EXHIBIT 10.1
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ASSET PURCHASE AND CONTRIBUTION AGREEMENT
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TABLE OF CONTENTS
ARTICLE I
ASSETS
1.1 Purchase of the Metroplex Assets................................ 1
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1.2 Excluded Metroplex Assets....................................... 3
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1.3 Closing Date.................................................... 4
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1.4 Assumption of Metroplex Liabilities............................. 4
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1.5 Closing Date Actions and Deliveries............................. 6
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1.6 Further Assurances.............................................. 7
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1.7 Referrals....................................................... 7
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1.8 Employees....................................................... 8
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ARTICLE II
PURCHASE PRICE, OTHER AGREEMENTS
2.1 Purchase Price.................................................. 8
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2.2 Contribution for Class B Interests.............................. 9
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2.3 Allocation of Purchase Price.................................... 9
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2.4 Call Agreement.................................................. 9
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2.5 Texas Sub....................................................... 10
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2.6 Management Services Agreement................................... 10
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2.7 Employment Agreements........................................... 10
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2.8 Board Representation............................................ 10
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2.9 Oncology Disease State Management Board......................... 11
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF METROPLEX
3.1 Organization of Metroplex....................................... 11
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3.2 Subsidiaries and Investments.................................... 11
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3.3 Authority....................................................... 11
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3.4 Financial Statements............................................ 12
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3.5 Operations Since Metroplex Balance Sheet Date................... 12
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3.6 No Undisclosed Liabilities...................................... 13
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3.7 Taxes........................................................... 14
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3.8 Availability of Assets.......................................... 14
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3.9 Real Property................................................... 14
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3.10 Real Property Leases............................................ 14
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3.11 Condemnation.................................................... 14
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3.12 Personal Property............................................... 15
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3.13 Personal Property Leases........................................ 15
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3.14 Patents and Trademarks.......................................... 15
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3.15 Accounts Receivable............................................. 15
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3.16 Title to Purchased Assets....................................... 15
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3.17 Employees....................................................... 16
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3.18 Employee Relations.............................................. 16
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3.19 Contracts....................................................... 16
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3.20 Status of Contracts............................................. 18
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3.21 No Violation, Litigation or Regulatory Action................... 18
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3.22 Insurance....................................................... 18
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3.23 Environmental Protection........................................ 19
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3.24 Books and Records............................................... 19
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3.25 No Finder's Fee................................................. 20
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3.26 Transactions with Affiliates.................................... 20
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3.27 Licenses and Permits............................................ 20
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3.28 Filing Reports.................................................. 20
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3.29 Employment and Labor Relations.................................. 20
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3.30 Benefit Plans................................................... 21
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3.31 Telephone Numbers............................................... 22
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3.32 Related Party Interests......................................... 22
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3.33 Other Names..................................................... 22
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3.34 Payor Contracts................................................. 22
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3.35 Accounting Controls............................................. 22
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3.36 Physicians...................................................... 23
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3.37 Conflicts of Interest........................................... 23
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3.38 Funding Sources and Commitments................................. 23
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3.39 Inventories..................................................... 23
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3.40 Investment Intent............................................... 23
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization of the Company..................................... 24
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4.2 Capacity of the Company......................................... 24
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4.3 Subsidiaries and Investments.................................... 24
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4.4 Authority of the Company........................................ 24
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4.5 No Litigation................................................... 25
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4.6 No Finder's Fee................................................. 25
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ARTICLE V
ACTION PRIOR TO THE CLOSING DATE
5.1 Investigation of the Metroplex Business by the Company.......... 25
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5.2 Preserve Accuracy of Representations and Warranties............. 26
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5.3 Operations Prior to the Closing Date............................ 26
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5.4 No Public Announcement.......................................... 27
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5.5 Interim Financial Statements of Metroplex....................... 28
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5.6 Compliance With Laws............................................ 28
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5.7 Pre-Closing Obligations......................................... 28
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Sales, Use and Transfer Taxes................................... 28
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6.2 Discharge of Liabilities of Metroplex Business.................. 28
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6.3 Employee Benefit Plans.......................................... 29
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6.4 Acquisition Proposals........................................... 29
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6.5 Right to Remedy Certain Breaches Prior to Closing............... 29
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6.6 Pro-Rations..................................................... 31
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6.7 Audited Financial Statements.................................... 31
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6.8 Texas Sub Budget................................................ 32
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6.9 RIT Program..................................................... 32
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ARTICLE VII
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CONDITIONS PRECEDENT TO OBLIGATIONS OF METROPLEX
7.1 No Misrepresentation or Breach of Covenants and Warranties...... 32
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7.2 Opinions of Counsel for the Company............................. 32
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7.3 Action by the Company........................................... 32
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7.4 No Restraint or Litigation...................................... 33
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7.5 No Material Adverse Change...................................... 33
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7.6 Financing....................................................... 33
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7.7 Consents........................................................ 33
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7.8 Partnership Agreement........................................... 33
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7.9 Due Diligence................................................... 33
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ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
8.1 No Misrepresentation or Breach of Covenants and Warranties...... 34
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8.2 Opinions of Counsel for Metroplex............................... 34
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8.3 Partnership Action.............................................. 34
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8.4 No Restraint.................................................... 34
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8.5 Necessary Consents.............................................. 35
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8.6 No Material Adverse Change...................................... 35
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8.7 Financing....................................................... 35
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8.8 Due Diligence................................................... 35
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8.9 Releases of Liens............................................... 35
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ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Company.................................. 35
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9.2 Indemnification by Metroplex.................................... 37
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9.3 Notice of Claims................................................ 39
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9.4 Third Party Claims.............................................. 39
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9.5 Arbitration and Mediation....................................... 40
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ARTICLE X
TERMINATION
10.1 Termination..................................................... 42
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ARTICLE XI
GENERAL PROVISIONS
11.1 Survival of Representations, Warranties and Obligations......... 43
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11.2 Confidential Nature of Information.............................. 44
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11.3 Governing Law................................................... 44
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11.4 Notices......................................................... 44
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11.5 Successors and Assigns.......................................... 45
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11.6 Entire Agreement; Amendments.................................... 46
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11.7 Interpretation.................................................. 46
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11.8 Waivers......................................................... 46
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11.9 Expenses........................................................ 46
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11.10 Partial Invalidity.............................................. 46
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11.11 Execution in Counterparts....................................... 46
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11.12 Notice of Sale.................................................. 47
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11.13 Definitions..................................................... 47
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11.14 Risk of Loss; Damage to Facilities.............................. 50
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11.15 Federal Income Tax Treatment.................................... 51
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EXHIBITS
A Assignment and Assumption Agreement
B-1 Nonrecourse Note
B-2 PHC Note
C-1 Assumption and Release Agreement
C-2 Exchange Rights Agreement
D Weston Equity Call Agreement
E Management Services Agreement
F Physician Owner Employment Agreement
G Individual Liability Limitation Amounts
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ASSET PURCHASE AND CONTRIBUTION AGREEMENT
This ASSET PURCHASE AND CONTRIBUTION AGREEMENT (this "Agreement"), is
dated as of June 16, 1997, by and among Metroplex Hematology/Oncology
Associates, L.L.P., a Texas limited liability partnership ("Metroplex"), the
physicians listed as such on the signature page hereto (collectively, the
"Physicians"), each Physician's wholly owned professional association, MHOA
Texas I, L.L.C., a Texas limited liability company ("Texas Sub") and Physician
Health Corporation, a Delaware corporation (the "Company").
W I T N E S S E T H:
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A. Metroplex is, among other things, currently engaged in the
practice of medicine specializing in hematology and oncology in Arlington, Texas
(the "Metroplex Business").
B. The Company wishes to acquire, and Metroplex wishes to sell and
contribute substantially all of the tangible and intangible assets associated
with the Metroplex Business, as more specifically set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, it is hereby agreed between Metroplex, Texas Sub, the
Physicians and the Company as follows:
ARTICLE I
ASSETS
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1.1 Purchase of the Metroplex Assets. Upon the terms and subject to
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the conditions of this Agreement, the Company hereby purchases, and Metroplex
hereby sells, transfers, assigns, conveys and delivers to the Company, free and
clear of all Encumbrances (except for Permitted Encumbrances), an 80% undivided
interest in all of the assets and properties (excepting only the Excluded
Metroplex Assets) of every kind and description, wherever located, real,
personal or mixed, tangible or intangible, owned or held by Metroplex relating
to the Metroplex Business as the same shall exist on the Closing Date (herein
collectively called the "Metroplex Assets"), including, without limitation, all
right, title and interest of Metroplex in, to and under:
(a) All in-house billing services as listed on Schedule 1.1(a);
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(b) The real property leases and leasehold improvements listed or
described in Schedule 3.10;
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(c) The personal property leases listed in Schedule 3.13;
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(d) All trademarks, trade names, service marks and copyrights (and
all goodwill associated with such trademarks, trade names, service marks and
copyrights), registered or unregistered, owned by Metroplex relating to the
Metroplex Business, and the applications for registration thereof and all
patents and applications therefor owned by Metroplex and the licenses relating
to any of the foregoing including, without limitation, the items listed in
Schedule 3.14 and any trade name using or incorporating the name "The Arlington
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Cancer Center";
(e) All of Metroplex's rights, claims or causes of action against
third parties arising under warranties from manufacturers, vendors and others in
connection with the Metroplex Assets;
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(f) All prepaid expenses (except for prepaid insurance) arising from
payments made by Metroplex in the ordinary course of the operation of the
Metroplex Business prior to the Closing Date for goods or services where such
goods or services have not been received at the Closing Date;
(g) All books and records (including all computer programs and
personnel records of current employees of Metroplex who are hired by the Company
or Texas Sub on or following the Closing Date) of Metroplex relating to the
assets, business and operations of the Metroplex Business; it being understood
by all of the parties to this Agreement that Metroplex and the Physicians shall
have access to such books and records at all reasonable times, provided, any
duplicating or non-employee expense incurred therewith shall be borne solely by
Metroplex;
(h) All telephone and telecopy numbers used by Metroplex in
connection with the Metroplex Business including, without limitation, the
numbers 817/261-4906 and 817/261-5837;
(i) All goodwill associated with the Metroplex Business and all
intangible assets associated with the conduct of the Metroplex Business,
including Metroplex's workforce in place, business know-how, and information
base;
(j) All machinery, equipment (including computers and office
equipment), supplies, inventory, advertising and promotional materials, all
collection and credit records, medical literature, engineering plans, records
and data, (including medical records and data) vehicles, furniture, office
supplies and other personal property of Metroplex used in or relating to the
Metroplex Business including, but not limited to, those items listed or referred
to in Schedule 1.1(j);
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(k) All rights, titles or any property interests, if any, in any
inventions and/or patents developed by Metroplex or any such rights, titles or
property interests subsequently acquired by Metroplex, including any such
rights, titles or interests in the radio-immunotherapy program under development
by Metroplex, it being acknowledged by the Company and Texas Sub that Metroplex
makes no representation that it now owns or will hereafter acquire any such
rights, titles or property interests; and
(l) All other assets or properties not referred to above which are
reflected on the Metroplex Financial Statements, except (i) any such assets or
properties disposed of after the Metroplex Balance Sheet Date in the ordinary
course of the Metroplex Business and (ii) the Excluded Metroplex Assets.
The parties acknowledge that the management of the non-medical aspects
of the Metroplex Business will change simultaneously with the closing of the
transactions contemplated hereby. Accordingly, under applicable law and
professional ethical standards appropriate arrangements need to be made for the
custody and maintenance of patient records. Texas Sub has agreed to take custody
of the records to assure that the records are properly handled and readily
available to patients and their treating physicians of choice. Accordingly, to
the fullest extent permitted by law, the medical records of patients,
simultaneously with the closing of the transaction contemplated hereby, shall be
assigned to the custody of Texas Sub. Metroplex and the Physicians shall
cooperate with and assist Texas Sub in taking all actions as may be necessary or
desirable to obtain or retain all custodial rights to such records. The parties
agree and acknowledge that the medical records are subject to legal and ethical
principles governing their confidentiality. Accordingly, to the extent
reasonably required, patients may be requested to sign appropriate record
transfer forms.
1.2 Excluded Metroplex Assets. Notwithstanding the foregoing, the
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Metroplex Assets shall not include the following (herein referred to as the
"Excluded Metroplex Assets");
(a) Any of Metroplex's cash and cash equivalents (including any
marketable securities or certificates of deposit) as of the close of business on
the Closing Date;
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(b) The real property described in Schedule 3.9 and any option,
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right or contract to purchase real property described in Schedule 3.9;
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(c) Any accounts receivable generated by Metroplex for periods prior
to the Closing Date;
(d) All claims, rights and interests of Metroplex in and to any
refunds for federal, state or local franchise, income or other taxes or fees of
any nature whatsoever for periods prior to the Closing Date;
(e) Any of Metroplex's rights, claims or causes of action against
third parties relating to the assets, properties, business or operations of the
Metroplex Business arising out of transactions occurring prior to the Closing
Date, except to the extent any such claims relate to the Metroplex Assets;
(f) All contracts or policies of insurance and prepaid insurance
with respect to such contracts or policies;
(g) Metroplex's partnership records relating to its formation,
partnership tax returns and related documents, and supporting work papers and
any other records and returns relating to taxes, assessments and similar
governmental levies (other than real and personal property taxes, assessments
and levies imposed on the Metroplex Assets), except tax-related records,
documents and work papers relating to the Metroplex Assets, access to which
shall be provided to Metroplex during normal business hours;
(h) The contracts, agreements or understandings of Metroplex listed
in Schedule 3.19 and designated on such Schedule as a "Contract Not Assumed" and
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any other contract, agreement or understanding of Metroplex (i) in existence on
the date hereof which is not listed in Schedule 3.19 but which, by the
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provisions of Section 3.19, is required to be so listed or (ii) entered into by
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Metroplex after the date hereof in violation of Section 5.3 of this Agreement;
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(i) Except to the extent the parties hereto shall otherwise
specifically agree in writing, any of Metroplex's employee benefit agreements,
plans or arrangements listed in Schedule 3.19;
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(j) Any of Metroplex's rights under or pursuant to this Agreement
(including any interests in the Company acquired pursuant to this Agreement) or
the other agreements with the Company contemplated hereby;
(k) That certain equipment and other personal property listed on
Schedule 1.2(k); and
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(l) Any asset the use of which by the Company or Texas Sub would be
illegal under Texas law.
1.3 Closing Date. The consummation of the transactions contemplated
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herein (the "Closing") shall be consummated at 10:00 a.m. on June ____, 1997
(such date and time being hereinafter called the "Closing Date").
1.4 Assumption of Metroplex Liabilities. (a) On the Closing Date,
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Texas Sub shall deliver to Metroplex an assignment and assumption agreement,
substantially in the form attached hereto as Exhibit A, pursuant to which the
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Texas Sub shall assume and be obligated for, and shall agree to pay, perform,
defend and discharge in accordance with their terms:
(i) all liabilities listed in Schedule 1.4(a)(i);
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(ii) all liabilities of Metroplex arising after the Closing
Date (other than any liability or obligation for breach or default
which occurred prior to the Closing) under the leases, contracts and
other agreements entered into by Metroplex with respect to the
Metroplex Business after the date hereof consistent with the terms of
Section 5.3 of this Agreement (which shall include all such leases,
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contracts and other agreements or written arrangements described in
Schedule 5.3(b)); and
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(iii) all liabilities arising after the Closing Date with
respect to Assumed Contracts as specified on Schedule 3.19.
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Notwithstanding the foregoing, Texas Sub shall assume no liability or
obligation arising as a result of the transfer or assignment to Texas Sub of any
Assumed Contract or agreement contemplated in Section 1.4(a)(ii) above without
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any consent required by the terms thereof if the Company, not more than 15 days
following the Closing Date, has indicated to Metroplex, in writing, that Texas
Sub will not assume such liability or obligation without the required consent
(such consents being collectively referred to herein as the "Required
Consents"). Such liabilities or obligations for which consent to transfer is
required and not obtained shall be considered a Clinic Expense, as that term is
defined in the Management Services Agreement.
All of the foregoing to be assumed by Texas Sub under this Section
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1.4(a) are referred to herein as the "Metroplex Assumed Liabilities."
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(b) Neither the Company nor Texas Sub shall assume or be obligated
for any, and Metroplex shall solely retain, pay, perform, defend and discharge
all of, Metroplex's liabilities or obligations of any and every kind whatsoever,
direct or indirect, disclosed or undisclosed, liquidated or unliquidated,
absolute or contingent, not expressly assumed by Texas Sub under Section 1.4(a)
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and, notwithstanding anything to the contrary in Section 1.4(a), none of the
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following shall be "Metroplex Assumed Liabilities" for purposes of this
Agreement and Metroplex shall remain responsible for all such matters and shall
indemnify Texas Sub and the Company with respect thereto:
(i) any liabilities of Metroplex in respect of
accounts payable, accrued equipment rentals, accrued salary, payroll
and wages, accrued sick or vacation pay or accounting and legal fees or
expenses, in each case which arise from the operation of the Metroplex
Business or the ownership of the Metroplex Assets prior to the Closing
Date and which are not reflected on the Metroplex Financial Statements;
(ii) any foreign, federal, state, county or local
income, excise, withholding, property, sales, use, franchise and other
taxes which arise from the operation of the Metroplex Business or the
ownership of the Metroplex Assets prior to the Closing Date;
(iii) except as listed in Schedule 1.4(a)(iii), any
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liability or obligation of Metroplex in respect of indebtedness for
borrowed money, including, without limitation, any liability or
obligation of Metroplex owing to any partner or Affiliate of Metroplex;
(iv) any costs and expenses incurred by Metroplex
incident to its negotiation and preparation of this Agreement or the
other documents contemplated hereby and its performance and compliance
with the agreements and conditions contained herein or therein;
(v) except to the extent the parties hereto shall
otherwise specifically agree in writing, any liabilities or
obligations, whenever arising, related to, associated with or arising
out of the employee benefit agreements, plans or arrangements listed in
Schedule 3.30;
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(vi) any liability or obligation of Metroplex to make
or provide severance pay or benefits to any employee of the Metroplex
Business prior to the Closing Date who is not extended employment with
the Company or Texas Sub after the Closing Date (it being understood
that nothing contained herein is intended to create any obligation of
Metroplex, Texas Sub, or the Company to make or provide severance pay
or benefits to any employee);
(vii) any liabilities or obligations arising as a result
of the transfer or assignment of any Metroplex lease, contract or other
agreement entered into by Metroplex with
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respect to the Metroplex Business after the date hereof consistent with
the terms of Section 5.3 of this Agreement, in each case without any
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consent required by the terms thereof;
(viii) any liabilities in respect of the claims, suits,
proceedings or investigations described in Schedule 3.21;
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(ix) any of Metroplex's liabilities or obligations
under this Agreement or the other agreements contemplated hereby
including, without limitation, the liabilities and obligations of
Metroplex under the Physician Owner Employment Agreement, as defined
herein; and
(x) any of Metroplex's liabilities or obligations in
respect of claims, suits, proceedings or investigations in relation to
the treatment or diagnosis of patients or the failure to treat or
diagnose patients or otherwise in relation to health care services
rendered by or on behalf of Metroplex.
(c) In addition to the foregoing, at the Closing the Company shall
repay the existing equipment and receivables loans (including principal and
accrued but unpaid interest) of Metroplex more particularly described on
Schedule 1.4(c) hereto (the "Metroplex Loans").
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1.5 Closing Date Actions and Deliveries. Upon the terms and subject
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to the conditions set forth in this Agreement, on the Closing Date:
(a) Metroplex or the Physicians, as appropriate, shall execute and
deliver (i) a xxxx of sale and any other appropriate documents evidencing
transfer of the Metroplex Assets, (ii) all of the documents, instruments and
opinions required to be delivered by Metroplex or the Physicians, as
appropriate, pursuant to this Agreement and (iii) all such other instruments of
assignment, transfer or conveyance as the Company or Texas Sub may reasonably
request or as may be otherwise necessary to evidence and effect the sale,
assignment, transfer and delivery of the Metroplex Assets and Metroplex Business
to Texas Sub; and
(b) Texas Sub shall pay that portion of the Purchase Price payable
at Closing and shall repay the Metroplex Loans. The Company or Texas Sub, as the
case may be, shall deliver or execute and deliver (i) all of the documents and
instruments contemplated to be delivered by the Company or Texas Sub on the
Closing Date pursuant to this Agreement and (ii) all such other instruments of
assignment, transfer or conveyance as Metroplex may reasonably request or as may
be otherwise necessary to evidence and effect the sale, assignment, transfer and
delivery to Texas Sub of the Metroplex Assets and the Metroplex Business by
Metroplex.
1.6 Further Assurances. On the Closing Date, Metroplex shall
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(a) deliver to the Company or Texas Sub, as the case may be, such other bills of
sale, deeds, endorsements, assignments and other good and sufficient instruments
of conveyance and transfer, in form reasonably satisfactory to the Company and
its counsel, as the Company may reasonably request or as may be otherwise
reasonably necessary to vest in the Company all the right, title and interest of
Metroplex in, to or under any or all of the Metroplex Assets, and (b) take all
steps as may be reasonably necessary to put the Company in actual possession and
control of all the Metroplex Assets and the Metroplex Business (with respect to
the latter to the extent permitted by applicable law). From time to time
following the Closing, Metroplex shall execute and deliver, or cause to be
executed and delivered, to the Company such other instruments of conveyance and
transfer as the Company may reasonably request or as may be otherwise necessary
to convey more effectively and transfer to, and vest in, the Company and put the
Company in possession of, any part of the Metroplex Assets and, in the case of
licenses, certificates, approvals, authorizations, agreements, contracts,
leases, easements and other commitments included in the Metroplex Assets which
cannot be transferred or assigned effectively without the consent of third
parties which consent has not been obtained prior to the Closing, to cooperate
with the Company and Texas Sub at their reasonable request in endeavoring to
obtain such consent. Notwithstanding anything in this Agreement to the contrary,
this Agreement shall not constitute an agreement to assign any license,
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certificate, approval, authorization, agreement, contract, lease, easement or
other commitment included in the Metroplex Assets if (i) such assignment is
prohibited by applicable law or (ii) an attempted assignment thereof without the
consent of a third party thereto would constitute a breach thereof, unless such
consent is obtained.
1.7 Referrals. The parties hereto acknowledge and agree that it is
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not a purpose of this Agreement or any of the transactions contemplated herein
to exert influence in any way over the reason or judgment of any party hereto
with respect to the referral of patients or business of any nature whatsoever,
and that neither Metroplex nor any of the Physicians are under any obligation
whatsoever to refer any patients or business to the Company or a parent,
subsidiary or affiliate of the Company. Likewise, neither the Company nor any of
its parent, subsidiaries or affiliates are under any obligation whatsoever to
refer any patients or business to Metroplex or its partners or any of their
parents, subsidiaries or affiliates (as applicable). It is the intent of all
parties hereto that any referrals made among them will continue to be based on
the medical judgment and discretion of individual physicians acting in the best
interests of the pertinent patient.
1.8 Employees. The Company or Texas Sub, as the case may be, may,
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but shall not be obligated to, offer employment to some or all of the employees
of Metroplex as of the Closing Date. During the period prior to the Closing
Date, the Company and Texas Sub shall be permitted reasonable access to the
employees of Metroplex for the purpose of allowing Texas Sub to interview and,
if so desired, to make offers of employment to such employees. All such
employees so hired shall be considered "new hires" by the Company or Texas Sub,
as the case may be, for all purposes and the Company or Texas Sub shall
establish all terms and conditions relating to their employment. Notwithstanding
the foregoing, each employee so hired shall retain his or her date of hire with
the Metroplex Business for purposes of determination of eligibility and vesting
under all employee benefit plans of Texas Sub or the Company for which such
employees are eligible, and such employees shall be initially compensated at the
same salary or hourly wage as they received from Metroplex immediately prior to
the Closing Date. The Company or Texas Sub, as the case may be, shall not,
unless it specifically agrees to do so in writing, assume any past or future
obligations of Metroplex to such employees, including specifically by way of
example and not limitation any obligations to pay severance pay to such
employees or to provide COBRA continuation benefits, and such obligations shall
be and remain obligations of Metroplex. Nothing contained in this Section 1.8 or
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elsewhere in this Agreement shall obligate the Company or Texas Sub to continue
to employ any such former employees for any length of time, and the employment
of any such former employees by the Company or Texas Sub, if any, shall be
terminable at will at any time.
ARTICLE II
PURCHASE PRICE, OTHER AGREEMENTS
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2.1 Purchase Price. The purchase price for the Purchased Assets (the
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"Purchase Price") shall be payable as follows:
(a) $11,810,000 paid by the Company to Metroplex at the Closing in
immediately available funds (the "Cash Payment");
(b) An aggregate of $12,670,000 paid pursuant to the terms of two
promissory notes, which shall be executed and delivered by the Company at
Closing, substantially in the forms attached hereto as Exhibit B-1 (the
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"Nonrecourse Note") and Exhibit B-2 (the "PHC Note") (the "Promissory Notes"),
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which Promissory Notes will bear no interest. In addition:
(i) the Nonrecourse Note shall provide for one payment of
$6,210,000 on April 1, 1998 (the "First Payment") and shall (a) provide
that Metroplex will have no right of recourse against the Company or
Texas Sub and their respective affiliates for payment thereunder,
(b) be freely assumable by Texas Sub
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and (c) be subordinated to the rights of DVI Financial Services, Inc.
("DVIF") and DVI Business Credit Corporation ("DVIBCC") pursuant to
these certain Subordination Agreements dated as of even date herewith
among (i) Metroplex, the Company, Texas Sub and DVIF and (ii)
Metroplex, the Company, Texas Sub and DVIBCC; and
(ii) the PHC Note shall provide for the remaining $6,460,000
to be paid in equal annual installments beginning on April 1, 1999,
with the final payment being due and payable on April 1, 2002.
2.2 Contribution for Class B Interests. At the Closing, Metroplex
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shall contribute the Contribution Assets to Texas Sub in exchange for all of the
Class B interests in Texas Sub, such interests being designated as a 20%
interest in Texas Sub, par value $0.01 per share (the "Texas Sub Class B
Interests"). The parties agree and acknowledge that immediately following the
Closing (i) the Company shall assign all of the Metroplex Assets to Texas Sub
and (ii) Texas Sub shall assume all obligations of the Company under the
Nonrecourse Note. Such assumption shall be pursuant to the Assumption and
Release Agreement attached hereto as Exhibit C-1. The parties agree that the
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Texas Sub Class B Interests received herein may, at the option of Metroplex, be
distributed to either the Physicians or their professional associations. Texas
Sub Class B Interests shall be exchangeable into shares of common stock of the
Company, par value $0.01 per share ("PHC Common Stock"), pursuant to an Exchange
Rights Agreement executed by the parties and substantially in the form attached
hereto as Exhibit C-2. The Company agrees to sell to Texas Sub a sufficient
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number of shares of PHC Common Stock to enable Texas Sub to meet its obligations
under the Exchange Agreement.
2.3 Allocation of Purchase Price. The Company and Metroplex agree
----------------------------
that the Purchase Price shall be allocated among the Purchased Assets for
accounting and other purposes as provided in Schedule 2.3. The Company and
------------
Metroplex further agree that the Purchase Price shall be allocated, for purposes
of Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"),
in accordance with the value of each class of asset set forth above, and any tax
returns or other tax information they may file or cause to be filed with any
governmental agency shall be prepared and filed consistently with such agreed
upon allocations. In this regard, the Company and Metroplex agree that, to the
extent required, they will each properly prepare and file Form 8594 in
accordance with Section 1060 of the Code.
2.4 Call Agreement. Texas Sub's obligation to pay the Nonrecourse
--------------
Note, provided the Nonrecourse Note is assumed by Texas Sub, shall be severally
guaranteed by Weston Presidio Capital Partners II, L.P., BancBoston Ventures,
Inc. and EGL Holdings, Inc. pursuant to the terms of the Equity Call Agreement
in substantially the form attached hereto as Exhibit D.
---------
2.5 Texas Sub. At the Closing, and for the term of the Management
---------
Services Agreement (as defined herein), the parties shall take such action as
shall be necessary to ensure that the Managers of Texas Sub (the "Texas Sub
Board") shall consist of eight persons, four of whom shall be persons designated
by Metroplex (the "Metroplex Designees") (two of whom shall initially be Xxxxxx
Xxxxxxxxxxxx, M.D. and Xx XxXxxxxxx, M.D.) and four of whom shall be designated
by the Company (the "PHC Designees") (two of whom shall be Xxxxx Xxxxxx and Xxx
Xxxxxx, D.O.). Should either Metroplex or the Company fail to designate a
manager to serve on the Texas Sub Board, the holders of a majority of Texas Sub
Class B Interests shall have the right to nominate for election a replacement
member to serve on the Texas Sub Board, provided, however, that a failure by the
Company or Metroplex to designate a manager to serve on the Texas Sub Board
shall not act as a waiver of such right. If any Metroplex Designee elected to
serve as a manager on the Texas Sub Board (a "Metroplex Manager") or any Company
Designee elected to serve as a manager on the Texas Sub Board (a "PHC Director")
resigns or otherwise ceases to serve as a manager of Texas Sub, or if: (i) the
Company desires to remove a PHC Designee or (ii) Metroplex desires to remove a
Metroplex Designee, each party agrees that it will promptly take all action
requested to fill such vacancy, or to remove and replace such director, as the
case may be.
7
A simple majority of the Texas Sub Board shall be necessary to take
action with regard to any matter provided, however, that in the event of a tie
on any vote, such matter shall be decided by the vote of a physician member of
the Board of Directors of the Company reasonably acceptable to Metroplex.
Metroplex and the Company further agree to use their best efforts to elect Xx.
Xxxxxx X. Xxxxxxx as chief executive officer of Texas Sub at the first meeting
of the Managers of Texas Sub to occur after the Closing Date.
2.6 Management Services Agreement. At the Closing, Texas Sub and
-----------------------------
Metroplex shall enter into a Management Services Agreement, substantially in the
form attached hereto as Exhibit E (the "Management Services Agreement"),
---------
pursuant to which, among other things, Texas Sub will provide certain management
services to Metroplex as provided therein.
2.7 Employment Agreements. At the Closing, Metroplex will enter into
---------------------
an employment agreement with each Physician substantially in the form attached
hereto as Exhibit F (each a "Physician Owner Employment Agreement").
---------
2.8 Board Representation. On the Closing Date, the Company shall
--------------------
take such action as is necessary in order to enable one individual designated by
Metroplex (the "Designee") to be elected to the Company's Board of Directors
(the "Board"). Metroplex has selected Xxxxxx XxXxxxxxx, M.D. as the Designee.
The Company agrees to use its best efforts to retain the Designee on the Board
until the sooner of (i) the second anniversary of any Designee's election to the
Board or (ii) the registration of a class of the Company's, or its successor's,
equity securities under the Securities Act of 1933, as amended.
2.9 Oncology Disease State Management Board. In the event the
---------------------------------------
Company shall create an Oncology Disease State Management Board (the "ODSM
Board"), the Company shall appoint four Metroplex designees to the ODSM Board.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF METROPLEX
-------------------------------------------
As an inducement to the Company to enter into this Agreement and to
consummate the transactions contemplated hereby, Metroplex hereby represents and
warrants to the Company and agrees as follows:
3.1 Organization of Metroplex. Metroplex is a limited liability
-------------------------
partnership duly organized, validly existing and in good standing under the laws
of the State of Texas and is duly qualified to transact business as a foreign
limited liability partnership in each jurisdiction in which the ownership or
leasing of the Metroplex Assets or the conduct of the Metroplex Business
requires such qualification.
3.2 Subsidiaries and Investments. Except as set forth in Schedule
---------------------------- --------
3.2, neither Metroplex nor any of the Physicians, directly or indirectly, (a)
---
owns, of record or beneficially, any outstanding voting securities or other
equity interests in any corporation, partnership, joint venture or other entity
which is involved in or relates to the Metroplex Business, or (b) otherwise
controls any such corporation, partnership, joint venture or other entity which
is involved in or relates to the Metroplex Business.
3.3 Authority. Metroplex has the power and authority to execute and
---------
deliver this Agreement and all of the other agreements and instruments to be
executed and delivered by Metroplex pursuant hereto (collectively, the
"Metroplex Ancillary Agreements"), to consummate the transactions contemplated
hereby and thereby and to comply with the terms, conditions and provisions
hereof and thereof.
8
Each Physician has the power and authority to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by such Physician pursuant hereto (collectively, the "Physician
Ancillary Agreements"), to consummate the transactions contemplated hereby and
thereby and to comply with the terms, conditions and provisions hereof and
thereof.
The execution, delivery and performance of this Agreement and the
Metroplex Ancillary Agreements by Metroplex have been duly authorized and
approved by all necessary partnership action on behalf of, and do not require
any further authorization or consent of, Metroplex or the Physicians. This
Agreement is, and each Metroplex Ancillary Agreement or Physician Ancillary
Agreement, as the case may be, when executed and delivered by Metroplex or the
Physicians, as the case may be, and the other parties thereto will be, legal,
valid and binding agreements of Metroplex enforceable against Metroplex or the
Physicians, as the case may be, in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditor's rights generally or the availability of equitable remedies.
Except as set forth in Schedule 3.3, neither the execution and delivery
------------
by Metroplex of this Agreement and the Metroplex Ancillary Agreements nor the
consummation by Metroplex of any of the transactions contemplated hereby or
thereby nor compliance by Metroplex with or fulfillment by Metroplex of the
terms, conditions and provisions hereof or thereof will: conflict with, result
in a breach of the terms, conditions or provisions of, or constitute a default,
an event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation or imposition
of any Encumbrance upon any of the Metroplex Assets under, the partnership
agreement of Metroplex, any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument or governmental license or
permit applicable to Metroplex, the Metroplex Assets or the Metroplex Business
or any judgment, order, award or decree to which Metroplex a party or any of its
respective assets or properties is subject or by which Metroplex is bound, or
any statute, other law or regulatory provision affecting Metroplex, the
Metroplex Assets or the Metroplex Business.
3.4 Financial Statements. Schedule 3.4 contains (A) the audited
-------------------- ------------
consolidated balance sheets of Metroplex as of December 31, 1996 and the related
statements of income and cash flow for the year ended December 31, 1996 and (B)
an unaudited balance sheet of Metroplex as of April 30, 1997 and related
statements of operations and cash flow for the month then ended (collectively,
the "Metroplex Financial Statements"). The Metroplex Financial Statements have
been prepared in accordance with generally accepted accounting principles
consistently applied and present fairly in all material respects the financial
position and results of operations of Metroplex, as of their dates and for the
periods covered thereby.
3.5 Operations Since Metroplex Balance Sheet Date. (a) Except as set
---------------------------------------------
forth in Schedule 3.5(a), during the period from the Metroplex Balance Sheet
---------------
Date to the date hereof, inclusive, there has been:
(i) no material adverse change in the financial
condition or the results of operations of the Metroplex Business from
that reflected on the Metroplex Financial Statements; or
(ii) no damage, destruction, loss or claim not fully
covered by insurance or condemnation or other taking which materially
adversely affects the Metroplex Assets or the Metroplex Business, taken
as a whole.
(b) Except as set forth in Schedule 3.5(b) hereto, since the
---------------
Metroplex Balance Sheet Date, Metroplex has conducted the Metroplex Business
only in the ordinary course and substantially in conformity with past practice.
Without limiting the generality of the foregoing, since the Metroplex Balance
Sheet Date, except as set forth in such Schedule, Metroplex has not, in respect
of the Metroplex Business:
(i) sold, leased, transferred or otherwise disposed of
(including any transfers from Metroplex to any of its Affiliates), or
mortgaged or pledged, or imposed or suffered to be
9
imposed any Encumbrance on, any of the assets reflected on the
Metroplex Financial Statements or any assets acquired by Metroplex
after the Metroplex Balance Sheet Date, other than personal property
sold or otherwise disposed of for fair value in the ordinary course of
the Metroplex Business consistent with past practice and except for
Permitted Encumbrances and Encumbrances;
(ii) cancelled without fair consideration therefor
any debts owed to or claims held by Metroplex (including the settlement
of any claims or litigation) or waived any right of significant value
to Metroplex, other than in the ordinary course of the Metroplex
Business consistent with past practice;
(iii) created, incurred, guaranteed or assumed, or
agreed to create, incur, guarantee or assume, any indebtedness for
borrowed money or entered into any capitalized leases;
(iv) accelerated collection of notes or accounts
receivable generated by the Metroplex Business to a date prior to the
date such collection would have occurred in the ordinary course of the
Metroplex Business;
(v) delayed payment of any account payable or other
liability of the Metroplex Business beyond its due date or the date
when such liability would have been paid in the ordinary course of the
Metroplex Business consistent with past practice;
(vi) entered, cancelled, modified or amended any
contract or agreement with a third-party payor;
(vii) granted or instituted any increase in any rate of
salary or compensation or any profit sharing, bonus, incentive,
deferred compensation, insurance, pension, retirement, medical,
hospital, disability, welfare or other employee benefit plan: or
(viii) entered into any agreement or made any commitment
to take any action described in subparagraphs (i) through (vii) above.
3.6 No Undisclosed Liabilities. Except as set forth in Schedule 3.6,
-------------------------- ------------
and except for liabilities which individually, or when aggregated with other
liabilities, are less than $5,000, Metroplex is not subject, to its actual
knowledge, with respect to the Metroplex Business, to any liability (including,
without limitation, unasserted claims), whether absolute, contingent, accrued or
otherwise, which is not shown or which is in excess of amounts shown or reserved
for in the Metroplex Financial Statements, other than liabilities of the same
nature as those set forth in the Metroplex Financial Statements and the notes
thereto and incurred in the ordinary course of the Metroplex Business after the
Metroplex Financial Statements.
3.7 Taxes. Metroplex has either filed or obtained extensions for
-----
filings pursuant to established procedures of all foreign, federal, state,
county or local income, excise, property, sales, use, franchise or other tax
returns and reports which are required to have been filed by Metroplex under
applicable law on or prior to the date of this Agreement and has paid or made
provision for the payment of all taxes which have become due pursuant to such
returns or pursuant to any assessments which have become payable and which are
not being contested in good faith by appropriate proceedings. All monies
required to be withheld by Metroplex from employees of the Metroplex Business
for income taxes, social security and other payroll taxes have been collected or
withheld, and either paid to the respective governmental agencies, set aside in
accounts for such purpose, or accrued, reserved against and entered upon the
books of Metroplex.
3.8 Availability of Assets. Except as set forth in Schedule 3.8 and
---------------------- ------------
except for the Excluded Metroplex Assets, the Metroplex Assets constitute all
the material assets used in the conduct of the Metroplex Business
10
(including, but not limited to, all books, records, computers and computer
programs and data processing systems) and all such material assets are in good
operating condition and repair (reasonable wear and tear in ordinary usage
excepted) for the purposes for which they are currently used by Metroplex.
3.9 Real Property. Schedule 3.9 contains a brief description of each
------------- ------------
parcel of real property owned by Metroplex and used in or relating to the
Metroplex Business (showing the record title holder, legal description,
location, improvements, the uses being made thereof and any indebtedness secured
by a mortgage or other lien thereon) and of each option, right or contract to
purchase held by Metroplex to acquire any real property for use in connection
with the Metroplex Business. Complete and correct copies of any policies of
title insurance currently in force and in possession of Metroplex with respect
to each such parcel shall be delivered by Metroplex to the Company on request.
3.10 Real Property Leases. Schedule 3.10 sets forth a list and brief
-------------------- -------------
description of each lease or similar agreement (showing the rental, expiration
date, renewal, the uses being made thereof and the location of the real property
covered by such lease or other agreement) under which Metroplex is lessee of, or
holds or operates, any real property owned by any third party and used in or
relating to the Metroplex Business.
3.11 Condemnation. (A) Neither the whole nor any part of any real
------------
property owned, leased, used or occupied by Metroplex in connection with the
Metroplex Business is subject to any pending suit for condemnation or other
taking by any public authority and (B) to the actual knowledge of Metroplex
after due inquiry, no such condemnation or other taking is threatened.
3.12 Personal Property. Schedule 3.12 contains a list as of June 4,
----------------- -------------
1997 of (A) all vehicles used in or relating to the Metroplex Business and (B)
all machinery and instruments (other than minor medical instruments) and
material equipment, furniture, and other personal property owned by Metroplex
used in or relating to the Metroplex Business.
3.13 Personal Property Leases. Schedule 3.13 contains a brief
------------------------ -------------
description of each lease or other agreement or right, whether written or oral
(including in each case the rental, the expiration date thereof and a brief
description of the property covered), under which Metroplex is lessee of, or
holds or operates, any machinery, equipment, instruments, vehicle or other
tangible personal property owned by a third party and used in or relating to the
Metroplex Business and which is not terminable by Metroplex without penalty on
30 days' notice or less and which provides for annual rentals in excess of
$10,000.
3.14 Patents and Trademarks. (a) Schedule 3.14 contains a list of:
---------------------- -------------
(i) all trademarks, service marks, trade names and copyrights related to the
Metroplex Business for which registrations have been issued to Metroplex or
applications for registrations have been made by Metroplex, (ii) all registered
assumed or fictitious names under which Metroplex is doing business and (iii)
all licenses, agreements or other arrangements under which Metroplex, in
connection with the Metroplex Business, has the right to use any trademark,
service xxxx, trade name or copyright. Metroplex does not own, and has not
applied for, any patents, in connection with the Metroplex Business. No
proceedings have been instituted or are pending or, to the actual knowledge of
Metroplex, after due inquiry, are threatened which challenge the validity of the
ownership or use by Metroplex of any trademarks, service marks, trade names,
copyrights or patents related to the Metroplex Business. Except as set forth in
Schedule 3.14, Metroplex has not licensed anyone to use any trademarks, trade
-------------
names or copyrights of Metroplex, and Metroplex has no actual knowledge, after
due inquiry, of the infringement by any person of any trademarks or trade names
or copyrights or patents owned or used by it. Except as set forth in Schedule
--------
3.14, to its actual knowledge, after due inquiry, Metroplex owns, or has the
----
royalty-free right to use, all trademarks, service marks, trade names,
copyrights or patents used in the operation of the Metroplex Business and has
not received any notice of conflict with the asserted rights of others. Except
as set forth in Schedule 3.14, no trademark, service xxxx, trade name, copyright
-------------
or patent listed in Schedule 3.14 is subject to any outstanding order, judgment,
-------------
decree, stipulation or agreement restricting the use thereof by Metroplex or
restricting the licensing thereof by Metroplex to any person.
11
3.15 Accounts Receivable. All accounts receivable of Metroplex
-------------------
relating to the Metroplex Business have arisen from bona fide transactions by
Metroplex in the ordinary course of the Metroplex Business and, to the knowledge
of Metroplex, constitute only valid claims which are not subject to
counterclaims or setoffs.
3.16 Title to Purchased Assets. Metroplex has good and marketable
-------------------------
title to all of the Metroplex Assets, free and clear of all Encumbrances, except
for those items listed in Schedule 3.16 and Permitted Encumbrances and subject
-------------
to receipt of the applicable consents from, or the making of any requisite
filings with, any third parties listed in Schedule 3.3. Upon delivery to the
------------
Company on the Closing Date of the xxxx of sale contemplated by Section 1.6(a),
--------------
Metroplex will thereby transfer to the Company good and marketable title to the
Metroplex Assets, subject to no Encumbrances, except for Permitted Encumbrances.
3.17 Employees. Schedule 3.17 contains: (A) a list of all individuals
--------- -------------
employed by Metroplex in connection with the Metroplex Business; and (B) the
then current rate of compensation of, and a description of the fringe benefits
(including sick and vacation pay) indicating how much has actually been accrued
(other than those generally available to employees of Metroplex under the plans
listed in Schedule 3.19 or Schedule 3.30) provided by Metroplex to, any such
------------- -------------
employees, in each case as of February 28, 1997.
3.18 Employee Relations. (a) Except as set forth in Schedule 3.18, or
------------------ -------------
as could not have a material adverse effect on the business or operations of
Metroplex, Metroplex has complied with respect to the Metroplex Business in all
material respects with all applicable laws, rules and regulations which relate
to occupational health and safety, prices, wages, hours, discrimination in
employment and collective bargaining and to the operation of the Metroplex
Business and is not liable for any arrears of wages or any taxes or penalties
for failure to comply with any of the foregoing.
(b) Except as set forth in Schedule 3.18, as of the date of this
-------------
Agreement, there is with respect to the Metroplex Business no (i) unfair labor
practice charge or complaint against Metroplex pending before the National Labor
Relations Board, any state labor relations board or any court or tribunal and,
to the actual knowledge of Metroplex, after due inquiry, none is or has been
threatened, (ii) strike, dispute, request for representation, slowdown or
stoppage pending against Metroplex and, to the actual knowledge of Metroplex,
after due inquiry, none is or has been threatened, or (iii) arbitration
proceeding arising out of or under any collective bargaining agreement pending
against Metroplex and, to the best knowledge of Metroplex, none is or has been
threatened.
(c) Except as set forth in Schedule 3.18, Metroplex has no severance
-------------
obligations with respect to its employees.
3.19 Contracts. Except as set forth in Schedule 3.19 or any other
--------- -------------
Schedule hereto, as of the date of this Agreement, Metroplex is not, with
respect to the Metroplex Business, a party to or bound by:
(a) Any contract for the purchase or sale of real property;
(b) Any contract for the payment for health care goods and services
to be delivered by Metroplex;
(c) Any contract for the purchase of merchandise, supplies or
personal property or for the receipt of services (other than services referred
to in clause (b) above) which is not terminable by Metroplex on 30 days' notice
or less or which provides for performance over a period of more than 90 days or
which involves the payment after the date hereof of more than $5,000;
(d) Any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others;
(e) Any contract not made in the ordinary course of the Metroplex
Business;
12
(f) Any agreement which provides for the incurrence or assumption of
debt for borrowed money;
(g) Any employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by Metroplex without
premium or penalty on notice of 30 days or less under which the only monetary
obligation of Metroplex is to make current wage or salary payments and provide
current fringe benefits), consulting, advisory or service agreement, deferred
compensation agreement or covenant not to compete;
(h) Any contract or agreement with any officer, director or employee
(other than employment agreements disclosed in response to clause (g) above or
clause (j) below), agent or attorney-in-fact of Metroplex;
(i) Any employees' pension, profit-sharing, stock option, phantom
stock, bonus, incentive, stock purchase, welfare, life insurance, hospital or
medical benefit plan or other employee benefit agreement or plan;
(j) Any contract lease, agreement or arrangement, written or oral,
with any of Metroplex's partners or with any of the employees, consultants,
advisors or agents of the foregoing;
(k) any joint venture contract or arrangement, or any other
agreement involving a sharing of profits;
(l) any lease, option or right of first refusal pertaining to any of
the Metroplex Assets;
(m) any license or franchise agreement, either as licensor or
licensee, or as franchisor or franchisee;
(n) any outstanding bids, sales proposals, or service proposals;
(o) any noncompetition agreements or similar restraint contracts; or
(p) any instruments granting any powers of attorney or authority to
act on behalf of Metroplex;
Schedule 3.19 also indicates which contract, agreement or other instrument
-------------
listed therein is to be deemed an "Assumed Contract" or a "Contract Not Assumed"
for purposes of this Agreement.
3.20 Status of Contracts. Except as set forth in Schedule 3.20 or in
------------------- -------------
any other Schedule hereto, each of (a) the leases, contracts and other
agreements listed in Schedules 3.10, 3.13, 3.14 and 3.19 (provided, in the case
-------------------------- ----
of Schedule 3.19, such contract or other agreement is designated therein as an
-------------
"Assumed Contract") and (b) the contracts of Metroplex for other purposes made
in the ordinary course of the Metroplex Business and consistent with past
practice (collectively in the case of clauses (a) and (b), but excluding the
contracts and other agreements designated in Schedule 3.19 as a "Contract Not
-------------
Assumed") constitutes a valid and binding obligation of Metroplex and, to the
actual knowledge of Metroplex, after due inquiry, the other parties thereto and
is in full force and effect and, except as set forth in Schedule 3.3, may be
------------
transferred to Texas Sub pursuant to this Agreement and will continue in full
force and effect thereafter, in each case without breaching the terms thereof or
resulting in the forfeiture or impairment of any rights thereunder and without
the consent, approval or act of, or the making of any filing with, any other
party.
3.21 No Violation, Litigation or Regulatory Action. Except as set
---------------------------------------------
forth in Schedule 3.21:
-------------
(a) Except as could not have a material adverse effect on the
business or operations of Metroplex, Metroplex has complied in all material
respects with all laws, regulations, rules, writs, injunctions, ordinances,
franchises, decrees or orders of any court or of any foreign, federal, state,
municipal or other government, governmental department, commission, board,
bureau, agency or instrumentality which are applicable to the Metroplex Assets
or the Metroplex Business including, without limitation, those relating to
environmental,
13
occupational health and hazardous waste, those relating to the payment and
withholding of taxes and those relating to third-party programs as they have
been in effect from time to time;
(b) There are no lawsuits, claims, suits, proceedings or
investigations pending or, to the actual knowledge of Metroplex, after due
inquiry, threatened against Metroplex or any of the Physicians in respect of the
Metroplex Assets or the Metroplex Business;
(c) There is no action, suit or proceeding pending or, to the actual
knowledge of Metroplex, after due inquiry, threatened which questions the
legality or propriety of the transactions contemplated by this Agreement; and
(d) Neither Metroplex nor any Physician has received any notice of
any violation or claim of violation of any governmental laws, rules or
regulations or any moratorium, ban or similar restriction on the Metroplex
Business or the Metroplex Assets.
3.22 Insurance. Metroplex maintains policies of, or self insures with
---------
respect to, fire and extended coverage and casualty, liability, professional
liability, errors and omissions, property loss, and other forms of insurance in
such amounts and against such risks and losses as are in the judgment of
Metroplex prudent for the Metroplex Business and the Metroplex Assets. Metroplex
has maintained such insurance for the last five years. All such policies are
currently in full force and effect and Metroplex shall use its best efforts to
keep such insurance policies in full force and effect through the Closing Date.
Metroplex has received no written notification from any insurer disputing or
denying a claim within the last 12 months. Metroplex has no claim pending or
anticipated against any of its insurers under any such policies. Metroplex shall
provide the Company prior to Closing with a list of all such forms of insurance
and the amount of coverage provided thereby.
3.23 Environmental Protection. Except as set forth in Schedule 3.23,
------------------------ -------------
(a) to the actual knowledge of Metroplex, after due inquiry, neither the
Metroplex Business nor any of its present properties, assets or operations are
subject to any order from or agreement with any governmental authority,
regulatory body or private party respecting (i) any environmental, health or
safety Requirements of Law, (ii) any Remedial Action or (iii) any liabilities
and costs arising from the Release or threatened Release of a Contaminant into
the environment;
(b) There is not, to the knowledge of Metroplex, now, nor has there
ever been on or in the properties of the Metroplex Business:
(i) any Release of any Contaminant on, in, under or from
such properties;
(ii) any underground storage tanks or surface
impoundments;
(iii) any asbestos containing material; or
(iv) any polychlorinated biphenyls (PCB) used in
hydraulic oils, electrical transformers or other
equipment;
except, in each case, for items which have previously been remedied in
accordance with applicable law.
(c) Neither Metroplex nor the Metroplex Business has received any
notice or claim to the effect that it is or may be liable to any Person as a
result of the Release or threatened Release of a Contaminant into the
environment with respect to the Metroplex Business; or
(d) The present operations of the Metroplex Business are not, to the
knowledge of Metroplex, the subject of any investigation by any governmental
authority or regulatory body evaluating whether any Remedial Action is needed to
respond to a Release or threatened Release of a contaminant into the
environment.
14
3.24 Books and Records. The books and records of Metroplex relating
-----------------
to the Metroplex Business have been maintained in accordance with good business
practices and applicable legal, regulatory and accounting requirements, reflect
only valid transactions, are complete and materially reflect the financial
position and results of operations of the Metroplex Business.
3.25 No Finder's Fee. Neither Metroplex nor any party acting on its
---------------
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement, and, to the extent that it shall be hereafter determined that
any broker, finder or intermediary acting on behalf of Metroplex is entitled to
any fee or commission with respect to the transactions contemplated by this
Agreement, Metroplex shall be responsible for the payment thereof.
3.26 Transactions with Affiliates. Except as set forth in
----------------------------
Schedule 3.26, since the Metroplex Balance Sheet Date, other than in the
-------------
ordinary course of business there have been no material transactions in respect
of the Metroplex Assets or the Metroplex Business between Metroplex and any
officer, director or other Affiliate of Metroplex.
3.27 Licenses and Permits.
--------------------
(a) Metroplex has all material, local, state and federal licenses,
permits, registrations, certificates, contracts, consents, accreditations and
approvals (collectively referred to as "Licenses and Permits") necessary for its
operation as a health care business, including but not limited to Licenses and
Permits from the fire marshal, the police, the sanitation and health
departments, OSHA and applicable work authorities. Metroplex is not in default
in any respect under any of such Licenses and Permits and Metroplex has no
knowledge of any grounds for revocation, suspension or limitation of such
Licenses or Permits. Copies of these Licenses and Permits have been previously
delivered to the Company by Metroplex, and have been described in Schedule 3.27.
-------------
(b) There are no, and at Closing will be no, provisions in any
License or Permit which would preclude or limit Metroplex from operating the
Metroplex Business.
3.28 Filing Reports. All returns, reports, plans and filings of any
--------------
kind or nature necessary to be filed by Metroplex with any governmental
authorities have been properly completed and timely filed and accompanied by all
required payments in compliance with all applicable requirements, and Metroplex
has not received written notice or other written communication of, nor does it
have any actual knowledge, after due inquiry, of claims from a governmental
agency for any failure to file any such return, report, plan or filing or to
make any payments required in connection therewith.
3.29 Employment and Labor Relations. Metroplex is not a party to any
------------------------------
collective bargaining agreement or other contract or understanding with a labor
or employees union and there are no disputes, claims or grievances involving the
employees of Metroplex or others concerning employment in connection with
Metroplex's business pending or to the actual knowledge of Metroplex, after due
inquiry, threatened against Metroplex.
3.30 Benefit Plans.
-------------
(a) Identification. Schedule 3.30 contains a complete and accurate
-------------
list of all employee benefit plans (the "Employee Benefit Plans") (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) sponsored by Metroplex or to which Metroplex contributes
on behalf of its employees and all Employee Benefit Plans previously sponsored
or contributed to on behalf of its employees within the three years preceding
the date hereof. For purposes of this Section 3.30 only, the term "Metroplex"
shall mean Metroplex and any member of a "Controlled Group" or "Affiliated
Service Group" (within the meaning of Section 414 of the Internal Revenue Code)
of which Metroplex may be a member. Metroplex has provided the Company with
copies of all plan documents, determination letters, pending determination
letter applications, trust instruments,
15
insurance contracts, administrative services contracts, annual reports,
actuarial valuations, summary plan descriptions, summaries of material
modifications, administrative forms and other documents that constitute a part
of or are incident to the administration of the Employee Benefit Plans. In
addition, Metroplex has provided the Company a written description of all
existing practices engaged in by Metroplex that constitute Employee Benefit
Plans. Each of the Employee Benefit Plans can be terminated or amended at will
by Metroplex, subject to applicable law. No unwritten amendment exists with
respect to any Employee Benefit Plan.
(b) Administration. Each Employee Benefit Plan has been administered
and maintained in compliance with all laws, rules and regulations in all
material respects.
(c) Examinations. No Employee Benefit Plan is currently the subject
of an audit, investigation, enforcement action or other similar proceeding
conducted by any state or federal agency, the outcome of which could have a
material adverse effect on Metroplex.
(d) Prohibited Transactions. No material, uncorrected prohibited
transactions (within the meaning of Section 4975 of the Code) have occurred with
respect to any Employee Benefit Plan.
(e) Claims and Litigation. No threatened or pending claims, suits or
other proceedings exist with respect to any Employee Benefit Plan the outcome of
which could have a material adverse effect on Metroplex, other than normal
benefit claims filed by participants or beneficiaries.
(f) Qualification. Except as provided in Schedule 3.30, Seller has
-------------
received a favorable determination letter or ruling from the Internal Revenue
Service for each Employee Benefit Plan intended to be qualified within the
meaning of Section 401(a) of the Code and/or tax-exempt within the meaning of
Section 501(a) of the Code. No proceedings exist or have been threatened that
could result in the revocation of any such favorable determination letter or
ruling.
(g) Funding Requirements. Neither Metroplex nor any member of a
Controlled Group (within the meaning of Section 412(n)(6)(B) of the Code) in
which Metroplex is a member maintains, or has maintained, any Employee Benefit
Plan subject to Title IV of ERISA or the funding requirement of Section 412 of
the Code.
(h) Excise Taxes. Neither Metroplex nor any member of a Controlled
Group has any material liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
(i) Retirees. Metroplex has no obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired from
employment with Metroplex, except as provided by COBRA.
3.31 Telephone Numbers. The telephone numbers set forth in
-----------------
Section 1.1(h) hereof are the telephone numbers principally and currently used
--------------
by Metroplex in connection with the Metroplex Business.
3.32 Related Party Interests. Except for the real estate leases
-----------------------
described in Schedule 3.10, after the Closing, neither Metroplex nor any of the
-------------
Physicians will have any interest or investment in any corporation, partnership,
joint venture, other business organization or facility which owns, operates or
has any interest in any medical practice, medical clinic, diagnostic facility,
or clinical laboratory or provides professional medical services.
3.33 Other Names. In the five-year period prior to the Closing Date,
-----------
Metroplex has conducted operations only under the names "[The] Arlington Cancer
Center" and the names listed on Schedule 3.33 and has not conducted operations
-------------
under any other names.
16
3.34 Payor Contracts. Schedule 3.34 sets forth a list of all third
--------------- -------------
party payor contracts, agreements and billing numbers of Metroplex and its
partners. Copies of Metroplex's existing Medicare and Medicaid contracts (the
"Program Agreements"), all of which are listed on Schedule 3.34, have been made
-------------
available to the Company. Metroplex is, and will be at the time of Closing, in
material compliance with all of the terms, conditions and provisions of such
contracts.
3.35 Accounting Controls. For all periods not covered by the
-------------------
Metroplex Financial Statements, Metroplex has maintained a system of internal
accounting controls which provides reasonable assurances that (a) transactions
are executed in accordance with Metroplex's general or specific authorization,
(b) transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain accountability for assets and liabilities, (c) access to assets is
permitted only in accordance with Metroplex's general or specific authorization,
and (d) the recorded accountability for assets and liabilities is compared to
its existing assets and liabilities at reasonable intervals and appropriate
action is taken to correct any differences.
3.36 Physicians. With regard to the Physicians, there are not pending
----------
or, to Metroplex's actual knowledge, after due inquiry, medical staff privilege
or licensure-related threatened appeals, challenges, disciplinary or correction
actions, or disputes involving the Physicians or their ability to practice
medicine, except as set forth in Schedule 3.36 hereto.
-------------
3.37 Conflicts of Interest. Except as described in Schedule 3.37
--------------------- -------------
hereto, none of the Physicians is either a supplier or customer of Metroplex or
directly or indirectly controls or is a director, trustee, officer, employee or
agent of any corporation, firm, association, partnership of other business
entity which is a supplier or customer of Metroplex.
3.38 Funding Sources and Commitments. Metroplex has not received any
-------------------------------
funds (including grants or loans) under any federal laws, including Title VI and
XVI of the Public Health Service Act, pursuant to which Metroplex has agreed to
abide by assurances requiring Metroplex to offer uncompensated or community
service. Metroplex has made no commitments to any governmental authority,
utility company, school board, church or other religious body, or to any other
organization, group or individual, relating to the Metroplex Business or the
Metroplex Assets which would impose an obligation upon the Company or its
successors or assigns to make any contributions or dedications of money or land
or to construct, install or maintain any improvements of a public or private
nature or to provide services of any type or nature to any person.
3.39 Inventories. The inventory of Metroplex shall on the Closing
-----------
Date be of a quality consistent with Metroplex's past practice. The inventory of
Metroplex is at the date of this Agreement, and on the Closing Date will be,
maintained at Metroplex's normal levels.
3.40 Investment Intent. Except as contemplated herein, Metroplex is
-----------------
acquiring its interest as a stockholder in Texas Sub for its own account and not
with a view to the distribution or resale thereof and with no present intention
of distributing or reselling any portion of such interest, or solicit offers to
buy the same from or otherwise approach or negotiate in respect thereof with any
Person or Persons whomsoever, so as thereby to bring the transactions
contemplated by this Agreement or its acquisition of an interest in Texas Sub
within the provisions of Section 5 of the Securities Act of 1933, as amended, or
the registration requirements of any state Blue Sky statute unless an effective
registration statement is in effect or appropriate exemptions from the
requirements of such Securities Act and any applicable state Blue Sky statutes
are available.
3.41 Acknowledgement. Except as previously disclosed in writing to
---------------
the Company, Metroplex does not have actual knowledge of a fact that would
result in a breach of any of the representations and warranties of the Company
contained in this Agreement. For purposes of this representation and warranty,
"actual knowledge" shall
17
not be deemed to include the fact that documents or other materials containing
information with respect to a breach of a representation and warranty were
delivered to Metroplex or its representatives prior to the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
As an inducement to Metroplex and the Physicians to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
hereby represents and warrants to Metroplex and the Physicians and agrees as
follows:
4.1 Organization of the Company. The Company is a corporation duly
---------------------------
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is duly qualified to transact business as a foreign corporation
in each jurisdiction in which such qualification is required.
4.2 Capacity of the Company. The Company has full legal right, power
-----------------------
and capacity to execute and deliver this Agreement and all of the other
agreements and instruments to be executed and delivered by the Company pursuant
hereto or thereto (collectively, the "Company Ancillary Agreements"), to
consummate the transactions contemplated hereby and thereby and to comply with
the terms, conditions and provisions hereof and thereof.
4.3 Subsidiaries and Investments. The Company does not, directly or
----------------------------
indirectly, (a) own of record or beneficially, any outstanding voting securities
or other equity interests in any corporation, partnership, joint venture or
other entity which is involved in or relates to the Metroplex Business, or (b)
otherwise control any such corporation, partnership, joint venture or other
entity which is involved in or relates to the Metroplex Business.
4.4 Authority of the Company. The Company has the power and
------------------------
authority to execute and deliver this Agreement and the Company Ancillary
Agreements, to consummate the transactions contemplated hereby and thereby and
to comply with the terms, conditions and provisions hereof and thereof.
The execution, delivery and performance of this Agreement and the
Company Ancillary Agreements by the Company have been duly authorized and
approved by all necessary corporate action on behalf of, and do not require any
further authorization or consent of, the Company. This Agreement is, and each
Company Ancillary Agreement when executed and delivered by the Company and the
other parties thereto will be, legal, valid and binding agreements of the
Company enforceable in accordance with their respective terms.
Except as set forth in Schedule 4.4, neither the execution and delivery
------------
by the Company of this Agreement and the Company Ancillary Agreements or the
consummation by the Company of any of the transactions contemplated hereby or
thereby nor compliance by the Company with or fulfillment by the Company of the
terms, conditions and provisions hereof thereof will conflict with, result in a
breach of the terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument or governmental
license or permit applicable to the Company, or any judgment, order, award or
decree to which the Company a party or any of its respective assets or
properties is subject or by which the Company is bound, or any statute, other
law or regulatory provision affecting the Company.
4.5 No Litigation. There is no action, suit or proceeding pending
-------------
or, to the best knowledge of the Company, threatened against the Company which
questions the legality or propriety of the transactions contemplated by this
Agreement.
18
4.6 No Finder's Fee. Neither the Company nor any party acting on its
---------------
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement, and to the extent that it shall be hereafter determined that any
broker, finder or intermediary acting on behalf of the Company is entitled to
any fee or commission with respect to the transactions contemplated by this
Agreement, the Company shall be responsible for the payment thereof.
4.7 Acknowledgement. Except as previously disclosed in writing to
---------------
Metroplex, the Company does not have actual knowledge of a fact that would
result in a breach of any of the representations and warranties of Metroplex
contained in this Agreement. For purposes of this representation and warranty,
"actual knowledge" shall not be deemed to include the fact that documents or
other materials containing information with respect to a breach of a
representation and warranty were delivered to the Company or its representatives
prior to the Closing Date.
ARTICLE V
ACTION PRIOR TO THE CLOSING DATE
--------------------------------
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
5.1 Investigation of the Metroplex Business by the Company. Upon the
------------------------------------------------------
request of the Company, Metroplex shall afford to the officers, employees and
authorized representatives of the Company (including, without limitation,
independent public accountants, attorneys and consultants) reasonable access
during normal business hours, and upon 24-hour prior notice, to the offices,
properties, employees and business and financial records (including computer
files, retrieval programs and similar documentation) of the Metroplex Business
to the extent the Company shall reasonably deem necessary or desirable and shall
furnish to the Company or its authorized representatives such additional
information concerning the Metroplex Assets and the Metroplex Business as shall
be reasonably requested, including all such information as shall be necessary to
enable the Company or its representatives to verify the accuracy of the
representations and warranties contained in Article III and to verify that the
covenants of Metroplex in Section 5.3 have been complied with. The Company
agrees that any such investigation or audit, including interviews with
employees, shall be conducted in such a manner as not to interfere unreasonably
with the operations of Metroplex or the Metroplex Business.
5.2 Preserve Accuracy of Representations and Warranties. Each of
---------------------------------------------------
Metroplex, the Physicians and the Company shall use reasonable, good faith
efforts to refrain from taking any action which would render any representation
or warranty contained in Article III or IV, respectively, of this Agreement
inaccurate in any material respect as of the Closing Date. Metroplex, the
Physicians and the Company shall promptly notify the other parties of any
action, suit or proceeding that shall be instituted or threatened against
Metroplex, the Physicians or the Company to restrain, prohibit or otherwise
challenge the legality of any transaction contemplated by this Agreement.
Metroplex, the Physicians or the Company shall promptly notify the other parties
of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against either party which would have been listed
in Schedule 3.21, or in response to Section 3.3 if such lawsuit, claim,
------------- -----------
proceeding or investigation had arisen prior to the date hereof.
5.3 Operations Prior to the Closing Date. (a) Prior to the Closing
------------------------------------
Date, Metroplex shall operate and carry on the Metroplex Business only in the
ordinary course and substantially as presently operated. Consistent with the
foregoing, Metroplex shall use reasonable efforts to keep and maintain the
Metroplex Assets in good operating condition and repair.
19
(b) Notwithstanding Section 5.3(a), except as expressly
--------------
contemplated by this Agreement, except as set forth in Schedule 5.3(b) or
---------------
except with the express prior written approval of the other party to this
Agreement, Metroplex shall not:
(i) make any material change in the Metroplex Business
or sell, assign, pledge, subject to lien or security interests or
otherwise transfer the Metroplex Assets other than in the ordinary
course of business;
(ii) make any capital expenditure, or enter into any
contract or commitment therefore in excess of $5,000, or make any
capital expenditures not previously discussed with such other party;
(iii) enter into any contract, agreement, undertaking or
commitment (or any extension or renewal thereof) not in the ordinary
course of business;
(iv) amend or consent to the amendment of any contract,
agreement, undertaking or commitment listed in Schedule 3.19, if the
-------------
aggregate effect of such amendment and all similar amendments is to
cause the terms of such contracts, agreements, undertakings or
commitments, in the aggregate, to be materially less favorable to
Metroplex, or, subsequent to Closing, the Company than prior to such
amendments or consents to amendment;
(v) grant any powers of attorney;
(vi) except in the ordinary course of business consistent
with past practice, grant any salary or benefit increase or otherwise
modify any other benefit due or compensation payable to any employee or
other person performing services for Metroplex;
(vii) issue any equity securities or rights to acquire
equity securities;
(viii) except in the ordinary course of business consistent
with past practice, pay any dividends, make any distributions, redeem
any securities or otherwise cause the Metroplex Assets to be
distributed to any of its partners;
(ix) borrow any funds, under existing lines of credit or
otherwise, except as reasonably necessary for the ordinary operation of
the Metroplex Business;
(x) make any material change in the accounting policies
applied in the preparation of the Metroplex Financial Statements; and
(xi) agree or commit to do or authorize any of the
foregoing.
(c) Metroplex may at any time prior to Closing, and in the event
that the Closing has not occurred within 90 days of this Agreement Metroplex
shall commencing on such ninetieth day and thereafter on a bi-monthly basis,
amend its respective Schedules to this Agreement to reflect changes in the
information set forth in such Schedules or developments that have occurred since
the date as of which information has been given in such statements. All such
changes to such Schedules shall be automatically incorporated in the Schedules
previously delivered and made a part of this Agreement except that no such
change shall be deemed to amend, to update or be incorporated in any such
previously delivered Schedule if (i) such change reflects that Metroplex is in
breach of any of its covenants and agreements set forth in this Section 5.3 or
-----------
(ii) such change, when considered together with any other changes made pursuant
to this subsection (c), would (A) reflect a material adverse effect on the
financial condition, results of operations or business prospects of the
Metroplex Business or (B) reflect that the Company would
20
have to incur any material cost or penalty with respect to any of the
governmental licenses necessary to operate the business of the Company after
Closing or to be unable in any material respect to operate the business of the
Company after Closing in the manner currently proposed.
5.4 No Public Announcement. Neither Metroplex, the Physicians, Texas
----------------------
Sub nor the Company shall, without the approval of the other party, make any
press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law, in which case the other party shall be advised and
the parties shall use their best efforts to cause a mutually agreeable release
or announcement to be issued.
5.5 Interim Financial Statements of Metroplex. Metroplex shall
-----------------------------------------
promptly deliver to the Company copies of any monthly, quarterly or annual
balance sheets or statements of income and cash flow (presented on both a
consolidated all-station basis and a consolidating basis reflecting each
station) relating to the Metroplex Business that may be prepared by it during
the period from the date hereof through the Closing Date. Such financial
statements shall fairly present the financial position and results of operations
of the Metroplex Business as at the dates and for the periods indicated, and
shall be prepared on a basis consistent and in accordance with the basis upon
which the Metroplex Financial Statements were prepared, subject to normal year
end adjustments.
5.6 Compliance With Laws. Metroplex shall not take any action in
--------------------
respect of the Metroplex Assets which violates any law, regulation, rule, writ,
injunction, ordinance, franchise, decree or order of any court or of any
foreign, federal, state, municipal or other government, governmental department,
commission, board, bureau, agency or instrumentality applicable in any material
respect to the Metroplex Assets.
5.7 Pre-Closing Obligations. (a) Metroplex shall provide reasonable
-----------------------
cooperation to the Company in obtaining the permits, licenses, authorizations
and approvals required by the Company under applicable state and federal law to
purchase and operate the Metroplex Assets.
(b) Metroplex will maintain the insurance currently carried to
insure the Metroplex Assets against liability, loss or other casualty and will
continue all professional liability insurance coverage currently carried through
the date of Closing. Metroplex will not, without the consent of the Company,
which will not be unreasonably withheld, amend, modify or cancel any policies
currently in effect.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
6.1 Sales, Use and Transfer Taxes. The transfer and conveyance of
-----------------------------
the Metroplex Assets hereunder will qualify for the occasional sale exemption
under the Texas Tax Code (S)151.304(b)(2).
6.2 Discharge of Liabilities of Metroplex Business. Metroplex
----------------------------------------------
covenants and agrees that it will pay and discharge, and hold the Company and
the directors and officers of the Company harmless from, each and every
liability and obligation of Metroplex in respect of the Metroplex Business or
the Metroplex Assets arising from events occurring on or prior to the Closing
Date, excepting only those obligations expressly assumed by the Company and/or
Texas Sub at the Closing pursuant to the Assignment and Assumption Agreement and
any other instruments of assumption delivered to Metroplex at the Closing, it
being understood and agreed that the Company or Texas Sub are assuming no
liabilities or obligations of Metroplex other than obligations so expressly
assumed by the Company or Texas Sub, as the case may be.
21
6.3 Employee Benefit Plans.
----------------------
(a) The Company, Texas Sub and Metroplex agree to cooperate with
respect to employee benefit plans covering employees of Metroplex and the
Company or Texas Sub. The parties shall administer such employee benefit plans
and plan-related issues in a manner specified in the Management Services
Agreement.
(b) Notwithstanding any of the provisions of this Section 6.3 or
-----------
anything else contained in this Agreement, none of the foregoing shall create
any obligation or agreement on behalf of the Company or Texas Sub to employ any
employees of the Metroplex Business after the Closing Date or, except as
provided in the Management Services Agreement, to maintain or provide any
specific benefits or level of benefits to employees of the Company or Texas Sub
from and after the Closing Date. All decisions regarding employment and employee
benefits after the Closing Date shall remain at the sole discretion of the
Company or Texas Sub, as the case may be, except as provided in the Management
Services Agreement.
6.4 Acquisition Proposals. Metroplex and the Physicians agree not
---------------------
to do any of the following or permit the employees, agents or affiliates of
Metroplex or any Physician to do any of the following: (i) solicit or accept any
other offer to acquire the partnership interests of Metroplex or to purchase all
or any part of the assets, business or operations of Metroplex, (ii) furnish any
information regarding Metroplex to any potential buyer of Metroplex other than
the Company or (iii) hold discussions with any party concerning any such
transaction (other than such discussions that are in furtherance of the
consummation of the transactions contemplated by this Agreement).
Notwithstanding the foregoing, Metroplex and the Physicians shall have the right
to conduct negotiations with and to consummate any acquisitions with respect to,
any third parties, provided that Metroplex is the surviving or acquiring entity
in such transaction. The parties agree that discussions, transactions,
negotiations or similar actions involving Texas Association of Oncology
Specialists, P.A. or Oncology Network of America, P.A. shall not constitute a
violation of this Section 6.4, it being understood that such actions are in
-----------
furtherance of the business and/or betterment of Metroplex.
6.5 Right to Remedy Certain Breaches Prior to Closing.
-------------------------------------------------
Notwithstanding anything contained in this Agreement to the contrary, in the
event of a material failure by Metroplex or the Company (the party so failing
being referred to in this Section 6.5 as the "Defaulting Party") to satisfy the
-----------
conditions precedent to the obligations of the other party set forth in Articles
VII or VIII, respectively, by reason of a material breach by the Defaulting
Party of its respective covenants, agreements and obligations herein or by
reason of the material breach by the Defaulting Party of any of its respective
warranties contained herein or the inaccuracy of any of its respective
representations contained herein, the Defaulting Party shall have the right to
undertake to cure or remedy such breach or inaccuracy, and to postpone the
Closing for up to 15 days so to cure or remedy such breach or inaccuracy;
provided, however, that, in any such case, such right to cure, remedy or
-------- -------
postpone shall be subject at all times to the fulfillment and satisfaction in
all respects, on or prior to the then scheduled Closing Date, of each and every
one of the following conditions:
(a) The breach or inaccuracy is of such nature that it is capable of
being cured and remedied by the Defaulting Party in all respects on or prior to
the Closing Date (either as originally scheduled or as so postponed), and that,
upon the taking by the Defaulting Party of the actions specified in the notice
described in paragraph (b) below, such breach or inaccuracy will not impair or
otherwise have any continuing effect on the business or operations of the
Company after the Closing Date;
(b) The Defaulting Party shall have delivered to the other parties
hereto, at least one business day prior to the Closing Date as originally
scheduled, written notice of the existence of such breach and inaccuracy setting
forth (i) the specific nature of such breach and inaccuracy and the
circumstances giving rise thereto, (ii) the Defaulting Party's intention to cure
or remedy such breach or inaccuracy, (iii) if the Closing Date is to be
postponed, the date to which the Closing is to be postponed (which date must be
a date not later than 15 days after the originally scheduled Closing Date) and
(iv) the specific actions the Defaulting Party anticipates taking to cure or
remedy such breach or inaccuracy;
22
(c) The existence of such breach or inaccuracy (even after giving
effect to any such cure or remedy) must not have resulted, or be reasonably
expected to result, in the imposition by the Company's financing sources of any
adverse addition to or modification or other change in the terms and conditions
of the Company's anticipated financing or otherwise have impaired, or be
reasonably expected to impair, the Company's ability to obtain the governmental
and other approvals necessary to enable the parties hereto to consummate the
transactions contemplated by this Agreement;
(d) The Defaulting Party shall have (i) paid (and/or reimbursed the
Company or the other parties hereto prior to the Closing for) any and all costs
and expenses of the Defaulting Party, the Company or the other parties hereto
arising from or related to such attempt to cure or remedy or resulting from any
postponement of the Closing Date and (ii) furnished the Company and such other
parties with a written undertaking of the Defaulting Party to indemnify and hold
harmless the Company and such other parties and their respective Affiliates from
and against any and all costs and expenses associated with any such
postponement, including any and all additional charges, fees or other costs
incurred by the Company and such other parties or their respective Affiliates in
preserving and maintaining the Company's financing sources and commitments
during the period of such postponement; and
(e) The aggregate amount of Loss and Expense which could reasonably
be expected to be incurred at any time by the Company or such other parties as a
result of such breach or inaccuracy (assuming the consummation of the Closing
without any action on behalf of the Defaulting Party, the Company or any other
party prior to the Closing to cure or remedy such breach or inaccuracy) shall
not exceed $100,000.
6.6 Pro-Rations. (a) The following expenses shall be pro-rated as of
-----------
June 1, 1997 in favor of Metroplex, Texas Sub or the Company as the case may be:
all fees and other rentals and charges payable under the Assumed Contracts and
agreements listed on Schedule 3.19; all real and personal property taxes and
-------------
assessments levied and assessed against any of the Assets; and charges for
utilities (including, but not limited to electricity, fuel, water, sanitation
and garbage disposal).
(b) Within 45 days after the Closing Date, the Company shall prepare
and deliver to Metroplex a statement (the "Final Statement"), setting forth the
Company's good faith determination of the foregoing pro-rations (the "Final
Adjustment Amount"). During the 15-day period following delivery of the Final
Statement to Metroplex, the Company shall provide Metroplex with access during
normal business hours to any books, records, working papers or other information
reasonably necessary or useful in the review of the Final Statement and the
calculation of the Final Adjustment Amount to enable Metroplex to verify the
accuracy of the Final Statement. The Final Statement shall become final and
binding upon all parties hereto on the sixteenth day following delivery thereof
(without counting such day of delivery) to Metroplex unless Metroplex gives
written notice of disagreement with the Final Statement (a "Notice of
Disagreement") to the Company prior to such date. Any Notice of Disagreement
shall specify in reasonable detail the nature of any disagreement so asserted
and relate solely to the review of the Final Statement and the calculation of
the Final Adjustment Amount. The matters so specified in the Notice of
Disagreement shall be resolved in accordance with the provisions of Section 9.5
-----------
of this Agreement.
(c) The Final Statement shall become final and binding upon all
parties hereto on the earlier of (i) the date the Company and Metroplex resolve
in writing any differences they may have with respect to all matters specified
in the Notice of Disagreement and (ii) the date all disputed matters are finally
resolved in writing by the arbitrator appointed pursuant to this Agreement.
Within five business days after the Final Statement becomes final and binding
upon the parties, the Company, Texas Sub or Metroplex, as the case may be, shall
pay the difference between the Estimated Adjustment Amount and the Final
Adjustment Amount. All payments pursuant to this Section 6.6 shall be by wire
-----------
transfer of immediately available funds to an account designated by the
recipient at least two business days prior to the date of payment.
6.7 Audited Financial Statements. In the event that the Company or a
----------------------------
successor to the Company proposes to engage in an underwritten initial public
offering and it is legally required that audited financial statements
23
of Metroplex be contained in the registration statement(s) related to such
initial public offering or any subsequent or concurrent public offering
conducted by the Company or its successor, Metroplex and the Physicians will
fully cooperate with the Company and its representatives to provide in the
registration statement(s) such audited financial statements.
6.8 Texas Sub Budget. The parties agree to work together in good
----------------
faith to create a definitive one-year business plan for the conduct of the
operations of Texas Sub within forty-five days after the Closing Date.
6.9 RIT Program. The parties agree to work together in good faith to
-----------
develop within forty-five days after the Closing Date a protocol for the
development of the Radio-Immune Therapy Program (the "RIT Program"). Such
protocol (the "RIT Protocol") shall include a determination of the rights,
titles and interests Metroplex will receive in any inventions or patents
resulting from the RIT Program. Metroplex hereby agrees to immediately assign
all rights, titles or interests it receives in any inventions or patents
resulting from the RIT Program directly to Texas Sub or a designee of Texas Sub.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF METROPLEX
------------------------------------------------
The obligations of Metroplex under this Agreement shall, at the option
of Metroplex be subject to the satisfaction, on or prior to the Closing Date, of
the following conditions:
7.1 No Misrepresentation or Breach of Covenants and Warranties.
----------------------------------------------------------
Without limitation of the Company's rights under Section 6.5, there shall have
-----------
been no material breach by the Company in the performance of any of its
covenants and agreements herein; each of the representations and warranties of
the Company contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date (except
to the extent that they expressly speak as of a specific date or time other than
the Closing Date, in which case they need only have been true and correct in all
material respects as of such specified date or time), except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Metroplex; and there shall have been
delivered to Metroplex a certificate or certificates by the members of the
Company to so elect.
7.2 Opinions of Counsel for the Company. Metroplex shall have
-----------------------------------
received from Xxxxxxx & Xxxxxx, L.L.P., counsel for the Company, an opinion
dated as of the Closing Date, in form and substance reasonably satisfactory to
Metroplex and its counsel.
7.3 Action by the Company. (a) The Company shall have taken all
---------------------
corporate action necessary to approve the transactions contemplated by this
Agreement, and the Company shall have furnished Metroplex with certified copies
of all such action.
(b) The Company shall have caused Texas Sub to take all corporate
action necessary to approve and perform the transactions contemplated by this
Agreement, and the Company shall cause Texas Sub to furnish Metroplex with
appropriate documentation of all such action.
7.4 No Restraint or Litigation. (a) There shall not be in effect or,
--------------------------
to the best knowledge of Metroplex, threatened any preliminary or permanent
injunction or other order, decree or ruling by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or commission, no
statute, rule, regulation or executive order shall have been promulgated or
enacted by a government authority and there shall not be in effect or,
24
to the best knowledge of Metroplex or the Company, threatened any temporary
restraining order of a court of competent jurisdiction, which, in any case,
restrains or prohibits the transactions contemplated hereby.
(b) There shall be no action, suit or proceeding pending or, to the
knowledge of Metroplex, threatened which questions the legality or propriety of
the transactions contemplated hereby.
7.5 No Material Adverse Change. Since the date of this Agreement,
--------------------------
there shall have been no material adverse change in the financial condition of
the Company.
7.6 Financing. The Company shall on or before June 16, 1997, subject
---------
to extension by the mutual agreement of the parties, have received requisite
financing to complete the transactions contemplated herein on terms acceptable
to the Company in its sole discretion.
7.7 Consents. Metroplex shall have obtained the Required Consents.
--------
7.8 Partnership Agreement. Metroplex shall have amended its current
---------------------
Amended and Restated Partnership Agreement (the "Partnership Agreement") to
eliminate any provision which would require the payment of any termination or
severance payment upon the occurrence of the transactions contemplated under
this Agreement.
7.9 Due Diligence. Metroplex shall be satisfied, in its sole
-------------
discretion, with its due diligence review of the operations and financial
condition of the Company, which due diligence review shall have been completed
by June 16, 1997.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
--------------------------------------------------
The obligations of the Company under this Agreement shall, at the
option of the Company, be subject to the satisfaction on or prior to the Closing
Date, of the following conditions:
8.1 No Misrepresentation or Breach of Covenants and Warranties. With
----------------------------------------------------------
out limitation of Metroplex's rights under Section 6.5, there shall have been no
-----------
material breach by Metroplex in the performance of any of its covenants and
agreements herein; each of the representations and warranties of Metroplex
contained or referred to in this Agreement shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date, except
for changes therein specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by the Company or any
transaction contemplated by this Agreement; and there shall have been delivered
to the Company a certificate or certificates to such effect, dated the Closing
Date and signed on behalf of Metroplex by all of its partners.
8.2 Opinions of Counsel for Metroplex. The Company shall have
---------------------------------
received from Xxxxxx & Xxxxxx, L.L.P., counsel for Metroplex, an opinion, dated
as of the Closing Date, in form and substance reasonably satisfactory to the
Company and its counsel.
8.3 Partnership Action. Metroplex shall have taken all partnership
------------------
action necessary to: (i) approve the transactions contemplated by this Agreement
and (ii) amend the Partnership Agreement pursuant to Section 7.8 of this
-----------
Agreement, and Metroplex shall have furnished the Company with certified copies
of such resolutions and the amended Partnership Agreement, as duly adopted by
the partners of Metroplex, in form and substance reasonably satisfactory to
counsel for the Company, in connection with such transactions.
8.4 No Restraint. (a) There shall not be in effect or, to the best
------------
knowledge of the Company, threatened any preliminary or permanent injunction or
other order, decree or ruling by a court of competent jurisdiction or by
25
a governmental, regulatory or administrative agency or commission, no statute,
rule, regulation or executive order shall have been promulgated or enacted by a
government authority and there shall not be in effect any temporary restraining
order of a court of competent jurisdiction, which, in any case, restrains or
prohibits the transactions contemplated hereby.
(b) Except as set forth in or contemplated by Schedule 3.21, there
-------------
shall be no lawsuits, claims, suits, proceedings or investigations pending or,
to the best knowledge of the Company after due inquiry, threatened against
Metroplex in respect of the Metroplex Assets or the Metroplex Business, other
than such lawsuits, claims, suits, proceedings or investigations which are not
Metroplex Assumed Liabilities and which, if determined adversely against
Metroplex, would not materially adversely affect the business or operations of
the Company.
(c) Except as set forth in or contemplated by Schedule 3.21, there
-------------
shall be no action, suit or proceeding pending or, to the knowledge of the
Company, threatened which questions the legality or propriety of the
transactions contemplated hereby.
8.5 Necessary Consents. Metroplex shall have received consents, in
------------------
form and substance reasonably satisfactory to the Company, to the assignment to
the Company of all leases, contracts and other agreements entered into by
Metroplex with respect to the Metroplex Business after the date hereof
consistent with the terms of Section 1.4, or Section 6.5, as the case may be, of
----------- -----------
this Agreement, except for leases, contracts or other agreements which have been
or will be terminated, effective as of the Closing Date, as contemplated by this
Agreement.
8.6 No Material Adverse Change. Except as set forth in Schedule
-------------------------- --------
3.5(a), since the date of this Agreement there shall have been (a) no material
------
adverse change in the financial condition or the results of operations of the
Metroplex Business or (b) no damage, destruction, loss or claim (whether or not
covered by insurance) or condemnation or other taking which materially adversely
affects the Metroplex Assets or the Metroplex Business.
8.7 Financing. The Company shall, on or before June 16, 1997 have
---------
received requisite financing to complete the transactions contemplated herein on
terms acceptable to the Company in its sole discretion.
8.8 Due Diligence. The Company shall be satisfied, in its sole
-------------
discretion, with its due diligence review of the operations and financial
condition of Metroplex, which due diligence review shall have been completed by
June 16, 1997.
8.9 Releases of Liens. The Company shall have received evidence
-----------------
reasonably satisfactory to it and its counsel that all liens on the Metroplex
Assets have been released.
ARTICLE IX
INDEMNIFICATION
---------------
9.1 Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless Metroplex from and against any and all (a) liabilities,
losses, costs or damages ("Loss") and (b) reasonable attorneys' and accountants'
fees and expenses, court costs and all other reasonable out-of-pocket expenses
("Expense") incurred by Metroplex in connection with or arising from:
(a) any breach by the Company or Texas Sub of, or any other failure
of the Company or Texas Sub to perform, any of its covenants, agreements or
obligations in this Agreement or in any agreement or instrument contemplated
hereby;
26
(b) any breach of any warranty or the inaccuracy of any
representation of the Company contained or referred to in this Agreement or any
certificate delivered by or on behalf of the Company pursuant hereto;
(c) the failure of the Company or Texas Sub to perform any
obligation assumed by the Company pursuant to this Agreement;
(d) any liability or claim arising out of the obligations or
liabilities and commitments of the Company or Texas Sub, or its employees or
agents expressly assumed by the Company or Texas Sub pursuant to the terms of
this Agreement;
(e) any liability or claim arising out of actions taken in
connection with the hiring (or failing to hire), firing, disciplining, and
supervising of, and otherwise with respect to, any employees of the Company or
Texas Sub following the Closing Date;
(f) any claim(s) made against Metroplex arising out of Metroplex's
ownership, operation, use or sale of the Metroplex Assets, including, but not
limited to, any suit, claim or proceeding of any nature seeking to recover
damages for personal injury, death or property damage due to occurrences in
connection with the Metroplex Assets arising after the Closing Date and any
suit, claim or proceeding by any person an employee of the Company which arises
as a result of acts or omissions following the Closing Date;
(g) any claim(s) made against the Company for any broker's, finder's
or originator's fees or commissions by reason of services alleged to have been
rendered for or at the instance of the Company, in connection with this
Agreement and the transactions contemplated hereby;
(h) any liability incurred by Metroplex arising out of a violation
by the Company or Texas Sub of applicable laws or regulations relating to
"leased employees"; or
(i) any liability incurred by the Company or Texas Sub
arising out of a violation by Metroplex of applicable laws or regulations
relating to "leased employees".
provided, however, that the Company shall not be required to indemnify and hold
-------- -------
harmless Metroplex in accordance with this Section 9.1 with respect to any Loss
-----------
or Expense incurred by any such person unless, until and then only to the extent
that the aggregate amount of all Loss and Expense incurred by any such person
under this Section 9.1 exceeds $500,000; and provided, further, that,
----------- -----------------
notwithstanding anything contained herein to the contrary, the aggregate
liability and obligation of the Company to indemnify and hold harmless hereunder
shall be limited solely to, and satisfied and discharged solely from, the assets
of the Company and Texas Sub and shall be without recourse to any other assets
or properties of the shareholders of the Company or their respective Affiliates.
9.2 Indemnification by Metroplex. Metroplex agrees to indemnify and
----------------------------
hold the Company and Texas Sub harmless from and against any and all Loss and
Expense incurred by the Company or Texas Sub, in connection with or arising
from:
(a) Any breach by Metroplex of, or other failure of Metroplex to
perform, any of its covenants, agreements or obligations in this Agreement or
any agreement or instrument contemplated hereby;
(b) Any breach of any warranty or the inaccuracy of any
representation of Metroplex contained or referred to in this Agreement or in any
certificate delivered by or on behalf of Metroplex pursuant hereto;
(c) The failure of Metroplex to perform any obligation of Metroplex
or the Metroplex Business not assumed by the Company pursuant to this Agreement;
27
(d) The failure of Metroplex to use reasonable best efforts to
obtain any of the consents or amendments in accordance with the terms hereof;
(e) Any liability or claim arising out of the obligations or
liabilities and commitments of Metroplex, or its employees or agents not
expressly assumed by the Company or Texas Sub pursuant to the terms of this
Agreement, including but not limited to personal injury and professional
liability claims;
(f) Any liability or claim arising out of actions taken in
connection with the hiring (or failing to hire), firing, disciplining, and
supervising of, and otherwise with respect to, any employees of Metroplex prior
to the Closing Date;
(g) Any liability or claim arising out of any audit, recoupment, or
contractual settlement retroactively or otherwise adjusting the amounts payable
for reimbursement purposes, with respect to services rendered by or on behalf of
Metroplex or billed for, by or on behalf of Metroplex prior to the Closing Date;
(h) Any liability, claim, loss or expense of any nature whatsoever
relating to the provision of fringe benefits of any kind to the employees of
Metroplex and their dependents including, without limitation, those arising out
of COBRA continuation coverage, including but not limited to those applicable or
claimed to be applicable to the Company or Texas Sub as the result of being
determined to be a "successor employer" of Metroplex;
(i) Any federal, state or local tax liability, obligation or claim
(including any such liability, obligation or claim arising as a result of or
with respect to the consummation of the transactions contemplated by this
Agreement), for periods on or before the Closing Date which affect in any way
the Metroplex Assets, the Metroplex Business or the Company or Texas Sub as
transferee thereof;
(j) Any claim(s) made against the Company or Texas Sub arising out
of Metroplex's ownership, operation, use or sale of the Metroplex Assets or the
operations of the Metroplex Business, including, but not limited to, any suit,
claim or proceeding of any nature seeking to recover damages for personal
injury, death or property damage due to occurrences in connection with the
Metroplex Business or the Metroplex Assets arising on or before the Closing Date
and any suit, claim or proceeding by any person currently an employee of
Metroplex which arises as a result of acts or omissions prior to the Closing
Date or in connection with any communications between or arrangements with the
employees and Metroplex; or
(k) Any claim(s) made against the Company or Texas Sub for any
broker's, finder's or originator's fees or commissions by reason of services
alleged to have been rendered for or at the instance of Metroplex, in connection
with this Agreement and the transactions contemplated hereby;
provided, however, that Metroplex shall not be required to indemnify and hold
-------- -------
harmless the Company or Texas Sub in accordance with this Section 9.2 with
-----------
respect to any Loss or Expense incurred by any such person unless, until and
then only to the extent that the aggregate amount of all Loss and Expense
incurred by any such person under this Section 9.2 exceeds $500,000; and that
-----------
the liability of Metroplex hereunder shall not exceed $30,600,000. The parties
agree that the Company and Texas Sub shall have the right to set-off any amount
to which it may be entitled under this Section 9.2 against amounts otherwise
-----------
payable under the Promissory Notes. The exercise of such right of set-off by the
Company or Texas Sub in good faith, whether or not ultimately determined to be
justified, will not constitute an event of default under the Promissory Notes or
any instrument securing the Promissory Notes. In the event the parties disagree
with respect to the amount to be set-off, the Company or Texas Sub, as the case
may be, shall, at the time the payment in question under the Promissory Notes is
due, place such funds in escrow with a mutually acceptable escrow agent. The
amount to be set-off shall then be determined in accordance with Section 9.5
-----------
hereof and any party who receives an award of such escrowed funds shall be
entitled to retain any accrued interest thereon. If at any time the unpaid
balance of the Promissory Notes is insufficient to satisfy Metroplex's
obligation to the Company or Texas Sub hereunder, and Metroplex is otherwise
unable to satisfy its obligation to the Company or
28
Texas Sub, each of the Physicians agrees to indemnify the Company and Texas Sub
from all Loss and Expense incurred by the Company or Texas Sub in connection
with or arising from any breach of any warranty or the inaccuracy of any
representation of Metroplex contained in Sections 3.4, 3.6, 3.7, 3.8, 3.15,
------------------------
3.27, 3.28 and 3.36 of this Agreement; provided, however, that the aggregate of
-------------------
the amounts paid by individual Physicians (and their respective professional
associations) to the Company and Texas Sub pursuant to this Section 9.2 shall
-----------
not exceed the amounts of any such unsatisfied Loss or Expense incurred by the
Company or Texas Sub, and no individual Physician (or his professional
association) shall be liable for an amount in excess of an aggregate of (i) the
individual liability limitations ascribed to him in Exhibit G attached hereto,
---------
and (ii) an amount equal to 30% of the compensation payable under the Physician
Owner's Employment Agreement of such individual Physician for one year. Any
amount due under subsection (ii) hereof shall be paid in equal installments as
the salary obligation is accrued and shall not be paid in a lump sum. The
Company or Texas Sub shall have the right to withhold the amounts to be paid to
the Company or Texas Sub pursuant to this subsection from amounts due to
Metroplex under Section 5.3 of the Management Services Agreement. To the extent
that the amount to be withheld is in dispute, such amounts shall be paid into an
escrow account as they are accrued and be distributed as provided above upon
settlement of the dispute. As more particularly provided in Section 11.1 hereof,
------------
the representations contained in Sections 3.4, 3.6, 3.8, 3.15, 3.27, 3.28 and
--------------------------------------------
3.36 referred to above shall be terminated as of the second anniversary of the
----
Closing Date, and the representations contained in Section 3.7 shall survive for
-----------
a period of five years from the Closing Date.
9.3 Notice of Claims. (a) If any party entitled to seek
----------------
indemnification hereunder (an "Indemnified Person") believes that it has
suffered or incurred any Loss or incurred any Expense, such Indemnified Person
shall so notify the party from whom indemnification is to be sought (the
"Indemnifying Party") promptly in writing describing such Loss or Expense, the
amount thereof if known, and the method of computation of such Loss or Expense,
all with reasonable particularity and containing a reference to the provisions
of this Agreement or other agreement, instrument or certificate delivered
pursuant hereto in respect of which such Loss or Expense shall have occurred.
If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Person intends to claim any
liability or expense as Loss or Expense under this Article IX, such Indemnified
Person shall promptly notify the Indemnifying Party of such action or suit. The
failure of any party to give any notice required by this Section 9.3 shall not
-----------
affect any of such party's rights under this Article IX except to the extent
such failure is actually prejudicial to the rights or obligations of the other
party.
(b) The amount to which an Indemnified Person shall be entitled
under this Article IX shall be determined: (i) by written agreement between the
Indemnified Person and Indemnifying Party, or (ii) pursuant to Section 9.5
-----------
hereof.
9.4 Third Party Claims. (a) Subject to paragraph (b) of this Section
------------------ -------
9.4, the Indemnified Person under this Article IX shall have the right to
---
conduct and control, through counsel of its choosing, any third party claim,
action or suit, and the Indemnified Person may compromise or settle the same,
provided that the Indemnified Person shall give the Indemnifying Party advance
notice of any proposed compromise or settlement. The Indemnified Person shall
permit the Indemnifying Party to participate in the defense of any such action
or suit through counsel chosen by it, provided that the fees and expenses of
such counsel shall be borne by the Indemnifying Party. Subject to paragraph (b)
of this Section 9.4, any compromise or settlement with respect to a claim for
-----------
money damages effected after the Indemnifying Party by notice to the Indemnified
Person shall have disapproved such compromise or settlement shall discharge the
Indemnifying Party from liability with respect to the subject matter thereof,
and no amount in respect thereof shall be claimed as Loss or Expense under this
Article IX.
(b) If the remedy sought in any action or suit referred to in
paragraph (a) of this Section 9.4 is solely money damages and will have no
-----------
continuingeffect on the business of the Indemnified Person, the Indemnifying
Party shall have 15 business days after receipt of the notice referred to in
Section 9.4(a) to notify the Indemnified Person that it elects to conduct and
--------------
control such action or suit. If the Indemnifying Party does not give the
foregoing notice,
29
the Indemnified Person shall have the right to defend, contest settle or
compromise such action or suit in the exercise of its exclusive discretion, and
the Indemnifying Party shall, upon request from the Indemnified Person, promptly
pay to the Indemnified Person in accordance with the other terms of this Article
IX the amount of any Loss resulting from its liability to the third party
claimant and all related Expense. If the Indemnifying Party gives the foregoing
notice, the Indemnifying Party shall have the right to undertake, conduct and
control, through counsel of its own choosing and at the sole expense of the
Indemnifying Party, the conduct and settlement of such action or suit and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided that (x) the Indemnifying Party shall not thereby permit to
--------
exist any lien, encumbrance or other adverse change upon any asset of the
Indemnified Person; (y) the Indemnifying Party shall permit the Indemnified
Person to participate in such conduct or settlement through counsel chosen by
the Indemnified Person, but the fees and expenses of such counsel shall be borne
by the Indemnified Person except as provided in clause (z) below; and (z) the
Indemnifying Party shall agree promptly to reimburse to the extent required
under this Article IX the Indemnified Person for the full amount of any Loss
resulting from such action or suit and all related Expense incurred by the
Indemnified Person, except fees and expenses of counsel for the Indemnified
Person incurred after the assumption of the conduct and control of such action
or suit by the Indemnifying Party. So long as the Indemnifying Party is
contesting any such action or suit in good faith, the Indemnified Person shall
not pay or settle any such action or suit. Notwithstanding the foregoing, the
Indemnified Person shall have the right to pay or settle any such action or
suit, provided that in such event the Indemnified Person shall waive any right
to indemnity therefor by the Indemnifying Party, and no amount in respect
thereof shall be claimed as Loss or Expense under this Article IX.
9.5 Arbitration and Mediation.
-------------------------
(a) Mediation:
(i) Agreement to Use Procedure: The parties agree to utilize
the following procedure with regard to any contention or claim arising
out of or relating to a claim for indemnification pursuant to this
Agreement, (a "Dispute").
(ii) Initiation of Procedure: The initiating party shall give
written notice to the other party, describing the nature of the
Dispute, its claim for relief and identifying one or more individuals
with authority to resolve the Dispute on such party's behalf. The other
party shall have five (5) business days from receipt of such notice
within which to designate in writing one or more individuals with
authority to resolve the Dispute on such party's behalf.
(iii) Selection of Mediator: Within ten (10) business days
from the date of designation by the noninitiating party, the parties
shall make a good faith effort to select a person to mediate the
Dispute. If no mediator has been selected under this procedure, the
parties shall jointly request a State or Federal District Judge of
their choosing (or if they cannot agree, the President of the Dallas
Bar Association) to supply within ten (10) business days a list of
potential qualified attorney-mediators in Dallas, Texas. Within five
(5) business days of receipt of the list, the parties shall rank the
proposed mediators in numerical order of preference, simultaneously
exchange such list, and select as the mediator the individual receiving
the highest combined ranking. If such mediator is not available to
serve, they shall proceed to contact the mediator who was next highest
in ranking until they select a mediator.
(iv) Time and Place for Mediation; Parties Represented: In
consultation with the mediator selected, the parties shall promptly
designate a mutually convenient time in Dallas, Texas for the
mediation, such time to be no later than sixty (60) days after
selection of the mediator. In the mediation, each party shall be
represented by persons with authority and discretion to negotiate a
resolution of the Dispute, and may be represented by counsel.
30
(v) Conduct of Mediation: The mediator shall determine the
format for the meetings and the mediation sessions shall be private.
The mediator will keep confidential all information learned in private
caucus with any party unless specifically authorized by such party to
make disclosure of the information to the other party. The parties
agree that the mediation shall be governed by the provisions of Chapter
154 of the Tex. Civ. Prac. & Rem. Code and such other rules as the
mediator shall reasonably prescribe.
(vi) Fees of Mediator; Disqualification: The reasonable fees
and expenses of the mediator shall be shared equally by the parties.
The mediator shall be disqualified as a witness, consultant, expert or
counsel for any party with respect to the dispute and any related
matters.
(vii) Confidentiality: Mediation is a compromise negotiation
for purposes of Federal and State Rules of Evidence and constitutes
privileged communication under Texas law. The entire mediation process
is confidential, and such conduct, statements, promises, offers, views
and opinions shall not be discoverable or admissible in any level
proceeding for any purpose.
(b) Binding Arbitration: If any Dispute cannot be settled through
direct discussions, the parties agree to first endeavor to settle the Dispute by
mediation as set forth in Section 9.5(a) above, before resorting to arbitration.
--------------
Thereafter, any Dispute shall be settled solely by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitrator(s) may be entered and
enforced in any court having jurisdiction thereof. The parties agree to execute
a complete written Arbitration Agreement (requiring binding arbitration and
setting forth in detail procedures for arbitration) within ten (10) days of the
close of any unsuccessful mediation proceeding. If the parties cannot agree on a
binding Arbitration Agreement, such agreement shall, within twenty (20) days of
the close of unsuccessful mediation proceedings, be prepared and submitted to
each party by the mediator and such agreement in the form submitted by the
mediator shall be binding on both parties as to all arbitration procedures.
(c) Breach of Mediation and/or Arbitration Provisions.
(i) Enforcement: In the event any party shall breach the
terms of Section 9.5(a) or (b) above regarding mediation and
------------- ---
arbitration, the parties agree the following shall occur:
(A) The non-breaching party may, no earlier than five
(5) days after written notice to the breaching party, apply to a
court of competent jurisdiction for specific enforcement of the
mediation and arbitration procedures set forth herein;
(B) The breaching party shall pay all costs and
expenses of such breach to the non-breaching party, including
attorney's fees, travel expenses and mediator fees;
(C) Upon a judicial determination of a material breach,
the breaching party hereby waives and relinquishes all claims of
treble, punitive or similar damages or claims of irreparable
harm concerning the Dispute in question, and further waives all
objections to the non-breaching party's claim of treble,
punitive or similar damages or claims of irreparable harm
concerning said Dispute; and
(D) The breaching party shall pay all other actual and
special damages to the non-breaching parties that result from
such breach.
(ii) Other Damages: In addition to the agreed consequences
of breach set out above, the parties hereby agree any court obtaining
jurisdiction over the involved Dispute shall, upon the court's
discretion, have the authority to impose the consequences set out in
the Rules of Civil Procedure of that court, for the failure of a party
to cooperate in discovery and pretrial matters, including, but not
limited to, the striking of
31
a party's pleading, award of attorney's fees and costs, and such other
remedies as the court may deem appropriate. The remedies set forth in
this subparagraph are in addition to the court's contempt and other
judicial powers.
ARTICLE X
TERMINATION
-----------
10.1 Termination. (a) Notwithstanding anything contained in this
-----------
Agreement to the contrary, this Agreement may be terminated at any time prior to
the Closing: (i) by the mutual consent of Metroplex, the Physicians and the
Company; (ii) subject to the rights of the Company under Section 6.5, by
-----------
Metroplex in the event of a material breach by the Company of any of its
agreements, representations or warranties contained in this Agreement which are
not qualified by materiality or do not contain a materiality exception (it being
understood that if any of the Company's representations or warranties contained
in this Agreement are not qualified by materiality or do not contain a
materiality exception, then a breach thereof for purposes of this Section 10.1
------------
must have been inaccurate in any material respect when made); (iii) subject to
the rights of Metroplex under Section 6.5, by the Company in the event of a
-----------
material breach by the Company of any of their agreements, representations or
warranties contained in this Agreement which are qualified by materiality or
contain a materiality exception (it being understood that if any of the
Company's representations or warranties contained in this Agreement are not
qualified by materiality or do not contain a materiality exception, then a
breach thereof for purposes of this Section 10.1 must have been inaccurate in
------------
any respect when made); or (iv) by Metroplex and or the Company if the Closing
shall not have occurred on or before June 30, 1997 (or such later date as may be
mutually agreed to by Metroplex and the Company) provided that no party shall
--------
terminate pursuant to this clause (iv) if the reason the Closing has not
occurred by such date relates to a breach by such party of any of its
obligations and agreements hereunder.
(b) This Agreement may be terminated at any time on or prior to June
16, 1997 by the Company if the Company is not satisfied with its due diligence
review.
(c) This Agreement may be terminated at any time on or prior to June
16, 1997 by Metroplex if Metroplex is not satisfied with its due diligence
review of the Company.
(d) In the event that this Agreement shall be terminated pursuant to
this Article X, all further obligations of the parties under this Agreement
(other than Sections 11.2 and 11.9) shall be terminated without further
------------- ----
liability of any party to the others, provided that nothing herein shall relieve
any party from liability for its willful breach of this Agreement.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.1 Survival of Representations, Warranties and Obligations. All
-------------------------------------------------------
representations, warranties, covenants and obligations contained in this
Agreement shall survive the consummation of the transactions contemplated by
this Agreement; provided, however, that, except as otherwise provided in Article
-------- -------
IX, the representations and warranties contained in Articles III and IV of this
Agreement (other than the representations and warranties contained in Sections
--------
3.16, 3.21 or 4.1, which shall survive indefinitely and those contained in
---------- ---
Sections 3.1, 3.3, 3.7, 3.15, 3.23, 3.30, 3.40, 4.2 and 4.4, which shall survive
--------------------------------------------------- ---
for a period of five years) shall terminate as of the second anniversary of the
Closing Date. Except as otherwise provided herein, no claim shall be made for
the breach of any representation or warranty contained in Article III or IV
after the date on which such representations and warranties terminate as set
forth in this Section.
32
11.2 Confidential Nature of Information. (a) Each party agrees that
----------------------------------
it will treat in confidence all documents, materials and other information which
it shall have obtained regarding any other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of this Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions (contemplated hereby shall not be
consummated, each party will return to the appropriate party all copies of
nonpublic documents and materials which have been furnished in connection
therewith. The obligation of each party to treat such documents, materials and
other information in confidence shall not apply to any information which (a)
such party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by any other party, (b) is known to the public and did not
become so known through any violation of a legal obligation, (c) became known to
the public through no fault of such party, (d) is later lawfully acquired by
such party from other sources or (e) such party is required to disclose any such
information pursuant to judicial order or, in the opinion of counsel, pursuant
to applicable law. Without limiting the right of any party to pursue all other
legal and equitable rights available to it for violation of this Section 11.2 by
------------
any other party, it is agreed that other remedies cannot fully compensate the
aggrieved party for such a violation of this Section 11.2 and that the aggrieved
------------
party shall be entitled to injunctive relief to prevent a violation or
continuing violation hereof.
(b) Notwithstanding anything to the contrary contained in Section
-------
11.2(a) the Company shall be entitled to share nonpublic information regarding
-------
Metroplex with potential sources of financing provided that the recipients of
such nonpublic information agree to maintain the confidentiality of the
nonpublic information.
11.3 Governing Law. THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
-------------
HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS WITHOUT REFERENCE TO ITS CHOICE OF LAW RULES.
11.4 Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or by messenger or 72 hours after having been sent by
registered or certified mail or by private courier addressed as follows:
If to Metroplex, to:
Metroplex Hematology/Oncology Associates, L.L.P.
Arlington Cancer Center
000 Xxxx Xxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxxx XxXxxxxxx, M.D.
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxx Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Company or to Texas Sub, to:
Physician Health Corporation
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
33
with a copy to:
Xxxxxxx & Xxxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, III, Esq.
or, in the case of any notice described above, to such other address as such
party may indicate by a notice delivered to the other parties hereto.
11.5 Successors and Assigns. (a) Except as specifically
----------------------
contemplated herein, the rights of parties hereto shall not be assignable by any
party hereto prior to the Closing without the written consent of the other
parties hereto. Following the Closing, the parties hereto may assign any of
their respective rights hereunder, but no such assignment shall relieve any
party of its obligations hereunder.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended or shall be construed to
confer upon any person other than the parties and successors and assigns
permitted by this Section 11.5 any right, remedy or claim under or by reason of
------------
this Agreement.
11.6 Entire Agreement; Amendments. This Agreement and the Exhibits
----------------------------
and Schedules referred to herein and the documents delivered pursuant hereto
contain the entire understanding of the parties hereto with regard to the
subject matter contained herein or therein, and supersede all prior agreements,
understandings or intents between or among any of the partes hereto. The parties
hereto, by mutual agreement in writing, may amend, modify and supplement this
Agreement.
11.7 Interpretation. Article titles and headings to sections herein
--------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement. The Schedules and
Exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein.
Whenever the context may require, any pronoun used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns, pronouns and verbs shall include the plural and vice versa.
11.8 Waivers. Any term or provision of this Agreement may be
-------
waived, or the time for its performance may be extended, by the party or parties
entitled to the benefit thereof. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
11.9 Expenses. Each party hereto will pay all of its own costs and
--------
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel and accountants.
11.10 Partial Invalidity. Wherever possible, each provision hereof
------------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect such invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of
34
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
11.11 Execution in Counterparts. This Agreement may be executed in one
-------------------------
or more counterparts, each of which shall be considered an original instrument,
but all of which shall be considered one and the same agreement and shall become
binding when one or more counterparts have been signed by each of the parties
and delivered to each of the other parties hereto.
11.12 Notice of Sale. The parties agree that Metroplex will not be
--------------
obligated to notify any state and local taxing or other persons, entities or
authorities of the intended sale of the Metroplex Assets to the Company in order
to relieve the Company of any liability as a successor to the Metroplex in the
conduct of its business or for any other reason, and that Metroplex will
indemnify the Company, in the manner set forth in Article X hereof, for any
Damages that the Company as a result of may incur from Metroplex's failure to
make such notification.
11.13 Definitions. As used in this Agreement, the following terms have
-----------
the meanings specified or referred to in this Section 11.13:
-------------
"Accounts Receivable" has the meaning specified in Section 2.11.
------------------- ------------
"Actual knowledge" has the meaning specified in Section 3.41.
---------------- ------------
"Affiliate" means, with respect to any person, any other person which
---------
directly or indirectly controls, is controlled by or is under common control
with such person.
"Agreement" has the meaning specified in the introductory paragraph
---------
hereof.
"Assumed Contract" has the meaning specified in Section 3.20.
---------------- ------------
"Cash Payment" has the meaning specified in Section 2.1(a).
------------ --------------
"Closing" has the meaning specified in Section 1.3.
------- -----------
"Closing Date" has the meaning specified in Section 1.3.
------------- -----------
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
-----
1985, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company" has the meaning specified in the introductory paragraph to
-------
this Agreement.
"Company Ancillary Agreements" has the meaning specified in
----------------------------
Section 4.2.
-----------
"Contaminant" means any waste, pollutant, hazardous substance, toxic
-----------
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, or any constituent of any such substance or waste.
"Contract Not Assumed" has the meaning specified in Section 1.2(h).
-------------------- --------------
"Contribution Assets" means the undivided 20% interest in the Metroplex
-------------------
Assets that will be contributed to Texas Sub in exchange for the Class B
Interests.
"Controlled Group" has the meaning specified in Section 3.30(a).
---------------- ---------------
35
"Defaulting Party" has the meaning specified in Section 6.5.
---------------- -----------
"Designee" has the meaning specified in Section 2.8.
-------- -----------
"Dispute" has the meaning specified in Section 9.5.
------- -----------
"Employee Benefit Plans" has the meaning specified in Section 3.30(a).
---------------------- ---------------
"Encumbrance" means any lien, claim, charge, security interest,
-----------
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"ERISA" has the meaning specified in Section 3.30(a) hereof.
----- ---------------
"Event of Loss" has the meaning specified in Section 11.14, 11.15.
------------- --------------------
"Exchange Agreement" has the meaning specified in Section 2.2.
------------------ -----------
"Excluded Metroplex Assets" has the meaning specified in Section 1.2.
------------------------- -----------
"Expense" has the meaning specified in Section 9.1.
------- -----------
"Final Adjustment Amount" has the meaning specified in Section 6.6(b).
----------------------- -------------
"Final Statement" has the meaning specified in Section 6.6(b).
--------------- --------------
"First Payment" has the meaning specified in Section 2.1(b).
------------- --------------
"Indemnified Person" has the meaning specified in Section 9.3(a).
------------------ --------------
"Indemnifying Party" has the meaning specified in Section 9.3(a).
------------------ --------------
"Licenses and Permits" has the meaning specified in Section 3.27
-------------------- ------------
hereof.
"Loss" has the meaning specified in Section 9.1.
---- -----------
"Management Services Agreement" has the meaning specified in
-----------------------------
Section 2.6.
-----------
"Metroplex" has the meaning specified in the introductory paragraph to
---------
this Agreement.
"Metroplex Ancillary Agreements" has the meaning specified in Section
------------------------------ -------
3.3.
---
"Metroplex Assets" has the meaning specified in Section 1.1.
---------------- -----------
"Metroplex Assumed Liabilities" has the meaning specified in Section
----------------------------
1.4(a).
------
"Metroplex Balance Sheet Date" means December 31, 1995.
----------------------------
"Metroplex Business" has the meaning specified in the introductory
-----------------
paragraph.
"Metroplex Financial Statements" has the meaning specified in Section
------------------------------ -------
3.4.
---
36
"Metroplex Loans" has the meaning specified in Section 1.4(c).
--------------- --------------
"New hires" has the meaning specified in Section 1.8.
--------- -----------
"Notice of Disagreement" has the meaning specified in Section 6.6(b).
---------------------- --------------
"ODSM Board" has the meaning specified in Section 2.9.
---------- -----------
"Permitted Encumbrance" means the liens described in Schedule 3.16 and
--------------------- -------------
liens for taxes, assessments or other governmental charges which are not yet due
and payable and any other Encumbrance which, either individually or in the
aggregate when considered with all other Encumbrances on the affected property,
does not have a material adverse effect on the value of such property or its
usefulness for the purposes it has been used for prior to Closing.
"Person" means any person, employee, individual, corporation, partnership,
------
trust, or any other non-governmental entity or any governmental or regulatory
authority or body.
"Physician Ancillary Agreements" has the meaning specified in Section 3.3.
------------------------------ -----------
"Physician Owner Employment Agreement" has the meaning specified in
------------------------------------
Section 2.7.
-----------
"Physicians" has the meaning specified in the introductory paragraph to this
----------
Agreement.
"Program Agreements" has the meaning specified in Section 3.34 hereof.
------------------ ------------
"Promissory Notes" has the meaning specified in Section 2.1(b).
---------------- --------------
"Purchase Price" has the meaning specified in Section 2.1.
-------------- -----------
"Purchased Assets" means the undivided interest in the Metroplex Assets
----------------
that will be sold to the Company in exchange for cash and the Promissory Notes
pursuant to the terms hereof.
"Release" means any release, spill, emission, leaking, pumping, injection,
-------
deposit, disposal discharge, dispersal, leaching or migration into the indoor or
outdoor environment or into or out of any property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
property.
"Remedial Action" means actions required to (a) clean up, remove, treat
---------------
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment: or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Required Consents" has the meaning specified in Section 1.4(a).
----------------- --------------
"Requirements of Law" means any federal, state or local law, rule or
-------------------
regulation, governmental permit license, or other binding determination of any
governmental or regulatory authority or body.
"Shareholders' Agreement" has the meaning specified in Section 2.2.
-----------------------
"Successor employer" has the meaning specified in Section 9.2(h).
------------------ --------------
"Texas Sub" has the meaning specified in Section 2.5.
--------- -----------
37
"Texas Sub Class B Interests" has the meaning specified in Section 2.2.
--------------------------- -----------
"The Arlington Cancer Center" has the meaning specified in Section 1.1(d).
--------------------------- --------------
11.14 Risk of Loss; Damage to Facilities. The risk of loss or damage to
----------------------------------
any of the Metroplex Assets shall be on Metroplex prior to the Closing Date and
thereafter shall be on Texas Sub. If any of the Metroplex Assets is damaged or
destroyed prior to the Closing Date (any such event being referred to as an
"Event of Loss"), Metroplex, as the case may be, at its expense, shall use
reasonable efforts to replace or repair the item with comparable property of
like value and quality as soon as practicable before the Closing Date. If any
Event of Loss shall materially affect the operations of the Metroplex Business
or the repair or replacement cannot be accomplished by the scheduled Closing
Date but can be accomplished within 60 days after that date, the Closing Date
shall be postponed for that 60-day period; if, however, the repair or
replacement cannot be accomplished within that 60-day period, the unaffected
party may elect by written notice to the affected party within 20 days after the
unaffected party has received notice that any Event of Loss has occurred:
(a) To postpone the Closing for a period not more than 120 days beyond
the date specified in Section 10.1, until such time as the Metroplex Assets
which are the subject of the Event of Loss have been substantially restored to
their condition immediately prior to the Event of Loss;
(b) To consummate the Closing on the scheduled Closing Date and accept
all of the Metroplex Assets as is, in which event the affected party shall
assign to the Company at the Closing all of its rights under any insurance
policies and to all insurance proceeds covering that Event of Loss, including
property damage, loss of income and continuing expenses (less amounts due to the
affected party for repairs or replacements of the property prior to the
Closing); or
(c) To terminate this Agreement without liability on the part of
Metroplex or the Company.
11.15 Federal Income Tax Treatment. Notwithstanding any implications to
----------------------------
the contrary which may be contained in this Agreement, the parties hereto intend
and expressly agree that the transactions described herein shall be reported by
the parties for income purposes as (i) a transfer by Metroplex of the Metroplex
Assets, subject to the Metroplex Liabilities, to Texas Sub, in exchange for a
membership interest in Texas Sub, the Nonrecourse Note and the PHC Note,
followed by (ii) the distribution by Texas Sub of cash derived by Texas Sub from
loan proceeds supplied by DBIF and DVIBCC (the "DVI Loan"). Accordingly, the
transaction shall be treated by the parties as a part-sale, part-contribution
transaction and, pursuant to Treas. Reg. (S) 1.707-5(b), the transfer of the
Nonrecourse Note, the PHC Note and cash to Metroplex shall be taken into account
as part of a sale transaction only to the extent that the fair market value of
such notes and the amount of such cash exceed Metroplex's allocable share (as
determined pursuant to Treas. Reg. (S) 1.707-5(b)(2) and 1.707-5(a)(2)) of the
DVI Loan. The parties agree to cooperate reasonably with one another in the
interpretation and implementation of the foregoing.
[intentionally left blank]
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
METROPLEX
HEMATOLOGY/ONCOLOGY
ASSOCIATES, L.L.P., a Texas limited
liability partnership
By: /s/ Xxxxxx XxXxxxxxx, M.D., P.A.
----------------------------------
Title: President and Managing Partner
------------------------------
PHYSICIANS:
/s/ Xxxxxx XxXxxxxxx, M.D.
-------------------------------------
Xxxxxx XxXxxxxxx, M.D.
/s/ Xxxxxx Xxxxxxxxxxxx, M.D.
-------------------------------------
Xxxxxx Xxxxxxxxxxxx, M.D.
/s/ Xxxxx Xxxxxxxxxxx, D.O.
-------------------------------------
Xxxxx Xxxxxxxxxxx, D.O.
/s/ Xxxx X. Xxxxx, D.O.
-------------------------------------
Xxxx X. Xxxxx, D.O.
/s/ Xxxxxx Xxxxxx, M.D.
-------------------------------------
Xxxxxx Xxxxxx, M.D.
/s/ Xxxxx Xxxxx, M.D.
-------------------------------------
Xxxxx Xxxxx, M.D.
/s/ Xxxx X. Xxxxxxx, M.D.
-------------------------------------
Xxxx X. Xxxxxxx, M.D.
39
PHYSICIANS PROFESSIONAL
ASSOCIATIONS:
Xxxxxx XxXxxxxxx, M.D., P.A.
By: /s/ Xxxxxx XxXxxxxxx, M.D., P.A.
-------------------------------------
Its:
---------------------------------
Xxxxxx Xxxxxxxxxxxx, M.D., P.A.
By: /s/ Xxxxxx Xxxxxxxxxxx, M.D. ,P.A.
-------------------------------------
Its:
---------------------------------
Xxxxx Xxxxxxxxxxx, D.O., P.A.
By: /s/ Xxxxx Xxxxxxxxxxx, D.O., P.A.
-------------------------------------
Its:
---------------------------------
Xxxx X. Xxxxx, D.O., P.A.
By: /s/ Xxxx X. Xxxxx, D.O., P.A.
-------------------------------------
Its:
---------------------------------
Xxxxxx Xxxxxx, M.D., P.A.
By: /s/ Xxxxxx Xxxxxx, M.D., P.A.
-------------------------------------
Its:
---------------------------------
Xxxxx Xxxxx, M.D., P.A.
By: /s/ Xxxxx Xxxxx, M.D., P.A.
-------------------------------------
Its:
---------------------------------
Caderao Radiation Oncology, P.A.
By: /s/ Xxxxx X. Xxxxxxx M.D., P.A.
-------------------------------------
Its:
---------------------------------
40
PHYSICIAN HEALTH CORPORATION
By:/s/ Xxxxx X. Xxxxxx
-------------------------------------
Its:
---------------------------------
MHOA TEXAS I, L.L.C.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Its:
---------------------------------
41
