STOCK PURCHASE AND SALE AGREEMENT
Among
INTEGRAMED AMERICA, INC.,
And
XXXXXXX X. XXXX, M.D.,
XXXXXX X. XXXXXXXX, M.D.,
And
XXXXXX X. XXXXXXXX, M.D.,
AGREEMENT made this 12th day of March, 1998 by and between IntegraMed
America, Inc., a Delaware corporation, having its principal place of business at
Xxx Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("IntegraMed") and Xxxxxxx X.
Xxxx, M.D., residing at 00000 Xxxxxxxx Xxxxx, Xxxxxxxxx, XX 00000 ("Levy"),
Xxxxxx X. Xxxxxxxx, M.D., residing at 00000 Xxxxxxxxx Xxxxxxx, Xxxxxxx, XX 00000
("Xxxxxxxx"), and Xxxxxx X. Xxxxxxxx, M.D., residing at 00000 Xxxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx, XX 00000 ("Sagoskin"). Levy, Stillman and Sagoskin are
collectively referred to as "Shareholders."
RECITALS
IntegraMed is engaged in the business of owning certain assets and
providing management and administrative services to medical practices
specializing in the provision of gynecological services, treatment of human
infertility, encompassing the provision of in vitro fertilization and other
assisted reproductive services ("Infertility Services").
Shareholders own all the issued and outstanding shares (the "Shares")
of capital stock of Shady Grove Fertility Centers, Inc., currently a Maryland
business corporation and formerly a Maryland professional corporation ("Shady
Grove"), which was engaged in the practice of providing Infertility Services in
the jurisdictions of the District of Columbia, Maryland and Virginia (the
"Practice").
In anticipation of the execution of this Agreement, Shady Grove (a)
formed a new Maryland professional corporation known as Levy, Sagoskin and
Xxxxxxxx, M.D., P.C. ("New P.C."),
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(b) transferred to New P.C. all of Shady Grove's medical assets, including
patient charts and records, payor contracts, employment agreements and certain
other assets and liabilities related to the Practice (the "Medical Assets"), but
specifically excluding Shady Grove's non-medical fixed assets, accounts
receivable and equipment and office leases, (the activities in clauses (a) and
(b) being hereinafter collectively referred to as the "Restructuring"), (c)
entered into and executed a Management Agreement dated March 11, 1998 (the
"Management Agreement"), a copy of which is attached hereto as Exhibit A, (d)
filed Articles of Amendment to the Articles of Incorporation of Shady Grove (the
"Articles of Amendment") amending the Articles of Incorporation of Shady Grove
to convert it from a professional corporation to a business corporation, and (e)
distributed the stock of New P.C. to the Shareholders.
Shareholders wish to sell and IntegraMed wishes to purchase the Shares,
and IntegraMed desires to acquire the exclusive right to provide management and
related administrative services to Shareholders in connection with the continued
operation of the Practice through New P.C. pursuant to the terms of the
Management Agreement.
In consideration of the mutual promises and covenants herein contained,
the receipt and adequacy of which are acknowledged, the parties hereto agree as
follows:
ARTICLE I
PURCHASE OF THE SHARES
Subject to the terms and conditions set forth in this Agreement and
based upon the representations, warranties and covenants made herein, at the
Closings (as herein defined), Shareholders shall sell, assign, convey and
transfer to IntegraMed and IntegraMed shall acquire from Shareholders the
Shares.
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price and Manner of Payment.
Upon and subject to the terms and conditions set forth herein
and in consideration for the sale of the Shares, IntegraMed shall pay
Shareholders Five Million Seven Hundred Thousand Dollars ($5,700,000) in the
aggregate (the "Purchase Price"), payable to each Shareholder at the Closings in
the amounts set forth on Schedule 2.01 as follows:
(a) One Million Four Hundred Thousand Dollars ($1,400,000) in
the aggregate in shares of unregistered IntegraMed Common Stock ("IntegraMed
Stock"). The number of shares of IntegraMed Stock to be issued will be
determined based upon the average closing price of IntegraMed Stock for the
10-day trading period prior to the third business day before each Closing;
provided, however, that in no event will the price per share exceed $2.00 or be
less than $1.70 for
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purposes of calculating the amount of IntegraMed Stock to be issued to
Shareholders at each Closing. For a period of two years following the First
Closing, each Shareholder will give Xxxxxxx Xxxxx, President and Chief Executive
Officer of IntegraMed or his designee ("Canet"), voting proxy as to the
IntegraMed Stock issued to such Stockholder in the form of Exhibit B attached
hereto (the "Proxy") with respect to (i) the election of Directors or any
amendment to IntegraMed's Certificate of Incorporation affecting directors and
(ii) any change in stock options for management and directors; the proxy will
not attach to any Rule 144 sales of the IntegraMed Stock by a Shareholder;
(b) Two Million Eight Hundred Thousand Dollars ($2,800,000) in
the aggregate in certified funds at the First or Second Closing, as the case may
be; and
(c) One Million Five Hundred Thousand Dollars ($1,500,000) in
the aggregate by delivery of one or more Promissory Notes (the "Notes") bearing
interest equal to the prime rate of First Union National Bank on the date of the
First or Second Closing, as the case may be, with Seven Hundred Fifty Dollars
($750,000) of the aggregate principal amount of the Notes, together with accrued
interest from the date of delivery of each Note, payable on April 1, 1999 and
Seven Hundred Fifty Thousand Dollars ($750,000) of the aggregate principal
amount of the Notes, together with accrued interest from the date of delivery of
each Note, payable on April 1, 2000. The Notes shall be in the form of Exhibit C
attached hereto.
2.02 Closing Statement.
Shareholders shall deliver to IntegraMed a pro forma balance
sheet with the projected assets and liabilities of Shady Grove as of the day
before the First Closing (the "Closing Statement") for purposes of the
reconciliation described in Schedule 6.03. The parties acknowledge that the
Closing Statement includes projections, and the amounts set forth therein shall
not be binding on the parties.
ARTICLE III
CLOSING
3.01 Closing Dates.
The closing (the "First Closing") of the transaction
contemplated by this Agreement with respect to the Shares to be purchased from
Levy and Sagoskin shall be held at 6:00 p.m. on March 12, 1998 (the "First
Closing Date") at the offices of Ober, Kaler, Xxxxxx & Xxxxxxx, 0000 X Xxxxxx,
X.X., Xxxxx Xxxxx, Xxxxxxxxxx, XX 00000-0000 or such other date or at such other
time or location as to which Shareholders and IntegraMed may agree to in
writing. The effective time of the First Closing shall be 11:59 p.m. on the
First Closing Date. The closing (the "Second Closing") of the transaction
contemplated by this Agreement with respect to the Shares to be purchased from
Xxxxxxxx (the "Xxxxxxxx Shares") shall be held on or about November 1, 1998 (the
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"Second Closing Date") as determined in accordance with the terms of Section
3.02 below. The First Closing and the Second Closing are hereinafter referred to
"each Closing" or collectively as the "Closings."
3.02 Second Closing.
(a) Xxxxxxxx shall not be required to deliver the Xxxxxxxx
Shares to IntegraMed, and IntegraMed shall not be required to pay any portion of
the Purchase Price relating to the Xxxxxxxx Shares, on or before November 1,
1998, subject to the following conditions, all of which conditions shall be
reflected in the terms of a Voting Trust Agreement (the "Voting Trust
Agreement") by and among Xxxxxxxx and Canet as Voting Trustee, in the form
attached hereto as Exhibit D.
(b) At the First Closing hereunder, Xxxxxxxx shall:
(i) deliver the stock certificates evidencing
ownership of the Xxxxxxxx Shares together with a stock power, endorsed in blank
and guaranteed as counsel for IntegraMed shall reasonably require, to the Voting
Trustee; and
(ii) execute and enter into the Voting Trust
Agreement naming Canet as
Voting Trustee with respect to the Xxxxxxxx Shares for all purposes.
(c) After November 1, 1998, IntegraMed shall have the right,
in its sole and absolute discretion, to (i) fix the Second Closing Date (which
shall be no later than November 15, 1998), and (ii) upon payment and delivery to
Xxxxxxxx of the portion of the Purchase Price attributable to the Xxxxxxxx
Shares, cause the Voting Trustee to transfer and deliver the Xxxxxxxx Shares to
IntegraMed. The Voting Trust Agreement shall automatically expire and be deemed
revoked when the Xxxxxxxx Shares are transferred to IntegraMed. At the Second
Closing, Xxxxxxxx and IntegraMed shall execute and enter into a Personal
Responsibility Agreement in the form of Exhibit H attached hereto.
(d) At any time after the First Closing Date, IntegraMed shall
have the right, in its sole and absolute discretion, to take all of the actions
described in Section 3.02(c) above if Xxxxxxxx'x Employment Agreement is
terminated for any reason whatsoever (including, without limitation, his death
or disability) or if Xxxxxxxx is or becomes a party to any personal bankruptcy
or insolvency proceeding.
(e) The Note to be issued to Xxxxxxxx as of the Second Closing
Date shall be subject to offset in accordance with Section 6.02(c) below,
whether or not the claims giving rise to the right to offset arise before or
after the Second Closing Date.
(f) Each of IntegraMed and Xxxxxxxx shall be entitled to all
available legal and equitable remedies, including, without limitation, the right
to seek specific performance, to enforce the other party's obligations with
respect to the purchase of the Xxxxxxxx Shares and shall also be entitled to
require the other party to pay to the enforcing party all reasonable costs and
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expenses(including professional fees and expenses) of the other party incurred
in connection with the enforcement of such party's obligation to purchase or
sell the Xxxxxxxx Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Shareholders, for the purpose of inducing IntegraMed to enter into and
consummate this Agreement, hereby, jointly and severally, represent and warrant
to IntegraMed that:
4.01 Organization and Power.
(a) Shady Grove and New P.C. are each a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland and each has full power and authority, corporate and otherwise, to
carry on its business as now conducted and to own, lease and operate its
properties and assets now owned, leased and operated by it, and with respect to
New P.C., to conduct the business of the Practice. Shady Grove and New P.C. are
each duly qualified as a foreign corporation and in good standing in each
jurisdiction where the Practice does business. Complete and correct copies of
the charter and by-laws, as amended to date, of both Shady Grove and New P.C.
have heretofore been delivered to IntegraMed, and such instruments, as so
amended, are in full force and effect at the date hereof.
(b) The authorized, issued and outstanding capital stock of
Shady Grove and New P.C. are as set forth on Schedule 4.01. Except as disclosed
on Schedule 4.01, all of the issued and outstanding shares of Shady Grove and
New P.C. are owned of record by the Shareholders free and clear of all liens,
security interests, claims and encumbrances or other restrictions of any kind,
and no shares are held in treasury. Except as set forth on Schedule 4.01, there
are no voting trusts or agreements, stockholders' agreements, pledge agreements,
buy-sell agreements, rights of first refusal, preemptive rights or proxies
relating to any stock of Shady Grove. Shady Grove has no outstanding stock or
securities convertible or exchangeable for any shares of its capital stock, nor
does it have outstanding any rights or options to subscribe for or to purchase
any capital stock or securities convertible into or exchangeable for any capital
stock. Except as disclosed on Schedule 4.01, Shady Grove is not subject to any
obligation (contingent or otherwise) to issue, redeem, repurchase or otherwise
acquire or retire any shares of its capital stock. All of the Shares were
validly issued and are fully paid and nonassessable. There are no agreements
(oral or written) to which any of the Shareholders is a party involving the
voting or sale of any of the Shares.
4.02 Authority; No Conflicting Instruments; Consent
(a) Each of the Shareholders has the power, capacity and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated on his part hereby. No corporate proceedings on the
part of Shady Grove and New P.C. are necessary to authorize the execution and
delivery of this Agreement by the Shareholders or the consummation by the
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Shareholders of the transactions contemplated hereby. This Agreement, when
executed, will constitute the valid and binding obligation of Shareholders
enforceable against Shareholders in accordance with its terms.
(b) New P.C. has the power, capacity and authority to enter
into and perform its obligations under the terms of the Physician--Stockholder
Employment Agreements and the Management Agreement as required pursuant to the
terms of this Agreement. The execution and delivery of such agreements by New
P.C. has been duly authorized by all necessary corporate proceedings. Such
agreements, when executed, will constitute the valid and binding obligations of
New P.C., enforceable against New P.C. in accordance with their terms.
(c) Shady Grove has the power, capacity and authority to enter
into and perform its obligations under the terms of the Management Agreement as
required pursuant to the terms of this Agreement. The execution and delivery of
such agreements by Shady Grove has been duly authorized by all necessary
corporate proceedings. Such agreements, when executed, will constitute the valid
and binding obligations of Shady Grove, enforceable against Shady Grove, in
accordance with their terms.
(d) The execution and delivery of this Agreement and the
consummation of the transactions as herein contemplated will not (i) violate any
provisions of any applicable law or of the charter or By-Laws of Shady Grove or
New P.C. or any order, judgment or decree of any court or other agency of
government binding on Shareholders, Shady Grove or New P.C., (ii) except as set
forth in Schedule 4.02(d), conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any contractual
obligation of Shareholders, Shady Grove or New P.C., (iii) result in or require
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any property or assets of Shareholders, Shady Grove or New P.C.,
(iv) require any approval of or any consent of any person under any contractual
obligation of Shareholders, Shady Grove or New P.C. other than as set forth on
Schedule 4.02(d), or (v) except as set forth in Schedule 4.02(d), conflict with
or result in any breach or default under any of the terms, conditions or
provisions of any indenture, mortgage, deed of trust or other instrument to
which Shady Grove, New P.C. or any Shareholder is a party or by which Shady
Grove, New P.C. or any Shareholder or any of their assets or properties may be
bound or affected.
(e) Except as set forth in Schedule 4.02(e), no consent,
approval or authorization of, or declaration or filing with any federal, state,
local or foreign governmental or regulatory authority, or any other third party,
is required in connection with the execution and delivery of this Agreement by
Shareholders or the performance by Shareholders, Shady Grove or New P.C. of the
transactions contemplated by this Agreement, except for any state licensing
board approvals.
4.03 Fixed Assets.
Except as set forth in Schedule 4.03, Shady Grove has good and
marketable title to the fixed assets which are owned solely and exclusively by
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Shady Grove, free and clear of all liens, mortgages and encumbrances of any kind
or nature. Except as set forth on Schedule 4.03, the fixed assets are not and
will not be subject to any pledge, option, escrow, hypothecation, lien, security
interest, financing statement, lease, license, easement, right of way,
encumbrance or other restriction of any kind. The Fixed Assets are in good
operating condition and repair (reasonable wear and tear excepted) and are
suitable for the purposes for which they are presently being used.
4.04 Financial Statements; Undisclosed Liabilities; Taxes.
Attached hereto as Schedule 4.04 are the unaudited compiled
financial statements of Shady Grove, consisting of Statements of Assets,
Liabilities and Capital, and Income Statement for the fiscal years ended
December 31, 1996 and 1995, and draft financial statements prepared by Shady
Grove management for the fiscal year ended December 31, 1997, together with a
Statement of Assets, Liabilities and Capital, and Income Statement for the one
(1) month ended January 31, 1998 (collectively, the "Financial Statements").
(a) Neither Shady Grove nor New P.C. has any liabilities,
debts or obligations, whether accrued, absolute or contingent, and whether due
or to become due, which are not reflected or reserved against in the Financial
Statements or are not listed on Schedule 4.04(a). Except as set forth in
Schedule 4.04(a), as of the date hereof, neither Shareholders nor Shady Grove
has any unfunded liability under any Employee Benefit Plan (as hereinafter
defined) and there are no circumstances, conditions events or arrangements which
may hereafter give rise to any such liabilities or obligations which may be
asserted against IntegraMed under any such plan.
(b) All appropriate federal, state and local tax returns
required by law, regulation or otherwise to be filed by Shady Grove, New P.C. or
Shareholders with respect to the Practice, including all withholding or other
payroll related taxes, have been filed with such authorities (or appropriate
extensions of the time to file have been obtained) for all taxable periods
ending on or prior to the date hereof for which tax returns have become due.
Shady Grove or Shareholders have paid or made adequate provisions for the
payment of all taxes, penalties and interest which have or may become due for or
during all taxable periods of the Practice ending on or prior to the date
hereof. There are no claims or investigation pending or, to the knowledge of
Shareholders, threatened against Shady Grove or New P.C. and neither
Shareholders, Shady Grove or New P.C. has received any notice of any threatened
claims or investigation by any governmental authority against Shady Grove and
there has been no waiver of any applicable statute of limitations or extension
of the time for the assessment of any tax against Shady Grove. Shady Grove has
timely withheld proper and correct amounts of taxes in compliance with the tax
withholding provisions of all applicable laws for all compensation paid to their
employees. The income tax returns of Shady Grove have not been audited by the
Internal Revenue Service and all taxes due or claimed to be due with respect to
such tax returns have been fully paid and satisfied by Shady Grove. Shady Grove
and Shareholders will cooperate with IntegraMed to file any tax returns to be
filed for the calendar year in which the Closings occurs. Whenever used herein
or elsewhere in this Agreement, the phrase "to the knowledge of Shareholders"
shall be deemed to include the knowledge of Shady Grove and its officers and
directors.
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4.05 Financial Position.
Since December 31, 1997:
(a) Except as set forth in Schedule 4.05(a) and except for the
transactions contemplated by this Agreement, there has not been (i) any change
in the financial condition, assets, properties, liabilities, business or results
of operations of Shady Grove or the Practice other than changes in the ordinary
and usual course of business, none of which, individually or in the aggregate,
has been adverse to the business or operations of Shady Grove, New P.C. or the
Practice, (ii) any strike, labor trouble, employee dispute, property dispute,
lease or contract dispute, loss or destruction or property, actual or
threatened, claim or other event, adversely effecting, or which would adversely
effect, the financial position or business of Shady Grove, New P.C. or the
Practice.
(b) Except for the bonuses set forth in Schedule 4.05(b),
neither Shareholders, Shady Grove nor New P.C. has granted any wage or salary
increase or bonus or any fringe benefits, or created or amended any Employee
Benefit Plan (as hereinafter defined) or entered into any employment or labor
contract with any director, officer, employee or group of employees, except for
normal increases in a manner consistent with policies and practices of Shady
Grove.
(c) Except in connection with the Restructuring, Shady Grove
has conducted the Practice in the ordinary and normal course of business and
used its best efforts to (i) maintain all patient lists, records, billing and
collection data, goodwill associated with the Practice, and all material files
and records and intangible assets related to the continued operation of the
Practice, (ii) preserve, protect and maintain the Fixed Assets and (iii)
preserve the good standing of Shady Grove and New P.C. and keep available the
services of present employees and agents and to preserve the goodwill of
suppliers, patients and others having business relationships with Shady Grove
and New P.C.
(d) Neither Shareholders, Shady Grove nor New P.C. has,
without IntegraMed's prior written consent, (i) waived or committed to waive any
right of substantial value of Shady Grove or New P.C.; (ii) sold, transferred,
disposed of or encumbered or committed to sell, transfer, dispose of or encumber
the Fixed Assets; (iii) except as set forth on Schedule 4.05(d), incurred any
indebtedness for borrowed money; (iv) except as set forth on Schedule 4.05(d),
made capital expenditures in excess of $25,000 in the aggregate; (v) other than
in connection with the Restructuring, terminated any key employee or, to the
knowledge of Shareholders, taken any action that impaired the existing
relationships between Shady Grove or New P.C. and their employees and other
persons and entities having business relations with Shady Grove or New P.C.; or
(vi) taken any action in the conduct of its business which is contrary to, or in
breach of, any term or representation or warranty contained in this Agreement.
4.06 Licenses; Compliance.
(a) Shady Grove has held all such licenses, orders, approvals
and permits ("Licenses") of every kind or nature which are material to the
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operation and business of the Practice and such Licenses were in full force and
effect while it was conducting its Practice. Shady Grove has transferred all
such Licenses to New P.C. in conjunction with the Restructuring and no action,
proceeding or investigation has been instituted or threatened with reference to
or affecting the existence of said Licenses. A list of all Licenses is set forth
on Schedule 4.06. To the knowledge of Shareholders, Shady Grove and New P.C. are
in compliance in all respects with the terms and conditions of such Licenses and
with all requirements, standards and procedures of the federal, state and local
governmental or regulatory bodies which issued said Licenses.
(b) To the knowledge of Shareholders, Shady Grove and New
P.C., Shady Grove and New P.C. are in compliance in all material respects with
all federal, state and local laws, ordinances, codes, regulations, orders,
requirements, standards and procedures which are applicable to the Practice.
4.07 Litigation.
(a) To the knowledge of Shareholders, Shady Grove and New
P.C., there are no actions, suits, claims or legal, administrative or
arbitration proceedings or investigations pending or threatened against,
involving or affecting Shareholders, Shady Grove, New P.C. or the Practice or
any of their properties or assets, except as set forth on Schedule 4.07(a).
Neither Shady Grove, New P.C. or Shareholders has notice or knowledge of any
outstanding orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against, involving or affecting Shareholders,
Shady Grove, New P.C., the Practice or any of their properties or assets, except
as set forth on Schedule 4.07(a).
(b) Except as set forth on Schedule 4.07(b), neither Shady
Grove, New P.C. nor Shareholders has received any notice of any violation of
applicable law, order, regulation or requirement related to any of Shareholders,
Shady Grove, New P.C., the Practice or the Fixed Assets, and none of them is
aware of any condition or state of facts that could result in any such notice.
To the knowledge of Shareholders, there is no existing law, rule, regulation or
order, whether federal, state or local, which would prohibit or restrict New
P.C. from operating the Practice.
4.08 Third-Party Xxxxxxxx.
(a) To the knowledge of Shareholders, all claims and bills to
patients and third party payors by Shady Grove have been prepared and filed in
accordance with applicable laws, rules and regulations and Shady Grove has not
retained any unrefunded monies to which it is not entitled under applicable law.
(b) To the knowledge of Shareholders, neither Shady Grove nor
any of its respective officers, directors or Shareholders have engaged in any
activities which are prohibited under 42 U.S.C. xx.xx. 1320a-7, 1320a-7a or
1320a-7b, the regulations promulgated pursuant to such statutes or related state
or local statutes or regulations governing billing and payment for health care
services.
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4.09 Contracts and Agreements.
(a) Schedule 4.09(a) is a list as of the date hereof of all
the material contracts or agreements (oral or written) related to the Practice
to which Shady Grove, New P.C. or any Shareholder is a party (the "Contracts"),
all of which are valid and existing, in full force and effect, and binding upon
the parties thereto in accordance with their terms. Either Shady Grove or New
P.C. has paid in full or accrued all amounts due thereunder which are currently
due. Except as otherwise disclosed on Schedule 4.09(a), no approval or consent
of any person or entity is needed in order that the Contracts continue in full
force and effect with respect to IntegraMed from and after the Closing Date.
(b) To the knowledge of Shareholders and except as set forth
on Schedule 4.09(a), Shady Grove, New P.C. and Shareholders are in material
compliance with all terms and provisions of all Contracts material to the
operation of Shady Grove or by which Shady Grove, the New P.C. or the
Shareholders is bound or affected; and all such Contracts are legally valid and
binding in accordance with their terms and in full force and effect except as
may be limited by bankruptcy, moratorium, reorganization, insolvency and other
similar laws of general application relating to or affecting the rights of
creditors, and by general principles of equity.
(c) Except as set forth on Schedule 4.09(c), neither Shady
Grove, New P.C. nor any Shareholder is a party to any:
(i) agreement or indenture relating to the borrowing of
money on behalf of or related to the Practice or to the mortgaging, pledging or
otherwise placing a lien on any material asset or material group of assets of
Shady Grove, New P.C. or the Practice;
(ii) oral or written direct or indirect guarantee of any
obligation relating to the Practice;
(iii) lease or agreement under which it is lessee of or
holds or operates any property, real or personal, owned by any other party
relating to the Practice;
(iv) lease or agreement under which it is lessor of or
permits any third party to hold or operate any property, real or personal, owned
or controlled by it relating to the Practice;
or
(v) oral or written contract or agreement for the
purchase or sale by or to Shady Grove, New P.C. or the Practice of goods or
services, excluding such contracts or agreements which contemplate the payment
of less than $5,000.00.
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4.10 Insurance.
Shady Grove has maintained at all times since its date of
incorporation, with responsible and financially solvent insurance companies,
adequate insurance covering risks of such types and in such amounts as are
customary for other professional corporations of similar size engaged in
business of the Practice. New P.C. will maintain all such insurance after the
First Closing identified on Schedule 4.10. Schedule 4.10 contains a true and
complete list of all policies of insurance relating to comprehensive liability
coverage, the amount of coverage, the period of coverage, the type of coverage
and all pending claims or occurrences reported under such policies and the
amount paid out under any such policy for the past three (3) years. Shareholders
have maintained and will continue to maintain after the First Closing without
any gap in coverage professional liability insurance coverage in the amount of
$1,000,000 individual and $3,000,000 in the aggregate.
4.11 Personnel.
(a) Schedule 4.11(a) lists each current employee, both
full-time and part-time, of Shady Grove and New P.C. and all current independent
contractors and consultants of Shady Grove and New P.C. and discloses their
duties, the date of hire or contract, the annual compensation, bonuses and
incentive arrangements with each. With respect to the Practice, each of
Shareholders, Shady Grove and New P.C., to the knowledge of Shareholders, has
complied in all material respects with all applicable laws, rules and
regulations, whether federal, state or local, relating to the employment of
labor, including provisions relating to wages, hours, equal opportunity,
collective bargaining and the payment of Social Security and other taxes, and
with the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Neither Shady Grove, New P.C. nor any of the Shareholders is aware that any
executive of Shady Grove or New P.C. or any group of employees of either Shady
Grove or New P.C. has any plans to terminate his, her or its employment and
neither Shady Grove, New P.C. nor any of the Shareholders is aware of any
material labor relations problems of the Practice and neither Shady Grove nor
New P.C. is a party to any collective bargaining agreement.
(b) Schedule 4.11(b) describes all of the benefit plans
generally available to employees of Shady Grove ("Employee Benefit Plans").
Shady Grove has complied with the terms and conditions of such Employee Benefit
Plans and has no obligations to establish or create any employee pension benefit
plan or defined benefit plan for the benefit of any of its employees to become
effective after the date hereof. IntegraMed shall have no obligations relating
to the Employee Benefit Plans or the employees covered thereunder and IntegraMed
shall have no obligations for employees of Shady Grove arising out of federal or
state law or case decisions as to employment matters arising prior to the First
Closing Date.
(c) With respect to Shady Grove regarding the Practice:
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(i) the Employee Benefit Plans which are intended to
qualify under Section 401 of the Internal Revenue Code, as amended (the "Code")
are so qualified and the trusts maintained pursuant thereto are exempt from
federal income taxation under Section 501 of the Code, and nothing has occurred
with respect to the operation of such plans which could cause the loss of such
qualification or exemption or the imposition of any material liability, lien,
penalty, or tax under ERISA or the Code, and all such plans are fully funded;
(ii) there are no material pending claims or lawsuits
which have been asserted or instituted by or against the Employee Benefit Plans,
against the assets of any of the trusts under such plans or by or against the
plan sponsor, plan administrator, or any fiduciary of the Employee Benefit Plans
(other than routine benefit claims) nor does Shareholders, Shady Grove or New
P.C. have knowledge of facts which could form the basis for any such claim or
lawsuit;
(iii) the Employee Benefit Plans have been maintained in
all material respects in accordance with their plan documents and with all
provisions of the Code and ERISA (including rules and regulations thereunder and
including the reporting and disclosure requirements thereof) and other
applicable law, and neither Shareholders, Shady Grove, New P.C. nor any "party
in interest" or "disqualified person" with respect to the Employee Benefits
Plans has engaged in a "prohibited transaction" within the meaning of Section
4975 of the Code or Title I, Part 4 of ERISA nor breached any fiduciary duty
owed to any participant, former participant or beneficiary;
(iv) none of the Employee Benefit Plans contains any
provisions which would prohibit the transactions contemplated by this Agreement
or which would give rise to any severance, termination or other payments or
liabilities as a result of the transactions contemplated by this Agreement, and
there are no restrictions on Shady Grove or New P.C.'s right to terminate or
decrease the level of benefits under any such plan after the First Closing Date
without further liability to any present or former employee or beneficiary,
except for the payment of non-forfeitable benefits under a pension or
profit-sharing plan listed on Schedule 4.11(b), and neither Shady Grove nor New
P.C. have any unfunded obligations or liabilities under the terms of any
non-qualified deferred compensation plan;
(v) no Employee Benefit Plan which constitutes an
Employee Welfare Benefit Plan (as defined in Section 3(1) of ERISA) provides
benefits to former employees or their beneficiaries other than in order to avoid
excise taxes under Section 4980B of the Code and Title I, Part 6 of ERISA;
(vi) Each of Shareholders, Shady Grove and New P.C. has
at all times complied in all material respects with the notification and
coverage continuation requirements under Code Section 4980B and Title 1, Part 6
of ERISA;
(viii) Neither Shareholders, Shady Grove nor New P.C. has
any liability (whether actual, contingent, with respect to any of its assets or
otherwise) with respect to any Employee Benefit Plan maintained by any trade or
12
business, whether or not incorporated, under common control of Shareholders,
Shady Grove or New P.C. within the meaning of Section 414(b), (c), (m) or (o) of
the Code.
(d) Except as set forth on Schedule 4.11(d), neither Shady
Grove, New P.C., nor the Shareholders is a party to any:
(i) pension, profit sharing, stock option, employee
stock purchase or other plan providing for deferred compensation or other
employee benefit plan, or any contract with any
labor union; or
(ii) oral or written contract for the employment of any
officer, individual employee, or other person or entity on a full-time,
part-time, consulting or other basis, or agreement relating to loans to
officers, directors or affiliates, other than advances in the ordinary course of
business.
4.12 Absence of Certain Developments. Except for transactions required
by this Agreement and the transfer of the Medical Assets to New P.C. and except
as set forth on Schedule 4.12, since the date of the Financial Statements, Shady
Grove has not:
(a) redeemed or repurchased, directly or indirectly, any
shares of its capital stock or declared or paid any dividends or distributions
with respect to any shares of its capital stock;
(b) issued any equity securities, securities convertible into
equity securities, or warrants, options or other rights to acquire equity
securities, or bonds or other securities;
(c) borrowed any amount or incurred or become subject to any
material liabilities, except current liabilities incurred in the ordinary course
of business and liabilities under contracts entered into in the ordinary course
of business;
(d) discharged or satisfied any material lien or encumbrance
or paid any material obligation or liability other than current liabilities paid
in the ordinary course of business;
(e) mortgaged, pledged or subjected to any lien, charge or any
other encumbrance, the Property or any assets of Shady Grove or New P.C., except
liens for current property taxes not yet due and payable;
(f) sold, assigned, transferred or otherwise disposed of or
committed to sell, assign, transfer or otherwise dispose of any of its tangible
assets (including books and records of the Practice), except in the ordinary
course of business, or canceled any material debts or claims;
(g) suffered any extraordinary losses or waived any rights of
material value, whether or not in the ordinary course of business or consistent
with past practice;
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(h) made capital expenditures in excess of $25,000.00 or made
any binding commitments therefor which would cause the aggregate amount of all
actual capital expenditures for the period subsequent to the Financial
Statements to exceed $25,000.00;
(i) paid or committed to any bonuses or similar payments,
except in the ordinary course of business;
(j) made any loans or advances to, guarantees for the benefit
of, or any investments in, any person or entity;
(k) made or committed to any charitable or political
contributions or pledges; or
(l) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance.
4.13 Transactions With Certain Persons. Except as set forth on Schedule
4.13, (a) neither Shady Grove nor New P.C. has, directly or indirectly,
purchased, leased or otherwise acquired any goods, services or property from any
Shareholder or from any person, firm, corporation or other entity directly or
indirectly controlled by (or under common control with) any Shareholder, and (b)
neither Shady Grove, New P.C. nor any Shareholder owes any amount to Shady
Grove, New P.C. or Shareholder or any person, firm, corporation or other entity
directly or indirectly controlled by (or under common control with) Shady Grove,
New P.C. or any Shareholder.
4.14 Environmental Matters. To the knowledge of Shareholders, each of
Shareholders, Shady Grove and New P.C. has, with respect to the Practice,
complied with all environmental laws and regulations applicable to the Practice,
and neither Shareholders, Shady Grove nor New P.C. has received any notice,
demand, suit or information request pursuant to any environmental laws or
regulations applicable to the Practice.
4.15 Medical Waste. Neither Shareholders, Shady Grove nor New P.C.,
with respect to the Practice, is in violation of, or to the knowledge of
Shareholders, the subject of any investigation, inquiry or enforcement action by
any governmental authority under, the Medical Waste Tracking Act, 42 U.S.C.
ss.6992 et seq., or any applicable state or local government statute, ordinance,
or regulation dealing with the disposal of medical wastes (collectively, the
"Medical Waste Laws"). Shady Grove and New P.C. have obtained and are in
compliance with any permits required by the Medical Waste Laws relating to
medical waste disposal, and all disposal of medical waste generated by the
Practice and has been in compliance with the Medical Waste Laws.
4.16 Effective Date of Warranties, Representations and Covenants. Each
warranty, representation, and covenant set forth in this Article IV shall be
deemed to be made on and as of the date hereof and as of the First Closing
(except as otherwise specifically provided herein).
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4.17 Disclosure. All documents, schedules, exhibits and other materials
delivered or made available, by or on behalf of Shady Grove, New P.C. and
Shareholders to IntegraMed in connection with this Agreement and the
transactions contemplated hereby, are true and complete. No representation or
warranty made by Shareholders in this Agreement and no information furnished by
or on behalf of Shady Grove, New P.C. and Shareholders to IntegraMed in
connection with this Agreement and the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained therein not false or misleading.
There is no material fact which Shareholders have not disclosed to IntegraMed
which adversely affects, or insofar as Shareholders can foresee, will adversely
affect Shady Grove, New P.C., the Practice or the ability of Shareholders to
perform their obligations under this Agreement or any other agreement entered
into in connection with this transaction.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF INTEGRAMED
IntegraMed, for the purpose of inducing Shareholders to enter into and
consummate this Agreement, hereby represents and warrants to Shareholders that:
5.01 Organization, Power and Authority.
(a) IntegraMed is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
full power and authority, corporate and otherwise, to carry on its business as
now conducted and to own or lease and to operate its properties and assets now
owned or leased and operated by it, to conduct the business of IntegraMed and to
consummate the transactions contemplated hereby.
(b) The execution, delivery and performance of this Agreement
by IntegraMed has been duly authorized by all requisite corporate action, and no
further action or approval is required in order to constitute this Agreement as
a valid, binding and enforceable obligation of IntegraMed, and this Agreement
constitutes the valid and binding obligation of IntegraMed, enforceable against
IntegraMed in accordance with its terms.
(c) The execution and delivery of this Agreement and the
consummation of the transactions as herein contemplated will not violate any
provisions of any applicable law or of the Certificate of Incorporation or
By-Laws of IntegraMed, or any order, judgment or decree of any court or other
agency of government binding on IntegraMed, or conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
contractual obligation of IntegraMed, result in or require the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of IntegraMed's properties or assets, require any approval of or any consent of
any person under any contractual obligation of IntegraMed or conflict with or
result in any breach or default under any of the terms, conditions or provisions
15
of any indenture, mortgage, deed of trust or other instrument to which
IntegraMed is a party or by which it or its properties may be bound or affected.
5.02 Litigation.
(a) To the best of IntegraMed's knowledge, there are no
material actions, suits, claims or legal, administrative or arbitration
proceedings or investigations pending or, threatened against, involving or
affecting IntegraMed or IntegraMed's properties or assets which are not covered
by insurance or disclosed in the SEC Documents described in Section 5.05.
IntegraMed has no notice or knowledge of any outstanding orders, writs,
injunctions or decrees of any court, governmental agency or arbitration tribunal
against, involving or affecting IntegraMed or IntegraMed's properties or assets.
(b) IntegraMed has received no notice of any violation of
applicable law, order, regulation or requirement related to IntegraMed's
business and is not aware of any condition or state of facts that could result
in any such notice.
5.03 Status of Shady Grove.
It is IntegraMed's present intention to maintain the existence
of Shady Grove as a wholly-owned subsidiary of IntegraMed.
5.04 IntegraMed Stock.
The IntegraMed Stock has been duly authorized by all necessary
corporate action of IntegraMed and when delivered hereunder will be validly
issued, fully paid and non-assessable. Delivery of the IntegraMed Stock shall
convey to Shareholders lawful, valid and marketable title to the IntegraMed
Stock, free and clear of any and all claims or encumbrances.
5.05 SEC Documents.
IntegraMed has filed and will file with the Securities and
Exchange Commission (the "SEC") all forms, reports, schedules, statements,
exhibits and other documents required to be filed on or before the date of this
Agreement, respectively, by it under the Securities Act of 1933, as amended, and
the regulations and rulings issued thereunder or the Securities Exchange Act of
1934, as amended, and the regulations and rulings issued thereunder. IntegraMed
has furnished to the Shareholders (i) the annual report on Form 10-K for its
fiscal year ended December 31, 1996, (ii) its quarterly report on Form 10-Q for
its fiscal quarters ended March 31, June 30, and September 30, 1997, and (iii)
all of its other reports, statements, schedules and registration statements
filed with the SEC since January 1, 1997.
16
ARTICLE VI
INDEMNIFICATION AND RECONCILIATION
6.01 Survival of Representations and Warranties.
The representations and warranties contained in this Agreement
and in any instrument or certificate delivered pursuant to, or provided for in
this Agreement and any Schedules or Exhibits attached hereto ("Representations
and Warranties"), shall survive the consummation of the transactions
contemplated by this Agreement for (i) a period of twenty-one (21) years after
the First Closing Date with respect to any claims relating to the professional
negligence of any Shareholder, Shady Grove or any of its employees, (ii) the
appropriate statute of limitations provided under law with respect to Section
4.04(b) relating to taxes, and (iii) a period of three (3) years after the First
Closing Date for all other Representations and Warranties; provided, however,
that the expiration of the applicable period shall not preclude either party
from indemnification by the other relating to any third-party Claim (as defined
herein) asserted prior to the expiration of the applicable period. Each party to
this Agreement shall be deemed to have relied upon each and every Representation
and Warranty of the other party, regardless of any investigation made at any
time by the party relying on such Representation and Warranty.
6.02 Indemnification.
(a) After the First Closing Date, Shareholders (including each
Shareholder's personal representatives, executors, legatees, heirs and assigns)
jointly and severally shall indemnify IntegraMed (including its officers,
directors, shareholders, employees and agents) against, and defend and hold
IntegraMed harmless from, all demands, claims, actions or causes of action,
assessments, losses, damages, deficiencies, liabilities, costs and expenses
(including interest, penalties and reasonable attorneys' fees and disbursements,
but excluding indirect, punitive and consequential damages) (hereinafter
collectively called a "Claim") arising out of or in connection with (i) any
breach of the Representations and Warranties or non-fulfillment of any covenants
or agreements of Shareholders, Shady Grove or New P.C. contained in this
Agreement or any agreement or instrument delivered by Shareholders, Shady Grove
or New P.C. pursuant to this Agreement; (ii) subject to the reconciliation
process set forth in Section 6.03, the payment of all liabilities and
obligations of Shady Grove arising out of or relating to the operations of Shady
Grove on or prior to the First Closing Date, including, without limitation, (A)
all tax liabilities relating to the period ending on the First Closing Date, (B)
all trade payables, loan obligations to the third parties and bonus obligations
of Shady Grove which exceed the aggregate amount of the accounts receivable
collected by Shady Grove after the First Closing Date plus the value of those
fixed assets set forth on Schedule 6.03, and (C) any liabilities or obligations
(whether or not disclosed in the Schedules or Exhibits to this Agreement)
relating to or arising out of the operation of Shady Grove prior to the First
Closing Date or the provision of services (professional or otherwise) or actions
by any employee, officer, director or agent of Shady Grove or the use of
trademarks, service marks, logos or other proprietary symbols on or prior to the
First Closing Date; (iii) the operations of New P.C. or the Practice (including,
17
but not limited to the provision of services (professional or otherwise) or,
actions by any employee, officer, director or agent of New P.C. or the Practice
or the use of trade marks, service marks, logos or other proprietary symbols)
and (iv) any liabilities assumed by New P.C. as part of the Restructuring or
pursuant to the Assumption Agreement described in Section 8.02(c)14. Upon the
assertion of any Claim against IntegraMed that may give rise to a liability of
Shareholders hereunder, IntegraMed shall notify Shareholders of the existence of
such Claim (which notice shall include a description thereof). IntegraMed shall
give Shareholders reasonable opportunity to defend and/or settle such Claim at
Shareholders' own expense and with counsel of their own selection, which counsel
shall be reasonably satisfactory to IntegraMed; provided, however, that in the
case of any Claim, IntegraMed shall have the right to participate in any
administrative or judicial proceedings with respect to such Claim, at its
expense and with counsel of its choice. If Shareholders shall, after ten (10)
days notice thereof by IntegraMed, fail, in IntegraMed's judgment, to take
adequate action to defend any Claim, IntegraMed shall have the right to
undertake the defense, compromise or settlement of such Claim on behalf of, for
the account of, and at the risk of the Shareholders. If the Claim is one that
cannot by its nature be solely defended by Shareholders, then IntegraMed shall,
at its sole expense, make available all information and assistance as may
reasonably be requested by Shareholders.
(b) IntegraMed hereby agrees to indemnify Shareholders
against, and to defend and hold Shareholders harmless from Claims arising out of
in connection with (i) any breach of any Representations and Warranties or
non-fulfillment of any or covenant or agreement of IntegraMed contained in this
Agreement or any agreement or instrument delivered by IntegraMed pursuant to
this Agreement; and (ii) the management services provided by IntegraMed directly
or indirectly to New P.C. after the First Closing Date. Upon the assertion of
any Claim that may give rise to a liability of IntegraMed hereunder,
Shareholders shall notify IntegraMed of the existence of such Claim (which
notice shall include a description thereof). Shareholders shall give IntegraMed
reasonable opportunity to defend and/or settle such Claim at its own expense and
with counsel of its own selection, which counsel shall be satisfactory to
Shareholders; provided however, that in the case of any Claim, Shareholders
shall have the right to participate in any administrative or judicial
proceedings with respect to such Claim, at their expense and with counsel of
their choice. If IntegraMed shall, after ten (10) days notice thereof by
Shareholders, fail to defend any Claim, Shareholders shall have the right to
undertake the defense, compromise or settlement of such Claim on behalf of, for
the account of, and at the risk of IntegraMed. If the Claim is one that can not
by its nature be solely defended by IntegraMed, then Shareholders shall, at
their sole expense, make available all information and assistance as may be
requested by IntegraMed.
(c) The respective rights of the parties to be indemnified by
the other shall not in any way be limited by the existence or non-existence of
insurance coverage. IntegraMed shall have the right to offset any amount owed to
it from Shareholders, Shady Grove or New P.C. under this Article VI against any
amounts due and payable by IntegraMed to Shareholders under the Notes.
18
6.03 Reconciliation.
Schedule 6.03 sets forth certain assets and liabilities of Shady Grove
which shall be subject to a reconciliation process subsequent to the First
Closing. Those assets listed include the value of the fixed assets of Shady
Grove valued at book value in accordance with GAAP as of March 12, 1998, which
value shall be set forth on Schedule 6.03, and the accounts receivable of Shady
Grove as of the First Closing for services rendered by the Practice prior to the
First Closing. The liabilities include trade payables, certain bonuses set forth
on Schedule 4.05(b), Shareholder and third party debt and all accrued salaries
and wages (including accrued vacation and sick leave) for all employees, all
accrued bonuses for any employees (other than those bonuses set forth on
Schedule 4.05(b)) and any accrued compensatory time for any employees. On March
31, 1999, there shall be a reconciliation of these assets and liabilities based
upon actual accounts receivable collected and liabilities paid or incurred,
which shall be reflected on a reconciliation statement delivered by IntegraMed
to Shareholders. If the collected accounts receivable plus the value of all
other assets reflected on Schedule 6.03 is less than the amount of the
liabilities paid or incurred by IntegraMed for pre-closing liabilities, then the
Notes payable in accordance with Section 2.01(c) shall be reduced on a pro rata
basis among Shareholders by the amount of any such deficit. If the collected
accounts receivable plus the value of all other assets reflected on Schedule
6.03 is greater than the amount of the liabilities paid or incurred by
IntegraMed for pre-closing liabilities, then the Notes payable in accordance
with Section 2.01(c) shall be increased on a pro rata basis among Shareholders
by the amount of any such excess. By way of example, if all accounts receivable
reflected on Schedule 6.03 are fully collected, then the Notes shall be reduced
on a pro rata basis among Shareholders by $493,613. On March 31, 2000, there
shall be a second reconciliation for any accounts receivable collected and
liabilities paid or incurred since the first reconciliation and any deficit or
excess shall be handled in the same fashion as they were handled for the first
reconciliation.
ARTICLE VII
CERTAIN COVENANTS
7.01 Covenants of Shareholders.
Prior to the First Closing, Shareholders shall:
(a) obtain malpractice tail insurance coverage for Shady Grove;
(b) obtain malpractice insurance coverage for New P.C. and
provide evidence of such policy(ies) to IntegraMed;
(c) at their option, freeze or terminate each of the pension
and profit sharing plans of Shady Grove and New P.C. and New P.C. shall be the
sponsor of any frozen plans and the Shareholders shall prepare and file with the
Internal Revenue Service, an application for determination with respect to each
terminated plan immediately following the First Closing; and
19
(d) file the Articles of Amendment to be effective on the
First Closing Date .
7.02 Covenant of IntegraMed. With respect to those former employees of
Shady Grove hired by IntegraMed, IntegraMed shall recognize and give credit to
all such employees for their years of service to Shady Grove for purposes of
vacation and sick leave and other benefits provided by IntegraMed.
ARTICLE VIII
CONDITION TO OBLIGATIONS
8.01 Conditions to Shareholders's Obligations.
The obligations of Shareholders under this Agreement are
subject to the satisfaction on or before the First Closing Date of the following
conditions, any of which may be waived by Shareholders by proceeding with the
First Closing:
(a) The representations and warranties of IntegraMed set forth
in this Agreement shall be true on and as of the First Closing Date and
IntegraMed shall have performed all obligations and complied with all covenants
required by this Agreement to be performed or complied with by IntegraMed prior
to or on the First Closing Date and IntegraMed shall have delivered to
Shareholders a certificate, dated as of the First Closing Date, to all such
effects;
(b) No suit, action or other proceeding shall be pending
before any court or other government agency which seeks to restrain or prohibit
performance of this Agreement or the consummation of the transactions
contemplated herein or in connection herewith to subject Shareholders to
liability on the ground that IntegraMed has breached any law or duty or
otherwise acted improperly, nor shall any such suit, action or proceeding be
threatened, to the knowledge of IntegraMed; and
(c) IntegraMed shall have delivered in form satisfactory to
Shareholders the items or documents identified below:
1. The consideration required to be delivered at the First
Closing pursuant to Section 2.01 hereof;
2. Copies of the resolutions of the Board of Directors of
IntegraMed, certified by the Secretary or Assistant Secretary of IntegraMed,
approving and authorizing the execution of this Agreement and the Notes and the
consummation of the transactions contemplated herein; and
3. The opinion of Xxxxxx X. Xxxxx, Esq. legal counsel to
IntegraMed, dated the First Closing Date, in the form of Exhibit E attached
hereto.
20
8.02 Conditions to IntegraMed's Obligations.
The obligations of IntegraMed under this Agreement are subject
to the satisfaction on or before the First Closing Date of the following
conditions, any of which may be waived by IntegraMed by proceeding with the
First Closing:
(a) The representations and warranties of Shareholders set
forth in this Agreement shall be true on and as of the First Closing Date and
Shareholders shall have performed all obligations and complied with all
covenants required by this Agreement to be performed or complied with by
Shareholders prior to or on the First Closing Date and Shareholders shall have
delivered to IntegraMed a certificate dated as the First Closing Date, to all
such effects;
(b) No suit, action or other proceeding shall be pending
before any court or other government agency which seeks to restrain or prohibit
performance of this Agreement or the consummation of the transactions
contemplated herein or in connection herewith, except as disclosed on Schedule
4.07(a), to subject IntegraMed to liability on the ground that Shareholders have
breached any law or duty or otherwise acted improperly, nor shall any such suit,
action or proceeding be threatened, to the knowledge of IntegraMed; and
(c) Shareholders shall have delivered in form reasonably
satisfactory to IntegraMed the items or documents identified below:
1. Physician-Stockholder Employment Agreements dated March 11,
1998 between each Shareholder and New P.C., copies of which are attached hereto
collectively as Exhibit F;
2. Non-Shareholder Physician Employment Agreements dated on or
about March 11, 1998 between each non-Shareholder physician employee of New P.C.
and New P.C. in the form of Exhibit G;
3. The issued and outstanding stock certificates of Shady
Grove, endorsed in blank;
4. The Proxy in the form of Exhibit B;
5. Personal Responsibility Agreements dated March 12, 1998
between each Shareholder (other than Xxxxxxxx) and IntegraMed, copies of which
are attached hereto collectively as Exhibit H;
6. The Voting Trust Agreement in the form of Exhibit D;
7. Shareholder Representation Letters in the form of Exhibit
I;
21
8. A provider agreement dated March 11, 1998 between Shady
Grove and New P.C. in the form of Exhibit K;
9. Copies of resolutions of the Board of Directors of Shady
Grove, certified by an officer of Shady Grove, approving and authorizing the
execution of the Management Agreement and the Provider Agreement and the
consummation of the transactions contemplated thereby;
10. Copies of resolutions of the Board of Directors of New
P.C., certified by an officer of New P.C., approving and authorizing the
execution of the Management Agreement, the Provider Agreement, the
Physician-Stockholder Employment Agreements and the Non-Shareholder Physician
Employment Agreements and the consummation of the transactions contemplated
thereby;
11. The Closing Statement as set forth on Schedule 6.03;
12. The opinion of Xxxxxxx, Xxxxxx & Green, P.C., legal
counsel to Shareholders, dated the First Closing Date, in the form annexed
hereto as Exhibit J;
13. The Articles of Amendment, as filed on or before the First
Closing Date, and the Articles of Incorporation of New P.C. and any amendments
thereto; and
14. An Assignment and Assumption Agreement (the "Assumption
Agreement") dated on or before the First Closing Date between Shady Grove and
New P.C. in the form of Exhibit L attached hereto.
ARTICLE IX
MISCELLANEOUS
9.01 Brokers. Shareholders represent and warrant to IntegraMed
that Shareholders have not dealt with or retained any broker or finder or agreed
to pay any commission or fee to any broker or finder for or on account of this
Agreement or the transactions contemplated hereby. IntegraMed represents and
warrants to Shareholders that it has not dealt with or retained any broker or
finder for or on account of this Agreement or the transactions contemplated
hereby. Each party agrees to indemnify the other against any loss, cost or
expense, including attorneys' fees, as a result of any claim for a fee or
commission asserted by any broker or finder with respect to this Agreement or
the consummation thereof whose claim arises through dealings with such broker or
finder by the indemnifying party.
9.02 Further Action. If at any time after either Closing Date
any further assignment, transfers or assurances in law are reasonably necessary
or desirable to carry out the provisions of this Agreement, the parties to this
Agreement shall execute and deliver any and all assignments, transfers, and
assurances in law, and do all things, reasonably necessary or proper to such end
and otherwise to carry out the provisions and intent of this Agreement.
MBA:174958.7:3/12/98: 8:43 PM
22
9.03 Notices. Any notice or other communication required, by,
or which may be given pursuant to this Agreement shall be in writing and either
personally delivered or mailed, certified or registered mail, postage prepaid,
return receipt requested, or overnight courier, prepaid, and shall be deemed
given when received. Any such notice or communication shall be sent to the
address set forth below:
If to IntegraMed, at:
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx Xxxxx, President
With a copy to:
IntegraMed America, Inc.
Xxx Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx, General Counsel
And if to Shareholders, at:
Xxxxxxx X. Xxxx, M.D.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxxxx, M.D.
00000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxxxxxx, M.D.
00000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxx Xxxxxxx Xxxxxx, Esq.
Xxxxxxx, Xxxxxx & Green, P.C.
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Any party may change the persons and addressees to which notices or
other communications are to be sent to it by giving written notice of any such
change to the other party hereto.
23
9.04 Headings. The headings contained in this Agreement are
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
9.05 Entire Agreement. The Recitals and all Schedules and
Exhibits referred to in this Agreement are deemed annexed hereto and made a part
of this Agreement and this Agreement, together with the Schedules and Exhibits:
(a) Constitutes the entire agreement among the parties
with respect to the purchase and sale of the Shares and supersedes all prior
agreements and understandings;
(b) May not be modified or discharged, nor may any of
its terms be waived, except by an instrument in writing, signed by the party or
parties to be charged; and
(c) Shall bind and inure to the benefit of the parties
and their respective successors and permitted assigns. Nothing expressed or
mentioned in this Agreement is intended, or will be construed, to give any
person, firm corporation or other entity, other than the parties to this
Agreement and their respective successors and assigns, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any of its
provisions.
9.07 Assignment. This Agreement may not be assigned by any
party hereto without the prior written consent of the other party. No assignment
or delegation of any rights or obligations hereunder shall release the assignor
from any of its liabilities hereunder.
9.08 No Waiver. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect the
right of such party at a later time to enforce the same. No waiver of any
nature, whether by conduct or otherwise, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or of any breach of any other term, covenant, representation or
warranty of this Agreement.
9.09 Counterpart. This Agreement may be executed in any number
of separate counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
9.10 Governing Law; Arbitration. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland,
irrespective of the principal place of business of the parties hereto. Any and
all claims, disputes, or controversies arising under, out of, or in connection
with this Agreement or any breach thereof shall be determined by binding
arbitration in the State of Maryland, County of Baltimore (hereinafter
"Arbitration"). The party seeking determination shall subject any such dispute,
claim or controversy to either (i) JAMS/Endispute or (ii) the American
Arbitration Association, and the rules of commercial arbitration of the selected
entity shall govern. The Arbitration shall be conducted and decided by three (3)
arbitrators, unless the parties mutually agree, in writing at the time of the
Arbitration, to fewer arbitrators. In reaching a decision, the arbitrators shall
have no authority to change or modify any provision of this
24
Agreement. Each party shall bear its own expenses and one-half the expenses and
costs of the arbitrators. Any application to compel Arbitration, confirm or
vacate an arbitral award or otherwise enforce this Paragraph shall be brought in
the Courts of the State of Maryland or the United States District Court for the
District of Maryland, to whose jurisdiction for such purposes Shareholders and
IntegraMed hereby irrevocably consent and submit.
9.11 Expenses. All costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not either Closing shall have occurred.
9.12 Publicity. Shareholders shall not make any public
announcement regarding the transactions proposed herein without the prior
written approval of IntegraMed. Other than as may be required by law because of
IntegraMed's status as a publicly-held company, IntegraMed will not make any
public announcement regarding the transactions proposed herein without the prior
written approval of Shareholders.
IN WITNESS WHEREOF, the parties have executed this Agreement
the date first above written by their respective duly authorized officers.
INTEGRAMED AMERICA, INC.
By:/s/Xxxxxxx Xxxxx
------------------------------------
Xxxxxxx Xxxxx, President
SHAREHOLDERS:
/s/ Xxxxxxx X. Xxxx
---------------------------------------
Xxxxxxx X. Xxxx, M.D.
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx, M.D.
/s/Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx, M.D.
25
SCHEDULE 2.01
Payment of Purchase Price
Value of Shares
of IntegraMed Cash
Stock Purchase Price Notes
---------------- -------------- -----
First Closing Date:
Levy $ 655,100 $1,010,200 $ 594,750
(342,268 shares)
Sagoskin 569,000 838,000 502,500
(297,283 shares)
Second Closing Date:
Xxxxxxxx 175,900 951,800 402,750
---------- ---------- ----------
$1,400,000 $2,800,000 $1,500,000
26
SCHEDULES AND EXHIBITS
----------------------
Schedules
---------
Schedule 2.01 Payment of Purchase Price
Schedule 4.01 Shady Grove/Capital Stock
Schedule 4.02(d) Contractual Consents
Schedule 4.02(e) Governmental Consents
Schedule 4.03 Fixed Assets
Schedule 4.04 Financial Statements
Schedule 4.04(a) Undisclosed Liabilities
Schedule 4.05(a) Changes in Financial Position
Schedule 4.05(b) Employee Bonuses
Schedule 4.05(d) New Indebtedness and Capital Expenditures
Schedule 4.06 Licenses
Schedule 4.07(a) Litigation and Investigations
Schedule 4.07(b) Notice of Violations
Schedule 4.09(a) Contracts
Schedule 4.09(c) Other Agreements
Schedule 4.10 Insurance
Schedule 4.11(a) Employees
Schedule 4.11(b) Employee Benefit Plans
Schedule 4.11(d) Other Employee Agreements
Schedule 4.12 Absence of Certain Developments
Schedule 4.13 Transactions with Certain Persons
Schedule 6.03 Assets and Liabilities Subject to Reconciliation
Exhibits
Exhibit A Management Agreement
Exhibit B Proxy
Exhibit C Notes
Exhibit D Voting Trust Agreement
Exhibit E IntegraMed Opinion
Exhibit F Physician-Stockholder Employment Agreements
Exhibit G Non-Shareholder Physician Employment Agreement
Exhibit H Personal Responsibility Agreements
Exhibit I Shareholder Representation Letters
Exhibit J Shady Grove Opinion
Exhibit K Provider Agreement
Exhibit L Assumption Agreement
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