STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
December 31, 2004, is made between LONG ISLAND PHYSICIAN HOLDINGS CORPORATION, a
New York corporation (the "LIPH" or "Buyer"), MDNY HEALTHCARE, INC., a New York
corporation ("MDNY" and together with LIPH, the "Buyer Parties"), and CATHOLIC
HEALTHCARE NETWORK OF LONG ISLAND, INC., a New York not-for-profit corporation
("CHNLI" or "Seller").
RECITALS
A. LIPH owns 907 shares of MDNY's Class A Common Stock, par value
$.001, constituting all of MDNY's Class A Common Stock, and CHNLI owns 451
shares of MDNY's Class B Common Stock, par value $.001, constituting all of
MDNY's Class B Common Stock.
B. LIPH desires to purchase from CHNLI, and CHNLI desires to sell to
LIPH, all of the Class B Shares. In connection therewith, LIPH, MDNY and CHNLI
desire to cause the resignation of the three Class B Directors elected by CHNLI
and the termination of the MDNY Stock Subscription Agreement and the MDNY
Shareholders Agreement, and to waive any and all rights any of them has or may
have in connection with such purchase and sale pursuant to the MDNY Shareholders
Agreement.
TERMS OF AGREEMENT
In consideration of the premises, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follow:
ARTICLE I.
DEFINITIONS
Definitions. As used in this Agreement, the following terms have the
meanings set forth below:
"Acquiror" means any third party with whom or which LIPH or MDNY, as
the case may be, consummates a Sale.
"Amendment to CHSLI Subscriber Agreements" means an amendment to the
CHSLI Subscriber Agreements, in form and substance reasonably satisfactory to
MDNY and CHSLI, whereby the CHSLI Subscriber Agreements shall be amended,
effective as of the Closing Date, to provide for the same penalties and interest
on past due premiums and other amounts payable to MDNY by the CHSLI Subscribers
as those applicable under current regulations to late payments due from MDNY to
the Hospitals under the Hospital Provider Agreements, or, at MDNY's option, an
agreement, in form and substance reasonably satisfactory to MDNY and CHSLI,
whereby the CHSLI Subscribers shall agree to be subject to and pay the same
penalties and interest on past due premiums and other amounts payable by the
CHSLI Subscribers to MDNY under the CHSLI Subscriber Agreements as the those
applicable under current regulations to late payments due from MDNY to the
Hospitals under the Hospital Provider Agreements.
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"Attorney General" means the Attorney General of the State of New York.
"Buyer Party Release" means a release made by MDNY and LIPH,
individually and in its capacity as a shareholder of MDNY, in favor of CHNLI and
CHSLI, individually and in its capacity as agent for the Hospitals, in form and
substance reasonably satisfactory to CHNLI and the Buyer Parties, whereby, among
other things, the Buyer Parties shall release CHNLI and CHSLI, and their
respective members, directors, officers, shareholders and advisors, and the
Diocese and the Hospitals, from any and all claims arising through and including
the Closing Date, except for claims arising under this Agreement, the CHSLI
Subscriber Agreements (as amended by the Amendment to CHSLI Subscriber
Agreements), the Recovery and Subordination Agreement, the Diocese Subscriber
Agreement and the Hospital Provider Agreements.
"CHNLI's Equity Investment in MDNY" means $4,500,000, which equals the
aggregate amount of all payments or contributions to the capital of MDNY made by
CHNLI in payment or consideration for the issuance of the Class B Shares to
CHNLI.
"CHSLI" means Catholic Health System of Long Island, Inc. (d/b/a
Catholic Health Services of Long Island), a New York not-for-profit corporation.
"CHSLI Providers" means each of the Hospitals.
"CHLSI Subscribers" means each of the Hospitals; Maryhaven Center of
Hope; Our Lady of Consolation Geriatric Care Center; Nursing Sisters Homecare;
CHSLI Home Support Services; Good Shepherd Hospice; St. Xxxxxxxxx of Siena
Nursing Home; and CHSLI Service Center.
"CHSLI Subscriber Agreements" means the MDNY Group Applications
effective as of December 31, 2002 between MDNY and CHSLI, as agent for each of
the CHSLI Subscribers.
"Class B Shares" means 451 shares of MDNY's Class B Common Stock to be
purchased and sold pursuant to this Agreement;
"Class B Directors" means the three directors elected to the Board of
Directors of MDNY by CHNLI, as holder of the Class B Shares.
"Diocese" means the Diocese of Rockville Centre.
"Diocese Subscriber Agreement" means the MDNY Group Application
effective as of December 31, 2002 between MDNY and the Diocese.
"ERD" means the Ethical and Religious Directives for Catholic Health
Care Services of the United States Conference of Catholic Bishops (as
interpreted by the Xxxxxx of Rockville Centre).
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"Hospital Provider Agreements" means the contracts between MDNY and
each of the Hospitals whereby the Hospitals provide inpatient and outpatient
services to MDNY enrollees.
"Hospitals" means Mercy Medical Center, St. Xxxxxxxxx of Siena Medical
Center, St. Xxxxxxx Hospital and Rehabilitation Center, St. Xxxxxxx Hospital and
Good Samaritan Hospital Medical Center, each a New York corporation.
"Island IPA" means Island Professional Association, I.P.A., Inc., a New
York corporation (a/k/a Island Practice Association I.P.A., Inc.).
"MDNY By-laws" means the By-laws of MDNY, as amended and in effect.
"MDNY Board" means the Board of Directors of MDNY.
"MDNY Charter" means the Certificate of Incorporation of MDNY, as
amended and in effect.
"MDNY Shareholders Agreement" means the Shareholders Agreement dated as
of October 11, 1995 among MDNY, CHNLI and LIPH, as amended.
"MDNY Stock Subscription Agreement" means the Stock Subscription and
Purchase Agreement dated as of October 11, 1995 between LIPH, MDNY and CHNLI, as
amended.
"NYDOH" means the New York State Department of Health.
"NYSID" means the New York State Insurance Department.
"Recovery and Subordination Agreement" means the Recovery and
Subordination Agreement dated as of January 1, 2002, among MDNY, Island IPA and
CHSLI, as agent for the Hospitals, and approved by NYSID.
"Subscriber Agreements" means the Diocese Subscriber Agreement and the
CHSLI Subscriber Agreements.
"Sale" means the disposition by LIPH of its stock in MDNY or of all or
substantially all of MDNY's business to one or more third parties, in one
transaction or a series or combination of related transactions, through a sale
of capital stock or assets, or a merger, consolidation or similar transaction.
For the avoidance of doubt, the term "Sale" shall not include (i) any
transaction involving an investment in or capital contribution to MDNY unless
LIPH actually receives Sale Proceeds in connection therewith, or (ii) any
transaction not consummated on or before December 31, 2008; provided, that if
the definitive agreement(s) governing such transaction are executed prior to
December 31, 2008 and provide for the deferral of the closing of such
transaction for more than three months after such date of execution, and the
transaction closes after December 31, 2008, such transaction shall be considered
a Sale closed in 2008 for purposes hereof.
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"Sale Proceeds" shall mean the net amount of cash and the fair market
value (on the date of payment, as determined in accordance with the methodology
set forth in Section 2.3(b)) of all securities and other property paid by an
Acquiror and received by LIPH (either directly or from MDNY) in respect of
LIPH's equity interest in MDNY. Fair market value, bona fide payments to LIPH or
MDNY by third parties on account or in respect of goods, services or other
consideration not related to the subject Sale shall not be deemed Sale Proceeds.
"Section 1307 Contribution" means the sale, assignment and transfer
to, and contribution to the capital of, MDNY all CHNLI's right, title and
interest in, to and under the Section 1307 Loan Agreement and the Section 1307
Note.
"Section 1307 Loan" means the loan evidenced by the Section 1307 Loan
Agreement and the Section 1307 Note, together.
Section 1307 Loan Agreement" means the Section 1307 Loan Agreement
between LIPH and CHNLI dated December 18, 1997.
"Section 1307 Note" means the Subordinated Note dated December 18, 1997
made by MDNY in favor of CHNLI.
"Seller Party Release" means a release made by CHNLI, the Diocese, and
CHSLI, individually and in its capacity as agent for the Hospitals, in favor of
each of MDNY and LIPH, individually and in its capacity as a shareholder of
MDNY, in form and substance reasonably satisfactory to the CHNLI and the Buyer
Parties, whereby, among other things, CHNLI and CHSLI shall release LIPH and
MDNY, and their respective directors, officers, shareholders and advisors (in
their capacities as such), from any and all claims arising through and including
the Closing Date, except for claims arising under this Agreement, the CHSLI
Subscriber Agreements, the Recovery and Subordination Agreement, the Diocese
Subscriber Agreement and the Hospital Provider Agreements.
"Supreme Court" means the Supreme Court of the State of New York.
"Termination Agreement" means an agreement, in form and substance
reasonably satisfactory to CHNLI, LIPH and MDNY, whereby the MDNY Stock
Subscription Agreement and the MDNY Shareholder Agreement are terminated,
effective as of the Closing Date;
ARTICLE II.
PURCHASE AND SALE OF CLASS B SHARES AND SECTION 1307 LOAN
Subject to the terms and conditions of this Agreement:
2.1 Purchase and Sale of Class B Shares and Section 1307 Contribution.
(a) At the Closing (as defined below):
(i) LIPH shall purchase from CHNLI, and CHNLI shall sell, assign and
transfer to LIPH, the Class B Shares; and
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(ii) CHNLI shall sell, assign and transfer to MDNY all right, title
and interest in, to and under the Section 1307 Loan and contribute the Section
1307 Note to the capital of MDNY and for cancellation by MDNY.
2.2 Closing Payment. In consideration of the sale, assignment and
transfer of the Class B Shares and of the Section 1307 Contribution, LIPH shall
pay to CHNLI the sum of $10.00 (the "Closing Payment").
2.3 Additional Conditional Consideration.
(a) As additional consideration of the sale, assignment and transfer
of the Class B Shares, LIPH shall pay to CHNLI the percentage specified below of
any Sale Proceeds actually received by LIPH in respect of its equity interest in
MDNY upon any Sale that is consummated prior to December 31 of the year
specified below (or with respect to calendar year 2008, certain transactions
consummated after December 31, 2008 as detailed in the definition of "Sale"),
but not to exceed in the aggregate the amount of CHNLI's Equity Investment in
MDNY and subject to Section 2.3(i) hereof:
Percentage of Sale Proceeds Year
33.3% 2005
25.0% 2006
20.0% 2007
15.0% 2008
(b) Sale Proceeds, if any, payable to CHNLI shall, at LIPH's sole
option, be payable in kind, depending upon the form of consideration paid by the
Acquiror; provided that if the receipt of any securities by CHNLI would cause
CHNLI to violate the ERD, then CHNLI shall promptly notify LIPH thereof and LIPH
shall have the option, in its discretion, of (i) paying CHNLI cash in an amount
equal to the fair market value of such securities, (ii) paying CHNLI in kind
with other assets (not causing an ERD violation) having a fair market value
equal to the fair market value of such securities or (iii) obtaining the consent
of the issuer of such securities to CHNLI's assignment of its right to receive
such securities to an entity not subject to the ERD. (In each case, the fair
market value of any securities or other assets shall initially be determined in
good faith by the Board of Directors of LIPH. If CHNLI disagrees, CHNLI shall,
within fifteen (15) days, set forth the reasons for its disagreement in writing
and shall propose an alternate quantity reflecting fair market value. For thirty
(30) days following CHNLI's disagreement, the parties shall attempt in good
faith to come to agreement upon such fair market value. If the parties fail to
agree within such time period, the matter shall be resolved by submitting the
two competing values to PricewaterhouseCoopers LLP ("PWC"). In such case, PWC
shall either determine that one of the two proposed values most closely
represents the fair market value of the securities under the circumstances, or
if PWC determines in its reasonable discretion that neither of the two proposed
values most closely represents such fair market value, then PWC shall determine
such fair market value in accordance with such factors that it reasonably deems
appropriate. The valuation selected by PWC shall be used as the indicator of
fair market value.)
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(c) Any securities received by CHNLI as part of Sale Proceeds
payable hereunder shall be held by CHNLI subject to any generally applicable
restrictions imposed by the Acquiror and any such securities delivered to CHNLI
may bear an appropriate legend with respect to any such restrictions.
(d) In the event that the terms of any Sale provide that all or any
part of the investment or purchase price is to be paid into an escrow account at
closing, then the amount of Sale Proceeds, if any, payable to CHNLI shall be
proportional to the escrowed portion and shall not be payable unless and until
the escrowed portion is released and thereafter received by LIPH (directly or
from MDNY).
(e) In any instance where any cash or securities are required to be
returned to the Acquiror for any reason, CHNLI shall promptly return to LIPH an
amount of the cash or securities, as the case may be, received by CHNLI as Sale
Proceeds that is proportionate to the amount of cash and securities returned by
LIPH or MDNY, as the case may be. Payment by LIPH of any amounts to third
parties on account of or in respect of goods, services or other consideration
not related to the Sale shall not be deemed to be a return of Sale Proceeds.
(f) The applicable percentage of Sale Proceeds, if any, payable by
LIPH to CHNLI under Section 2.3(a), shall be deemed earned and payable to CHNLI
upon receipt of Sale Proceeds by LIPH at the closing of any Sale and, with
respect to contingent or deferred payments, if any, from time to time only upon
the receipt thereof by LIPH; provided, that, if LIPH agrees to accept contingent
or deferred payments for the purpose of reducing the applicable percentage of
Sale Proceeds otherwise payable to CHNLI, then the applicable percentage of any
such contingent or deferred payments received by LIPH and payable to CHNLI shall
be determined by reference to the year in which the first payment was received
under the definitive agreement governing such Sale; and further provided, that
the applicable percentage of any Sale Proceeds that are paid into an escrow
account and releasable to LIPH, subject to the terms of the applicable escrow
agreement, shall be determined by reference to (i) the year that such Sale
Proceeds are paid into such account by the Acquiror if and to the extent that
such Sale Proceeds are deposited into escrow to secure indemnifiable obligations
(and/or payments in respect of any breach of representation or warranty) payable
by LIPH to the Acquiror pursuant to the definitive agreement(s) governing the
applicable Sale, and (ii) the year that such Sale Proceeds are released from
escrow to LIPH if and to the extent that such Sale Proceeds are deposited into
escrow to secure the performance, satisfaction or fulfillment of any
performance-based condition, covenant or criteria after the closing under such
definitive agreement(s).
(g) If, for any reason whatsoever, including, without limitation,
the act, omission, negligence or willful default of any party, a proposed Sale
is not consummated, CHNLI shall not be entitled to any Sale Proceeds.
(h) LIPH and MDNY reserve the right in their sole discretion to
determine all terms and conditions of any proposed Sale and to accept or reject,
for any reason in its or their absolute discretion, any Sale.
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(i) Each of CHNLI, LIPH and MDNY agree to (i) treat the total amount
of additional consideration payable to CHNLI under this Section 2.3 (prior to
the application of paragraph 2.3(j)) as additional purchase price for the Class
B Shares, which amount, when paid, shall increase LIPH's tax basis in its Class
B Shares to the extent permitted by law, and (ii) report the payment of such
additional consideration on its yearly information return (for CHNLI) and income
tax return (for LIPH and MDNY) as additional purchase price (to the extent
permitted by law) for the Class B Shares.
(j) Notwithstanding anything in this Section 2.3 to the contrary,
any amount payable by LIPH to CHNLI pursuant to this Section 2.3 shall be
reduced by the net increase in taxes payable by LIPH as a result of the receipt
by LIPH of that portion of the Sale Proceeds attributable to the amount payable
to CHNLI hereunder, taking into account the provisions of Section 2.3(i) and not
taking into account any net operating loss or other tax deductions available to
LIPH which are unrelated to this transaction.
2.4 Waiver. LIPH, CHNLI and MDNY hereby waive any and all rights any of
them has or may have under the MDNY Shareholders Agreement, the MDNY Charter and
the MDNY By-laws, as the case may be, and any failure to comply with the MDNY
Shareholders Agreement, the MDNY Charter or the MDNY By-laws, with respect to
the purchase of the Class B Shares by LIPH and the other transactions
contemplated hereby.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF CHNLI
CHNLI hereby represents and warrants to the Buyer Parties as follows:
3.1 Ownership of Shares. CHNLI owns all the Class B Shares and the
Section 1307 Loan free and clear of any liens, claims, charges, security
interests, options or other legal or equitable rights, claims or encumbrances of
any kind or nature whatsoever (collectively "Encumbrances"). CHNLI has made no
agreement, written or oral, with any person or entity other than the Buyer
Parties to sell, transfer or encumber the Class B Shares or the Section 1307
Loan. The Section 1307 Loan and the Class B Shares represent 100% of CHNLI's
direct or indirect interest in MDNY. Neither CHSLI nor any affiliate of CHSLI or
CHNLI has any other direct or indirect interest in MDNY. Upon the sale of the
Class B Shares and contribution of the Section 1307 Loan under this Agreement,
CHNLI shall transfer such Class B Shares and the Section 1307 Loan free and
clear of any Encumbrances.
3.2 Organization, Capitalization. Each of CHNLI and CHSLI is a
not-for-profit corporation duly organized, validly existing and in good standing
under the laws of the State of New York; and has all requisite corporate power
and corporate authority and is entitled to own, lease and operate its properties
and to carry on its business as and in the places such properties are now owned,
leased or operated and where such business is presently conducted.
3.3 Authority. Each of CHNLI and CHSLI has all requisite corporate
power and corporate authority to enter into this Agreement and the Seller Party
Release and each other agreement, document and instrument to be executed or
delivered by CHNLI or CHSLI, as the case may be, in accordance with this
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Agreement (collectively, the "Seller Party Documents") and to carry out the
transactions contemplated hereby and thereby. On or prior to the Closing Date,
the execution, delivery and performance of this Agreement and the Seller Party
Documents to which CHNLI or CHSLI is a party shall have been authorized by all
necessary corporate action and no other proceedings (except for legal and
administrative proceedings that may be required in order to comply with
Not-for-Profit Corporation Law ss. 510(a)(3) or as may be requested by the
Attorney General or the Supreme Court) on the part of CHNLI or CHSLI, as the
case may be, are necessary to authorize the Seller Party Documents to which
CHNLI or CHSLI is a party, as the case may be, and the transactions contemplated
hereby and thereby.
3.4 No Violation. The execution, delivery and performance of this
Agreement and the other Seller Party Documents and the consummation of the
transactions contemplated hereby and thereby, including without limitation the
sale of the Class B Shares to LIPH and the Section 1307 Contribution, do not and
will not (a) conflict with or violate any provision of the certificate of
incorporation or by-laws, as the same may be amended, of CHNLI or CHSLI, as the
case may be, (b) with or without the giving of notice or the passage of time, or
both, result in a breach of, or violate, or be in conflict with, or constitute a
default under, or permit the termination of, or cause or permit acceleration
under, any mortgage, indenture, loan agreement, security document, deed of
trust, lease, sales order, or any other agreement or instrument of any kind or
character to which CHNLI or CHSLI is a party or by which either CHNLI or CHSLI,
or any of their respective properties or assets are bound, (c) require the
consent of any party (other than the Buyer Parties) to any contract to which
CHNLI or CHSLI is also a party or require the consent or approval of any
regulatory or administrative agency or authority to which CHNLI or CHSLI is
subject (other than the Attorney General and the Supreme Court), (d) result in
the creation or imposition of any lien upon any of the assets of CHNLI or CHSLI,
or violate, with or without the giving of notice or the passage of time, any
law, rule or regulation or any order, judgment, decree or award of any court,
governmental authority or arbitrator to which CHNLI or CHSLI is subject or by
which CHNLI or CHSLI or any of their respective properties or assets may be
bound or affected. This Agreement and the other Seller Party Documents to which
CHNLI or CHSLI are party are the legal, valid and binding obligations of CHNLI
or CHSLI, as the case may be.
3.5 Litigation. There is (i) no action, suit, proceeding or arbitration
pending, or to the knowledge of CHNLI, threatened, and (ii) to the knowledge of
CHNLI no investigation pending or threatened, against CHNLI or CHSLI or any of
their affiliates (other than the Buyer Parties), and there is not outstanding
any order, writ, injunction, award or decree of any court or arbitrator or any
federal, state, municipal or other governmental department, commission, board,
agency or instrumentality to which CHNLI or CHSLI or any of their affiliates
(other than the Buyer Parties) is subject, which would reasonably be expected to
materially adversely affect the ability of CHNLI or CHSLI to consummate the
transactions contemplated hereby (other than CHNLI's request to the Attorney
General and the Supreme Court for their consent to and approval of the
transactions contemplated hereby).
3.6 Own Investigation; etc.
(a) CHNLI understands and agrees that THE BUYER PARTIES ARE NOT
MAKING NOR HAVE THEY MADE, ANY, AND THE BUYER PARTIES DISCLAIM ALL,
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REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS OR IMPLIED, AS TO THE VALUE OF
THE CLASS B SHARES OR MDNY'S ABILITY TO REPAY THE SECTION 1307 LOAN, THE
ADEQUACY OF THE CLOSING DATE PAYMENT, THE ABILITY OF THE BUYER PARTIES TO EFFECT
A SALE, THE LIKELIHOOD OF CONSUMMATING ANY SALE, AND THE ADEQUACY OR AMOUNT OF
ANY SALE PROCEEDS PAID OR PAYABLE TO CHNLI UNDER THIS AGREEMENT.
(b) In connection with the purchase and sale of the Class B Shares
and the Section 1307 Contribution, the Series B Directors and CHNLI are familiar
with certain estimates, projections and other forecasts, plans and budgets
prepared by MDNY. CHNLI acknowledges that there are uncertainties inherent in
attempting to make such projections, forecasts, plans and budgets, that CHNLI is
familiar with such uncertainties and are not relying upon such projections,
forecasts, plans or budgets, and that CHNLI is taking full responsibility for
making its own evaluation of the adequacy and accuracy of all estimates,
projections, forecasts, plans and budgets so furnished to the Class B Directors
or CHNLI, and that CHNLI will not assert or permit to be asserted any claim
against the Buyer Parties or any affiliate thereof or any of their respective
directors, officers, managers, members, partners, employees, agents,
consultants, counsel, accountants, investment bankers or representatives, or
hold the Buyer Parties or any thereof, or any of such other person or entity,
liable, for any inaccuracies, misstatements or omissions with respect to any
such projections, forecasts, plans or budgets.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES
The Buyer Parties hereby, jointly and severally, represent and warrant
to CHNLI, as follows:
4.1 Organization, Capitalization.
(a) Each of the Buyer Parties is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
and has all requisite corporate power and corporate authority and is entitled to
own, lease and operate its properties and to carry on its business as and in the
places such properties are now owned, leased or operated and where such business
is presently conducted.
4.2 Authority. Each of the Buyer Parties has all requisite corporate
power and corporate authority to enter into this Agreement, the Buyer Party
Release and each other agreement, document and instrument to be executed or
delivered by it in accordance with this Agreement (collectively, the "Buyer
Party Documents") and to carry out the transactions contemplated hereby and
thereby. On or prior to the Closing Date, the execution, delivery and
performance of this Agreement and the Buyer Party Documents by each of the Buyer
Parties shall have been authorized by all necessary corporate action and no
other proceedings on the part of the Buyer Parties are necessary to authorize
this Agreement, the Buyer Party Documents and the transactions contemplated
hereby and thereby. This Agreement and each of the Buyer Party Documents has
been duly authorized by each of the Buyer Parties party thereto and is the
legal, valid and binding obligation of such Buyer Party.
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4.3 No Violation. The execution, delivery and performance of the Buyer
Party Documents and the consummation of the transactions contemplated hereby and
thereby, including without limitation the sale of the Class B Shares to LIPH,
will not (a) conflict with or violate any provision of the certificate of
incorporation or by-laws of LIPH, as amended, (b) with or without the giving of
notice or the passage of time, or both, result in a breach of, or violate, or be
in conflict with, or constitute a default under, or permit the termination of,
or cause or permit acceleration under, any mortgage, indenture, loan agreement,
security document, deed of trust, lease, sales order, or any other agreement or
instrument of any kind or character to which LIPH is a party or by which it, or
any of its properties or assets are bound, (c) require the consent of any party
(other than CHNLI and CHSLI) to any contract to which LIPH is also a party or
any license, permit or approval granted to LIPH is a party or to which LIPH is
subject or require the consent or approval of any regulatory or administrative
agency or authority to which LIPH or MDNY is subject (other than NYSID and
NYDOH), (d) result in the creation or imposition of any lien upon any of the
assets of LIPH, or violate, with or without the giving of notice or the passage
of time, any law, rule or regulation or any order, judgment, decree or award of
any court, governmental authority or arbitrator to which LIPH is subject or by
which it or any of its properties or assets may be bound or affected.
4.4 Litigation. There is no action, suit, proceeding, arbitration or
investigation pending, or to the knowledge of the Buyer Parties threatened,
against LIPH or any of its affiliates (other than MDNY and CHNLI), and there is
not outstanding any order, writ, injunction, award or decree of any court or
arbitrator or any federal, state, municipal or other governmental department,
commission, board, agency or instrumentality to which LIPH or any of its
affiliates (other than MDNY and CHNLI) is subject, which would reasonably be
expected to materially adversely affect the ability of LIPH to consummate the
transactions contemplated hereby (other than MDNY's request to NSYDI and NYDOH
for their consent to and approval of the transactions contemplated hereby).
ARTICLE V.
CLOSING
5.1 Closing. The closing under this Agreement (the "Closing") shall
take place at the offices of counsel to the Buyer Parties concurrently with the
execution and delivery of this Agreement, or at such other date, place or time
as the parties hereto shall mutually agree. The date of the Closing is herein
called the "Closing Date".
5.2 Deliveries at Closing.
(a) At the Closing, CHNLI shall deliver or cause to be delivered to
the Buyer Parties, as appropriate, the following:
(i) stock certificate(s) representing the Class B Shares,
accompanied by duly executed stock powers endorsing the Class B Shares to LIPH;
(ii) the Section 1307 Note, duly endorsed or accompanied by duly
executed bond powers endorsing the Section 1307 Note to MDNY;
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(iii) an instrument of assignment and contribution, in form and
substance reasonably satisfactory to CHNLI, MDNY and LIPH, effecting the Section
1307 Contribution, duly executed by CHNLI;
(iv) the Termination Agreement, duly executed by CHNLI;
(v) the Seller Party Release, duly executed by CHNLI, CHSLI and the
Diocese;
(vi) resignations of the Class B Directors, as directors and
officers, as the case may be, of MDNY, effective as of the Closing Date;
(vii) evidence to the Buyer Parties' reasonable satisfaction that,
as of the Closing Date:
(A) all premiums then payable under the Diocese
Subscriber Agreement and the CHSLI Subscriber
Agreements, respectively, with respect to periods
through the Closing Date shall have been paid in
full; and
(B) no premiums under Diocese Subscriber Agreement or
the CHSLI Subscriber Agreements with respect to
periods through the Closing Date shall be more than
30 days past due.
(viii) the Amendment to CHSLI Subscriber Agreements, duly executed
by CHSLI, as agent for the CHSLI Subscribers;
(ix) evidence to the Buyer Parties' reasonable satisfaction that the
Attorney General and the Supreme Court have approved and consented to this
Agreement and the transactions contemplated hereby;
(x) a certificate duly executed by an officer of each of CHNLI and
CHSLI certifying that, as of the Closing, resolutions adopted by the Boards of
Directors of each of CHNLI and CHSLI in the form attached thereto approving the
execution and delivery of this Agreement and the other Seller Party Documents
and the transactions contemplated hereby and thereby remain in full force and
effect and have not been amended;
(xi) the CHNLI Closing Certificate (as defined below), duly executed
by CHNLI;
(xii) such other documents or agreements as may be reasonably
requested by the Buyer Parties or their counsel.
(b) At the Closing, the Buyer Parties shall deliver or cause to be
delivered to CHNLI or CHSLI, as the case may be, the following:
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(i) the Closing Date Payment paid by check or cash;
(ii) the Termination Agreement, duly executed by LIPH and MDNY;
(iii) the Buyer Party Release, duly executed by LIPH and MDNY;
(iv) evidence to CHNLI's reasonable satisfaction that NYSID has
approved and consented to this Agreement and the transactions contemplated
hereby, including without limitation, the purchase and sale of the Class B
Shares and the Section 1307 Contribution;
(v) evidence to CHNLI's reasonable satisfaction that NYDOH has
approved and consented to the to this Agreement and the transactions
contemplated hereby, including without limitation, the purchase and sale of the
Class B Shares and the Section 1307 Contribution;
(vi) the Amendment to CHSLI Subscriber Agreements, duly executed by
MDNY;
(vii) evidence to CHNLI's reasonable satisfaction that all payments
due and owing to the Hospitals for services rendered under the Hospital Provider
Agreements have been paid in full to the extent required by the terms of such
Agreements, and that no such payments, with respect to clean claims, shall be
more than 45 days past due;
(viii) a certificate duly executed by an officer of each of the
Buyer Parties certifying that, as of the Closing, resolutions adopted by the
Boards of Directors of such Buyer Party in the form attached thereto approving
the execution and delivery of this Agreement and the other Buyer Party Documents
to be executed and delivered by the Buyer Parties and the transactions
contemplated hereby and thereby remain in full force and effect and have not
been amended;
(ix) the Buyer Party Closing Certificate (as defined below), duly
executed by the Buyer Parties;
(x) such other documents or agreements as may be reasonably
requested by CHNLI or its counsel.
5.3 The Buyer Parties' Conditions Precedent. The obligations of the
Buyer Parties under this Agreement to proceed with the transactions contemplated
hereby are, at the option of the Buyer Parties, subject to the fulfillment of
each of the following conditions at or prior to the Closing:
(a) The representations and warranties of CHNLI and CHSLI,
respectively, contained in this Agreement and any other Seller Party Document,
as applicable, delivered at the Closing by CHNLI or CHSLI pursuant to this
Agreement shall be true and correct when made, and, except for changes expressly
permitted by this Agreement, representations and warranties made as of a
specific date shall also be true and correct at the time of Closing with the
same force and effect as though such representations and warranties were made at
that time.
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(b) Each covenant, agreement and obligation required by the terms of
this Agreement to be complied with and performed by CHNLI or CHSLI at or prior
to the Closing shall have been duly and properly complied with and performed.
(c) The respective Boards of Directors of CHNLI and CHSLI, as
applicable, shall have approved the execution and delivery of this Agreement and
the other Seller Party Documents to which each of them is party and the
transactions contemplated hereby and thereby.
(d) There shall be delivered to the Buyer Parties a certificate of
CHNLI executed on the Closing Date certifying that the conditions set forth in
subsections (a) and (b) of this Section 5.3 have been fulfilled (the "CHNLI
Closing Certificate").
5.4 CHNLI's Conditions Precedent. The obligations of CHNLI under this
Agreement to proceed with the transactions contemplated hereby are, at the
option of CHNLI, subject to the fulfillment of each of the following conditions
at or prior to the Closing:
(a) The representations and warranties of the Buyer Parties
contained in this Agreement and any other Buyer Party Document delivered by
Buyer Parties at the Closing pursuant to this Agreement shall be true and
correct when made, and, except for changes expressly permitted by this
Agreement, representations and warranties made as of a specific date shall also
be true and correct at the time of Closing with the same force and effect as
though such representations and warranties were made at that time.
(b) Each covenant, agreement and obligation required by the terms of
this Agreement to be complied with and performed by the Buyer Parties or prior
to the Closing shall have been duly and properly complied with and performed.
(c) The respective Boards of Directors of LIPH and MDNY shall have
approved the execution and delivery of this Agreement and the other Buyer Party
Documents and the transactions contemplated hereby and thereby.
(d) There shall be delivered to CHNLI a certificate of the Buyer
Parties executed on the Closing Date certifying that the conditions set forth in
subsections (a) and (b) of this Section 5.4 have been fulfilled (the "Buyer
Parties Closing Certificate").
ARTICLE VI.
Termination
6.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of CHNLI and LIPH;
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(b) by either LIPH or CHNLI, if the Closing does not occur on or
before April 30, 2005 (the "Termination Date"); provided, however, that the
right to terminate this Agreement under this Section 6.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been a significant cause of, or shall have resulted in, the
failure of the Closing to occur prior to such time;
(c) by LIPH, if CHNLI shall breach or default in performance of any
of its material representations, warranties or obligations under this Agreement,
and such breach or default in performance is not capable of being cured or shall
not have been cured or waived within ten (10) days after written notice thereof
from LIPH to CHNLI.
ARTICLE VII.
MISCELLANEOUS
7.1 Survival of Representations and Warranties. Representations and
warranties made hereunder shall survive the Closing until the applicable statute
of limitations expires.
7.2 Amendment and Modification. This Agreement may be amended, modified
and supplemented only by written agreement of the Buyer Parties and CHNLI.
7.3 Waiver. Any failure of CHNLI, on the one hand, or the Buyer
Parties, on the other hand, to comply with any obligation, covenant, agreement
or condition herein may be waived in writing by the Buyer Parties or CHNLI,
respectively, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
7.4 Expenses. Each party will pay its own legal, accounting and other
expenses incurred by such party or on its behalf in connection with this
Agreement and the transactions contemplated herein.
7.5 Notices. Any notice, request, consent or communication
(collectively, a "Notice") under this Agreement shall be effective only if it is
in writing and (i) personally delivered, (ii) sent by certified or registered
mail, return receipt requested, postage prepaid, (iii) sent by a nationally
recognized overnight delivery service, with delivery confirmed, or (iv)
telecopied, with receipt confirmed, addressed as follows:
(a) If to the Buyer Parties:
Long Island Physician Holdings Corporation
Xxx Xxxxxxxxxx Xxxxxxxxxx
Xxxxx 0X-00
Xxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
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MDNY Healthcare, Inc.
Xxx Xxxxxxxxxx Xxxxxxxxxx
Xxxxx 0X-00
Xxxxxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
And with a copy to:
Golenbock Xxxxxxx Xxxxx Xxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to the Seller Parties to:
Catholic Healthcare Network of Long Island, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (516) 678-5800 ext. 543
Telecopier: (000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
when (i) personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telecopy is confirmed, as the case may be.
7.6 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. LIPH and MDNY agree that CHNLI may,
if CHNLI is dissolved after the Closing, assign its interests in this Agreement,
including its right to be paid the applicable percentage of any Sale Proceeds,
to any not-for-profit entity designated by CHSLI.
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7.7 Specific Performance. The parties recognize that the Class B Shares
have a unique value and the failure of LIPH or CHNLI to consummate the purchase
and sale of the Shares would irreparably injure the other party. The Buyer
Parties, on the one hand, and CHNLI, on the other, shall have the right
specifically to enforce the performance of the other party under this Agreement
without the necessity of posting any bond or other security, and such other
party hereby waive the defense in any such suit that an adequate remedy at law
is available; and agree not to interpose any opposition, legal or otherwise, as
to the propriety of specific performance as a remedy. The remedy of specifically
enforcing any or all of the provisions of this Agreement in accordance with this
Section 7.7 shall not be exclusive of any other rights which the parties may
have under this Agreement, all of which rights and remedies under this Agreement
shall be cumulative.
7.8 Governing Law. This Agreement shall be governed by the laws of the
State of New York (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law of the State of New York) as to all
matters including, but not limited to, matters of validity, construction,
effect, performance and remedies.
7.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.10 Cooperation. Each party shall reasonably cooperate with each other
party with respect to the process of obtaining any necessary approvals from
NYDOH, NYSID, the Attorney General or the Supreme Court, as applicable, except
to the extent that such cooperation conflicts with the ERD. Each of the parties
shall, without further consideration, take such reasonable action and execute
and deliver such documents the other reasonably may request to carry out the
purposes of this Agreement. The parties shall reasonably cooperate in the
drafting of any public statements to be made in connection with the entry into
or consummation of this Agreement, except that, without review by or the
approval of CHNLI, LIPH shall have the right to prepare and file with the
Securities and Exchange Commission such report(s) on Form 8-K, Form 10-Q, Form
10-K and otherwise to report and disclose the execution and delivery of this
Agreement, the closing under this Agreement and the transactions contemplated
hereby. 7.11 No Third Party Beneficiaries. Nothing herein, express or implied,
is intended or shall be construed to or shall confer upon or give to any person,
firm, corporation or legal entity, other than the parties hereto or named herein
or therein, any rights, remedies or other benefits under or by reason of this
Agreement or any documents executed in connection with this Agreement.
7.12 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
7.13 Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations, warranties,
covenants or undertakings other than those expressly set forth or referred to
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first set forth above.
LONG ISLAND PHYSICIAN HOLDINGS CORPORATION
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Name: Xxxx Xxxxxx, M.D.
Title: President
MDNY HEALTHCARE, INC.
By: /s/ Xxxxxxxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: President
CATHOLIC HEALTHCARE NETWORK OF LONG ISLAND, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxx. X. Xxxxxxx
Title:
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