EXECUTION COPY
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ASSET PURCHASE AGREEMENT
BETWEEN
BONE, MUSCLE AND JOINT, INC.
AND
SOUTH TEXAS SPINAL CLINIC, P.A.
Effective as of November 1, 1996
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EXHIBITS
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Exhibit A - Xxxx of Sale
Exhibit B - Assignment and Assumption Agreement
SCHEDULES
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1.1(a) - Medical Equipment,
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
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 Amount ................................................................ 5
A/R Balance ............................................................... 6
A/R Collections ........................................................... 6
Accounts Receivable ....................................................... 2
Affiliate ................................................................. 16
Assignment and Assumption Agreement ....................................... 3
Assumed Obligations ....................................................... 3
Xxxx of Sale .............................................................. 3
Business Day .............................................................. 22
Buyer ..................................................................... 1
Buyer Indemnification Event ............................................... 16
Buyer Indemnified Persons ................................................. 16
Claims .................................................................... 8
Closing ................................................................... 14
Closing Date .............................................................. 14
Determination Date ........................................................ 5
Excluded Assets ........................................................... 36
Excluded Assets ........................................................... 2
Indemnified Persons ....................................................... 3
Indemnified Persons ....................................................... 16
Indemnifying Person ....................................................... 16
Losses .................................................................... 17
Management Services Agreement ............................................. 1
Permitted Liens ........................................................... 9
Purchase Price ............................................................ 5
Purchased Assets .......................................................... 2
Related Agreements ........................................................ 12
Seller .................................................................... 1
Seller Indemnification Event .............................................. 17
Seller Indemnified Persons ................................................ 17
Signature Date ............................................................ 1
Statement of Allocation ................................................... 5
Subject Business .......................................................... 1
THIS ASSET PURCHASE AGREEMENT is entered into
as of December 23, 1996 (the "Signature Date"),
effective as of November 1, 1996, by and between
BONE, MUSCLE AND JOINT, INC., a Delaware
corporation (the "Buyer"), and SOUTH TEXAS SPINAL
CLINIC, P.A., a Texas professional association
(the "Seller").
A. The Seller is engaged in the business (the "Subject Business") of
providing orthopedic medical and surgical services and related medical and
ancillary services to patients.
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:
ARTICLE I
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(a);
(c) the Seller's rights and interests under the 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);
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(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, 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 the equipment leases identified in Schedule 1.1(c) and the office leases
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
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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 delivery of
a Xxxx of Sale (the "Xxxx of Sale") substantially in the form of Exhibit A and
the delivery of an Assignment and Assumption Agreement (the "Assignment and
Assumption Agreement") substantially in the form of Exhibit B attached hereto.
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 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 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.
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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 done, executed, acknowledged, delivered or
filed, 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 lease 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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ARTICLE II
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 Four Hundred Forty-Six Thousand Three Hundred and
Twenty-Seven U.S. Dollars ($446,327) payable to the Seller in cash on the
earlier to occur of (i) November 1, 1997, or (ii) on the date on which an
initial public offering of the Buyer's common stock pursuant to the
Securities Act of 1933 is consummated; and
(b) the sum of One Million Seven Hundred and Three Thousand Eight
Hundred and Twenty-Eight U.S. Dollars ($1,703,828) representing fifty
percent (50%) of the A/R Amount (as defined below), subject to adjustment
and payable 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 parties acknowledge that the total of the
accounts receivable amounts set forth in Schedule 2.2 (the "A/R Amount")
represents the parties' best estimate 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.
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2.3. Accounts Receivable Payment.
The portion of the Purchase Price specified in Section 2.1(b) is subject to
adjustment and shall be paid as follows:
(a) Within fifteen (15) days after the earlier of (i) the date which
occurs one year after the Commencement Date hereunder or (ii) the date on
which an initial public offering of the Buyer's common stock pursuant to
the Securities Act of 1933 is consummated (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
balances of the Accounts Receivable, and any other detail relating thereto
as the Seller may reasonably request. The amount by which the A/R
Collections exceed the sum of $1,703,828 is hereinafter referred to as the
"A/R Balance." The Buyer shall deliver to the Seller a check in an amount
equal to the A/R Balance together with the statement referred to in this
Section 2.3(a). If the A/R Collections are less than $1,703,828, the Seller
shall deliver to the Buyer a check in an amount equal to such difference.
The Buyer or the Seller, as the case may be, may offset any amount payable
by it under this Section 2.3(a) against any amounts owed to it by the other
party hereto under this Agreement or the Management Services Agreement. Any
amounts payable by the Buyer or the Seller, as the case may be, under this
Section 2.3(a) shall be payable over the six (6) month period immediately
following the date when due in six equal monthly installments.
(b) The parties shall confer promptly after the Seller's receipt of
the notice and check described in Section 2.3(a) for the purpose of
determining the amount of collections then anticipated to be realized after
the Determination Date in respect of the then-outstanding Accounts
Receivable. If the parties agree on an amount that represents the amount of
such
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collections anticipated to be realized, the Buyer shall promptly pay such
amount to the Seller in full satisfaction of the Buyer's obligation to
purchase the Accounts Receivable hereunder. If the parties fail to so
agree, the Buyer shall pay to the Seller on a monthly basis, within fifteen
(15) days after the end of each month, commencing with the month next
following the month in which the Determination Date occurred, 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Buyer, as of the Signature
Date hereof, as follows:
(a) Organization; Good Standing; Qualification and Power. The Seller
is a professional association duly organized, validly existing and in good
standing under the laws of the State of Texas 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 enter
into this Agreement, the Xxxx of Sale, and the Assignment and
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Assumption Agreement, to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
Seller has delivered to the Buyer a true and correct copy of its
certificate of association and bylaws as in effect on the date hereof.
(b) Authority. The execution, delivery and performance of this
Agreement, the Xxxx of Sale, and the Assignment and Assumption Agreement
and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary partnership action
on the part of the Seller. This Agreement, the Xxxx of Sale, and the
Assignment and Assumption Agreement 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 this Agreement, the Xxxx of Sale, or the Assignment and
Assumption Agreement nor the consummation by the Seller of the transactions
contemplated hereby or thereby, nor compliance by the Seller with any
provision hereof or thereof will (i) conflict with or result in a breach of
any provision of the General Partnership Agreement of the Seller, (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
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with, any person (governmental or private) is required in connection with
the execution, delivery or performance by the Seller of this Agreement or
the consummation of the transactions contemplated hereby.
(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.
(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 this Agreement, the Xxxx of Sale, and the Assignment and
Assumption Agreement 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.
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(iv) As used in this Agreement, "Permitted Liens" shall mean (i)
any lien for current taxes not yet due and payable, (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 and (iii) in the case of Purchased
Assets, liens incurred in the ordinary course of the Subject Business
(including, without limitation, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and
other types of social security benefits.
(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, 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 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,
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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 Signature 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 and
the Assignment and Assumption Agreement, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby 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 Assignment and Assumption Agreement, and the consummation
of the transactions contemplated hereby and thereby, have been duly and
validly authorized by all
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necessary corporate action on the part of the Buyer. This Agreement and the
Assignment and Assumption Agreement have been duly and validly executed and
delivered by the Buyer, and both constitute valid and binding obligations
of the Buyer, 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
Buyer of this Agreement or the Assignment and Assumption Agreement, nor the
consummation by the Buyer of the transactions contemplated hereby or
thereby, nor compliance by the Buyer with any provision hereof or thereof,
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.
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ARTICLE IV
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 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.
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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 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 the 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
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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, and the Seller shall have received a certificate signed
by an authorized officer of the Buyer to that effect.
(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 the 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.
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(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:
(a) the Management Services Agreement, entered into by and between the
parties hereto;
(b) the Restricted Stock Agreements, entered into by and between the
Buyer and each of the Eligible Parties, respectively;
(c) the Stockholder Non-Competition Agreements, entered into by and
among the Seller, the Buyer, and each of the Eligible Parties,
respectively;
(d) the Office Subleases relating to each of the medical offices
identified in Schedule 1.1(f), entered into by and between the parties
hereto; and
(e) the Medical Equipment Master Lease, entered into by and between
the parties hereto.
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ARTICLE V
CLOSING
5.1. 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 November 1, 1996 (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) The Seller shall deliver to the Buyer an executed copy of the Xxxx
of Sale;
(b) Each of the parties shall execute and deliver to the other a copy
of the Assignment and Assumption Agreement;
(c) The Buyer shall deliver to the Seller a cashiers check or wire
transfer funds for that portion of the Purchase Price specified in Section
2.1(b) hereof;
(d) Each of the parties shall execute and deliver to the other a fully
executed copy of the Management Services Agreement;
(e) The Seller shall deliver Restricted Stock Agreements to the Buyer
executed respectively by each of the Eligible Parties (as defined in the
Management Services
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Agreement), and the Buyer shall execute and deliver to the Seller
Restricted Stock Agreements for each of the Eligible Parties, respectively;
(f) The Buyer shall deliver to the Seller stock certificates issued in
the names of the Eligible Parties as required under the terms of the
Restricted Stock Agreements.
(g) The Seller shall deliver Stockholder Non-Competition Agreements to
the Buyer executed by the Seller and by each of the Eligible Parties,
respectively;
(h) Each of the parties shall execute and deliver to the other an
Office Sublease relating to each of the premises identified in Schedule
1.1(f); and
(i) Each of the parties shall execute and deliver to the other a copy
of the Medical Equipment Master Lease.
ARTICLE VI
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
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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;
(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 the "bulk sales laws"
of Texas 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 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
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in connection herewith (or any facts or circumstances constituting any such
untruth, inaccuracy or breach) or the breach of any agreement or covenant
of the Buyer contained in this Agreement.
(h) "Seller Indemnified Persons" shall mean and include the Seller and
its partners and employees.
6.3. 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
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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 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
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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 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).
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ARTICLE VII
NON-COMPETITION PHYSICIANS
The parties hereby acknowledge that they have entered into an agreement
regarding non-competition, as set forth in Section 16 of the Management Services
Agreement.
ARTICLE VIII
REPURCHASE OF ASSETS
The Purchased Assets, except for the Accounts Receivable, are subject to
repurchase by the Seller from the Buyer upon termination and/or recission of the
Management Services Agreement in accordance with Sections 13.5, 14.1 and/or 14.3
of the Management Services Agreement. In addition, a portion of the Purchased
Assets are subject to repurchase by a Disengaging Member (as defined in the
Management Services Agreement) upon such Disengaging Member's disengagement from
the Management Services Agreement in accordance with the provisions of Section
14.2 of the Management Services Agreement.
ARTICLE IX
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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ARTICLE X
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, sent by certified mail, postage
prepaid, return receipt requested, or sent by facsimile if also sent by
nationally-recognized overnight courier for next day delivery, addressed as
follows:
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if to the Buyer, to:
Bone, Muscle and Joint, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Telecopier: (000) 000-0000
with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Held, Esq.
Telecopier: (000) 000-0000
if to the Seller, to:
South Texas Spinal Clinic, P.A.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telecopier: (000) 000-0000
in each case, with a copy to:
Law Offices of Xxxxx Xxxxxxxxx
NationsBank Plaza
000 Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopier: (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 Texas are not required to be open.
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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; Arbitration.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas without giving effect to the laws
and principles thereof, or of any other jurisdiction, which would direct the
application of the laws of another jurisdiction. All disputes, controversies,
differences or claims arising out of, relating to or in connection with this
Agreement, or the breach thereof, except controversies involving less than
$5,000, shall be finally settled by binding arbitration in San Antonio, Bexar
County, Texas pursuant to the arbitration rules of the American Arbitration
Association. Arbitration shall take place before three arbitrators with one
arbitrator selected by each of the Management Company and the Medical Group and
a third arbitrator selected by the two arbitrators chosen by the parties. Any
award or decision rendered by the arbitrators shall clearly set forth the
factual and legal basis for such award or decision. Judgment on the award or
decision rendered by the arbitrators shall be non-appealable and enforceable in
the Presiding District Court of Bexar County, Texas. Each party shall bear its
own legal and
-27-
administrative costs and expenses relating to the arbitration and the Management
Company and the Medical Group shall equally share the fees and expenses of the
arbitrators and the administration of the arbitration by the American
Arbitration Association.
10.8. Attorneys' Fees.
Notwithstanding anything contained herein to the contrary, in the event of
any dispute or controversy arising out of or relating to this Agreement, the
prevailing party shall be entitled to recover from the other party all costs and
expenses, including arbitrators' fees and expenses, attorneys' fees and
accountants' fees, incurred in connection with such dispute or controversy.
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.
By:____________________________
Xxxxxx Xxxxxx, M.D., President
and Chief Executive Officer
SOUTH TEXAS SPINAL CLINIC, P.A.
By:______________________________
Name: Xxxxxxx X. Xxxxxxx, M.D.
Title: President
Schedule 1.1(a)
MEDICAL EQUIPMENT, FURNITURE, FURNISHINGS,
TRADE FIXTURES, AND OFFICE EQUIPMENT
SEE FOLLOWING PAGES
Schedule 1.1(c)
EQUIPMENT LEASES
SEE FOLLOWING PAGES
Schedule 1.1(d)
SUPPLIES
All of the medical supplies, office supplies, postage, and printed
materials owned by the Medical Group and located on the premises of any of the
Medical Group's offices at 12:01 a.m. on the Closing Date hereunder.
Schedule 1.1(e)
ACCOUNTS RECEIVABLE
All of the accounts receivable of the Medical Group the payment of which
would constitute "Collections" as defined in Section 5.3(d)(ii) of the
Management Services Agreement, determined as of 12:01 a.m. of the Closing Date
hereunder.
SEE FOLLOWING PAGES
Schedule 1.1(f)
OFFICE LEASES
1. Suite Lease between Xxxxxxx Enterprises, L.C., as Lessor, and Medical
Group, as Lessee, dated March 1, 1994 for premises commonly known as
Suites 220 and 300, 0000 Xxxxx Xxxxxxx, Xxx Xxxxxxx, XX.
2. Suite Lease between International Bank of Commerce, Inc., as Lessor,
and Medical Group, as Lessee, dated September 7, 1994 for premises
commonly known as Xxxxx 000, 00000 Xxxxxxxxxxx, Xxx Xxxxxxx, XX.
3. Suite Lease between Memorial Professional Services, Inc., as Lessor,
and Medical Group, as Lessee, dated January 23, 1995 for premises
commonly known as Xxxxx 000, 0000 Xxxxxxx Xxxxx, Xxx Xxxxxxx, XX.
4. Suite Lease between S.W.R.O.E., Inc., as Lessor, and Medical Group, as
Lessee, dated April 30, 1996 for premises commonly known as 000
Xxxxxxx Xxxx., Xxxxx 0, Xxxxxx, XX.
5. Suite Sub-Lease arrangement between J. Xxxxx Xxxxxx, III, M.D., P.A.,
and Medical Group dated February 28, 1996 at 000 Xxxxx Xxxxxxx Xxxxxx,
Xxx Xxxxxxxxx, XX.
6. Suite Sub-Lease arrangement between Crossroads Orthopedics, P.A., and
Medical Group dated March 19, 1996 at 000 Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxx, XX.
7. Suite Lease arrangement between Medplex Rentals and Medical Group
dated December 1, 0000, Xxxxxxxx, XX.
Schedule 1.1(g)
DEPOSITS
1. Security deposits under leases of $ 19,952
offices located in San Antonio, TX, --------
Suite 300 only (Schedule 1.1(f), item
#1)
2. Security deposit under lease of office $ 1,375
located in San Antonio, TX Schedule --------
1.1(f), item #2
$ 21,327
========
Schedule 1.1(h)
ADDITIONAL ITEMS
NONE
Schedule 3.1(c)
CLAIMS
Except for the attached Promissory Note and Security Agreement both dated
April 26, 1993.
Schedule 3.1(d)
LITIGATION
EXHIBIT A
XXXX OF SALE
South Texas Spinal Clinic, P.A., a Texas professional association (the
"Seller"), hereby sells, conveys, transfers, signs and delivers to Bone, Muscle
and Joint, Inc., a Delaware corporation (the "Buyer"), the following assets,
properties, interests in properties and rights of the Seller (collectively, the
"Purchased Assets"):
1. the medical equipment owned by the Seller and listed on Schedule
1.1(a) of that certain Asset Purchase Agreement between the Seller and
the Buyer entered into as of the date hereof (the "Asset Purchase
Agreement");
2. the furniture, furnishings, trade fixtures, and office equipment owned
by the Seller and listed on Schedule 1.1(a) of the Asset Purchase
Agreement;
3. the Seller's rights and interests under the equipment leases
identified on Schedule 1.1(c) of the Asset Purchase Agreement, subject
to the Buyer's assumption of the obligations accruing thereunder from
and after the date hereof;
4. the supplies described on Schedule 1.1(d) of the Asset Purchase
Agreement;
5. the accounts receivable described on Schedule 1.1(e) of the Asset
Purchase Agreement;
6. the Seller's rights and interests under the office leases identified
in Schedule 1.1(f) of the Asset Purchase Agreement, subject to the
Buyer's assumption of the obligations accruing thereunder from and
after the date hereof;
7. the deposits identified on Schedule 1.1(g) of the Asset Purchase
Agreement; and
8. any additional items identified on Schedule 1.1(h) of the Asset
Purchase Agreement.
All assets, properties, interests in properties, and rights of the Seller not
expressly identified above or in the schedules referenced in the Asset Purchase
Agreement (the "Excluded Assets") are expressly excluded from the assets of the
Seller being sold, assigned, or otherwise transferred to the Buyer.
To the extent there is a conflict between the terms and provisions of this
Xxxx of Sale and the Asset Purchase Agreement, the terms and provisions of the
Asset Purchase Agreement shall govern.
IN WITNESS WHEREOF, the Seller has executed this instrument, by its duly
authorized signatory as of December 23, 1996, effective as of November 1, 1996.
SOUTH TEXAS SPINAL CLINIC, P.A.
By:______________________________
Name:
Title:
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is entered into
as of December 23, 1996 and effective November 1, 1996 by and between South
Texas Spinal Clinic, P.A. ("Assignor") and Bone, Muscle and Joint, Inc.
("Assignee").
A. Pursuant to the terms of the Asset Purchase Agreement dated the date
hereof (the "Asset Purchase Agreement"), between Assignor, as Seller, and
Assignee, as Buyer, Assignor has concurrently with the delivery hereof, sold,
conveyed, transferred, assigned and delivered to Assignee certain assets of
Assignor (the "Purchased Assets"), which are specifically identified in the
Asset Purchase Agreement.
B. In partial consideration of the Purchased Assets, the Asset Purchase
Agreement provides that Assignee shall assume certain liabilities of Assignor,
identified in Section 1.3 of the Asset Purchase Agreement.
NOW, THEREFORE, Assignor and Assignee hereby agree as follows:
1. Assignment; Assumption.
Assignor hereby assigns, transfers and delivers to Assignee, and Assignee
does hereby accept, all of Assignor's rights, titles, and interests, legal and
equitable, in, to and under the equipment leases identified in Schedule 1.1(c)
of the Asset Purchase Agreement and the office leases identified in Schedule
1.1(f) of the Asset Purchase Agreement (the "Assigned Contracts"), and Assignee
agrees to assume and to pay when due, those liabilities accruing from and after
the date hereof under the Assigned Contracts and to observe, perform, and comply
with the covenants, restrictions, limitations, and conditions imposed upon
Assignor under the Assigned Contracts.
2. Limitation of Assumption.
2.1 Right to Contest Obligations.
Nothing contained in this Agreement shall require that Assignee perform,
pay or discharge any obligation expressly assumed hereby so long as Assignee
shall in good faith contest or cause to be contested the amount or validity
thereof.
2.2 Obligations Not Assumed.
Other than as specifically stated above, Assignee is not assuming any
liabilities or obligations of the Assignor (fixed or contingent, known or
unknown, matured or unmatured) whatsoever.
To the extent there is a conflict between the terms and provisions of this
Assignment and Assumption Agreement and the Asset Purchase Agreement, the terms
and provisions of the Asset Purchase Agreement shall govern.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SOUTH TEXAS SPINAL CLINIC, P.A.
By:______________________________
Name:
Title:
BONE, MUSCLE AND JOINT, INC.
("Assignee")
By:______________________________
Xxxxxx Xxxxxx, M.D., President
and Chief Executive Officer
