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ASSET PURCHASE AGREEMENT
By and Among
PROMEDCO, INC.,
PROMEDCO OF ABILENE, INC.
and
ABILENE DIAGNOSTIC CLINIC, P.L.L.C.
January 19, 1996
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TABLE OF CONTENTS
(This Table of Contents is not a part of the Agreement and is only for
convenience of reference.)
Page
ARTICLE I. PURCHASE OF CERTAIN ASSETS................................. 1
1.1 Purchase of Certain Assets................................. 1
1.2 Financial Books and Records................................ 2
1.3 Assumption of Certain Liabilities.......................... 2
1.4 Liabilities Not Assumed.................................... 2
1.5 Service Agreement.......................................... 3
1.6 Collection of Accounts Receivable.......................... 3
1.7 Right of Offset............................................ 3
1.8 Occasional Sale............................................ 4
ARTICLE II.PURCHASE PRICE............................................. 4
2.1 Purchase Price............................................. 4
2.2 Adjustment to Purchase Price............................... 5
2.3 Stockholders Agreement..................................... 5
2.4 Tax........................................................ 5
2.5 Allocation of Purchase Price............................... 5
RTICLE III. CLOSING................................................... 6
ARTICLE IV. ITEMS TO BE DELIVERED AT OR PRIOR
TO CLOSING/CONDITIONS TO CLOSING...................................... 6
4.1 By ADC.................................................. 6
4.2 By Purchaser............................................ 6
4.3 Conditions to Purchaser's Obligations................... 7
4.4 Conditions to ADC's Obligations......................... 8
ARTICLE V. ITEMS TO BE DELIVERED AT OR PRIOR TO EXECUTION............. 9
5.1 Employment Agreements..................................... 9
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF ADC.................... 9
6.1 Organization and Authority to Enter into Agreements......... 9
6.2 Material Contracts...................................... 9
6.3 Insurance; Malpractice............................... 10
6.4 No Changes Prior to Closing Date..................... 10
6.5 Title; Condition....................................... 10
6.6 Litigation, Court Orders and Decrees................. 11
6.7 Permits and Licenses................................. 11
6.8 Authority............................................ 11
6.9 Tax Matters............................................ 11
6.10 Employee Benefit Plans.................................... 12
6.11 Third Party Relations..................................... 13
6.12 Leased Property........................................... 13
6.13 Compliance with Applicable Laws........................... 14
6.15 Environmental Matters..................................... 14
6.16 Healthcare Compliance..................................... 14
6.17 Fraud and Abuse........................................... 14
6.18 Facility Compliance....................................... 15
6.19 Rates and Reimbursement Policies.......................... 15
6.20 Accounts Receivable....................................... 15
6.21 Trade Relations........................................... 16
6.22 [Reserved]................................................ 16
6.23 Full Disclosure........................................... 16
6.24 Liabilities............................................... 16
6.25 Investment Representation and Access...................... 16
6.26 Membership Interest....................................... 17
6.27 Financial Statements..................................... 18
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ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF PURCHASER............ 18
7.1 Organization......................................... 18
7.2 Authority............................................ 18
7.3 Absence of Litigation................................ 19
7.4 Shares............................................... 19
7.5 Financial Statements................................. 19
7.6 Trade Relations...................................... 19
7.7 ProMedCo Stock Options and Warrants.................. 19
7.8 Fraud and Abuse...................................... 19
7.9 Full Disclosure...................................... 20
ARTICLE VIII. CONDUCT OF BUSINESS: REVIEW........................... 20
8.1 Conduct of Business of ADC.............................. 20
8.2 Review of ADC by ProMedCo................................ 20
ARTICLE IX. TRANSFERS AND FURTHER ASSURANCES........................ 21
ARTICLE X. INDEMNIFICATION.......................................... 21
10.1 Indemnification.......................................... 21
10.2 Rules Regarding Indemnification.......................... 22
10.3 Survival................................................. 23
10.4 Notice to ADC: Opportunity to Defend..................... 23
10.5 Notice to Purchaser: Opportunity to Defend............... 23
10.6 Security for Indemnity................................... 23
10.7 Indemnification Deductible............................... 23
ARTICLE XI. EXPENSES................................................ 24
ARTICLE XII. COSTS................................................... 24
ARTICLE XIII. TERMINATION............................................ 24
ARTICLE XIV. NOTICES................................................ 25
ARTICLE XV. AMENDMENT AND WAIVER.................................... 25
ARTICLE XVI. EMPLOYEES - EMPLOYEE BENEFITS.......................... 26
16.1 Affected Employees...................................... 26
16.2 Responsibilities........................................ 26
16.3 Payroll and Payoll Taxes................................ 26
16.4 Termination Benefits.................................... 26
16.5 Employee Benefit Plans................................... 27
ARTICLE XVII. DEFINITIONS........................................... 27
ARTICLE XVIII. MISCELLANEOUS........................................ 28
18.1 Press Release......................................... 28
18.2 Binding Effect........................................ 28
18.3 Entire Agreement...................................... 28
18.4 Governing Law; Venue.................................. 28
18.5 Counterparts.......................................... 28
18.6 Headings.............................................. 28
18.7 Finders............................................... 28
18.8 No Third Party Benefit................................ 28
18.9 Materiality........................................... 28
18.10 Arbitration........................................... 29
18.11 Assignment and Delegation............................. 29
18.12 Knowledge............................................. 29
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into this the
19th day of January, 1996, by and among ABILENE DIAGNOSTIC CLINIC, P.L.L.C., a
professional limited liability company organized under the laws of the State of
Texas (hereinafter referred to as "ADC"), PROMEDCO, INC., a corporation
organized under the laws of the State of Texas (hereinafter referred to as
"ProMedCo") and PROMEDCO OF ABILENE, INC., a corporation organized under the
laws of the State of Texas (hereinafter referred to as "POA").
WITNESSETH:
WHEREAS, ADC is the owner and operator of a group medical practice in
Xxxxxx County, Texas ("Practice") and is engaged in the practice of providing
medical care to patients;
WHEREAS, ProMedCo, through its 100% owned subsidiary POA, is engaged in
the business of providing medical practice facilities, nonmedical personnel, and
medical practice management and administrative services (ProMedCo and POA being
herein collectively referred to as "Purchaser");
WHEREAS, ADC wishes to transfer certain of the Practice Assets to POA in
exchange for voting shares of ProMedCo; and
WHEREAS, the parties desire to set forth in writing the terms and
conditions under which said exchange will be consummated.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, it is agreed as
follows:
ARTICLE I.
PURCHASE OF CERTAIN ASSETS
1.1 Purchase of Certain Assets. On the Closing Date (as hereafter
defined) ProMedCo and POA shall acquire from ADC certain of the Practice assets
(the "Practice Assets") of ADC. The Practice Assets shall be more particularly
described on Exhibit 1. 1.
The Practice Assets shall include, but not be limited to ADC's certain
accounts receivable, furnishings and equipment that are currently covered under
the Hospital Agreements referenced in Section 1.5. The furnishings and equipment
subject to the Hospital Agreements shall become the property of POA upon the
reimbursement of ADC by POA for the cost of the furnishings and equipment as
specified in the purchase option detailed in the Hospital Agreements. The
reimbursement of ADC by POA, in the event that the Hospital Agreements complete
their initial terms, shall be the reacquisition price incurred by ADC according
to the Hospital Agreements for furnishings, equipment and replacements thereof
purchased by the hospitals prior to January 17, 1996, plus any furnishings,
equipment and replacements thereof that were
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purchased pursuant to the Hospital Agreements after January 17, 1996, that were
approved by the Policy Council, as defined in that Interim Services Agreement
between the parties dated January 19, 1996 (the "Interim Services Agreement").
In the event that the Hospital Agreements are terminated, with or without cause
by ADC prior to the initial term of the Hospital Agreements, then the
reimbursement of ADC by POA shall be limited to ten percent (10%) of the
original acquisition price of such furnishings, equipment and replacements
thereof that were purchased pursuant to such Hospital Agreements prior to
January 17, 1996, plus the reacquisition price, according to the terms of such
Hospital Agreements, of any furnishings, equipment and replacements thereof that
were purchased pursuant to such Hospital Agreements after January 17, 1996, and
that were approved by the Policy Council, as defined in the Interim Services
Agreement.
In either case above, the reimbursement of ADC by POA shall be reduced
by the reacquisition price of any assets associated with any physicians who
became members of ADC concurrent with the formation of ADC on January 17, 1996,
and who sold their assets to either local hospital according to the Hospital
Agroctnents, subsequent to January 17, 1996.
ADC agrees that upon the termination of the Hospital Agreements, ADC will
exercise its option to repurchase the equipment owned by the hospital under the
Hospital Agreements.
1.2 Financial Books and Records. At Closing, all right, title and
interest in and possession of the financial books and records of ADC shall be
delivered to POA. POA shall grant to ADC the right, at reasonable times, to
inspect and copy (at ADC's own expense) said records for the purposes of
preparing for federal, state and local tax audits, any governmental enforcement
procedures or preparing for the defenses of any claims, causes of action or
other similar matters; provided however, POA shall provide one copy of such
financial books and records to ADC as are sufficient for ADC to maintain its own
books and records at Closing at no cost.
1.3 Assumption of Certain Liabilities. At the Closing, POA shall assume,
pay, perform and discharge only the liabilities of ADC set forth on Exhibit 1.3.
To the extent POA assumes any liabilities, ADC must pay cash equal to the
liabilities assumed.
1.4 Liabilities Not Assumed. It is expressly acknowledged and agreed
that Purchaser will not assume and shall not be liable, either expressly or
impuey, for any of the obligations Or liabilities Of ADC of any kind and nature
other than those specifically assumed in Section 1.3; without limiting the
foregoing, Purchaser shall not assume or become liable (expressly or impliedly)
with respect to any of the following liabilities that accrue prior to the
Closing Date:
(a) any liability of ADC, either directly or indirectly, for
either principal or interest, with respect to advances or loans made to or owed
by ADC;
(b) any liability or claim arising out of or related to the operation
and use of the Practice Assets prior to and including the Closing Date,
including, without limitations any obligations or abilities of ADC with respect
to inedical malpractice, Medicare or Medicaid fraud
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or abuse, overpayments under any Third Party Payor Programs, negligence, strict
liability in tort, product liability or breach of warranty claims;
(c) liabilities and obligations that may arise out of or relate to any
noncompliance with the provisions of the Bulk Sales law under the Uniform
Commercial Code as adopted by any applicable state in connection with the
transaction herein contemplated;
(d) any liability arising out of any employee benefit plans maintained
by ADC for the benefit of any employees of ADC or any other liability of ADC
with respect to any employees including but not limited to incentive
compensation plans, severance pay, accrued salaries, wages, bonuses, payroll
taxes, hospitalization and medical insurance, deferred compensation and vacation
and sick pay;
(e) any liability attributable to personal property tax assessed by any
governmental entity, federal, state, or local, against any of the assets to be
conveyed or leased hereunder, such taxes to remain the responsibility of ADC;
and
(f) any liability for any other tax assessed by any goverrunental.
entity, federal, state, or local, attributable to the business of ADC relating
to the period on or before the Closing Date, including but not limited to, any
income, franchise, excise, sales, or use taxes.
ADC covenants and agrees to satisfy or pay when due, any and all
liabilities of ADC not expressly assumed by POA and that POA shall have a right
of offset as set forth in Section 1.7.
1.5 Service Agreement. At the time of the Closing, ADC and POA shall
have entered into a Service Agreement ("Service Agreement") to be effective the
later date of (a) February 16, 1997 or (b) the first day of the month following
the date of the Initial Public Offering ("IPO") of ProMedCo, in the form
attached as Exhibit 1.5 (the "Effective Date"). This Agreement is different
from, and shall not effect the terms of, that certain Practice Management
Agreement by and between Southwestern Health Development Corporation and Abilene
Diagnostic Clinic Associates, P.A. ("PA"), a Texas professional association,
dated as of October 13, 1993, and that certain Practice Management Agreement by
and between Abilene Medical Management Services, Inc. and PA dated as of the
June 20, 1994, (collectively the "Hospital Agreements").
1.6 Collection of Accounts Receivable. ADC agrees to cooperate with
POA in the collection of the Accounts Receivable transferred pursuant to
Section 1.1.
1.7 Right of Offset. In addition to all other rights and remedies
available to POA at law or in equity, and notwithstanding any other provision of
this Agreement to the contrary, POA may offset against any amounts it owes ADC
under this Agreement, the Services Agreement, or any other agreement any amounts
due POA due to a failure of ADC to perform any indemnity pursuant to Section 10,
or created by POA's payment of any ADC liability. In the event that POA
determines that an amount is to be so offset, as a condition precedent to such
right of offset, POA shall give ADC written notice of the amount of such
proposed offset and the basis therefore within thirty (30) days after the date
on which such amount is finally determined. If POA shall not have received
written notice from ADC contesting such offset within thirty (30) days of their
receipt of such
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written notice from POA, the offset shall be deemed to have been consented to by
ADC and POA shall be entitled to deduct the entire amount claimed as an offset
from the agreements referenced within this Section 1.7. In the event that ADC
shall object to the proposed offset by written notice received by POA during
such thirty (30) day period, the entitlement of POA to the claimed offset shall
be determined by arbitration as described in Section 18.10.
In the event that any offset is determined to be due POA, and POA elects
to offset that amount against any stock due ADC pursuant to this Agreement, then
the basis of value for that stock shall be its fair market value on the date of
offset for purposes of satisfying the amount of the offset.
1.8 Occasional Sale. ADC and Purchaser believe that the transactions
contemplated by this Agreement constitute the sale of an entire operating unit
or a separate division or a separate identifiable segment of a division in
accordance with Section 151.304(b)(2) of the Texas Tax Code and Section 3.316(d)
of Title 34 of the Texas Administrative Code, and, therefore, the sale of any
and all items of tangible personal property to POA pursuant to this Agreement is
exempt from any and all state and local sales and use tax. In the event the
transactions contemplated by this Agreement do not qualify for such exemption or
other applicable exemption, and the State of Texas seeks to collect sales or use
tax under the Texas Tax Code, Purchaser shall be liable and responsible for any
such tax. ADC agrees to cooperate with Purchaser in connection with any audit of
this transaction regarding the application of the sales tax law thereto.
ARTICLE II.
PURCHASE PRICE
2.1 Purchase Price. ProMedCo shall pay ADC a Purchase Price of one (i)
times annual Net Revenue of ADC. Annual Net Revenue is defined as the
historical net revenue for the prior twelve (12) months ended December 31, 1995,
for all physicians that are members and/or employees of ADC as of January
19, 1996 (the "Execution Date"). A list of these physicians is attached
as Exhibit 2.1. In addition, Annual Net Revenue shall include 100% of the first
year net revenue for Xx. Xxxxxx, not to exceed $400,000, and 50% of the first
year net revenue for Xx. Xxxxxxx.
Annual net Revenue shall be determined according to generally accepted
accounting principles ("GAAP"), excluding any Non-recurring Revenues, and
excluding revenues unrelated to clinical operations.
The Purchase Price shall be determined during the period preceding the Closing
Date of this Agreement. The Purchase Price shall be adjusted as set forth in
Section 2.2 below. The Purchase Price shall consist of ProMedCo Common Stock,
the number of shares of which shall be rounded to the nearest whole number,
obtained by dividing the Purchase Price by $6 (the value per share). The
shares are payable as follows:
a. 70 % of the total shares to be distributed at the Closing Date,
28.57 % of which shall be registered, subject to limitations from underwriters.
Any remaining unregistered stock shall have piggyback registration rights for up
to 20% of the shares extending to any secondary offerings for five (5) years.
The piggyback rights are subject to limitations from underwriters, and any
restrictions would be shared pro rata with others that have similar rights.
Should any limitations from underwriters apply, then the total shares to
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be distributed at the Closing Date shall be adjusted downward. The rate of
adjustment shall be a reduction of 3.57 Shares (rounded to the nearest whole
number) for every 1 share affecting ADC that is limited by underwriters.
b. The remaining shares and any shares not delivered at the Closing
Date as the result of underwriter-required reductions under Section 21(a) at the
earliest of any secondary offering following the date of ProMedCo's IPO or two
years from the Closing Date.
2.2 Adjustment to Purchase Price. Not later than one hundred and five
(105) days after the Closing, ADC and Purchaser shall prepare a balance sheet of
the Practice as of the Closing Date ("Closing Date Balance Sheet") which balance
sheet shall be prepared in accordance with GAAP, except for the absence of
certain note information. The Purchase Price shall be adjusted as follows:
a. decreased, dollar for dollar for each dollar the amount of accounts
receivable is less than One Million Dollars ($1,000,000) as stated on the
Effective Date Balance Sheet. Attached hereto as Exhibit 2.2 is a
summary aging report of ADC's accounts receivable as of the Execution Date.
2.3 Stockholders Agreement. The Shares shall be issued subject to the
Stockholders Agreement datedas of the Closing Date ("Stockholders Agreement") a
copyofwhich is attachedas Exhibit 2.3 and which shall be executed by ADC and
ProMedCo. ADC understands that ADC only will be allowed to transfer the Shares
in accordance with the Stockholders Agreement. ADC also understands that any
document evidencing the Shares will bear a restrictive legend prohibiting
transfer other than in accordance with the Stockholders Agreement.
2.4 Tax. All transfer and similar taxes, fees and assessments incurred as a
result of the transactions contemplated by this Agreement shall be paid by ADC.
2.5 Allocation of Purchase Price. The Purchase Price shall be allocated
to the Assets and shall be reported for tax purposes by each party, consistent
with a method mutually agreed upon by representatives of ADC, ProMedCo and POA.
If ADC, ProMedCo and POA are unable to agree, a "Big Six" accounting firm shall
be engaged to allocate the Purchase Price equitably.
ARTICLE III.
CLOSING
The purchase of the Practice Assets as contemplated hereby shall close
("Closing") by the later of: (a) February 16, 1997; or (b) the first day of the
month following the date of the Initial Public Offering ("IPO") of ProMedCo (the
"Effective Date"). At Closing, all assignments, bills of sale and other
documents required to be delivered hereunder shall be delivered to Purchaser.
Also at Closing, Purchaser shall issue the consideration described in Section
2.1 hereof. ADC and Purchaser covenant and agree to use their best efforts to
satisfy the conditions to Closing described in Article IV of this Agreement. The
date on which the Closing occurs is referred to as the Closing Date.
ARTICLE IV.
ITEMS TO BE DELIVERED AT OR PRIOR
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TO CLOSING/CONDITIONS TO CLOSING
4.1 By ADC. ADC shall deliver to Purchaser, on the Closing Date:
(a) A Xxxx of Sale for the Practice Assets duly executed by ADC for the
Practice Assets set forth on Exhibit 1.1. Such Xxxx of Sale shall be in the form
attached as Exhibit 4.1(a).
(b) The Stockholders Agreement duly executed by ADC which shall be in the
form attached as Exhibit 2.3.
(c) All assignments and third-party consents for any contracts or leases
being assigned by ADC to POA and such estoppel certificates that POA may
request.
(d) Member Assurance Agreements duly executed by each of ADC's Members,
in the form attached as Exhibit 4. 1 (d).
(e) Employment Agreements between each of the physician Members and
physician employees of ADC duly executed by the parties thereto, in the form
attached as Exhibit 5. 1.
(f) Such other instruments as may be reasonably requested by
Purchaser in order to give effect to or carry out the intent of this Agreement.
4.2 By Purchaser. Purchaser shall deliver to ADC, on the Closing Date:
(a) Stock certificates representing ownership of the number of Shares set
forth under Section 2.1.
(b) An Assumption Agreement with respect to the contact
obligations assumed as let forth on Exhibit 1.3. Such Assumption Agreement shall
be in the form attached as Exhibit 4.2(b).
(c) Copies of duly filed articles of incorporation, bylaws and
organizational minutes, proMly executed, for ProMedCo of Abilene, Inc.
(d) Such other instruments as may be reasonably requested by
ADC in order to give effect to or carry out the intent of this Agrement.
4.3 Conditions to Purchaser's Obligations. Purchaser's obligation to
acquire the assets of ADC as provided in this Agreement shall be Conditioned
upon the satisfaction of the following conditions at or prior to Closing:
(a) Delivery of Documents. The documents and other items set forth in
Section 4.1 hereof shall have been executed and delivered to Purchaser.
(b) No Material Adverse Change. From and after the Execution Date and prior
to the Closing Date, (i) there shall have been no Material Adverse Change, as
hereinafter defined, in ADC or the assets or liabilities of ADC; (ii) the
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updated information contained in the certificate submitted pursuant to Section
4.3(c) shall not reflect a Material Adverse Change; and (iii)ADC shall have
delivered to Purchaser a certificate, dated as of the Closing Date, to such
effect-
(c) Truth of Representation and Warranties. The representations and
warranties of ADC contained in this Agreement, or in any Exhibit hereto, shall
be in all material respects true and correct on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date, and ADC shall have delivered to Purchaser a certificate,
dated as of the Closing Date, to such effect. ADC shall have the express
obligation to update all infomiation contained in the Exhibits hereto so that
such Exhibits shall be true, correct and complete as of the Closing Date.
(d) No Litigation Threatened. No action or proceeding shall have been
instituted or to ADC's knowledge threatened before a court or other government
body or by any public authority to restrain or prohibit any of the transactions
contemplated hereby, and ADC shall have delivered to Purchaser a certificate,
dated as of the Closing Date, to such effect.
(e) Opinions of Counsel. Purchaser shall have received all of the
necessary opinions of its corporate and health care counsel and an opinion from
ADC's counsel in the form attached as Exhihit 4.3(e).
(f) Securities Law Compliance. The issuance of the Shares to ADC will
not violate the securities laws of the Xxxxx xx Xxxxx xx xx xxx Xxxxxx Xxxxxx.
(g) Third Party Consents. POA shall have received copies of all
third-party consents for any contracts or leases which POA agrees to assume
pursuant to Section 1.3.
(h) Licenses, Permits, Qualification. POA and ADC shall have obtained
or applied for all licenses and permits necessary to operate their respective
businesses after the Closing Date. As to licenses that have not been obtained,
POA shall have reasonable assurances that the licenses will be issued upon
notice of Closing without any further conditions.
(i) Medical Malpractice Insurance. All physicians, health care
providers, and employees of ADC and POA must be properly covered by medical
malpractice insurance and medical malpractice tail insurance to cover prior
occurrences or continuation of ADC's existing malpractice coverage with the
addition of POA as a named insured.
(j) Due Diligence. Purchaser shall have verified to its reasonable
satisfaction the accuracy of the representations and warranties of ADC.
4.4 Conditions to ADC's Obligations. ADC's obligations to sell its
assets as provided in this Agreement shall be conditioned upon the satisfaction
of the following conditions at or prior to Closing:
(a) Delivery of Documents. The documents and other items set forth in
Section 4.2 hereof shall have been executed and delivered by Purchaser.
(b) Truth of Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement, or in any Exhibit hereto,
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shall be in all material respects true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had been made
as of such date, and Purchaser shall have delivered to ADC an officer's
certificate, dated as of the Closing Date, to such effect.
(c) No Material Change. From and after the Execution Date and Prior to
the Closing Date, (i) there shall have been no Material Adverse Change in the
assets or liabilities of POA or ProMedCo; (ii) the updated information contained
in the Exhibits submitted pursuant to Section 4.4(b) shall. not reflect a
Material Adverse Change; and (iii) POA or ProMedCo shall have delivered to
Purchaser a certificate, dated as of the Closing Date, to such effect.
(d) No Litigation Threatened. No action or proceeding shall have been
instituted or threatened before a court or other government body or by any
public authority to restrain or prohibit any of the transactions contemplated
hereby, and Purchaser shall have delivered to ADC an officer's certificate,
dated as of the Closing Date, to such effect.
(e) No Investigation. No action, proceeding or investigation shall have
been instituted by HCFA or any other governmental entity against ProMedCo, and
Purchaser shall have delivered to ADC an officer's certificate, drafted as of
the Closing Date, to such effect.
(f) ProMedCo of Abilene, Inc. ProMedCo shall have caused to be formed
ProMedCo of Abilene, Inc., a 100% owned subsidiary of ProMedCo, as a Texas
for-profit corporation, for the purpose of acquiring the Practice Assets and
assuming the contruct obligations set forth in this Agreement.
(g) Opinions of Counsel. ADC shall have received an opinion from
Purchaser's counsel in the form attached hereto as Exhibit 4.4(g).
(h) Due Diligence. ADC shall have verified to its reasonable
satisfaction the accuracy of the representations and warranties of ProMedCo and
POA.
ARTICLE V.
ITEMS TO BE DELIVERED AT OR PRIOR TO EXECUTION
5.1 Employment Agreements. Employment Agreements between each of the
physician employees of ADC and ADC, duly executed by the parties thereto, in the
form attached as Exhibit 5.1.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF ADC
ADC represents, warrants, covenants and agrees with Purchaser that:
6.1 Organization and Authority to Enter into Agreements. ADC is a
professional limited liability company duly organized, validly existing and in
good standing under the laws of the State of Texas. ADC has the full authority
to own its property, to carry on the Practice as presently conducted, to enter
into this Agreement and to consummate the transactions contemplated hereby. ADC
has no direct or indirect interest in, by way of stock ownership or otherwise,
any corporation, partnership, joint venture, association or business enterprise.
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6.2. Material Contracts. Except as set forth on Exhibit 6.2, or on
another Exhibit to this Agreement, ADC is not bound by (a) any material
agreement, contract, or commitment relating to the employment of any person by
ADC, or any loans, deferred compensation, incentive compensation, pension,
profit sharing, retirement, or other Employee Benefit Plan, (b) any loan or
advance to, or investment in, any other person or entity, or any agreement,
contract, or commitment relating to the making of any such loan, advance, or
investment, (c) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any other person or entity, (d) any agreement,
contract, or commitment materially limiting the freedom of ADC or any associated
entity or individual to provide health care services in any location or to
compete with any other person or entity, or (e) any other agreement, contract,
or commitment which is material to the Practice. Except as set forth in Exhibit
6.2 each contract or agreement set forth in Exhibit 6.2 is in full force and
effect, and there exists no default or event of default or event, occurrence,
condition, or act, which with the giving of notice, the lapse of time, or both,
or the happening of any other event or condition, would become a default or
event of default thereunder.
6.3 Insurance; Malpractice. Exhibit 6.3(a) is a list and brief
description of all policies or binders of fire, liability, product liability,
workers compensation, health and other forms of insurance policies or binders
currently in force insuring against risks which will remain in full force and
effect at least through the Closing Date. Exhibit 6.3(b) contains a description
of all malpractice liability insurance policies of ADC since January 1, 1988.
Except as set forth on Exhibit 6.3(c), (a) ADC has not in the last seven (7)
years filed a written application for any insurance coverage which has been
denied by an insurance agency or carrier, and (b) ADC has been continuously
insured for professional malpractice claims. Exhibit 6.3(c) also sets forth a
list of all claims for any insured loss in excess of Five Thousand Dollars
($5,000.00) per occurrence, filed by ADC during the three (3) year period
immediately preceding the date hereof, including, but not limited to, workers
compensation, general liability, environmental liability and professional
malpractice liability claims. ADC is not in material default with respect to any
provision contained in any such policy and has not failed to give any notice or
present any claim under any such policy in due and timely fashion.
6.4 No Changes Prior to Closing Date. During the period from the
Balance Sheet Date through the date hereof, ADC has not, and from the date
hereof to the Closing Date, ADC shall not have (i) incurred any material
liability or obligation of any nature (whether accrued, absolute, contingent, or
otherwise), except in the ordinary course of business, or except with the prior
written consent of ProMedCo, such consent not to be unreasonably withheld, (ii)
written off as uncollectible any notes or accounts receivable, except write-offs
in the ordinary course of business charged to applicable reserves, none of which
individually or in the aggregate is material to ADC, (iii) conducted its
business in such a manner so as to materially increase its accounts payable or
so as to materially decrease its accounts receivable, (iv) granted any increase
in the rate of wages, salaries, bonuses, or other remunerations of any employee,
except in the ordinary course of business, (v) canceled or waived any claims or
rights of substantial value, (vi) made any change in any method of accounting,
(vii) otherwise conducted its business or entered into any transaction, except
in the usual and ordinary manner and in the ordinary course of business (such as
normal year-end bonuses), (viii) increased compensation except in the ordinary
course,
13
(ix) suffered any damage, destruction or loss to any of the Practice Assets, (x)
canceled or failed to continue any insurance, or (xi) agreed, whether or not in
writing, to do any of the foregoing.
6.5 Title; Condition. Exhibit 1.1 contains a complete, true and correct
list of ADC's Practice Assets. ADC has good and marketable title to certain of
the Practice Assets. Except as disclosed on Exhibit 1.3 or Exhibit 6.5 hereto,
none of such assets is subject to a contract or other agreement of sale or
subject to security interests, mortgages, encumbrances, liens (including income,
personal property and other tax liens) or charges of any kind or character. The
Practice Assets shall be conveyed to Purchaser free and clear of all liens and
encumbrances other than those granted in connection with the contract
obligations to be assumed by Purchaser as set forth in Exhibit 1.3.
6.6 Litigation, Court Orders and Decrees. There are no outstanding or to
ADC's knowledge threatened suits, actions, proceedings at law or in equity,
orders, writs, administrative proceedings, injunctions or decrees of any court,
governmental agency or entity or arbitration tribunal against or affecting the
Practice, ADC, the Practice Assets or any other healthcare professional
associated with or employed by ADC. To ADC's knowledge, ADC is in compliance
with all applicable federal, state and local laws, regulations and
administrative orders which are applicable to the operation of ADC, including,
without limitation, matters relating to antitrust and anti-competitive
practices, discrimination, employment, and health and safety, and ADC has not
received any notices of alleged violations thereof. No governmental authorities
are presently conducting proceedings against ADC and to ADC's knowledge no such
investigation or proceeding is pending or being threatened.
6.7 Permits and Licenses. To ADC's knowledge, ADC and all other
healthcare professionals associated with or employed by ADC have all permits and
licenses required by all applicable laws; have made all regulatory filings
necessary for the conduct of ADC's business; and are not in violation of any of
said permitting or licensing requirements. A list of such permits and licenses
is attached as Exhibit 6.7.
6.8 Authority. The execution of this Agreement and the consummation of
the transactions contemplated hereby has been duly authorized by all necessary
action, and this Agreement is a valid and binding Agreement of ADC enforceable
in accordance with its terms, except (a) as such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditor's rights and (b) as the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. Attached as Exhibit 6.8 is a listing of
all third-party consents which must be obtained prior to Closing. To ADC's
knowledge, neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor compliance by ADC with
any of the provisions hereof, will:
(a) violate or conflict with, or result in a material breach
of any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of, any lien, security interest, charge or encumbrance upon any of the
assets to be conveyed hereunder of any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust, license, agreement or other
instrument or obligation to which ADC is a party, or by which either ADC or any
of the
14
assets to be conveyed hereunder is bound which would cause a Material Adverse
Change to ADC or ADC's assets; or
(b) violate any order, writ, injunction, decree, statute, rule
or regulation applicable either to ADC or any of the assets to be conveyed
hereunder which would cause a Material Adverse Change to ADC or ADC's assets.
6.9 Tax Matters. All taxes, including without limitation income,
property, sales, franchise, employees' withholdings and social security taxes
imposed by the United States or by any state, municipality or subdivision of any
state or by any other taxing authority which are due and payable by ADC and all
interest or penalties thereon have been paid in full and all federal, state and
other tax returns of ADC required by law to be filed have been timely filed, and
ADC has paid or adequately provided for all taxes (including taxes on
properties, income, franchises, licenses, sales and payrolls) which have become
due pursuant to such returns or pursuant to any assessment, except for any taxes
and assessments, the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which ADC has set aside on its books adequate reserves. There are no tax liens
on any of the assets of ADC except those with respect to taxes not yet due and
payable. There are no pending tax examinations of ADC's tax returns nor has ADC
received a revenue agent's report asserting a tax deficiency in the last twelve
(12) months. There are not and will not be at the Closing Date, any claims
pending or asserted against the assets of ADC for unpaid taxes by any federal,
state or other governmental body. Except as set forth in Exhibit 6.9, ADC has
withheld from each payment made to employees of ADC the amount of all taxes
(including, but not limited to, federal, state and local income taxes and
Federal Insurance Contribution Act taxes) required to be withheld therefrom and
all amounts customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
has paid or will pay the same to, or has deposited or will deposit such payment
with, the proper tax receiving officers or other appropriate authorities.
6.10 Employee Benefit Plans.
(a) List of Plans. Set forth on Exhibit 6.10 is an accurate
and complete list of all employee benefit plans ("Employee Benefit Plans")
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not any Employee Benefit Plans are
otherwise exempt from the provisions of ERISA, established, maintained or
contributed to by ADC, including all employers (whether or not incorporated)
which by reason of common control are treated together with ADC as a single
employer within the meaning of Section 414 of the Code since September 2, 1974.
(b) Status of Plans. ADC has never maintained and does not now
maintain or contribute to any Employee Benefit Plan subject to ERISA which is
not in substantial compliance with ERISA, or which has incurred any accumulated
funding deficiency within the meaning of Section 412 or 418B of ERISA, or which
has applied for or obtained a waiver from the Internal Revenue Service of any
minimum funding requirement under Section 412 of the Code or which is subject to
Title IV of ERISA. ADC has not incurred any liability to the Pension Benefit
Guaranty Corporation ("PBGC") in connection with any Employee Benefit Plan
covering any employees of ADC or ceased operations at any facility or withdrawn
from any such Plan in a manner which could subject it to liability under Section
4062(f), 4063 or 4064 of ERISA, and knows of no facts or circumstances which
might give rise to any liability of ADC to the PBGC under Tide IV of ERISA which
could reasonably be anticipated to result in any claim being made against
Purchaser by the PBGC. ADC has not incurred any withdrawal liability (including
15
any contingent or secondary withdrawal liability) within the meaning of Sections
4201 and 4202 of ERISA, to any Employee Benefit Plan which is a Multiemployer
Plan (as defined in Section 4001 of ERISA), and no event has occurred, and there
exists no condition or set of circumstances, which represents a material risk of
the occurrence of any withdrawaL-from or the partition, termination,
reorganization or insolvency of any Multiemployer Plan which would result in any
liability to a Multiemployer Plan.
(c) Contributions. Full payment has been made of an amounts
which ADC is required, under applicable law or under any Employee Benefit Plan
or any agreement relating to any Employee Benefit Plan to which ADC is a party,
to have paid as contributions thereto as of the last day of the most recent
fiscal year such Employee Benefit Plan ended prior to the date hereof. ADC has
made adequate provision for reserves to meet contributions that have not been
made because they are not yet due under the terms of any Employee Benefit Plan
or related agreements. Benefits under all Employee Benefit Plans are as
represented and have not been increased subsequent to the date as of which
documents have been provided.
(d) Tax Qualification. Each Employee Benefit Plan intended to be
qualified under Section 401 (a) of the Code has been determined to be so
qualified by the Internal Revenue Service and nothing has occurred since the
date of the last such deten-nination which resulted or is likely to result in
the revocation of such determination.
(e) Transactions. ADC has not engaged in any transaction with
respect to the Employee Benefit Plans which would subject it to a tax, penalty
or liability for prohibited transactions under ERISA or the Code. Neither ADC
nor any of its employees, to the extent they or any of them are fiduciaries with
respect to such plans, have breached any of the responsibilities or obligations
imposed upon fiduciaries under Title I of ERISA, nor have they taken any actions
which would result in any claim being made under or by or on behalf of any such
plans by any party with standing to make such claim.
(f) Other Plans. ADC presently does not maintain any employee
benefit plans or any other foreign pension, welfare or retirement benefit
plans other than those listed on Exhibit 6.10.
(g) Documents. ADC has delivered or caused to be delivered to
ProMedCo and its counsel true and complete copies of (i) all Employee Benefit
Plans as in effect, together with all amendments thereto which will become
effective at a later date, as well as the latest Internal Revenue Service
determination letter obtained with respect to any such Employee Benefit Plan
qualified under Section 401 or 501 of the Code, and (ii) Form 5500 for the most
recent completed fiscal year for each Employee Benefit Plan required to file
such form.
6.11 Third Party Relations. ADC is not aware of any material problems or
material disagreements with any third parties with which it does business, and
ADC will use its best efforts from the date of this Agreement until the Closing
Date to operate its business in such a manner so as not to adversely affect the
goodwill of its patients, suppliers, employees, associated physicians and other
such persons or third parties with which the ADC does business.
6.12 Leased Property. Except as set forth on Exhibit 6.12, no material
adverse claim against, or defect in, the interest purportedly leased or given
under or by any such instrument exists, and neither the lessor (to the ADC's
best knowledge) nor
16
ADC is in default under any of such leases, and ADC is not aware of any fact
which, with notice and/or the passage of time, would constitute such a default.
6.13 Compliance with Applicable Laws. Except as set forth in Exhibit
6.13, to ADC's knowledge, ADC has operated in compliance with all federal,
state, county and municipal laws, ordinances and regulations applicable thereto.
No item disclosed on Exhibit 6.13 wW cause a Material Adverse Change to ADC's
Assets.
6.14 Employees: Employee Compensation. Exhibit 6.14 is a list of all
current physician employees, physician independent contractors, nonphysician
employees, officers and consultants of ADC. Exhibit 6.14 shall include for all
Affected Employees, as such term is defined in Section 16.1 of this Agreement,
their date of hire, rate of compensation, position and social security number.
ADC has paid or discharged or will pay, discharge or assume all liabilities for
compensation and benefits to which all employees are entitled through the
Closing Date, other than those individuals who are employed by POA, pursuant to
that certain Interim Service Agreement dated January 19, 1996 between ADC and
POA including but not limited to all salaries, wages, bonuses, incentive
compensation, payroll taxes, hospitalization and medical expenses, defer-red
compensation, and vacation and sick pay, as well as any severance pay becoming
due as a result of the termination of any of ADC's employees.
6.15 Enviromnental Matters. To the best of ADC's knowledge, ADC is in
compliance in all material respects with all federal, state and local
environmental laws, rules, regulations, standards and requirements, including,
without limitation those respecting chemical, radiographic, or biomedical wastes
or any other hazardous substances or materials, as defined in any applicable
federal or state law or regulation ("Hazardous Wastes"). Any storage, holding,
release, emission, discharge, generation, processing, disposition, handling or
transportation of any Hazardous Wastes from, into or on any portion of the
clinic premises is and has been at all times in full compliance in all material
respects with all federal, state and local environmental laws, rules,
regulations, standards and requirements.
17
6.16 Healthcare Compliance. ADC is or will be within two months of the
Execution Date participating in or otherwise authorized to receive reimbursement
from or is a party to Medicare, Medicaid, and other third-party payor programs
(collectively "Third Party Payor Programs"). All necessary certifications and
contracts required for participation in such programs are in full force and
effect and have not been amended or otherwise modified, rescinded, revoked or
assigned as of the date hereof, and to the best of ADC's knowledge no condition
exists or event has occurred which in itself or with the giving of notice or the
lapse of time or both would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such Third Party Payor Program. To the best of
ADC's knowledge, ADC is in full compliance with the requirements of all such
Third Party Payor Programs applicable thereto.
6.17 Fraud and Abuse. ADC and, to ADC's knowledge, each employee of ADC
providing professional services for ADC have not engaged in any activities which
are prohibited under 42 U.S. C. ss. 1320a-7b or the regulations promulgated
thereunder pursuant to such statutes, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct, including
but not limited to the following: (a) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in any
application for any benefit or payment; (b) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment; (c) failing to disclose
knowledge by a claimant of'the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit or payment; and (d)
knowingly and willfully soliciting or receiving any remuneration (including any
kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind or offering to pay or receive such remuneration (i) in return
for referring an individual to a person for the furnishing or arranging for the
furnishing or any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or Q in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid.
6.18 Facility Compliance. To ADC's best knowledge, ADC's facility is
duly licensed and is lawfully operated in accordance with the requirements of
all applicable law and has all necessary authorizations for the use and
operation, all of which are in full force and effect. There are no outstanding
notices of deficiencies relating to ADC issued by any governmental authority or
Third Party Payor Program requiring conformity or compliance with any applicable
law or condition for participation of such governmental authority or Third Party
Payor Program, and after reasonable and independent inquiry and due diligence
and investigation, ADC has neither received notice nor has any knowledge or
reason to believe that such necessary authorizations may be revoked or not
renewed in the ordinary course.
6.19 Rates and Reimbursement Policies. To ADC's knowledge, the
jurisdiction in which ADC is located does not currently impose any restrictions
or limitations on rates which may be charged to private-pay patients receiving
services provided by ADC. ADC does not have any rate appeal currently pending
before any govenuriental authority or any administrator of any Third Party Payor
Program. ADC has no knowledge of any applicable law, which has been enacted,
promulgated or issued within the eighteen (18) months preceding the date of this
Agreement or any such legal requirement proposed or currently pending in the
jurisdiction in which ADC is located, which could have a material adverse effect
on ADC or may result in the imposition of additional Medicaid, Medicare,
charity,
18
free care, welfare, or other discounted or government assisted patients at ADC
or require ADC to obtain any necessary authorization which ADC does not
currently possess.
6.20 Accounts Receivable. To the best of ADC's knowledge, the amount of
all accounts receivable, unbilled invoices and other debts due or recorded in
the respective records and books of account of ADC, as being due to ADC, as of
the Closing Date, will be due and collectible in full in the ordinary course of
business, except to the extent of reasonable Adjustments thereon. "Adjustments"
shall mean any Adjustments to ADC's gross xxxxxxxx for uncollectible accounts,
discounts, Medicare and Medicaid allowances, worker's compensation discount,
employee/dependent health care benefit programs, professional courtesies, and
other activities that do not generate a collectible fee. Any Adjustments-made
shall be made on a reasonable historical basis, or on a reasonable prospective
basis should a new payor agreement apply.
None of such accounts receivable (except ADC's accounts receivable currently
subject to the Hospital Agreements) or other amounts'are or will at the Closing
Date be subject to any counterclaim or set-off except to the extent of any such
provision or Adjustment. ADC will furnish POA at Closing with a summary aging
report of ADC's accounts receivable as of the Closing Date.
6.21 Trade Relations. To ADC's best knowledge, there exists no actual or
threatened limitation of the business relationship of ADC with any material
customer, supplier or landlord or with any person whose contracts or projected
contracts with ADC would be material to the operations of ADC taken ' as a
whole. There exists no condition or state of facts or circumstances which could
result in the occurrence of a material adverse effect with respect to ADC or
prevent Purchaser from conducting its business after the consummation of the
transactions contemplated by this Agreement as such business is conducted or
proposed to be conducted.
6.22 [Reserved].
6.23 Full Disclosure. When considered in the context of all information
contained herein, no representation or warranty made by ADC in this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit or fail to state a material fact necessary to make the statements
contained herein or therein not materially misleading; provided, 'however, that
this warranty is not intended to obligate ADC to a higher disclosure obligation
than is set out in each of the separate representations and warranties contained
herein.
6.24 Liabilities. Attached as Exhibit 6.24 is a list of ADC's existing
liabilities associated with ADC's Practice. ADC has no other liabilities
(whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, and whether due or to become due).
6.25 Investment Representation and Access.
(a) ADC confirms that ProMedCo has made available to ADC, or to
ADC's representatives), all information requested concerning ProMedCo, the
opportunity to ask questions of its officers and directors and to acquire such
additional information about the Shares and the business and financial condition
of ProMedCo as ADC has requested, which additional information has been
satisfactorily received.
19
(b) In deciding to acquire the Shares, ADC has relied upon
consultations with ADC's legal, financial and tax advisers with respect to this
transaction and the nature of the investment together with the additional
information concerning ProMedCo provided under subsection (a) above.
(c) The financial condition of ADC is such that ADC can bear the
risk of this investment indefinitely. ADC, either alone or with ADC's
representatives has such knowledge and experience in financial and business
matters that ADC is capable of evaluating the merits and risks of an investment
in ProMedCo.
(d) ADC wil-I not transfer or otherwise dispose of the Shares or
any interest therein, except in accordance with the Stockholder Agreement and in
such manner as to not violate any registration provision of the Securities Act
of 1933, as amended (the "Securities Act"), or of any applicable state
securities law regulating the disposition thereof. Except for the shares to be
registered under Section 2.1(a) of this Agreement, ADC is aware that the Shares
have not been registered under the Securities Act or any state securities laws
or any other applicable securities legislation and that the Shares must be held
indefinitely unless they are subsequently registered or an exemption from such
registration is available. ProMedCo will permit transfer of the Shares by ADC
only when such securities have been registered under the Securities Act, any
applicable state securities law and any other applicable securities legislation
or when the request is accompanied by an opinion of counsel, acceptable to
ProMedCo, to the effect that the sale or proposed transfer does not require
registration under the Securities Act, any state securities law or any other
applicable securities legislation, or when presented with evidence otherwise
satisfactory to ProMedCo. ADC agrees that the following legend to such effect
and any other legends required by applicable state securities law will be placed
on the unregistered Shares and a stop transfer order shall be placed with
respect thereto, for as long as ProMedCo deems it necessary:
"The shares represented by this certificate have not been registered under the
Securities Act of 1933 as amended, or any state securities laws (Acts). The
shares have been acquired for investment and may not be sold or offered for sale
in the absence of an effective registration statement for the shares under the
Acts or an opinion of counsel or other evidence satisfactory to ProMedCo that
such registration is not required."
(e) ADC acknowledges that ADC has not relied on any
representation by any person, whether such representation was made directly or
indirectly, regarding the amount, percentage or type of profit or loss to be
realized, if any, from an investment in the Shares. ADC further acknowledges
that the prior experience of ProMedCo or any other person is not in any way a
prediction of the results which ADC may obtain as a result of its investment in
the Shares. ADC further acknowledges that ADC is familiar with the business to
be conducted by the ProMedCo and has had full access to the business plan
formulated by the ProMedCo.
(f) The representations, warranties and covenants of ADC
contained herein shall survive the execution and delivery of this Agreement and
the issuance of the Shares.
6.26 Membership Interest. The membership interests of ADC arr, owned in the
manner set forth in Exhibit 6.26 and, except as set forth on such exhibit, there
are no outstanding membership interests of any nature whatsoever in ADC. Except
for the transactions contemplated by this Agreement, insofar as is known
20
to ADC, there are not any agreements or understandings by ADC with respect to
ADC or any agreements by ADC relating to the practice or operation of the ADC on
any matter.
6.27 Financial Statements. ADC will furnish ProMedCo with an unaudited
balance sheet dated January 19, 1996, a copy of which is attached hereto as
Exhibit 6.27. Such financial statements, including the notes thereto, eicept as
indicated therein, are accurate and complete, were prepared from ADC's books and
records, were prepared on a basis consistent with past accounting practices of
ADC and accurately reflect the results of operations for the periods noted
therein. The balance sheet of ADC heretofore delivered (or to be delivered) by
ADC to ProMedCo fairly present the financial condition of ADC at the date
thereof, and except as indicated therein, reflect all claims against and all
debts and liabilities of ADC, fixed or contingent, as of the date thereof. Since
January 19, 1996 (the "Balance Sheet Date"), there has been (i) no material
adverse change in the assets or liabilities, or in the business condition,
financial or otherwise, or in the results of operations of ADC, and (ii) no fact
or condition known to ADC which exists or is contemplated or threatened which
might cause such a change in the future.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
ProMedCo represents, warrants, covenants and agrees with ADC as follows:
7.1 Organization. ProMedCo is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. ProMedCo has
the full power to own its property, to carry on its business as presently
conducted, to enter into this Agreement and to consummate the transactions
contemplated hereby. Upon its formation, POA shall be a corporation duly
organized, validly existing and in good standing of the laws of the State of
Texas and shall have the full power to own its property, to carry on its
business as contemplated by this Agreement, to accept the assignment of this
Agreement and to consummate the transactions contemplated hereby.
7.2 Authority. ProMedCo has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, as well as the
consummation of the transactions contemplated hereby, and at Closing, ProMedCo
shall deliver an officer's certificate to such effect. This Agreement is a valid
and binding agreement of the Purchaser, enforceable in accordance with its
terms, except (a) as such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditor's rights and (b) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provisions of the charter or the bylaws of ProMedCo or POA or any indenture,
mortgage, deed of trust, lien, lease, agreement, arrangement, contract,
instrument, license, order, judgment or decree or result in the acceleration of
any obligation thcrconder to which ProMedCo is a party or by which it is bound.
7.3 Absence of Litigation. No action or proceeding by or before any Court
or other governmental body has been instituted or is, to the best of ProMedCo's
21
knowledge, threatened with respect to the transactions contemplated by this
Agreement.
7.4 Shares. Upon delivery of the certificates represenfing ownership of
the Shares, such Shares will be duly authorized, validly issued, fully paid and
nonamessable.
7.5 Financial Statements. Attached hereto as Exhibit 7.5 are: (a) the
unaudited consolidated statements of income and of cash flows of ploMedCo for
the fiscal year ending on September 30, 1995 (the 'Interim Financials'); (b) the
unaudited consolidated balance sheet of the Company as of September 30, 1995 and
the unaudited consolidated statements of income and of cash flows for the
Company for the three months then ended (the 'Unaudited Financials,'
collectively with the Interim Financials, the "Financials'). The Financials; (i)
are complete and correct in all material respects; (ii) have been prepared in
accordance with generally accepted accounting principles, consistently applied;
and (iii) fairly present, in all material respects, the financial position of
ProMedCo as of each such date and the results of operations for each such period
then ended; provided, however, that the Financials may not contain all footnotes
required under generally accepted accounting principles, consisterdy applied.
7.6 Trade Relations. To ProMedCo's and POA's best knowledge, there
exists no actual or threatened termination of the business relationship of
ProMcdCo or POA with any material customer, supplier or landlord or with any
person whose contracts with ProMedCo or POA taken as a whole would be material
to the operations of ProMedCo or POA. There exists no condition or state of
facts or circumstances which could result in the occurrence of a material
adverse effect with respect to ProMedCo or POA taken as a whole, or prevent ADC
from conducting its business after the consummation of the transactions
contemplated by this Agreement as such business is conducted or proposed to be
conducted.
7.7 ProMedCo Stock Options and Warrants. Prior to the Initial Public
Offering(IPO) by ProMcdCo, ProMedCo and each Subsidiary will not issue any
additional stock options or warrants to anyone listed on Exhibit 7.7.
7.8 Fraud and Abuse. Purchaser and, to Purchaser's knowledge, each
employee of Purchaser providing services for Purchaser have not engaged in any
activities that are prohibited under 42 U.S.C. ss. 1320a-7b, 42 U.S.C. ss.
1395an, or the regulations promulgated thereunder pm=t to such statutes, or
related state or local statutes or rcguLations, or that are prohibited by rules
of professional conduct, including but not limited to the following: (a)
knowingly and willMy making or causing to be made a false statement or
representation of a material fact in any application for any benefit or payment;
(b) kwwingly and willfully making or causing to be made any falsc statement or
representation of a material fact for use in determining rights to any benefit
or payment, (c) failing to disclose knowledge by a claimant of the occurrence of
any event affecting the initial or continued right to any benefit or payment on
its own behalf or on behalf of another, with intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe, or rebate), directly or indirectly,
overtly or covertly, in cash or in kind or offering to pay or receive such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (H) in
return for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing, or ordering any
22
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid.
7.9 Full Disclosure. When considered in the context of all information
contained herein, no representation or warranty made by Purchaser in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit or fail to state a material fact necessary to make the
statements contained herein or therein not materially misleading. Provided,
however, that this warranty is not intended to delegate Purchaser to a higher
disclosure obligation than is set out in each of the separate representations
and warranties contained herein.
ARTICLE VIII.
CONDUCT OF BUSINESS: REVIEW
8.1 Conduct of Business of ADC. During the period from the date of this
Agreement to the Closing Date, ADC shall conduct its business only in the
ordinary and usual course of business, and shall use its best efforts to
preserve intact its business organization, keep available the services of its
employees and maintain satisfactory relationships with patients and others
having business, medical or professional relationships with ADC. ADC shall
immediately notify POA or ProMedCo of any unexpected emergency or other change
in the normal course of its business or in the operation of its properties and
of any governmental complaints, investigations, or hearings (or communications
indicating that the same may be contemplated), adjudicatory proceedings
involving the business or practice of ADC or any other healthcare professional
associated with or employed
23
by ADC and shall keep POA or ProMedCo fully informed of such events and permit
its representatives prompt access to all materials prepared in connection
therewith.
8.2 Review of ADC by ProMedCo. ADC has given ProMedCo and shall continue
to give ProMedCo prior to the Closing Date, through its representatives,
reasonable access to the assets, books, and records of ADC, as well as its
financial and legal condition to familiarize itself with such assets and other
matters; such review shall not, however, affect the representations and
warranties made by ADC herein and in the Exhibits attached hereto. ADC shall
permit ProMedCo and its representatives, advisors, lenders, and their advisors,
accountants and counsel to have full access to the premises and to all books and
records of ADC during normal business hours and to cause its employees to
furnish ProMedCo with such financial and operational data and other information
with respect to the business and assets of ADC as ProMedCo shall from time to
time reasonably request.
ARTICLE IX.
TRANSFERS AND FURTHER ASSURANCES
From time to time after the date hereof, at the request of ProMedCo, ADC
shall, without further consideration, execute, acknowledge and deliver such
further instruments of transfer and other assurances and shall take such other
action as ProMedCo reasonably may request in order to assign and/or transfer mom
effectively any of the assets to be transferred under this Agreement. ADC shall
take all action reasonably requested by ProMedCo to enable POA to succeed to the
workers compensation and unemployment insurance ratings, insurance policies,
deposits and other interests of ADC and other ratings for insurance or other
purposes established by ADC. POA shall not be obligated to succeed to any such
rating, insurance policy, deposit or other interest, except as it may elect to
do so. ADC does not warrant that POA will be successful in succeeding to any
such rating, insurance policy, deposit or other interest.
ARTICLE X.
INDEMNIFICATION
10.1 Indemnification. Each party agrees to and shall defend, indemnify
and hold harmless the other party, its employees, officers, directors,
shareholders, subsidiaries, affiliates, agents, successors and assigns
("Indemnified Parties"), against the following:
(a) Any and all direct or indirect damages, losses, settlement
payments, obligations, liabilities, claims, actions or causes of action,
encumbrances and costs and expenses suffered, sustained, incurred or paid by any
Indemnified Parties because of:
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(i) the claims of any broker or finder engaged by ADC or Purchaser;
(ii) the untruth, inaccuracy, nonfulfillment or breach of any
representation, warranty, agreement or covenant of either party contained in or
made in connection with this Agreement;
(iii) in the case of ADC:
(A) Any federal, state or local tax liability of the ADC which
is in excess of the provision for taxes reflected on the Balance Sheet and any
tax liability arising from the transactions contemplated hereby and any
penalties and interest on any of the foregoing,
(B) Purchaser's payment of any of ADC's liabilities not
expressly assumed hereunder,
(C) any liabilities arising as a result of the operation of
ADC's business prior to the Closing, and
(D) the noncompliance by the parties with the Bulk Sales law of
the Uniform Commercial Code as adopted by any applicable state.
(b) All reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees, interest and penalties) incurred by any
Indemnified Parties in connection with any action, proceeding, demand,
assessment or judgment incident to any of the matters for which indemnity is
provided in this Section 10.1.
10.2 Rules Regarding Indemnification. The obligations and
liabilities of Purchaser or ADC, as applicable, to indemnify (the "Indemnifying
Party') the Indemnified Parties shall be subject to the following terms and
conditions:
(a) The Indemnified Parties shall give written notice to the
Indemnifying Party of any claim which gives rise to a claim by the Indemnified
Parties against the Indemnifying Party based on the indemnity agreement
contained in Section 10.1 hereof, stating the nature and basis of said claims
and the amounts thereof, to the extent known.
(b) In the event any claims, action, suit or proceeding is
brought against the Indemnified Parties with respect to which the Indemnifying
Party may have liability under the indemnity contained in Section 10.1 hereof
the Indemnified Parties shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting from such claim, provided
that the Indemnified Parties shall not be required to permit the Indemnifying
Party to assume the defense of any third party claim which if not first paid,
discharged, or otherwise complied with would result in an interruption or
cessation of the conduct of the business of the Indemnified Parties or any part
thereof. Failure by the Indemnifying Party to notify the Indemnified Parties of
the Indemnifying Party's election to defend any such claim or action by a third
party within 30 days after notice thereof shall have been given by the
Indemnified Parties, shall be deemed a waiver of any such election. If the
Indemnifying Party assumes the defense of such claim or litigation resulting
therefrom, the obligations of the Indemnifying Party hereunder as to such claim
shall include taking all steps reasonably necessary in the defense or settlement
of such claim or litigation resulting in the defense or settlement of such claim
or litigation resulting
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therefrom, including the retention of counsel satisfactory to the Indemnified
Parties, and holding the Indemnified Parties han-riless fi-om and against any
and all damage resulting from, arising out of, or incurred with respect to any
settlement approved by the Indemnifying Party or any judgment in connection with
such claim or litigation resulting therefrom. The Indemnifying Party shall not,
in the defense of such claim or litigation, consent to the entry of any judgment
(other than a judgment of dismissal on the merits with costs) except with the
written consent of the Indemnified Parties nor enter into any settlement (except
with the written consent of the Indemnified Parties) which does not include as
an unconditional term thereof the giving by the claimant or the..Plaintiff to
the Indemnified Parties a release from all liability in respect to such claim or
litigation. If the Indemnifying Party shall not assume the defense of any such
claim by a third party or litigation resulting therefrom, the Indemnified
Parties may defend against such claim or litigation in such manner as they deem
appropriate. The Indemnifying Party shall, in accordance with the provisions
hereof, promptly reimburse th6 Indemnified Parties for the amount of any
settlement reasonably entered into by the Indemnified Parties and for all damage
incurred by the Indemnifying Party in connection with the defense against or
settlement of such claim or litigation.
10.3 Survival. The representations and warranties of ADC and Purchaser
contained in this Agreement, the right of offset set forth in this Agreement,
and the indemnifications contained in this Article shall survive Closing. Any
matter to which an indemnification pertains and with respect to which a claim
has been asserted or threatened following the Closing Date shall continue to be
subject to the indemnifications under this Article until finally terminated,
settled, resolved, or adjudicated; and all terms, conditions and stipulations of
this Article shall likewise continue to apply.
10.4 Notice to ADC: Opportunity to Defend. Purchaser agrees to give
prompt notice to ADC of the assertion of any claim, or the commencement of any
suit, action or proceeding, in respect of which indemnity may be sought under
Section 10.1. ADC may participate in and at its election or, at the request of
Purchaser, assume the defense of any such suit, action or proceeding at ADC's
expense. ADC shall not be Eable under Section 10.1 for any settlement effected
without its consent of any claim, litigation or proceeding in respect of which
indemnity may be sought under Section 10.1, which consent shall not be
unreasonably withheld.
10.5 Notice to Purchaser: OppQrtunity to Defend. ADC agrees to give
prompt notice to Purchaser of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought under
Section 10.1. Purchaser may participate in and at its election or, at the
request of ADC, assume the defense of any such suit, action or proceeding at
Purchaser's expense. Purchaser shall not be liable under Section 10.1 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
be unreasonably withheld.
10.6 Security for Indemnity. ADC hereby agrees that in the event
Purchaser is entitled to indemnification pursuant to the provisions of this
Article X and ADC does not pay to Purchaser the amount due hereunder, then
Purchaser shall be entitled to offset such amount against monies collected by
Purchaser on behalf of ADC pursuant to the Service Agreement or any other monies
due from Purchaser to ADC. Such right of offset shall be exercised in the manner
set forth in Section 1.7 hereof.
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10.7 Indemnification Deductible. No party hereto shall be required to
indemnify any other party hereto unless the amount of the loss or claim for
which indemnification is sought, when aggregated with all other losses and
claims for which indemnification is sought by such party, exceeds $5,000, at
which time rights to indemnification for losses and claims may be asserted for
any amounts in excess of $5,000.
ARTICLE XI.
EXPENSES
Except as otherwise provided herein, each of the parties shall pay their
own costs and expenses incurred or to be incurred by it in negotiating and
preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
ARTICLE XII.
COSTS
Should any legal proceeding arising out of this Agreement be instituted
by any party to this Agreement against another party, the party prevailing in
such suit shall be entitled, in addition to such other darnages and relief as
the court shall award, to reimbursement of reasonable attorneys' fees, costs,
expenses and court costs incurred in the prosecution or defense of such suit.
ARTICLE XIII.
TERMINATION
Notwithstanding any of the foregoing provisions, this Agreement may be
terminated at any time prior to the Closing Date:
(a) By mutual written consent of the parties hereto;
(b) By written notice from ProMedCo to ADC if any of the
representations and warranties made by the ADC in this Agreement or in the
Exhibits annexed hereto are reasonably determined by ProMedCo to be untrue or
inaccurate in any material respect;
(c) By written notice from ADC to ProMedCo if any of the
representations and warranties made by ProMedCo in this Agreement are reasonably
determined by the ADC to be untrue or inaccurate in any material respect;
(d) By written notice from ProMedCo to the ADC, or from ADC to
PrWedCo, if this transaction shall not have closed by January 19, 2002,
provided, however, if a party has intentionally frustrated the Closing, then
that party shall not have the authority to terminate this Agreement pursuant to
this Article; or .
(e) By written notice from ProMedCo to ADC, or from ADC to
ProMedCo upon termination of the Interim Service Agreement, provided the Service
Agreement does not then become effective.
27
ARTICLE XIV.
NOTICES
Any notices hereunder shall be in waiting and shall be deemed to have
been given (i) when received if given in person, (ii) on the date of
acknowledgment of receipt if sent by telex, facsimile or other wire
transmission, (iii) one (1) business day after being sent by overnight delivery
service, or (iv) three (3) days after being deposited in the United States mail,
certified or registered mail, postage prepaid, addressed as follows:
If to ProMedCo: ProMedCo, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxxx
with a copy to: Xxxxx X. Xxxxxxx, Esq.
Jenkens & Xxxxxxxxx, a Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000 Xxxxxx,
Xxxxx 00000
If to ADC: Abilene Diagnostic Clinic, P.L.L.C.
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
with a copy to: Xxxxx X. Xxxxxxx, Esq.
Xxxxxxx & Xxxxxxx
98 San Jacinto Blvd., Suite 0000
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
or to such other address as the party addressed shall have previously designated
by notice to the serving party, given in accordance with this Article.
ARTICLE XV.
AMENDMENT AND WAIVER
The parties hereto may by mutual agreement amend this Agreement in any
respect. Either party hereto may extend the time for the performance of any of
the obligations of the other, waive any inaccuracies in representations by the
other contained in this Agreement or in any document delivered pursuant hereto,
which inaccuracies would constitute a breach of this Agreement, waive compliance
by the other with any of the covenants contained in this Agreement and
performance of any obligations by the other and waive the fulfillment of any
condition that is precedent to the performance by the party so waiving of any of
its obligations under this Agreement. Any agreement on the part of any party for
any such amendment, extension or waiver must be in writing and signed by the
party agreeing to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver.
ARTICLE XVI.
EMPLOYEES - EMPLOYEE BENEFITS
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16.1 Affected Employees. "Affected Employees" shall mean nonmedical
employees, a Est of which is included in Exhibit 6.14 of ADC on the Effective
Date of the Interim Services Agreement. Effective at 12:01 a.m. Central time as
of the Effective Date of the Interim Services Agreement, all Affected Employees
shall be terminated by ADC and, if they so desire, shall become employees of POA
on terms comparable to those employed by ADC.
16.2 Responsibilities. ADC agrees to use its best efforts to satisfy, or
cause its insurance carriers to satisfy, all claims for medical, health and
hospital benefits, whether insured or otherwise (including, but not limited to,
workers compensation, life insurance, medical and disability programs), under
ADC's employee benefit plans brought by, or in respect of, Affected Employees
and former employees of ADC prior to the Closing Date, in accordance with the
terms and conditions of such employee benefit plans or applicable workers
compensation statutes without interruption as a result of the employment by POA
of any such employees after the Closing Date.
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16.3 Payroll and Payroll Taxes. ADC agrees to make a clean cut-off of
payroll and payroll tax reporting with respect to the Affected Employees paying
over to the federal, state and city governments those amounts respectively
withheld or required to be withheld for periods ending prior to the Effective
Date of the Interim Service Agreement. ADC also agrees to issue, by the date
prescribed by IRS Regulations, Forms W-2 for wages paid to the Effective Date of
the Interim Service Agreement. POA shall be responsible for all payroll and
payroll tax obligations accruing on and after the Effective Date of the Interim
Service Agreement for Affected Employees.
16.4 Termination Benefits. ADC shall be solely responsible for, and
shall pay or cause to be paid, severance payments and other termination
benefits, if any (not including state unemployment compensation), to Affected
Employees who may become entitled to such benefits by reason of any events. If
any action on the part of ADC prior to the Closing or the purchase by POA of the
Practice Assets of ADC pursuant to this Agreement or the transactions
contemplated hereby, shall result in any liability or claim of liability for
severance payments or termination benefits, or any liability, forfeiture, fine
or other obligation by virtue of any state, federal or local law, such liability
or claim of liability shall be the sole responsibility of ADC, and ADC shall
indemnify and hold harmless Purchaser for any losses resulting directly or
indirectly from such liability or claim. POA shall be solely responsible for and
shall pay or cause to be paid severance payments and other termination benefits,
if any, to Affected Employees who may become entitled to such benefits by reason
of events occurring after Closing. If any action on the part of P0A after
Closing shall result in any liability or claim of liability for severance
payments or termination benefits, or any liability, forfeiture, fine or other
obligation by virtue of any state, federal or local law, such liability or claim
of liability shall be the sole responsibility of POA, and POA shal.1 indemnify
and hold harmless ADC for any losses resulting directly or indirectly from such
liability or claim.
16.5 Employee Benefit Plans. At Closing, Purchaser shall not assume
anyresponsibility under any employee benefit plans maintained by ADC.
ARTICLE XVII.
DEFINITIONS
17.1 Adjustments is as defined in Section 6,20.
17.2 Affected Employees means those employees defined in Section
16.1.
17.3 Effective Date means the later of (a) February 16, 1997 or (b) the
first day of the month following the date of the Initial Public Offering of
ProMedCo.
17.4 Execution Date means the date this Asset Purchase Agreement is signed
by allparties.
17.5 Closing Date means the date all requirements set out in Article II
have been fulfilled.
17.6 Initial Public Offering (IPO) means an underwritten public offering
on a firm commitment basis pursuant to an effective registration statement under
the Securities Act of 1933, as amended, covering the offer and sale of Common
Stock for the account of XxxXxx.Xx (other than a registration on Form S-8
relating solely to the sale of securities to participants in a ProMedCo stock
30
plan or a registration on Forms S-3 or S-4 or any successor form.
17.7 HCFA means the Health Care Financing Agency of the United States
Government.
17.8 Material Adverse Change means, with respect to ADC, ProMedCo or
POA, any change in the business, results of operations, financial condition or
liabilities thereof as a result of an event or occurrence, including but not
limited to any legislative or regulatory change, revocation of license or rights
to do business or revocation of professional licenses or right to practice
medicine of physician partners or employees of ADC, loss of physicians, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot, storm,
condemnation, act of God or other public force that is, or may reasonably be
expected to be, material and adverse to POA and ProMedCo, taken as a whole, or
ADC, as the case may be; provided, however, that as regards the ADC, any
prospective change or changes that result directly or indirectly from any
default of POA or ProMedCo in their roles as described in the Interim Services
Agreement shall not constitute a Material Adverse Change.
17.9 Non-recurring Revenues means revenues that are not in the ordinary
course of business, or revenues that occurred during the period preceding
December 31, 1995 that are not expected to occur in the future, and excluding
any income guarantees to physicians or other recruitment incentives.
ARTICLE XVIII.
MISCELLANEOUS
18.1 Press Release. Except as required by law, ADC shall not make any
press releases or other public announcements relating to this Agreement or the
transactions contemplated hereby without the prior written consent of ProMedCo.
18.2 Binding Effect. This Agreement shall be binding upon, and shall inure
to the benefit of, the parties hereto, their successors and assigns.
18.3 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes any
prior agreements and understandings of the parties in connection therewith.
18.4 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. ANY LITIGATION
BROUGHT WITH RESPECT TO THIS AGREEMENT SHALL BE BROUGHT IN A COURT OF COMPETENT
JURISDICTION IN THE STATE OF TEXAS.
18.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
18.6 Headings. The subject headings of the Articles, Sections and
subparagraphs of this Agreement are included for purposes of convenience only,
and shall not affect the construction or interpretation of any of its
provisions.
18.7 Finders. Each party warrants to the other that no finder or broker
has been engaged by it in this transaction and that no finder's or brokerage
fees are due to any person as a result of this Agreement.
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18.8 No Third Party Benefit. Except as otherwise expressly provided,
nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person other than the parties hereto, any right,
remedy, or claim, legal or equitable, under or by reason of this Agreement or
any provision thereof.
18.9 Materiality. For purposes of this Agreement, any reference to
"material," Of materially," or similar phrase shall mean any material adverse
effect upon the business, financial condition or the results of operations of
the ADC taken as a whole.
18.10 Arbitration. Any controversy or claim arising out-pf or relating
to this Agreement or the breach thereof will be settled by binding arbitration
in accordance with the rules of commercial arbitration of the American
Arbitration Association, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Such
arbitration shall occur within the County of Xxxxxx, State of Texas, unless the
parties mutually agree to have such proceedings in sorn6 other locale. The
arbitrator(s) may in any such proceeding award attorneys' fees and costs to the
prevailing party.
18.11 Assigment and Delegation. ProMedCo and POA shall have the right
to assign their riahts hereunder to any person, firm or corporation controlling,
controlled by or under common control with ProMedCo or POA and to any lending
institution, for security purposes or as collateral, from which ProMedCo or POA
obtains financing for itself and as agent. Except as set forth above, ProMedCo
and POA shall not have the right to assign its rights and obligations hereunder
without the written consent of ADC. ADC shall not have the right to assign its
rights and obligations hereunder without the written consent of ProMedCo. ADC
may not delegate any of ADC's duties hereunder, except as expressly contemplated
herein; however, ProMedCo may delegate some of all of ProMedCo's duties
hereunder to the extent it concludes, in its sole discretion, that such
delegation is in the mutual interest of the parties hereto.
18.12 Knowledge. Any representation, warranty or covenant qualifiled by
the phrase "to ADC's knowledge," "known" or other similar phrase implying a
limitation on the basis of knowledge is intended to indicate that none of the
present members, officers, or administrators of ADC, or any
32
of them has information which would give him or her actual knowledge contrary to
the existence or non-existence of such facts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year hereinabove first set forth.
PURCHASER:
PROMEDCO, INC.
By:_______________________
Name:____________________
Title:_____________________
PROMEDCO OF ABILENE, INC.
By:_______________________
Name:____________________
Title:_____________________
ADC:
ABILENE DIAGNOSTIC CLINIC, P.L.L.C.
By:________________________
Name:______________________
Title:_______________________
HLTHHOU:6431.8/29270-1
33
LIST OF EXHIBITS
1.1 Practice Assets
1.1.1 Excluded Assets
1.3 Liabilities Assumed
1.5 Form of Service Agreement
2.1 List of Physicians
2.2 Execution Date Summary Aging Report
2.3 Form of Stockholders Agreement
4. 1 (a) Form of Xxxx of Sale
4. 1 (d) Member Assurance Agreement
4.2(b) Form of Assumption Agreement
4.3(e) Form of Opinion of ADC's Counsel
4.4(g) Form of Opinion of Purchaser's Counsel
5.1 Employment Agreements
6.2 Material Contracts
6.3(a) Insurance - Property, Fire, Liability, Etc.
6.3(b) Insurance - Malpractice Policies
6.3(c) Insurance Coverage Denied and Malpractice Claims
6.5 Contracts of Sale, Security Interests, Etc.
6.7 Permits and Licenses
6.8 Third Party Consent--ADC
6.9 Tax Matters
6.10 List of Employee Benefit Plans
6.12 Property and Adverse Claims
6.13 Compliance with Applicable Laws
6.14 Employees; Employee Compensation
6.24 Liabilities
6.26 Membership Interest
34
6.27 Financial Statements
7.5 ProMedCo's Financial Statements
7.7 Stock Option Recipients
