AGREEMENT FOR
THE PURCHASE AND SALE OF STOCK
OF
SANTA XXX/TUSTIN PHYSICIANS GROUP, INC.
BY AND AMONG
PROSPECT MEDICAL GROUP, INC.
A CALIFORNIA PROFESSIONAL CORPORATION
PURCHASER
AND
SANTA XXX/TUSTIN PHYSICIANS GROUP, INC.
A CALIFORNIA PROFESSIONAL CORPORATION
AND
XXXXXX X. XXXXX, D.O.
SELLER
TABLE OF CONTENTS
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1. PURCHASE AND SALE OF STOCK: . . . . . . . . . . . . . . . . . . . . . . . . . .1
2. ASSUMPTION OF LIABILITIES:. . . . . . . . . . . . . . . . . . . . . . . . . . .1
3. PURCHASE PRICE OF STOCK:. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.1 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.2 Payment of the Purchase Price . . . . . . . . . . . . . . . . . . . . .2
3.3 Other Consideration . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.4 Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.5 Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.6 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER:. . . . . . . . . . . . . .4
4.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.3 No Consent Required; No Violations. . . . . . . . . . . . . . . . . . .5
4.4 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
4.5 Financial Statements, Books and Records . . . . . . . . . . . . . . . .6
4.6 Conduct of Practice . . . . . . . . . . . . . . . . . . . . . . . . . .6
4.7 No Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . .7
4.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
4.9 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.10 Right to Premises; Condition of the Property and Premises . . . . . . .8
4.11 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
4.13 Powers of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.14 No Litigation and Insurance . . . . . . . . . . . . . . . . . . . . . .9
4.15 Violation of Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.16 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . 10
4.17 No Bankruptcy Proceedings . . . . . . . . . . . . . . . . . . . . . . 10
4.18 Licensure and Reimbursement . . . . . . . . . . . . . . . . . . . . . 10
4.19 Employees and Employee Benefits . . . . . . . . . . . . . . . . . . . 11
4.20 Employee Entitlements . . . . . . . . . . . . . . . . . . . . . . . . 12
4.21 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.22 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.23 Environmental Conditions. . . . . . . . . . . . . . . . . . . . . . . 13
4.24 Primary Care Physicians . . . . . . . . . . . . . . . . . . . . . . . 13
4.25 Bank Accounts; Securities . . . . . . . . . . . . . . . . . . . . . . 14
4.26 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.27 Articles of Incorporation and Bylaws. . . . . . . . . . . . . . . . . 14
4.28 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.29 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . 14
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4.30 Securities Law Compliance . . . . . . . . . . . . . . . . . . . . . . 14
4.31 Option to Purchase IPAs.. . . . . . . . . . . . . . . . . . . . . . . 14
4.32 No Untrue Statements. . . . . . . . . . . . . . . . . . . . . . . . . 15
4.33 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER: . . . . . . . . . . . 15
5.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 No Violation of Other Obligations . . . . . . . . . . . . . . . . . . 16
5.5 No Consent Required . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 No Bankruptcy Proceedings . . . . . . . . . . . . . . . . . . . . . . 16
5.7 No Untrue Statements. . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 Financial Resources . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.9 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.10 Investigation and Sophistication. . . . . . . . . . . . . . . . . . . 17
5.11 No Intent To Distribute . . . . . . . . . . . . . . . . . . . . . . . 17
5.12 Strategic Provider. . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.13 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6. POST-CLOSING COVENANTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.1 Company Employees; Prior Service Credit . . . . . . . . . . . . . . . 17
6.2 Company's Offices . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Subsequent Sale of Company. . . . . . . . . . . . . . . . . . . . . . 18
6.4 Company's Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Choice of Hospitals . . . . . . . . . . . . . . . . . . . . . . . . . 18
7. PURCHASERS' ACCESS TO RECORDS; CONFIDENTIAL INFORMATION;
PUBLICITY:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.2 Confidential Information. . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8. CLOSING; CONDITIONS TO OBLIGATIONS TO CLOSE:. . . . . . . . . . . . . . . . . 19
8.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Deliveries by Seller. . . . . . . . . . . . . . . . . . . . . . . . . 20
8.3 Deliveries by Purchaser . . . . . . . . . . . . . . . . . . . . . . . 21
8.4 Conditions to Purchaser's Obligations . . . . . . . . . . . . . . . . 22
8.5 Conditions to Seller's Obligation . . . . . . . . . . . . . . . . . . 22
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9. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Seller's Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Purchaser's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 25
9.3 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . 25
9.4 Payment; Purchaser's Right to Offset. . . . . . . . . . . . . . . . . 26
9.5 Non-Exclusive Remedy/Mitigation of Damages. . . . . . . . . . . . . . 26
10. PURCHASER'S CANCELLATION OF STOCK PURCHASE AGREEMENT. . . . . . . . . . . . . 27
10.1 Jeopardy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Exercise of Cancellation Options. . . . . . . . . . . . . . . . . . . 27
11. MUTUAL RELEASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.1 Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2 No Third Party Beneficiaries. . . . . . . . . . . . . . . . . . . . . 28
12.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.4 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 28
12.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.6 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.9 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.10 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . 29
12.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.12 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.13 Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . . . . 30
12.14 Survival of Indemnification, Representations and Warranties . . . . . 30
12.15 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.16 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.17 Arbitration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
12.18 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.19 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 31
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AGREEMENT FOR THE PURCHASE AND SALE OF STOCK
THIS AGREEMENT FOR THE PURCHASE AND SALE OF STOCK ("Stock Purchase
Agreement") is made and entered into as of the 23 day of June, 1997, by and
among Prospect Medical Group, Inc., a California professional corporation
("Purchaser"), as buyer, Xxxxxx X. Xxxxx, D.O. ("Seller") as seller, and Santa
Xxx/Tustin Physicians Group, Inc. a California professional corporation
("Company").
R E C I T A L S
This Stock Purchase Agreement is made with reference to the following facts
and circumstances:
A. Seller owns all of the capital stock of the Company, which owns and
operates a medical practice and an independent practice association located at
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxx, Xxxxxxxxxx (the "Practice");
B. The Practice provides professional medical services in Orange
County, California, primarily through a capitated contract with PacifiCare, a
health maintenance organization;
C. Seller desires to sell to Purchaser and Purchaser desires to
purchase from Seller all of the issued and outstanding stock (the "Stock") of
the Company on the terms and conditions set forth in this Stock Purchase
Agreement.
NOW, THEREFORE, in consideration of the covenants and conditions
contained herein and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. PURCHASE AND SALE OF STOCK:
On the "Closing Date" (as defined in Section 8.1 herein), Seller shall sell
and assign to Purchaser, and Purchaser shall acquire from Seller, all right,
title and interest in and to the Stock, free and clear of all liens, mortgages,
pledges, claims, security interests, title defects, encumbrances, charges and
other restrictions of every kind (collectively, the "Liens") on the terms and
subject to the conditions set forth in this Stock Purchase Agreement. Seller is
the owner of record of all of the Company's issued and outstanding capital
Stock.
2. ASSUMPTION OF LIABILITIES:
Except for trade payables arising in the ordinary course of business, all
of the liabilities of Company or the Practice as of March 31, 1997, exceeding
$5,000 individually, are set forth on Exhibit 2 attached hereto, which Exhibit 2
shall also include aggregate amounts for each category of liabilities. Seller
shall provide for the payment of such liabilities out of the Reserve Account, as
defined in Section 3.5 herein, and, to the extent that the Reserve Account is
insufficient to pay such liabilities, Seller shall be individually responsible
for payment of all claims or liabilities of the Company or the Practice which
arose or accrued prior to the Closing. Purchaser shall assume no liabilities of
Company or the Practice existing as of the Closing Date, and in the event that
Purchaser is unable to satisfy or pay such liabilities from the Reserve Account
or otherwise, Purchaser shall have a right of indemnification against Seller
with respect to any such liabilities or obligations of the Company which
Purchaser is ultimately required to pay.
3. PURCHASE PRICE OF STOCK:
3.1 CONSIDERATION. Subject to the terms and conditions of this Stock
Purchase Agreement, in reliance on the representations, warranties and covenants
of the parties hereto (including the Non-Competition Agreement of Seller
attached hereto as Exhibit 8.2(f) and incorporated herein by this reference),
and in full consideration of the sale, assignment and delivery of the Stock,
Purchaser shall pay to the Seller Five Million Dollars ($5,000,000) on or before
the Closing, as set forth herein, plus all amounts, if any, which remain in the
Reserve Account, as defined in Section 3.5 herein, on the date one year from the
date of this Stock Purchase Agreement in accordance with Section 3.2 below (the
"Purchase Price"). For the purposes of this Stock Purchase Agreement, the
parties agree that no portion of the sale price shall be apportioned to
Company's CalOPTIMA contract or assets related thereto, although Company is
transferring all right, title and interest to such contracts or assets as
permitted by law. The parties further agree that the restrictions contained in
the Non-Competition Agreement by and between Purchaser and Seller, the form of
which is attached hereto as Exhibit 8.2(f), are incidental to the goodwill being
acquired by Purchaser hereunder and that no separate compensation or
consideration is being paid with respect to the provisions contained in the
Non-Competition Agreement.
3.2 PAYMENT OF THE PURCHASE PRICE.
(a) Purchaser shall pay Seller in the aggregate, Five Million
Dollars ($5,000,000) in cash, plus all amounts, if any, which remain in the
Reserve Account on the date one year from the date of this Stock Purchase
Agreement. Payment shall be made as follows: At the date of the parties'
execution of this Stock Purchase Agreement, Purchaser shall (i) pay One Hundred
Thousand Dollars ($100,000) to Seller, and (ii) deposit One Million Nine Hundred
Thousand Dollars ($1,900,000) into an escrow account established by Purchaser
with Seller's consent, established pursuant to instructions given in the form of
those set forth on Exhibit 3.2(a) ("Escrow Account"). At the conclusion of
twenty-one (21) days from the date hereof, Nine Hundred Thousand Dollars
($900,000) from the Escrow Account shall be paid to Seller. Unless such funds
have already been disbursed to Seller, at the Closing Date Purchaser shall pay
Three Million Dollars ($3,000,000) to Seller and direct the payment of the
remaining One Million Dollars ($1,000,000) in the Escrow Account to Seller. On
the date that is forty-two (42) days from the date of this Stock Purchase
Agreement, the One Million Dollars ($1,000,000) remaining in the Escrow Account
shall be paid to Seller, and the remaining Three Million Dollars ($3,000,000)
owed shall be paid on the Closing Date. It shall be a condition to the
effectiveness of the Stock Purchase Agreement that the $1.9 million to be paid
into the Escrow Account have been wired into the Escrow Account.
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(b) Except for the payment of the $100,000 deposit, which shall
be paid through a journal entry transfer from Purchaser's Xxxxxxx Xxxxx account
to Seller's Xxxxxxx Xxxxx account, and which shall be confirmed by facsimile and
telephone, all such sums payable hereunder shall be payable to Seller by way of
wire transfer of immediately available funds into a deposit account designated
in writing by Seller. Purchaser and Seller agree that the $100,000 payment made
as of the date of this Stock Purchase Agreement shall be non-refundable. The
parties further agree that in the event that the transactions contemplated
herein have not been consummated on or before forty-two (42) days from the date
hereof, all remaining funds in the Escrow Account shall be paid to Seller unless
(i) Seller commits fraud related to this Stock Purchase Agreement or the
operation of the Company or the Practice, or (ii) there is a material breach of
the representations, warranties and covenants set forth in Sections 4.1, 4.2,
4.3, 4.4 (solely with respect to agreements with health maintenance
organizations, provider agreements and the leases of Company's facilities, and
in such cases only where the material breach is so severe as to interfere with
Company's business), 4.6, 4.7(a), 4.7(e), 4.12(b), 4.12(c), 4.14 (only to the
extent such undisclosed lawsuit is not covered by insurance), 4.15 (only to the
extent Seller has violated a criminal statute), 4.17, 4.18(b) and 4.32 of this
Stock Purchase Agreement by Company or Seller; provided however, that in the
event of the aforementioned material breaches of the representations, warranties
and covenants of this Stock Purchase Agreement set forth in item (ii), Seller
shall have 20 days from the date of notice of such material breach to cure such
breach ("Cure Period"). During the Cure Period the Purchaser's obligations to
pay any amounts from the Escrow Account shall be suspended.
(c) Prior to the Closing, in the event that any or all of the
amounts in the Escrow Account have been disbursed to Seller and Purchaser
becomes aware of a material breach of this Agreement as set forth in items (i)
or (ii) above, Seller shall immediately return such amounts (except for the
nonrefundable $100,000 deposit) to Purchaser, subject to Seller's Cure Period.
3.3 OTHER CONSIDERATION. As additional consideration for the execution
of this Stock Purchase Agreement and the transactions contemplated hereby, the
parties agree that Seller and Company shall assign to Purchaser the option to
purchase Premier IPA and will assign, if executed, an option to purchase Western
IPA.
3.4 FAIR MARKET VALUE. The parties agree that the Purchase Price
reflects the fair market value of the Stock as valued by a third party,
independent appraiser in accordance with accepted business practices for valuing
the stock of professional medical practices. The parties agree no consideration
is or will be paid for the value of any referrals (direct or indirect) to or
from Purchaser, Seller, or any of his affiliates.
3.5 RESERVE ACCOUNT. Concurrent with the Closing (as hereinafter
defined in Section 8.1), the Company shall establish a reserve account (the
"Reserve Account"). The Reserve Account will be used to offset liabilities of
the Company existing as of the Closing Date. The Reserve Account shall
initially consist of the liquid assets of the Company as of the Closing,
including, but not limited to, the Company's cash, money market accounts,
reserves, securities, checking accounts and Xxxxxxx Xxxxx account. All money
earned or accrued for the period prior to the Closing but received by the
Company after the Closing, including, but not limited to, such items as receipt
of hospital control funds, stop loss payments, maternity guarantee, mammogram
3
pools, retroactive capitation payments, and the Company's accounts receivable
existing as of the Closing shall be deposited in the Reserve Account.
Additionally, any prepaid liabilities of the Company for the period relating to
after the Closing shall be credited to the amount of the Reserve Account. Any
refunds given to the Company after the Closing which relate to the period prior
to the Closing shall also be deposited into the Reserve Account. Purchaser
shall notify Seller of any such required deposits within five (5) days of
receipt of such funds by Company or Purchaser. The Reserve Account shall be a
separate mutually agreed upon account for which the signatures of both Seller
and Purchaser shall be required, although Seller shall oversee all payments made
from the Reserve Account. Seller shall provide Purchaser with copies of all
checks issued relating to the Reserve Account together with copies of the
supporting bills which are being paid. Except for liabilities related to the
transfer of capitated lives from Seoul Medical Group, Inc. prior to
December 1, 1996 (the "Seoul Liabilities"), any pre-Closing liabilities of the
Company shall be paid by Seller from the Reserve Account, including, but not
limited to, pre-Closing tax liabilities and the premiums for Seller's "tail"
malpractice insurance policy relating to the period prior to the Closing.
Except for the Seoul Liabilities, the pre-Closing liabilities will include any
liability of the Company which has a date of service (regardless of when billed)
prior to the Closing. The funds in the Reserve Account shall not be removed
from the Reserve Account for any purpose other than (i) for the payment of the
pre-Closing liabilities of the Company; (ii) for possible indemnification
purposes pursuant to Section 9 of this Agreement; or (iii) for distribution to
Seller upon liquidation of the Reserve Account. Prior to Seller incurring any
liability for any indemnification pursuant to Section 9 of this Agreement, it
shall be a precondition first that funds in the Reserve Account shall first be
required to be used and applied until all such funds in the Reserve Account have
been exhausted. There shall be no requirement for the Company to deposit any
funds into the Reserve Account other than as required pursuant to this Section
3.5. At any time after the Closing up through the date when the Reserve Account
is liquidated, in the event that the amount of the pre-Closing claims and
pre-Closing liabilities of the Company exceed the amount which is held in the
Reserve Account, Seller shall pay to Purchaser within thirty (30) days the
amount by which such claims and liabilities exceed the amount held in the
Reserve Account. On the first anniversary of the Closing Date, in the event
that the pre-Closing liabilities of the Company and the pre-Closing claims
against the Company are less in the aggregate than the amount held in the
Reserve Account, such surplus shall be distributed from the Reserve Account to
Seller. The Reserve Account will have a balance of at least Five Hundred
Thousand Dollars ($500,000) cash or other liquid securities at the Closing.
3.6 EXPENSES. Seller shall be individually responsible for all federal,
state and local taxes, transfer tax and documentary stamps, if any, through and
including the date of Closing attributable to or arising out of the sale of the
Stock to Purchaser or with respect to the Company, and the arrangements in
connection with the Closing of such sale.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER:
Seller represents and warrants to Purchaser that the statements contained
in this Section 4 are correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Stock Purchase Agreement throughout this Section 4), except
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as otherwise specifically set forth in the disclosure schedule delivered by
Seller to Purchaser on the Closing Date and initialed by the parties (the
"Disclosure Schedule") as Exhibit 4 attached hereto. The Disclosure Schedule is
to be arranged in sections corresponding to the numbered and lettered sections
contained in this Section 4. Notwithstanding the foregoing, it is understood
and agreed that the matters set forth in Schedules 4.3, 4.14(b), 4.19, 4.20,
4.22, 4.25, 4.26 and 4.28 are not intended to be exceptions to such
representations and warranties, but are in response to information requested by
such representations and warranties.
4.1 ORGANIZATION. Company is a California professional corporation duly
organized, validly existing and in good standing under the laws of the State of
California. Company has all requisite authority to own, lease, and operate its
business and to carry on its business as currently being conducted. Company is
duly qualified to transact business in the State of California and in each other
state in which such qualification is required by law or in which failure to be
so qualified would have an adverse effect on the Practice, its businesses and
operations, or its ability to transact such business.
4.2 AUTHORIZATION. Seller has good and marketable title to the Stock,
and full legal right, power, authority and legal capacity, without the consent
of any other person, to sell the Stock, to execute and deliver this Stock
Purchase Agreement, and to carry out the transactions contemplated hereby. All
action on the part of Seller and Company necessary for the authorization,
execution, delivery and performance of this Stock Purchase Agreement and the
consummation of the transactions contemplated hereby has been or will be taken
prior to the Closing Date, and this Stock Purchase Agreement (including
exhibits, schedules and the ancillary agreements) constitutes the legal, valid
and binding obligation of Seller, enforceable in accordance with its terms,
except as enforceability may be restricted, limited or delayed by applicable
bankruptcy or other laws affecting creditor's rights generally and except as
enforceability is subject to general principles of equity. Purchaser hereby
acquires good and marketable title to the Stock free and clear of all Liens.
The Seller is the sole shareholder of Company. The authorized number of shares
of Company is One Hundred Thousand (100,000), all of one class, of which One
Thousand (1,000) shares are issued and outstanding, fully paid and nonassessable
and held by Seller. The Stock was issued in compliance with all applicable
federal and state securities laws. Seller has full voting power over the Stock,
subject to no outstanding subscriptions, options, rights, convertible
securities, preemptive rights, buy-sell agreements, or any agreements or
commitments of any kind that obligate Company or the Seller to (a) purchase or
otherwise receive or be issued any shares of Stock or any security or liability
of any kind convertible into or exchangeable for any such Stock, (b) receive any
benefits or rights similar to any rights enjoyed by or accruing to the holder of
shares of capital stock of Company, (c) convert or exchange any securities for
shares of Stock, (d) participate in the equity, income or election of directors
or officers of Company, or (e) take or refrain from taking any actions. Other
than this Agreement, there is no contract, commitment or agreement between
Seller and any other person with respect to the disposition of any shares of the
Stock.
4.3 NO CONSENT REQUIRED; NO VIOLATIONS. Neither the execution of this
Stock Purchase Agreement by Seller, nor the performance by Seller of its
obligations under this Stock Purchase Agreement, requires the consent of any
third party, which has not been obtained and delivered to Purchaser, or will not
have been obtained and delivered to Purchaser, prior to the Closing Date.
5
Notwithstanding any other provisions contained herein, Seller and Company agree
and acknowledge that, except for the consent of CalOptima, the required consents
listed on Schedule 4.3 shall be obtained and delivered to Purchaser on or prior
to the Closing. Neither this Stock Purchase Agreement nor any of the
transactions contemplated hereunder violates or shall violate any lease,
contract, document, understanding, agreement or instrument to which the Company
or the Seller is a party or by which he may be bound, or any other lease,
contract, document, understanding, agreement or instrument affecting the Seller,
the Company or the Practice. Neither this Stock Purchase Agreement nor any of
the transactions contemplated hereunder violates, shall violate, conflict with,
result in a default under or breach any legally protected right of any
individual or entity or the articles of incorporation or bylaws of the Company.
4.4 NO DEFAULT. Company is not in default under the terms of any lease,
contract, document, understanding, agreement or instrument pertaining to the
Practice, nor has any event occurred that shall constitute a default by Company
or Seller under any of the same following the passage of time or consummation of
any of the transactions contemplated hereunder, nor has Company or Seller
received any notice of any default under any of the same. No acceleration or
other right to accelerate, terminate, modify, cancel, create a security
interest, or otherwise change any existing arrangement, including, but not
limited to, agreements with health maintenance organizations such as PacifiCare,
will be created as a result of the consummation of any of the transactions
contemplated hereunder.
4.5 FINANCIAL STATEMENTS, BOOKS AND RECORDS. Seller has previously
delivered to Purchaser copies of all available unaudited financial statements,
books, and records of Company for the fiscal periods ended February 28, 1994,
February 28, 1995 and February 29, 1996, and for the six month period ended
August 31, 1996 ("Unaudited Company Financial Statements"). Seller has also
delivered an audited statement of operations, statement of stockholders' equity
and statement of cash flows for the fiscal year ended February 29, 1996, and for
the ten months ended December 31, 1996, and Company's audited consolidated
balance sheet at December 31, 1996. The audited balance sheets of Company are
hereinafter referred to as the "Company Balance Sheet," and all such audited
financial statements are hereinafter referred to collectively as the "Company
Financial Statements." As of the Closing, the Company Financial Statements will
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved, and fairly present, or will present the financial position
of Company and the results of its operations as of the date and for the periods
indicated thereon. At the date of the Company Balance Sheet (the "Company
Balance Sheet Date") and as of the Closing Date, Company will have no
liabilities or obligations, secured or unsecured (whether accrued, absolute,
contingent or otherwise) not reflected on the Company Balance Sheet or the
accompanying notes thereto except for liabilities incurred in the ordinary
course of business since the date of said balance sheet which are usual and
normal in amount. The reserves reflected in the Company Financial Statements
for incurred but not yet reported claims ("IBNR") make sufficient provision for
such liabilities and have been established in accordance with GAAP consistently
applied.
4.6 CONDUCT OF PRACTICE. Between the date of the execution of this
Stock Purchase Agreement and the Closing, Seller (a) shall carry on the Practice
in substantially the same manner as he has previously done, (b) shall use his
best efforts to maintain and preserve the assets of Company in good condition
and repair, and to prevent the imposition of any liens, security interests,
claims,
6
leases, encumbrances, covenants and restrictions of any nature whatsoever on
such assets, (c) shall use his best efforts to preserve the Practice and its
relationships with all patients and payors, and (d) shall not liquidate or
dissolve Company, take any steps to do same, or inform any third person or
entity that Company or Seller has done or intends to do the same.
4.7 NO MATERIAL CHANGES. Since the date of this Stock Purchase
Agreement there will not have been, and as of the Closing there shall not be:
(a) Any material adverse change in the Practice. For the purpose
of this Section, "material adverse change" shall mean a net reduction in the
number of the Company's covered lives of more than five percent (5%) from
November 1, 1996.
(b) Any material change in the manner in which the Practice has
been conducted, or any extraordinary transaction involving the assets of
Company.
(c) Any voluntary or involuntary sale, assignment, license or
other disposition, of any kind, of any property or right included in the
Practice, except as contemplated by this Stock Purchase Agreement.
(d) Any debts, liabilities or obligations of any kind, whether
absolute or contingent, due or to become due, or any security interests, liens,
loans encumbering the Practice, or any other encumbrances, incurred by Company
or by Seller in connection with the Practice except for:
(i) current liabilities incurred for services rendered or
goods supplied in the ordinary course of the operations of the Practice;
(ii) liabilities on account of taxes and governmental
charges not yet due, but not penalties, interest or fines in respect thereof; or
(iii) obligations or liabilities incurred by virtue of the
execution of this Stock Purchase Agreement other than as expressly described
herein.
(e) Any extraordinary compensation, bonuses or distributions to
Seller, or any employee of Company or Seller, except as set forth on Schedule
4.7(e) hereto.
4.8 TAXES. There are no delinquent federal or state corporate income or
franchise taxes or any federal, state or local assessments due or owing by
Company or Seller with respect to the Practice. No extensions of time or
requests therefor or waiver thereof have been made or are presently pending or
effective with respect to such reports, returns or taxes. Company has timely
filed or caused to be filed on its own behalf and on behalf of its and Seller's
employees all tax returns (federal, state and local) required to be filed by it
on or before the Closing Date, and all taxes shown to be due and payable on said
returns have been paid. There are no actions, suits, proceedings,
investigations, audits, claims or liens now pending against or related to
Company, Seller, or the Practice regarding any tax or assessment. Further,
Seller shall timely file all tax returns relating to the operation of the
Practice on or before the Closing Date but which are due after the Closing Date,
7
and shall timely pay all taxes relating to the Practice on or before the Closing
Date but which are due thereafter. To the extent that any of such tax payments
relate to periods following the Closing Date, there shall be a proration of such
payments, and Seller shall be entitled to an adjustment in the reserve accounts
listed on the Company Balance Sheet equal to the amount of taxes paid on behalf
of the Company after the Closing Date. There are no unpaid taxes, interest or
penalties, or unassessed tax deficiencies which are or could become a lien on
the assets of the Company; no claim for any additional tax, assessment or
reassessment is being asserted against the Company or proposed by any tax
authority; and Seller has not been notified of, and there are no facts or
circumstances known to the Company or Seller which could result in any claim
being asserted with respect to any such taxes. There is no action, dispute,
suit, proceeding, investigation or audit pending or threatened against the
Company in respect of any tax or assessment.
4.9 TITLE TO ASSETS. The assets of the Company are free and clear of
all security interests, encumbrances, covenants and restrictions (collectively,
"Liens") except as expressly described on the Disclosure Schedule.
4.10 RIGHT TO PREMISES; CONDITION OF THE PROPERTY AND PREMISES. Company
either (i) owns in fee simple absolute the premises in which the Practice is
located ("Premises") or (ii) has valid and enforceable leases for the Premises,
and there are no unpaid mortgage payments, rental payments or any other
applicable amounts now due and payable by Company with respect to the premises
or any uncured default by Company, and no governmental condemnation proceedings
threatened or in process. All of Company's fixtures, equipment, furniture, and
Premises are (a) in good repair and operating condition, (b) free from any
material defects, except for normal wear and tear, and (c) fit for the purposes
for which they are intended.
4.11 INVENTORY. On the Closing Date, the inventory used in connection
with the Practice shall consist of items of a quality and quantity normally
maintained on hand by Company and in compliance with all applicable laws and
regulations.
4.12 CONTRACTS.
(a) Seller has furnished to Purchaser, for Purchaser's inspection
and review, true and complete copies of all contracts, agreements, leases,
documents, written understandings, instruments, loan documents and security
agreements relating to the Practice, and any and all other documents concerning
any Liens against the Stock or any aspect of the Practice.
(b) There are no guarantees of any obligations or indebtedness
whatsoever of the Practice, Company, Seller, or any third person or entity by
either Company or Seller.
(c) The Company and Seller are not parties to, or bound by, any
contract which in any manner limits or restricts them from competing in any line
of business or carrying on or expanding the nature or geographical scope of
their business.
(d) The contracts of Company are valid, binding obligations and
in full force and effect and have been entered into in the ordinary course of
business, consistent with past practice,
8
except as enforceability may be restricted, limited or delayed by applicable
bankruptcy or other laws affecting creditor's rights generally and except as
enforceability is subject to general principles of equity. Company and Seller
have not received any notice from any other party to a contract of the
termination or threatened termination, thereof, nor any material claim, dispute
or controversy thereon, and have no knowledge of the occurrence of any event
which would allow any other party to terminate any contract of Company, nor has
Seller received notice of any asserted claim of default, breach or violation of,
any note, debt instrument, security agreement, option to purchase, lease, deed
of trust or mortgage, or any other contract or "Lease" (as defined in Section
4.28 below) binding upon the Company or its assets or properties which failure
of performance or default would be material to the business, condition
(financial or otherwise), operations, results of operations, net worth, working
capital, assets, properties, reserves or prospects of Company.
4.13 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of Company or Seller.
4.14 NO LITIGATION AND INSURANCE. There is no pending litigation,
judgment, appeal, investigation or asserted claim or, to Company and Seller's
actual knowledge, threatened investigation, judgment, appeal, unasserted claim,
or governmental investigation, relating to the Company, the Practice, Seller, or
employees thereof and Seller is not aware of any facts or circumstances which
could serve as a basis for an action or proceeding against or affecting the
Company or which seeks or threats to restrain, enjoin or prohibit him or to
obtain damages from the Company. Except as set forth in Exhibit 4.14(a),
neither Company nor Seller is subject to any judgment, decree, order or writ of
any court, agency, authority, arbitration panel or other tribunal. The Company
has maintained with financially responsible insurance companies insurance on the
Practice and its assets in such amounts and against such risks and losses as is
customary for persons or companies engaged in their businesses, including
insurance against personal injury, property damage to third persons and medical
malpractice. Set forth in Exhibit 4.14(b) is a list of all policies of
liability, property damage, fire, workers' compensation, employer's liability,
malpractice, casualty or other forms of insurance owned or carried by the
Company and the names of insurance agents and/or brokers providing this
insurance coverage, and of all performance bonds and letters of credit securing
any of their obligations or maintained in the conduct of their businesses. All
such insurance is in full force and effect on the date hereof as evidenced by
certificates of insurance for each insurance policy listed in Exhibit 4.14(b),
of which true and complete copies dated no more than thirty (30) business days
prior to the date of Closing shall be delivered to Purchaser at the Closing, and
Seller will insure that such insurance will remain in full force and effect.
Neither the Company nor the Seller has received any notification from any
insurance carrier denying or disputing any claim made on any policies, denying
or disputing any coverage for any claim, denying or disputing the amount of any
claim, or regarding the possible cancellation or material limitation of any
policies.
4.15 VIOLATION OF LAWS. Neither Company nor Seller is in violation of
any law, rule, regulation or administrative or judicial order pertaining to the
Practice and which is material to the conduct of the Practice (including,
without limitation, licensing, health care, drug enforcement, securities,
zoning, building, environmental, immigration, civil rights and occupational
health and safety laws, regulations, ordinances and codes) and, to their actual
knowledge, there is no law, rule, regulation or administrative or judicial order
that any of the transactions contemplated by this Stock
9
Purchase Agreement or the execution and delivery of this Stock Purchase
Agreement would violate. The Company has not been charged with, threatened
with, nor is under any investigation with respect to, any charge concerning any
violation of any provision of any such law, rule, regulation or order.
4.16 NO BROKERS OR FINDERS. Neither Company nor Seller has incurred any
liability to any broker, finder or agent for any brokerage fees, finder's fees
or commissions with respect to the transactions contemplated by this Stock
Purchase Agreement, and if either Company or Seller incurred any such liability,
such liability shall be and remain the sole responsibility of the Seller, and
Company and Seller shall indemnify, defend and hold Purchaser harmless from and
against any and all liabilities, losses, damages, claims, causes of action,
costs and expenses (including, without limitation, reasonable attorneys' fees),
arising out of or relating to such liability.
4.17 NO BANKRUPTCY PROCEEDINGS. Neither Company nor Seller has (a) made
a general assignment for the benefit of creditors, (b) filed any voluntary
petition in bankruptcy or suffered the filing of an involuntary petition by its
creditors, (c) suffered the appointment of a receiver to take possession of all
or substantially all of its assets, (d) suffered the attachment or other
judicial seizure of all, or substantially all, of its assets, (e) admitted in
writing its inability to pay its debts as they come due, or (f) made an offer of
settlement, extension or compromise to its creditors generally.
4.18 LICENSURE AND REIMBURSEMENT. Seller and Company represent and
warrant that:
(a) Each of Seller's and Company's employee-physicians is duly
licensed to practice his or her profession in the State of California without
restriction; and Company has all licenses, permits, approvals, authorizations,
consents, franchises and orders of all governmental and regulatory authorities
(collectively, the "Permits") necessary for the conduct of its business as
presently conducted. There is no proceeding pending or threatened that disputes
the validity of any such Permit or that may result in the revocation,
cancellation or suspension or any material adverse modification of any of such
Permits.
(b) Company and Seller are participating in the Medicare and
Medicaid programs and in any other applicable governmental health care payment
programs, and have been and will continue to be authorized to receive
reimbursement from such programs for fees and charges incurred by eligible
patients for their services. Neither Company nor Seller has received any notice
that any such license, participation or authorization has been or is threatened
to be terminated or, in any material respect, restricted, and neither Company
nor Seller knows of any basis for any such termination or restriction. There is
no federal or state investigation pending or, to Company's and Seller's
knowledge, contemplated, that will have an impact upon Company's or Seller's
reimbursement status or Seller's license to practice medicine in California.
Neither Company nor Seller has received any notice of action nor is there any
threatened or likely action by the Medicare or Medicaid program or any carrier,
to recoup or challenge any Medicare or Medicaid reimbursement that Company or
Seller has received or for which any of them currently has a claim pending, for
services rendered at or in connection with the Practice.
(c) All billing practices by Company to all third party payors,
including but not limited to the Medicare and Medicaid programs and private
insurance companies, have been true, fair
10
and correct and in compliance with all applicable laws, regulations and policies
of all such third party payors, and Company has not billed for or received any
payment or reimbursement in excess of amounts permitted by law.
(d) Neither Company, its directors, officers, employees,
affiliates or agents, nor Seller or its affiliates or agents has directly or
indirectly (i) offered to pay or solicited any remuneration, in cash or in kind,
to, or made any financial arrangements with, any past or present customers, past
or present suppliers, contractors, third parties, or third party payors of
Company in order to obtain business or payments from such persons, other than
entertainment activities in the ordinary and lawful course of business; (ii)
given or received, or agreed to give or receive, or is aware that there has been
made or that there is any agreement to make or receive, any gift or gratuitous
payment of any kind, nature or description (whether in money, property or
services) to any customer or potential customer, supplier or potential supplier,
contractors, third party payor or any other person other than in connection with
promotional or entertainment activities in the ordinary and lawful course of
business; (iii) made or agreed to make, or is aware that there has been made or
that there is any agreement to make, any contribution, payment or gift of funds
or property to, or for the private use of, any governmental official, employee
or agent where either the contribution, payment or gift or the purpose of such
contribution, payment or gift is or was illegal under the laws of the United
States or under the laws of any state thereof or any other jurisdiction under
which such payment, contribution or gift was made; (iv) established or
maintained any unrecorded fund or asset for any purpose or made any false or
artificial entries on any of its books or records for any reason; or (v) made or
agreed to make or is aware that there has been made or that there is any
intention to make, any payment to any person with the intention or understanding
that any part of such payment would be used for any purpose other than that
described in the documents supporting such payment.
(e) Neither Company, its directors, officers, employees or
agents, nor Seller is or in the past twenty-four months has been, a party to any
contract, lease, agreement or arrangement, including but not limited to any
joint venture or consulting agreement with any physician, hospital, nursing
facility, home health agency or other person who is in a position to make,
receive or influence referrals to or from Company, to provide services, lease
space, lease equipment or engage in any other venture or activity.
4.19 EMPLOYEES AND EMPLOYEE BENEFITS. Attached hereto as Exhibit 4.19 is
a complete list of the names, positions and current annual salaries or wage
rates and all bonus and other compensation arrangements of any kind, of all
full-time and part-time employees, directors or officers of the Company,
specifying their names, titles, full or part-time status and compensation
payable, by means of wages, salaries, bonuses, gratuities or otherwise and all
salary increases and/or bonuses paid to any employee between the date of this
Stock Purchase Agreement and the Closing. None of such employees is a family
member of or otherwise related to Seller. Seller shall cause the Company to pay
out of the Reserve Account, with respect to each person listed on Exhibit 4.19,
the aggregate amount of: (a) accrued vacation and sick leave pay, (b) employer
contributions accrued or committed under each pension, profit-sharing, medical,
dental, life insurance or retirement plan or similar arrangement, and (c) any
other accrued benefits to which each person listed on Exhibit 4.19 or such
persons who have been terminated as of the Closing Date may be entitled, as
accrued up to and including the Closing. Seller shall indemnify and hold
Purchaser harmless from and against any and
11
all expenses, losses, damages or liabilities, including reasonable attorneys'
fees and court costs, that Purchaser may suffer as a result of any claims,
suits, investigations or charges asserted by or on behalf of any person listed
on Exhibit 4.19 due to any actual or alleged liabilities or obligations,
injuries or damages occurring or arising prior to the Closing, including,
without limitation, any matters arising under laws governing wages and hours,
wage payment and collection, employment discrimination, wrongful discharge,
occupational safety and health, workers' compensation, short and long-term
disability, occupational diseases, unemployment insurance, the payment and
withholding of employment taxes and any alleged violation of the common law;
provided however, that Purchaser agrees to first seek repayment from the Reserve
Account. Company has previously entered into a three year employment agreement
with Xxxxxx Xxxxxx ("Xxxxxx"), pursuant to which Seller has personally
guarantied the remaining amount owed under such agreement in the event of any
termination of Xxxxxx without cause. In connection therewith, except for the
severance benefits payable by Purchaser related to the first year of Ingles'
employment following the Closing, as set forth in Section 6.1, Seller shall
indemnify and hold Purchaser harmless from and against any and all expenses,
losses, damages or liabilities, including reasonable attorneys' fees and court
costs, that Purchaser (or Company, following the Closing) may suffer as a result
of any termination of Xxxxxx without cause pursuant to such employment
agreement. Company was not a party to or bound by any collective bargaining
agreement or any other agreement with a labor union and there has been no effort
by any labor union during the twenty-four (24) months prior to the Closing to
organize any employees of Company or Seller into one or more collective
bargaining units. There has been no strike, walkout or work stoppage involving
any of the employees of Company during the twenty-four (24) months prior to the
date of Closing. There is not pending or threatened, any labor dispute, strike
or work stoppage which affects or which may affect Company or which may
interfere with its continued operation in any manner.
4.20 EMPLOYEE ENTITLEMENTS. Except as described on Exhibit 4.20 attached
hereto, Company does not maintain, contribute to or possess, and has not at any
time maintained, contributed to or possessed: (a) any non-qualified deferred
compensation or retirement plans or arrangements, (b) any qualified defined
contribution retirement plans or arrangements, (c) any qualified defined benefit
pension plan, (d) any other profit-sharing, deferred compensation, bonus, stock
option, stock purchase, vacation pay, holiday pay, employee benefit, health,
welfare, medical, disability, life insurance, stock, stock purchase or stock
option plan, program, agreement, arrangement or policy under which former
employees or beneficiaries are entitled or current employees will be entitled
following termination of employment, to medical, health or life insurance or
other benefits other than pursuant to benefit continuation rights granted by
state or federal law, or (e) any summary description of the foregoing that has
been distributed to employees (collectively, "Benefit Plans"). True and
complete copies of each Benefit Plan, related trust agreements or annuity
contracts (or any other funding instruments), the most recent determination
letter issued by the Internal Revenue Service (the "IRS") with respect to each
Benefit Plan that is a "pension plan" as defined in Section 3 of ERISA, Annual
Reports on Form 5500 Series required to be filed with any governmental agency
for any such Benefit Plan for the two (2) most recent plan years and all
actuarial reports prepared for the last three (3) years of each Benefit Plan
that is a pension plan, other than an "individual account plan," have heretofore
been delivered by Seller to Purchaser. Prior to the Closing, Seller will have
adopted a resolution of its board of directors and sole shareholder terminating
all Benefit Plans.
12
4.21 CONFIDENTIALITY. The Company and Seller have maintained the
confidentiality of all business and patient records as required by and in
conformance with all applicable state and federal laws and regulations. The
Company and Seller have not transferred any patient records to any individual or
entity against the request of any patient regarding transferring his or her
patient information or records.
4.22 INSPECTIONS. The Disclosure Schedule sets forth accurately and
fully describes (a) all inspections of Company and the Practice by any
governmental agency at any time during the previous five (5) years; (b) all
matters which were noted by any and all such governmental agency as requiring
correction or modifications which were requested or recommended; and (c) the
present status of each such noted matter.
4.23 ENVIRONMENTAL CONDITIONS. To the actual knowledge of Seller and the
Company, there are no (a) undisclosed material defects in the physical condition
of the Premises; (b) unremediated material incidents of non-compliance regarding
the Premises with zoning, land use, building, safety and fire laws; and
(c) unremediated material incidents of non-compliance of the Premises with
respect to applicable environmental laws, rules and regulations. To the actual
knowledge of Seller, no "Hazardous Substances" (as defined below) have been
released on any part of the Premises and no soil, air, surface water, ground
water or structural contamination exists (a) on any of the Premises or (b) on
property adjacent to the Premises. As used herein "Hazardous Substances" shall
include (i) all of those substances included within the definitions of
"hazardous substances", "hazardous materials", "toxic substances", or "solid
waste" in (a) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601 ET SEQ. ("CERCLA"),
as amended, (b) the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Section 6901 ET SEQ. ("RCRA"), and (c) the Hazardous Materials Transportation
Act, 49 U.S.C. Appx. Section 1801, ET SEQ., and in the regulations promulgated
pursuant to said laws or any amendment thereto or replacement thereof; (ii) all
of those substances listed in the United States Department of Transportation
Table (49 CFR 172.101 and amendments thereto) or by the Environmental Protection
Agency (40 CFR Part 302 and amendments thereto) as hazardous substances; (iii)
all of those substances defined as "hazardous wastes" in Sections 25100 ET SEQ.
of the California Health & Safety Code, or as "hazardous substances" in Sections
25316 and 25281 of the California Health & Safety Code or Section 736(f)(3) of
the California Code of Civil Procedure, or as "waste," "pollution," or
"contamination" in Sections 13000 ET SEQ. of the California Water Code, and in
the regulations promulgated pursuant to said laws or any replacement thereof;
and (iv) all other substances, materials and wastes which are regulated under
applicable local, state or federal law, or which are classified as hazardous or
toxic under federal, state, or local laws or regulations, or classified or
identified as posing a threat to human health or the environment, including
without limitation federal laws and regulations and California law set forth
above, and any radioactive wastes or substances. The term "Hazardous
Substances" does not include consumer products which are used in accordance with
their intended use.
4.24 PRIMARY CARE PHYSICIANS. No primary care physician who provides
medical care to 100 or more of Company's covered lives pursuant to the terms of
a provider agreement by and between Company and such primary care physician
("Participating Provider") has informed Company or Seller of his or her
intention to terminate the provider agreement, and Seller has no knowledge,
directly or
13
indirectly, that any Participating Provider intends to terminate such provider
agreement. Further, Seller shall cooperate with Purchaser after the Closing to
obtain reasonable amendments to each Participating Provider's provider
agreement, including mutually agreeable language relating to the non-diversion
and non-solicitation of Company's and Purchaser's members.
4.25 BANK ACCOUNTS; SECURITIES. Attached hereto as Exhibit 4.25 is a
true, correct and complete listing of all bank, brokerage, checking, depositary
and similar accounts, lockboxes and safe deposit boxes maintained by the Company
as of the date of Closing and at any time during the twelve (12) month period
preceding the date of Closing; this listing includes with respect to each such
account (a) the account number, (b) the nature or purpose of the account, (c)
the name and address of the institution at which the account is maintained, and
(d) the names of the authorized signatories on the account. Exhibit 4.25 also
contains a complete and accurate list of all investments in and securities of
other corporations or businesses owned by the Company, together with a
description of any restrictions affecting the transfer thereof.
4.26 SUBSIDIARIES. Except as described in Exhibit 4.26, the Company has
no subsidiaries or affiliates and does not directly or indirectly own either an
equity or debt interest in any corporation, partnership, limited liability
company, business trust, joint venture, joint stock company, association or
other business entity.
4.27 ARTICLES OF INCORPORATION AND BYLAWS. Copies of the Articles of
Incorporation and the Bylaws of the Company certified by its Secretary as being
the Articles of Incorporation and Bylaws currently in effect, as well as copies
of the minute books and stock records of the Company which have been delivered
to Purchaser are true and complete copies of such instruments as amended to the
date of this Stock Purchase Agreement and of Closing and are in full force and
effect on such dates.
4.28 LEASES. Exhibit 4.28 attached hereto contains a true and complete
list of all leases pursuant to which the Company leased or leases any real
property interest (the "Leases"), whether as lessor or lessee. To Seller's
knowledge, the Company enjoys peaceful and undisturbed possession under all of
the Leases under which they are lessee, and the Company is not in default in any
material respect under such Leases.
4.29 INTELLECTUAL PROPERTY. Exhibit 4.29 attached hereto sets forth a
true and complete list of all patents, trademarks, trade names or service marks
that the Company is licensed under or uses. None of the Company's business
activities infringes upon the patent, trademark, trade name or service xxxx
rights of any third party.
4.30 SECURITIES LAW COMPLIANCE. Seller represents and warrants that the
sale of Seller's Stock is (a) exempt from the registration requirements of the
Securities Act of 1933, as amended, and (b) exempt from qualification under the
California Corporate Securities Law of 1968. For purposes of this Section 4.30,
Seller shall be entitled to rely upon the accuracy of the representations and
warranties of Purchaser set forth in this Agreement.
4.31 OPTION TO PURCHASE IPAs. Seller represents and warrants that he has
full right, power and authority to transfer the option to purchase the Premier
IPA to Purchaser. A true, correct and
14
complete copy of such option is attached hereto as Exhibit 4.31. Seller
represents and warrants that such option confers the right to purchase a 100%
ownership interest in Premier IPA. Seller covenants to cooperate fully with
Purchaser in attempting to obtain and transfer an option to purchase Western
IPA.
4.32 NO UNTRUE STATEMENTS. Seller represents and warrants to his actual
knowledge that (a) neither Company nor Seller has made any untrue statement or
representation in connection with this Stock Purchase Agreement, (b) all items
to be transferred or delivered and/or given to Purchaser by or from Seller are
true, correct and complete copies of what they purport to be, (c) there are no
undisclosed liabilities of any nature whatsoever in connection with the Practice
or any of the assets, (d) neither Company nor Seller has failed to state or
disclose any material fact in connection with the transactions contemplated by
this Stock Purchase Agreement, and (e) neither Company nor Seller knows of any
facts and Seller has not misrepresented any facts concerning his ability,
financial or otherwise, to consummate the transactions contemplated by this
Stock Purchase Agreement or that would otherwise materially adversely affect
Purchaser's decision to acquire the Stock.
4.33 DUE DILIGENCE. To Seller's actual knowledge, the documents,
agreements and other written materials provided to Purchaser in response to its
due diligence request constitute all of the material documents, agreements and
other written materials that would be material to a purchaser of the Stock of
Company.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER:
Purchaser hereby represents and warrants to Seller that:
5.1 ORGANIZATION. Purchaser is a California professional corporation
validly existing and in good standing under the laws of the State of California.
5.2 AUTHORITY. Purchaser has the corporate power and authority to enter
into this Stock Purchase Agreement and to consummate the transactions
contemplated hereby. All action on the part of Purchaser necessary for the
authorization, execution, delivery and performance of this Stock Purchase
Agreement and the consummation of the transactions contemplated hereby has been
or will be taken prior to the Closing Date, and this Stock Purchase Agreement
(including exhibits, schedules and the ancillary agreements) constitutes the
legal, valid and binding obligation of Purchaser, enforceable in accordance with
its terms, except as enforceability may be restricted, limited or delayed by
applicable bankruptcy or other laws affecting creditor's rights generally and
except as enforceability is subject to general principles of equity. Purchaser
hereby indemnifies Seller against any and all liabilities, losses, damages,
claims, causes of action, costs and expenses (including, without limitation,
reasonable attorneys' fees), arising out of or relating to any final
determination by a court of competent jurisdiction that Purchaser's acts in
entering into this Stock Purchase Agreement and consummating the transactions
contemplated thereby were ultra xxxxx acts.
5.3 NO BROKERS OR FINDERS. Purchaser has not incurred any liability to
any broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Stock Purchase Agreement,
and if Purchaser incurred any such liability, such
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liability shall be and remain the sole responsibility of Purchaser, and
Purchaser shall indemnify, defend and hold Seller harmless from and against any
and all liabilities, losses, damages, claims, causes of action, costs and
expenses (including, without limitation, reasonable attorneys' fees), arising
out of or relating to such liability.
5.4 NO VIOLATION OF OTHER OBLIGATIONS. Neither this Stock Purchase
Agreement nor any of the transactions contemplated hereunder violates or shall
violate any lease, contract, document, understanding, agreement or instrument to
which Purchaser is a party or by which it may be bound, or any lease, contract,
document, understanding, agreement or instrument affecting Purchaser. Neither
the execution and delivery of this Stock Purchase Agreement nor the consummation
of the transactions contemplated hereby will conflict with or violate any
provision of the articles of incorporation or bylaws of the Purchaser or of any
law, ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either applicable to, binding
upon or enforceable against Purchaser.
5.5 NO CONSENT REQUIRED. Neither the execution of this Stock Purchase
Agreement by Purchaser, nor the performance by Purchaser of its obligations
under this Stock Purchase Agreement, requires the consent of any third party
that will not have been obtained and delivered to Seller prior to the Closing
Date.
5.6 NO BANKRUPTCY PROCEEDINGS. Purchaser has not (a) made a general
assignment for the benefit of creditors, (b) filed any voluntary proceeding in
bankruptcy or suffered the filing of any involuntary petition by Purchaser's
creditors, (c) suffered the appointment of a receiver to take possession of all
or substantially all of the assets, properties or business of Purchaser,
(d) suffered the attachment or other judicial seizure of all or substantially
all of the assets, properties or business of Purchaser, (e) admitted in writing
its inability to pay its debts as such debts become due, or (f) made an offer of
settlement, extension or compromise to its creditors generally.
5.7 NO UNTRUE STATEMENTS. Purchaser represents and warrants to its
actual knowledge that (a) Purchaser has made no untrue statement or
representation in connection with this Stock Purchase Agreement, (b) all items
to be transferred or delivered and/or given to Seller by or from Purchaser are
true, correct and complete copies of what they purport to be, (c) Purchaser has
not failed to state or disclose any material fact in connection with the
transactions contemplated by this Stock Purchase Agreement, and (d) Purchaser
knows of no facts and Purchaser has not misrepresented any facts concerning
Purchaser's ability, financial and otherwise, to consummate the transactions
contemplated by this Stock Purchase Agreement or that would otherwise materially
adversely affect Seller's decision to sell the Stock.
5.8 FINANCIAL RESOURCES. Purchaser has the financial resources itself
or through arrangements with its Affiliates (as defined below) to fulfill its
financial obligations under this Stock Purchase Agreement.
5.9 PERFORMANCE. Purchaser shall perform its obligations under this
Stock Purchase Agreement, including the ancillary agreements and the forms of
which are attached hereto as exhibits.
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5.10 INVESTIGATION AND SOPHISTICATION. At the Closing, Purchaser will
represent that it has been furnished with or has had access to the information
Purchaser has requested from Seller and/or the Company and that Purchaser has
had an opportunity to ask questions and receive answers from Seller as Purchaser
has determined to be appropriate. Purchaser has such knowledge, experience, and
skill in business and financial matters with respect to investments and
securities so as to enable Purchaser to understand and evaluate the merits and
risks of the acquisition of the Stock and to form an investment decision with
respect to such investments. The Purchaser is relying upon its own
investigation and analysis and the representations and warranties given by
Seller in this Agreement, in determining whether to enter into this Agreement
and determining whether to purchase the Stock. The Purchaser understands that
investment in and ownership of the Stock involves a degree of risk with no
guarantee of profit or return and the possibility of loss of Purchaser's
investment. Except as set forth in this Agreement, the Seller has made no
representations or warranties to the Purchaser as to the Company and the Company
Stock. The foregoing language in this Section 5.10 is not intended to diminish
or eliminate the reliance by Purchaser on the representations and warranties
contained in Section 4 of this Agreement.
5.11 NO INTENT TO DISTRIBUTE. Purchaser is acquiring the Stock for its
own account and not with a view toward sale or other distribution thereof.
5.12 STRATEGIC PROVIDER. Purchaser is a "strategic provider" of
PacifiCare, pursuant to the terms of that certain 1996 Amendment to IPA Medicare
Shared Risk Services Agreement, dated January 1, 1996, by and between PacifiCare
and Purchaser.
5.13 DUE DILIGENCE. Purchaser has completed its due diligence review of
Company and the Practice.
6. POST-CLOSING COVENANTS:
6.1 COMPANY EMPLOYEES; PRIOR SERVICE CREDIT. Purchaser agrees that for
a period of six (6) months following the Closing Date, none of Company's
employees shall be terminated. Further, all employees of Company shall be given
credit for their prior service on behalf of Company, including, but not limited
to, retirement benefits, vacation pay, holidays and other benefits in accordance
with Purchaser's current policies. With respect to severance benefits,
Purchaser agrees that if any Company employee listed in Section 8.5(e) of this
Stock Purchase Agreement is terminated without cause prior to the end of such
person's employment agreement, such employee shall receive severance pay equal
to (i) the remaining term of his or her employment agreement, plus (ii) one
month's salary for each year of service at Company prior to Closing, pro-rated
for each year of partial service, up to a maximum of six months pay, provided
that such amounts paid for prior service shall be in addition to the amount set
forth in item (i) hereinabove. Additionally, Seller's employees shall be
entitled to receive bonuses for services rendered prior to Closing at the
discretion of Seller from Hospital Bonus Funds to be paid into the Reserve
Account, provided that the payment of any such bonus does not create a
deficiency in the Reserve Account. Provided that Xxxxxx Xxxxxx ("Xxxxxx") has
agreed to terminate her three year employment agreement with Company, Purchaser
agrees to use its best efforts to cause Prospect Medical Systems, Inc., a
Delaware corporation ("Prospect Medical Systems") to enter into a one year
employment agreement with Xxxxxx in the form of that listed on
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Schedule 8.2(h) attached hereto. Notwithstanding the foregoing, in the event
Prospect Medical Systems does not enter into an employment agreement with
Xxxxxx, Purchaser agrees to provide Xxxxxx with health and vacation benefits and
the severance benefits set forth in this Section 6.1, as if Xxxxxx were employed
under the form of employment agreement set forth in Schedule 8.2(h) for one
year. In the event of a termination of Xxxxxx without cause, any such severance
payments paid by Purchaser or Company will offset the remaining amount owed by
Seller to Xxxxxx under Xxxxx'x current employment agreement with Company.
6.2 COMPANY'S OFFICES. Purchaser and Seller agree that for an eighteen
(18) month period following the Closing, Purchaser will maintain Company's
Practice offices at their present location. Purchaser and Seller further agree
that for a six (6) month period following the Closing, Purchaser will maintain
Company's administrative offices at their present location.
6.3 SUBSEQUENT SALE OF COMPANY. Purchaser agrees that for a period of
twenty-four (24) months following the Closing Date, Purchaser will not sell,
offer or otherwise dispose of the shares or assets of Company to St. Joseph's
Hospital Systems, St Joseph's Foundation, St. Joseph's Medical Corporation, or
any of their affiliates (collectively, "St. Joseph's"). Purchaser further
agrees that for a period of six (6) months following the Closing Date, Purchaser
will not sell, offer or otherwise dispose of the shares or assets of Company to
any other purchaser. In the event that Purchaser sells Company after such six
month period, Purchaser agrees that such sale will contain negative covenants
prohibiting the subsequent purchaser of Company from selling Company to St.
Joseph's for a twenty-four (24) month period following the Closing Date of this
transaction. Notwithstanding the foregoing, Seller and Company acknowledge that
nothing herein shall be construed to prevent or otherwise limit the sale of all
or a part of Purchaser to another entity.
6.4 COMPANY'S NAME. Purchaser agrees not to change the Company's name
for a six (6) month period following the Closing.
6.5 BOARD OF DIRECTORS. At the Closing, Purchaser shall name Seller to
Company's and Purchaser's Boards of Directors, and their compensation
committees, if such committee are in existence, for at least two (2) years.
6.6 CHOICE OF HOSPITALS. For a period of two (2) years following the
Closing, Purchaser will allow all patients of Company to use West Med Santa Xxx
Hospital, West Med Anaheim Hospital, and/or Xxxxxxx General Hospital, and will
take no steps to encourage patients to use St. Xxxxxx Hospital. Company and
Seller agree, however, that patients who request that they be admitted to St.
Joseph's Hospital shall be so permitted.
7. PURCHASERS' ACCESS TO RECORDS; CONFIDENTIAL INFORMATION; PUBLICITY:
7.1 ACCESS TO RECORDS. Between the date of the execution hereof and the
Closing, Purchaser, its appraisers, accountants, consultants, counsel and other
representatives, shall have access after normal business hours, upon reasonable
notice, to the tax returns, books, records, licenses, certifications, contracts,
agreements and all other relevant documentation of Company.
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Neither Purchaser nor its representatives shall disclose the contents of any of
said materials that Purchaser has discovered in the course of its due diligence
("Due Diligence") to any third party without prior written consent of Company,
except: (a) as required by law, including, but not limited to, civil litigation
arising out of this Stock Purchase Agreement or the transactions contemplated
hereunder; (b) except to the extent covered by the Agreement of Confidential
Disclosure by and between Purchaser and Seller, information contained in any
such materials that was already in Purchaser's possession prior to the date
hereof; and (c) information contained in any such materials that is or becomes
generally available to the public other than as a result of a disclosure by
Purchaser or its agents or employees in violation of this Section (collectively,
the "Exceptions").
7.2 CONFIDENTIAL INFORMATION. Each of the parties hereto agrees that at
all times prior to, or following the Closing Date, none of such parties shall
use for its or their benefit or for any third party's benefit, any confidential
information or trade secrets of the other parties or any "Affiliate" (as defined
below), or of any successor or assignee of such parties or any Affiliate, and
shall not disclose or cause to be disclosed to any third party any confidential
information or trade secrets of the other parties, any Affiliate, or any of
their respective successors or assigns at any time prior to or after the Closing
Date. The parties shall maintain and keep confidential and never disclose the
terms of this Stock Purchase Agreement and the negotiations preceding this Stock
Purchase Agreement, except as may be required by applicable law. As used
herein, "Affiliate" shall mean any affiliated or related organization of a party
to this Agreement.
7.3 PUBLICITY. No party shall, at any time on or after the date hereof,
issue any publicity or written or oral statement, or otherwise disclose the
existence of this Stock Purchase Agreement or any of the terms or conditions
hereof, or disclose the contemplation, implementation or consummation of any of
the transactions intended hereby (other than to its directors, officers,
attorneys, financial advisors and other agents and representatives, as necessary
in order to negotiate, evaluate, approve and consummate the transactions
hereunder), without the prior written consent of Purchaser (in the case of
Seller) or Seller (in the case of Purchaser), except in accordance with any of
the Exceptions as set forth in Section 7.1, and except as reasonably required of
Purchaser by any applicable federal or state securities law (or agency's)
disclosure requirements. In the case of any written publicity or statement, the
applicable party with the above right of consent shall have the right to approve
in advance the specific language of any such writing, provided that such
approval may not be unreasonably withheld in the event of occurrence of any of
the Exceptions. The parties shall agree to the language used in the publication
of a joint press release following the Closing.
8. CLOSING; CONDITIONS TO OBLIGATIONS TO CLOSE:
8.1 CLOSING DATE. The transactions contemplated by this Stock Purchase
Agreement shall be consummated at the "Closing." The Closing shall take place
at Xxxxxx & Xxxxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxxxx Xxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, or at such other place as may be designated by Seller and
Purchaser, on the Closing Date. The Closing Date shall occur on the first
business day occurring 30 days from the date hereof, or at such other time as is
mutually agreed upon by the parties.
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8.2 DELIVERIES BY SELLER. At the Closing, Seller shall execute (as to
documents calling for execution) and deliver to Purchaser the following:
(a) Stock certificates representing all of the issued and
outstanding shares of the Company, duly executed, endorsed and properly
witnessed for transfer to Purchaser.
(b) A UCC search report dated not more than five (5) days before
the Closing Date issued by the California Secretary of State which shows that
there are no filings under the Uniform Commercial Code on file with such
Secretary of State which name Company or Seller as a debtor or otherwise
indicating any lien on the Stock or on the assets of the Company, other than
those filings specifically approved by Purchaser in writing.
(c) A good standing certificate and tax clearance issued by the
California Secretary of State and Franchise Tax Board, respectively, which shows
Company is in good standing with such agencies.
(d) An officer's certificate signed by Company's president and
its secretary, and a certificate signed by Seller, that all conditions specified
in this Stock Purchase Agreement to be fulfilled by Company have been fulfilled,
and that the Articles of Incorporation and the Bylaws of Company previously
provided to Purchasers are true and complete copies, as currently in effect, in
the form of the certificates attached hereto as Exhibit 8.2(d).
(e) A certificate from California's Employment Development
Department or equivalent confirming that, as of the Closing Date (or as of the
latest date for which such confirmation is available prior to the Closing Date),
neither Company nor Seller is in default with respect to any filing or payment
obligations respecting any employees of Company, and if applicable, a
certificate from the California State Board of Equalization/Taxation or
equivalent showing that no amount is due from Company or Seller on account of
any sales tax permit issued to Company or such Seller for the operation of the
Practice.
(f) Non-Competition Agreement of Seller in the form of Exhibit
8.2(f) attached hereto.
(g) Copies of Employment Agreement between Company and Seller, in
the form of such agreement in the form of Exhibit 8.2(g) hereto.
(h) Copies of Employment Agreements between Prospect Medical
Systems and each of the persons specified in Section 8.5(e), the form of such
agreements in the form of Exhibit 8.2(h) respectively, hereto.
(i) Personal Guaranty Agreement by Seller in the form of Exhibit
8.2(i) attached hereto.
(j) True and complete minute books and the stock register of the
Company, as amended.
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(k) True and complete copies of all contracts pursuant to Section
4.12 and leases of real property listed on Exhibit 4.28.
(l) A true and complete copy of each insurance policy listed in
Exhibit 4.14(b) hereto.
(m) An opinion of counsel, dated as of the Closing Date,
substantially in the form of Exhibit 8.2(m) attached hereto ("Seller's
Opinion").
(n) A board resolution evidencing the termination of all Benefit
Plans (as defined in Section 4.20) as of the Closing.
(o) A board resolution authorizing the terms of this Stock
Purchase Agreement, the transactions contemplated herein and the Closing.
(p) Such other customary instruments, documents and certificates
in forms reasonably satisfactory to Purchaser as shall be necessary to carry out
the intent and effectuate the purposes of this Stock Purchase Agreement and
sufficient to vest in Purchaser good, valid and marketable title to the Stock,
free and clear of all Liens.
8.3 DELIVERIES BY PURCHASER. At the Closing, Purchaser shall deliver to
Seller the following:
(a) Payment of the Purchase Price in accordance with Section 3.3
herein.
(b) A copy of the Employment Agreement between Company and
Seller, the form of such agreement as set forth in Exhibit 8.2(g) attached
hereto.
(c) Copies of the form of Employment Agreements between Prospect
Medical Systems and certain of Seller's employees, the form of such agreement as
set forth in Exhibit 8.2(h) attached hereto.
(d) An officer's certificate setting forth a copy of the
resolutions adopted by the Board of Directors of Purchaser authorizing and
approving the execution and delivery of this Stock Purchase Agreement by
Purchaser and certifying as to the authority of the officers executing this
Stock Purchase Agreement and any documents to be delivered by Purchaser at the
Closing.
(e) All other instruments and documents as Seller may reasonably
request as necessary to carry out the intent and effectuate the purposes of this
Stock Purchase Agreement.
(f) An opinion of counsel, dated as of the Closing Date,
substantially in the form of Exhibit 8.3(f) attached hereto ("Purchaser's
Opinion").
(g) A board resolution authorizing the terms of this Stock
Purchase Agreement, the transactions contemplated herein and the Closing.
21
(h) A copy of the Employment Agreement by and between Company and
Xxxxxxxx Xxxxxx, M.D., the form of such agreement as set forth in Exhibit 8.2(h)
attached hereto.
8.4 CONDITIONS TO PURCHASER'S OBLIGATIONS. Purchaser's obligation to
consummate the transactions contemplated by this Stock Purchase Agreement is
conditioned upon satisfaction, or waiver by Purchaser in writing, of all of the
following on or before the Closing Date:
(a) The performance by Company and Seller of all of the their
respective promises and agreements under this Stock Purchase Agreement that are
to be performed as of the Closing, including but not limited to the procurement
and delivery to Purchaser of all necessary assignments and consents, provided
however, that the consent of CalOptima shall not be a condition to Closing.
(b) No suit, action, arbitration or legal, administrative or
other proceeding or governmental investigation shall be pending or threatened
against Purchaser, Company or Seller in relation to or affecting the
consummation of the transactions contemplated by this Stock Purchase Agreement,
and no statute, rule, regulation, decree, executive or judicial order shall have
been instituted or threatened by any governmental or regulatory authority which
challenge the validity or enforceability of this Agreement or any of its terms,
or which adversely affects Company.
(c) Written evidence provided to Purchaser that Company's bylaws
have been amended to increase the number of directors to three, and Xxxxx X.
Xxxxxx M.D. and Xxxxx XxXxxxxx, M.D. have been named as directors and officers
of Company as of the Closing.
(d) The assets of Company have not been damaged, Seller shall
have maintained Company in the regular course of business and shall have paid
all of its accounts payable as they came due, and there have been no adverse
change from the date of this Agreement or of the Financial Statements, whichever
is later.
(e) Purchaser has not exercised the cancellation option under
Section 10 below.
(f) At the Closing, the Stock shall not be subject to any pledge,
lien or encumbrance.
(g) Company and Seller have given all notices to any third
parties, if any, made all filings, and obtained all required authorizations,
consents and approval of all health plans, (including but not limited to,
PacifiCare) and all governmental agencies in connection with the matters
described herein.
(h) Seller shall have increased the coverage limits on his
malpractice policy related to the period prior to the Closing, to $2 million per
claim, with a $4 million annual aggregate.
8.5 CONDITIONS TO SELLER'S OBLIGATION. Seller's obligation to
consummate the transactions contemplated by this Stock Purchase Agreement is
conditioned upon satisfaction, or waiver by Company in writing, of all of the
following on or before the Closing Date:
22
(a) The performance by Purchaser of all of Purchaser's promises
and agreements under this Stock Purchase Agreement that are to be performed as
of Closing.
(b) No suit, action, arbitration or legal, administrative or
other proceeding or governmental investigation shall be pending or threatened
against Purchaser, Company or Seller in relation to or affecting the
consummation of the transactions contemplated by this Stock Purchase Agreement.
(c) Seller shall enter into a two year employment agreement
effective as of the Closing, with Company in the amount of $250,000 per year, as
set forth on Exhibit 8.2(g) attached hereto;
(d) Each of the representations and warranties of Purchaser is
true as of the Closing.
(e) Prospect Medical Systems shall enter into one year employment
agreements effective as of the Closing, with X. Xxxxxxxxxxx, X. Xxxxxxxx, X.
Xxxxx and X. Xxxxxxxxx, including severance provisions, in the form of that
listed on Exhibit 8.2(h) attached hereto.
(f) Seller and the Company shall have received a certificate of
the respective Secretary or other officer of the Purchaser certifying as true
and correct as of the Closing Date, a copy of the Resolutions of the Board of
Directors which authorize the execution and full performance of the Transaction
Documents and the incumbency of their respective officers.
(g) Purchaser is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of California and has
all required necessary corporate power to perform its obligations under the
Agreement.
(h) All corporate proceedings required by law or by the
provisions of the Agreement to be taken by Purchaser on or before the Closing
Date, in connection with the execution and delivery of the Agreement and the
consummation that transactions contemplated by the Agreement have been duly and
validly taken.
(i) Every consent, approval, authorization, or order of any
federal or California governmental agency or body that is required for the
consummation by Purchaser of the transactions contemplated by the Agreement has
been obtained and will be in effect on the Closing Date.
(j) The execution and delivery of that certain Personal Guaranty
of Payment and Performance, by and between Xxxxx X. Xxxxxx, M.D. ("Terner"),
Seller and Company, in the form of that attached hereto as Exhibit 8.4(j),
pursuant to which Terner shall agree to personally fund up to $1 million of the
Purchase Price in the event Purchaser does not timely make such payment when
due.
23
(k) Company shall enter into a three year employment agreement
effective as of the Closing, with Xxxxxxxx Xxxxxx, M.D. in the amount of
$150,000 per year, as set forth on Exhibit 8.3(h) attached hereto.
(l) Seller shall have received a certificate of the respective
Secretaries or other officers of the Purchaser and Company, certifying as true
and correct as of the Closing Date, copies of the resolutions of the Boards of
Directors of Purchaser and Company, as the case may be, naming Seller to their
respective Boards of Directors.
9. INDEMNIFICATION:
9.1 SELLER'S INDEMNITY.
(a) Except as provided in subsection (b) herein, for a period of
three (3) years from the Closing Date, Seller shall indemnify, defend and hold
Purchaser, its affiliates (including without limitation, Company), and their
directors, officers, employees, attorneys, and agents harmless from and against
any and all liabilities, losses, damages, claims, causes of action, costs and
expenses (collectively "Claims") (including, without limitation, reasonable
attorneys' fees and expenses and court costs), whether known or unknown, whether
suit is instituted or not, and, if instituted, whether at any trial and
appellate level, for the period prior to the Closing, arising out of, relating
to or as a result of: (a) Company's and/or Seller's ownership or operation of
Company or the Practice, including any defects in title; (b) any other actions
or omissions of Company prior to the Closing Date; (c) any default or breach by
Company or Seller of any representation, warranty or any other material term or
condition in this Stock Purchase Agreement (including the exhibits and
attachments) or any ancillary agreement, document, or certificate to be
delivered in connection with this Stock Purchase Agreement; (d) the conduct of
Company's business on or prior to the date of the Closing, including, without
limitation, any litigation now existing or hereafter arising from such conduct
occurring on or prior to the Closing Date, (e) any inaccuracy of the Company
Financial Statements; and (f) any act, conduct, omission or commitment of
Company or Seller occurring on or prior to the Closing Date, which may hereafter
be asserted against Company or Seller, whether or not unknown, unasserted or
undiscovered by Purchaser as of Closing, but only to the extent not actually
reimbursed to Purchaser by insurance and only in an amount up to $1,000,000,
exclusive of any amounts in the Reserve Account. Purchaser agrees that with
respect to any matter for which Seller has the foregoing obligations, Purchaser
shall first attempt to satisfy the amount owed by Seller out of the Reserve
Account. Without limiting the generality of the foregoing, with respect to the
measurement of damages, the Purchaser shall have the right to be put in the same
financial position as it would have been in had the representations and
warranties of Seller been true and correct, had each of the covenants of Company
and Seller been performed in full, and had Company and Seller paid, discharged
and performed all of the liabilities and obligations of the Seller.
(b) Notwithstanding the foregoing, the three year duration of
Seller's indemnification and the limit of $1,000,000 in amount set forth in
subsection (a) above shall not apply to Claims related to (i) fraud, (ii) tax
liabilities, (iii) a violation of state or federal statutes or regulations
governing the practice of medicine, or (iv) Claims of which Seller was aware as
of the Closing Date that were not disclosed to Purchaser, which Claims shall
survive indefinitely.
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9.2 PURCHASER'S INDEMNITY. Purchaser shall indemnify, defend and hold
Seller harmless from and against any and all Claims (including, without
limitation, reasonable attorneys' fees), arising out of (a) Purchaser's
ownership or operation of Company or the Practice following the Closing Date,
(b) any other actions or omissions of Company following the Closing Date; (c)
any default or breach by Purchaser of any representation, warranty or any other
material term or condition in this Stock Purchase Agreement (including the
exhibits and attachments) or any ancillary agreement, document, or certificate
to be delivered in connection with this Stock Purchase Agreement; (d) the
conduct of Company's business following the date of the Closing; and (e) any
act, conduct, omission or commitment of Company occurring following the Closing
Date. Notwithstanding the foregoing, Purchaser's indemnification of Seller
shall be limited to a period of three (3) years from the Closing Date and an
amount up to $1,000,000, except for Claims related to (i) fraud, (ii) tax
liabilities, or (iii) a violation of state or federal statutes or regulations
governing the practice of medicine, which claims shall survive indefinitely.
9.3 INDEMNIFICATION PROCEDURE.
(a) In the event any person or entity not a party to this Stock Purchase
Agreement shall make a demand or Claim or file or threaten to file or continue
any lawsuit, which demand, Claim or lawsuit may result in liability to an
indemnified party under this Stock Purchase Agreement, or in the event that a
potential loss, damage or expense comes to the attention of any party, then the
party receiving notice or aware of such event shall promptly notify the other
party or parties of the demand, Claim or lawsuit. Within ten (10) days after
notice by the indemnified party (the "Notice") to an indemnifying party of such
demand, Claim or lawsuit, except as provided in subsection (b) herein, the
indemnifying party shall have the option, at its cost and expense, to retain
counsel for the indemnified party, to defend any such demand, claim or lawsuit,
provided that counsel who will conduct the defense of such claim or litigation
will be approved by the indemnified party whose approval will not unreasonably
be withheld. The indemnified party shall have the right, at its own expense, to
participate in the defense of any suit, action or proceeding brought against it
with respect to which indemnification may be sought hereunder, provided, (a) if
the named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them, (b) the employment of counsel by
such indemnified party has been authorized in writing by the indemnifying party,
or (c) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time; then, the indemnified party
shall have the right to retain its own counsel at the cost and expense of the
indemnifying party. No indemnifying party, in the defense of any such claim or
litigation, will consent to entry of any judgment or enter into any settlement
without the consent of the indemnified party. If any indemnified party will
have been advised by counsel chosen by it that there may be one or more legal
defenses available to such indemnified party which are different from or
additional to those available to and which have not been asserted by the
indemnifying party, the indemnifying party will not have, at the election of the
indemnified party, the right to continue the defense of such claim or action on
behalf of such indemnified party and will reimburse such indemnified party and
any person controlling such indemnified party for the reasonable fees and
expenses of any counsel retained by the indemnified party to undertake the
defense. In the event that the indemnifying party shall fail to respond within
ten (10) days after receipt of the Notice, the indemnified party may retain
counsel and
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conduct the defense of such demand, claim or lawsuit, as it may in its sole
discretion deem proper, at the sole cost and expense of the indemnifying party.
Except as explicitly provided in this Section 9.3, failure to provide Notice
shall not limit the rights of such party to indemnification.
(b) Notwithstanding the foregoing, in the event that any demand, Claim
or lawsuit for which indemnification is payable hereunder relates with respect
to Seller or Company, to a criminal investigation, quasi criminal investigation,
governmental regulatory claim, civil claim involving allegations of criminal
conduct, or a matter in which the licensure of Purchaser or Company could be
jeopardized, Purchaser shall have the sole right to retain counsel to represent
it or the Company in such matter and Seller shall pay the reasonable fees of
such counsel on a current basis; provided however, that Purchaser shall
collaborate in good faith with Seller and his counsel in the handling of such
matters. In the event Purchaser determines to settle any such matter, it shall
provide Seller and his counsel with 30 days prior notice of Purchaser's
intention to settle, specifying the amount payable and other material terms of
the proposed settlement. Within 10 days of such notice, Seller shall notify
Purchaser of its intention to pay such proposed settlement. If Seller elects
not to pay the settlement amount, Purchaser may at its sole discretion elect
either to (i) provide for the payment of such settlement and may seek
reimbursement from Seller for the amount of such settlement and all fees and
costs associated therewith, by submitting a claim in arbitration to determine
whether Purchaser's actions were reasonable actions for a prudent person under
the circumstances under which they were made, or (ii) tender the continuing
defense of such action to Seller and its counsel as provided herein.
9.4 PAYMENT; PURCHASER'S RIGHT TO OFFSET. All amounts paid by either
party pursuant to this Section 9 shall be on a dollar-for-dollar basis as to the
claims for which indemnification is to be paid. All amounts shall be on an
after-tax basis, with such tax effects to be determined within 20 days of the
completion of an audit of Company's financial statements for the first fiscal
period following the Closing Date. With regard to claims of third parties for
which indemnification is payable hereunder, such indemnification shall be paid
by the indemnifying party in advance of settlement or final adjudication thereof
on a current basis within thirty (30) days of receipt from the indemnified party
of such supporting documentation as the indemnifying party may reasonably
request, and any offset of such amounts due to the determination of the tax
effects as set forth herein shall be paid within 30 days of the completion of
such audit of Company's financial statements for the first fiscal period
following the Closing Date. Anything herein to the contrary notwithstanding,
Purchaser shall be required to offset any amounts due to Purchaser from Seller
under this Section 9 by first offsetting the amount of the Reserve Account,
after which Purchaser may seek indemnification directly from the Seller.
Purchaser shall not be permitted to offset any amounts owed hereunder against
sums owed to Seller under the Employment Agreement.
9.5 NON-EXCLUSIVE REMEDY/MITIGATION OF DAMAGES. The provisions of this
Section 9 do not limit the parties' right to choose any and all available
remedies for breach, provided, however, that the parties shall first look to
indemnification to the extent such monetary remedy shall be appropriate.
Notwithstanding the foregoing, before seeking indemnification from Seller,
Purchaser shall be required to mitigate all amounts owed by Seller hereunder.
Such duty to mitigate shall include, but not be limited to, Purchaser's
obligation to satisfy amounts owed out of the Reserve Account.
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10. PURCHASER'S CANCELLATION OF STOCK PURCHASE AGREEMENT:
10.1 JEOPARDY. In the event the performance by Seller of any term,
covenant, condition or provision of this Agreement should be in violation of any
statute, ordinance, or be otherwise deemed illegal, by a state or federal court
or governmental agency (collectively, "Jeopardy Event"), then the parties shall
use their best efforts to meet forthwith and attempt to negotiate an amendment
to this Stock Purchase Agreement to remove or negate the effect of the Jeopardy
Event. In the event the parties are unable to negotiate such an amendment
within twenty (20) days following written notice by either party of the Jeopardy
Event, then Purchaser may cancel this Agreement immediately upon written notice
("Cancellation Option"), and except for the $100,000 deposit, all amounts
previously paid by Purchaser to Seller shall be paid within ten (10) days.
10.2 EXERCISE OF CANCELLATION OPTIONS. In the event Purchaser exercises
the Cancellation Option described above, it shall so notify Company in writing
and each party shall return forthwith all originals and copies of any financial
or other records, instruments, or other documents it has received from the other
party and, except as provided in this Agreement, all of the parties' respective
rights and obligations hereunder shall terminate immediately. Notwithstanding
the foregoing, the parties' respective obligations under Section 7.2 above shall
survive Purchaser's exercise of any of said cancellation options.
11. MUTUAL RELEASE
Except as provided in Sections 3.5 and 9 of this Stock Purchase Agreement,
(a) Effective upon the Closing, Seller hereby irrevocably waives,
releases and discharges the Company from any and all liabilities and obligations
of Company to Seller of any kind, or nature whatsoever, whether in his capacity
as the Seller hereunder, as a stockholder, officer, or director of the Company
or otherwise, including, without limitation, in respect of rights of
contribution or indemnification, in each case whether absolute or contingent,
liquidated or unliquidated, and whether arising at law or equity, and Seller
hereby covenants and agrees that he will not seek to recover any amounts in
connection therewith or thereunder from the Company; provided, however, that
nothing in this Section 11 will constitute a waiver of any claims Seller may
have against the Company pursuant to the terms of this Agreement, including but
not limited to a material breach of any representation or warranty contained
herein, and/or any acts or events which occur after the Closing.
(b) Effective upon the Closing, Company hereby irrevocably waives,
releases and discharges Seller from any and all liabilities and obligations of
Seller to the Company of any kind or nature whatsoever, including, without
limitation, in respect of rights of contribution or indemnification, in each
case whether absolute or contingent, liquidated or unqualified, and whether
arising at law or equity, and the Company hereby covenants and agrees that it
will not seek to recover any amounts in connection therewith or thereunder from
Seller; provided, however, that nothing in this Section 11 will constitute a
waiver of any claims that the Company may have against Seller pursuant to the
terms of this Agreement, including but not limited to a material breach of any
representation or warranty contained herein.
27
It is the intention of the parties hereto that the foregoing releases shall
be effective as of the Closing.
12. MISCELLANEOUS
12.1 RISK OF LOSS. Until the Closing, Seller shall bear all risk of loss,
damage or destruction to the assets.
12.2 NO THIRD PARTY BENEFICIARIES. The parties intend that the benefits
of this Stock Purchase Agreement shall inure only to Purchaser and the Seller
except as expressly so stated herein. Notwithstanding anything contained
herein, or any conduct or course of conduct by any party hereto, before or after
signing this Stock Purchase Agreement, this Stock Purchase Agreement shall not
be construed as creating any right, claim or cause of action against Purchaser,
Company or Seller by any other person or entity.
12.3 ENTIRE AGREEMENT. This Stock Purchase Agreement, together with all
exhibits and schedules hereto, and all documents referred to herein (including
without limitation any ancillary agreements), constitutes the entire agreement
between the parties with respect to the subject matter hereof, supersedes all
other and prior agreements on the same subject, whether written or oral, and
contains all of the covenants and agreements between the parties with respect to
the subject matter hereof. Each party to this Stock Purchase Agreement
acknowledges that no representations, inducements, promises, or agreements,
orally or otherwise, have been made by the other party(ies), or by anyone acting
on behalf of any party, that are not embodied herein, and that no other
agreement, statement, or promise not contained in this Stock Purchase Agreement
shall be valid or binding.
12.4 SUCCESSORS AND ASSIGNS. This Stock Purchase Agreement shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs (as applicable), legal representatives, and permitted successors and
assigns. No party may assign this Stock Purchase Agreement or the rights,
interests or obligations hereunder; provided, however, that Purchaser may, (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates, except for the actual purchase of Seller's stock in Company, and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Purchaser shall remain liable and
responsible for the performance of all of its obligations hereunder). Any
assignment or delegation in contravention of this Section shall be null and
void.
12.5 COUNTERPARTS. This Stock Purchase Agreement, and any amendments
thereto, may be executed in counterparts, each of which shall constitute an
original document, but which together shall constitute one and the same
instrument.
12.6 HEADINGS. The section headings contained in this Stock Purchase
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Stock Purchase Agreement.
12.7 NOTICES. Any notices required or permitted to be given hereunder by
any party to the other shall be in writing and shall be deemed delivered upon
personal delivery; twenty-four (24) hours
28
following deposit with a courier for overnight delivery; or seventy-two (72)
hours following deposit in the U.S. Mail, registered or certified mail, postage
prepaid, return-receipt requested, addressed to the parties at the following
addresses or to such other addresses as the parties may specify in writing:
If to Seller: Xxxxxx Xxxxx, D.O.
0000 Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
with copy to: Xxxxxx Xxxx, Esq.
Palmieri, Tyler, Xxxxxx, Xxxxxxx and Xxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
If to Purchaser: Xxxxx XxXxxxxx, M.D.
Prospect Medical Group, Inc.
00000 Xxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxxx 00000
with copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
12.8 GOVERNING LAW. This Stock Purchase Agreement shall be governed by
and construed in accordance with the laws of the State of California.
12.9 AMENDMENT. This Stock Purchase Agreement may be amended at any time
by agreement of the parties, provided that any amendment shall be in writing and
executed by all parties.
12.10 SPECIFIC PERFORMANCE. Seller and Purchaser acknowledge and agree
that, in the event either party terminates this Stock Purchase Agreement or
otherwise fails to close, the other party would be irreparably damaged thereby
and that monetary damages would not provide an adequate remedy. Accordingly, it
is agreed that, in addition to any other remedies that the parties may have at
law or in equity, the parties shall be entitled to specific performance and
injunctive relief to prevent such a breach and specifically to enforce the terms
and provisions hereof in any action instituted in a court of competent
jurisdiction.
12.11 SEVERABILITY. If any provision of this Stock Purchase Agreement is
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions will nevertheless continue in full force and effect, unless
such invalidity or unenforceability would defeat an essential business purpose
of this Stock Purchase Agreement.
12.12 FEES AND EXPENSES. Except for accountant's fees directly related to
the audit of the Company, which fees the parties agree are to be paid by
Purchaser, or as otherwise explicitly set forth otherwise in writing signed by
the parties, Seller and Purchaser agrees to bear their own expenses
29
including, without limitation, attorneys' fees in connection with the
preparation of this Stock Purchase Agreement and the transactions contemplated
hereby.
12.13 EXHIBITS AND SCHEDULES. All exhibits and schedules attached to this
Stock Purchase Agreement are incorporated herein by this reference and all
references herein to "Stock Purchase Agreement" shall mean this Stock Purchase
Agreement together with all such exhibits and schedules, and all ancillary
agreements to be delivered at Closing.
12.14 SURVIVAL OF INDEMNIFICATION, REPRESENTATIONS AND WARRANTIES. Except
as expressly stated to the contrary herein, the indemnifications,
representations and warranties of Purchaser, Company and the Seller contained in
this Stock Purchase Agreement or in any certificate or document delivered
pursuant to the provisions hereof shall survive the Closing Date for a period of
three (3) years and shall not be affected by any investigation made by or on
behalf of Purchaser, Company or Seller.
12.15 TIME OF ESSENCE. Time is expressly made of the essence of this
Stock Purchase Agreement and each and every provision hereof of which time of
performance is a factor.
12.16 WAIVERS. No waiver by any party, whether express or implied, of its
rights under any provision of this Agreement shall constitute a waiver of the
party's rights under such provisions at any other time or a waiver of the
party's rights under any other provision of this Stock Purchase Agreement. No
failure by any party to take any action against any breach of this Stock
Purchase Agreement or default by another party shall constitute a waiver of the
former party's right to enforce any provision of this Stock Purchase Agreement
or to take action against such breach or default or any subsequent breach or
default by the other party. To be effective any waiver must be in writing and
signed by the waiving party.
12.17 ARBITRATION. The parties firmly desire to resolve all disputes
arising hereunder without resort to litigation in order to protect their
respective business reputations and the confidential nature of certain aspects
of their relationship. Accordingly, any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration as set forth below.
(a) All disputes which in any manner arise out of or relate to
this Agreement or the subject matter thereof, shall be resolved exclusively by
arbitration in accordance with the provisions of this Section 12.17. Either
party may commence arbitration by sending a written demand for arbitration to
the other party, setting forth the nature of the controversy, the dollar amount
involved, if any, and the remedies sought, and attaching a copy of this Section
to the demand.
(b) The parties stipulate to arbitration before a single,
mutually agreed upon arbitrator sitting on the Los Angeles, California Judicial
Arbitration Mediation Services (JAMS) panel. In the event that the parties are
unable to agree upon the person chosen as arbitrator within 30 days of the
demand for arbitration, the arbitrator shall be selected in the sole discretion
of the JAMS administrator. The arbitrator shall be a member of the California
bar.
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(c) The parties shall share all costs of arbitration. The
prevailing party shall be entitled to reimbursement by the other party of such
party's attorneys' fees and costs and any arbitration fees and expenses incurred
in connection with the arbitration hereunder.
(d) The substantive law of the State of California shall be
applied by the arbitrator. All proceedings in arbitration shall be in
accordance with the California Code of Civil Procedure, as amended, and the
parties shall have the right to legal discovery in any matter submitted to
arbitration in satisfaction of California Code of Civil Procedure Section
1283.05, as permitted by California Code of Civil Procedure Section 1283.1(b).
(e) Arbitration shall take place in Los Angeles, California
unless the parties otherwise agree. As soon as reasonably practicable, a
hearing with respect to the dispute or matter to be resolved shall be conducted
by the arbitrator. As soon as reasonably practicable thereafter, the arbitrator
shall arrive at a final decision, which shall be reduced to writing, signed by
the arbitrator and mailed to each of the parties and their legal counsel.
(f) All decisions of the arbitrator shall be final, binding and
conclusive on the parties and shall constitute the only method of resolving
disputes or matters subject to arbitration pursuant to this Agreement. The
arbitrator or a court of appropriate jurisdiction may issue a writ of execution
to enforce the arbitrator's judgment. Judgment may be entered upon such a
decision in accordance with applicable law in any court having jurisdiction
thereof.
(g) Notwithstanding the foregoing, because time is of the essence
of this Agreement, the parties specifically reserve the right to seek a judicial
temporary restraining order, preliminary injunction, or other similar equitable
relief.
(h) The decision and award of the arbitrator shall be kept
confidential by the parties to the greatest extent possible. No disclosure of
such decision or award shall be made by the parties except as required by law or
as necessary or appropriate to effect the enforcement thereof.
(i) Should either Employer or Physician institute any action or
procedure to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder (including without limitation
arbitration), the prevailing party in any such action or proceeding shall be
entitled to receive from the other party all costs and expenses, including
without limitation reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.
12.18 CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Stock Purchase Agreement and in the event of
any ambiguity or question of intent or interpretation, no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Stock Purchase Agreement.
12.19 FURTHER ASSURANCES. The parties shall take such actions and execute
and deliver such further documentation as may reasonably be required in order to
give effect to the transactions contemplated by this Stock Purchase Agreement
and the intentions of the parties hereto.
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IN WITNESS WHEREOF, the undersigned have executed this Stock
Purchase Agreement as of the date first written above.
"PURCHASER"
PROSPECT MEDICAL GROUP, INC.,
a California professional corporation
By: /s/ Xxxxx X. Xxxxxx, M.D.
------------------------------------------
Xxxxx X. Xxxxxx, M.D., Vice President
"COMPANY"
SANTA XXX/TUSTIN PHYSICIANS GROUP, INC.
a California professional corporation
By: /s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx, D.O., President
"SELLER"
By: /s/ Xxxxxx Xxxxx
------------------------------------------
Xxxxxx Xxxxx, D.O.
32
EXHIBITS TO
AGREEMENT FOR THE PURCHASE AND SALE OF STOCK
OF
SANTA XXX/TUSTIN PHYSICIANS GROUP, INC.(1)
2 Liabilities
3.2(a) Escrow Instructions
4.2 Authorization
4.3 Required Consents
4.4 Defaults
4.5 Books and Records
4.7(a) Changes to Practice
4.7(e) Extraordinary Compensation
4.8 Taxes
4.10 Premises
4.12 Contracts
4.13 Powers of Attorney
4.14(a) Outstanding Judgments
4.14(b) Insurance Policies
4.18 Licensure and Reimbursement
4.19 Employee Information
4.20 Employee Entitlement Programs
4.22 Inspections
4.24 Primary Care Physicians
4.25 Bank Accounts and Investments
4.26 Subsidiaries and Affiliates
4.28 Real Property Leases
4.29 Intellectual Property
4.31 Option to Purchase Premier IPA
8.2(d) Form of Officer's Certificate; and Form of Seller's Certificate
8.2(f) Form of Non-Competition Agreement -- filed herewith as
Exhibit 10.3
8.2(g) Employment Agreement -- Xxxxxx Xxxxx
8.2(h) Form of Employment Agreement
8.2(i) Form of Seller's Personal Guaranty Agreement
8.2(m) Form of Opinion of Seller's Counsel
8.3(f) Form of Opinion of Purchaser's Counsel
8.3(h) Form of Employment Agreement -- Xxxxxxxx Xxxxxx, M.D.
8.5(j) Personal Guaranty of Payment and Performance
(1) The Registrant hereby undertakes to provide to the Securities and Exchange
Commission upon request copies of any of the exhibits listed above not
otherwise filed with this Form S-1 Registration Statement as noted above.
33
