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SECOND AMENDMENT
TO
ASSET PURCHASE AGREEMENT
SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT dated December 11, 1995
("Second Amendment") by and between CENTRAL MASSACHUSETTS HEALTH CARE, INC., a
not-for-profit corporation organized under the laws of the Commonwealth of
Massachusetts with a principal address at 000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Seller") and HEALTHSOURCE MASSACHUSETTS,
INC., a corporation organized under the laws of the Commonwealth of
Massachusetts with a principal office at c/o Healthsource, Inc., Xxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxxxxx 00000 (the "Buyer").
WHEREAS, Seller and Buyer entered into a certain Asset Purchase Agreement
dated April 10, 1995 and amended by the First Amendment to Asset Purchase
Agreement dated November 9, 1995 ("First Amendment") (hereinafter such Asset
Purchase Agreement and First Amendment, shall be collectively referred to as
the "Agreement") with respect to the sale by Seller to Buyer of certain of the
assets of Seller to Buyer as more specifically defined in the Agreement; and
WHEREAS, Seller and Buyer desire to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual provisions herein set
forth, and subject to the terms and conditions hereof, the parties agree as
follows:
1. SUCCESSORS TO SELLER/TRANSFER OF PURCHASE PRICE. Seller and Buyer
agree that SECTIONS 7 AND 8 of the First Amendment shall be deleted in their
entirety and the following is hereby agreed upon: Seller and Buyer agree and
acknowledge that after Closing of the transactions contemplated in the
Agreement, Seller shall not under any circumstances transfer any of its assets
or capital (including without limitation the Purchase Price paid by Buyer), for
a period of not less than one (1) year from the Closing Date, and after such
period Seller may only transfer some or all of the Seller's assets or capital
(including the Purchase Price paid by Buyer)
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to a charitable foundation to be established by Seller or to another
appropriate charitable successor to Seller upon terms and approved in advance
by the Attorney General of the Commonwealth of Massachusetts ("Attorney
General"). Prior to and as a condition precedent to any such transfer, EITHER:
(i) any such foundation or successor of Seller shall have (a) specifically
assumed in a writing acceptable to Buyer all rights and obligations of Seller
(including without limitation indemnification obligations, duties, covenants,
liabilities not assumed by Buyer and other liabilities) pursuant to the
Agreement and this Second Amendment and other agreements referred to herein or
delivered by or on behalf of Seller at Closing (including without limitation
joining in the Non-Competition Agreement referred to in SECTION 10.13 and in
the form of EXHIBIT D of the Agreement), and (b) given reasonable assurance to
Buyer in a writing acceptable to Buyer that transfer of any material part of
such foundation's or successor's assets or capital (including the Purchase
Price) will not occur; OR (ii) Seller shall have procured and paid for
insurance covering the above-mentioned obligations and liabilities of Seller in
a form and amount and from an insurer acceptable to Buyer. In addition to all
other rights and remedies of Buyer for breach of this SECTION 1, and
notwithstanding anything to the contrary, if any, contained in the Agreement,
Buyer shall be entitled to preliminary and permanent injunctive relief
restraining Seller from doing or continuing to do any act in violation of this
SECTION 1 and ordering Seller to cause its successor to assume fully the
obligations of Seller pursuant to the Agreement and this Amendment as required
in this SECTION 1 without showing or proving any actual damage sustained by
Buyer, it being acknowledged and agreed by the parties that a breach of this
SECTION 1 by Seller will cause irreparable injury to Buyer for which money
damages will not provide a total and adequate remedy. As a condition to
Closing Seller shall have received and delivered to Buyer a written order of a
court of competent jurisdiction in a form acceptable to Buyer approving the
transactions contemplated in and the provisions of the Agreement and this
Second Amendment.
2. SPECIAL INDEMNIFICATION: Seller hereby indemnifies and holds Buyer
harmless from any and all loss, damage, claims, actions, suits, proceedings or
expenses (including without
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limitation legal, accounting and other expenses) relating to any challenge by
any party to the transactions contemplated in the Agreement, as amended (the
"Transaction"), either before or at any time after Closing. Buyer shall also
have the right to rescind entirely the Transaction either before or after
Closing in the event any final non-appealable order of a court of competent
jurisdiction or other regulatory authority orders a material change in the
terms of the Transaction or requires any change in the Purchase Price to be
paid by Buyer.
3. SECTION 4 of the First Amendment is deleted in its entirety and
replaced with the following:
"1995 ACCOUNTING: In addition to deducting the Physician Withholds
(as defined in SECTION 5 below) from Seller's "Risk Fund" line item
of the Estimated and Final Balance Sheets as required in SECTION 4.01
of the Agreement, for all purposes in preparation of Seller's 1995
financial statements (and for any interim period during 1995 as
required by SECTION 10.09 of the Agreement) and for purposes of
preparation of the Estimated Balance Sheet and the Final Balance
Sheet, a liability to participating physicians for return of 1995
Physician Withholds (as defined in SECTION 5 below) in the amount of
$3.2 million shall be recorded as a liability of Seller on the
aforementioned 1995 financial statements, Estimated Balance Sheet and
Final Balance Sheet. Recording of this liability shall have the
effect of reducing the tangible net worth of Seller by $3.2 million
and shall cause a corresponding $3.2 million reduction in the
purchase price to be paid by Buyer."
4. SECTION 5 of the First Amendment is deleted in its entirety and
replaced with the following:
"PHYSICIAN WITHHOLD AND FEE DISTRIBUTION: Seller and Buyer agree
that SECTION 2.09 of the Agreement is hereby amended to read as
follows:
'Seller has paid the fees withheld from its participating physicians
for the calendar year 1994 (the "Physician Withholds") in the amount
of $5,825,000 to its participating physicians and shall provide Buyer
with proof of such payments at Closing. After
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Closing, Buyer shall pay to participating physicians of Seller
("Physicians") $3.2 million of the amount withheld (or to be
withheld) from Physicians for the calendar year 1995 (such $3.2
million amount is referred to as the "1995 Physician Withholds").
Seller and Buyer agree that the definition of all "Assets" of
Seller to be conveyed to Buyer shall include all cash and Acceptable
Financial Assets (as defined in SECTION 2.06 of the Agreement) of
Seller including but not limited to cash and investment assets
sufficient to pay the $3.2 million 1995 Physician Withholds. Buyer
shall provide Seller with proof of payment of the $3.2 million 1995
Physician Withholds promptly after such amounts are paid. Buyer
shall assume no liability whatsoever for the payment of physician
withholds for any period before the calendar year 1995, the
Physician Withholds, or for payment of any amounts to physicians
beyond the $3.2 million 1995 Physician Withholds.'"
5. TERMINATION: The termination date as stated in SECTION 18, Part (ii)
and (iii) of the Agreement and in SECTION 9 of the First Amendment is hereby
changed to February 28, 1996.
6. EFFECT OF AMENDMENT: Except as otherwise amended by this Second
Amendment, all terms, conditions and provisions of the Agreement shall remain
unchanged and continue to be effective and binding upon the parties hereto.
7. NO WAIVERS: Seller and Buyer agree that any actions taken in
anticipation of or in connection with the Closing, and the execution of this
Second Amendment will in no way be considered as a waiver or modification of
any of the terms of the Asset Purchase Agreement or other material agreements
executed by the parties or any rights of the parties pursuant thereto, except
as otherwise set forth in this Second Amendment.
8. TERMS OF AGREEMENT: Except as specifically amended in this Second
Amendment, all terms and provisions of the Agreement shall remain unchanged and
continue to be effective and binding upon the parties hereto.
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