FORM OF ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is made and entered into this 9th day of August, 1996, by
and between (the "Seller"), and Physicians Quality Care,
Inc., a Delaware corporation with principal offices at 000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000 ("PQC") and Medical Care Partners, P.C., a Massachusetts
professional corporation with principal offices at 000 Xxxxxx Xxxxxx, Xxxxxxx,
XX 00000 ("MCP"). MCP, PQC and the Seller are sometimes referred to herein as
a "Party" or collectively as the "Parties".
Recitals
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Seller owns and operates a medical practice (the "Practice") and certain
assets utilized in connection therewith, including accounts receivable,
inventory, equipment and other assets.
In connection with the acquisition and the affiliation transactions
contemplated hereby, the Seller is becoming an employee of MCP with other
physicians.
Now therefore, in consideration of the respective representations,
warranties, covenants, agreements and conditions hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.01 Assets to be Purchased from Seller. (a) Simultaneously with the
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closing of the transactions contemplated hereby (the "Closing"), Seller is
selling, conveying, assigning, transferring and delivering to MCP all of
Seller's right, title and interest in and to all of the assets owned by Seller
(tangible and intangible) and used in the Practice (the "Assets"), including,
without limitation, the assets described below, other than Excluded Assets as
provided in Section 1.01(b):
(i) all inventory (the "Inventory") of Seller, wherever located,
including, without limitation, medical supplies, office supplies, maintenance
supplies, pharmaceuticals and similar items of Seller that are used in the
Practice;
(ii) all deposits and prepaid expenses related to the Practice;
(iii) all outstanding purchase orders (the "Purchase Orders");
(iv) all fixtures, leasehold improvements, furnishings, office
(including all computers) and medical equipment and appliances owned by Seller
and used in the Practice and all service agreements, license agreements and
warranties relating thereto;
(v) all rights of Seller under contracts, agreements, leases,
licenses and other instruments set forth on Schedule 1.01(a) hereto;
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(vi) (a) all records and lists of Seller pertaining to the Assets;
(b) all records and lists pertaining to the Practice, patients, suppliers or
personnel of the Practice; (c) all
records, history and analysis relating to purchasing, selling, advertising and
promotional activities relating to the Practice, in all forms in which such
information is recorded;
(vii) all intangible property rights relating to the Practice; and
(viii) all other assets, properties, claims, rights and interests of
Seller relating to the Practice that exist on the date of Closing, of every kind
and nature, whether tangible or intangible, real, personal or mixed.
(b) Notwithstanding Section 1.01(a), the Assets shall not include the
following ("Excluded Assets"):
(i) accounts and notes receivable of the Seller arising prior to
the Closing Date (as defined below);
(ii) all cash and cash equivalents held by Seller;
(iii) all licenses and permits of the Seller, to the extent not
transferable;
(iv) all claims, causes of action, chosen in action, rights of
recovery and rights of set-off of any kind against any person or entity arising
out of or relating to the Assets to the extent related to the Excluded
Liabilities;
(v) all managed care contracts listed on Schedule 1.01(b) that
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are not assignable by Seller;
(vi) the Seller's Medicare and Medicaid participation agreements;
(vii) all personal property, furniture, artwork, and similar items
owned by the Seller and not used in the Practice;
(viii) any other asset of the Seller that is not related to or used
by the Seller in the Practice;
(ix) Seller's insurance policies relating to coverage periods
prior to the Closing, including any tail coverage;
(x) the consideration paid by PQC and MCP hereunder and under any
related agreements or instruments; and
(xi) Seller's financial statements, financial records, tax returns
and related records and all other records (other than the records referred to in
1.01(a)(vi)) that are necessary for the Seller's collection of the accounts and
notes receivables referenced to in 1.01(b)(i).
1.02 (a) Assumption of Liabilities. Upon the terms and subject to the
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conditions contained herein, at the Closing, MCP shall assume (the "Assumed
Liabilities") all obligations
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and liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing Date under (i) the equipment leases described on
Schedule 1.01(a), but not including any obligation or liability for any breach
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of such equipment leases occurring on or prior to the Closing Date; and (ii) the
contracts described on Schedule 1.01(a), but not including any obligation or
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liability for any breach of such contract occurring on or prior to the Closing
Date. MCP shall be deemed to have assumed and shall assume all liabilities
which may be incurred by reason of any breach of or default occurring after the
Closing Date under any leases, contracts, commitments, or obligations assumed by
MCP hereunder.
(b) Excluded Liabilities. Notwithstanding any other provisions of this
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Agreement, except for the Assumed Liabilities expressly specified in Section
1.02(a), neither PQC nor MCP shall assume, or otherwise be responsible for, any
liabilities or obligations of Seller, whether actual or contingent, matured or
unmatured, liquidated or unliquidated, or known or unknown, whether arising out
of occurrences prior to, at or after the date hereof ("Excluded Liabilities"),
which Excluded Liabilities include, without limitation:
(i) any liability or obligation to or in respect of any employees
or former employees of Seller including without limitations (I) any employment
agreement, whether or not written, (II) any liability under any Employee Plan
(as defined in Section 2.19) at any time maintained, contributed to or required
to be contributed to, by or with respect to Seller or under which Seller may
incur liability, and (III) any claim of an unfair labor practice, or any claim
under any state unemployment compensation or worker's compensation law or
regulation or under any federal or state employment discrimination law or
regulation, which shall have been asserted on or prior to the Closing Date or is
based on acts or omissions which occurred on or prior to the Closing Date;
(ii) any liability or obligation of Seller in respect of any tax
except for any personal property, use, or similar taxes imposed in connection
with the Assets and attributable to any period after the Closing Date; and
(iii) any liability arising from any injury to or death of any
person or damage to or destruction of any property, whether based on negligence,
malpractice, strict liability, enterprise liability or any other legal or
equitable theory arising from services performed by or on behalf of Seller or
any other person or entity on or prior to the Closing Date.
1.03 Deliveries by Seller. Simultaneously with the Closing, Seller shall
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deliver or cause to be delivered to MCP and PQC the following:
(a) a Xxxx of Sale in the form of Schedule 1.03(a) hereto;
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(b) the employment agreement (the "Employment Agreement") between
MCP and the Seller, in the form attached hereto as Schedule 1.03(b);
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(c) an opinion of Xxxxx & Xxxxxxx LLP, counsel to Seller, in form
and substance satisfactory to counsel for MCP and PQC;
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(d) The Lease in form satisfactory to PQC with respect to the
premises at 00 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx ("Premises Lease");
(e) a report of a reputable lien search firm indicating that
there are no liens of record against any of the Assets (except for the liens
arising under equipment leases listed on Schedule 1.01(a);
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(f) a release from any party with a mortgage or lien on any of
the Assets;
(g) the consents of all parties necessary to enable MCP to
acquire the Assets and assume the Assumed Liabilities and to consummate the
other transactions contemplated by this Agreement including consents of third-
party payors and governmental authorities (including, but not limited to, all
consents listed on Schedule 2.03) necessary (i) to assign to MCP all third-party
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payment agreements listed on Schedule 1.01(a) and (ii) otherwise to consummate
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the transactions contemplated by this Agreement;
(h) a tax lien waiver from the Department of Revenue of the
Commonwealth of Massachusetts;
(i) such instruments of conveyance, assignment and transfer, in
form and substance reasonably satisfactory to PQC and MCP, as shall be
appropriate to convey, transfer and assign to and be vested in, MCP good, clean,
record and marketable title to the Assets; and
(j) such other agreements, consents and documents as PQC shall
reasonably request in connection with (i) its due diligence investigation of the
Seller, (ii) the affiliation of the Seller with MCP and PQC, and (iii) the
transactions contemplated by this Agreement, the affiliation agreement among
MCP, PQC and Seller, and the Employment Agreement.
1.04 Deliveries by MCP. Simultaneously with the Closing, MCP shall
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deliver or cause to be delivered to Seller the following:
(a) the Purchase Price by check. The "Purchase Price" shall be an
amount equal to the value assigned to the Assets based upon the report (the
"Report") prepared by Coopers & Xxxxxxx dated as of June 30, 1995, such amount
being $ .
(b) an Instrument of Assumption of Liabilities, with respect to
the Assumed Liabilities in form reasonably satisfactory to PQC, MCP and Seller;
(c) certificates of duly authorized officers of MCP and PQC,
dated the Closing Date, setting forth the resolutions of the Board of Directors
of MCP and PQC authorizing the execution and delivery by MCP and PQC of this
Agreement and the consummation of the transactions contemplated hereby, and
certifying that such resolutions were duly adopted and have not been rescinded
or amended;
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(d) an opinion of Xxxx and Xxxx, counsel to PQC, in form and
substance reasonably satisfactory to counsel to the Company; and
(e) such other instruments, consents and documents as the Seller
shall reasonably request in connection with (i) its due diligence investigation
of MCP and PQC and (ii) the transactions contemplated by this Agreement, the
affiliation agreement and the Employment Agreement.
1..05 The Closing. The Closing shall take place at the offices of Xxxx
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and Xxxx in Xxxxxx, Xxxxxxxxxxxxx 00000, commencing at 9:00 a.m. local time on
the date on which the Financing contemplated by Section 6.09 of this Agreement
is completed, or, if all of the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby have not been satisfied or
waived by such date, on such mutually agreeable later date as soon as
practicable after the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(the "Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Schedules attached hereto (which shall identify
exceptions by specific section reference), as of the date hereof and as of the
Closing Date, Seller, subject to the limitations contained in Section 8.02,
represents and warrants to PQC and MCP as follows:
2.01 Valid and Binding Agreement. Seller has the necessary power and
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authority to enter into this Agreement and the other agreements, documents and
instruments to be executed and delivered by Seller pursuant hereto, and to carry
out the transactions contemplated hereby and thereby. Assuming due
authorization, execution and delivery thereof by PQC and MCP, this Agreement and
each of the other agreements, documents and instruments to be executed and
delivered by Seller pursuant hereto will constitute valid and binding agreements
of Seller, enforceable against Seller in accordance with their terms.
2.02 No Violation. Neither the execution and delivery of this Agreement
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or the other agreements, documents and instruments to be executed and delivered
by Seller pursuant hereto nor the consummation by Seller of the transactions
contemplated hereby or thereby (a) subject to obtaining the required consents
and approvals described in Schedule 2.03, will violate or conflict with any
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applicable statute, law, ordinance, rule, regulation, order, judgment or decree
or (b) subject to obtaining the required consents and approvals described in
Schedule 2.03, will violate or conflict with or constitute a default (or an
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event which, with notice or lapse of time, or both, would constitute a default)
under, or will result in the termi nation of, or accelerate the performance
required by, or result in the creation of any lien, se curity interest, charge
or encumbrance upon any of the Assets under, any contract, commitment,
understanding, arrangement, agreement or restriction of any kind by which the
Assets are bound or affected, to which the Assets are subject, or to which
Seller is a party, except for any such violation, conflict, or default that
would not have a Material Adverse Effect. The term "Material Adverse Effect" as
used in this Agreement shall mean any change
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or effect or any prospective change or effect that, individually or when taken
together with other changes or effects, is or is reasonably likely to be
materially adverse to any of the Practice, the Assets, the financial
arrangements contemplated by the Employment and Affiliation Agreements, the
financial condition and results of operation of MCP or PQC, the value to PQC or
MCP of their affiliation with the Seller or any Party's ability to consummate
the transactions contemplated herein.
2.03 Consents; Filings. Except as set forth in Schedule 2.03 hereto, no
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registration or filing with, or consent, approval, permit, authorization or
action by, any third-party (including, without limitation, any federal, state,
local, foreign or other governmental agency, instrumentality, commission,
authority, board or body or other person or entity ("Government Entity")) is
required in connection with the execution and delivery by Seller of this
Agreement or the other agreements, documents and instruments to be executed and
delivered by Seller pursuant hereto or the consummation by Seller of the
transactions contemplated hereby or thereby.
2.04 Financial Statements. Seller has delivered to PQC balance sheets and
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statements of income with respect to the Practice for and as at the end of the
Practice's three most recent fiscal years (the "Financial Statements"), and such
balance sheets and statements of income are true, complete and accurate and
fairly present the financial condition and results of operations for and as at
the end of the periods therein referred to on a stand-alone basis.
2.05 No Material Adverse Change. No event involving a Material Adverse
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Effect has occurred since December 31, 1995.
2.06 Compliance with Law. The Practice has been conducted in substantial
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compliance with all applicable laws, regulations and other requirements of all
national governmental authorities, and of all states, municipalities and other
political subdivisions and agencies thereof, having jurisdiction over Seller,
including without limitation, all such laws, regulations and requirements
relating to antitrust, consumer protection, employee benefit, equal opportunity,
health, occupational safety, pension, pollution or environmental protection
matters except for such noncompliance as would not have a Material Adverse
Effect. Seller has not received any notification of any asserted present or
past failure to comply with such laws, rules or regulations.
2.07 Tax Matters. Seller has filed all Tax Returns relating to the
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Practice which are required to be filed prior to the date hereof or the Closing
Date and has paid all Taxes for all periods covered by such returns. Seller is
current in the payment of all Taxes relating to the Practice. No deficiencies
have been asserted or assessed as a result of any audit by the Internal Revenue
Service or any state or local taxing authority which has not been satisfied in
full and no such deficiency or audit has been proposed or threatened. Except as
described in Schedule 2.07, there are no liens for Taxes (other than for current
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Taxes not yet due and payable) on the Assets. None of the Assets is property
that is required to be treated as being owned by any other person pursuant to
the safe harbor lease provisions of former (S)168(f)(8) of the Internal Revenue
Code of 1986, as amended (the "Code"). None of the Assets is "tax exempt use
property" within the meaning of (S)168(h) of the Code. None of the Assets
directly
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or indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the Code. The Seller is not a person other than a United States
person within the meaning of the Code. The transaction contemplated herein is
not subject to tax withholding under (S)3406 of the Code, under Subchapter A of
chapter 3 of the Code, or of any other provision of law. For purposes of this
Agreement, "Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income, gross receipts,
ad valorem, premium, value-added, excise, real property, personal property,
sales, use, transfer, withholding, employment, payroll and franchise taxes
imposed by the United States of America or any state or local government, or any
agency thereof, or other political subdivision of the United States or any such
government, and any interest, fines, penalties, assessments or additions to tax
resulting from, attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax Returns" means
all reports, returns, declarations, statements or other information required to
be supplied to a taxing authority in connection with Taxes.
2.08 Good Title. Except as set forth on Schedule 2.08 Seller has complete
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and unrestricted power and the unqualified right to sell, convey, assign,
transfer and deliver to MCP, and upon payment of the Purchase Price, MCP will
acquire, good, valid and marketable title to the Assets, free and clear of title
defects or objections, liens, claims, charges, security interests or other
encumbrances (collectively "Encumbrances") of any nature whatsoever, except for
any encumbrances relating to the equipment leases assumed by MCP pursuant to
Section 1.01(a). The Xxxx of Sale provided for in Section 1.03 constitutes the
valid and binding obligation of Seller and will effectively vest in MCP good,
valid and marketable title to all of the Assets.
2.09 No Undisclosed Liabilities. Seller has no liabilities or obligations
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of any nature relating to the Practice (whether absolute, accrued, known or
unknown, contingent or otherwise and whether due or to become due) which are not
disclosed on the most recent Financial Statement or which have not been incurred
since the date of the Financial Statements in the ordinary course of business.
2.10 Leases. (a) Schedule 2.10 contains a complete and accurate listing of
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all leases (the "Leases") pursuant to which Seller leases real or personal
property relating to the Practice, which listing sets forth a general
description of the leased property or items, the term, the annual rent, any and
all renewal options, and any requirements for the consent of third parties to
assignments thereof. All such Leases are valid, binding and enforceable in
accordance with their terms and are in full force and effect; no event of
default has occurred which (whether with or without notice, lapse of time or
both or the happening or occurrence of any other event) would constitute a
default thereunder on the part of Seller; and Seller has no knowledge of the
occurrence of any event of default which (whether with or without notice, lapse
of time or both or the happening or occurrence of any other event) would
constitute a default thereunder by any other party.
(b) Except for Leases listed on Schedule 2.10, there are no
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leases, subleases, licenses, occupancy agreements, options, rights, concessions
or other agreements or arrangements, written or oral, granting to any person the
right to purchase, use or occupy any facility occupied by the Seller and related
to or used in the Practice.
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(c) With respect to each Lease, Seller has and will transfer to
MCP at the Closing an unencumbered interest in the leasehold interest covered
thereby. Seller enjoys peaceful and undisturbed possession of all the leased
real property related to and used in the Practice, and Seller has in all
material respects performed all the obligations required to be performed by it
through the date hereof.
2.11 Contracts and Commitments.
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(a) Schedule 2.11 sets forth a complete and accurate list of all
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contracts which are known to the Seller after reasonable investigation and which
were entered into by Seller and related to the Practice and still in effect as
of the date hereof (the "Contracts"), of the following categories:
(i) Managed care contracts and other contracts with third-party
payors;
(ii) Employment or similar contracts and severance agreements;
(iii) Contracts (other than Leases set forth on Schedule 2.10)
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related to the Assets of the Practice which are not cancelable without liability
on thirty (30) calendar days (or less) notice;
(iv) Options with respect to any property, real or personal
related to the Practice, whether Seller is the grantor or grantee thereunder;
(v) Contracts involving expenditures or liabilities, actual or
potential, in excess of one thousand dollars ($1,000) or otherwise material to
the Practice or the Assets;
(vi) Promissory notes, loans, agreements, indentures, evidences of
indebtedness, letters of credit, guarantees, or other instruments relating to an
obligation to pay money, individually in excess of or in the aggregate in excess
of one thousand dollars ($1,000) and related to the Practice, whether Seller
shall be the borrower, lender or guarantor thereunder or whereby any Assets are
pledged;
(vii) Contracts containing covenants limiting the freedom of Seller
or employee of Seller, to engage in any line of business or compete with any
person; and
(viii) Any Contract with the United States, state or local
government or any agency or department thereof related to the Practice.
Seller has made available to PQC true, correct and complete copies within
Seller's possession of, and all records related to, all of the Contracts listed
on Schedule 2.11, including all amendments and supplements thereto.
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(b) Absence of Breaches or Defaults. To the Seller's knowledge, all of
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theContracts are valid and in full force and effect. Seller has duly performed
all of its obligations under the Contracts, and no violation of, or default or
breach, under any Contracts by Seller or any other party has occurred except for
any violations, defaults, or breaches that would not have a
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Material Adverse Effect and neither Seller nor any other party, to the best of
Seller's knowledge after due inquiry, has repudiated any provisions thereof.
2.12 Permits. Seller has all licenses, permits, franchises, approvals,
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authorizations, consents or orders of, or filings with ("Permits") any
Governmental Entity or any other person, necessary or desirable to conduct the
Practice as now being conducted, except where the failure to obtain such permits
would not have a Material Adverse Effect. All Permits of Seller are valid and
in full force and effect and are listed on Schedule 2.12. No notice to,
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declaration, filing or registration with, or Permit or consent from, any
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Seller in connection with the execution,
delivery or performance of this Agreement and the consummation of the
transactions contemplated hereby, except as set forth on Schedule 2.12. The
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Seller has not suffered any loss, revocation, suspension, expiration without
renewal or other failure to keep in full force and effect and good standing his
or her membership on the medical staff of the hospitals listed on Schedule 2.20,
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or any material license, certification, accreditation, clinical privilege or
other right or authorization necessary for the unrestricted practice of medicine
by Seller or for the conduct of the Practice as previously conducted.
2.13 Books and Records. Seller has made and kept (and given PQC and MCP
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access to) books and records (including patient lists) and accounts, which, in
reasonable detail, accurately and fairly reflect the activities of the Practice.
2.14 Litigation. Except as set forth on Schedule 2.14, there is no, and
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during the past five (5) years there has not been any, action, order, writ,
injunction, judgment or decree outstanding or any claim, suit, litigation,
proceeding, labor dispute, arbitral action, governmental audit or investigation
(collectively, "Actions") pending or, to the best of Seller's knowledge,
threatened (a) against, related to or affecting (i) Seller, the Practice or the
Assets, or (ii) any employees of Seller as such, (b) seeking to delay, limit or
enjoin the transactions contemplated by this Agreement, (c) that involve the
risk of criminal liability (other than minor traffic violations), or (d) in
which Seller is a plaintiff. Seller is not in default with respect to or
subject to any judgment, order, writ, injunction or decree of any court or
governmental agency, and there are no unsatisfied judgments against Seller, the
Practice or the Assets.
2.15 Transactions with Certain Persons. Except as set forth on Schedule
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2.15, neither Seller nor any employee of Seller nor any member of any such
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person's immediate family is presently, or within the past two (2) years has
been a party to any transaction with Seller relating to the Practice with an
aggregate annual value of more than one thousand dollars ($1,000) to Seller or
the other parties thereto, including, without limitation, any contract,
agreement or other arrangement (a) providing for the furnishing of services by,
(b) providing for the rental of real or personal property from, or (c) otherwise
requiring payments to (other than for services as an employee of Seller) any
such person or any corporation, partnership, trust or other entity in which any
such person has an interest as a shareholder, officer, director, trustee or
partner, except that Seller provides certain medical services to employees and
family members as previously disclosed to PQC.
2.16 Insurance. Schedule 2.16 contains a complete and accurate list of
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all policies or binders of fire, liability, title, worker's compensation,
malpractice and other forms of insurance
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(showing as to each policy or binder the carrier, policy number, coverage
limits, expiration dates, annual premiums and a general description of the type
of coverage provided) maintained by Seller on the Assets, the Practice or its
employees. Such insurance provides, and during such period provided, coverage
to the extent and in the manner (a) customary for medical practices and (b) as
may be required by applicable law and by any and all Contracts known to the
Seller to which Seller is a party. Seller is not in default under any of such
policies or binders, and Seller has not failed to give any notice or to present
any claim under any such policy or binder in a due and timely fashion. No
insurer has advised Seller that it intends to reduce coverage, increase premiums
or fail to renew any existing policy or binder. There are no outstanding unpaid
claims under any such policies or binders. All policies and binders provide
sufficient coverage for the risks insured against, are in full force and effect
on the date hereof and shall be kept in full force and effect through the
Closing Date. If any insurance policy maintained by the Seller is carried on a
claims made basis, the Seller shall obtain a "tail policy" or "prior acts
policy" with the same limits and deductibles as the applicable policy listed on
Schedule 2.16 and naming MCP and PQC as co-insureds.
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2.17 Brokers. Seller is not obligated to pay, nor has Seller retained any
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broker or finder or other person who is entitled to, any broker's or finder's
fee or any other commission or financial advisory fee based on any agreement or
understanding made by Seller in connection with the transactions contemplated
hereby.
2.18 Benefit Plans.
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(a) Except as set forth in Schedule 2.18, Seller is not a party
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to any pension, retirement, profit sharing, savings, bonus, incentive, deferred
compensation, group health insurance or group life insurance plan or obligation,
or to any collective bargaining agreement or other contract, written or oral,
with any trade or labor union, employees' association or similar organization
(the "Employee Plans"). Seller does not have any obligations to provide to its
active employees or current retirees any post-retirement non-pension benefits.
There are no labor disputes pending or threatened by, or to the best knowledge
or Seller, any attempts at union organization of, any of the employees of
Seller.
(b) Seller (i) is and has been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment, and wages and hours (including,
but not limited to, the Worker Adjustment and Retraining Notification Act, 29
U.S.C. 2101 et seq. ("WARN"), or any similar state or local law), (ii) has made
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all contributions required to be made under any state unemployment or disability
laws or regulations and has accrued the amount of any such contribution required
for any period prior to the Closing Date which is not yet due and payable and
(iii) is not engaged in any unfair labor practice, and there are no arrears in
the payment of wages or taxes with respect to employees.
(c) Except as set forth in Schedule 2.18, no employee has any
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claims pending against Seller (whether under any law, any employment agreement
or otherwise) on account of or for (i) overtime pay, other than overtime pay for
the current payroll period, (ii) wages or salary (excluding bonuses and amounts
accruing under pension and profit sharing plans) for any period other than the
current payroll period, (iii) vacation, time off or pay in lieu of
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vacation or time off, other than that earned in respect of the current fiscal
year, (iv) any violation of any statute, ordinance or regulation relating to
minimum wages or maximum hours of work or (v) the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(d) Except as set forth on Exhibit 2.18 (which liabilities will
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be discharged on or prior to the Closing Date) Seller is not, and neither MCP
nor PQC will be, pursuant to any employment agreement, employee benefit plan or
other law, arrangement or understanding, obligated to pay or be liable for the
payment of any compensation (including accrued vacation), severance pay or other
benefit (including any disability benefit or payment or any unfunded liabilities
relating to pension benefits) by reason of the voluntary termination of
employment of any employee, the voluntary or involuntary termination prior to
the Closing Date of employment of any employee, or the consummation of the
transactions contemplated by this Agreement.
(e) With respect to all employee benefit plans (as defined in
ERISA) for which any employee is or was eligible to participate in, Seller or
any entity which, within the last five (5) years, has been under common control
or affiliated with Seller (an "ERISA Affiliate") within the meaning of Section
414(b), (c) or (m) of the Code, is in compliance in all material respects with
the requirements prescribed by any and all statutes, orders or governmental
rules or regulations currently in effect, including, but not limited to, ERISA
and the Code, applicable to such employee benefit plans and Seller is in
compliance in all material respects with its obligations under the terms of such
plans. None of the employee benefit plans are subject to Title IV of ERISA.
Neither Seller nor any ERISA Affiliate has ever been obligated to contribute to
any "multi-employer plan" as such term is defined in Section III(37) of ERISA.
No employee benefit plan of Seller or any ERISA Affiliate has engaged in any
prohibited transaction as such term is defined in Section 4975 of the Code or
Section 406 of ERISA.
2.19 Fraud and Abuse. Neither the Seller nor, to the knowledge of the
---------------
Seller, any other persons or entities providing professional services for the
Practice, have engaged in any activities which are prohibited under U.S.C.
(S)1320a-7b, or the regulations promulgated thereunder pursuant to such
statutes, or related state or local statutes or regulations, or which are
prohibited by rules of professional conduct, including but not limited to the
following: (i) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment; (ii) knowingly and willfully making or causing to be made
any false statement or representation of a material fact for use in determining
rights to any benefit or payment; (iii) failure to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on its own behalf or on behalf of another, with intent
to fraudulently secure such benefit of payment; and (iv) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate), directly or indirectly, overtly or covertly, in cash or in kind or
offering to pay or receive such remuneration (a) in return for referring an
individual to a person for the furnishing or arranging for the furnishing of any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid, or (b) in return for purchasing, leasing, or ordering or arranging for
or recommending purchasing, leasing, or
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ordering any good, facility, service, or item for which payment may be made in
whole or in part by Medicare or Medicaid.
2.20 Hospital Privileges. Schedule 2.20 hereto lists all of the hospitals
------------------- -------- ----
at which Seller is a member of the medical staff.
2.21 Employment Agreements. No event permitting termination under the
---------------------
Employment Agreement, if it were in effect at such time of such event, shall
have occurred at any time prior to the Closing Date. The Seller does not have
any current intention of terminating the Employment Agreement with MCP prior to
the termination of its initial three (3) year term.
2.22 Employees. Schedule 2.22 contains a list of all employees of the
--------- -------- ----
Practice along with the position and the annual rate of compensation of each
such person. To the knowledge of the Seller, no employee or group of employees
has any plans to terminate employment with the Practice or not to continue as an
employee of MCP after the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH OF PQC AND MCP
Each of PQC and MCP hereby represents and warrants to Seller as of the date
hereof and as of the Closing Date as follows:
3.01 Organization. Each of PQC and MCP is a corporation duly organized,
------------
validly existing and in good standing under the laws of the jurisdictions of
their incorporation, and each of PQC and MCP has the power and authority to
carry on its business as presently being conducted. PQC has provided the Seller
with complete and accurate copies of the Articles of Incorporation and By-Laws
of PQC and MCP
3.02 Capitalization of Physicians Quality Care, Inc. and MCP The
----------------------------------------------------
authorized capital stock of PQC, consists of 15,308,333 shares of Common Stock,
par value $0.01 per share, of which 6,693,750 shares are outstanding, 1,666,667
shares of Series A Preferred Stock, of which 1,666,151 shares are outstanding.
Except for Physicians Quality Care of Massachusetts, Inc. and Physicians Quality
Care of Maryland, Inc., PQC is not the record owner of the equity securities of
any issuer. Prior to and on the Closing Date, MCP's authorized capital stock
will consist of 10,000 shares of Common Stock, $0.01 par value per share, of
which 1,000 shares will be outstanding. Except as set forth in Schedule 3.02
-------------
attached hereto, there are not, and on the Closing Date there will not be,
outstanding (i) any options, warrants or other rights to purchase from MCP or
PQC any capital stock of MCP or PQC; (ii) any securities convertible into or
exchangeable for shares of such stock; or (iii) any other commitments of any
kind for the issuance of additional shares of capital stock or options, warrants
or other securities of MCP or PQC.
3.03 Authorization. The Boards of Directors of PQC and MCP have duly
-------------
authorized the execution and delivery of this Agreement and the other
agreements, documents and instruments to be executed and delivered by PQC and
MCP pursuant hereto and the
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consummation by PQC and MCP of the transactions contemplated hereby and there-
by. No further corporate or other proceedings on the part of PQC and MCP are
necessary to authorize this Agreement or the other agreements, documents and
instruments to be executed and delivered by PQC and MCP pursuant hereto or the
transactions contemplated hereby or thereby.
3.04 Valid and Binding Agreement. Each of MCP and PQC has the necessary
---------------------------
power and authority to enter into this Agreement and the other agreements,
documents and instruments to be executed and delivered by PQC and MCP pursuant
hereto, and to carry out the transactions contemplated hereby and thereby. When
fully executed and delivered, this Agreement and each of the other agreements,
documents and instruments to be executed and delivered by PQC and MCP pursuant
hereto will constitute valid and binding agreements of PQC and MCP, enforceable
against MCP or PQC, as the case may be, in accordance with their terms.
3.05 No Violation. Neither the execution and delivery of this Agreement
------------
or the other agreements, documents and instruments to be executed and delivered
by PQC or MCP pursuant hereto nor the consummation by PQC or MCP of the
transactions contemplated hereby or thereby (a) will violate any provision of
the Certificate of Incorporation or By-laws of PQC or MCP, each as currently in
effect, (b) will violate or conflict with any applicable statute, law,
ordinance, rule, regulation, order, judgment or decree or (c) will violate any
contract or commitment which violation would have the effect of preventing PQC
or MCP from performing its obligations hereunder or preventing PQC, MCP or any
of their affiliates from consummating the transactions contemplated herein and
in the agreements and instruments to be executed and delivered by PQC or MCP and
its affiliates in connection therewith.
3.06 Consents; Filings. No registration or filing with, or consent,
-----------------
approval, permit, authorization or action by, any third party (including,
without limitation, any federal, state, local, foreign or other governmental
agency, instrumentality, commission, authority, board or body or other person or
entity) is required to be obtained by PQC or MCP in connection with the
execution and delivery by PQC or MCP of this Agreement or the other agreements,
docu ments and instruments to be executed and delivered by PQC or MCP pursuant
hereto or the consummation by PQC or MCP of the transactions contemplated hereby
or thereby.
3.07 Capital Stock. All shares of capital stock of PQC issued to the
-------------
Seller in connection with the transactions contemplated by this Agreement shall
be duly authorized, validly issued, fully paid and nonassessable and not subject
to any pre-emptive rights created by statute, PQC's Certificate of Incorporation
or By-Laws, or any agreement to which PQC is a party or by which PQC is bound.
3.08 Brokers. Neither PQC nor MCP is obligated to pay, nor has PQC or MCP
-------
retained any broker or finder or other person who is entitled to, any broker's
or finder's fee or any other commission or financial advisory fee based on any
agreement or understanding made by PQC or MCP in connection with the
transactions contemplated hereby.
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3.09 Fraud and Abuse. Neither MCP nor PQC has engaged in any activities
---------------
which are prohibited under U.S.C. (S)1320a-7b, or the regulations promulgated
thereunder pursuant to such statutes, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct, including
but not limited to the following: (i) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in any
application for any benefit or payment; (ii) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment; (iii) failure to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit of payment; and (iv)
knowingly and willfully soliciting or receiving any remuneration (including any
kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash
or in kind or offering to pay or receive such remuneration (a) in return for
referring an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (b) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or ordering any
good, facility or item for which payment may be made in whole or in part by
Medicare or Medicaid.
ARTICLE IV
CERTAIN COVENANTS OF THE PARTIES
4.01 Purchase Price Allocation. The allocation of the Purchase Price,
-------------------------
which shall be utilized by the parties hereto in connection with the preparation
of their respective federal and state tax returns and the return required by
Section 1060 of the Code, shall be as set forth on Schedule 4.01, attached
-------------
hereto. Such allocation shall be subject to adjustment to the extent that the
Purchase Price is adjusted pursuant to the terms of this Agreement.
4.02 Reasonable Efforts to Close. Each of Seller, PQC and MCP shall use
---------------------------
its respective reasonable efforts to proceed to the closing of the purchase and
sale of the Assets and to satisfy any of the conditions precedent to the other
Party's obligations set forth in Article VI or Article VII, as the case may be,
to the extent such conditions are within such Party's control. Seller shall use
the Seller's reasonable efforts (i) to keep available the services of the
professional and non-professional members of the Practice's staff, (ii) to
maintain all existing relationships with and the goodwill of all managed care
payors, patients and others having business or professional relations with the
Seller related to the Practice, and (iii) to obtain prior to the Closing Date
all consents necessary to consummate the transaction contemplated by this
agreement or any other agreement referred to herein.
4.03 Confidentiality. All information not previously disclosed to the
---------------
public or generally known to persons engaged in the respective businesses of the
Seller, PQC or MCP which shall have been furnished by PQC, MCP or the Seller to
the other Parties in connection with the transactions contemplated hereby or as
provided pursuant to this Agreement shall not be disclosed to any person other
than their respective employees, directors, attorneys, accountants or financial
advisors or other than as expressly contemplated herein. In the event that the
transactions contemplated by this Agreement shall not be consummated, all such
information which shall be in writing shall upon request be returned to the
Party furnishing
-14-
the same, including, to the extent reasonably practicable, all copies or
reproductions thereof which may have been prepared, and none of the Parties,
without the consent of PQC and the Seller, shall at any time thereafter disclose
to third parties, or use, directly or indirectly, for its own benefit, any such
information, written or oral, about the business of the other Parties hereto.
4.04 Public Announcements. The Parties agree that prior to the Closing
--------------------
Date, except as otherwise required by law, any and all public announcements or
other public communications concerning this Agreement and the purchase of the
Assets by MCP shall be subject to the approval of each of the Parties, which
approval shall not be unreasonably withheld.
4.05 Certain Transaction Costs. If the transactions contemplated by this
-------------------------
Agreement are completed, PQC agrees to reimburse the Seller for the Seller's
transaction costs, including fees of counsel and auditors, to the extent
provided in the memorandum, dated May 30, 1996, from Xxxxxxx Xxxxx to Xxxxxxxx
Xxxxxxxxx, M.D. and Xxxx Xxxxxx, M.D.
4.06 Continued Truth of Representations and Warranties. The Seller shall
-------------------------------------------------
not take any actions which would result in any of the representations or
warranties set forth in Article 2 hereof being untrue. Neither MCP nor PQC
shall take any actions which would result in any of the representations and
warranties set forth in Article 3 hereof being untrue.
4.07 Continuing Obligation to Inform. From time to time prior to the
-------------------------------
Closing, the Parties shall deliver or cause to be delivered to the other Parties
supplemental information concerning events subsequent to the date hereof which
would render any statement, representation or warranty in this Agreement or any
information contained in any Schedule inaccurate or incomplete in any material
respect at any time after the date hereof until the Closing Date.
ARTICLE V
PRE-CLOSING COVENANTS OF THE SELLER
From and after the date hereof and until the Closing Date or termination of
this Agreement in accordance with Article IX:
5.01 Conduct of Business. The Seller shall carry on the Practice
-------------------
diligently and substantially in the same manner as heretofore and shall not make
or institute any unusual or new methods of practice, management, accounting or
operation, except as expressly contemplated in this Agreement or any other
agreement referred to herein or as agreed to in writing by PQC. All of the
property of the Seller used in the Practice shall be used, operated, repaired
and maintained in a normal business manner consistent with past practice.
5.02 Absence of Material Changes. Without the prior written consent of
---------------------------
PQC (which consent shall not be unreasonably withheld), the Seller shall not:
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(a) Incur any obligations or liabilities (absolute or contingent)
related to the Practice greater than one thousand dollars ($1,000) in the
aggregate, except current liabilities incurred and obligations under contracts
entered into in the ordinary course of business;
(b) Mortgage, pledge, or subject to any lien, charge or any other
encumbrance any of the Assets;
(c) Sell, assign, or transfer any of the Assets;
(d) Cancel any debts or claims that are included in the Assets, except
in the ordinary course of business;
(e) Make, accrue or become liable for any bonus, profit sharing or
incentive payment, except for accruals under existing plans, if any, or increase
the rate of compensation payable or to become payable by the Seller to any
employee, other than increases in the ordinary course of business consistent
with past practice;
(f) Make any election or give any consent under the Code or the tax
statutes of any state or other jurisdiction or make any termination, revocation
or cancellation of any such election or any consent or compromise or settle any
claim for past or present tax due;
(g) Waive any rights of material value that are included in the
Assets;
(h) Modify, amend, alter or terminate any executory contracts of a
material value or which are material in amount and are included in the Assets;
(i) Take or permit any act or omission constituting a breach or
default under any contract, indenture or agreement included in the Assets by
which the Seller or the Seller's properties are bound;
(j) Fail to use the Seller's reasonable efforts to (i) preserve the
possession and control of the Assets and the Practice, (ii) keep in faithful
service the present employees of the Practice, (iii) preserve the goodwill of
the Practice's patients, suppliers, agents, brokers and others having business
relations with the Practice, and (iv) keep and preserve the Practice's business
existing on the date hereof until after the Closing Date;
(k) Fail to operate the Practice's business and maintain the
Practice's books, accounts and records in the customary manner and in the
ordinary or regular course of business and maintain in good repair the
Practice's business premises, fixtures, machinery, furniture and equipment;
(l) Enter into any leases, contracts, agreements or understandings
related to the Practice which is required to be performed in whole or in
material part after the Closing Date;
(m) Engage any new Practice employee;
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(n) Materially alter the terms, status or funding condition of any
Employee Plan; or
(o) Commit or agree to do any of the foregoing in the future.
5.03 Taxes. The Seller will, on a timely basis, file all tax returns for
-----
and pay any and all taxes which shall become due or shall have accrued (a) on
account of the operation of the Practice or the ownership of the Assets on or
prior to the Closing Date or (b) on account of the sale of the Assets (including
a pro-rata portion of all personal property and excise taxes payable with
respect to the Assets by the Seller).
5.04 Financial Information. Between the execution of this Agreement and
---------------------
the Closing Date, the Seller shall provide PQC and MCP with such access as PQC
and MCP shall reasonably request to the financial and accounting records of the
Seller related to the Practice and shall provide PQC with copies of all
financial statements or other financial data prepared by the Seller.
5.05 Compliance with Laws. The Seller will comply in all material
--------------------
respects with all laws and regulations which are applicable to the Seller and
the Practice, the Seller's ownership of the Assets or to the conduct of the
Practice and will perform and comply in all material respects with all
contracts, commitments and obligations related to the Practice by which the
Seller is bound.
5.06 Exclusive Dealing. The Seller will not, directly or indirectly,
-----------------
through any agent or otherwise, (a) solicit, initiate or encourage submission of
proposals or offers from any person relating to any affiliation transaction
between the Seller and any healthcare company or practice management company or
any acquisition or purchase of all or a material portion of the Assets, or any
equity investment, merger, consolidation or business combination with the
Practice, or (b) participate in any discussions or negotiations regarding, or
furnish to any other person, any non-public information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of the
foregoing except to inform such person of Seller's obligations hereunder.
5.07 Access to Management, Properties and Records. From the date of this
--------------------------------------------
Agreement until the Closing Date, the Seller shall afford the officers,
attorneys, accountants and other authorized representatives of PQC free and full
access upon reasonable notice and during normal business hours to all management
personnel, offices, properties, books and records of the Seller related to the
Practice, and all properties under the management of the Seller related to the
Practice and all records relating thereto, so that PQC may have full opportunity
to make such investigation as it shall desire to make of the management,
business, properties and affairs of the Seller related to the Practice and the
properties under the management of Seller related to the Practice, and PQC and
MCP shall be permitted to make abstracts from, or copies of, all such books and
records. The Seller shall furnish to PQC and MCP such financial and operating
data and other information as to the Assets and the Practice as PQC and MCP
shall reasonably request.
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5.08 Severance Obligations. Seller shall satisfy all severance obligations
---------------------
related to each person employed by Seller prior to or at the Closing Date who is
to become employed by MCP after the Closing Date.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PQC AND MCP
The obligations of PQC and MCP under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of PQC:
6.01 Delivery of Documents. Seller shall have delivered to PQC and MCP
---------------------
all items described in Section 1.03 above.
6.02 Continued Truth of Representations and Warranties of Seller;
------------------------------------------------------------
Compliance with Covenants and Obligations. The representations and warranties
-----------------------------------------
of Seller shall be true on and as of the Closing Date as though such
representations and warranties were made on and as of such date, except for any
changes permitted by the terms hereof or consented to in writing by PQC. Seller
shall have performed and complied with all terms, conditions, covenants,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by the Seller prior to or at the Closing Date.
6.03 No Proceedings or Litigation. No action by any governmental
----------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to result in a Material Adverse Effect.
There shall not be any statute, rule or regulation that makes the purchase and
sale of the Assets contemplated hereby illegal or otherwise prohibited.
6.04 Material Changes. Between the date of the latest Financial
----------------
Statements and the Closing, there shall not have been any material adverse
change in the business, prospects, operations or conditions of the Practice or
in the Assets.
6.05 Stockholder Agreements. The Seller shall have entered into and be in
----------------------
compliance with the Stockholder Agreement between the Seller and PQC.
6.06 Other Transactions. Each of the medical practices listed on Schedule
------------------ --------
6.06 shall have entered into or delivered (i) an agreement among PQC, MCP and
----
such practice to merge such practice into MCP or for MCP or PQC to purchase
substantially all of the assets of such practice, and (ii) the Employment
Agreement.
6.07 Financing. PQC or its affiliate shall have completed a private
--------
placement of equity securities, on terms satisfactory to PQC in its sole
determination, with net proceeds to PQC or such affiliate in an amount equal to
at least ten million dollars ($10,000,000).
-18-
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of the Seller under this Agreement are subject to the
fulfillment, at the Closing Date, of the following conditions precedent, each of
which may be waived in writing in the sole discretion of the Seller:
7.01 Delivery of Documents. PQC and MCP shall have delivered to the
---------------------
Seller all items described in Section 1.04 above.
7.02 Continued Truth of Representations and Warranties of PQC and
------------------------------------------------------------
MCP; Compliance with Covenants and Obligations. The representations and
----------------------------------------------
warranties of MCP and PQC shall be true on and as of the Closing Date as though
such representations and warranties were made on and as of such date, except for
any changes permitted by the terms hereof or consented to in writing by Seller.
MCP and PQC shall have performed and complied with all terms, conditions,
covenants, obligations, agreements and restrictions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date.
7.03 No Proceedings or Litigation. No action by any governmental
----------------------------
authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby and
which could reasonably be expected to damage MCP or PQC materially if the
transactions contemplated hereby are consummated, including without limitation
any material adverse effect on the right or ability of MCP to own, operate,
possess or transfer the Assets after the Closing. There shall not be any
statute, rule or regulation that makes the purchase and sale of the Assets
contemplated hereby illegal or otherwise prohibited.
7.04 Offers of Employment. MCP shall have offered employment to the
--------------------
persons listed on Schedule 7.04.
-------------
7.05 By-Laws of MCP. MCP shall have adopted Articles of Organization
--------------
and By-laws that conform to the terms thereof specified in the Employment
Agreement.
7.06 Financing. PQC or one of its affiliates shall have completed a
---------
private placement of equity securities in an amount equal to at least ten
million dollars ($10,000,000).
ARTICLE VIII
SURVIVAL AND INDEMNIFICATION
8.01 Indemnification.
---------------
(a) Seller shall indemnify, defend, and hold harmless each of MCP and
PQC and their respective subsidiaries and affiliates and their respective
directors, officers, employees and agents or the successor of any of the
forgoing (collectively, "PQC Indemnified Persons"), and reimburse PQC
Indemnified Persons for, from and against all payments,
-19-
demands, claims, suits, judgments, liabilities, losses, costs, damages and
expenses, including, without limitation, interest, penalties and reasonable
attorneys' fees, disbursements and expenses, ("Losses") imposed on or incurred
by PQC Indemnified Persons, which relate to or arise out of (i) breach of any
representation and warranty of, or covenant or agreements to be performed by,
Seller contained in this Agreement, the Affiliation Agreement or the
Stockholders' Agreement, (ii) any of the liabilities or obligations retained by
Seller pursuant to Section 1.02, (iii) the failure of Seller or of MCP to comply
with any bulk sales laws applicable to the transactions contemplated hereby,
(iv) any Tax liabilities of Seller; and (v) the conduct of the Practice prior to
the Closing Date. Notwithstanding the foregoing or any other term or condition
contained herein or in any other agreement or instrument referred to herein, the
indemnification obligations of Seller under this Section 8.01(a) and under the
Affiliation Agreement shall be limited, in the aggregate, to the Purchase Price
and to the consideration under the Affiliation Agreement between Seller and PQC
or its affiliates.
(b) MCP and PQC shall indemnify and hold harmless Seller and its
agents (collectively, "Seller Indemnified Persons" and together with the PQC
Indemnified Persons, the "Indemnified Persons"), and reimburse such Indemnified
Persons for, from, and against all Losses imposed on or incurred, by such
Indemnified Persons which relate to or arise out of (i) breach of any
representation or warranty of, or covenant to be performed by, PQC or MCP, in
each case contained in this Agreement or the Affiliation Agreement and (ii) the
Assumed Liabilities.
(c) An Indemnified Party shall give prompt written notice to an
indemnifying party (the "Indemnifying Party") of any payments, demands, claims,
suits, judgments, liabilities, losses, costs, damages or expenses (a "Claim") in
respect of which such Indemnifying Party has a duty to provide indemnity to such
Indemnified Party under this Section 8.01, except that any delay or failure so
to notify the Indemnifying Party only shall relieve the Indemnifying Party of
its obligations hereunder to the extent, if at all, that it is prejudiced by
reason of such delay or failure.
(d) If a Claim is brought or asserted by a third party (a "Third-Party
Claim"), the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all expenses. The Indemnified Party shall have the right to employ
separate counsel in such Third-Party Claim and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnified Party. In the event that the Indemnifying Party, within twenty
(20) days after written notice of any Third-Party Claim, fails to assume the
defense thereof, or in the event the Indemnifying Party fails to demonstrate, to
the reasonable satisfaction of the Indemnified Party, that it has sufficient
assets to meet its indemnification obligations hereunder, the Indemnified Party
shall have the right to undertake the defense, compromise or settlement of such
Third-Party Claim for the account of the Indemnifying Party. Anything in this
Section 8.01 to the contrary notwithstanding, the Indemnifying Party shall not,
without the Indemnified Party's prior written consent, settle or compromise any
Third-Party Claim or consent to the entry of any judgment with respect to any
Third-Party Claim which would have any adverse effect on the Indemnified Party,
except as provided immediately below. The Indemnifying Party may, without the
Indemnified Party's prior written consent, settle or compromise any such Third-
Party Claim or consent to entry of any judgment with respect to
-20-
any Third-Party Claim which requires solely money damages paid by the
Indemnifying Party and which includes as an unconditional term thereof the
release by the claimant or the plaintiff of the Indemnified Party from all
liability in respect of such Third-Party Claim.
(e) With respect to any Claim other than a Third Party Claim, the
Indemnifying Party shall have thirty (30) days from receipt of written notice
from the Indemnified Party of such Claim within which to respond thereto. If
the Indemnifying Party does not respond within such thirty (30)-day period, the
Indemnifying Party shall be deemed to have accepted responsibility to make
payment and shall have no further right to contest the validity of such Claim.
If the Indemnifying Party notifies the Indemnified Party within such thirty
(30)-day period that it rejects such Claim in whole or in part, the Indemnified
Party shall be free to pursue such remedies as may be available to the
Indemnified Party under applicable law.
8.02 Survival of Representations; Claims for Indemnification. All
-------------------------------------------------------
representations and warranties made by the Parties herein or in any instrument
or document furnished in connection herewith shall survive the Closing and any
investigation at any time made by or on behalf of the parties hereto. All such
representations and warranties and the Seller's obligations pursuant to Sections
8.01(a)(i), (ii) and (iii) and PQC's and MCP's obligations pursuant to Section
8.01(b) shall expire on the third anniversary of the Closing Date, except for
claims, if any, asserted in writing prior to such third anniversary, which shall
survive until finally resolved and satisfied in full. The obligation of the
Seller pursuant to Section 8.01(a)(iv) and (v) shall survive until six (6)
months after the expiration of the applicable statute of limitations with
respect thereto. All claims and actions for indemnity pursuant to this Section
8 shall be asserted or maintained in writing by a Party hereto on or prior to
the expiration of such periods.
8.03 Confidentiality. The Parties hereto agree to use reasonable
---------------
efforts to preserve in full the confidentiality of all confidential business
records and the attorney-client and work-product privileges. In connection
therewith, each Party hereto agrees that:
(a) it will use all reasonable efforts, in any action, suit or
proceeding in which it has assumed or participated in the defense, to avoid
production of confidential business records; and
(b) all communications between any Party hereto and counsel
responsible for, or participating in, the defense of any action, suit or
proceeding shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work-product privilege.
8.04 Remedies Cumulative. Except as otherwise provided herein, the
-------------------
remedies provided herein shall be cumulative and shall not preclude the
assertion by any Party hereto of any other rights or the seeking of any other
remedies against any other Party hereto.
8.05 Set-off and Recoupment. Any amount or amounts due from any
----------------------
Indemnifying Party to PQC under this Section 8 may be paid to PQC, at PQC's
option, by set-off or recoupment against any amounts due to the Indemnifying
Party pursuant to this Agreement or pursuant to any agreement between the
Indemnifying Party and PQC or any of its affiliates.
-21-
Any such set-off will be without prejudice to PQC's right to pursue any other
remedies at law or in equity available to it.
ARTICLE IX
TERMINATION
9.01 Optional Termination. This Agreement may be terminated and the
--------------------
transaction contemplated herein abandoned at any time prior to the Closing as
follows:
(a) by the mutual consent of the Seller, MCP and PQC;
(b) by the Seller, upon a material breach of any representation,
warranty, covenant or agreement on the part of PQC or MCP set forth in this
Agreement, or if any representation or warranty of PQC and MCP has become
materially untrue, in either case such that the conditions set forth in Article
VII would be incapable of being satisfied by August 31, 1996; provided, that in
any case, a willful breach will be deemed to cause such conditions to be
incapable of being satisfied for purposes of this paragraph (b);
(c) by PQC upon a material breach of any representation, warranty,
covenant or agreement on the part of the Seller set forth in this Agreement, or
if any representation or warranty of the Seller has become materially untrue, in
either case such that the conditions set forth in Article VI would be incapable
of being satisfied by August 31, 1996; provided, that in any case, a willful
breach will be deemed to cause such conditions to be incapable of being
satisfied for purposes of this paragraph (c). Any breach on the part of the
Seller of the representations and warranties contained in Article II or the
covenants contained in Articles IV and V, which permits termination of this
Agreement shall permit PQC and/or MCP to immediately terminate the Affiliation
Agreement and Employment Agreement to be entered into between MCP and/or PQC and
Seller; or
(d) by either party if the Closing shall not have occurred by August
31, 1996, or such other date agreed to by the Parties.
9.02 Effect of Termination. In the event this Agreement is terminated
---------------------
as provided above, (a) each of PQC, MCP and Seller shall, upon the other Party's
request, deliver to the other Parties all documents previously delivered (and
copies thereof in its possession) concerning one another and the transactions
contemplated hereby, and (b) none of the Parties nor any of their respective
stockholders, directors, officers or agents shall have any liability to the
other Parties, except for any deliberate breach or deliberate omission resulting
in a material breach of any of the provisions of this Agreement. In such case,
the breaching Party shall be liable only for the expenses and costs of the non-
breaching Party, and in no event shall either Party be liable for anticipated
profits or consequential damages. After termination each Party shall keep
confidential all information provided by the others pursuant to this Agreement
which is not in the public domain, shall exercise the same degree of care in
handling such information as it would exercise with similar information of its
own, and shall return any such information upon the other Party's request.
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ARTICLE X
GENERAL PROVISIONS
10.01 Amendment and Waiver. No amendment of any provision of this
--------------------
Agreement shall in any event be effective unless the same shall be in writing
and signed by the Parties hereto. Any failure of any Party to comply with any
obligation, agreement or condition hereunder may only be waived in writing by
PQC if such failure is by Seller and by Seller if such failure is by PQC or MCP,
but such waiver shall not operate as a waiver of, or estoppel with respect to,
any subsequent or other failure. No failure by any Party to take any action
against any breach of this Agreement or default by the other Party shall
constitute a waiver of such Party's right to enforce any provision hereof or to
take any such action.
10.02 Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be sent by personal delivery or
registered or certified mail, postage prepaid, or by telecopier as follows:
(a) if to Seller:
------------------------
with a copy to:
Xxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxxx Xxxxxxxx
(b) if to PQC or MCP:
Physicians Quality Care, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Any Party may change its address for receiving notice by written notice given to
the others named above. All notices shall be effective upon the earlier of
actual delivery or when deposited in the mail addressed as set forth above.
10.03 Counterparts. This Agreement may be executed simultaneously in
------------
two (2) or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same Agreement.
10.04 Parties in Interest. This Agreement shall bind and inure to
-------------------
the benefit of the Parties named herein and their respective heirs, successors
and assigns. This Agreement shall not be assignable by any Party without the
prior written consent of the other Parties.
10.05 Further Assurances. From time to time, at the request of any
------------------
Party hereto and without further consideration, the other Parties will execute
and deliver to such requesting
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Party such documents and take such other action (but without incurring any
material financial obligation) as such requesting Party may reasonably request
in order to consummate more effectively the transactions contemplated hereby,
including, without limitation, vesting in MCP good, valid and marketable title
to the Assets.
10.06 Entire Transaction. This Agreement and the other agreements,
------------------
documents and instruments referred to herein contain the entire understanding
among the Parties with respect to the transactions contemplated hereby and
supersede all other agreements and understandings among the Parties.
10.07 Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal substantive laws of the Commonwealth
of Massachusetts, and the Parties hereby consent to the sole jurisdiction of
Massachusetts courts over all matters relating to this Agreement.
10.08 Headings. The section and other headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.09 Expenses. Except as otherwise expressly provided herein
--------
(including Section 4.05), each Party to this Agreement shall pay its own costs
and expenses in connection with the transactions contemplated hereby. Seller
shall be responsible for any documentary and transfer taxes and any sales, use
or other taxes imposed by reason of the transfers of Assets provided hereunder
and any deficiency, interest or penalty asserted with respect thereto.
10.10 Third Parties. Except as specifically set forth or referred to
-------------
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or entity other than the Parties hereto and
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
10.11 Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
[Rest of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be duly executed all as of the day and year first written above.
--------------------------
PHYSICIANS QUALITY CARE, INC.
By:
-------------------------
Name:
Title:
MEDICAL CARE PARTNERS, P.C.
By:
-------------------------
Name:
Title:
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