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ASSET PURCHASE AGREEMENT
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PROMEDCO MANAGEMENT COMPANY
PHB MANAGEMENT COMPANY, INC.
AND
HEALTHAMERICA PENNSYLVANIA, INC.
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August 12, 1997
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Table of Contents
ARTICLE 1 DEFINITIONS..........................................................1
Affiliate.............................................................1
Alliance4Health NetSource Agreement...................................1
Assets................................................................1
Assumed Balance Sheet Liabilities.....................................3
Beacon................................................................3
Beacon Professionals..................................................3
Binding Allocation....................................................3
Clinic Expense........................................................3
Consideration.........................................................3
COBRA.................................................................3
Clinic Facility.......................................................3
Closing...............................................................3
Closing Date..........................................................3
Code..................................................................3
Contracts.............................................................3
Deferred Consideration................................................3
Definitive Closing Statements.........................................4
Excluded Assets.......................................................4
Excluded Liabilities..................................................4
Exhibit Volume........................................................4
Final Closing Statement...............................................4
GAAP..................................................................4
HealthAmerica.........................................................4
HealthAmerica Financial Statements....................................4
Inducement Agreement..................................................4
Initial Portion of Purchase Consideration.............................4
Inventory.............................................................4
Interim Service Agreement.............................................4
IRS...................................................................4
Medical Professional..................................................4
Net Clinic Revenues...................................................4
Pension Plan..........................................................4
Person................................................................4
ProMedCo Management Company...........................................5
ProMedCo-Harrisburg...................................................5
Second Portion of the Purchase Consideration..........................5
Service Agreement.....................................................5
Undertaking...........................................................5
0431310.06
08002.0-017 08/12/97(4)
ARTICLE 2 SALE AND TRANSFER OF ASSETS: CONSIDERATION; CLOSING.................5
2.1 Sale and Transfer of Assets......................................5
2.2 Assets Free and Clear; Undertaking...............................5
2.3 Excluded Assets..................................................6
2.4 Consideration for Sale and Transfer..............................6
2.5 Excluded Liabilities.............................................7
2.6 Allocation of Consideration......................................8
2.7 Closing..........................................................8
2.8 Further Acts and Assurances......................................8
2.9 Other Transactions...............................................9
2.10 Purchase Consideration Adjustments.............................10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HEALTHAMERICA....................11
3.1 Organization, Corporate Power and Qualification................11
3.2 Authority; Binding Effect......................................11
3.3 Financial Statements...........................................11
3.4 Absence of Undisclosed Liabilities.............................12
3.5 Absence of Certain Recent Changes..............................12
3.6 Title to Assets................................................14
3.7 Contracts......................................................14
3.8 Burdensome Agreements..........................................16
3.9 Absence of Related Party Transactions...........................16
3.10 Defaults.......................................................17
3.11 Inventory.....................................................17
3.12 Equipment.....................................................17
3.13 Receivables...................................................17
3.14 Permits and Licenses..........................................18
3.15 Litigation, etc...............................................18
3.16 Court Orders, Decrees and Laws................................18
3.17 Taxes.........................................................19
3.18 Immigration Act...............................................19
3.19 Program Compliance............................................19
3.20 Environmental Matters.........................................20
3.21 ERISA.........................................................21
3.22 Pension, etc..................................................21
3.23 Employee Matters..............................................22
3.24 Insurance and Bonds...........................................22
3.25 Labor Matters.................................................22
3.26 Third Party Payor Compliance..................................23
3.27 Facility Compliance...........................................23
3.28 Improper Payments.............................................23
3.29 Books of Account; Reports.....................................23
3.30 No Finders or Brokers.........................................24
3.31 Consents and Approvals of Governmental Authorities............24
3.32 Consents and Approvals of Non-Governmental Authorities........24
3.33 No Adverse Effect.............................................24
3.34 Disclosure....................................................24
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PROMEDCO AND
PROMEDCO-HARRISBURG..........................................................24
4.1 Organization and Standing of ProMedCo and ProMedCo-Harrisburg..25
4.2 Authority; Binding Effect......................................25
4.3 No Finders or Brokers..........................................25
4.4 Consents and Approvals of Governmental Authorities.............25
ARTICLE 5 COVENANTS OF PROMEDCO AND PROMEDCO-HARRISBURG......................25
5.1 Best Efforts to Secure Consents................................25
5.2 Corporate Action...............................................26
5.3 Non-Disclosure.................................................26
5.4 Special Accounts...............................................26
ARTICLE 6 COVENANTS OF HEALTHAMERICA.........................................26
6.1 Access and Information.........................................26
6.2 Conduct of Business............................................27
6.3 Termination of Alliance4Health NetSource Agreement.............27
6.4 Compliance with Agreement......................................28
6.5 Necessary Consents.............................................28
6.6 Unusual Events.................................................28
6.7 Confidential Information.......................................29
6.8 Interim Financial Statements...................................29
6.9 Departmental Violations........................................29
6.10 Insurance Ratings.............................................29
6.11 Maintain Insurance Coverage...................................29
6.12 Exclusive Dealings............................................30
6.13 Payments Due Physicians.......................................30
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HEALTHAMERICA
7.1 Representations and Warranties True............................30
7.2 Opinion of Counsel.............................................31
7.3 Authority......................................................31
7.4 Approvals......................................................31
7.5 No Obstructive Proceeding......................................31
7.6 Delivery of Certain Certified Documents........................31
7.7 Proceedings and Documents Satisfactory.........................31
7.8 No Agency Proceedings..........................................32
7.9 ...............................................................32
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PROMEDCO AND
PROMEDCO-HARRISBURG.................................................32
8.1 Representations and Warranties True............................32
8.2 No Obstructive Proceeding......................................32
8.3 Opinion of HealthAmerica Counsel...............................33
8.4 Consents and Approvals.........................................33
8.5 Governmental Approvals.........................................33
8.6 Proceedings and Documents Satisfactory.........................33
8.7 Delivery of Certain Documents..................................33
8.8 Provider Agreement.............................................33
8.9 Financing......................................................34
ARTICLE 9 TERMINATION........................................................34
9.1 Optional Termination...........................................34
9.2 Notice of Abandonment..........................................35
9.3 Mandatory Termination..........................................35
9.4 Termination....................................................35
ARTICLE 10 INDEMNIFICATION...................................................35
10.1 Grant of Indemnity by HealthAmerica...........................35
10.2 Grant of Indemnity by ProMedCo and ProMedCo-Harrisburg........36
10.3 Representation, Cooperation and Settlement....................37
10.4 Remedies Cumulative...........................................38
ARTICLE II MISCELLANEOUS.....................................................38
11.1 Expenses......................................................38
11.2 Employee Transition...........................................38
11.3 Occasional Sale...............................................40
11.4 Non-Assignable Property Interests.............................40
11.5 Cooperation by ProMedCo and ProMedCo-Harrisburg...............40
11.6 Cooperation by HealthAmerica..................................40
11.7 Notices.......................................................41
11.8 Entire Agreement..............................................41
11.9 Alternative Dispute Resolution................................42
11.10 Governing Law................................................42
11.11 Time.........................................................42
11.12 Section Headings.............................................42
11.13 Waiver.......................................................42
11.14 Nature and Survival of Representations.......................42
11.15 Exhibits.....................................................43
11.16 Assignment...................................................43
11.17 Binding on Successors and Assigns............................43
11.18 Parties in Interest..........................................43
11.19 Amendments...................................................43
11.20 Drafting Party...............................................43
11.21 Counterparts.................................................43
11.22 Reproduction of Documents....................................43
11.23 Access to Records After Closing..............................44
11.24 Disclosure of Certain Information............................44
11.25 Press Releases...............................................44
11.26 Waiver of Conflict...........................................44
11.27 ProMedCo Guaranty............................................45
APPENDIX 2.1 TENTATIVE FORM OF XXXX OF SALE
APPENDIX 2.2 TENTATIVE FORM OF UNDERTAKING
APPENDIX 2.3 EXCLUDED ASSETS
APPENDIX 2.5 LIST OF HEALTHAMERICA PHYSICIAN ACQUISITION AGREEMENTS
APPENDIX 2.9A FORM OF BEACON INDUCEMENT AGREEMENT
APPENDIX 2.9B FORM OF INTERIM SERVICE AGREEMENT
APPENDIX 2.9C FORM OF SERVICE AGREEMENT APPENDIX 2.9D FORM OF PHYSICIAN
EMPLOYMENT AGREEMENT APPENDIX 2.9E FORM OF NON-PHYSICIAN EMPLOYMENT AGREEMENT
APPENDIX 2.9F FORM OF SPLIT-DOLLAR AGREEMENT APPENDIX 2.9G FORM OF COLLATERAL
ASSIGNMENT APPENDIX 2.9H TERM SHEET FOR PROVIDER AGREEMENT APPENDIX 3.7
ARRANGEMENTS WITH ALLIANCE 4 HEALTH
0431310.06
080020-017 08/12/97(9)
ASSET PURCHASE AGREEMENT
Asset Purchase Agreement dated as of August 12, 1997, among
HealthAmerica Pennsylvania, Inc., a Pennsylvania corporation ("HealthAmerica"),
ProMedCo Management Company, a Delaware corporation ("ProMedCo") and PHB
Management Company, Inc., a Pennsylvania corporation ("ProMedCo-Harrisburg"), a
wholly owned subsidiary of ProMedCo.
RECITAL:
HealthAmerica operates a multi-specialty medical practice in
Harrisburg, Pennsylvania and owns the Assets. ProMedCo, through its
subsidiaries, including ProMedCo-Harrisburg is engaged in the business of
providing medical practice facilities, nonmedical personnel and medical practice
management and administrative services.
HealthAmerica desires to sell the Assets to ProMedCo-Harrisburg in
exchange for the consideration described herein.
The parties hereby agree as follows:
ARTICLE 1 DEFINITIONS
For the purposes of this Agreement, the following definitions shall
apply:
"Affiliate" means with respect to any Party, any entity which controls,
is controlled by, or is under common control with such party all as
more fully set forth in the rules and regulations of the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
"Alliance4Health NetSource Agreement" means the agreement effective
October 1, 1996 between HealthAmerica and Aliance4Health NetSource,
Inc.
"Assets" means the following assets pertaining to the Clinic Facility:
(a) All furnishings, fixtures and equipment owned by
HealthAmerica relating to the Clinic Facility or the
business carried on at the Clinic Facility;
(b) All of HealthAmerica's rights, benefits and interests
under all contracts and agreements related to the
operation of the business of HealthAmerica conducted
at the Clinic Facility which are to be
assumed by ProMedCo-Harrisburg (collectively, the
"Contracts"), including without limitation the
Alliance4Health NetSource Agreement for the period
after July 1, 1997, certain contracts and leases
described in Exhibit 3.7A-H hereof and including, to
the extent allowable by law, all payor contracts
under which HealthAmerica (with respect to the
business carried on at the Clinic Facility) or any of
the Medical Professionals are currently paid for
services;
(c) All books, records, documents and other writings used
in connection with the operation of HealthAmerica's
business at the Clinic Facility, including all
patient records, charts and files;
(d) All accounts receivable of HealthAmerica relating to
the business carried on at the Clinic Facility and,
subject to applicable laws and regulations, all
patient accounts receivable records of HealthAmerica
respecting the business carried on at the Clinic
Facility;
(e) All cash and prepaid expenses of HealthAmerica
relating to the business carried on at the Clinic
Facility;
(f) All current and useable inventory of supplies, drugs,
janitorial and office supplies and other disposables
and consumables on hand at or under order by
HealthAmerica on the Closing Date relating to the
business carried on at the Clinic Facility;
(g) All permits, licenses, certificates and governmental
authorizations, approvals, license applications or
related certifications obtained in connection with
the operation of the Clinic Facility identified in
Exhibit 3.14, but only to the extent that transfer is
permitted by law;
(h) All data processing programs, software programs,
computer printouts, data bases and hardware and
related items used in the conduct of the business of
HealthAmerica at the Clinic Facility, including
accounting, invoices, auditing, and data processing
bases and programs;
(i) All intangible assets, trade names, service marks and
service names, and applications therefor, and all
intellectual property used in connection with the
operation of HealthAmerica's business at the Clinic
Facility;
(j) All rights, claims and causes of action other than
malpractice counterclaims or cross claims held by
HealthAmerica which have accrued as a result of the
operation of the Clinic Facility;
(k) All goodwill, customer lists, clinical and
administrative policy and procedure manuals, trade
secrets, marketing and promotional materials
(including audiotapes, videotapes and printed
materials) and all other property rights required for
or incident to the marketing of the products and
services of HealthAmerica's business at the Clinic
Facility, and all books and record relating thereto;
and
(l) All other assets, personal or mixed, tangible or
intangible, used in connection with the operation of
HealthAmerica's business at the Clinic Facility other
than the Excluded Assets.
"Assumed Balance Sheet Liabilities" is defined in ss. 2.2.
"Beacon" means Beacon Medical Group, P.C., a Pennsylvania professional
corporation.
"Beacon Professionals" means the persons who are signatories to the Inducement
Agreement.
"Binding Allocation" is defined in ss. 2.6.
"Clinic Expense" shall have the meaning ascribed thereto in the Service
Agreement.
"Consideration" means $2,014,995.
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985, 26 U.S.C. ss. 162 et seq.
"Clinic Facility" means the clinic facilities located at (i) 0000 Xxxxxxxxxxx
Xxxx, Xxxxxxxxxx, XX 00000, (ii) 000 Xxxxxxxx Xxxx, Xxxxxxx, XX 00000, (iii) 000
00xx Xxxxxx, Xxxxxxx, XX 00000, and (iv) 0 Xxxxxx Xxxx Xxxx Xxxx, Xxxxxxxxxxxxx,
XX 00000.
"Closing" and "Closing Date" are defined in ss. 2.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" is defined in the definition of "Assets" above.
"CPA Firm" is defined in ss. 2.10(a).
"Deferred Consideration" is defined in ss. ss. 2.4(d).
"Definitive Closing Statements" is defined in ss. 2.10.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Excluded Assets" is defined in ss. 2.3.
"Excluded Liabilities" is defined in ss. 2.5.
"Exhibit Volume" means the volume of Exhibits referred to in this Agreement
prepared and delivered by HealthAmerica.
"Final Closing Statement" is defined in ss. 2.10.
"GAAP" means generally accepted accounting principles.
"HealthAmerica" means HealthAmerica Pennsylvania, Inc., a Pennsylvania
corporation.
"HealthAmerica Financial Statements" is defined in ss. 3.3.
"Inducement Agreement" is defined in ss. 2.9(a).
"Initial Portion of Purchase Consideration" is defined in ss. 2.4.
"Inventory" means the inventory of HealthAmerica.
"Interim Service Agreement" means the Services Agreement effective April 1, 1997
between ProMedCo-Harrisburg and HealthAmerica.
"IRS" means the Internal Revenue Service.
"Medical Professional" shall have the meaning ascribed thereto in the Service
Agreement.
"Net Clinic Revenues" is defined in the Service Agreement. In the context of
this Agreement, Net Clinic Revenues shall be computed as if HealthAmerica were
Beacon.
"Pension Plan" and "Pension Plans" means any "employee pension benefit plan"
listed in Exhibit 3.2 1.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust or unincorporated organization.
ProMedCo Management Company" means ProMedCo Management Company, a Delaware
corporation which is the sole shareholder of ProMedCo-Harrisburg.
"ProMedCo-Harrisburg" means PHB Management Company, Inc., a Pennsylvania
corporation.
"Second Portion of the Purchase Consideration" is defined in ss. 2.4(c).
"Service Agreement" means the Services Agreement effective as of the Closing
Date between Pro-Medico-Harrisburg and Beacon.
"Undertaking" is defined in ss. 2.2.
ARTICLE 2 SALE AND TRANSFER OF ASSETS: CONSIDERATION; CLOSING
2.1 Sale and Transfer of Assets. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, HealthAmerica shall sell,
transfer, assign, convey and deliver good and marketable title to the Assets to
ProMedCo-Harrisburg, and ProMedCo-Harrisburg shall purchase the Assets from
HealthAmerica, free and clear of any encumbrances other than those expressly
assumed hereunder, for the consideration set forth in this Agreement.
HealthAmerica shall retain, and ProMedCo-Harrisburg shall not purchase the
Excluded Assets. The sale, transfer, assignment and conveyance of the Assets
shall be made by the execution and delivery by Health America of a xxxx of sale
substantially in the tentative form attached hereto as Appendix 2.1 (the "Xxxx
of Sale") and such other instruments of assignment, transfer and conveyance as
ProMedCo-Harrisburg shall request.
2.2 Assets Free and Clear; Undertaking. The Assets shall be sold free
and clear of all liabilities, liens and encumbrances except those liabilities of
HealthAmerica expressly assumed or agreed to be discharged by
ProMedCo-Harrisburg in the Undertaking substantially in the tentative form
attached hereto as Appendix 2.2 (the "Undertaking"), which shall include the
following liabilities and obligations of HealthAmerica as the same exist on the
Closing Date:
(a) HealthAmerica's liability after the Closing under the equipment leases
described in Exhibit 3.7;
(b) HealthAmerica's liability after the Closing under the contracts (other
than equipment leases) described in Exhibits 3.7A-H, including those
liabilities described in Appendix 3.7;
(c) expenses relating to accrued sick leave and accrued CME time, whether
or not reflected in the HealthAmerica Financial Statements; and
(d) HealthAmerica's liability for accounts payable up to a maximum of
$100,000, accrued vacation pay and other current liabilities due and
payable reflected in the HealthAmerica Financial Statements (but not
accrued payroll or any of payments referred to in ss. 6.13 hereof)
payable to or incurred in the ordinary course of business after the
date thereof (the "Assumed Balance Sheet Liabilities").
Except as provided in the Undertaking, ProMedCo-Harrisburg shall not assume any
other liability or obligation of HealthAmerica fixed or contingent, disclosed or
undisclosed, and HealthAmerica agrees to satisfy, when due, all of its
liabilities, indebtedness and obligations not assumed by ProMedCo-Harrisburg
pursuant to this Agreement and the Undertaking; provided, however, that
HealthAmerica shall be entitled to contest in good faith any of such
liabilities, indebtedness or obligations by appropriate legal proceedings.
ProMedCo-Harrisburg will pay, perform and discharge in due course in accordance
with their terms all obligations, indebtedness and liabilities of HealthAmerica
assumed by it pursuant to the Undertaking; provided, however, that
ProMedCo-Harrisburg shall be entitled to contest in good faith any of such
obligations, indebtedness or liabilities by appropriate legal proceedings.
2.3 Excluded Assets. HealthAmerica is not selling and
ProMedCo-Harrisburg is not purchasing or assuming obligations with respect to
the following (collectively the "Excluded Assets"):
(a) Any real estate owned by HealthAmerica;
(b) HealthAmerica's corporate and fiscal records and other records that
HealthAmerica is required by law to retain in its possession;
(c) HealthAmerica's pension, retirement or profit sharing plans and any
liabilities related thereto;
(d) Any assets and businesses owned by HealthAmerica not constituting part
of the Clinic Facility or the business operated thereat; and
(e) Any other assets described on Appendix 2.3.
2.4 Consideration for Sale and Transfer.
(a) At the Closing, in consideration for the sale of the Assets to
ProMedCo-Harrisburg, the following will occur:
(i) ProMedCo-Harrisburg will deliver to HealthAmerica 80% of the
Consideration (the "Initial Portion of Purchase Consideration") via
wire transfer as directed by HealthAmerica.
(ii) ProMedCo-Harrisburg will execute and deliver to HealthAmerica an
executed copy of the Undertaking assuming the liabilities of
HealthAmerica set forth in ss. 2.2 above, and shall specifically
exclude any mortgage or other liabilities related to real estate owned
by HealthAmerica.
(iii) HealthAmerica will execute and deliver to ProMedCo-Harrisburg
the Xxxx of Sale, assignment and other good and sufficient
instruments of conveyance and transfer, in form and substance
satisfactory to ProMedCo-Harrisburg's counsel, as shall be
effective on the Closing Date to vest in ProMedCo-Harrisburg
good and marketable title to the Assets as provided in this
Agreement.
(iv) ProMedCo-Harrisburg shall pay HealthAmerica, as contingent
consideration hereunder, the amounts, if any, which would have been
disbursed by HealthAmerica under Section 2 of the Inducement Agreement
for the period from July 1, 1997 through the Closing Date had the
Inducement Agreement been in effect during such period and the
obligations under such Section 2 commenced on July 1, 1997.
(b) In at other times, the following will occur:
(i) As soon as the Definitive Closing Statement is prepared in accordance
with ss. 2.10(a), ProMedCo-Harrisburg shall deliver to HealthAmerica
the balance of the Consideration (the "Second Portion of the Purchase
Consideration") adjusted pursuant to ss. 2.10.
(ii) On demand from time to time, ProMedCo-Harrisburg shall pay
HealthAmerica, as contingent consideration hereunder, amounts equal to
the amounts, if any, disbursed by HealthAmerica under Section 2 of the
Inducement Agreement on and after the Closing Date and 175% of the
amount disbursed by HealthAmerica under Section 3 of the Inducement
Agreement.
2.5 Excluded Liabilities. Except as provided in the Undertaking,
HealthAmerica shall remain liable and responsible for the payment or performance
as the case may be, of all contracts, leases and other obligations of any
nature, including without limitation all deferred payments remaining under the
acquisition agreements listed in Appendix 2.5 pursuant to which HealthAmerica
acquired the medical practices of the Beacon Professionals. Additionally,
HealthAmerica shall remain liable and responsible for all suits, claims,
indemnities, judgments, stipulation agreements, mortgages, taxes,
contingent liabilities and other obligations of HealthAmerica, including,
without limitation, any and all investment tax credit recapture, depreciation
recapture; recapture or prior period adjustments under Blue Cross, Medicare and
Medicaid; all impositions of income tax and other taxes for all time periods
prior to and including the Closing; all employee wages, salaries and benefits
including, without limitation, retirement payments, COBRA obligations, accrued
vacation not assumed by ProMedCo-Harrisburg, and other accrued employee benefits
and rights of Health America's retirees to participate in HealthAmerica's
medical plans. The obligations described in this ss. 2.5 are referred to
collectively as the "Excluded Liabilities."
2.6 Allocation of Consideration. The parties agree that the
consideration paid pursuant to ss. 2.2 shall be allocated among the Assets by
ProMedCo-Harrisburg within 120 days after the Closing or by such time as is
reasonable under the circumstances; if HealthAmerica agrees with the allocation
made by ProMedCo-Harrisburg, such allocation shall be binding on the parties as
set forth below and if HealthAmerica notifies ProMedCo-Harrisburg within 30 days
of its disagreement with the allocation, the parties shall engage a mutually
agreeable "big six" accounting firm to make the allocation, and the findings of
such firm shall be binding on the parties (the allocation which is ultimately
binding on the parties pursuant to this sentence is referred to herein as the
"Binding Allocation"). The Binding Allocation shall be used by the parties for
all purposes including tax, reimbursement and other purposes. Each party hereto
agrees that it will report the transaction in accordance with the Binding
Allocation, including under Section 1060 of the Code, and that it will not take
a position inconsistent with the Binding Allocation except with the written
consent of the other party hereto. Each party agrees to cooperate with the other
so that the information shown on Form 8594 filed with the IRS by such party will
be consistent with the information on the other party's Form 8594. Each party
shall pay 50% of the fees and expenses of the accounting firm which makes the
Binding Allocation.
2.7 Closing. The sale, purchase, and other activities provided for
herein (the "Closing") shall take place on or before October 31, 1997 (the
"Closing Date"), at a site designated by ProMedCo-Harrisburg. In case the
Closing does not take place on the Closing Date, the Closing Date shall be set
by mutual agreement between ProMedCo-Harrisburg and HealthAmerica; provided,
however, that in no event shall the Closing take place later than October 31,
1997 unless extended by ProMedCo-Harrisburg.
2.8 Further Acts and Assurances. HealthAmerica shall, at any time and
from time to time at and after the Closing, upon request of ProMedCo-Harrisburg,
take any and all steps reasonably necessary to place ProMedCo-Harrisburg in
possession and operating control of the Assets and the business to be
transferred hereunder and will do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may be reasonably required for the transferring and confirming to
ProMedCo-Harrisburg or to its successors or assigns, or for reducing to
possession, any or all of the Assets.
2.9 Other Transactions. In addition to the transaction set forth above,
the following additional transactions shall occur:
(a) At the Closing, HealthAmerica shall enter into an agreement in the form
attached hereto as Appendix 2.9A (the "Beacon Inducement Agreement") as
with the Beacon Professionals.
(b) HealthAmerica and the HealthAmerica Medical Professionals shall
terminate all employment agreements between such parties effective the
Closing Date.
(c) Simultaneously herewith, HealthAmerica and ProMedCo-Harrisburg are
entering into an interim Service Agreement in the form attached hereto
as Appendix 2.9B.
(d) At the Closing, Beacon and ProMedCo-Harrisburg shall enter into a
Service Agreement in the form attached hereto as Appendix 2.9C.
(e) Beacon Medical Group shall enter into employment agreements in the form
attached as Appendices 2.91D and E hereto (the "Physician Employment
Agreements" and "Non-Physician Employment Agreements") with each of the
Beacon Professionals.
(f) ProMedCo-Harrisburg shall enter into a Split-Dollar Agreement in the
form attached hereto as Appendix 2.9F (the "Split-Dollar Agreement")
with each of the Beacon Professionals who enter into Physician
Employment Agreements.
(g) Each Beacon Professional who is a party to a Split-Dollar Agreement and
Pro-MedCo-Harrisburg shall execute a Collateral Assignment (the
"Collateral Assignment") in the form attached hereto as Appendix 2.9G
pertaining to the Life Insurance Policy contemplated by the
Split-Dollar Agreement.
(h) ProMedCo-Harrisburg and HealthAmerica shall execute a mutually
agreeable ten year Provider Agreement having terms which are consistent
with the provisions outlined in Appendix 2.9H.
2.10 Purchase Consideration Adjustments.
(a) Definitive Closing Statements. Within 120 days after the Closing or by
such time as is reasonable under the circumstances, ProMedCo-Harrisburg
shall prepare and deliver to HealthAmerica a final closing statement
("Final Closing Statement") of HealthAmerica as of August 12, 1997.
ProMedCo-Harrisburg covenants that the Final Closing Statement shall be
true, complete and accurate
and will present fairly the assets and liabilities items set forth in
xx.xx. 2.1 and 2.2 hereof as at the August 12, 1997, calculated in a
manner consistent with GAAP (except as disclosed in Exhibit 3.3B), as
applied in the HealthAmerica Financial Statements (as defined in ss.
3.3), and the requirements of this Agreement. HealthAmerica and its
representatives shall be provided access to the books and records of
ProMedCo-Harrisburg as necessary to verify the accuracy of such
calculations. If within 30 business days of receipt of the Final
Closing Statement, HealthAmerica fails to deliver to
ProMedCo-Harrisburg written notice specifying any unacceptable entries
on the Final Closing Statements and the reasons therefor, then such
Final Closing Statement shall constitute the Definitive Closing
Statements. If HealthAmerica timely and duly delivers such notice
within 30 business days of receipt thereof, the parties shall attempt
in good faith to resolve the differences, and if they are unable to do
so, within 20 days thereafter either party may deliver the Final
Closing Statement to a "big six" accounting firm mutually agreeable to
the parties (the "CPA Firm"), who shall have 20 business days to review
the Final Closing Statement and make such adjustments thereto as it
deems necessary to ensure that the Final Closing Statement has been
prepared in a manner consistent with GAAP as applied in the
HealthAmerica Financial Statements calculated on a consistent basis and
the requirements of this Agreement. The Final Closing Statement as so
adjusted shall constitute the Definitive Closing Statement and shall be
binding on the parties hereto. If the total amount payable by
ProMedCo-Harrisburg pursuant to clause (b) below increases from that
shown on the Final Closing Statement, ProMedCo-Harrisburg shall pay the
fees and expenses of the CPA Firm, otherwise such fees and expenses
shall be borne by HealthAmerica. If the parties are unable to mutually
agree on a CPA firm, they shall select one by using the following
process: First ProMedCo-Harrisburg shall nominate a "big six" firm; if
that firm is unacceptable to HealthAmerica, it shall nominate a
different "big six" firm; if that firm is unacceptable to
ProMedCo-Harrisburg, each party shall designate a partner of the firm
nominated by it, and the two partners shall choose a third "big six"
firm which that thereupon be the "CPA Firm" contemplated hereby.
(b) Balance Sheet Adjustment. To the extent that the Definitive Closing
Statement shows Assets at Closing net of Assumed Balance Sheet
Liabilities to be different from the same assets net of the same
liabilities on the HealthAmerica Financial Statements as of June 30,
1997, the Consideration shall be increased or reduced, as the case may
be, on a dollar for dollar basis; provided however, if the adjustment
is less than $5,000, neither party shall have an obligation to make any
payment to the other.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF HEALTHAMERICA
HealthAmerica hereby represents and warrants to ProMedCo-Harrisburg as
follows (all representations other than those set forth in xx.xx. 3.1, 3.2,
3.16, 3.17, 3.30 and 3.31 are intended to be with respect to the business
conducted at the Clinic Facilities, and not to refer to business conducted by
HealthAmerica elsewhere):
3.1 Organization, Corporate Power and Qualification. HealthAmerica is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania and has full corporate power and authority
and all authorizations, licenses and permits necessary to own, lease and operate
its properties and assets and to carry on its business as and where it is now
being conducted, to enter into this Agreement, and to consummate the
transactions contemplated hereby. No jurisdiction where HealthAmerica is not
presently qualified as a foreign corporation has made any assertion that such
corporation's business or ownership of property makes qualification as a foreign
corporation in such jurisdiction necessary. A copy of the Articles of
Incorporation and all amendments thereto of HealthAmerica and a copy of its
by-laws, as amended to the date hereof (both certified by the Secretary of
HealthAmerica to be true and correct copies as in effect as of the date hereof),
are included as Exhibit 3.1 of the Exhibit Volume and are true, accurate and
complete as of the date hereof. HealthAmerica is not in default under or in
violation of any provision of its Articles of Incorporation or by-laws.
3.2 Authority; Binding Effect. HealthAmerica has full power and
authority to enter into this Agreement and, subject to approval by its Board of
Directors, to carry out the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement constitutes the valid and binding
agreement of HealthAmerica enforceable in accordance with its terms, and the
execution, delivery and performance of this Agreement is not in conflict with
any other agreement, and will not result in the acceleration or imposition of
any other obligation that will have a material adverse effect on the Assets.
3.3 Financial Statements. Exhibit 3.3A consists of the following
financial statements of HealthAmerica: unaudited schedule of assets and of the
business operated by HealthAmerica at the Clinic Facilities as of June 30, 1997
and the related statement of revenue and operating expenses for the three and
six month periods then ended (such financial statements and the related notes
being herein called "HealthAmerica Financial Statements").
The HealthAmerica Financial Statements are true, complete and accurate,
have been based upon the information contained in the books and records of
HealthAmerica and present fairly the assets, liabilities and financial results
of HealthAmerica as of the
dates thereof, prepared in conformity with generally accepted accounting
principles except as disclosed in Exhibit 3.3B. The HealthAmerica Financial
Statements do not contain any material inaccuracy and do not suffer from any
material omissions.
3.4 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or reserved against in the HealthAmerica Financial Statements and
except for commitments and obligations incurred in the ordinary course of
business and consistent with past practice accruing after June 30, 1997,
HealthAmerica as of June 30, 1997, had, or will have at Closing, no material
liabilities, claims or obligations (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to HealthAmerica or any
directors, officers or employees of HealthAmerica, whether due to become payable
and regardless of when or by whom asserted) relating to the Clinic Facility. The
expenses associated with accrued CME time assumed by ProMedCo-Harrisburg
pursuant to ss. 2.2 do not exceed the estimates by HealthAmerica, the details of
which are set forth on Exhibit 3.4 hereto.
3.5 Absence of Certain Recent Changes. Except as expressly provided in
this Agreement or as set forth on Exhibit 3.5 in alphabetical order
corresponding to the following subsections, HealthAmerica has continued and
shall continue the normal operations of HealthAmerica's business until the
Closing, and since June 30,1997, and through the Closing Date, HealthAmerica has
not and will not have:
(a) except in the usual and ordinary course of its business, consistent
with past practice, and in an amount which is usual and normal incurred
any indebtedness or other liabilities (whether accrued, absolute,
contingent or otherwise), guaranteed any indebtedness or sold any of
its assets;
(b) transferred, disposed of, or further encumbered or pledged any of the
Assets without the prior written consent of ProMedCo-Harrisburg;
(c) suffered any damage, destruction or loss, whether or not covered by
insurance, in excess of $10,000;
(d) suffered the resignation or other termination of any management
personnel of HealthAmerica, or the loss of or other termination of a
business relationship with any material customers or suppliers of
HealthAmerica's business;
(e) increased the regular rate of compensation payable by it to any
employee other than normal merit and cost of living increases granted
in the ordinary course of business; or increased such compensation by
bonus, percentage, compensation service award or similar arrangement
theretofore in effect for the benefit of any of its employees, and no
such increase is required;
(f) established or agreed to establish, amended or terminated any pension,
retirement or welfare plan or arrangement for the benefit of its
employees not theretofore in effect;
(g) suffered any change in its financial condition, assets, liabilities,
operations, prospects or business or suffered any other event or
condition of any character which individually or in the aggregate has
or might reasonably have a material adverse effect on HealthAmerica;
(h) experienced any labor organizational efforts, strikes or complaints
other than grievance procedures in the ordinary course of business or
entered into any collective bargaining agreements with any union;
(i) made any single capital expenditure which exceeded $5,000 or made
aggregate capital expenditures which exceeded $10,000;
(j) except with respect to liens or encumbrances arising by operation of
law, permitted or allowed any of the Assets to be subjected to any
pledge, lien, security interest, encumbrance, restriction or charge of
any kind;
(k) written down the value of any of the Assets, or written off as
uncollectible any notes or accounts receivable, except for write-downs
and write-offs in the ordinary course of business and consistent with
past practice, none of which are material or revalued any of the
Assets;
(l) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than in the usual
and ordinary course of business;
(m) suffered any extraordinary losses, canceled any debts or waived any
claims or rights of substantial value, whether or not in the usual and
ordinary course of business;
(n) paid, lent or advanced any amount to, or sold, transferred or leased any
properties or assets (real, personal or mixed, tangible or intangible) to,
or entered into any agreement or arrangement with, any stockholder of
HealthAmerica or any of the officers or directors of HealthAmerica or of
any "Affiliate" of any of its officers or directors, except for
reimbursement of ordinary and reasonable business expenses related to the
business of HealthAmerica and compensation to officers at rates not
exceeding the rates of compensation at June 30, 1997;
(o) amended, terminated or otherwise altered (whether by action or
inaction) any contract, agreement or license of significant value to
which HealthAmerica is a party, except in the ordinary course of
business;
(p) entered into a material transaction other than in the ordinary course
of business or made any change in any method of accounting or
accounting practice;
(q) canceled, or failed to continue, insurance coverages; or
(r) agreed, whether in writing or otherwise, to take any action described
in this ss. 3.5.
3.6 Title to Assets. The Assets to be transferred hereunder constitute
all of the non-real estate operating assets of HealthAmerica necessary or
appropriate for the continued operation of the Clinic Facility. HealthAmerica
shall remove all liens and encumbrances on the Assets, if any, prior to the
Closing (except those approved by ProMedCo-Harrisburg in writing). The bills of
sale and the assignments and other instruments to be executed and delivered by
HealthAmerica at the Closing will be valid and binding and enforceable in
accordance with their respective terms, and will effectively vest in
ProMedCo-Harrisburg good and marketable title to all the Assets. If
HealthAmerica shall fail to remove all such security interests,
ProMedCo-Harrisburg shall have the right to do so and shall have the right to
off-set the cost of doing so against the Cash Consideration payable under ss.
2.4 hereof.
3.7 Contracts. Exhibits 3.7A through 3.7H of the Exhibit Volume
contains a copy of each contract, lease, agreement and other instrument to which
HealthAmerica is a party or is bound which involves an unperformed commitment or
obligation (contingent or otherwise) of more than $10,000 in the aggregate,
including the following: Service Agreements, Exhibit 3.7A; Maintenance
Agreements, Exhibit 3.7B; Bank Loans and Equipment Financings, Exhibit 3.7C;
Real Estate Leases, Exhibit 3.7D; Payor Contracts, Exhibit 3.7E; Professional
Service Agreements, Exhibit 3.7F; Software License Agreements, Exhibit 3.7G and
Other Agreements, Exhibit 3.7H. Except as noted in such Exhibits: (i) to the
best knowledge of HealthAmerica, all such contracts, leases and agreements are
in full force and effect; (ii) to the best knowledge of HealthAmerica, there has
been no threatened cancellation thereof, (iii) there are no outstanding disputes
thereunder; (iv) each is with unrelated third parties and was entered into on an
arms-length basis in the ordinary course of business and all will continue to be
binding in accordance with their terms after consummation of the transactions
contemplated hereby; (v) there are no contracts, leases, agreements or other
instruments to which HealthAmerica is a party or is bound (other than insurance
policies) which could either singularly or in the aggregate have an adverse
effect on the value of the Assets to ProMedCo-Harrisburg; and (vi) there are no
employment agreements or other agreements to which Health-America is a party or
by which HealthAmerica is bound that contain any severance or termination pay
liabilities or obligations.
Except as described in Exhibits 3.7A-H or the other Schedules hereto
(and except for purchase contracts and orders for inventory in the ordinary
course of business consistent with past practice), HealthAmerica is not, as of
the date of this Agreement, a party to or bound by any:
(a) material agreement or contract not made in the ordinary course of
business;
(b) employee collective bargaining agreement or other contract with any labor
union;
(c) covenant not to compete;
(d) lease or similar agreement under which HealthAmerica is a lessor or
sublessor of any material real property owned or leased by
HealthAmerica or any portion of premises otherwise occupied by
HealthAmerica;
(e) (i) lease or similar agreement under which (A) HealthAmerica is lessee
of, or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by a third party or (B) HealthAmerica
is a lessor or sublessor of any tangible personal property owned by
any of its shareholders, (ii) continuing contract for the future
purchase of materials, supplies or equipment, or (iii) management,
service, consulting or other similar type of contract, in any such
case which has a future liability in excess of $10,000, and which is
not terminable by HealthAmerica for a cost of less than $10,000;
(f) license or other agreement relating in whole or in part to, trademarks
(including, but not limited to, any license or other agreement under
which HealthAmerica has the right to use any of the same owned or held
by a third party);
(g) agreement or contract under which HealthAmerica has borrowed or lent
any money or issued any note, bond, indenture or other evidence of
indebtedness or directly or indirectly guaranteed indebtedness,
liabilities or obligations of others for an amount in excess of $10,000
(other than (i) endorsements for the purpose of collection in the
ordinary course of business and (ii) advances to employees of
HealthAmerica in the ordinary course of business);
(h) mortgage, pledge, security agreement, deed of trust or other document
granting a lien against the Assets (including liens upon properties
acquired under conditional sales, capital leases or other title
retention or security devices but excluding operating leases);
(i) other agreement, contract, lease, license, commitment or instrument to
which HealthAmerica is a party or by or to which HealthAmerica or any
of it assets or businesses are bound or subject, which has an aggregate
future liability in excess of $10,000 and is not terminable by
HealthAmerica for a cost of less than $10,000; or
(j) any agreement, contract, understanding or business venture with any
physician, other provider or any other Person which violates the
Medicare/Medicaid Fraud and Abuse amendments or any regulations
thereunder adopted by the U.S.
Department of Health and Human Services.
Notwithstanding the failure of the parties to formalize the payment arrangements
HealthAmerica and Alliance4Health NetSource have followed a course of conduct
based on the arrangements described in Appendix 3.7 hereto, and HealthAmerica
will hold ProMedCo-Harrisburg harmless from any deviations from such
arrangements by Alliance4Health NetSource prior to the termination of the
Alliance4Health NetSource Agreement.
3.8 Burdensome Agreements. Except as is set forth in Exhibit 3.8 of the
Exhibit Volume, HealthAmerica is not a party to, nor are the Assets subject to
or bound or affected by, any provision of any order of any court or other agency
of government or any indenture, agreement or other instrument or commitment
which materially adversely affects the Assets,
3.9 Absence of Related Party Transactions. Except as disclosed on
Exhibit 3.9, neither HealthAmerica, nor any officer, director or affiliate of
HealthAmerica, has any material direct or indirect financial or economic
interest in any competitor or supplier of HealthAmerica. HealthAmerica is not a
party to any transaction or proposed transaction, including without limitation
the leasing of property, the purchase or sale of materials or goods (except with
respect to HealthAmerica's service business) or the furnishing of its services
(except as employees of the HealthAmerica), with HealthAmerica, or any Affiliate
of HealthAmerica, including (without limitation) any family member of a
shareholder of HealthAmerica; and HealthAmerica has not directly or indirectly
entered into any agreement or commitment which could result in HealthAmerica
becoming obligated to provide funds in respect of or to assume any obligation of
any such affiliated person or entity. Except as set forth on Exhibit 3.9, there
are no debts owing to HealthAmerica by, or any contractual agreements or
understandings between HealthAmerica and, any shareholder, director or officer
of HealthAmerica, any member of their respective families, or any affiliate or
associate of any of the foregoing individuals, as the term "affiliate" is
defined for purposes of the Securities Act of 1933 and the rules and regulations
thereunder, and none of the foregoing individuals or any affiliate or associate
of them owns any property or rights, tangible or intangible (other than an
equitable interest), used in or related to HealthAmerica's business.
HealthAmerica is not indebted to any shareholder, officer, director or employee
of HealthAmerica, or to any member of their respective families, or to any
affiliate or associate of any of the foregoing individuals, in any amount
whatsoever, other than for payment of salaries and compensation for services
actually rendered to HealthAmerica in the ordinary course of their businesses.
3.10 Defaults. Except as disclosed in Exhibit 3.10, HealthAmerica is
not in material default under, nor has any event occurred which, with the lapse
of time or action by a third party, could result in a material default under any
outstanding
indenture, mortgage, contract, instrument or agreement to which HealthAmerica is
a party or by which HealthAmerica may be bound or under any provision of the
Articles of Incorporation or by-laws of HealthAmerica. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated by this Agreement will not violate any provision of, or result in
the breach of, or constitute a default under, any law the violation of which
would result in a significant liability to HealthAmerica, or any order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal;
constitute a violation of or a default under, or a conflict with, any term or
provision of the Articles of Incorporation or by-laws of HealthAmerica or any
contract, commitment, indenture, lease, instrument or other agreement, or any
other restriction of any kind to which HealthAmerica is a party or is bound; or
cause, or give any party grounds to cause (with or without notice, the passage
of time or both) the maturity of any liability or obligation of HealthAmerica,
to be accelerated, or increase any such liability or obligation.
3.11 Inventory. The Inventory is sold hereunder on an AS IS WHERE IS
BASIS WITHOUT ANY WARRANTY, INCLUDING WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE. The Inventory is treated as a current expense on the HealthAmerica
Financial Statements. The only transactions related thereto since June 30, 1997
have been additions or sales in the ordinary course of business.
3.12 Equipment. All Assets consisting of equipment being sold hereunder
on an AS IS WHERE IS BASIS WITHOUT ANY WARRANTIES, INCLUDING ANY WARRANTY OF
FITNESS FOR A PARTICULAR USE. The only transactions related thereto since June
30,1997, have been additions thereto in the ordinary course of business.
3.13 Receivables. All notes and accounts receivable of HealthAmerica
shown on the HealthAmerica balance sheet and all those arising since the balance
sheet dates have arisen in the ordinary course of business. Attached as Exhibit
3.13 is a true and correct aging of the accounts receivable currently on the
books and records of HealthAmerica.
3.14 Permits and Licenses. Included as Exhibit 3.14 in the Exhibit
Volume is a schedule of permits and licenses, listing and briefly describing
each permit, license or similar authorization from each governmental authority
issued with respect to the operation or ownership of properties by HealthAmerica
together with the designation of the respective expiration dates of each, and
also listing and briefly describing each association in which HealthAmerica is a
member and each association or governmental authority by which HealthAmerica is
accredited or otherwise recognized.
HealthAmerica is not required to obtain any additional permits, licenses or
similar authorizations (including, without limitation, any additional
certificates of need) from any governmental authority for the proper conduct of
its business or to become a member of or accredited by any association or
governmental authority other than those listed on Exhibit 3.14 in the Exhibit
Volume, and there are no proceedings pending, or to the best of HealthAmerica's
knowledge, threatened, which may result in the revocation, cancellation,
suspension, or other adverse modification of, any license or permit listed in
Exhibit 3.14. All of such permits, licenses and authorizations will continue to
be valid and in full force and effect in accordance with their respective terms
after the consummation of the transactions contemplated hereby.
3.15 Litigation, etc. Except as set forth in Exhibit 3.15 of the
Exhibit Volume, there is no litigation, arbitration, governmental claim,
investigation or proceeding pending or, to the best knowledge of HealthAmerica,
threatened against HealthAmerica at law or in equity, before any court,
arbitration tribunal or governmental agency. No such proceeding set forth in
Exhibit 3.15 concerns the ownership or other rights with respect to the Assets.
To the best knowledge of HealthAmerica, there are no facts based on which
material claims may be hereafter made against HealthAmerica. Any and all claims
arising from incidents on or before the Closing Date shall be the sole
responsibility of HealthAmerica and are specifically excluded from the
liabilities to be assumed by ProMedCo-Harrisburg hereunder. All claims and
litigations against HealthAmerica are fully covered by insurance. HealthAmerica
shall unconditionally indemnify and hold ProMedCo-Harrisburg harmless against
any loss or liability including, without limitation, attorney's fees, resulting
from any claims or litigation arising out of incidents relating to HealthAmerica
which occurred prior to the Closing Date, to the extent such loss or liability
is not covered by insurance.
3.16 Court Orders, Decrees and Laws. There is not outstanding or, to
the best knowledge of HealthAmerica, threatened any order, writ, injunction or
decree of any court, governmental agency or arbitration tribunal against or
affecting HealthAmerica or the Assets. HealthAmerica is in compliance with all
applicable federal, state and local laws, regulations and administrative orders
which are material to the business of HealthAmerica and HealthAmerica has
received no notices of alleged violations thereof. No governmental authorities
are presently conducting proceedings against HealthAmerica and to the best
knowledge of HealthAmerica, no such investigation or proceeding is pending or
being threatened.
3.17 Taxes. All federal, state and other tax returns of HealthAmerica
required by law to be filed have been timely filed, and HealthAmerica has paid
or provided for all taxes (including taxes on properties, income, franchises,
licenses, sales and payrolls) which have become due pursuant to such returns or
pursuant to any assessment, except for any taxes and assessments of which the
amount, applicability or validity is currently being contested in good faith by
appropriate proceedings and with respect to which HealthAmerica has set aside on
its books adequate reserves. All such tax returns have been prepared in
compliance with all applicable laws and
regulations and are true and accurate in all respects. There are no tax liens on
any of the Assets except those with respect to taxes not yet due and payable and
except for any taxes and assessments of which the amount, applicability or
validity is currently being contested in good faith by appropriate proceedings
and with respect to which HealthAmerica has set aside on its books adequate
reserves. There are no pending tax examinations nor has HealthAmerica received a
revenue agent's report asserting a tax deficiency. HealthAmerica does not expect
any taxing authority to claim or assess any amount of additional taxes against
it. No claim has ever been made by a taxing authority in a jurisdiction where
HealthAmerica does not file tax returns that HealthAmerica is or may be subject
to taxes assessed by such jurisdiction. HealthAmerica has withheld from each
payment made to its employees the amount of all taxes (including, but not
limited to, federal, state and local income taxes and Federal Insurance
Contribution Act taxes) required to be withheld therefrom and all amounts
customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
has paid or will pay the same to, or has deposited or will deposit such payment
with, the proper tax receiving officers or other appropriate authorities, except
to the extent of any liabilities to be assumed by ProMedCo-Harrisburg under ss.
11.3 hereof.
3.18 Immigration Act. HealthAmerica is in material compliance with the
terms and provisions of the Immigration Act in all material respects. For each
employee (as defined in 8 C.F.R. ss. 274a.I(f)) of HealthAmerica for whom
compliance with the Immigration Act by HealthAmerica is required, HealthAmerica
has obtained and retained a complete and true copy of each such employee's Form
I-9 (Employment Eligibility Verification Form) and all other records or
documents prepared, procured or retained by HealthAmerica pursuant to the
Immigration Act. There are no violations or potential violations of the
Immigration Act by HealthAmerica. HealthAmerica has not been cited, fined,
served with a Notice of Intent to Fine or with a Cease and Desist Order, nor, to
HealthAmerica's knowledge, has any action or administrative proceeding been
initiated or threatened against HealthAmerica, by reason of any actual or
alleged failure to comply with the Immigration Act.
3.19 Program Compliance. To the best of HealthAmerica's knowledge after
due inquiry, neither HealthAmerica nor any of its shareholders, employees or
agents have engaged in or is being investigated for any activities which are
prohibited under either (a) Section 1320a-7a or 1320a-7b of Title 42 of the
United States Code, (b) Section 1395nn of Title 42 of the United States Code, or
(c) Section 3729 of Title 31 of the United States Code, or the regulations
promulgated thereunder, or any similar or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (1) knowingly presenting or
causing to be presented a false claim for payment; (2) knowingly making or using
a false record in order to receive payment for a claim; (3) 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; (4) 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; (5) any
failure by a claimant to disclose knowledge 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 the intent to fraudulently secure such
benefit or payment; (6) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overly 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, lease or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid; or (7)
referring a patient for "designated health services" to a person or entity with
which the referring physician has a financial relationship.
3.20 Environmental Matters. Except as disclosed on Exhibit 3.20:
(a) There are no outstanding violations or any consent decrees
entered against HealthAmerica regarding environmental matters,
including, but not limited to, matters affecting the emission
of air pollutants, the discharge of water pollutants, the
management of hazardous or toxic substances or wastes, or
noise.
(b) There are no claimed, threatened or alleged violations with
respect to any federal, state or local environmental law,
rule, regulation, ordinance, permit, license or authorization,
and there are no present discussions with any federal, state
or local governmental agency concerning any alleged violation
of environmental laws, rules, regulations, ordinances,
permits, licenses or authorizations.
(c) All operations conducted by HealthAmerica have been and are in
compliance with all federal, state and local statutes, rules,
regulations, ordinances, permits, licenses and authorizations
relating to environmental compliance and control.
3.21 ERISA.
(a) Except as listed in Exhibit 3.21 of the Exhibit has no
"employee benefit plans", as such term is defined under
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any other plan or similar
arrangement, written or otherwise, which provides any type of
pension or welfare benefit to any of its directors, employees,
or former employees.
(b) With respect to all of the plans listed in Exhibit 3.21, HealthAmerica
has delivered to ProMedCo-Harrisburg true and exact copies of (i) all
plan documents embodying the provisions of such plans, together with
all amendments thereto, (ii) all summary plan descriptions and
summaries of material modifications pertaining thereto, (iii) copies
of the most recent Internal Revenue Service determination letters, if
any, relating to such plans, (iv) copies of the last three (3) years'
Annual Report (Form 5500 series), as filed with respect to such plans
with the Internal Revenue Service, together with all Schedules and
attachments thereto, including, without limitation, copies of the plan
audits and/or actuarial valuations, (v) copies of all contract
administration agreements between HealthAmerica and third party
administrators, (vi) copies of all participant-related forms currently
in use in connection with such plans including, without limitation,
salary reduction agreements and beneficiary designations, and (vii)
participant-specific claims history for any "welfare benefit plan"
(within the meaning of Section 3(1) of ERISA) that has been in
existence during any part of the last three years.
(c) No "prohibited transaction", as such term is defined under
Section 4975(c) of the Code or under Section 406 of ERISA, and
the respective regulations thereunder, has occurred or is
occurring with respect to any "employee benefit plan"
maintained by HealthAmerica or with respect to any trustee or
administrator thereof.
3.22 Pension, etc.
(a) No "unfunded accrued liability", as such term is defined under
Section 3(30) of ERISA, exists with respect to any "employee
pension benefit plan" listed in Exhibit 3.21 (each a "Pension
Plan" and collectively the "Pension Plans").
(b) None of the Pension Plans or any related trusts have been
partially or fully terminated (through the complete cessation
of contributions thereto or otherwise). In addition there has
not occurred any "reportable events", as such term is defined
under Section 4043 of ERISA, which could have a material
adverse effect on the condition, financial or otherwise, of
HealthAmerica.
(c) Neither any of the Pension Plans nor any related trusts have
incurred any "accumulated funding deficiency", as such term is
defined under Section 302(a)(2) of ERISA or Section 412(a) of
the Code (whether or not waived), since the effective date of
ERISA.
(d) With respect to each Pension Plan, there are not in existence any
liabilities other than those liabilities shown on the Annual Reports
(Form 5500 series) delivered to ProMedCo-Harrisburg in connection
herewith. No material change with respect to the matters covered by
the most recent Annual Report for each Pension Plan has occurred since
the filing date thereof. The terms and operation of each Pension Plan
have complied, and are in compliance, with the applicable provisions
of ERISA and the Code. All Pension Plans have at all times been and
are qualified under Section 401(a) of the Code, except for those
Pension Plans set forth in Exhibit 3.22 of the Exhibit Volume. None of
the Pension Plans listed in Exhibit 3.21 is unfunded.
3.23 Employee Matters. Included as Exhibit 3.23A of the Exhibit Volume
is a list of all employees of HealthAmerica together with their annual rates of
compensation and a list of all people who were paid bonuses in the last twelve
months plus the amount thereof. No written employment agreement to which
HealthAmerica is a party requires longer than a four-week notice before
termination, and there is no agreement to lend, or guarantee any loan, to an
employee, or an agreement relating to a bonus, severance pay or similar plan,
agreement, arrangement or understanding, except as set forth in Exhibit 3.23B.
Exhibit 3.23C of the Exhibit Volume is a written description of employee
benefits of HealthAmerica.
3.24 Insurance and Bonds. Exhibit 3.24A contains a description of all
fire, liability and other insurance coverage maintained by HealthAmerica
currently in force, including the amounts and losses and risks covered; all such
policies are fully paid as to all premiums heretofore due. Exhibit 3.24B
contains a description of all malpractice liability insurance policies of
HealthAmerica since January 1, 1994. Except as set forth on Exhibit 3.24B,
HealthAmerica has not had in the last seven years filed a written application
for any insurance coverage which has been denied by an insurance agency or
carrier. HealthAmerica is not in material default with respect to any provision
contained in any such policy and has not failed to give any notice or present
any claim under any such policy in due and timely fashion.
3.25 Labor Matters. There are no collective bargaining agreements with
any labor union to which HealthAmerica is a party or by which HealthAmerica is
bound, and it is not currently negotiating with a labor union. No employees of
HealthAmerica have ever petitioned for a representation election. HealthAmerica
is in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. There is no unfair labor practice
complaint against HealthAmerica pending before the National Labor Relations
Board. There is no labor strike, dispute, slowdown or stoppage actually pending
or, to its knowledge, threatened against or affecting HealthAmerica. No
grievance which might have a material adverse effect on HealthAmerica or the
conduct of its business nor any such arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claim therefor exists.
HealthAmerica has not experienced any employee strikes during the
last three years. HealthAmerica will advise ProMedCo-Harrisburg of any such
labor dispute, petition for representative election or negotiations with any
labor union which shall arise before the Closing Date. Except as may be required
by ss. 4980B of the Code or applicable state health care continuation coverage
statutes, HealthAmerica has no liability under any plan or arrangement which
provides welfare benefits, including medical and life insurance, to any Current
or future retiree or terminated employee.
3.26 Third Party Payor Compliance. HealthAmerica is participating in or
otherwise authorized to receive reimbursement from or is a party to Medicare,
Medicaid, and other third-party payor programs (collectively "Third Party Payor
Programs"). All necessary certifications and contracts required for
participation in such programs are in full force and effect and have not been
amended or otherwise modified, rescinded, revoked or assigned as of the date
hereof, and to the best of HealthAmerica's knowledge, no condition exists or
event has occurred which in itself or with the giving of notice or the lapse of
time or both would result in the suspension, revocation, impairment, forfeiture
or non-renewal of any such Third Party Payor Program. To the best of
HealthAmerica's knowledge, HealthAmerica is in full compliance with the
requirements of all such Third Party Payor Programs applicable thereto.
3.27 Facility Compliance. The Clinic Facility is duly licensed and is
lawfully operated in accordance with the requirements of all applicable law and
has all necessary authorizations for the use and operation, all of which are in
full force and effect. There are no outstanding notices of deficiencies relating
to HealthAmerica issued by any governmental authority or Third Party Payor
Program requiring conformity or compliance with any applicable law or condition
for participation of such governmental authority or Third Party Payor Program,
and after reasonable and independent inquiry and due diligence and
investigation, HealthAmerica has neither received notice nor has any knowledge
or reason to believe that such necessary authorizations may be revoked or not
renewed in the ordinary course.
3.28 Improper Payments. Neither HealthAmerica nor any officer or
employee of HealthAmerica have made any bribes, kickbacks or other improper
payments on behalf of HealthAmerica or received any such payments from vendors,
suppliers or other persons contracting with HealthAmerica.
3.29 Books of Account; Reports. The books of account of HealthAmerica
in reasonable detail, accurately and fairly reflect its transactions and the
disposition of its assets. HealthAmerica has filed all reports and returns
required by any law or regulation to be filed by it for which the failure to
file would have a material adverse effect on the operations of the Clinic
Facility or the Assets.
3.30 No Finders or Brokers. Neither HealthAmerica nor any officer or
director of HealthAmerica has engaged any finder or broker in connection with
the transactions contemplated hereunder.
3.31 Consents and Approvals of Governmental Authorities. No
characteristic of HealthAmerica or of the nature of its business or operations
requires any consent, approval or authorization of, or declaration, filing or
registration with any governmental or regulatory authority in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby other than required approvals by the
Pennsylvania Departments of Insurance and Health.
3.32 Consents and Approvals of Non-Governmental Authorities. Except as
set forth in Exhibit 3.32, no approvals or consents from any nongovernmental
third parties are required in connection with the execution and delivery of this
Agreement by HealthAmerica and the consummation of the transactions contemplated
hereby.
3.33 No Adverse Effect. To the best knowledge of HealthAmerica, there
is no event or condition of any kind or character pertaining to the business,
assets or prospects of HealthAmerica that may adversely affect such business,
assets or prospects other than general economic conditions affecting the United
States.
3.34 Disclosure. No representations and warranties by HealthAmerica in
this Agreement and no statement in this Agreement or any document or certificate
furnished or to be furnished to ProMedCo and ProMedCo-Harrisburg pursuant hereto
contains or will contain any untrue statement or omits or will omit to state a
fact necessary in order to make the statements contained therein not misleading.
HealthAmerica has disclosed to ProMedCo and ProMedCo-Harrisburg all facts known
to HealthAmerica material to the assets, liabilities, business, operation and
property of HealthAmerica. There are no facts known to HealthAmerica not yet
disclosed which would adversely affect the future operations of HealthAmerica.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PROMEDCO AND PRO-
MEDCO-HARRISBURG
ProMedCo and ProMedCo-Harrisburg hereby jointly and severally represent
and warrant as follows:
4.1 Organization and Standing of ProMedCo and ProMedCo-Harrisburg.
ProMedCo and ProMedCo-Harrisburg are each corporations duly organized, validly
existing and in good standing under the laws of the state of Delaware and
Pennsylvania, respectively; each has full corporate power and authority to
conduct its business as now being conducted; and each is duly qualified to do
business in each jurisdiction in which the nature of the property owned or
leased or the nature of the business conducted by it requires such
qualification.
4.2 Authority; Binding Effect. Each of ProMedCo and ProMedCo-Harrisburg
has corporate power to execute and deliver this Agreement and consummate the
transactions contemplated hereby and has taken (or by the Closing Date will have
taken) all action required by law, its Articles of Incorporation, by-laws or
otherwise to authorize such execution and delivery and the consummation of the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement constitutes the valid and binding agreement of each of ProMedCo
and ProMedCo-Harrisburg enforceable in accordance with its terms (except as the
same may be restricted, limited or delayed by applicable bankruptcy or other
laws affecting creditors' rights generally and except as to the remedy of
specific performance which may not be available under the laws of various
jurisdictions) assuming that this Agreement has been duly authorized, delivered
and executed by HealthAmerica and constitutes the valid and binding obligation,
enforceable against HealthAmerica in accordance with its terms (except as
enforceability against HealthAmerica may be restricted, limited or delayed to
the same extent as referred to in parenthetical phrase immediately above).
4.3 No Finders or Brokers. Neither ProMedCo, ProMedCo-Harrisburg nor
any officer or director of either has engaged any finder or broker in connection
with the transactions contemplated hereunder.
4.4 Consents and Approvals of Governmental Authorities. No
characteristic of ProMedCo or ProMedCo-Harrisburg or of the nature of their
business or operations requires any consent, approval or authorization of, or
declaration, filing or registration with any governmental or regulatory
authority in connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
ARTICLE 5 COVENANTS OF PROMEDCO AND PROMEDCO-HARRISBURG
ProMedCo and ProMedCo-Harrisburg hereby jointly and severally covenant
and agree as follows:
5.1 Best Efforts to Secure Consents. ProMedCo and ProMedCo-Harrisburg
shall use their best efforts to secure before the Closing all necessary consents
and approvals needed to satisfy all the conditions precedent to the obligations
of HealthAmerica hereunder, including, if necessary to procure landlord
consents, provision of ProMedCo guarantees of ProMedCo-Harrisburg's obligations
under leases assumed by or subleased to ProMedCo-Harrisburg as a result of the
consummation of the transactions contemplated hereby.
5.2 Corporate Action. ProMedCo and ProMedCo-Harrisburg will take all
necessary corporate and other action and use its best efforts to obtain all
consents, approvals and amendments of agreements required of it to carry out the
transactions contemplated by this Agreement and to satisfy the conditions
specified herein.
5.3 Non-Disclosure. ProMedCo and ProMedCo-Harrisburg will keep
confidential and not disclose to any third party any information relating to the
business of HealthAmerica or any Affiliate thereof, whether acquired by ProMedCo
or ProMedCo-Harrisburg before or after the Closing Date, which HealthAmerica has
not made generally available to the public and will exercise the same care in
handling such information as it would exercise with similar information of its
own.
5.4 Special Accounts. ProMedCo and ProMedCo-Harrisburg will comply with
applicable federal law, rules and regulations relating to the collection of
Medicare and Medicaid accounts receivable on behalf of HealthAmerica.
ARTICLE 6 COVENANTS OF HEALTHAMERICA
HealthAmerica hereby covenants and agrees as follows:
6.1 Access and Information. Between the date of this Agreement and the
Closing Date, HealthAmerica will: (i) provide to ProMedCo-Harrisburg and its
officers, attorneys, accountants and other representatives, during normal
business hours, or otherwise if ProMedCo-Harrisburg deems reasonably necessary,
free and full access to all of the properties, assets, agreements, commitments,
books, records, accounts, tax returns, and documents of HealthAmerica pertaining
to the business operated at the Clinic Facility and permit them to make copies
thereof; (ii) furnish ProMedCo-Harrisburg and its representatives with all
information concerning the business, properties and affairs of HealthAmerica
pertaining to the business operated at the Clinic Facility as
ProMedCo-Harrisburg reasonably requests and certified by the officers, if
requested; (iii) cause the independent public accountants of HealthAmerica to
make available to ProMedCo-Harrisburg and its representatives all financial
information pertaining to the business operated at the Clinic Facility
requested, including all working papers pertaining to audits and reviews made
heretofore by such auditors; (iv) furnish ProMedCo-Harrisburg true and complete
copies of all financial and operating statements of HealthAmerica pertaining to
the business operated at the Clinic Facility; (v) permit access to customers and
suppliers of the Clinic Facility for consultation or verification of any
information obtained by ProMedCo-Harrisburg and use their best efforts to cause
such customers and suppliers to cooperate with ProMedCo-Harrisburg in such
consultation and in verifying such information; and (vi) cause their employees,
accountants and attorneys to make disclosure of all material facts known to them
affecting the financial condition and business operations of HealthAmerica
pertaining to the business operated at the Clinic Facility and to cooperate
fully with any audit, review, investigation or examination made by
ProMedCo-Harrisburg and its representatives, including, without limitation, with
respect to:
(a) The books and records of HealthAmerica pertaining to the business
operated at the Clinic Facility;
(b) The reports of state and federal regulatory examinations pertaining to
the business operated at the Clinic Facility;
(c) Leases, contracts and commitments between HealthAmerica and any other
person pertaining to the business operated at the Clinic Facility;
(d) Physical examination of the Clinic Facility; and
(e) Physical examination of the equipment and furnishings within the Clinic
Facility.
6.2 Conduct of Business. Between the date hereof and the Closing Date,
except as otherwise expressly approved in writing by ProMedCo-Harrisburg,
HealthAmerica shall conduct the business of the Clinic Facility only in the
ordinary course thereof consistent with past practice and in such a manner that
the representations and warranties contained in Article 3 of this Agreement
shall be true and correct at and as of the Closing Date (except for changes
contemplated, permitted or required by this Agreement) and so that the
conditions to be satisfied by HealthAmerica at the Closing shall have been
satisfied. HealthAmerica will, consistent with conducting its business in
accordance with reasonable business judgment, preserve the business of the
Clinic Facility intact, use its reasonable best efforts to preserve and maintain
the business organization and the physician relationships of HealthAmerica, keep
available to ProMedCo-Harrisburg the services of the present employees of the
Clinic Facility (except those dismissed for cause, those who voluntarily
discontinue their employment and those whose termination is consented to by
ProMedCo-Harrisburg), and preserve for ProMedCo-Harrisburg the goodwill of the
physicians, suppliers, patients and others having business relations with the
Clinic Facility. So long as HealthAmerica does not terminate or otherwise
interfere with ProMedCo-Harrisburg's performance of the Interim Service
Agreement, it shall be deemed to be in compliance with this ss. 6.2.
6.3 Termination of Alliance4Health NetSource Agreement. Immediately
upon execution of this Agreement, HealthAmerica shall give notice of termination
of the Alliance4Health NetSource Agreement. If the transactions contemplated by
this Agreement are consummated prior to the date the Alliance4Health NetSource
Agreement is terminated, HealthAmerica shall take such steps as are necessary to
provide the full economic benefit to HealthAmerica of the Alliance4Health
NetSource Agreement to ProMedCo-Harrisburg, including, if necessary entering
into a subcontracting arrangement with ProMedCo-Harrisburg or Beacon.
HealthAmerica shall indemnify and hold ProMedCo-Harrisburg harmless from the
consequence of any
breach of the Alliance4Health NetSource Agreement caused, or resulting from
actions of, HealthAmerica.
6.4 Compliance with Agreement. Prior to the Closing, HealthAmerica
shall not undertake any course of action inconsistent with satisfaction of the
conditions applicable to it set forth in this Agreement, and shall do all such
acts and take all such measures as may be reasonably necessary to comply with
the representations, agreements, conditions and other provisions of this
Agreement. Prior to the Closing, HealthAmerica shall give ProMedCo-Harrisburg
prompt written notice of any change in any information contained in the
representations and warranties made in Article 3 hereof and on the Exhibits
referred to therein (provided, however that such notice shall not limit
ProMedCo-Harrisburg's rights under ss. 9.1 hereof) and of any condition or event
which constitutes a default of any covenant or agreement made in Article 6 or in
any other section hereof.
6.5 Necessary Consents. HealthAmerica shall take the necessary
corporate and other actions, including submitting required notices to various
departments of the Commonwealth of Pennsylvania on or before August 20, 1997,
and shall, on or before the Closing Date, obtain and deliver to
ProMedCo-Harrisburg in writing, effective as of the Closing Date, such consents
as are necessary to effect a valid and binding transfer or assignment of all of
the Assets so as to enable ProMedCo-Harrisburg to enjoy all of the rights now
enjoyed by HealthAmerica with respect to the Assets. Said consents shall be in a
form acceptable to ProMedCo-Harrisburg and, if executed with respect to a
contract, shall contain an acknowledgment by the consenting party that
HealthAmerica has fully complied with and is not in default under any provision
of the particular contract. Nothing in this Agreement shall be construed as an
attempt to agree to assign any contract which is by law or by agreement
nonassignable without the consent of the other party or parties thereto, or of
any governmental authority, as the case may be, unless such consent shall be
given.
6.6 Unusual Events. Until the Closing Date, HealthAmerica shall
supplement or amend all relevant Exhibits in the Exhibit Volume with respect to
any matter thereafter arising or discovered which, if existing or known at the
date of this Agreement, would have been required to be set forth or described in
such Exhibits; provided, however, that for the purposes of the rights and
obligations of the parties hereunder, any such supplemental disclosure shall not
be deemed to have been disclosed as of the date HealthAmerica delivers to
ProMedCo-Harrisburg the Exhibit Volume pursuant to ss. 9.1 of this Agreement or
any other date, and shall not be deemed to amend or supplement any Exhibits or
to prevent or cure any misrepresentation, breach of warranty or breach of
covenant, unless agreed to in writing by ProMedCo-Harrisburg.
6.7 Confidential Information. HealthAmerica shall keep confidential all
information provided by ProMedCo and ProMedCo-Harrisburg regarding the business
plan, financial condition and operations of ProMedCo and ProMedCo-Harrisburg,
which is not in the public domain, and shall exercise the same care in handling
such
information as it would exercise with similar information of its own.
HealthAmerica may disclose information it deems advisable to its physician
employees provided such physician employees are advised of the confidential
nature of such information and agree to keep such information confidential as
provided herein. ProMedCo and ProMedCo-Harrisburg shall be a third party
beneficiaries of such agreements.
6.8 Interim Financial Statements. Within 30 days after the end of each
calendar month subsequent to the date of this Agreement and prior to the Closing
Date, HealthAmerica shall deliver to ProMedCo-Harrisburg an unaudited balance
sheet of HealthAmerica as of the end of such calendar month together with the
related statement of operations. All such financial statements shall fairly
present the financial position, results of operations and cash flows for the
financial periods indicated, in accordance with generally accepted accounting
principles consistently applied except that footnote information may be omitted
in such statements, and that such statements shall be subject to normal year-end
audit adjustments, but only if such adjustments are of a normal, recurring type
and are not material in the aggregate. So long as the Interim Service Agreement
is in full force and effect, HealthAmerica shall be deemed to be in compliance
with this ss. 6.8.
6.9 Departmental Violations. All notes or notices of violations of law
or municipal ordinances, orders or requirements noted in or issued by the
departments of buildings, fire, labor, health, or any other state or municipal
department having jurisdiction against or affecting the business, property or
assets of HealthAmerica shall be complied with prior to the Closing Date. All
such notes or notices, after the date hereof and prior to the Closing Date,
shall be complied with by HealthAmerica prior to the Closing Date. Upon written
request, HealthAmerica shall furnish ProMedCo-Harrisburg with an authorization
to make the necessary searches for such notes or notices.
6.10 Insurance Ratings. HealthAmerica shall take all action reasonably
requested by ProMedCo-Harrisburg to enable it to succeed to the Workers'
Compensation and Unemployment Insurance ratings, insurance policies, deposits
and other interests of HealthAmerica and other ratings for insurance or other
purposes established by HealthAmerica. ProMedCo-Harrisburg shall not be
obligated to succeed to any such rating, insurance policy, deposit or other
interest, except as it may elect to do so.
6.11 Maintain Insurance Coverage. From the date hereof until the
Closing, HealthAmerica shall maintain and cause to be maintained in full force
and effect the existing insurance on the Assets and the operations of
HealthAmerica and shall provide, upon request by ProMedCo-Harrisburg, evidence
satisfactory to ProMedCo-Harrisburg (which evidence may be in the form of a
certificate executed by an officer
of HealthAmerica) that such insurance continues to be in effect and that all
premiums due have been paid.
6.12 Exclusive Dealings. During the period from the date of this
Agreement to the Closing Date, or until the earlier termination of this
Agreement pursuant to Article 9, HealthAmerica shall refrain from taking any
actions, directly or indirectly, to encourage, initiate, or engage in
discussions or negotiations with, or provide any information to, any
corporation, partnership, person, or other entity or group, other than
ProMedCo-Harrisburg, concerning the purchase of the Clinic Facility or the
Assets, or any merger, joint venture or similar transaction involving the Clinic
Facility and will not enter into any such transaction.
6.13 Payments Due Physicians. HealthAmerica shall pay when due all
deferred amounts due any HealthAmerica Medical Professionals pursuant to
agreements relating to the purchase of medical practices with which such
HealthAmerica Medical Professionals were associated when their relationship with
HealthAmerica commenced. HealthAmerica acknowledges that ProMedCo-Harrisburg has
an interest in ensuring that the HealthAmerica Medical Professionals receive all
payments from HealthAmerica to which they are entitled and intends that
ProMedCo-Harrisburg shall have third party beneficiary rights to enforce this
ss. 6.13.
ARTICLE 7 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HEALTHAMERICA
All obligations of HealthAmerica which are to be discharged under this Agreement
at the Closing are subject to the performance, at or prior to the Closing, of
all covenants and agreements contained herein which are to be performed by
ProMedCo and ProMedCo-Harrisburg at or prior to the Closing and to the
fulfillment at, or prior to, the Closing, of each of the following conditions
(unless expressly waived in writing by HealthAmerica at any time at or prior to
the Closing):
7.1 Representations and Warranties True. All of the representations and
warranties made by ProMedCo and ProMedCo-Harrisburg contained in Article 4 of
this Agreement shall be true as of the date of this Agreement, shall be deemed
to have been made again at and as of the date of Closing, and shall be true at
and as of the date of Closing in all material respects; ProMedCo and
ProMedCo-Harrisburg shall have performed and complied in all material respects
with all covenants and conditions required by this Agreement to be performed or
complied with by then prior to or at the Closing; and HealthAmerica shall have
been furnished with a certificate of the President or any Vice President of
ProMedCo and of ProMedCo-Harrisburg, dated the Closing Date, in such officer's
capacity, certifying to the truth of such representations and warranties as of
the Closing and to the fulfillment of such covenants and conditions.
7.2 Opinion of Counsel. HealthAmerica shall have been furnished with an
opinion dated the Closing Date of Boult, Cummings, Xxxxxxx & Xxxxx, PLC, counsel
to ProMedCo and ProMedCo-Harrisburg, in form and substance reasonably
satisfactory to HealthAmerica.
7.3 Authority. All action required to be taken by or on the part of
ProMedCo and Pro-MedCo-Harrisburg to authorize the execution, delivery and
performance of this Agreement by Pro-MedCo and ProMedCo-Harrisburg and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Boards of Directors of ProMedCo and ProMedCo-Harrisburg.
7.4 Approvals. HealthAmerica shall have received all consents and
approvals from the Pennsylvania Departments of Health and Insurance and any
other person, including without limitation HealthAmerica's senior lender,
necessary for it to consummate the transactions contemplated hereby.
7.5 No Obstructive Proceeding. No action or proceedings shall have been
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against HealthAmerica,
or the officers or directors of HealthAmerica, which seeks to, or would, render
it unlawful as of the Closing to effect the transactions contemplated hereby in
accordance with the terms hereof, and no such action shall seek damages in a
material amount by reason of the transactions contemplated hereby. Also, no
substantive legal objection to the transactions contemplated by this Agreement
shall have been received from or threatened by any governmental department or
agency.
7.6 Delivery of Certain Certified Documents. At the Closing,
ProMedCo-Harrisburg shall deliver to HealthAmerica copies of the Articles of
Incorporation of each of ProMedCo-Harrisburg and ProMedCo certified (not more
than 30 days prior to the Closing Date) by the appropriate governmental
authorities, copies of resolutions of the Board of Directors of
ProMedCo-Harrisburg, certified by the secretary or assistant secretary of
ProMedCo-Harrisburg approving and authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
copies of resolutions of the Board of Directors of ProMedCo, certified by the
secretary or assistant secretary of ProMedCo approving the consummation of the
transactions contemplated hereby.
7.7 Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated hereby and all certificates and
documents delivered to HealthAmerica pursuant to this Agreement shall be
satisfactory in form and substance to HealthAmerica and its counsel acting
reasonably and in good faith.
7.8 No Agency Proceedings. There shall not be pending or, to the
knowledge of ProMedCo or ProMedCo-Harrisburg, threatened, any claim, suit,
action or other
proceeding brought by a governmental agency before any court or governmental
agency, seeking to prohibit or restrain the transactions contemplated by this
Agreement or material damages in connection therewith.
7.9 Provider Agreement. ProMedCo-Harrisburg and HealthAmerica shall
have entered into the provider agreement contemplated by ss. 2.9(h) or if state
approval thereof is not forthcoming, the relationship with Alliance4Health
NetSource is continued on terms reasonably satisfactory to ProMedCo-Harrisburg.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PROMEDCO AND
PROMEDCO-HARRISBURG
All obligations of ProMedCo and ProMedCo-Harrisburg which are to be
discharged under this Agreement at the Closing are subject to the performance,
at or prior to the Closing, of all covenants and agreements contained herein
which are to be performed by HealthAmerica at or prior to the Closing and to the
fulfillment at or prior to the Closing of each of the following conditions
(unless expressly waived in writing by ProMedCo and ProMedCo-Harrisburg at any
time at or prior to the Closing):
8.1 Representations and Warranties True. All of the representations and
warranties of HealthAmerica contained in Article 3 of this Agreement shall be
true as of the date of this Agreement, shall be deemed to have been made again
at and as of the Closing, and shall be true at and as of the date of Closing in
all material respects (without taking into account any disclosures made by
HealthAmerica to ProMedCo and ProMedCo-Harrisburg pursuant to ss. 6.6 hereof)
except for changes resulting from ProMedCo-Harrisburg's management under the
Interim Service Agreement; HealthAmerica shall have performed or complied in all
material respects with all covenants and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing; and ProMedCo
and ProMedCo-Harrisburg shall be furnished with a certificate of the President
or any Vice President of HealthAmerica, dated the Closing Date, in such person's
corporate capacity, certifying to the truth of such representations and
warranties as of the time of the Closing and to the fulfillment of such
covenants and conditions other than the exception set forth in the first clause
hereof.
8.2 No Obstructive Proceeding. No action or proceedings shall have been
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against ProMedCo or
ProMedCo-Harrisburg or the officers or directors of ProMedCo or
ProMedCo-Harrisburg which seeks to, or would, render it unlawful as of the
Closing to effect the transactions contemplated hereby in accordance with the
terms hereof, and no such action shall seek damages in a material amount by
reason of the transaction contemplated hereby. Also, no substantive legal
objection to the transactions contemplated by this Agreement shall have been
received from or threatened by any governmental department or agency.
8.3 Opinion of HealthAmerica Counsel. HealthAmerica shall have
delivered to ProMedCo and ProMedCo-Harrisburg at the Closing an opinion of Bass,
Xxxxx & Xxxxx, PLC, counsel to HealthAmerica, dated the Closing Date, in form
and substance reasonably satisfactory to ProMedCo and ProMedCo-Harrisburg, and
Beacon shall have delivered to ProMedCo and ProMedCo-Harrisburg at the Closing
an opinion of Xxxxxxx & Miler, P.C., counsel to Beacon dated the Closing Date,
in form and substance reasonably satisfactory to ProMedCo and
ProMedCo-Harrisburg.
8.4 Consents and Approvals. Each of the parties to any agreement or
instrument under which the transactions contemplated hereby would constitute or
result in a default or acceleration of obligations shall have given such consent
as may be necessary to permit the consummation of the transactions contemplated
hereby without constituting or resulting in a default or acceleration under such
agreement or instrument which would have a material adverse effect on the
Assets, and any consents required from any public or regulatory agency or
organization having jurisdiction shall have been given. Also,
ProMedCo-Harrisburg shall have received releases, waivers of default and
consents to assignment in form satisfactory to it from all parties to material
contracts and agreements to be assumed by ProMedCo-Harrisburg hereunder.
8.5 Governmental Approvals. HealthAmerica shall have received all
consents and approvals from the Pennsylvania Departments of Health and Insurance
necessary for it to consummate the transactions contemplated hereby.
8.6 Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated hereby and all certificates and
documents delivered to ProMedCo-Harrisburg pursuant to this Agreement shall be
satisfactory in form and substance to ProMedCo and ProMedCo-Harrisburg and its
counsel acting reasonably and in good faith.
8.7 Delivery of Certain Documents. At the Closing, HealthAmerica shall
have delivered to ProMedCo-Harrisburg copies of the Articles of Incorporation of
HealthAmerica certified (not more than 30 days prior to the Closing Date) by the
appropriate governmental authorities and copies of resolutions of the
stockholders of HealthAmerica and of the Board of Directors of HealthAmerica,
certified by the secretary of HealthAmerica, approving and authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
8.8 Provider Agreement. ProMedCo-Harrisburg and HealthAmerica shall
have entered into the provider agreement contemplated by ss. 2.9(h) or if state
approval thereof is not forthcoming, the relationship with Alliance4Health
NetSource, Inc. is
continued on terms reasonably satisfactory to ProMedCo-Harrisburg
(ProMedCo-Harrisburg agrees that the Alliance4Health NetSource Agreement is
satisfactory).
8.9 Financing. ProMedCo-Harrisburg shall have arranged the financing
necessary to carry out the transactions contemplated by this Agreement.
ARTICLE 9 TERMINATION
9.1 Optional Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing Date
as follows:
(a) By the mutual consent of ProMedCo, ProMedCo-Harrisburg and
HealthAmerica; or
(b) By HealthAmerica, if any of the conditions set forth in Article 7 shall
not have been met by October 31, 1997; provided that HealthAmerica
shall not be entitled to terminate this Agreement pursuant to this ss.
9.1(b) if HealthAmerica's willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby; or
(c) By ProMedCo-Harrisburg, if any of the conditions provided in Article 8
hereof have not been met by October 31, 1997; provided that
ProMedCo-Harrisburg shall not be entitled to terminate this Agreement
pursuant to this ss. 9.1(c) if ProMedCo-Harrisburg's willful breach of
this Agreement has prevented the consummation of the transactions
contemplated hereby.
Notwithstanding anything to the contrary set forth herein, the parties
acknowledge and agree that the Exhibits 3.1, 3.9, 3.13, 3.14, 3.23A, 3.23B,
3.23C and 3.24B referred to in Article 3 herein were not prepared or delivered
to ProMedCo-Harrisburg prior to or contemporaneously with the execution of this
Agreement. By September 1, 1997, HealthAmerica shall deliver to
ProMedCo-Harrisburg all the remaining Exhibits referred to in Article 3, to be
prepared in accordance with Article 3 of this Agreement, and ProMedCo-Harrisburg
may, at its discretion, within seven days after its receipt of such Exhibits,
terminate this Agreement by notice to HealthAmerica if any information contained
in any of such Exhibits or any information obtained by ProMedCo-Harrisburg
pursuant to ss. 6.4 of this Agreement shall establish that any representation or
warranty of HealthAmerica contained in Article 3 of this Agreement or any
information previously furnished to ProMedCo-Harrisburg by HealthAmerica
concerning the Clinic Facility shall not be true and accurate in all material
respects as of the date of the termination notice or in the opinion of
ProMedCo-Harrisburg, any of such Exhibits shall disclose facts which shall be
materially adverse concerning the financial condition, business or operations of
the Clinic Facility.
9.2 Notice of Abandonment. In the event of such termination by either
ProMedCo and ProMedCo-Harrisburg or HealthAmerica pursuant to ss. 9.1 above,
written notice shall forthwith be given to the other party hereto.
9.3 Mandatory Termination. If the Closing has not occurred by October
31, 1997, this Agreement shall automatically terminate and no longer be of any
force or effect.
9.4 Termination. In the event this Agreement is terminated as provided
above, ProMedCo and ProMedCo-Harrisburg shall deliver to HealthAmerica all
documents (and copies thereof in their possession) concerning HealthAmerica and
its Affiliates previously delivered by HealthAmerica to ProMedCo and
ProMedCo-Harrisburg; and none of the parties nor any of their respective
partners, shareholders, directors, or officers shall have any liability to the
other party for costs, expenses, loss of anticipated profits, consequential
damages, or otherwise, except for any deliberate breach of any of the provisions
of this Agreement; provided however, if ProMedCo-Harrisburg terminates this
Agreement and abandons the transactions contemplated hereby for any reason other
than the following:
(i) Failure of HealthAmerica to satisfy the closing conditions to
ProMedCo-Harrisburg's performance set forth in xx.xx. 8.1 (with
respect to the truth of the Representations and Warranties at the date
hereof), 8.2, 8.4, 8.5 and 8.8;
(ii) Bankruptcy of HealthAmerica or of its parent corporation Coventry
Corporation;
(iii)The refusal or inability of HealthAmerica to consummate the
transactions contemplated hereby then ProMedCo shall pay HealthAmerica
$500,000 simultaneously with its delivery of the notice of abandonment
described in ss. 9.2.
ARTICLE 10 INDEMNIFICATION
10.1 Grant of Indemnity by HealthAmerica. Subject to the provisions of
ss. 11.15, HealthAmerica agrees to indemnify, defend and hold ProMedCo and
ProMedCo-Harrisburg and their Affiliates, and subsidiaries, and its and their
respective employees, representatives, officers and agents, harmless from and
against any claims, losses, settlement payments, liability, obligations,
lawsuits, deficiencies, encumbrances, damages or expense of whatever nature,
whether known or unknown, accrued, absolute, contingent or otherwise including
(without limitation) interest, penalties, attorneys' fees, costs of
investigation and all amounts paid in defense or
settlement of the foregoing, suffered or incurred by ProMedCo or
ProMedCo-Harrisburg as a result of the occurrence of any of the following: (i)
the Assets were subject to any liabilities or obligations of any kind, whether
accrued, absolute, contingent or otherwise, which are not being specifically
assumed by ProMedCo-Harrisburg hereunder, including without limitation,
liabilities for federal, state, local and other applicable taxes of every kind
and description, whether or not said liabilities or obligations are disclosed in
Exhibit 3.3; (ii) HealthAmerica did not have title to any of the Assets; (iii) a
breach of any obligation, representation, warranty, covenant or agreement made
by HealthAmerica in this Agreement or any agreement referred to herein or
because any document furnished or required to be furnished pursuant to this
Agreement by HealthAmerica to ProMedCo or ProMedCo-Harrisburg or any of their
representatives, or any documents furnished to ProMedCo and ProMedCo-Harrisburg
in connection with the Closing hereunder, shall be materially false or
misleading; (iv) any liability, obligation or litigation arising out of or based
upon events or operative facts occurring prior to the Closing Date, in
connection with the Assets, whether or not disclosed in Exhibit 3.15 except for
those liabilities and obligations expressly assumed by ProMedCo or ProMedCo
Harrisburg; (v) any employee benefits, including pension or retirement benefits,
and any severance payments to the employees of HealthAmerica which are or may be
assessed as a result of the transactions contemplated by this Agreement, payable
to or on behalf of the employees of HealthAmerica as of the Closing Date, or due
through the consummation of this Agreement; (vi) unless otherwise specifically
agreed in this Agreement, any and all claims, including legal, administrative or
creditor claims or actions, in connection with the Assets or their sale or
transfer hereunder, if any fact material to any such claim or cause of action
pleaded or stated there occurred prior to or on the Closing Date; (vii) all
claims and litigation and potential claims and litigation with respect to
incidents or other matters which occurred prior to the Closing Date related to
the business of the Clinic Facility; (viii) any other liabilities of
HealthAmerica pertaining to the business of the Clinic Facility, including any
professional malpractice liability of HealthAmerica or any individual physicians
associated therewith, whether absolute or contingent, known or unknown, matured
or unmatured and not expressly assumed hereunder pursuant to the Undertaking;
and (ix) reasonable costs and expenses (including reasonable attorneys' fees)
incurred by ProMedCo and ProMedCo-Harrisburg in connection with any demand,
action, suit, proceeding, assessment or judgment incident to any of the
foregoing.
10.2 Grant of Indemnity by ProMedCo and ProMedCo-Harrisburg. Subject to
the provisions of ss. 11.15, ProMedCo and ProMedCo-Harrisburg jointly and
severally agree to indemnify, defend and hold HealthAmerica and its Affiliates,
and subsidiaries, and its and their respective employees, representatives,
officers and agents, harmless from and against any claims, losses, settlement
payments, liability, obligations, lawsuits, deficiencies, encumbrances, damages
or expense of whatever nature, whether known or unknown, accrued, absolute,
contingent or otherwise including (without limitation) interest, penalties,
attorneys' fees, costs of investigation and all amounts paid in defense or
settlement of the foregoing, suffered or incurred by HealthAmerica or
HealthAmerica as a result of the occurrence of any of the following:
(i) a breach of any obligation, representation, warranty, covenant or agreement
made by ProMedCo-Harrisburg in this Agreement or any agreement referred to
herein or because any representation or warranty by ProMedCo-Harrisburg
contained herein, in any document furnished or required to be furnished pursuant
to this Agreement by ProMedCo-Harrisburg to HealthAmerica or any of its
representatives, or any documents furnished to HealthAmerica in connection with
the Closing hereunder, shall be false; (ii) any liability, obligation or
litigation arising out of or based upon events or operative facts occurring
after the Closing Date, in connection with the Assets; (iii) all claims and
litigation and potential claims and litigation with respect to incidents or
other matters which may occur after to the Closing Date related to the business
of ProMedCo-Harrisburg; and (iv) reasonable costs and expenses (including
reasonable attorneys' fees) incurred by HealthAmerica and HealthAmerica in
connection with any demand, action, suit, proceeding, assessment or judgment
incident to any of the foregoing.
10.3 Representation, Cooperation and Settlement.
(a) Each party agrees to give prompt notice to the other(s) of any claim
against the other(s) which might give rise to a claim based on the
indemnity contained in this Article 10, stating the nature and basis of
the claim and the amount thereof.
(b) In the event any claim, action, suit or proceeding is brought against
a party (the "Indemnified Party") with respect to which the other
party (the "Indemnifying Party") may have liability under the
indemnity contained in this Article 10, the Indemnified Party shall
permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting from such claim, provided that
ProMedCo-Harrisburg shall not be required to permit HealthAmerica to
assume the defense of any third party claim which if not first paid,
discharged, or otherwise complied with would result in an interruption
or cessation of the conduct of the ProMedCo-Harrisburg's business or
any material part thereof. Failure by the Indemnifying Party to notify
the Indemnified Party of its election to defend any such claim or
action by a third party within thirty (30) days after notice thereof
shall have been given by the Indemnified Party, shall be deemed a
waiver of any such election. If the Indemnifying Party assumes the
defense of such claim or litigation resulting therefrom, the
obligations of the Indemnifying Party hereunder as to such claim shall
include taking all steps reasonably necessary in the defense or
settlement of such claim or litigation resulting in the defense or
settlement of such claim or litigation resulting therefrom, including
the retention of counsel satisfactory to the Indemnified Party, and
holding the Indemnified Party harmless from and against any and all
damage resulting from, arising out of, or incurred with respect to any
settlement
approved by the Indemnifying Party or any judgment in connection with
such claim or litigation resulting therefrom. The Indemnifying Party
shall not, in the defense of such claim or litigation, consent to the
entry of any judgment (other than a judgment of dismissal on the merits
with costs) except with the written consent of the Indemnified Party
nor enter into any settlement (except with the written consent of the
Indemnified Party) which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified
Party a release from all liability in respect to such claim or
litigation.
(c) If the Indemnifying Party shall not assume the defense of any such
claim by a third party or litigation resulting therefrom, the
Indemnified Party may defend against such claim or litigation in such
manner as it deems appropriate. The Indemnifying Party shall, in
accordance with the provisions hereof, promptly reimburse the
Indemnified Party for the amount of any settlement reasonably entered
into by the Indemnified Party and for all damage incurred by the
Indemnified Party in connection with the defense against or settlement
of such claim or litigation.
10.4 Remedies Cumulative. The remedies provided herein shall be
cumulative and shall not preclude ProMedCo and ProMedCo-Harrisburg from
asserting any other rights or seeking any other remedies against HealthAmerica
to which ProMedCo and ProMedCo-Harrisburg are entitled by law. Notwithstanding
the foregoing, neither party shall have any liability under this Article 10 in
excess of the Consideration hereunder except for cases of fraud or other
intentional misconduct and neither party shall assert any claims for matters
involving less than $5,000 in the aggregate.
ARTICLE 11 MISCELLANEOUS
11.1 Expenses. All expenses of the preparation of this Agreement and of
the transactions contemplated hereby, including, without limitation, counsel
fees, accounting fees, investment adviser's fees and disbursements, shall be
borne by the respective parties incurring such expense, whether or not such
transactions are consummated.
11.2 Employee Transition.
(a) Termination of Affected Employees. Effective at the Closing Date,
HealthAmerica shall terminate all Affected Employees who shall be given
the option of becoming employees of ProMedCo-Harrisburg on terms
comparable to those in effect immediately prior to the Closing.
"Affected Employees" shall mean non-medical employees of HealthAmerica
on the Closing Date.
(b) Insurance and Benefit Plans. HealthAmerica shall use its best efforts
to satisfy, or cause its insurance carriers to satisfy, all claims for
medical, health and hospital benefits, whether insured or otherwise
(including, but not limited to, workers compensation, life insurance,
medical and disability programs), under
HealthAmerica's employee benefit plans brought by, or in respect of,
Affected Employees and former employees of the HealthAmerica prior to
the Closing Date, in accordance with the terms and conditions of such
employee benefit plans or applicable workers compensation statutes
without interruption as a result of the employment by
ProMedCo-Harrisburg of any such employees after the Closing Date.
(c) Payroll and Payroll Taxes. HealthAmerica shall make a clean cut-off of
payroll and payroll tax reporting with respect to the Affected
Employees paying over to the federal, state and city governments those
amounts respectively withheld or required to be withheld for periods
ending prior to the Closing Date. HealthAmerica shall issue, by the
date prescribed by IRS Regulations, Forms W- 2 for wages paid to the
Closing Date. ProMedCo-Harrisburg shall be responsible for all payroll
and payroll tax obligations accruing on and after the Closing Date for
Affected Employees.
(d) Termination Benefits. HealthAmerica shall be solely responsible for,
and shall pay or cause to be paid, severance payments and other
termination benefits, if any (not including state unemployment
compensation), to Affected Employees who may become entitled to such
benefits by reason of any events. If any action on the part of
HealthAmerica prior to the Closing or the purchase by
ProMedCo-Harrisburg of the Assets of HealthAmerica pursuant to this
Agreement or the transactions contemplated hereby, shall result in any
liability or claim of liability for severance payments or termination
benefits, or any liability, forfeiture, fine or other obligation by
virtue of any state, federal or local law, such liability or claim of
liability shall be the sole responsibility of HealthAmerica, and
HealthAmerica shall indemnify and hold harmless ProMedCo-Harrisburg
for any losses resulting directly or indirectly from such liability or
claim. ProMedCo-Harrisburg shall be solely responsible for and shall
pay or cause to be paid severance payments and other termination
benefits, if any, to Affected Employees who may become entitled to
such benefits by reason of events occurring after Closing. If any
action on the part of ProMedCo-Harrisburg after Closing shall result
in any liability or claim of liability for severance payments or
termination benefits, or any liability, forfeiture, fine or other
obligation by virtue of any state, federal or local law, such
liability or claim of liability shall be the sole responsibility of
ProMedCo-Harrisburg, and ProMedCo-Harrisburg shall indemnify and hold
harmless HealthAmerica for any losses resulting directly or indirectly
from such liability or claim.
(e) Employee Benefit Plans. At Closing, neither ProMedCo nor
ProMedCo-Harrisburg shall assume any responsibility under any employee
benefit plans maintained by HealthAmerica.
11.3 Occasional Sale. HealthAmerica, ProMedCo and ProMedCo-Harrisburg
believe that the transaction contemplated by this Agreement constitute the sale
of an entire operating unit or a separate division or a separate identifiable
segment of a division in accordance with the Pennsylvania Tax Code, and,
therefore, the sale of any and all items of tangible personal property to
ProMedCo-Harrisburg pursuant to this Agreement is exempt from any and all state
and local sales and use tax. In the event the transactions contemplated by this
Agreement do not qualify for such exemption or other applicable exemption and
the Commonwealth of Pennsylvania seeks to collect sale or use tax under the
Pennsylvania Tax Code, ProMedCo-Harrisburg shall be liable and responsible for
any such tax. HealthAmerica shall cooperate with ProMedCo-Harrisburg in
connection with any audit of this transaction regarding the application of the
sales tax law thereto.
11.4 Non-Assignable Property Interests.
(a) To the extent that any lease, contract, permit or other property
interest which would otherwise constitute a part of the Assets is not
capable of being assigned, transferred or subleased or if such
assignment, transfer or sublease or attempted assignment, transfer or
sublease would constitute a breach thereof or a violation of any law,
decree, order, regulation or other governmental edict, neither this
Agreement nor the Closing shall constitute an assignment, transfer or
sublease thereof, or an attempted assignment, transfer or sublease
thereof.
(b) To the extent that any lease, contract, permit or other property
interest constituting a part of the Assets is not capable of being
assigned, transferred or subleased, from and after the Closing Date,
and to the extent reasonably possible, HealthAmerica shall make all
benefits of such non-assignable interests available to
ProMedCo-Harrisburg at no charge, cost or expense to
ProMedCo-Harrisburg.
11.5 Cooperation by ProMedCo and ProMedCo-Harrisburg. In the event
HealthAmerica is required to defend against any action, suit or proceeding
arising out of a claim pertaining to the business or operations of
HealthAmerica, ProMedCo and ProMedCo-Harrisburg shall provide such assistance
and cooperation, including, without limitation, witnesses and documentary or
other evidence as may reasonably be requested by HealthAmerica in connection
with its defense.
11.6 Cooperation by HealthAmerica. In the event ProMedCo or
ProMedCo-Harrisburg is required to defend against any action, suit or proceeding
arising out of a claim pertaining to a liability assumed by ProMedCo-Harrisburg
pursuant to this Agreement relating to the business or operations of
HealthAmerica, HealthAmerica shall provide such assistance and cooperation,
including without limitation, witnesses and documentary or other evidence, as
may reasonably be requested by ProMedCo-Harrisburg in connection with its
defense.
11.7 Notices. All notices, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person or mailed by certified mail or registered mail (postage prepaid) or sent
by reputable overnight courier service (charges prepaid):
To HealthAmerica: HealthAmerica Pennsylvania, Inc.
5 Gateway Center
60 Blvd. Of the Allies
Xxxxxxxxxx, XX 00000
Attention: President
with a copy to: Xxx X. Xxxxxxxx, Esq.
Bass, Xxxxx & Xxxxx, PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
To ProMedCo and
ProMedCo-Harrisburg: ProMedCo Management Company
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, XX 00000
Attention: Chief Executive Officer
with a copy to Xxxx X. Xxxxxxx
Boult, Cummings, Xxxxxxx & Xxxxx
PLC 000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
or to such other address as either HealthAmerica or ProMedCo may designate by
notice to the other.
11.8 Entire Agreement. This Agreement and the Appendices, Exhibits,
schedules and documents delivered pursuant hereto constitute the entire contract
between the parties hereto pertaining to the subject matter hereof and supersede
all prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties, and there are no
representations, warranties or other agreements between the parties in
connection with the subject matter hereof, except as specifically set forth
herein. No supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the parties to be bound thereby.
11.9 Alternative Dispute Resolution. Any dispute, disagreement, claim
or controversy arising out of or related to this Agreement (a "Disputed Matter")
may, at the option of either party hereto upon written notice to the other
party, be submitted to non-binding mediation before a mutually acceptable
neutral advisor. To the extent the neutral advisor is compensated, the parties
shall each bear half the cost. Any Disputed Matter that is not resolved through
mediation will be settled by binding arbitration in accordance with the rules of
commercial arbitration of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Such arbitration shall occur within Dauphin County,
Pennsylvania, unless the parties mutually agree to have such proceedings in some
other locale. The arbitrator(s) may in any such proceeding award attorneys' fees
and costs to the prevailing party.
11.10 Governing Law. THE VALIDITY AND CONSTRUCTION OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
COMMONWEALTH OF PENNSYLVANIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF
PENNSYLVANIA. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE
COMMONWEALTH OF PENNSYLVANIA SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AGREEMENT, EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR
CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.
11.11 Time. Time is of the essence for purposes of each and every
provision of this Agreement.
11.12 Section Headings. The Section headings are for reference only and
shall not limit or control the meaning of any provision of this Agreement.
11.13 Waiver. No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.
11.14 Nature and Survival of Representations. All statements contained
in any certificate delivered by or on behalf of any of the parties to this
Agreement pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties made by the
respective parties hereunder. No representations or warranties made by the
parties shall survive the Closing by more than 12 months, except for the
following representations and warranties of ProMedCo and ProMedCo-Harrisburg, on
the one hand, and HealthAmerica, on the other hand: the representations and
warranties set forth in xx.xx. 3.6, 3.15, 3.17, 3.19, 3.20, and 3.22 shall
survive the Closing for the applicable period of limitations for the
commencement of actions.
11.15 Exhibits. All Exhibits, Appendices, schedules and documents
referred to in or attached to this Agreement are integral parts of this
Agreement as if fully set forth herein and all statements appearing therein
shall be deemed to be representations. All items disclosed hereunder shall be
deemed disclosed only in connection with the specific representation to which
they are explicitly referenced.
11.16 Assignment. Neither party shall assign this Agreement without
first obtaining the written consent of the other party (which consent may
require the assignee to sign an instrument reasonably satisfactory to the
consenting party formally assuming the obligations of the assigning party),
except ProMedCo and ProMedCo-Harrisburg shall have the right to assign this
Agreement to an Affiliate or any institutional lender providing financing to
ProMedCo and its subsidiaries.
11.17 Binding on Successors and Assigns. Subject to ss.11.16, this
Agreement shall inure to the benefit of and bind the respective heirs,
administrators, successors and assigns of the parties hereto. Nothing expressed
or referred to in this Agreement is intended or shall be construed to give any,
person other than the parties to this Agreement or their respective successors
or permitted assigns any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein, it being the
intention of the parties to this Agreement that this Agreement shall be for the
sole and exclusive benefit of such parties or such successors and assigns and
not for the benefit of any other person.
11.18 Parties in Interest. Nothing in this Agreement is intended to
confer any right on any person other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to modify or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third person any right of
subrogation or action over against any party to this Agreement.
11.19 Amendments. This Agreement may be amended, but only in writing,
signed by the parties hereto, at any time prior to the Closing.
11.20 Drafting Party. The provisions of this Agreement, and the
documents and instruments referred to herein, have been examined, negotiated,
drafted and revised by counsel for each party hereto and no implication shall be
drawn nor made against any party hereto by virtue of the drafting of this
Agreement.
11.21 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
11.22 Reproduction of Documents. This Agreement and all documents
relating thereto, including without limitation, consents, waivers and
modifications which may hereafter be executed, the Exhibits and documents
delivered at the Closing, and financial statements, certificates and other
information previously or hereafter furnished to either party to the other be
reproduced by either party by any photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and such party may
destroy any original documents so reproduced. Both parties agree and stipulate
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by the other party
in the regular course of business) and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
11.23 Access to Records After Closing. HealthAmerica will, and will
cause its counsel and certified public accountants to, afford to the
representatives of ProMedCo and ProMedCo-Harrisburg, including their counsel and
accountants, reasonable access to, and copies of, any records pertaining to the
business of the Clinic Facilities not transferred to ProMedCo-Harrisburg,
including, but not limited to, audit and tax work papers. ProMedCo and
ProMedCo-Harrisburg will afford to the representatives of HealthAmerica
reasonable access to, and copies of, the records transferred to
ProMedCo-Harrisburg at the Closing during normal business hours after the
Closing Date. Copies furnished to the party gaining such access shall be
furnished at the cost of the recipient.
11.24 Disclosure of Certain Information. HealthAmerica grants ProMedCo
authorization to disclose aggregate financial history and financial and other
information about HealthAmerica and about the Clinic Facility in order for
ProMedCo to comply with disclosure requirements in correction with the sale and
registration of its securities, and also to lenders, investment bankers and
other officials as deemed necessary by ProMedCo. ProMedCo shall use its best
efforts to maintain the confidentiality of such information through filing of
documents in redacted format if feasible, and, when practicable, shall give
HealthAmerica advance notice of any public filings of such information.
11.25 Press Releases. Except as required by law, HealthAmerica shall
not make any press releases or other public announcements relating to this
Agreement or the transactions contemplated hereby without the prior written
consent of ProMedCo-Harrisburg.
11.26 Waiver of Conflict. ProMedCo and HealthAmerica acknowledge that
the law firm of Boult, Cummings, Xxxxxxx & Xxxxx, PLC acted as counsel for
Coventry Corporation, the parent of HealthAmerica, at one time, and
HealthAmerica represents to ProMedCo that Boult, Cummings, Xxxxxxx & Xxxxx, PLC
no longer acts in such capacity. Both parties hereby waive any claim they may
have that Boult, Cummings, Xxxxxxx & Xxxxx, PLC may have a conflict of interest
in representing ProMedCo in the
transactions contemplated by this Agreement, and HealthAmerica hereby consents
to their so doing.
11.27 ProMedCo Guaranty. ProMedCo hereby guarantees the performance by
ProMedCo-Harrisburg of its obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
PROMEDCO MANAGEMENT COMPANY
By
Its Senior Vice-President
Name Xxxx X. Xxxxxxx
PHB MANAGEMENT COMPANY, INC.
By
Its Vice President
Name Xxxx X. Xxxxxxx
HEALTHAMERICA PENNSYLVANIA, INC.
By
Its Vice President & CEO
Name Xxx X. Xxxxxx
