ASSET PURCHASE AGREEMENT
BETWEEN
BONE, MUSCLE AND JOINT, INC.
AND
SUN VALLEY ORTHOPAEDIC SURGEONS
Effective as of July 1, 1997
TABLE OF CONTENTS
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Article Page
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1. Transfer of Purchased Assets, Assumption of Liabilities and
Related Matters........................................................ 2
1.1 Transfer of Assets............................................. 2
1.2 Assets Not Being Transferred................................... 2
1.3 Liabilities Being Assumed...................................... 2
1.4 Liabilities Not Being Assumed.................................. 3
1.5 Instruments of Conveyance and Transfer, Etc.................... 3
1.6 Right of Endorsement, Etc...................................... 3
1.7 Further Assurances............................................. 4
1.8 Assignment of Leases........................................... 4
2. Purchase Price; Allocation.............................................. 5
2.1 Purchase Price; Payment........................................ 5
2.2 Allocation of Purchase Price................................... 5
2.3 Accounts Receivable Payment.................................... 5
3. Representations and Warranties.......................................... 6
3.1 Representations and Warranties of the Seller................... 6
3.2 Representations and Warranties of the Buyer.................... 9
4. Conditions of Closing................................................... 10
4.1 Conditions of Each Party's Obligations......................... 10
4.2 Conditions of Obligations of the Buyer......................... 11
4.3 Conditions of Obligations of the Seller........................ 12
4.4 Related Agreements............................................. 13
5. Closing................................................................. 14
5.1 Closing Date................................................... 14
5.2 Closing Transactions........................................... 14
5.3 Post-Closing Obligations....................................... 15
6. Indemnification......................................................... 15
6.1 Definitions.................................................... 15
6.2 Indemnification Generally...................................... 17
6.3 Assertion of Claims............................................ 17
6.4 Notice and Defense of Third Party Claims....................... 17
6.5 Survival of Representations, Warranties and Covenants.......... 19
7. Non-Competition......................................................... 19
8. Repurchase of Assets.................................................... 19
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9. Amendment, Modification and Waiver..................................... 19
10. Miscellaneous.......................................................... 20
10.1 Transfer Taxes, Etc........................................... 20
10.2 Entire Agreement.............................................. 20
10.3 Descriptive Headings.......................................... 20
10.4 Notices....................................................... 20
10.5 Counterparts.................................................. 21
10.6 Bulk Sales Compliance......................................... 21
10.7 Governing Law; Jurisdiction................................... 21
10.8 Attorneys' Fees............................................... 22
10.9 Benefits of Agreement......................................... 22
10.10 Pronouns...................................................... 22
SCHEDULES
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1.1(a) - Medical Equipment
1.1(b) - Furniture, Furnishings, Trade Fixtures, and Office Equipment
1.1(c) - Equipment Leases
1.1(d) - Supplies
1.1(e) - Accounts Receivable
1.1(f) - Office Leases
1.1(g) - Deposits
1.1(h) - Additional Items
2.2 - Allocation of Purchase Price
3.1(c) - Claims
3.1(d) - Litigation
EXHIBITS
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Exhibit A - Xxxx of Sale
Exhibit B - Financing Statement
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Definitions
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The following terms which may appear in more than one Section of this
Agreement are defined at the following pages:
Term Page
---- ----
A/R Collections ........................................................... 5
A/R Initial Payment Amount ................................................ 5
Accounts Receivable ....................................................... 2
Affiliate ................................................................. 15
Agreement ................................................................. 1
Assignment of Office Lease ................................................ 13
Assumed Obligations ....................................................... 3
Business Day .............................................................. 21
Buyer .................................................................. 1
Buyer Indemnification Event ............................................... 15
Buyer Indemnified Persons ................................................. 16
Claims .................................................................. 7
Closing .................................................................. 14
Closing Date .............................................................. 14
Consent of Landlord ....................................................... 13
Determination Date ........................................................ 5
Excluded Assets ........................................................... 2
Excluded Obligations ...................................................... 3
Indemnified Persons ....................................................... 16
Indemnifying Person ....................................................... 16
Losses .................................................................. 16
Management Services Agreement ............................................. 1
Medical Equipment Master Lease ............................................ 14
Medical Group Governance Documents ........................................ 6
Office Sublease ........................................................... 13
Partner .................................................................. 1
Permitted Liens ........................................................... 8
Principal ................................................................. 1
Provider Account Agreement ................................................ 13
Purchase Price ............................................................ 5
Purchased Assets .......................................................... 2
Related Agreements ........................................................ 11
Restricted Stock Agreement ................................................ 13
Seller .................................................................. 1
Seller Indemnification Event .............................................. 16
Seller Indemnified Persons ................................................ 17
Statement of Allocation ................................................... 5
Stockholder Non-Competition Agreement ..................................... 13
Subject Business .......................................................... 1
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of July
1, 1997, by and between BONE, MUSCLE AND JOINT, INC., a Delaware corporation
(the "Buyer"), and SUN VALLEY ORTHOPAEDIC SURGEONS, an Arizona general
partnership (the "Seller").
A. The Seller is an Arizona general partnership comprised of individual
physicians and Arizona professional corporations, and is engaged in the business
(the "Subject Business") of providing orthopedic medical and surgical services
and related medical and ancillary services to patients. (Each partner in the
Medical Group is referred to herein as a "Partner," and each shareholder of a
professional corporation that is a Partner is referred to herein as a
"Principal.")
B. The Buyer is engaged in the business of providing management,
administrative, financial, marketing, information technology, and related
services to professional medical organizations.
C. Concurrently herewith, the Seller and the Buyer are entering into a
Management Services Agreement (the "Management Services Agreement"), pursuant to
which the Buyer will furnish to the Seller management, administrative, and
related services.
D. The Seller desires to sell, transfer, convey and assign to the Buyer,
and the Buyer desires to purchase from the Seller, certain of the assets,
properties, interests in properties and rights of the Seller used in the Subject
Business upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereby agree as follows:
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1. Transfer of Purchased Assets, Assumption of Liabilities and Related
Matters.
1.1 Transfer of Assets. On the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined), the Seller shall sell,
transfer, convey and assign to the Buyer, and the Buyer shall purchase, assume,
and accept from the Seller, the following assets, properties, interests in
properties and rights of the Seller (the "Purchased Assets"), as the same shall
exist immediately prior to the Closing, free and clear of all Claims (as defined
below) (except Permitted Liens (as defined below)):
(a) the medical equipment owned by the Seller and listed on Schedule
1.1(a);
(b) the furniture, furnishings, trade fixtures, and office equipment
owned by the Seller and listed on Schedule 1.1(b);
(c) the Seller's rights and interests under any equipment leases
identified on Schedule 1.1(c), subject to the Buyer's assumption of the
obligations accruing thereunder as provided in Section 1.3;
(d) the supplies described on Schedule 1.1(d);
(e) the accounts receivable described on Schedule 1.1(e) (the
"Accounts Receivable");
(f) the Seller's rights and interests under the office leases
identified in Schedule 1.1(f), subject to the Buyer's assumption of the
obligations accruing thereunder as provided in Section 1.3;
(g) the deposits identified on Schedule 1.1(g); and
(h) any additional items identified on Schedule 1.1(h).
1.2 Assets Not Being Transferred. All assets, properties, interests in
properties, and rights of the Seller not expressly identified in Section 1.1 or
the schedules referenced therein (the "Excluded Assets") are expressly excluded
from the assets of the Seller being sold, assigned, or otherwise transferred to
the Buyer.
1.3 Liabilities Being Assumed. Except as otherwise provided herein and
subject to the terms and conditions of this Agreement, simultaneously with the
sale, transfer,
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conveyance and assignment to the Buyer of the Purchased Assets, the Buyer shall
assume, and hereby agrees to pay when due, those liabilities accruing after the
Closing Date under any equipment leases identified in Schedule 1.1(c) and under
any office lease identified in Schedule 1.1(f) (the "Assumed Obligations").
1.4 Liabilities Not Being Assumed. The Buyer is not assuming any
liabilities or obligations of the Seller (fixed or contingent, known or unknown,
matured or unmatured) whatsoever other than the Assumed Obligations. For
convenience of reference, all liabilities and obligations of the Seller not
being assumed by the Buyer are collectively referred to as the "Excluded
Obligations."
1.5 Instruments of Conveyance and Transfer, Etc. At the Closing, the Seller
shall deliver (or cause to be delivered) to the Buyer such deeds, bills of sale,
endorsements, assignments and other good and sufficient instruments of sale,
transfer, conveyance and assignment as shall be necessary to sell, transfer,
convey and assign to the Buyer, in accordance with the terms hereof, title to
the Purchased Assets, free and clear of all Claims (except Permitted Liens),
including, without limitation, the items required to be delivered by Seller
pursuant to Section 5.2 hereof. Simultaneously therewith, the Seller shall take
all steps as may be reasonably required to put the Buyer in possession and
operating control of the Purchased Assets.
1.6 Right of Endorsement, Etc. Effective upon the Closing, the Seller
hereby constitutes and appoints the Buyer, its successors and assigns, the true
and lawful attorney-in-fact of the Seller with full power of substitution, in
the name of the Buyer, or the name of the Seller, on behalf of and for the
benefit of the Buyer, to collect all accounts receivable assigned to the Buyer
as provided herein, to endorse, without recourse, checks, notes and other
instruments received in payment of such accounts receivable in the name of the
Seller, and to execute in the name of the Seller such financing statements,
continuation statements, and other documentation as may be necessary or
appropriate to evidence, protect, or perfect the Buyer's interest in and with
respect to such accounts receivable, and to institute and prosecute, in the name
of the Seller or otherwise, all proceedings which the Buyer may deem proper in
order to assert or enforce
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any claim, right or title of any kind in or to the Purchased Assets (other than
the Accounts Receivable), to defend and compromise any and all actions, suits or
proceedings in respect of any of the Purchased Assets (other than the Accounts
Receivable) and to do all such acts and things in relation thereto as the Buyer
may deem advisable. The foregoing powers are coupled with an interest and shall
be irrevocable by the Seller, directly or indirectly, whether by the dissolution
of the Seller or in any manner or for any reason.
1.7 Further Assurances. The Seller shall pay or cause to be paid to the
Buyer promptly any amounts which shall be received by the Seller after the
Closing which constitute Purchased Assets, including all amounts paid to the
Seller on account of the Accounts Receivable. The Seller shall, at any time and
from time to time after the Closing, upon the reasonable request of the Buyer,
execute, acknowledge, deliver and file, or cause to be executed, acknowledged,
delivered, and filed, and perform or cause to be performed, all such further
acts, transfers, conveyances, assignments or assurances as may reasonably be
required for better selling, transferring, conveying, assigning and assuring to
the Buyer, or for aiding and assisting in the collection of or reducing to
possession by the Buyer, any of the assets, properties, interests in properties
or rights being purchased by the Buyer hereunder. Any expenses incurred in
connection with the foregoing shall be borne equally by the Buyer and the
Seller.
1.8 Assignment of Leases. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement or
attempted agreement to assign any office or equipment lease if an attempted
assignment thereof, without the consent of any other party thereto, would
constitute a breach thereof or in any way affect the rights of the Buyer or the
Seller thereunder. The Seller shall use its best efforts, and the Buyer shall
cooperate with the Seller, to obtain the consent of any such third party to the
assignment thereof to the Buyer. If such consent is not obtained, the Seller
shall cooperate with the Buyer in any arrangements reasonably necessary or
desirable to provide for the Buyer the benefits (together with the obligations
to perform) thereunder.
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2. Purchase Price; Allocation.
2.1 Purchase Price; Payment. The purchase price (the "Purchase Price") to
be paid for the Purchased Assets shall consist of the following:
(a) the sum of One Hundred Six Thousand Five Hundred Sixty-Four
Dollars and Seventy-Five Cents ($106,564.75); and
(b) the sum of Three Hundred Seven Thousand Dollars ($307,000) (the
"A/R Initial Payment Amount"), subject to adjustment in accordance with
Section 2.3.
2.2 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Purchased Assets in a statement (the "Statement of Allocation")
reflecting the allocation set forth in Schedule 2.2 attached hereto. The A/R
Initial Payment Amount represents the parties' best estimate, as of the date of
this Agreement, of the total collectible amount of the accounts receivable
assigned under this Agreement. The parties shall complete their respective tax
returns for the period which includes the Closing Date in a manner that is
consistent with the Statement of Allocation.
2.3 Accounts Receivable Payment. The portion of the Purchase Price
specified in Section 2.1(b) is subject to adjustment as follows:
(a) Within fifteen (15) days after the date which occurs one year
after the date hereof (the "Determination Date"), the Buyer shall furnish
to the Seller a statement setting forth the amount of collections received
by the Buyer in payment of the Accounts Receivable as of the Determination
Date (the "A/R Collections"), including detail of write-offs of any of the
Accounts Receivable, the remaining outstanding balance of the Accounts
Receivable, and any other detail relating thereto as the Seller may
reasonably request. If the amount of A/R Collections exceeds the A/R
Initial Payment Amount, the Buyer shall promptly pay to the Seller an
amount equal to the amount of such excess. If the A/R Initial Payment
Amount exceeds the amount of the A/R Collections, the Seller shall promptly
pay to the Buyer an amount equal to such excess.
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(b) Commencing with the month next following the month in which the
Determination Date occurred, the Buyer shall pay to the Seller on a monthly
basis, within fifteen (15) days after the end of each month, an amount
equal to the actual amount of collections received by the Buyer during the
prior month in respect of any of the then-outstanding Accounts Receivable,
such payments to continue until the Accounts Receivable have been collected
in full or agreed by the parties to be written off. It is the intention of
the parties that an amount equal to any and all payments received by the
Buyer in respect of the Accounts Receivable be paid by the Buyer to the
Seller.
(c) All payments by patients and third party payors shall be accounted
for on a first-in-first-out basis unless any such payment is identified as
a payment in respect of a particular invoice or otherwise is designated as
payment of a particular invoice or for a particular service.
3. Representations and Warranties.
3.1 Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer, as of the date hereof, as follows:
(a) Organization; Good Standing; Qualification and Power. The Seller
is a general partnership duly organized, validly existing and in good
standing under the laws of the State of Arizona and has all requisite power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted and as proposed to be conducted, to execute
and deliver this Agreement, a Xxxx of Sale in the form attached hereto as
Exhibit A (the "Xxxx of Sale"), and a Financing Statement in the form
attached hereto as Exhibit B (the "Financing Statement") (collectively, the
"Transaction Documents"), to perform its obligations thereunder, and to
consummate the transactions contemplated thereby. The Seller has delivered
to the Buyer a true and correct copy of its partnership agreement,
including all amendments thereto (the "Medical Group Governance Documents")
as in effect on the date hereof.
(b) Authority. The execution, delivery and performance of the
Transaction Documents, and the consummation of the transactions
contemplated hereby and
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thereby have been duly and validly authorized by all necessary corporate action
on the part of the Seller. The Transaction Documents have been duly and validly
executed and delivered by the Seller and constitute legal, valid and binding
obligations of the Seller enforceable in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally. Neither the execution, delivery or performance by the Seller of the
Transaction Documents, nor the consummation by the Seller of the transactions
contemplated thereby, nor compliance by the Seller with any provision thereof
will (i) conflict with or result in a breach of any provision of the Medical
Group Governance Documents, (ii) cause a default (with due notice, lapse of time
or both), or give rise to any right of termination, cancellation or
acceleration, under any of the terms, conditions or provisions of any note,
bond, lease, mortgage, indenture, license or other instrument, obligation or
agreement to which the Seller is a party or by which it or any of its respective
properties or assets may be bound or (iii) violate any law, statute, rule or
regulation or order, writ, judgment, injunction or decree of any court,
administrative agency or governmental body applicable to the Seller or any of
its respective properties or assets. No permit, authorization, consent or
approval of or by, or any notification of or filing with, any person
(governmental or private) is required in connection with the execution, delivery
or performance by the Seller of the Transaction Documents or the consummation of
the transactions contemplated thereby.
(c) Title to Assets, Properties, Interests in Properties and Rights and
Related Matters.
(i) The Seller has good and valid title to all of the Purchased
Assets, free and clear of all security interests, judgments, liens,
pledges, claims, charges, escrows, encumbrances, easements, options, rights
of first refusal, rights of first offer, mortgages, indentures, security
agreements or other agreements, arrangements, contracts, commitments,
understandings or obligations, whether written or oral and whether or not
relating in any way to credit or the borrowing of money (collectively,
"Claims"), of any kind or character, except for (i) those Claims set forth
on Schedule 3.1(c) and (ii) Permitted Liens.
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(ii) There does not exist any condition which materially interferes
with the economic value or use (consistent with the Seller's past practice)
of any tangible personal property included in the Purchased Assets and such
property is in good operating condition and repair, reasonable wear and
tear excepted.
(iii) The Seller has the complete and unrestricted power and the
unqualified right to sell, transfer, convey and assign the Purchased
Assets, and the Transaction Documents are sufficient to sell, transfer,
convey and assign to the Buyer all right, title and interest of the Seller
in and to the Purchased Assets, free and clear of all Claims (other than
Permitted Liens) and to vest in the Buyer good and valid title thereto.
(iv) As used in this Agreement, "Permitted Liens" shall mean (i) any
lien for current taxes not yet due and payable, and (ii) liens of carriers,
warehousemen, mechanics and materialmen created in the ordinary course of
the Subject Business for amounts not yet due and payable which do not
materially detract from the value or impair the use of any property or
assets.
(d) Litigation. Except as set forth on Schedule 3.1(d), there are no (i)
actions, suits, claims, investigations or legal or administrative or arbitration
proceedings pending or, to the best knowledge of the Seller, threatened against
the Seller, against any Partner or Principal in connection with the Subject
Business, or against the Purchased Assets or the Subject Business, whether at
law or in equity, or before or by any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality or
(ii) judgments, decrees, injunctions or orders of any court, governmental
department, commission, agency, instrumentality or arbitrator against the Seller
or affecting the Purchased Assets or the Subject Business. The Seller has
delivered to the Buyer all documents and correspondence relating to matters
referred to in said Schedule 3.1(d).
(e) Compliance; Governmental Authorizations. The Seller has complied in all
material respects with all applicable Federal, state, local or foreign laws,
ordinances, regulations and orders. The Seller has all Federal, state, local and
foreign
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governmental licenses and permits necessary in the conduct of the Subject
Business the lack of which would have a material adverse effect on the Buyer's
ability to operate the Subject Business after the Closing on substantially the
same basis as presently operated, such licenses and permits are in full force
and effect, no violations are or have been recorded in respect of any thereof
and no proceeding is pending or threatened to revoke or limit any thereof. None
of such licenses and permits shall be affected in any material respect by the
transactions contemplated hereby.
(f) Disclosure. Neither this Agreement (including the Exhibits and
Schedules attached hereto) nor any other document, certificate or written
statement furnished to the Buyer by or on behalf of the Seller in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
3.2 Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Seller, as of the date hereof, as follows:
(a) Organization, Good Standing and Power. The Buyer (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, (ii) has all requisite corporate power and
authority to own, lease and operate its properties, to carry on its
business as now being conducted, to execute and deliver this Agreement, to
perform its obligations hereunder, and to consummate the transactions
contemplated hereby, and (iii) is duly qualified and in good standing to do
business in all jurisdictions in which the failure to be so qualified and
in good standing to do business could reasonably be expected to have a
material adverse effect on the business, assets, operations, results of
operations or affairs of the Buyer.
(b) Authority. The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate action on
the part of the Buyer. This Agreement has been duly and validly executed
and delivered by the Buyer, and constitutes the valid and binding
obligation of the Buyer, enforceable in accordance with its terms except as
enforcement
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may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the rights of creditors generally. Neither the
execution, delivery or performance by the Buyer of this Agreement, nor the
consummation by the Buyer of the transactions contemplated hereby, nor
compliance by the Buyer with any provision hereof, will (i) conflict with or
result in a breach of any provisions of the Certificate of Incorporation or
By-laws of the Buyer, (ii) cause a default (with due notice, lapse of time or
both), or give rise to any right of termination, cancellation or acceleration,
under any of the terms, conditions or provisions of any material note, bond,
lease, mortgage, indenture, license or other instrument, obligation or agreement
to which the Buyer is a party or by which it or any of its properties or assets
is or may be bound or (iii) violate any law, statute, rule or regulation or
order, writ, judgment, injunction or decree of any court, administrative agency
or governmental body applicable to the Buyer or any of its properties or assets.
No permit, authorization, consent or approval of or by, or any notification of
or filing with, any person (governmental or private) is required in connection
with the execution, delivery or performance by the Buyer of this Agreement or
the consummation by the Buyer of the transactions contemplated hereby.
(c) Disclosure. Neither this Agreement (including the Exhibits and
Schedules attached hereto) nor any other document, certificate or written
statement furnished to the Seller by or on behalf of the Buyer in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
4. Conditions of Closing.
4.1 Conditions of Each Party's Obligations. The obligations of the Seller
to sell the Purchased Assets, and of the Buyer to purchase the Purchased Assets,
are subject to the satisfaction of the following conditions unless waived in
writing (to the extent such conditions can be waived) by the Seller and the
Buyer:
(a) Approvals. All authorizations, consents, orders or approvals of,
or declarations or filings with, or expiration of waiting periods imposed
by, any governmental
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agency or authority necessary for the consummation of the transactions
contemplated hereby shall have been filed, occurred or been obtained.
(b) Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the
consummation of transactions contemplated hereby shall have been issued by
any Federal or state court and remain in effect. Each party agrees to use
its best efforts to have any such injunction or order lifted.
(c) Legislation. No Federal, state, local or foreign statute, rule or
regulation shall have been enacted which prohibits, restricts or delays the
consummation of the transactions contemplated by this Agreement or any of
the conditions to the consummation of such transactions.
(d) Related Agreements. Each of the related agreements identified in
Section 4.4 hereof (collectively, the "Related Agreements") shall have been
fully executed and delivered prior to or at the Closing by all of the
parties required to execute and deliver such agreements.
4.2 Conditions of Obligations of the Buyer. The obligation of the Buyer to
purchase the Purchased Assets is subject to the satisfaction of the following
conditions unless waived in writing (to the extent such conditions can be
waived) by the Buyer:
(a) Representations and Warranties. The representations and warranties
of the Seller set forth in Section 3.1 shall in each case be true and
correct in all material respects as of the date of this Agreement and as of
the Closing as though made at and as of the Closing.
(b) Performance of Obligations. The Seller shall have performed all
obligations required to be performed by it under this Agreement prior to
and at the Closing.
(c) Authorization. All action necessary to authorize the execution,
delivery and performance of this Agreement by the Seller and the
consummation of the
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transactions contemplated hereby and thereby shall have been duly and
validly taken by the Seller and the Seller shall have full power and right
to consummate the transactions contemplated hereby and thereby.
(d) Consents and Approvals. The Seller shall have delivered to the
Buyer duly executed copies of (i) consents to the assignment of any office
leases and equipment leases listed on Schedules 1.1(c) and 1.1(f) and (ii)
all other approvals, if any, required by this Agreement or the Schedules,
in each case in form and substance satisfactory to the Buyer and counsel to
the Buyer.
(e) Government Consents, Authorizations, Etc. All consents,
authorizations, orders or approvals of, and filings or registrations with,
any Federal, state, local or foreign governmental commission, board or
other regulatory body which are required for or in connection with the
execution and delivery by the Seller of this Agreement and the consummation
by the Seller of the transactions contemplated hereby shall have been
obtained or made.
4.3 Conditions of Obligations of the Seller. The obligation of the Seller
to sell the Purchased Assets to the Buyer is subject to the satisfaction of the
following conditions unless waived in writing (to the extent such conditions can
be waived) by the Seller:
(a) Representations and Warranties. The representations and warranties
of the Buyer set forth in Section 3.2 shall in each case be true and
correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made at and as of the Closing.
(b) Performance of Obligations. The Buyer shall have performed all
obligations required to be performed by it under this Agreement prior to
and at the Closing.
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(c) Authorization. All action necessary to authorize the execution,
delivery and performance of this Agreement by the Buyer and the
consummation of the transactions contemplated hereby shall have been duly
and validly taken by the Buyer.
(d) Consents and Approvals. The Seller shall have received duly
executed copies of (i) consents to the assignment of any office leases and
equipment leases listed on Schedules 1.1(c) and 1.1(f) and (ii) all other
approvals, if any, required by this Agreement or the Schedules, in each
case in form and substance satisfactory to the Seller and counsel to the
Seller.
(e) Government Consents, Authorizations, Etc. All consents,
authorizations, orders or approvals of, and filings or registrations with,
any Federal, state, local or foreign governmental commission, board or
other regulatory body which are required for or in connection with the
execution and delivery by the Buyer of this Agreement and the consummation
by the Buyer of the transactions contemplated hereby shall have been
obtained or made.
4.4 Related Agreements. The Related Agreements referred to in this
Agreement consist of the following, all of which are entered into as of the date
hereof:
(a) the Management Services Agreement, entered into by and between the
parties hereto;
(b) the Stockholder Non-Competition Agreement, entered into by and
among the Seller, the Buyer, and the Eligible Parties (the "Stockholder
Non-Competition Agreement");
(c) the Restricted Stock Agreement, entered into by and between the
Buyer and the Eligible Parties (the "Restricted Stock Agreement");
(d) the Provider Account Agreement, entered into by and between the
Seller, the Buyer, the Seller's bank, and the Buyer's lender (the "Provider
Account Agreement");
(e) an Assignment of Office Lease ("Assignment of Office Lease") and
an Office Sublease ("Office Sublease"), together with Consent of Landlord
("Consent of
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Landlord"), relating to each of the medical offices identified in Schedule
1.1(f), entered into by and between the parties hereto; and
(f) the Medical Equipment Master Lease, entered into by and between
the parties hereto (the "Medical Equipment Master Lease").
5. Closing.
5.1 Closing Date. The closing (the "Closing") for the consummation of the
transactions contemplated by this Agreement shall be deemed to have taken place
at 12:01 a.m. on July 1, 1997 (the "Closing Date"), irrespective of the actual
date(s) and time(s) that all of the documents required hereunder are executed
and delivered.
5.2 Closing Transactions. At the Closing, the parties shall take the
actions and deliver the documents identified in this Section 5.2. The Closing
shall not be deemed to have taken place, and the transactions contemplated by
this Agreement shall not be deemed to have been consummated, unless all of the
closing transactions identified in this Section 5.2 have been completed or
waived in writing by the parties.
(a) Each of the parties shall deliver to the other a fully executed copy of
the Management Services Agreement;
(b) Each of the parties shall deliver to the other a fully executed copy of
the Stockholder Non-Competition Agreement;
(c) Each of the parties shall deliver to the other a fully executed copy of
the Restricted Stock Agreement;
(d) Each of the parties shall deliver to the other a fully executed copy of
the Provider Account Agreement;
(e) Each of the parties shall deliver to the other a fully executed copy of
each Assignment of Office Lease, each Office Sublease, and each Consent of
Landlord relating to each of the premises identified in Schedule 1.1(f);
(f) Each of the parties shall deliver to the other a fully executed copy of
the Medical Equipment Master Lease;
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(g) The Seller shall deliver to the Buyer fully executed copies of the
Authorization and Approval by Partners and Resolutions of Corporate Partners
presented for signature herewith;
(h) The Seller shall deliver to the Buyer an executed copy of the Xxxx of
Sale;
(i) The Seller shall deliver to the Buyer a fully executed copy of the
Financing Statement;
(j) The Buyer shall instruct its bank to wire immediately available funds
for credit to Seller's bank account, for the Purchase Price as specified in
Section 2.1 hereof and for the Additional Consideration, if any, specified in
Schedule III, Section C, of the Management Services Agreement.
5.3 Post-Closing Obligations. Within fifteen (15) days after the Closing
Date, the Buyer shall deliver to the Seller stock certificates issued in the
names of the Eligible Parties as required by the Restricted Stock Agreement.
6. Indemnification.
6.1 Definitions. As used in this Agreement, the following terms shall have
the following meanings:
(a) "Affiliate", as to any person, means any other person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such person.
(b) "Buyer Indemnification Event" shall mean the following:
(i) (A) the untruth, inaccuracy or breach of any representation
or warranty of the Seller contained in this Agreement, any Schedule or
Exhibit attached hereto or any certificate delivered by the Seller in
connection herewith (or any facts or circumstances constituting any
such untruth, inaccuracy or breach) or (B) the breach of any agreement
or covenant of the Seller contained in this Agreement;
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(ii) the assertion against the Buyer or any Buyer Indemnified
Person of any liability or obligation arising from, relating to, or in
any way connected with the operation of the Subject Business prior to
the Closing;
(iii) the assertion against the Buyer or any Buyer Indemnified
Person of any Excluded Obligation; and
(iv) any non-compliance by the Seller with any state "bulk sales
laws" to the extent that such laws may be applicable to the
transactions contemplated hereby.
(c) "Buyer Indemnified Persons" shall mean and include the Buyer and
its officers, directors, and employees.
(d) "Indemnified Persons" shall mean the Buyer Indemnified Persons or
the Seller Indemnified Persons, as the case may be.
(e) "Indemnifying Person" shall mean the Buyer or the Seller.
(f) "Losses" shall mean any and all losses, claims, damages,
liabilities, expenses (including reasonable attorneys' and accountants'
fees), assessments, tax deficiencies and taxes (including interest or
penalties thereon) sustained, suffered or incurred by any Indemnified
Person arising from any matter which is the subject of indemnification
under Section 6.2.
(g) "Seller Indemnification Event" shall mean (i) the untruth,
inaccuracy or breach of any representation or warranty of the Buyer
contained in this Agreement, any Schedule or Exhibit attached hereto or any
certificate delivered by the Buyer in connection herewith (or any facts or
circumstances constituting any such untruth, inaccuracy or breach) or (ii)
the breach of any agreement or covenant of the Buyer contained in this
Agreement.
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(h) "Seller Indemnified Persons" shall mean and include the Seller,
the Partners, the Principals, and Seller's employees.
6.2 Indemnification Generally.
(a) Buyer Indemnification. The Seller shall indemnify, defend and hold
harmless the Buyer Indemnified Persons, and each of them, from and against any
and all Losses resulting from Buyer Indemnification Events.
(b) Seller Indemnification. The Buyer shall indemnify, defend and hold
harmless the Seller Indemnified Persons, and each of them, from and against any
and all Losses resulting from Seller Indemnification Events.
6.3 Assertion of Claims. No claim, demand, suit or cause of action shall be
brought under Section 6.2 unless the Indemnified Persons, or any of them, give
the Indemnifying Person written notice of the existence of any such claim,
demand, suit or cause of action, stating with particularity the nature and basis
of said claim, and the amount thereof, to the extent known, and providing to the
extent reasonably available all written documentation relating thereto. Such
written notice shall be delivered to the Indemnifying Person as soon as
practicable upon receipt of actual knowledge of such claim, demand, suit or
cause of action; provided, however, that the failure to provide such written
notice shall not affect the Indemnified Persons' right to indemnification
hereunder if failure to provide such written notice does not materially
adversely affect the Indemnifying Person. Upon the giving of such written notice
as aforesaid, the Indemnified Persons, or any of them, shall have the right to
commence legal proceedings subsequent to the applicable survival date, if any,
for the enforcement of their rights under Section 6.2.
6.4 Notice and Defense of Third Party Claims. (a) In the event any action,
suit or proceeding is brought by a third party against an Indemnified Person,
with respect to which an Indemnifying Person may have liability under Section
6.2, the action, suit or proceeding shall, upon the written agreement of the
Indemnifying Person that it is obligated with respect to such action, suit or
proceeding, be
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defended (including all proceedings on appeal or for review which counsel for
the defendant shall deem appropriate) and, unless otherwise provided below,
controlled by such Indemnifying Person. The Indemnified Persons shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Persons
unless (i) the employment of such counsel shall have been authorized in writing
by the Indemnifying Person in connection with the defense of such action, suit
or proceeding, (ii) the Indemnifying Person shall fail actively and diligently
to defend such action, suit or proceeding, (iii) the Indemnified Persons shall
have reasonably concluded that such action, suit or proceeding involves to a
significant extent matters beyond the scope of the indemnity agreement contained
in Section 6.2 or (iv) the Indemnified Persons shall have reasonably concluded
that there may be one or more legal or equitable defenses available to the
Indemnified Persons which are different from or additional to those available to
the Indemnifying Person, in any of which events the Indemnifying Person shall
not have the right to direct the defense of such action, suit or proceeding on
behalf of the Indemnified Persons and that portion of any fees and expenses of
counsel related to matters covered by the indemnity agreement and contained in
Section 6.2 shall be borne by the Indemnifying Person. The Indemnified Persons
shall be kept fully informed of such action, suit or proceeding at all stages
thereof whether or not they are so represented. The Indemnifying Person shall
make available to the Indemnified Persons and their attorneys and accountants
all books and records of the Indemnifying Person relating to such action, suit
or proceeding and the parties hereto agree to render to each other such
assistance as they may reasonably require of each other in order to ensure the
proper and adequate defense of any such action, suit or proceeding.
(b) The Indemnifying Person shall not make any settlement of any action,
suit or proceeding without the written consent of the Indemnified Persons, which
consent shall not be unreasonably withheld; provided, however, that in the event
the Indemnified Persons refuse to consent to a settlement acceptable to the
Indemnifying Person which is capable of settlement by the payment of money only
and the Indemnifying Persons shall demonstrate to the reasonable satisfaction of
the Indemnified Persons their ability to pay such amount, the Indemnifying
Person may pay the amount of the proposed settlement to the Indemnified Persons
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and shall thereupon be released from any further liability with respect to such
action, suit or proceeding.
6.5 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Seller contained in Section 3.1 and the
representations and warranties of the Buyer contained in Section 3.2 shall
survive the Closing and shall terminate forty-five (45) days following the first
anniversary of the Closing Date; provided, however, that the representations and
warranties of the Seller set forth in Sections 3.1(a), 3.1(b), 3.1(c) and
3.1(e), and the representations and warranties of the Buyer set forth in
Sections 3.2(a) and 3.2(b), shall survive the Closing and remain in full force
and effect until the expiration of the statute of limitations, if any,
applicable to the matters set forth therein (and indefinitely if none).
7. Non-Competition. The parties hereby acknowledge that they have entered
into an agreement regarding non-competition, as set forth in Section 15 of the
Management Services Agreement (identified at Recital C hereof).
8. Repurchase of Assets.
The Purchased Assets, except for the Accounts Receivable, are subject to
repurchase by the Seller from the Buyer upon termination of the Management
Services Agreement in accordance with Section 13.5 of the Management Services
Agreement.
9. Amendment, Modification and Waiver.
This Agreement shall not be altered or otherwise amended except pursuant to
an instrument in writing signed by each of the parties. The waiver by one party
of the performance of any covenant, condition or promise shall not invalidate
this Agreement, nor shall it be considered as a waiver by such party of any
other covenant, condition or promise. The delay in pursuing any remedy or in
insisting upon full performance for any breach or failure of any covenant,
condition or promise shall not prevent a party from later pursuing any remedies
or insisting upon full performance for the same or any similar breach or
failure.
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10. Miscellaneous.
10.1 Transfer Taxes, Etc. The Seller and the Buyer shall each pay one-half
(1/2) of all sales, use and excise taxes and all registration, recording or
transfer taxes which may be payable in connection with the transactions
contemplated by this Agreement.
10.2 Entire Agreement. This Agreement (including the recitals hereof and
the Schedules and the Exhibits attached hereto), together with the related
agreements referenced herein, contains the entire agreement between the parties
hereto with respect to the transactions contemplated hereby and supersedes all
prior agreements, representations, warranties and understandings, either oral or
written, between the parties with respect thereto.
10.3 Descriptive Headings. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provisions of
this Agreement.
10.4 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by telecopier (if an addressee has set forth a telecopy number below),
sent by nationally-recognized overnight courier or sent by certified mail,
postage prepaid, return receipt requested, addressed as follows:
if to the Buyer, to:
Bone, Muscle and Joint, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Bone, Muscle and Joint, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, Vice President, Western Region
Facsimile: (000) 000-0000
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and to:
Xxxxxxx and Xxxxxx Law Corporation
1900 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Seller, to:
Sun Valley Orthopaedic Surgeons
14506 Xxxx Xxxxxxx Xxxxxx Xxxxx, #000
Xxx Xxxx Xxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered if
personally delivered or sent by telecopier, (ii) on the Business Day after
dispatch if sent by nationally-recognized, overnight courier and (iii) on the
fifth Business Day after dispatch, if sent by mail. As used herein, "Business
Day" means a day that is not a Saturday, Sunday or a day on which banking
institutions in California are not required to be open.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
10.6 Bulk Sales Compliance. The Buyer hereby waives compliance by the
Seller with the provisions of the "bulk sales laws" of any state which may be
applicable to the transactions contemplated hereby; provided, however, that the
Seller shall indemnify the Buyer in connection with such noncompliance to the
extent provided in Article 6 hereof.
10.7 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of California
without giving effect to the laws and principles thereof, or of any other
jurisdiction, which would direct the
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application of the laws of another jurisdiction. The parties to this Agreement
agree that jurisdiction and venue in any action brought by any party hereto
pursuant to this Agreement shall exclusively lie in any federal or state court
located in the State of California. By execution and delivery of this Agreement,
the parties hereto irrevocably submit to the jurisdiction of such courts for
themselves and in respect of their property with respect to such action. The
parties hereto irrevocably agree that venue would be proper in such court, and
hereby waive any objection that such court is an improper or inconvenient forum
for the resolution of such action. The parties hereto shall act in good faith
and shall refrain from taking any actions to circumvent or frustrate the
provisions of this Agreement.
10.8 Attorneys' Fees. In the event of any dispute or controversy arising
out of or relating to this Agreement, all costs and expenses, including
attorneys' fees and accountants' fees, incurred in connection with such dispute
or controversy, shall be apportioned between the parties as ordered in the
discretion of the court.
10.9 Benefits of Agreement. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Anything contained herein to the
contrary notwithstanding, this Agreement shall not be assignable by any party
without the consent of the other parties hereto, and any purported assignment
without such consent shall be null and void.
10.10 Pronouns. As used herein, all pronouns shall include the masculine,
feminine, neuter, singular and plural thereof whenever the context and facts
require such construction.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf effective as of the day and year first above written.
BONE, MUSCLE AND JOINT, INC.
("Buyer")
By: /s/ Xxxxxx Xxxxxx
------------------------------------------
Xxxxxx Xxxxxx, M.D., President
SUN VALLEY ORTHOPAEDIC SURGEONS
("Seller")
By: XXXXXX X. XXXXXX, M.D., P.C., General
Partner
By: /s/ Xxxxxx X. Xxxxxx, M.D.
------------------------------------
Xxxxxx X. Xxxxxx, M.D., President
By: /s/ Xxx Xxxxx Xxxxxx, M.D.
-------------------------------------------
XXX XXXXX XXXXXX, M.D., General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------
XXXXXX X. XXXXXXXX, M.D., General Partner
By: /s/ Xxxxxx Xxxxxxx
-------------------------------------------
XXXXXX XXXXXXX, M.D., General Partner
APPROVAL BY PRINCIPAL
---------------------
The undersigned individual (who is the sole shareholder of a professional
corporation which is a Partner in the Medical Group) hereby agrees,
individually, to those provisions contained in this Agreement which by their
terms are expressly applicable to "Principals."
/s/ Xxxxxx X. Xxxxxx, M.D.
---------------------------------
Xxxxxx X. Xxxxxx, M.D.
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