aggregate is material to PPTC, (iii) conducted its
business in such a manner so as to materially increase its accounts payable or
so as to materially decrease its accounts receivable, (iv) granted any increase
in the rate of wages, salaries, bonuses, or other remunerations of any employee,
except in the Ordinary Course of Business, except for accrual of bonuses for
certain employees, (v) canceled or waived any claims or rights of substantial
value, (vi) made any material change in any method of accounting, (vii)
otherwise conducted its business or entered into any material transaction,
except in the usual and ordinary manner and in the Ordinary Course of Business,
(viii) agreed, whether or not in writing, to do any of the foregoing, or (ix)
disposed of its assets other than in the Ordinary Course of Business.
(l) Title; Condition. PPTC has, or will have at the Closing Date, good
and marketable title to all of the Purchased Assets subject to no mortgage,
pledge, lien, lease, conditional sales agreement, option, right of first refusal
or any other encumbrance or charge, including taxes, except for (i) liens with
respect to taxes not yet due and payable and (ii) statutory landlord liens. PPTC
agrees to remove all security interests reflected on any search of public
records, if any, prior to the Closing Date and to remove any other security
interest filed with respect to the Purchased Assets between the date of such
search of public records and the Closing Date.
- 9 -
(m) Litigation. Except as disclosed in Section 3(m) of the Disclosure
Schedule, there is no suit, action, proceeding at law or in equity, arbitration,
administrative proceeding or other proceeding or investigation by any
governmental entity pending, or, to the Knowledge of PPTC or the Physician
Owners, threatened against, or affecting PPTC or any of the Purchased Assets, or
to the Knowledge of PPTC or the Physician Owners, any physician or other health
care professional engaged or employed by PPTC, and to the Knowledge of PPTC or
the Physician Owners, there is no basis for any of the foregoing. None of the
actions, suits, proceedings, hearings, and investigations set forth in Section
3(m) of the Disclosure Schedule could reasonably be anticipated to result in any
material adverse change in the operations, results of operations, or future
prospects of the business assets to be operated by SCN, or a material adverse
effect on the Service Agreement, after the Closing.
(n) Permits and Licenses. To the Knowledge of PPTC and the Physician
Owners, PPTC and all physicians and other health care professionals engaged or
employed by PPTC have all permits and licenses required by all applicable laws;
have made all regulatory filings necessary for the conduct of PPTC's business;
and are not in violation of any of said permitting or licensing requirements,
except for any violations that would not have a material adverse effect on the
Purchased Assets or the business of PPTC.
(o) Tax Matters. All federal, state and other tax returns of PPTC
required by law to be filed have been timely filed, and PPTC has paid or
adequately provided for all taxes (including taxes on properties, income,
franchises, licenses, sales and payrolls) which have become due pursuant to such
returns or pursuant to any assessment, except for any taxes and assessments, the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which PPTC has set aside on
its books adequate reserves. There are no tax liens on any of PPTC's assets
except those with respect to taxes not yet due and payable. There are no pending
tax examinations of PPTC's tax returns nor has PPTC received a revenue agent's
report asserting a tax deficiency in the last twelve (12) months. There are not
and will not be at the Closing Date, any claims pending or asserted against PPTC
for unpaid taxes by any federal, state or other governmental body. PPTC has
withheld from each payment made to employees of PPTC the amount of all taxes
(including, but not limited to, federal, state and local income taxes and
Federal Insurance Contribution Act taxes) required to be withheld therefrom and
all amounts customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
has paid or will pay the same to, or has deposited or will deposit such payment
with, the proper tax receiving officers or other appropriate authorities.
(p) Employee Benefit Plans.
(i) List of Plans. Section 3(p) of the Disclosure Schedule
contains an accurate and complete list of all employee benefit plans
("Employee Benefit Plans") within the meaning of Section 3(3) of ERISA,
whether or not any Employee Benefit Plans are otherwise exempt from the
provisions of ERISA, established, maintained or contributed to by PPTC
(including all employers (whether or not incorporated) which by reason
of common control are treated together with PPTC and/or the Physician
Owners as a single employer within the meaning of Section 414 of the
Code) since September 2, 1974.
(ii) Status of Plans. To the Knowledge of PPTC and the
Physician Owners, PPTC has never maintained and does not now maintain
or contribute to any Employee Benefit Plan subject to ERISA, which is
not in substantial compliance with ERISA or which has incurred any
accumulated funding deficiency within the meaning of Section 412 or
418B of the Code, or which has applied for or obtained a waiver from
the Internal Revenue Service of any minimum funding requirement under
Section 412 of the Code or which is subject to Title IV of ERISA. PPTC
has not incurred any liability
- 10 -
to the Pension Benefit Guaranty Corporation ("PBGC") in connection with
any Employee Benefit Plan covering any employees of PPTC or ceased
operations at any facility or withdrawn from any such Plan in a manner
which could subject it to liability under Section 4062(f), 4063 or 4064
of ERISA, and knows of no facts or circumstances which might give rise
to any liability of PPTC to the PBGC under Title IV of ERISA which
could reasonably be anticipated to result in any claims being made
against PPTC by the PBGC. PPTC has not incurred any withdrawal
liability (including any contingent or secondary withdrawal liability)
within the meaning of Sections 4201 and 4202 of ERISA, to any Employee
Benefit Plan which is a Multiemployer Plan (as defined in Section 4001
of ERISA), and, to the Knowledge of PPTC and the Physician Owners, no
event has occurred, and there exists no condition or set of
circumstances, which represent a material risk of the occurrence of any
withdrawal from or the partition, termination, reorganization or
insolvency of any Multiemployer Plan which would result in any
liability of PPTC.
(iii) Contributions. Full payment has been made of all amounts
which PPTC is required, under applicable law or under any Employee
Benefit Plan or any agreement relating to any Employee Benefit Plan to
which PPTC is a party, to have paid as contributions thereto as of the
last day of the most recent plan year of such Employee Benefit Plan
ended prior to the date hereof. PPTC has made adequate provision for
reserves to meet contributions that have not been made because they are
not yet due under the terms of any Employee Benefit Plan or related
agreements. Benefits under all Employee Benefit Plans are as
represented and have not been increased subsequent to the date as of
which documents have been provided.
(iv) Tax Qualification. Each Employee Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined to be
so qualified by the Internal Revenue Service and, nothing has occurred
since the date of the last such determination which resulted or is
likely to result in the revocation of such determination.
(v) Transactions. To the Knowledge of PPTC and the Physician
Owners, PPTC has not engaged in any transaction with respect to the
Employee Benefit Plans which would subject it to a material tax,
penalty or liability for prohibited transactions under ERISA or the
Code nor have any of its directors, officers or employees to the extent
they or any of them are fiduciaries with respect to such plans,
breached any of their responsibilities or obligations imposed upon
fiduciaries under Title I of ERISA which would result in any material
claim being made under or by or on behalf of any such plans by any
party with standing to make such claim.
(vi) Other Plans. PPTC presently does not maintain any
Employee Benefit Plans or any other foreign pension, welfare or
retirement benefit plans other than those listed on Section 3(p) of the
Disclosure Schedule.
(vii) Documents. PPTC has delivered or caused to be delivered
to SCN true and complete copies of (i) all Employee Benefit Plans as in
effect, together with all amendments thereto which will become
effective at a later date, as well as the latest IRS determination
letter obtained with respect to any such Employee Benefit Plan
qualified
- 11 -
under Section 401 or 501 of the Code, and (ii) the most recently filed
Form 5500 for each Employee Benefit Plan required to file such form.
(q) Third-Party Relations. PPTC has not received any notice that any
material patient, supplier, employee or associated physician intends to cease
doing business with PPTC.
(r) Compliance with Applicable Laws. To the Knowledge of PPTC or the
Physician Owners, PPTC has operated in material compliance with all federal,
state, county and municipal laws, constitutions, ordinances, statutes, rules,
regulations and orders applicable thereto ("Applicable Laws"). To the Knowledge
of PPTC or the Physician Owners, neither PPTC nor any physician associated with
or employed by PPTC has received payment or any remuneration whatsoever to
induce or encourage the referral of patients or the purchase of goods and/or
services as prohibited under 42 U.S.C. ss. 1320a-7b(b), or otherwise perpetrated
any Medicare or Medicaid fraud or abuse nor has any fraud or abuse been alleged
within the last five (5) years by any government agency.
(s) Employee Compensation. PPTC has paid or discharged or will pay or
discharge or assume all liabilities for compensation and benefits to which all
employees, including physician employees, are entitled through the Closing Date,
including but not limited to all salaries, wages, bonuses, incentive
compensation, payroll taxes, hospitalization and medical expenses, deferred
compensation, and vacation and sick pay, as well as any severance pay becoming
due as a result of the termination of certain of PPTC's employees.
(t) Environmental Matters.
(i) To the Knowledge of PPTC and the Physician Owners, PPTC is
in material compliance with all applicable Environmental Laws.
(ii) PPTC has not authorized or conducted nor does PPTC or the
Physician Owners have Knowledge of the disposal or release, or other
handling of any Medical Waste, hazardous substance, hazardous waste,
hazardous material, hazardous constituent, toxic substance, pollutant,
contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"),
petroleum product or waste (including crude oil or any fraction
thereof), natural gas, liquefied gas, synthetic gas, biohazardous or
biomedical material, or other material defined, regulated controlled or
potentially subject to any remediation requirement under any
Environmental Law (collectively "Hazardous Materials"), on, in, under
or affecting or any property owned or leased by PPTC.
(iii) To the Knowledge of PPTC and the Physician Owners, PPTC
has, and is in compliance with, all licenses, permits, registrations,
and government authorizations necessary to operate under all applicable
Environmental Laws. Section 3(t) of the Disclosure Schedule lists all
such licenses, permits, registrations and government authorizations
required by any Environmental Law.
(iv) PPTC has not received any written or oral notice from any
governmental agency or entity or any other Person and, to the Knowledge
of PPTC and the Physician Owners, there is no pending or threatened
claim, litigation or any administrative agency proceeding that: (a)
alleges a violation of any Environmental Law(s) by PPTC or, with
respect to the Purchased Assets or any property owned or leased by
PPTC, (b) alleges that PPTC is a liable party or potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
analogous state law, (c) has resulted or could result in the attachment
of an environmental lien on any of the Purchased Assets or property
owned or leased by PPTC or (d) alleges that PPTC is liable for any
contamination of the environment, contamination of any property owned
or leased by PPTC, damage to natural resources, property damage, or
personal injury based
- 12 -
on its activities or the activities of any predecessor or third parties
involving Hazardous Materials, whether arising under the Environmental
Laws, common law principles, or other legal standards.
(v) With respect to the generation, transportation, treatment,
storage and disposal or other handling of Medical Waste, to the
Knowledge of PPTC and the Physician Owners, PPTC has complied with all
Medical Waste Laws.
(u) Healthcare Compliance. PPTC is participating in or otherwise
authorized to receive reimbursement from Medicare and Medicaid and is a party to
other third-party payor agreements, if any, discussed in Section 3(i) of the
Disclosure Schedule. All necessary certifications and contracts required for
participation in such programs are in full force and effect and have not been
amended or otherwise modified, rescinded, revoked or assigned, and, to the
Knowledge of PPTC and the Physician Owners, no condition exists or event has
occurred which in itself or with the giving of notice or the lapse of time or
both would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such third-party payor program. To the Knowledge of PPTC and
the Physician Owners, PPTC is in compliance in all material respects with the
requirements of all such third-party payors. PPTC, the Physician Owners, and, to
the Knowledge of PPTC and the Physician Owners, its physician employees do not
have any financial relationship (whether investment interest, compensation
interest, or otherwise) with any entity to which any of the foregoing refer
patients, except for such financial relationships that qualify for exceptions to
state and federal laws restricting physician referrals to entities in which they
have a financial interest.
(v) Fraud and Abuse. To the Knowledge of PPTC or the Physician Owners,
PPTC, the Physician Owners, and persons and entities providing professional
services for PPTC have not engaged in any activities which are prohibited under
42 U.S.C. ss. 1320a-7b, or the regulations promulgated thereunder pursuant to
such statutes, or related state or local statutes or regulations, or which are
prohibited by rules of professional conduct, including the following: (a)
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;
(b) 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; (c) 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; or (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay or receive such
remuneration (1) in return for referring an individual to a person for the
furnishing or arranging for the furnishing or any item or service for which
payment may be made in whole or in part by Medicare or Medicaid or (2) 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 Medicare or Medicaid.
(w) Practice Compliance. PPTC is duly licensed as a medical practice
and, to the Knowledge of PPTC and the Physician Owners, is lawfully operated in
accordance with the requirements of all Applicable Laws and has all necessary
authorizations for the use and operation of a medical practice, all of which are
in full force and effect. There are no outstanding notices of deficiencies
relating to PPTC issued by any governmental authority or third-party payor
requiring conformity or compliance with any applicable law or condition for
participation with such governmental authority or third-party payor, and after
reasonable and independent inquiry and due diligence and investigation, PPTC has
neither received notice nor has any Knowledge or reason to believe that such
necessary authorizations may be revoked or not renewed in the Ordinary Course of
Business.
(x) Rates and Reimbursement Policies. PPTC does not have any rate
appeal currently pending before any governmental authority or any administrator
of any third-party payor program.
- 13 -
(y) [intentionally omitted]
(z) Guaranties. PPTC is not a guarantor and otherwise is not liable for
any liability or obligation (including indebtedness) of any other Person.
(aa) Powers of Attorney. There are no outstanding powers of attorney
executed by PPTC, except as may be contained in financing documents or security
agreements listed in Section 3(i) of the Disclosure Schedule.
(bb) Tangible Assets. PPTC owns or leases all land, buildings,
machinery, equipment, and other tangible assets necessary for the conduct of its
business as presently conducted. Each tangible asset is in good operating
condition and repair (subject to normal wear and tear).
(cc) SCN Warrants; Investment Intent.
(i) Neither PPTC nor the Physician Owners owns, beneficially
or otherwise, any SCN Shares.
(ii) The SCN Warrants issuable pursuant to this Agreement are
being acquired by PPTC solely for its own account for investment and
not with a view to the distribution thereof, and PPTC acknowledges and
understands that the SCN Warrants will bear a legend in substantially
the following form:
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES ACT AND
CANNOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS
REGISTERED UNDER SUCH ACTS OR UNLESS EXEMPTIONS FROM
REGISTRATION ARE AVAILABLE.
(iii) PPTC represent and warrant as follows:
(A) PPTC is an "accredited investor" as defined under
Rule 501 of Regulation D promulgated under the Securities Act.
(B) PPTC confirms that SCN has made available to it
or to its representatives the opportunity to ask questions of
SCN officers and directors and to acquire such information
about the SCN Warrants and the business and financial
condition of SCN as PPTC requested, which additional
information has been received.
(C) In deciding to acquire the SCN Warrants pursuant
to this Agreement, PPTC consulted with its legal, financial,
and tax advisors with respect to the transactions contemplated
by this Agreement and the nature of the investment together
with any additional information provided under subsection (B)
above.
(D) PPTC has adequate means of providing for its
current needs and contingencies and has no need for liquidity
in its investment in SCN. PPTC either alone or with its
representatives, has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of consummating the
transactions contemplated by this Agreement.
- 14 -
(E) PPTC understands and acknowledges that the
investment in the SCN Warrants is a speculative investment
which involves a high degree risk of loss of its investment
therein; that there are substantial restrictions on the
transferability of the SCN Warrants under the applicable
provisions of the Securities Act and the rules and regulations
promulgated thereunder and applicable state securities or
"blue sky" laws; and, accordingly, that it may not be possible
to liquidate an investment in the SCN Warrants.
(F) PPTC have been advised and understands that (i)
the offer and sale of the SCN Warrants have not been
registered under the Securities Act; (ii) the SCN Warrants
must be held indefinitely and PPTC must continue to bear the
economic risk of the investment in the SCN Warrants unless the
offer or sale of the SCN Warrants is subsequently registered
under the Securities Act or an exemption from such
registration is available; (iii) Rule 144 promulgated under
the Securities Act is not presently available with respect to
the sale of any securities of SCN, including the SCN Warrants,
and when and if the SCN Warrants may be disposed of without
registration in reliance on Rule 144, such disposition can be
made only in accordance with the terms and conditions of such
Rule, or another exemption from registration; (iv) the
restrictive legends described in Section 3(cc)(ii) shall be
placed on the certificates representing the SCN Warrants; and
(v) a notation shall be made in the appropriate records of SCN
indicating that the SCN Warrants are subject to restrictions
on transfer and appropriate stop-transfer instructions will be
issued to any transfer agent with respect to the SCN Warrants.
4. Representations and Warranties of SCN. SCN represents and warrants
to PPTC that the statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4), except as
set forth in the Disclosure Schedule. The Disclosure Schedule will be arranged
in paragraphs corresponding to the numbered and lettered paragraphs contained in
this Section 4.
(a) Organization. SCN is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Capitalization. The entire authorized capital stock of SCN consists
of fifty million (50,000,000) SCN Shares, of which Sixteen Million Four Hundred
Thirty Eight Thousand Eight Hundred Fifty (16,438,850) are issued and
outstanding and two million (2,000,000) shares of preferred stock, none of which
is issued or outstanding. The SCN Warrants to be issued upon consummation of the
transaction have been duly authorized and, upon consummation of the transaction,
will be validly issued, fully paid, and nonassessable. The shares issuable upon
exercise of the SCN Warrants (the "Warrant Shares") have been duly authorized
and, upon exercise of the SCN Warrants in accordance with the terms thereof,
will be validly issued, fully paid, and nonassessable.
(c) Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, to issue the SCN Warrants to and the Warrant Shares and otherwise to
perform its obligations hereunder. Except as set forth in the preceding
sentence, this Agreement constitutes the valid and legally binding obligation of
SCN, enforceable in accordance with its terms and conditions, subject to
applicable bankruptcy reorganization, insolvency, fraudulent conveyance,
moratorium or other laws of general application affecting the enforcement of
creditor's rights.
(d) Noncontravention. To the Knowledge of SCN, neither the execution
and the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, (i) violates any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, governmental agency,
- 15 -
professional regulatory organization or court to which SCN is subject or may
become subject as a result of the transaction contemplated by this Agreement, or
any provision of the charter or bylaws of SCN or (ii) conflicts with, results in
a breach of, constitutes a default under, results in the acceleration of,
creates in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any material agreement, contract, lease, license,
instrument or other arrangement to which SCN is a party or by which it is bound
or to which any of its assets is subject. Other than state and federal filings
required by the Securities Act and similar state statutes, SCN does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. SCN does not have any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which PPTC could become liable
or obligated.
(f) Securities Filings. All reports and statements filed with respect
to SCN pursuant to the Securities Act of 1933 (the "Securities Act") or the
Securities Exchange Act of 1934 (the "Exchange Act") conform to the requirements
of the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder and did not include at the time of filing such document
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 6 below) to be
satisfied by him or it. This Section 5(a) shall not be construed to obligate any
of the Parties to waive any condition precedent to his or its obligations to
perform hereunder.
(b) Notices and Consents. PPTC will give any notices to third parties,
and will use its best efforts to obtain any third party consents, necessary or
required to consummate the transaction or that SCN reasonably may request in
connection with the matters referred to in Section 3(i) above.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the transactions contemplated by this Agreement.
(d) Operation of Business. From the date of this Agreement through the
Closing Date, without the prior written consent of SCN which shall not be
unreasonably withheld, PPTC will not engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business, except any
that will not adversely affect the sale of the Purchased Assets or The Service
Fee to which SCN would otherwise be entitled under the Service Agreement and
except for the exercise or enforcement of PPTC's rights hereunder.
(e) Further Acts and Assurances. PPTC and the Physician Owners shall,
at any time and from time to time at and after the Closing, upon request of SCN,
take any and all reasonable steps necessary to place SCN in possession and
operating control of the Purchased Assets, and will do, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably required for the better
transferring and confirming to SCN or its successors or assigns, or for reducing
to possession, any or all of the Purchased Assets.
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(f) Full Access. Between the date hereof and the Closing Date, upon
three (3) days prior notice, PPTC will permit representatives of SCN to have
full access to all premises, properties, personnel, books, records (including
tax records), contracts, and documents of or pertaining to PPTC during normal
business hours. SCN (i) will maintain the confidentiality and not disclose to
third parties any information it receives from PPTC in the course of the reviews
occurring prior to the date hereof or as contemplated by this Section 5(e), (ii)
will not use any of the confidential information except in connection with this
Agreement, (iii) if this Agreement is terminated for any reason whatsoever,
agrees to return to PPTC all tangible embodiments (and all copies) thereof which
are in its possession, and (iv) will cause its representatives to also so
preserve the confidentiality of such information.
(g) Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 or Section 4 above. No
disclosure by any Party pursuant to this Section 5(f), however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
(h) Exclusivity. Until the earlier of (i) July 21, 1997 or (ii) the
Closing Date, PPTC will not solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of PPTC (including any
acquisition structured as a merger, consolidation, or share exchange). PPTC
shall notify SCN immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(i) [intentionally omitted]
(j) Corporate Authorization. By execution of this Agreement, the
Physician Owners agree to take any and all steps necessary and will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such acts, deeds and assurances required in order to authorize
the consummation of the transactions contemplated by this Agreement, including
voting as directors of PPTC in favor of the transactions contemplated by this
Agreement and voting as an owner of PPTC in favor of the transactions
contemplated by this Agreement at any meeting (or in any action by written
consent) required by the FPCA.
(k) Securities Law Compliance. PPTC shall not dispose of or distribute
the SCN Warrants received as a result of the transactions contemplated by this
Agreement except in accordance with the provisions of the Securities Act, the
provisions of any rule or regulation adopted by the Securities and Exchange
Commission pursuant to the Securities Act and "blue sky" laws or any rules or
regulations thereunder of any applicable state; provided, however, that the SCN
Warrants may be distributed by PPTC to its stockholders and officers at any time
or from time to time, but shall not be transferable by such stockholders and
officers, except in accordance with applicable securities laws.
(l) Malpractice Insurance. On or before the Closing, all physicians and
employees of PPTC shall be covered by medical malpractice insurance covering
malpractice of the physicians and employees.
(m) Employee Benefit Plans. Prior to the Closing Date, all Employee
Benefit Plans shall be terminated in accordance with Applicable Law.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of SCN. The obligation of SCN to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(i) PPTC shall have procured all of the third party consents
specified in Section 5(b) above;
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(ii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) PPTC shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of SCN to own the
Purchased Assets;
(v) all actions to be taken by PPTC in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby, have been taken or
delivered to SCN and are satisfactory in form and substance to SCN;
(vi) SCN's Board of Directors shall have approved the
transactions contemplated by this Agreement in their sole and absolute
discretion.
SCN may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of PPTC. The obligation of PPTC to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(i) the transactions contemplated by this Agreement shall be
approved by PPTC's Board of Directors and shall receive the Requisite
PPTC Approval;
(ii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of SCN to own the
Purchased Assets;
(v) PPTC and Xxxxxx Xxx shall have entered into an agreement
pursuant to which PPTC shall purchase from Xxxxxx Xxx, and Xxxxxx Xxx
shall sell to PPTC, all shares of capital stock of PPTC owned by Xxxxxx
Xxx as of the Closing Date (the "May Stock Redemption Agreement");
(vi) PPTC shall have received a duly executed release or
termination of all security interests in respect of the Purchased
Assets in favor of any Person; and
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(vii) Each non-owner physician employee of PPTC shall have
executed and delivered an agreement not to compete in favor of PPTC.
PPTC may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. Items to be Delivered at or Prior to Closing.
(a) By the Physician Owners or PPTC. The Physician Owners or PPTC, as
applicable, shall execute and deliver to SCN, or cause to be executed and
delivered, prior to or at the Closing:
(i) Certified resolutions of PPTC authorizing the execution of
all documents and the consummation of all transactions contemplated
hereby;
(ii) A Xxxx of Sale in substantially the form attached hereto
as Exhibit 7(a)(ii);
(iii) A Service Agreement in substantially the form attached
hereto as Exhibit 7(a)(iii);
(iv) An Assignment and Assumption Agreement in substantially
the form attached hereto as Exhibit 7(a)(iv);
(v) A Lease Assignment and Assumption Agreements in
substantially the form attached hereto as Exhibit 7(a)(v);
(vi) A Registration Rights Agreement in substantially the form
attached hereto as Exhibit 7(a)(vi);
(vii) A certificate duly executed by the President of PPTC
that as of the Closing Date, all representations and warranties of PPTC
are true and correct, all covenants and agreements contained in the
Agreement to be performed by PPTC have been performed or complied with,
and all conditions to Closing have been satisfied.
(viii) An opinion from PPTC's counsel in substantially the
form attached hereto as Exhibit 7(a)(viii); and
(ix) Such other instruments as may be reasonably requested by
SCN in order to effect or carry out the intent of this Agreement.
(b) By SCN. SCN shall deliver to PPTC at or prior to the Closing:
(i) The Purchase Price;
(ii) SCN Warrants in substantially the form attached hereto as
Exhibit 7(b)(ii);
(iii) An Assignment and Assumption Agreement in substantially
the form attached hereto as Exhibit 7(a)(iv);
(iv) Lease Assignment and Assumption Agreements in
substantially the form attached hereto as Exhibit 7(a)(v);
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(v) A Registration Rights Agreement in substantially the form
attached hereto as Exhibit 7(a)(vi);
(vi) The Knight Employment Agreement;
(vii) A certificate, duly executed by the President of SCN,
stating as of the Closing Date, all representations and warranties of
SCN are true, all covenants and agreements contained in the Agreement
to be performed by SCN have been performed or complied with and all
conditions to Closing have been satisfied;
(viii) A Service Agreement in substantially the form attached
hereto as Exhibit 7(a)(iii);
(ix) An opinion from SCN's counsel in substantially the form
attached hereto as Exhibit 7(b)(ix); and
(x) Such other instruments as may be reasonably requested by
PPTC or the Physician Owners in order to effect or carry out the intent
of this Agreement.
8. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing Date;
(ii) SCN may terminate this Agreement by giving written notice
to PPTC at any time prior to the Closing Date (A) in the event PPTC has
breached any representation, warranty, or covenant contained in this
Agreement in any material respect, SCN has notified PPTC of the breach,
and the breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before July 21, 1997 by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from SCN breaching any representation, warranty, or covenant
contained in this Agreement); or
(iii) PPTC may terminate this Agreement by giving written
notice to SCN at any time prior to the Closing Date (A) in the event
SCN has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, PPTC has notified SCN of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall not have
occurred on or before July 21, 1997 by reason of the failure of any
condition precedent under Section 6(b) hereof (unless the failure
results primarily from PPTC breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach).
9. Indemnification.
(a) Indemnification by PPTC and the Physician Owners. PPTC shall
defend, indemnify and hold harmless SCN, its successors and assigns, officers
and directors against any and all losses, liabilities, expenses (including
without limitation reasonable attorney's fees) and damages resulting from or
arising out of the breach, untruth or inaccuracy of any representation, warranty
or covenant of PPTC or the Physician Owners set forth in this Agreement or from
any
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liability or expense of SCN resulting from PPTC's operations prior to the
Closing Date or from any liability or expense of SCN resulting from any of the
litigation described in Section 3(m) of the Disclosure Schedule. Neither PPTC
nor the Physician Owners shall be liable to SCN for any claims against PPTC or
the Physician Owners under this Section 9(a) unless and until the aggregate of
all claims against PPTC or the Physician Owners exceeds the sum of $50,000.00,
whereupon SCN shall be entitled to recover the full amount of all claims,
including the initial $50,000.00. The Physician Owners hereby, jointly and
severally, guaranty the collection by SCN of the amount it is entitled to be
paid by PPTC pursuant to this Section 9 of this Agreement.
(b) Notice to PPTC and the Physician Owners; Opportunity to Defend. SCN
agrees to give prompt notice to PPTC and the Physician Owners of the assertion
of any claim, or the commencement of any suit, action or proceeding, in respect
of which indemnity may be sought under Section 9(a). PPTC and the Physician
Owners may participate in and at their election, or at the request of SCN,
assume the defense of any such suit, action or proceeding at PPTC or the
Physician Owners' expense. Neither PPTC nor the Physician Owners shall be liable
under Section 9(a) for any settlement effected without their consent of any
claim, litigation or proceeding in respect of which indemnity may be sought
under Section 9(a) which consent shall not be unreasonably withheld.
(c) General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless the Physician Owners, their heirs and assigns
against any and all losses, liabilities, expenses (including without limitation
reasonable attorneys' fees) and damages resulting from the breach, untruth or
inaccuracy of any representation, warranty or covenant of SCN set forth in this
Agreement. SCN shall not be liable to the Physician Owners for any claims
against SCN under this Section 9(c) unless and until the aggregate of all claims
against SCN exceeds the sum of $50,000.00, whereupon the Physician Owners shall
be entitled to recover the full amount of all claims, including the initial
$50,000.00.
(d) Notice to SCN; Opportunity to Defend. The Physician Owners agree to
give prompt notice to SCN of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought under
Section 9(c). SCN may participate in and at its election, or at the request of
the Physician Owners, assume the defense of any such suit, action or proceeding
at SCN's expense. SCN shall not be liable under Section 9(c) for any settlement
effected without its consent of any claim, litigation or proceeding in respect
of which indemnity may be sought hereunder, which consent shall not be
unreasonably withheld.
(e) Right of Setoff. In the event of any breach of warranty,
representation, covenant or agreement by PPTC or the Physician Owners giving
rise to indemnification to SCN under Section 9(a) hereof, SCN shall be entitled
to offset the amount of damages incurred by it as a result of such breach of
warranty, representation, covenant or agreement against the amounts payable to
PPTC under the Service Agreement. In the event that SCN determines that an
amount is to be so offset, as a condition precedent to such right of setoff, SCN
shall give PPTC and the Physician Owners written notice of the amount of such
proposed setoff and the basis therefor within thirty (30) days after the date on
which such amount is finally determined. If SCN shall not have received written
notice from PPTC and the Physician Owners contesting such setoff within twenty
(20) days of their receipt of such written notice from SCN, the setoff shall be
deemed to have been consented to by PPTC and the Physician Owners, and SCN shall
be entitled to deduct the entire amount claimed as a setoff from the next
succeeding amounts payable under the Service Agreement. In the event that PPTC
and the Physician Owners shall object to the proposed setoff by written notice
received by SCN during such twenty (20) day period, the entitlement of SCN to
the claimed setoff shall be determined as set forth in Sections 10.4.3 and
10.4.4. of the Service Agreement.
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10. Miscellaneous.
(a) Survival. The representations and warranties of the Physician
Owners, PPTC and SCN contained in this Agreement and the indemnifications
contained herein shall survive the Closing. No claim for indemnification with
respect to any alleged misrepresentation or breach of warranty or other claim by
SCN under this Agreement may be made after two (2) years following the Closing
Date. Any matter to which indemnification pertains and with respect to which a
claim has been asserted or threatened following the Closing Date shall continue
to be subject to the indemnification under this Agreement until finally
terminated, settled, resolved or adjudicated; and all terms, conditions and
stipulations of this Agreement shall likewise continue to apply.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to PPTC: Copy to:
Xxx Xxxxxx, CEO Xxxxx X. Xxxxxx, Esq.
Ortho-Associates, P.A. Xxxxx, McClosky, Smith, Xxxxxxxx &
000 X.X. 00xx Xxx. Xxxxxxx
Xxxxxxxxxx, XX 00000 000 Xxxx Xxxxxxx Xxxx.
Facsimile: (000) 000-0000 Xxxx Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
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Xxxxxx X. Xxxx, M.D.
0000 Xxxxxx Xxxx
Xxxx Xxxxxxxxxx, XX 00000
Xxxxxx X. May, M.D.
000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Xxxx X. Xxxxx, M.D.
0000 Xxxxxxx Xxxx
Xxxx Xxxxxxxxxx, XX 00000
If to SCN: Copy to:
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxxxx, Esq.
Specialty Care Network, Inc. Baker, Donelson, Bearman & Xxxxxxxx
00 Xxxxx Xxxxxxxxx, Xxxxx 000 165 Madison Ave, Suite 2100
Lakewood, Colorado 80228 Xxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
(h) Governing Law Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Florida or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Florida. Each of the
parties submits to the jurisdiction of any state or federal court sitting in
Denver, Colorado, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto.
(i) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Florida FPCA. No amendment of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by each of the Parties. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
- 23 -
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between PPTC
and SCN that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant patients.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:____________________________________
Title:_________________________________
ORTHO-ASSOCIATES, P.A. D/B/A PARK
PLACE THERAPEUTIC CENTER
By:____________________________________
Title:_________________________________
PHYSICIAN OWNERS:
---------------------------------------
Xxxxxx X. Xxxx, M.D.
---------------------------------------
Xxxxx X. Xxxxx, M.D.
---------------------------------------
Xxxxxx X. May, M.D.
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