MASTER TRANSACTION AGREEMENT by and among BASIC HEALTH CARE NETWORKS OF TEXAS, L.P. and BRUCE E. WARDLE’, D.O., P.A. IBERIA MEDICAL CLINIC, P.A. KINGSLEY MEDICAL CLINIC, P.A. LAKE JUNE MEDICAL CENTER, P.A. NORTHSIDE MEDICAL CLINIC, P.A. O’CONNOR...
EXHIBIT
2.5
by
and among
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
and
303
MEDICAL CLINIC, P.A.
XXXXX
X.
XXXXXX’, D.O., P.A.
IBERIA
MEDICAL CLINIC, P.A.
XXXXXXXX
MEDICAL CLINIC, P.A.
LAKE
JUNE
MEDICAL CENTER, P.A.
NORTHSIDE
MEDICAL CLINIC, P.A.
X’XXXXXX
MEDICAL CENTER, P.A.
RED
BIRD
URGENT CARE CLINIC, P.A.
and
XXXXX
XXXXXXX, as “Physician”
1
INDEX
ARTICLE
1
DEFINITIONS
ARTICLE
2
CLOSING
Section
2.1 Pre-Closing
Actions
Section
2.2 Closing
Section
2.3 Payment
of Consideration; Indemnity Obligations
Section
2.4 Noncompetition
and Confidentiality Covenants
Section
3.1 Representations
and Warranties of the Physician Parties
Section
3.2 Representations
and Warranties of the Physician
Section
4.1 Representations
and Warranties of the Company
Section
5.1 Conduct
of Business
Section
5.2 Access
to
Information and Records Before Closing
Section
5.3 No
Solicitation
Section
5.4 Certain
Notifications
Section
5.5 Updating
the Disclosure Schedule
Section
5.6 Master
Lease Agreement
ARTICLE
6
ADDITIONAL
AGREEMENTS
Section
6.1 Company
Registration Statement; Other Action
Section
6.2 Compliance
with Conditions Precedent; Further Assurances
Section
6.3 Certain
Notifications
Section
6.4 Amendment
to Schedules
Section
6.5 Each
Party to Obtain Own Tax Advice
Section
6.6 Investment
Representations and Covenants of Physician
Section
6.7 No
Corporate Practice
Section
6.8 Current
Public Information
Section
6.9 Reasonable
Efforts; Further Assurances; Cooperation
Section
6.10 No
Public
Announcement
Section
6.11 Confidentiality
Section
6.12 Transfer
of Employees and Accounts
Section
6.13 Advertising
Program
Section
6.14 Agreement
to Provide Information
2
Section
6.15 Maintenance
of Patient Records
Section
6.16 Employee
Information
ARTICLE
7
CONDITIONS
Section
7.1 Conditions
Precedent to the Obligations of All Parties
Section
7.2 Conditions
Precedent to the Obligations of the Company
Section
7.3 Conditions
Precedent to the Obligations of the Physician Parties
ARTICLE
8
CLOSING
Section
8.1 Closing
Section
8.2 Deliveries
to the Company at the Closing
Section
8.3 Deliveries
to the Physician Parties at the Closing
ARTICLE
9
TERMINATION
Section
9.1 Termination
by Mutual Agreement
Section
9.2 Termination
by the Company
Section
9.3 Termination
by the Physician Parties
Section
9.4 Termination
Date
ARTICLE
10 INDEMNIFICATION
Section
10.1 Indemnification
by the Physician Parties
Section
10.2 Indemnification
by the Company
Section
10.3 Notice
Section
10.4 Defense
of Third Party Claim
Section
10.5 Payment
of Losses
Section
10.6 Liquidated
Damages; Limitations
ARTICLE
11 MISCELLANEOUS
Section
11.1 Taxes
Section
11.2 Remedies
Not Exclusive
Section
11.3 Expenses
Section
11.4 Parties
Bound
Section
11.5 Notices
Section
11.6 Choice
of
Law
Section
11.7 Entire
Agreement; Amendments and Waivers
Section
11.8 Reformation
Clause
Section
11.9 Assignment
Section
11.10 Attorneys’
Fees
Section
11.11 Further
Assurances
Section
11.12 Announcements
and Press Releases
Section
11.13 No
Tax
Representations
3
Section
11.14 Multiple
Counterparts
Section
11.15 Headings
Section
11.16 Severability
Section
11.17 Negotiation
of Agreement
Section
11.18 Good
Faith and Fair Dealing
4
SCHEDULES
AND EXHIBITS
Exhibit
A
|
Asset
Purchase Agreement (for each individual Clinic)
|
Exhibit
B
|
Form
of Consulting Agreement
|
Exhibit
C
|
Form
of Non-Competition Agreement
|
Exhibit
D
|
Warrant
|
Exhibit
E
|
Master
Lease Agreement
|
Exhibit
F
|
Form
of Legal Opinion
|
Exhibit
G
|
Form
of Promissory Note
|
Disclosure
Schedule
|
|
Schedule
3.1 (u) - Clinic Leases
|
5
THIS
MASTER TRANSACTION AGREEMENT (“Master
Transaction Agreement”),
dated
and effective as of December 12, 2005, is by and among BASIC HEALTH CARE
NETWORKS OF TEXAS, L.P., a Texas limited partnership (the “Company”)
on the
one hand and 303 MEDICAL CLINIC, P.A. , a Texas professional association, XXXXX
X. XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL CLINIC,
P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas
professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional
association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association,
X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT
CARE CLINIC, P.A., a Texas professional association (collectively, the
“Clinics”)
and
Xxxxx X. Xxxxxxx, D.O. (“Physician”).
A. |
Physician
is a physician licensed to practice medicine in the State of Texas.
Physician currently owns and conducts his medical practice through
the
Clinics, each of which is wholly-owned by the
Physician.
|
B. |
Physician
desires to sell and transfer, and the Company desires to acquire,
the
accounts receivable and good will of the Clinics, including but not
necessarily limited to the right to business and operational records,
the
trade names, trademarks and service marks used by the Clinics, and
protocols and procedures and other intellectual property, through
the
consummation of the transactions described in this Master Transaction
Agreement.
|
C. |
It
is contemplated that each of the Clinics shall sell, transfer and
assign
such receivables and good will to the Company pursuant to a separate
asset
purchase agreement.
|
D. |
It
is also contemplated that one or more newly formed Texas professional
associations owned by Texas licensed physician(s) to be designated
by the
Company prior to the Closing (each, a new “New
PA”),
shall hire certain employees of the Clinics and shall continue to
conduct
the practices of the Clinics following the closing of the transactions
under this Agreement.
|
E. |
The
parties to this Master Transaction Agreement desire to set forth
the terms
and conditions upon which the transactions described above shall
be
accomplished and to agree upon other matters set forth
herein.
|
6
ARTICLE
1
DEFINITIONS
For
purposes of this Master Transaction Agreement, the following terms, in addition
to other capitalized terms used in this Master Transaction Agreement that are
defined elsewhere herein, shall have the meanings set forth herein.
“Accounts
Receivable”
shall
mean the accounts receivable of all of the Clinics as of the Closing Date.
“Affiliate”
shall
mean any member of the immediate family (including spouse, brother, sister,
descendant, ancestor or in-law) of any officer, director or stockholder of
any
Physician Party or any corporation, partnership, trust or other entity in which
a Physician Party or any such family member has a five percent (5%) or greater
interest or is a director, officer, partner or trustee. The term Affiliate
shall
also include any entity which controls, or is controlled by, or is under common
control with any of the individuals or entities described in the preceding
sentence.
“Asset
Purchase Agreements”
means
the Asset Purchase Agreements (each individually, an “Asset Purchase Agreement”)
to be executed by and between the Company and each of the Clinics, each
substantially in the form set forth in Exhibit
A.
“Audited
Financial Statements”
means,
with respect to a Clinic or the Clinics, shall have the meaning set forth in
Section 3.1(d) hereof with respect to such Clinic.
“Aggregate
Consideration”
consists of Total Cash Consideration and the Warrant, and shall have the meaning
set forth in Section 2.3(a) hereof.
“Balance
Sheet Date,”
with
respect to a Clinic or the Clinics, shall have the meaning set forth in Section
3.1(d) hereof with respect to such Clinic or Clinics.
“Balance
Sheet Date”
shall
mean September 30, 2005.
“Closing
Cash Amount”
shall
have the meaning set forth in Section 2.3(a)(i) hereof.
“Closing
Date”
shall
have the meaning set forth in Section 2.2 hereof.
“Closing”
means
the closing of the transactions contemplated by this Master Transaction
Agreement and the Asset Purchase Agreements.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Consulting
Agreements”
shall
mean the consulting agreements substantially in the form set forth in
Exhibit
B
attached
hereto to be entered into between the Company and each of the Key Persons.
7
“Contract”
or
“Contracts”
shall
mean all contracts and commitments outstanding and in effect on the date hereof
or at the Closing Date (as applicable), together with all amendments thereto,
to
which the Clinics are a party.
“Disclosure
Schedule”
means,
with respect to the representations and warranties set forth herein, the
disclosure schedule attached hereto setting forth, with reference to the
applicable section and subsection of this Master Transaction Agreement, certain
information and exceptions to the representations, warranties and covenants
of
the Physician Parties.
“Encumbrance”
shall
mean any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, equity, trust, equitable interest, claim, preference, right of
possession, lease, tenancy, license, encroachment, covenant, infringement,
interference, Order, proxy, option, right of first refusal, preemptive right,
community property interest, legend, defect, impediment, exception, reservation,
limitation, impairment, imperfection of title, condition or restriction of
any
nature (including any restriction on the voting of any security, any restriction
on the transfer of any security or other asset, any restriction on the receipt
of any income derived from any asset, any restriction on the use of any asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset).
“Entity”
shall
mean any professional association, corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust or company (including any limited
liability company or joint stock company).
“Environmental
Laws”
shall
have the meaning set forth in Section 3.1(m) hereof.
“ERISA”
shall
have the meaning set forth in Section 3.1(l) hereof.
“Exchange
Act”
shall
mean The Securities Exchange Act of 1934, as amended.
“Company
Financial Statements”
shall
have the meaning set forth in Section 4.1(d) hereof.
“Company
Common Stock”
means
the Common Stock, par value $.001 per share, of Basic Care Networks, Inc.,
a
Delaware corporation.
“Company
Indemnified Persons”
shall
have the meaning set forth in Section 10.1(a) hereof.
“Financial
Statements”
shall
mean, collectively, the Audited Financial Statements and the Interim Financial
Statements.
“GAAP”
means
generally accepted accounting principles in the United States, consistently
applied.
8
“Governmental
Authority”
means
any national, state, provincial, local or tribal governmental, judicial or
administrative authority or agency.
“Hazardous
Wastes”
shall
have the meaning set forth in Section 3.1(m) hereof.
“Indemnity
Loss”
shall
have the meaning set forth in Section 10.1(a) hereof.
“Initial
Public Offering”
shall
mean the firm commitment underwritten initial public offering of the parent
company of the Company, contemplated by the Registration Statement.
“Knowledge”
with
respect to any individual in this Agreement shall means facts or circumstances
that such party actually knows or would know upon reasonable investigation,
and
with respect to any entity, such knowledge of the officers and directors of
such
entity.
“Legal
Requirement”
shall
mean any federal, state, local, municipal, foreign or other law, statute,
legislation, constitution, principle of common law, resolution, ordinance,
code,
Order, edict, decree, proclamation, treaty, convention, rule, regulation,
permit, ruling, directive, pronouncement, requirement (licensing or otherwise),
specification, determination, decision, opinion or interpretation that is,
has
been or may in the future be issued, enacted, adopted, passed, approved,
promulgated, made, implemented or otherwise put into effect by or under the
authority of any Governmental Authority.
“Master
Lease Agreement”
shall
mean the master lease agreement entered into between the Company and BEW
Financing, L.P., effective as of the date of the Closing, under which the
Company shall lease the premises formerly used in the Practice by the Clinics
(and to be used by the New PA), and certain equipment, fixtures and furniture,
from BEW Financing, L.P., in the form attached hereto as Exhibit
E.
“Material
Adverse Effect”
means
(i) with respect to the Company, any event, change or effect that, when
taken individually or together with all other adverse events, changes and
effects, is or is reasonably likely (a) to be materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects of the Company, or (b) to
prevent or materially delay consummation of the Transaction or otherwise to
prevent the Company from performing its obligations under this Agreement and
(ii) with respect to the Physician Parties, any event, change or effect
that, when taken individually or together with all other adverse events, changes
and effects, is or is reasonably likely (a) to be materially adverse to the
condition (financial or otherwise), properties, assets (including Assets),
liabilities business, operations, results of operations or prospects of
Physician Parties or the Practice or (b) to prevent or materially delay
consummation of the Transaction or otherwise to prevent any of the Physician
Parties from performing their obligations under this Agreement.
9
“NASD”
means
the National Association of Securities Dealers, Inc.
“NASDAQ”
means
the National Association of Securities Dealers Automated Quotation
System.
“New
PA”
means
a
newly formed Texas professional association owned by a Texas-licensed physician
to be designated by the Company prior to the Closing.
“Non-Competition
Agreements”
shall
mean the non-competition agreements substantially in the form attached hereto
as
Exhibit
C,
to be
entered into between the Company and each of the Key Persons.
“Order”
shall
mean any: (a) temporary, preliminary or permanent order, judgment,
injunction, edict, decree, ruling, pronouncement, determination, decision,
opinion, verdict, sentence, stipulation, subpoena, writ or award that is or
has
been issued, made, entered, rendered or otherwise put into effect by or under
the authority of any court, administrative agency or other Governmental
Authority or any arbitrator or arbitration panel; or (b) Contract with any
Governmental Authority that is or has been entered into in connection with
any
Proceeding.
“Physician
Indemnified Persons”
shall
have the meaning set forth in Section 10.2 hereof.
“Physician
Parties”
means
the Physician and each of the Clinics.
“Practice”
means,
with respect to a Clinic or the Clinics in the aggregate (depending on the
context in which used) the acute care, medical and all other related health-care
practices conducted from time to time by the Clinics prior to Closing.
“Proceeding”
shall
mean any action, suit, litigation, arbitration, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), prosecution,
contest, hearing, inquiry, inquest, audit, examination or investigation that
is,
has been or may in the future be commenced, brought, conducted or heard at
law
or in equity or before any Governmental Authority or any arbitrator or
arbitration panel.
“Real
Property Leases”
shall
mean, collectively, the real property leases referenced in Schedule 3.1(u)
hereof.
“Receivable”
shall
mean, collectively, all accounts and notes receivable, checks, negotiable
instruments and chattel papers, including the Accounts Receivable listed on
each
Schedule 1.1(a)
of the
Asset Purchase Agreements.
“Registration
Statement”
shall
have the meaning set forth in Section 6.1(a) hereof.
“SEC”
shall
mean the Securities and Exchange Commission.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
10
“Securities”
means
the Warrant to be issued to the Physician pursuant to this Master Transaction
Agreement.
“Tax”
(and,
with correlative meaning, “Taxes”
and
“Taxable”)
means
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax, governmental
fee or other assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount and any interest
on such penalty, addition to tax or additional amount, imposed by any Tax
Authority.
“Tax
Authority”
means
Governmental Authority responsible for the imposition, assessment or collection
of any Tax (domestic or foreign).
“Tax
Return”
shall
mean any return, statement, declaration, notice, certificate or other document
that is or has been filed with or submitted to, or required to be filed with
or
submitted to, any Governmental Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement related to any Tax.
“Termination
Date”
shall
have the meaning set forth in Section 9.4 hereof.
“Trading
Day”
shall
mean any day on which the NASDAQ stock market or any successor entity is open
for trading, or if NASDAQ and its successors cease to conduct a securities
trading business, any day on which any national securities exchange is open
for
trading.
“Transaction”
shall
mean, collectively, the transactions contemplated by this
Agreement.
“Transaction
Documents”
means
this Master Transaction Agreement, the Consulting Agreement, the Note, the
Asset
Purchase Agreements, the Master Lease Agreement, and each other document and
instrument executed and delivered at this Closing.
“Warrant”
shall
have the meaning set forth in Section 2.3(a)(iii) hereof.
“Work
Hardening Centers”
shall
mean each of Fort Worth Rehabilitation, Inc. d/b/a North Texas Rehab Center,
000
X. Xxxxxxxx Xxxxx, Xxxx Xxxxx, Xxxxx 00000, and Rehabilitation Physician’s
Network, Inc., a Texas corporation d/b/a North Texas Rehab Center, 0000 Xxxx
Xxxxxx, Xxxxxx, Xxxxx 00000.
“Work
Hardening Purchase Agreements”
shall
mean the agreements described in Section 2.1(b).
11
ARTICLE
2
CLOSING
2.1
Pre-Closing
Actions.
Prior
to the Closing, the following actions shall occur in the order set forth in
this
Section
2.1:
(a) the
Physician and each of the Clinics shall have terminated any existing employment
and other agreements, oral, written or otherwise, between the Physician and
each
of the Clinics;
(b) the
Physician shall have entered into asset purchase agreements with each of the
Work Hardening Centers (the “Work
Hardening Purchase Agreements”),
in a
form which shall be acceptable to the Company, for the purchase of assets from
the Work Hardening Centers, and all conditions precedent for closing under
such
agreements shall have been fulfilled;
(c) the
Physician shall have executed an agreement with the Company to assign all of
Physician’s rights under the Work Hardening Purchase Agreements to the Company,
effective at the Closing; and
(d) each
of
the Clinics, Physician, and the Company shall have executed and delivered this
Master Transaction Agreement, and each of the Transaction Documents.
2.2
Closing.
The
Closing shall take place on or
before
(a) April 2, 2006, provided that the conditions in Article 7 are satisfied,
or
(b) on a date mutually agreed by the parties.
The date
on which the Closing occurs is hereinafter referred to as the “Closing
Date.”
At
the
Closing, each of the Clinics and the Company shall execute and deliver an
executed Asset Purchase Agreement in the form attached as Exhibit
A
hereto
with respect to each such Clinic, including each of the closing deliverables
set
forth in such Asset Purchase Agreement.
2.3
Payment
of Consideration; Indemnity Obligations.
At the
Closing, after the occurrence of the events described in Sections 2.1 and 2.2,
and the satisfaction of each condition set forth in article 7, the Company
shall
deliver the following consideration to the Physician in the amounts and on
the
dates set forth below:
(a)
Purchase
Price.
Subject
to the terms of this Agreement, as full consideration for the sale, assignment,
transfer and delivery of the Assets of the Clinics and the mutual execution
and
delivery of the Transaction Documents the Company shall execute and deliver
to
Physician at the Closing the aggregate consideration (“Aggregate
Consideration”)
payable in the following manner:
(i)
|
A
wire transfer of immediately available U.S. funds in a amount equal
to
FIFTEEN
MILLION SIX HUNDRED SEVENTY NINE THOUSAND ONE HUNDRED EIGHTY
FOUR ($15,679,184) (the
“Closing
Cash Amount”);
|
12
(ii)
|
A
promissory note issued to the Physician in the amount of $500,000,
in the
form attached as Exhibit
G
hereto; and
|
(iii)
|
A
warrant substantially in the form set forth in Exhibit
D
(“Warrant”)
for the purchase of the number of shares of the Company Common Stock
and
at the exercise price determined in accordance with the formulas
set forth
therein, with an aggregate exercise price of $1,500,000.
|
2.4
Noncompetition
and Confidentiality Covenants.
In
connection with the consummation of the transactions contemplated by this Master
Transaction Agreement, and by executing and delivering certain of the other
Transaction Documents, the Key Persons will be entering into certain
non-competition and confidentiality covenants. The Key Persons recognize that
such covenants are an essential part of the transactions contemplated by this
Master Transaction Agreement and certain other Transaction Documents and that,
but for the contemplated agreement of the Physician Parties to comply with
such
covenants, the Company would not have entered into this Master Transaction
Agreement.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF THE PHYSICIAN PARTIES
3.1
Representations
and Warranties of the Physician Parties.
The
Physician Parties jointly and severally represent and warrant to the Company
that:
(a)
Organization,
Valid Authorization and Good Standing.
Each of
the Clinics is a Texas professional association duly organized, validly existing
and in good standing under the laws of the State of Texas. Each of the Clinics
has the power and authority to own all of its properties and assets and to
conduct the Practice prior to the Closing Date. Each of the Clinics has the
power and authority to enter into the Transaction Documents to which it is
a
party and to carry out its obligations thereunder. The execution and delivery
of
the Transaction Documents to which each of the Clinics will be a party and
the
consummation of the transactions contemplated thereby have been duly and validly
authorized by each of the Clinics, and no other corporate or other proceedings
on the part of each of the Clinics are necessary to authorize the execution
and
delivery of such Transaction Documents and the transactions contemplated
thereby. This Master Transaction Agreement has been duly and validly executed
and delivered by each of the Clinics and constitutes the valid and binding
agreement of each of the Clinics enforceable against it in accordance with
its
terms. Each Transaction Document executed and delivered by each of the Clinics
will upon such execution and delivery constitute the valid and binding agreement
of such party enforceable against it in accordance with its terms, except as
enforcement in general may be limited by any applicable bankruptcy, insolvency,
reorganization or other laws affecting creditor’s rights generally or by the
application of equitable remedies. Except for the Clinics and except as set
forth in the Disclosure Schedule, Physician does not own any shares of capital
stock or other securities of, or control, directly or indirectly, any other
Entity which provides medical services.
13
(b)
Compliance.
Except
as set forth on the Disclosure Schedule, the execution and delivery of the
Transaction Documents and the consummation of the transactions contemplated
thereby by each of the Clinics will not (i) violate any provision of their
respective organizational documents, (ii) violate any material provisions of
or
result in the breach of or entitle any party to accelerate (whether after the
giving of notice or lapse of time or both) any material obligation under, any
mortgage, lien, lease, contract, license, instrument or any other agreement
to
which the Clinics are a party, (iii) result in the creation or imposition of
any
material lien, charge, pledge, security interest or other material encumbrance
upon any property of any of the Clinics or (iv) violate or conflict with any
order, award, judgment or decree or other material restriction or any law,
ordinance or regulation to which each of the Clinics or its properties are
or
will be subject.
(c)
Approvals.
To the
best of Physician Parties knowledge, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority or other person is required in connection with the execution and
delivery of the Transaction Documents by the Clinics or the consummation by
such
Clinics of the transactions contemplated thereby.
(d)
Financial
Statements.
Each of
the Clinics has furnished to the Company such Clinics’ financial statements for
the years ended December 31, 2002, 2003 and 2004 (collectively, the
“Audited
Financial Statements”),
for
the six months ended June 30, 2005, and for the three months ended September
30,
2005 (“Interim
Financial Statements”),
all
of which have been audited by an accounting firm of the Company’s choice,
consisting of a balance sheet, the related statements of income and changes
in
stockholders’ equity. To the best of the Physician Parties knowledge and except
as disclosed on the Disclosure Schedule, the Audited Financial Statements of
each respective Clinic (i) has been prepared in accordance with GAAP, (ii)
is
true, complete and correct in all material respects as of the respective dates
and for the respective periods above stated and (iii) fairly presents the
financial position of each of the Clinics at such dates and the results of
its
operations for the periods ended on such dates. Except as set forth in the
Disclosure Schedule, each Audited Financial Statement of each respective Clinic
reflects all of the liabilities and obligations of such Clinic.
(e)
Undisclosed
Liabilities.
To the
best knowledge of the Physician Parties there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand against any of the Clinics giving rise to any liability, except
as set forth on the Financial Statements of such Clinics, or on the Disclosure
Schedule.
(f)
Absence
of Changes or Events.
Except
as set forth on the Disclosure Schedule, since the Balance Sheet Date, each
Clinic has conducted its Practice only in the ordinary course of business,
and
none of the Clinics have:
14
(i)
incurred
any obligation or liability, absolute, accrued, contingent or otherwise, whether
due or to become due, whether individually or in the aggregate, that has had
or
would have a material adverse effect on the Assets;
(ii)
pledged
or subjected to any material lien, charge, security interest or any other
encumbrance or restriction on any of the Assets;
(iii)
sold,
transferred, leased to others or otherwise disposed of any of the Assets, except
in the ordinary course of the business of such Clinic(s);
(iv)
suffered
any damage, destruction or loss that, individually or in the aggregate, has
had
or might have a material adverse effect on such Clinic or its
Practice;
(v)
instituted,
settled or agreed to settle any litigation, action, proceeding or
arbitration;
(vi)
failed
to
replenish its inventory or supplies in a normal and customary manner or made
any
material purchase commitment other than in the ordinary course of business
of
such Clinic;
(vii)
failed
to
pay any accounts or note payable or any other obligations on a timely basis
consistent with the practice of such Clinic;
(viii)
except
as
contemplated in this Master Transaction Agreement and the related Transaction
Documents, entered into any material transaction, contract or commitment other
than in the ordinary course of the business of such Clinic; or
(ix)
suffered
any event or events, whether individually or in the aggregate, that has had
or
could be reasonably expected to have a material adverse effect on the financial
condition, results of operations, properties, assets, liabilities, business
or
operations of the Clinic or its Practice.
(g)
Proceedings
and Orders.
To the
best knowledge of the Physician Parties, there is no Proceeding pending or
threatened against or affecting the Physician Parties, any of the Physician
Parties’ properties, assets (including the Assets), operations or businesses
(including the Practice), or the Physician Parties’ respective rights relating
thereto. To the best knowledge of the Physician Parties, no event has occurred,
and no condition or circumstance exists, that might directly or indirectly
give
rise to or serve as a basis for the commencement of any such Proceeding. To
the
best of the Physician’s party knowledge, no insurance company has asserted in
writing that any such Proceeding is not covered by the applicable policy related
thereto. No Physician Party, its officers, directors, agents or employees,
nor
any of the Physician Parties’ properties, assets (including the Assets),
operations or businesses (including the Practice), nor the Physician Parties’
rights relating to any of the foregoing, is subject to any Order or any proposed
Order, except to the extent that any such proposed Order, if issued or otherwise
put into effect, individually or in the aggregate, will not have a Material
Adverse Effect on the Physician Parties. To the best knowledge of the Physician
Parties, no claim is pending or has been threatened, and no condition exists,
which is likely to interfere with the Company’s right to possess, use and
license and/or sublease the premises, equipment, fixtures and furnishings under
the Master Lease Agreement.
15
(h)
Compliance
with Laws.
To the
best of the Physician Parties’ knowledge, each of the Clinics has all permits,
licenses, orders, and approvals of all Governmental Authorities material to
the
conduct of its Practice. To the best of the Physician Parties’ knowledge, all
such permits, licenses, orders and approvals are in full force and effect,
and
no suspension or cancellation of any of them is pending or threatened. The
Physician Parties have not received any written notice of violation that any
of
the Clinics in its conduct of the Practice has not complied in any material
respects with any rule or regulation of any Governmental Authority having
authority over each of the Clinics, including without limitation, agencies
concerned with occupational safety, environmental protection, employment
practices, and Medicare and Medicaid requirements applicable to the billing
procedures of each Clinic (except denials of claims in the ordinary course
of
business).
(i)
Insurance.
To the
best knowledge of the Physician Parties, all insurance policies maintained
by
each of the Clinics or the Physician in connection with the operation of the
respective Practices are in full force and effect, and all premiums due on
such
policies have been paid. To the best knowledge of the Physician Parties the
insureds under each such policy have complied in all material respects with
the
provisions of all such policies.
(j)
Tax
Matters.
None of
the Physician Parties have been placed on notice of any audit, examination
or
any similar investigation by any Governmental Authority.
(k)
Contracts.
None of
the Clinics are a party to any Contract that may not be terminated by either
party to such contract on thirty days notice.
Each
of
the Clinics has made available to the Company complete and correct copies of
all
written agreements, contracts and commitments, together with all amendments
thereto, and accurate descriptions of all oral agreements. To the best of the
Physician Parties’ knowledge all such agreements, contracts and commitments are
in full force and effect and, all parties thereto have performed all material
obligations required to be performed by them to date, are not in default in
any
material respect thereunder, and have not violated any representation or
warranty contained therein. To the best of the Physician Parties’ knowledge, no
claim or default by any party has been made or is now pending under any such
agreement, contract or commitment, and, to the best of the Physician Parties’
knowledge, no event has occurred and is continuing that with notice or the
passing of time or both would constitute a default thereunder or would excuse
performance by any party thereto.
16
(l)
Employee
Benefit Plans.
Except
as set forth on the Disclosure Schedule, neither each of the Clinics nor any
other entity, whether or not incorporated, which is deemed to be under common
control (as defined in Section 414 of the Code or 4001(b) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”),
with
each of the Clinics (“Commonly
Controlled Entity”)
maintains or contributes to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) that is a defined contribution plan described in Section
3(34) of ERISA or Section 414(i) of the Code, or that is a defined benefit
plan
described in Section 3(35) of ERISA or Section 414(j) of the Code, and that
gives, or will give, rise to any liability of each of the Clinics for (i) any
premium payments due under Section 4007 of ERISA with respect to any such
defined benefit plan, or (ii) any unpaid minimum funding contributions that
would result in the imposition of a lien on any assets of each of the Clinics
pursuant to Section 412(c)(11) of the Code or Section 302(c)(11) of ERISA.
Neither the Clinics nor any Commonly Controlled Entity sponsors or sponsored,
or
maintains or maintained, any defined benefit plan (described in the immediately
preceding sentence) that has been, or will be, terminated in a manner that
would
result in any liability of each of the Clinics to the Pension Benefit Guaranty
Corporation or that would result in the imposition of a lien on any assets
of
each of the Clinics pursuant to Section 4068 of ERISA.
At
no
time during the five (5) consecutive year period immediately preceding the
first
day of the year in which the Closing Date occurs has any of the Clinics or
any
Commonly Controlled Entity participated in or contributed to any multiemployer
plan defined in Section 4001(a)(3) of ERISA, or Section 414(f) of the Code,
nor
to the best of the Physician Parties’ knowledge during such period has any
Clinic or any Commonly Controlled Entity had an obligation to participate in
or
contribute to any such multiemployer plan. Except as set forth on the Disclosure
Schedule, each of the Clinics is not obligated under any agreement or other
arrangement pursuant to which compensation or benefits will become payable
as a
result of the consummation of the transactions contemplated in this Master
Transaction Agreement. To the best of the Physician Parties’ knowledge neither
each of the Clinics nor any of its respective directors, officers, employees
or
agents, has, with respect to any employee benefit plan (as defined in Section
3(3) of ERISA), that is or has been established by or contributed to, or with
respect to which costs or liabilities are accrued by each of the Clinics engaged
in any conduct that would result in any material taxes or penalties on
prohibited transactions under Section 4975 of the Code or under Section 502(i)
or (1) of ERISA or in breach of fiduciary duty liability under Section 409
of
ERISA which, in the aggregate, could be material to the business, financial
condition or results of operation of each of the Clinics, taken as a whole,
and
to the best of the Physician Parties’ knowledge no actions, investigations,
suits or claims with respect to the fiduciaries, administrators or assets of
any
such employee benefit plan (other than routine claims for benefits) is pending
or threatened, which, in the aggregate, could reasonably be expected to give
rise to material liability of each of the Clinics, or which could be material
to
the business, financial condition or results of operations of each of the
Clinics, taken as a whole. No Clinic maintains a welfare benefit plan (as
defined in Section 3(1) of ERISA) provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee, officer
or director of each of the Clinics other than “continuation coverage” required
under the Comprehensive Omnibus Budget Reconciliation Act of 1985. To the best
of the Physician Parties’ knowledge any and all plans, policies, programs or
arrangements of each of the Clinics or any Commonly Controlled Entity which
are
subject to Section 4980B of the Code have been and are in compliance with the
requirements of Section 4980B of the Code and Part 6 of Title I of ERISA. Each
of the Clinics will remain fully liable with respect to all plans, programs,
policies or other arrangements, including but not limited to any pension,
profit-sharing, thrift or other retirement plan; deferred compensation; or
any
other pension benefit plan of any kind; stock ownership, stock purchase,
performance share, bonus or other incentive plan; severance plan; disability,
medical, dental, vision or other health plan; life insurance or death benefit
plan; vacation, sick leave, holiday or other paid leave plan; cafeteria plan,
medical flexible spending account reimbursement plan; dependent care plan;
or
any other welfare benefit plan of any kind; or any other benefit plan, policy,
program or arrangement whether or not any such plan, policy, program or other
arrangement is, or is intended to be, qualified under Section 401(a) of the
Code, and whether or not any such plan, policy, program or arrangement is
subject to the provisions of ERISA prior to the Closing, and the Company will
not be required to assume by law or under any form of any such plans, policies,
programs or arrangements any of the liabilities for or under such plans,
policies, programs or arrangements.
17
(m)
Environmental
Protection.
To the
best of the Physician Parties’ knowledge each of the Clinics has obtained all
permits, licenses and other authorizations that are required for the conduct
of
its Practice under any federal, state and local laws and the regulations
promulgated thereunder relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of hazardous substances, materials or wastes (collectively,
“Hazardous
Wastes”),
into
the environment (including, without limitation, ambient air, surface water,
ground water, or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
Hazardous Wastes (collectively, “Environmental
Laws”).
To
the best of the Physician Parties’ knowledge each of the Clinics and the
Practice is in material compliance with all terms and conditions of such
required permits, licenses and authorizations, and is also in compliance with
all applicable Environmental Laws. To the best of the Physician Parties’
knowledge there are no pending or, to the best of Physician Parties’ knowledge,
threatened, investigations, actions or proceedings of whatsoever nature
involving any of the Clinics or the Practice arising under any Environmental
Law.
(n)
Employees.
The
Disclosure Schedule sets forth a complete list of the names and positions held
of all employees of the Clinics, and the current annual rate of compensation,
including bonus compensation, paid to each such employee.
(o)
Brokers.
To the
best of the Physician Parties’ knowledge all negotiations relating to the
Transaction Documents and the transactions contemplated hereby have been carried
on without the intervention of any person acting on behalf of the Physician
Parties as a group in such manner as to give rise to any valid claim for any
broker’s or finder’s fee or similar compensation.
18
(p)
|
Employees
and Consultants.
|
(i) Employees
and Contracts.
No
employee of any Clinic has been granted the right to continued employment by
such Clinic or to any material compensation following termination of employment
with such Clinic. Physician Parties have no knowledge that any officer,
director, employee or consultant of a Clinic (collectively, the “Contractors”)
intends to terminate his or her employment or other engagement with a Clinic,
nor does any Physician Party have a present intention to terminate the
employment or engagement of any Contractor.
(ii)
Disputes.
There
are no claims, disputes or controversies pending or, to the knowledge of the
Physician Parties, threatened involving any employee or group of employees.
No
Clinic has suffered or sustained any work stoppage and no such work stoppage
is
threatened.
(iii)
Compliance
with Legal Requirements.
To the
best of the Physician Parties’ knowledge each Clinic has complied with all Legal
Requirements related to the employment of its employees, including provisions
related to wages, hours, leaves of absence, equal opportunity, occupational
health and safety, workers’ compensation, severance, employee handbooks or
manuals, collective bargaining and the payment of social security and other
Taxes. To the best of the Physician Parties’ knowledge no Clinic has any
liability under any Legal Requirements related to employment and attributable
to
an event occurring or a state of facts existing prior to the date
thereof.
(v)
WARN
Act.
To the
best of the Physician Parties’ knowledge each Clinic is in full compliance with
the Worker Readjustment and Notification Act (the “WARN
Act”)
(29
USC Sec.2101), including all obligations to promptly and correctly furnish
all
notices required to be given thereunder in connection with any “plant closing”
or “mass layoff” to “affected employees,” “representatives” and any state
dislocated worker unit and local government officials.
(vi)
Unions.
No
Clinic has any collective bargaining agreements with any of its employees.
To
the best of the Physician Parties’ knowledge there is no labor union organizing
or election activity pending or threatened with respect to any Clinic.
(q)
Transactions
with Affiliates.
Except
as set forth in the Financial Statements and the Disclosure Statement, no
Affiliate (a) owns, directly or indirectly, any debt, equity or other
interest in any Entity with which a Physician Party is affiliated, has a
business relationship or competes other than Affiliates that own less than
five
percent (5%) of the issued and outstanding capital stock of a publicly-traded
competitor of a Physician Party; (b) is indebted to any Physician Party,
nor is any Physician Party indebted (or committed to make loans or extend or
guarantee credit) to any Affiliate other than with respect to any of such
Physician Party’s obligations to pay accrued salaries, reimbursable expenses or
other standard employee benefits; (c) has any direct or indirect interest
in any asset (including the Assets), property or other right used in the conduct
of or otherwise related to the Practice; (d) has any claim or right against
any Physician Party, and to the best of the Physician Parties’ knowledge no
event has occurred, and no condition or circumstance exists, that might (with
or
without notice or lapse of time) directly or indirectly give rise to or serve
as
a basis for any claim or right in favor of any Affiliate against a Physician
Party; (e) is a party to any Physician Party Contract or has had any direct
or indirect interest in, any Physician Party Contract, transaction or business
dealing of any nature involving any Physician Party; or (f) received from
or furnished to a Physician Party any goods or services (with or without
consideration) since December 31, 2004.
19
(r)
Accounts
Receivable.
An
accurate and complete list of all Accounts Receivable existing as of September
30, 2005, will be provided to the Purchaser prior to the Closing Date. To the
best of the Physician Parties’ knowledge each of the Accounts Receivable is
(i) a valid and legally binding obligation of the account debtor
enforceable in accordance with its terms, free and clear of all Encumbrances,
and not subject to setoffs, adverse claims, counterclaims, assessments,
defaults, prepayments, defenses, and conditions precedent; (ii) a true and
correct statement of the account for merchandise actually sold and delivered
to,
or for services actually performed for and accepted by, such account debtor;
and
(iii) and Physician Parties will use reasonable efforts to collect the
Accounts Receivable within sixty (60) days of billing, subject to trade
discounts provided in the ordinary course of business and any allowance for
doubtful accounts contained in the Interim Financial Statement.
(s)
Supplies.
To the
best of the Physician Parties’ knowledge all of the Supplies, as defined in
Section 1.1(c) of each of the Asset Purchase Agreements, of each respective
Clinic are (a) of good and merchantable quality, fit for the purpose for which
they are intended, and useable in the ordinary course of business. To the best
of the Physician Parties’ knowledge all of the items in the inventory of each
Clinic meet such Clinic’s current standards and specifications. All Supplies and
items in inventory are being sold hereunder “as is.”
(t)
Title,
Sufficiency of Assets.
Each
Clinic is the exclusive legal and equitable owner of, and has the unrestricted
power and right to sell, assign and deliver the Assets of such Clinic. The
Assets are free and clear of all Encumbrances.
(u)
Real
Property Leases.
The
Clinics do not currently own any real property. Schedule 3.1(u)
sets
forth an accurate, correct and complete list of all locations leased by each
(including the street address of each leased real property and the name of
the
lessor, and the monthly rent and/or other rental terms for each such location)
of the Clinics. To the best of the Physician Parties’ knowledge, each Clinic has
been in lawful possession of the premises covered by each real property lease
since the commencement of the original term of such lease. Each Clinic or the
Physician has delivered to the Company accurate, correct and complete copies
of
each real property lease. The Clinics are currently in lawful possession of
all
property covered by real property leases and the Physician Parties do not know
of any default or breach under any such lease which would give rise to the
right
of any lessor to remove the Clinics from possession of the covered premises.
20
(v)
Intellectual
Property.
(i)
“Intellectual
Property”
shall
mean any or all rights in and to intellectual property and intangible industrial
property rights, including, without limitation, (A) patents, trade secrets,
copyrights, trademarks and (B) any rights similar, corresponding or
equivalent to any of the foregoing within the United States.
(ii)
To
the best of the Physician Parties’ knowledge all Intellectual Property rights of
Physician Parties (“Intellectual
Property Rights”)
(A) are valid, subsisting and in full force and effect, (B) have not
been abandoned or passed into the public domain and (C) are free and clear
of any Encumbrances, except for non-exclusive licenses granted to end-user
customers in the ordinary course of business.
(iii)
To
the
best of the Physician Parties’ knowledge the Intellectual
Property
Rights
constitute all
of
the Intellectual Property Rights used in the conduct of the Practice as it
is
currently conducted, and as it is currently planned or contemplated to be
conducted by Physician Parties prior to the Closing.
To the
best of the Physician Parties’ knowledge each item of Intellectual Property
either (A) is exclusively owned by Physician Parties and was written and
created solely by employees of Physician Parties acting within the scope of
their employment or by third parties, all of which employees and third parties
have validly and irrevocably assigned all of their rights, including
Intellectual Property Rights therein, to Physician Parties, and no third party
owns or has any rights to any such Intellectual Property, or (B) is duly
and validly licensed to Physician Parties for use in the manner currently used
by Physician Parties in the conduct of the Practice and, as it is currently
planned or contemplated to be used by Physician Parties in the conduct of the
Practice prior to the Closing.
(iv)
To
the best knowledge of the Physician Parties, there is no fact or circumstance
that (A) would render any Intellectual Property invalid or unenforceable,
(B) would adversely affect any pending application for any registered
Intellectual Property Right of the Physician Parties, or (C) would
adversely affect or impede the ability of Physician Parties to use any
Intellectual Property in the conduct of the Practice as it is currently
conducted or as it is currently planned or contemplated to be conducted by
Physician Parties prior to Closing. The Physician Parties have no knowledge
of
any misrepresentation or failure to disclose, any fact or circumstances in
any
application for any registered Intellectual Property Right that would constitute
fraud or a misrepresentation with respect to such application or that would
otherwise affect the validity or enforceability of any registered Intellectual
Property Right.
(v)
To
the best of the Physician Parties’ knowledge, all necessary registration,
maintenance and renewal fees in connection with each item of registered
Intellectual Property Rights have been paid and all necessary documents and
certificates in connection with such registered Intellectual Property Rights
have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may
be,
for the purposes of maintaining such registered Intellectual Property Rights.
To
the best of the Physician Parties’ knowledge, there are no actions with respect
to Intellectual Property that must be taken by Physician Parties within one
hundred twenty (120) days following the Closing Date, including the payment
of
any registration, maintenance or renewal fees or the filing of any responses
to
office actions, documents, applications or certificates for the purposes of
obtaining, maintaining, perfecting, preserving or renewing any registered
Intellectual Property Rights.
21
(vi)
To
the best of the Physician Parties’ knowledge, Physician Parties have taken all
necessary action to maintain and protect (A) Physician Parties’
Intellectual Property, and (B) the secrecy, confidentiality, value and
Physician Parties’ rights in the confidential information and trade secrets of
Physician Parties and those provided by any person to Physician Parties.
Physician Parties have no knowledge of any violation or unauthorized disclosure
of any trade secret or confidential information related to the Practice, the
Assets, or obligations of confidentiality with respect to such.
(vii)
To
the best of the Physician Parties’ knowledge, neither this Agreement nor the
transactions contemplated hereunder will result in (A) the Company granting
to any third party any right to, or with respect to, any Intellectual Property
Right owned by, or licensed to, the Company; (B) the Company being bound
by, or subject to, any non-compete or other restriction on the operation or
scope of its businesses, including the Practice; or (C) the Company being
obligated to pay any royalties or other amounts to any third party.
(w)
Disclosure.
No
representation, warranty or statement made by the Physician Parties in this
Master Transaction Agreement or any of the exhibits or schedules hereto, or
any
agreements, certificates, documents or instruments delivered or to be delivered
to the Company in accordance with this Master Transaction Agreement or the
other
Transaction Documents, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
3.2
Representations
and Warranties of the Physician.
Physician represents and warrants to the Company that:
(a)
Valid
Authorization.
Physician has full power, capacity and authority to enter into the Transaction
Documents to which he is a party and to carry out his obligations thereunder.
This Master Transaction Agreement has been duly and validly executed and
delivered by Physician and constitutes the valid and binding agreement of
Physician enforceable against him in accordance with its terms. Each Transaction
Document executed and delivered at the Closing by the Physician will upon such
execution and delivery constitute the valid and binding agreement of the
Physician enforceable against the Physician in accordance with its terms, except
as enforcement in general may be limited by any applicable bankruptcy,
insolvency, reorganization or other laws affecting creditor’s rights generally
or by the application of equitable remedies or defenses legal or
equitable.
22
(b)
Compliance.
To the
best of the Physician’s knowledge, except as set forth on the Disclosure
Schedule, the execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by Physician will not
(i)
violate any material provision of or result in the breach of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under any mortgage, lien, lease, contract,
license, instrument or any other agreement to which the Physician is a party,
(ii) result in the creation or imposition of any material lien, charge, pledge,
security interest or other encumbrance upon any property of the Physician or
(iii) violate or conflict with any order, award, judgment or decree or other
material restriction or any law, ordinance or regulation to which the Physician
or the property of the Physician is subject.
(c)
Approvals.
To the
best of the Physician’s knowledge, no consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Authority
or
other person is required in connection with the execution and delivery of the
Transaction Documents by the Physician or the consummation by the Physician
of
the transactions contemplated thereby.
(d)
Litigation.
To the
best of the Physician’s knowledge, except as disclosed on the Disclosure
Schedule, there are no claims, actions, suits or proceedings (arbitration or
otherwise) pending or, to the Physician’s knowledge, threatened against the
Physician at law, or in equity, in any court or before or by any Governmental
Authority arising out of or otherwise relating to the Physician’s practice of
medicine, and to Physician’s knowledge, there are no, and within the last five
(5) years have not been any, facts, conditions or incidents that may result
in
any such actions, suits, proceedings (arbitration or otherwise) or
investigations. To the best of the Physician’s knowledge the Physician is not in
default in respect of any judgment, order, writ, injunction or decree of any
court or other Governmental Authority known to the Physician. Except as set
forth on the Disclosure Schedule, there have been no disciplinary, revocation
or
suspension proceedings or similar types of claims, actions or proceedings,
hearings or investigations against any of the Physician or each of the Clinics
within the last five (5) years.
(e)
Permits.
To the
best of the Physician’s knowledge, the Physician has all permits, licenses,
orders and approvals of all Governmental Authorities necessary to perform the
services performed by the Physician in connection with the conduct of the
Practice. To the best of the Physician’s knowledge all such permits, licenses,
orders and approvals are in full force and effect and no suspension or
cancellation of any of them is pending or threatened. The Physician has not
been
disciplined, sanctioned or excluded from the Medicare program and has not been
subject to any plan of correction imposed by any professional review body within
the last five (5) years.
23
(f)
Brokers.
To the
best of the Physician’s knowledge all negotiations relating to the Transaction
Documents and the transactions contemplated hereby have been carried on without
the intervention of any person acting on behalf of the Physician in such manner
as to give rise to any valid claim for any broker’s or finder’s fee or similar
compensation.
(g)
Disclosure.
No
representation, warranty or statement made by the Physician in this Master
Transaction Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to the Company in accordance with this Master Transaction Agreement or the
other
Transaction Documents, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading.
(h)
Disclaimer. Physician
disclaims any representations, opinions, forecasts, predictions, agreements
or
promises with respect to the value of the Clinics and their business
and
with
respect to the past and future profitability of the Clinics. Further,
the
Company acknowledges
and agrees that
any
representations concerning
the past performance, the current value, or the future profitability of the
businesses being purchased
hereunder made by the Company to any person or party in connection
with its
Initial Public Offering are
representations made solely by the Company, and shall not be deemed under any
circumstances to be representations of the Physician Parties.
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
4.1
Representations
and Warranties of the Company.
The
Company represents and warrants to Physician that:
(a)
Organization,
Valid Authorization and Good Standing.
The
Company is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Texas. The Company has the power and
authority to own all of its properties and assets and to conduct its business.
The Company has the power and authority to enter into the Transaction Documents
to which it is a party and to carry out its obligations thereunder. The
execution and delivery of the Transaction Documents to which it is a party
and
the consummation of the transactions contemplated thereby have been duly and
validly authorized by the Board of Directors of the Company, and no other
corporate or other proceedings on the part of the Company are necessary to
authorize the Company’s execution and delivery of the Transaction Documents and
the transactions contemplated thereby. This Master Transaction Agreement has
been duly and validly executed and delivered by the Company and constitutes
the
valid and binding agreement of the Company enforceable against the Company,
in
accordance with its terms. Each Transaction Document executed and delivered
at
the Closing by the Company will upon such execution and delivery constitute
the
valid and binding agreement of the Company, enforceable against the Company
in
accordance with its terms.
24
(b)
Compliance.
To the
Company’s knowledge, the execution and delivery of the Transaction Documents and
the consummation of the transactions contemplated thereby by the Company will
not (i) violate any provision of its charter or bylaws, (ii) violate any
material provision of or result in the breach of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
material obligation under, any mortgage, lien, lease, contract, license,
instrument or any other agreements to which the Company is a party, (iii) result
in the creation or imposition of any material lien, charge, pledge, security
interest or other encumbrance upon any property of the Company or (iv) violate
or conflict with any order, award, judgment or decree or other material
restriction or any law, ordinance or regulation to which the Company or the
property of the Company is subject.
(c)
Approvals.
To the
Company’s knowledge no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or other
person is required in connection with the execution and delivery of the
Transaction Documents by the Company or the consummation by the Company of
the
transactions contemplated thereby, except for (i) any filings and approvals
required under the rules and regulations of the Securities and Exchange
Commission, and (ii) filings and approvals required by the “Blue Sky” laws of
the various states.
(d)
Financial
Statements.
The
Company has furnished to the Physician Parties the Company’s audited financial
statements for the year ended December 31, 2004, and unaudited financial
statements for the six-month period ending June 30, 2005, consisting of a
balance sheet, and the related statement of income and changes in stockholders’
equity (the “Company
Financial Statements”).
To
the Company’s knowledge and except as disclosed on the Disclosure Schedule, the
Company Financial Statements (i) have been prepared in accordance with GAAP,
(ii) are true, complete and correct in all material respects as of their date
and for the period above stated and (iii) fairly present the financial position
of the Company at such date and the results of its operations for the period
ended on such date. Except as set forth on the Disclosure Schedule, the Company
Financial Statements reflect all of the liabilities and obligations of the
Company.
(e)
Litigation.
Except
as disclosed on the Disclosure Schedule, there are no claims, actions, suits,
proceedings (arbitration or otherwise) or investigations pending or, to the
Company’s knowledge, threatened against the Company at law or in equity in any
court or before or by any Governmental Authority, and, to the Company’s
knowledge, there are no, and have not been any, facts, conditions or incidents
that may result in any such actions, suits, proceedings (arbitration or
otherwise) or investigations. the Company is not in default in respect of any
judgment, order, writ, injunction or decree of any court or other Governmental
Authority.
(f)
Brokers.
To the
Company’s knowledge all negotiations relating to the Transaction Documents and
the transactions contemplated hereby have been carried on without the
intervention of any person acting on behalf of the Company in such manner as
to
give rise to any valid claim for any broker’s or finder’s fee or similar
compensation.
25
(g)
Disclosure.
No
representation, warranty or statement made by the Company in this Master
Transaction Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to the Physician Parties in accordance with this Master Transaction Agreement
or
the other Transaction Documents, contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary
to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
(h)
Initial
Public Offering.
The
Company represents that it will pursue its Initial Public Offering in good
faith
and in a lawful manner. The Company represents and promises that it will not
represent to prospective purchasers that the involvement of the Physician
Parties, through the sale of the Clinics and through the involvement of the
Physician Parties pursuant to the Consulting Agreement, guarantees any
particular level of profitability or return on investment. The Company further
represents that it will properly, effectively and lawfully comply with any
and
all registration requirements of any Governmental Authority necessary to pursue
the Initial Public Offering, including but not limited to the United States
Securities and Exchange Commission and the Texas State Securities Board. The
Company represents that it will make full disclosure of all risks associated
with an investment in the Initial Public Offering and that it will not represent
to prospective investors that the participation of the Physician Parties will
or
can be expected to reduce any of such risks. The provision of information by
the
Physician Parties for inclusion in the Form S-1 will not be deemed waivers
of or
defenses to any claim arising out of the breach of this
representation.
The
Company further represents that it will retain the services of licensed and
competent attorneys, certified public accountants or tax advisors, as necessary,
to determine that the Initial Public Offering and Form S-1 are proper and
lawful. The Company represents that it will use such services to review all
statements, information, memoranda, books and records, account information,
leases, bank statements, tax returns, contracts, agreements, corporate
documents, licenses, matters, disclosures, representations, warranties and
statements of the Physician Parties to determine whether any and all
representations made in the Form S-1 are correct, legal and not misleading,
whether through commission or omission. In particular, and without limitation,
such experts retained by the Company shall determine, from the organization
of
the new PA, from the materials provided by the Physician Parties and from the
Company’s own investigation that the Transaction Documents do not violate any
law, rule, or regulation relating to the corporate practice of
medicine.
(i) No
Representations as to Profitability.
Subject
to the Clinics obligations to permit access to information as set forth in
Section 5.2, the
Company
acknowledges that as
of the
Closing it shall have
exhaustively investigated the business of each of the Clinics. The Company
further acknowledges that it has had access to all books and records of each
of
the Clinics and all related matters necessary to formation of its intention
to
consummate
the transactions contemplated under this
Master Transaction Agreement. The Company agrees and represents that it is
relying solely upon its own research and investigation in making a decision
to
enter into this Master Transaction Agreement and that it is not relying on
any
representations, warranties, statements or intimations by any Physician Parties
or any of their affiliates concerning the value of the property to be acquired
or concerning any future profitability. The Company agrees and acknowledges
that
any past profitability may not be indicative of future performance of the
businesses in that, without limitation, Physician and his affiliates will no
longer be operating the businesses and in that economic, legislative, regulatory
and insurance conditions may change, thereby negatively impacting the future
value and profitability of the businesses. The
Company acknowledges that there are other
factors
too numerous to mention which may also affect future value and
profitability.
26
(j)
Permits.
The
Company acknowledges and agrees that the Physician Parties are not transferring
or assigning any permits issued to the Physician Parties whether for the
operation of the Practice, or otherwise. The Company further acknowledges and
agrees that it shall be the sole responsibility of the Company to obtain
whatever permits the Company deems necessary or desirable to conduct the
business it intends to conduct subsequent to Closing.
ARTICLE
5
PRE-CLOSING
COVENANTS OF CLINICS AND THE PHYSICIAN
5.1
Conduct
of Business.
From
the date hereto to the Closing, except with the prior written consent of the
Company, or except as otherwise provided for in this Master Transaction
Agreement, each of the Clinics will, and the Physician will use his best efforts
to cause each of the Clinics to:
(a)
carry
on
its business in, and only in, the usual, regular and ordinary course in
substantially the same manner as heretofore and use its best efforts to preserve
intact its present business organization, keep available the services of its
present officers and employees, and preserve its relationships with customers,
contractors, institutional health care providers, health care professionals
and
others having business dealings with it to the end that its goodwill and going
business shall be unimpaired on the Closing Date;
(b)
keep
in
full force and effect insurance comparable in amount and scope of coverage
to
insurance now carried by it;
(c)
perform
all of its obligations under agreements, contracts and instruments relating
to
or affecting its properties, assets and business;
(d)
maintain
its books of account and records in the usual, regular and ordinary
manner;
(e)
comply
with all statutes, laws, ordinances, rules and regulations applicable to it
and
to the conduct of its business;
27
(f)
pay
all
account payables and collect all account receivables of the Practice only in
the
ordinary course of business consistent with prudent past practice, not
accelerate collection of accounts receivable or defer payment of accounts
payable in anticipation of the Closing and not purchase drugs or supplies on
terms and conditions not in the ordinary course, consistent with past
practice;
(g)
promptly
advise the Company in writing of any material adverse change in its financial
condition, results of operations, properties, assets, liabilities, business
operations or prospects or in the Practice;
(h)
not
enter
into, assume or amend in any material respect, any agreement, contract or
commitment of the character referred to in Section 3.1(k);
(i)
not
merge
or consolidate with or purchase substantially all of the assets of, or otherwise
acquire, any corporation, partnership, association or other
business;
(j)
not
sell,
transfer or convey all or substantially all of the assets of any of the
Clinics;
(k)
not
take,
or permit to be taken, any action which is represented and warranted in Section
3.1(f) not to have been taken since the Balance Sheet Date;
(l)
not
increase salaries or other compensation of employees of each of the Clinics,
except in the ordinary course of business consistent with past
practice;
(m)
not
issue
any shares or other equity interests or effect any stock split or other
reclassification or declare or pay any dividends or similar types of
distributions with respect to any Clinic;
(n)
not
create, incur, assume, guarantee or otherwise become directly or indirectly
liable with respect to any indebtedness for borrowed money other than in the
ordinary course of business under agreements, that to the Physician Parties’
best knowledge, exist on the date hereof;
(o)
not
enter
into any agreement or understanding that would interfere or conflict with its
obligations set forth in subsections (a) though (g) above in a material respect,
or cause it to engage in any of the actions described in subsections (h) through
(o).
5.2
Access
to Information and Records Before Closing.
The
Company may, at its expense, prior to the Closing Date, make, or cause to be
made, such investigation of the Practice, and of the assets, liabilities,
operations and properties of each of the Clinics and of its financial and legal
condition as the Company deems necessary or advisable to familiarize itself
with
such matters. Each of the Clinics shall permit the Company and its
representatives (including legal counsel and independent accountants) upon
reasonable notice to have full access to the properties and relevant books
and
records of each of the Clinics and of the Practice, at reasonable business
hours, and will cause its employees to furnish the Company with such financial
and operating data and other information and copies of documents with respect
to
the services, operations and properties of each of the Clinics and the Practice
as the Company may from time to time request.
28
5.3
No
Solicitation.
Until
the earlier of (a) the Closing or (b) the termination of this Master
Transaction Agreement pursuant to its terms, no Physician Party shall, and
each
Physician Party shall cause its representatives not to, directly or indirectly,
(i) initiate, solicit or encourage (including by way of furnishing
information regarding the Practice or the Assets) any inquiries, or make any
statements to third parties which may reasonably be expected to lead to any
proposal concerning the sale of the Practice or the Assets (whether by way
of
merger, purchase of capital shares, purchase of assets or otherwise) (a
“Competing
Transaction”);
or
(ii) hold any discussions or enter into any agreements with, or provide any
information or respond to, any third party concerning a proposed Competing
Transaction or cooperate in any way with, agree to, assist or participate in,
solicit, consider, entertain, facilitate or encourage any effort or attempt
by
any third party to do or seek any of the foregoing. If at any time prior to
the
earlier of (x) the Closing or (y) the termination of this Master Transaction
Agreement pursuant to its terms, Physician is approached in any manner by a
third party concerning a Competing Transaction (a “Competing
Party”),
Physician shall promptly inform Buyer regarding such contact and furnish Buyer
with a copy of any inquiry or proposal, or, if not in writing, a description
thereof, including the name of such Competing Party, and the Physician shall
keep the Company informed of the status and details of any future notices,
requests, correspondence or communications related thereto.
5.4
Certain
Notifications.
From
the date of this Master Transaction Agreement until the Closing, Physician
shall
promptly notify the Company in writing regarding any:
(a)
Action
taken by any Physician Party not in the ordinary course of business and any
circumstance or event that could reasonably be expected to have a Material
Adverse Effect on the Practice;
(b)
Fact,
circumstance, event, or action by any Physician Party (i) which, if known
on the date of this Agreement, would have been required to be disclosed in
or
pursuant to this Agreement; or (ii) the existence, occurrence, or taking of
which would result in any of the representations and warranties of the Physician
Parties contained in this Agreement or in any Transaction Agreement not being
true and correct when made or at Closing;
(c)
Breach
of
any covenant or obligation of any Physician Party hereunder; and
(d)
Circumstance
or event which will result in, or could reasonably be expected to result in,
the
failure of any Physician Party to timely satisfy any of the closing conditions
specified in Article 7
of this
Agreement.
29
5.5
Updating
the Disclosure Schedule.
If any
event, condition, fact or circumstance that is required to be disclosed pursuant
to Section 5.4 would require a change to the Disclosure Schedule if the
Disclosure Schedule were dated as of the date of the occurrence, existence
or
discovery of such event, condition, fact or circumstance, then the Physician
shall promptly deliver to the Company an update to the Disclosure Schedule
specifying such change and shall use its best efforts to remedy same, as
applicable.
5.6
Master
Lease Agreement.
The
Physician shall use his best efforts to cause BEW Financing, LP to enter into
the Master Lease Agreement with the Company prior to the Closing, which shall
become effective as of the date of Closing.
ARTICLE
6
ADDITIONAL
AGREEMENTS
6.1
Company
Registration Statement; Other Action.
(a) The
Physician Parties shall use reasonable efforts to cooperate with the Company
in
the Company’s preparation of its registration statement on Form S-1 (or other
appropriate Form) to be filed by the Company with the SEC under the Securities
Act in connection with the Company’s Initial Public Offering (including the
prospectus constituting a part thereof, the “Registration
Statement”);
provided, however, that after the Closing the Company shall reimburse the
Physician Parties for reasonable expenses it has incurred in complying with
such
requests, including photocopy charges. The date on which the SEC declares the
Registration Statement effective, and each date on which an amendment or
supplement thereto is declared effective, is referred to as an “Effective
Date.”
(b) The
Physician Parties agree to use their reasonable efforts to promptly furnish,
upon request of the Company, factual information specifically regarding the
Clinics and the Practice that may be required by the rules of (or at the request
of) the United States Securities and Exchange Commission (the “SEC”),
and
such other matters as may be reasonably requested by the Company in response
to
any request by the SEC, in connection with the preparation of the Registration
Statement and each amendment or supplement thereto, or any other statement,
filing, notice or application made by or on behalf of each such party to the
SEC, which may include Clinics’ material agreements, corporate documents,
schedules and exhibits (the “Clinic
Information”).
(c)
The
Physician Parties represent and warrant that to their best knowledge, the Clinic
Information, when furnished by the Physician Parties, shall be true and correct
in all material respects; provided however, that the foregoing representation
and warranty shall be strictly limited to the Clinic Information (and not facts
regarding the Company, the Affiliates of the Company, the Registration Statement
as a whole or any part thereof), and shall be limited to the extent that the
furnished Clinic Information relates to facts concerning the Clinics and the
Practice. In addition, the parties hereto acknowledge and agree that the
Physician Parties shall not be liable or responsible for any failure to provide,
or delay in providing, Clinic Information so long as the Physician Parties
use
good faith reasonable efforts to respond to any proper request made
hereunder.
30
6.2
Compliance
with Conditions Precedent; Further Assurances.
(a)
Each
party hereto shall use such party’s good faith efforts to cause the conditions
precedent to the Closing set forth in Article 7 hereof to be fulfilled and,
subject to the terms and conditions herein provided, to take, or cause to be
taken, all action, and to do or cause to be done all things necessary, proper
or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Master Transaction Agreement and the
other
Transaction Documents. Each party hereto covenants and agrees that it will
cooperate with each of the other parties hereto and use its reasonable efforts
to (i) procure upon reasonable terms and conditions all consents and approvals
necessary to the transactions contemplated by this Agreement (ii) complete
or
obtain all necessary filings, registrations, certificates, and authorizations
necessary or advisable for the transactions contemplated by this Agreement,
(iii) satisfy all requirements prescribed by law for, and all conditions, to,
the consummation of the transactions contemplated by this Agreement, and to
(iv)
effect the transactions contemplated by this Agreement. In case at any time
after Closing any further actions are necessary to carry out the purposes of
this Master Transaction Agreement or the other Transaction Documents, and the
necessity of such documents was not reasonably foreseeable at the time of the
Closing, each party shall take all such necessary actions.
6.3
Certain
Notifications.
At all
times from the date hereof until the Closing, each party shall promptly notify
the others in writing of the occurrence of any event which will or may
reasonably result in the failure to satisfy any of the conditions specified
in
Article 7.
6.4
Amendment
to Schedules.
Each
party hereto agrees that, with respect to the representations and warranties
of
such party contained in this Agreement, such party shall have the continuing
obligation until Closing to supplement or amend promptly the Schedules with
respect to any matter that would have been or would be required to be set forth
or described in the Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Schedule that constitutes or reflects,
individually or in the aggregate, a material adverse change to the Practice
or
the Assets may be made unless the Company consents to such amendment or
supplement, and no amendment or supplement to a Schedule that constitutes or
reflects a material adverse change to the Company may be made unless the
Physician and each of the Clinics consent to such amendment or supplement.
For
all purposes of this Agreement, including without limitation for purposes of
determining whether the conditions set forth in Sections 7.1, 7.2 and 7.3 have
been fulfilled, the Schedules hereto shall be deemed to be the Schedules as
amended or supplemented pursuant to this Section 6.4. In the event that the
Physician or each of the Clinics seeks to amend or supplement a Schedule
pursuant to this Section 6.4 and the Company does not consent to such amendment
or supplement, or the Company seeks to amend or supplement a Schedule pursuant
to this Section 6.4 and Physician and each of the Clinics do not consent, this
Agreement shall be deemed terminated by mutual consent.
31
6.5
Each
Party to Obtain Own Tax Advice.
Each
party hereto represents and warrants that it has relied, and covenants and
agrees that in connection with the transactions contemplated by this Master
Transaction Agreement, it will rely, solely on its own advisors to determine
the
tax consequences of the transactions contemplated hereunder, and that no
representation or warranty has been made by any party as to the tax consequences
of such transactions.
6.6
Investment
Representations and Covenants of Physician.
(a)
The
Physician understands that the Company Common Stock issuable upon exercise
of
the Warrant will not be registered under the Securities Act or any state
securities laws on the grounds that the issuance of the Securities is exempt
from registration pursuant to Section 4(2) of the Securities Act or Regulation
D
promulgated under the Securities Act and applicable state securities laws,
and
that the reliance of the Company on such exemptions is predicated in part on
the
Physician’s representations, warranties, covenants and acknowledgments set forth
in this Section 6.6.
(b)
Physician
represents and warrants that he is an “accredited investor” as defined in Rule
501 promulgated under the Securities Act.
(c)
The
Physician represents and warrants that the Securities to be acquired by such
Physician upon consummation of the transactions described in Article 2 of this
Master Transaction Agreement will be acquired by the Physician for his own
account, not as a nominee or agent, and without a view to resale or other
distribution within the meaning of the Securities Act and the rules and
regulations thereunder, except as contemplated in Article 11 hereof, and that
the Physician will not distribute any of the Securities in violation of the
Securities Act.
(d)
The
Physician represents and warrants the Physician’s principal residence is located
in the State of Texas.
(e)
The
Physician (i) understands that the Securities to be issued pursuant to this
Agreement are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act
only
in certain limited circumstances, (ii) is aware that any routine sales of
Securities made pursuant to Rule 144 under the Securities Act may be made only
in limited amounts and in accordance with the terms and conditions of that
Rule
and that in such cases where the Rule is not applicable, compliance with some
other registration exemption will be required, and (iii) is aware that Rule
144
is not currently available for use by such Physician for resale of any of the
Securities to be acquired by Physician upon consummation of the transactions
described in Article 2 of this Master Transaction Agreement.
32
(f)
The
Physician represents and warrants to the Company that he has such knowledge
and
experience in financial and business matters such that he is capable of
evaluating the merits and risks of an investment in any of the Securities to
be
acquired by the Physician upon consummation of the transactions described in
Article 2 of this Master Transaction Agreement.
(g)
The
Physician confirms that the Company has made available to the Physician the
opportunity to ask questions of and receive answers from it concerning the
terms
and conditions of his investment in the Securities, and has received, to his
satisfaction, such additional information, in addition to that set forth herein,
about the Company’s operations and the terms and conditions of the offering as
Physician has requested.
(h)
In
order
to ensure compliance with the provisions of Section 6.6(c) hereof, the Physician
agrees that after the Closing the Physician will not sell or otherwise transfer
or dispose of Securities or any interest therein (unless registered under the
Securities Act) without first complying with either of the following
conditions::
(i)
The
Company shall have received a written legal opinion from legal counsel, which
opinion and counsel shall be satisfactory to the Company in the exercise of
its
reasonable judgment, indicating that the proposed transfer will not be in
violation of any of the registration provisions of the Securities Act and the
rules and regulations promulgated thereunder; or
(ii)
The
Company shall have received an opinion from its own counsel to the effect that
the proposed transfer will not be in violation of any of the registration
provisions of the Securities Act and the rules and regulations promulgated
thereunder.
The
legal
opinions referenced in (i) and (ii) above shall be obtained at the Company’s
sole expense.
The
Physician also agrees that the certificates or instruments representing the
Securities (or stock issuable upon the exercise thereof) to be issued to the
Physician pursuant to this Master Transaction Agreement may contain a
restrictive legend noting the restrictions on transfer described in this Article
and required by federal and applicable state securities laws.
6.7
No
Corporate Practice.
Neither
the Company nor any Physician Party has knowledge that the actions, transactions
or relationships arising from, and contemplated by the Transaction Documents
violate any law, rule or regulation relating to the corporate practice of
medicine. Each Party accordingly agrees that such Party will not, in an attempt
to void or nullify any Transaction Document or any relationship involving the
Company or any Physician Party, xxx, claim, aver, allege or assert that any
such
Transaction Document or any such relationship violates any law, rule or
regulation relating to the corporate practice of medicine; provided, however,
such any Party is entitled to make any such claim, assessment, allegation or
assertion if such Party reasonably believes, on advice from counsel, that
failure to terminate such Transaction Document or such relationship will subject
such Party to material liability or will materially adversely affect the
Physician’s right to practice medicine.
33
6.8
Current
Public Information.
At all
times following the registration of any of the Company’s securities under the
Securities Act or Exchange Act pursuant to which the Company becomes subject
to
the reporting requirements of the Exchange Act, the Company shall use reasonable
efforts to comply with the requirements of Rule 144 under the Securities Act,
as
such Rule may be amended from time to time (or any similar rule or regulation
hereafter adopted by the SEC) regarding the availability of current public
information to the extent required to enable any holder of shares of the Company
Common Stock to sell such shares without registration under the Securities
Act
pursuant to Rule 144 (or any similar rule or regulation).
6.9
Reasonable
Efforts; Further Assurances; Cooperation.
Subject
to the other provisions of this Master Transaction Agreement, the parties hereto
shall each use their reasonable efforts to perform their obligations herein
and
to take, or cause to be taken or do, or cause to be done, all things necessary,
proper or advisable under applicable law to obtain all regulatory approvals
and
satisfy all conditions to the obligations of the parties under this Agreement
and to cause the covenants hereunder and the other transactions contemplated
herein to be carried out promptly in accordance with the terms hereof and shall
cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of their respective obligations under
this Agreement. Nothing in this Agreement shall imply or be interpreted to
hold
the Physician or the Physician Parties responsible for the formation,
liabilities or operations of the New PA.
6.10 No
Public Announcement.
The
Parties acknowledge that no announcement regarding any aspect of this Agreement
or the transactions herein shall be made to the financial community,
Governmental Entities, employees, customers, suppliers or the general public
without the express prior written consent of the other party; provided that
nothing herein shall prevent any party from complying with applicable law.
6.11
Confidentiality.
Each
party hereto will hold, and will use its best efforts to cause its affiliates
and representatives to hold, in strict confidence, unless (i) compelled to
disclose by judicial or administrative process (including without limitation,
in
connection with obtaining the necessary approvals of this Master Transaction
Agreement and the transactions contemplated hereby of any Governmental Entity)
or by other requirements of law or any national securities exchange or NASDAQ
or
(ii) disclosed in an action or proceeding brought by a party hereto in pursuit
of its rights or in the exercise of its remedies hereunder, all documents and
information concerning the other party to this Master Transaction Agreement
furnished to it or its representatives by such party or such party’s
representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information
can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of
such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation
to
another party hereto to keep such documents and information confidential. In
the
event the transactions contemplated hereunder are not consummated, upon the
request of any party, each party hereto will, and will cause its affiliates
and
representatives to, promptly (and in no event later than ten (10) days after
such request) redeliver or cause to be redelivered all copies of any documents
or information furnished by the requesting party or the requesting party’s
representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related thereto or based
thereon prepared by the party or the party’s representatives.
34
6.12
Transfer
of Employees and Accounts.
The
parties shall use reasonable efforts, and to take such actions, or cause such
actions to be taken or do, or cause to be done, all things necessary, proper
or
advisable to permit the New PA to evaluate and hire at its discretion, the
personnel (including both medical and non-medical staff) who were employed
by
the Clinics prior to the Closing.
6.13 Advertising
Program.
Following the Closing, with the advice and consultation with the Physician,
the
Company shall establish a public relations and advertising program with a budget
of $150,000 per month, with the aim of generating additional revenue; provided
however that such budget shall be subject to adjustment from time to time as
appropriate depending upon business conditions at the discretion of the Company.
6.14 Agreement
to Provide Information.
Physician agrees, either directly or through his accountant, to provide
information concerning the Assets reasonably requested by the Company, as
necessary for the Company to prepare and file all of its Tax returns.
6.15 Maintenance
of Patient Records.
The
Company agrees to maintain, at its expense, all patient charts in a safe and
secure manner that is readily available for review and access by patients and
authorized persons as required by HIPPA rules.
6.16 Employee
Information.
In
order to facilitate the selection and hiring of employees of the Clinics by
the
New P.A. (which shall be at the New P.A.’s discretion), on or prior to the
Closing Date, the Physician Parties shall use their reasonable efforts to
provide the Company, at the reasonable request of the Company, an accurate
list
of (i) all employees of the Clinics, including the employees’ names, titles or
positions, present rate of compensation, year to date compensation, (including
bonuses, commissions and deferred compensation), accrued and unused vacation
and
other paid leave, years of service, interests in any incentive compensation
plan, and estimated entitlements to receive supplementary retirement benefits
or
allowances (whether pursuant to a contractual obligation or otherwise) and
(ii) individuals who are currently performing services for a Clinic related
to the Practice who are classified as “consultants” or “independent
contractors.”
35
ARTICLE
7
CONDITIONS
7.1
Conditions
Precedent to the Obligations of All Parties.
The
obligations of the parties to complete the Closing shall be subject to the
fulfillment, at or prior to the time of the Closing, of each of the following
conditions:
(a)
all
permits, approvals, waivers and consents of any Governmental Authority or of
any
third party necessary or appropriate for consummation of the Closing shall
have
been obtained;
(b)
no
preliminary or permanent injunction or other order of a court or other
Governmental Authority in the United States shall have been issued and be in
effect, and no United States federal or state statute, rule or regulation shall
have been enacted or promulgated after the date hereof and be in effect, that
(i) prohibits the consummation of the Closing or (ii) imposes material
limitations after the Closing on the ability of New PA to own and operate a
medical practice or the Company to manage the New PA’s medical practice;
and
(c)
there
shall not be any action or proceeding commenced by or before any court or other
Governmental Authority in the United States that challenges the consummation
of
the Closing or seeks to impose material limitations on the ability of New PA
to
own and operate a medical practice or the Company to manage the New PA’s medical
practice.
7.2
Conditions
Precedent to the Obligations of the Company.
The
obligations of the Company to complete the Closing shall be subject to the
fulfillment, at or prior to the time of the Closing of each of the following
conditions:
(a)
except
for such changes as permitted or contemplated by this Master Transaction
Agreement, the representations and warranties of the Physician Parties contained
in this Master Transaction Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect as if
made
at and as of the Closing Date;
(b)
the
Physician Parties shall have performed, complied with and fulfilled all the
covenants, agreements, obligations and conditions required by any of the
Transaction Documents to be performed, complied with or fulfilled by them prior
to or at the Closing;
36
(c)
since
the
date of this Master Transaction Agreement, there shall not have occurred any
event or events, whether individually or in the aggregate, that have had or
that
reasonably could be reasonably expected to have a material adverse effect on
the
financial condition, results of operations, properties, assets, liabilities,
business operations of each of the Clinics or the Practice;
(d)
the
Registration Statement shall have become effective under the Securities Act
and
no stop order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC. At or prior to Closing, the Company shall have
received all state securities and “Blue Sky” permits necessary, in its
reasonable discretion, to consummate the transactions contemplated
hereby;
(e)
the
Company shall have received all of the instruments, documents and other items
described in Section 8.2 hereof;
(f)
the
Company shall have received a legal opinion from local counsel in Texas, in
a
form satisfactory to the Company, stating that the Physician Parties are in
full
compliance with Texas and federal health care laws, and that neither the
consummation of the transactions contemplated under this Agreement nor the
performance of the Related Agreements will contravene any Texas law or federal
health care law;
(g)
the
real
property leases between BEW Financing, L.P. and the Clinics, that are being
replaced by new real property leases under the Master Lease Agreement, shall
have been terminated;
(h) the
Company shall have entered into the Master Lease Agreement with BEW Financing,
L.P.;
(i) all
real
property leases to which the Clinics are a party shall have been terminated,
except for leases contemplated by the Master Lease Agreement; and
(j)
the
Physician shall have assigned all of Physician’s rights, proceeds, assets (other
than equipment, furnishings and fixtures),
claims
and benefits under the Work Hardening Purchase Agreements to the Company, and
shall have paid all applicable amounts due and payable to Xx. Xxxxx, Xx. Xxxx,
Xx. Xxxxxxx and Myers, Trager, Do Management Consulting, LLC under the Work
Hardening Purchase Agreements and the “Agreement to Transition Management
Services” attached as Exhibit A thereto;
(k) the
Physician Parties (as the term is defined in the Work Hardening Purchase
Agreements) at the Work Hardening centers shall have performed and complied
with
all of the covenants in the Work Hardening Purchase Agreements;
37
(l) Xxxxx
Xxxxxx Do Management Consulting, LLC shall have entered into the Agreement
to
Transition Management Services in the form attached as Exhibit A to each of
the
Work Hardening Purchase Agreements; and
(m) the
Company shall have received all information reasonably requested from the
Physician Parties with respect to employees of the Clinics, in connection with
its evaluation of employees of the Clinics.
7.3
Conditions
Precedent to the Obligations of the Physician Parties.
The
obligations of the Physician Parties to complete the Closing shall be subject
to
the fulfillment at or prior to the time of the Closing, of each of the following
conditions:
(a)
except
for such changes as permitted or contemplated by this Master Transaction
Agreement and, the representations and warranties of the Company contained
in
this Master Transaction Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect as if
made
at and as of the Closing Date;
(b)
the
Company shall have performed, complied with and fulfilled all of the covenants,
agreements, obligations and conditions required by any of the Transaction
Documents to be performed, complied with or fulfilled by them prior to or at
the
Closing;
(c)
since
the
date of this Master Transaction Agreement, there shall not have occurred any
event or events, whether individually or in the aggregate, that have had or
that
reasonably could be expected to have a material adverse effect on the financial
condition, results of operations, properties, assets, liabilities, business,
operations or prospects of the Company;
(d) the
Company shall have assumed all of the Physician’s obligations under the Work
Hardening Purchase Agreements, and shall remit a total of $650,000 out of the
cash portion of the Closing Proceeds directly to the sellers thereunder in
accordance with the terms of the Work Hardening Purchase Agreements;
and
(e)
the
Physician Parties shall have received from the Company all of the instruments,
documents and other items described in Section 8.3 hereof.
ARTICLE
8
CLOSING
8.1
Closing.
(a)
The
Closing shall take place at the offices of Xxxxxxxxxx & Xxxxx, LLP, 00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx on the Closing
Date.
38
(b)
At
the
Closing, the parties shall complete the transactions provided for in Sections
2.2, 2.3, and 2.4 in the sequence specified in Article 2 hereof.
8.2
Deliveries
to the Company at the Closing.
At the
Closing, and simultaneously with the deliveries to the Physician Parties
specified in Section 8.3 hereof, and in addition to any other deliveries
required to be made to the Company pursuant to any other Transaction Document
at
the Closing, the Physician Parties shall deliver or cause to be delivered to
the
Company the following:
(a)
the
Asset
Purchase Agreements, including the Xxxx of Sale, duly executed by each Clinic
with respect to such Clinic;
(b)
a
Consulting Agreement duly executed by each of the Key Persons or entities owned
by them;
(c)
a
Non-Competition Agreement duly executed by each of the Key Persons;
(d)
written
evidence reasonably satisfactory to the Company documenting the termination
of
existing real property leases to which the Clinics are a party; and
(e) such
other closing documents, certificates and instruments as are contemplated by
the
other Transaction Documents or as shall have been reasonably requested by the
Company and as are customarily delivered in connection with transactions of
the
type contemplated herein.
8.3
Deliveries
to the Physician Parties at the Closing.
At the
Closing, and simultaneously with the deliveries to the Company specified in
Section 8.2, and in addition to any other deliveries required to be made to
a
Physician Party pursuant to any other Transaction Document at the Closing,
the
Company shall deliver or cause to be delivered to the Physician Parties the
following:
(a)
the
Asset
Purchase Agreements, delivered by each of the Clinics, each duly executed by
the
Company;
(b)
such
other closing documents, certificates and instruments as are contemplated by
the
other Transaction Documents or as shall have been reasonably requested by the
Physician Parties and as are customarily delivered in connection with
transactions of the type contemplated herein; and
(c)
the
consideration required to be delivered by the Company at the Closing pursuant
to
the Transaction Documents.
ARTICLE
9
TERMINATION
39
9.1
Termination
by Mutual Agreement.
This
Master Transaction Agreement may be terminated by the mutual agreement in
writing of the parties hereto at any time prior to the Closing.
9.2
Termination
by the Company.
If at
any time prior to or at the Closing (a) any of the Physician Parties shall
have
failed to perform in any material respect any of its respective covenants or
obligations, at the time required to be performed, set forth in this Master
Transaction Agreement or the other Transaction Documents and such failure has
not been or cannot be cured to the reasonable satisfaction of the Company within
a reasonable time; (b) any representation or warranty of any of the Physician
Parties contained herein or in any of the other Transaction Documents is false
or misleading in any material respect; (c) any of the Physician Parties shall
fail to make any deliveries specified in Section 8.2; or (d) any of the
conditions set forth in Sections 7.1 or 7.2 shall not have been satisfied in
any
respect (and such failure cannot be cured to the reasonable satisfaction of
the
Company prior to Closing) or waived in writing by the Company, all obligations
of the Company under this Master Transaction Agreement may be terminated by
the
Company.
9.3
Termination
by the Physician Parties.
If at
any time prior to or at the Closing (a) the Company shall have failed to perform
in any material respect any of its respective covenants or obligations, at
the
time required to be performed, set forth in this Master Transaction Agreement
or
the other Transaction Documents and such failure has not been or cannot be
cured
to the reasonable satisfaction of the Physician Parties within a reasonable
time; (b) any representation or warranty of the Company contained herein or
in
any of the other Transaction Documents is false or misleading in any material
respect; (c) the Company shall fail to make any deliveries specified in Section
8.3; or (d) any of the conditions set forth in Sections 7.1 or 7.3 shall not
have been satisfied in any respect (and such failure cannot be cured to the
reasonable satisfaction of the Physician Parties prior to Closing) or waived
in
writing by the Physician Parties, all obligations of the Physician Parties
under
this Master Transaction Agreement (other than their obligations under Sections
6.10 and 6.11) may be terminated by the Physician Parties.
9.4
Termination
Date.
Unless
terminated by mutual agreement of the parties prior to Closing, this Master
Transaction Agreement shall terminate upon the first to occur of the following
events: (a) December 31, 2005, if at such date no registration statement shall
have been filed with the SEC with respect to the initial public offering of
the
Company, (b) a date mutually agreed in writing by the Company and the Key
Persons on which this Agreement shall terminate, (c) thirty (30) days after
delivery of notice by a non-breaching party to the other party or parties of
a
material breach by such party or parties, provided that such material breach
has
not been cured (“Termination
Date”).
If
Closing fails to occur as a result of the breach of this Master Transaction
Agreement by the Company on the one hand, or any of the Physician Parties,
on
the other, this Master Transaction Agreement may be extended for a reasonable
time to facilitate Closing at the election of the non-breaching party. In the
event of termination of this Master Transaction Agreement pursuant to the
provisions of this Section, a party that is not in material breach of this
Master Transaction Agreement shall stand fully released and discharged with
respect to any and all obligations under this agreement. In the event that
the
Conditions Precedent to Closing are not satisfied because of the breach of
any
representation, warranty or covenant of any party hereto, each party shall
be
entitled to pursue, exercise and enforce any and all remedies, rights, powers
and privileges available hereunder or at law or in equity.
40
ARTICLE
10
(a)
Except as provided in Section 10.1(b) and subject to the limitations set forth
in Section 10.6, each of the Physician Parties, jointly and severally, hereby
agrees to indemnify, defend and hold the Company, and its respective officers,
directors, employees and shareholders (collectively, the “Company
Indemnified Persons”)
harmless from and against all demands, suits, claims, actions or causes of
action, assessments, losses, damages, liabilities, liens, settlements,
penalties, and forfeitures, and reasonable costs and expenses incident thereto
(including reasonable attorneys’ fees) (collectively, the “Indemnity Losses” and
individually, an “Indemnity
Loss”),
asserted against or suffered or incurred, directly or indirectly, by any of
the
Company Indemnified Persons and resulting from:
(i)
any
material misrepresentation in or material breach of the representations or
warranties of any of the Physician Parties or the failure of any of the
Physician Parties to perform any of their respective covenants or obligations
contained in this Master Transaction Agreement or the Asset Purchase
Agreements;
(ii)
except with respect to any liabilities relating to or arising from the provision
of professional medical services (or failure to provide professional medical
services), the operation of the Practice by each of the Clinics prior to the
Closing including, but not limited to, any and all obligations or liabilities
of
any of the Physician Parties of any kind, description or character, direct
or
indirect, absolute or contingent, known or unknown; or
(iii)
any
liability for Taxes arising out of, or by virtue of, or based on any Physician
Party.
(b)
Notwithstanding the foregoing provisions of Section 10.1(a), the Physician
Parties shall not be obligated to jointly and severally indemnify, defend or
hold the Company Indemnified Parties harmless from and against any Indemnity
Losses asserted against or suffered or incurred by any of the Company
Indemnified Parties and resulting from any material misrepresentation in or
material breach of any representation of Physician contained in Section 3.2
hereof or Section 6.6 hereof or from the failure of Physician to perform any
of
the Physician’s covenants or obligations contained in the Non-Competition
Covenant. In each of these cases, the Physician shall severally and not jointly
indemnify, defend and hold the Company harmless from and against all Indemnity
Losses asserted against or suffered or incurred by any of the Company
Indemnified Parties and resulting from any material misrepresentation in or
material breach of such representations of the Physician or from the failure
of
the Physician to perform any of such covenants or obligations.
41
10.2
Indemnification
by the Company.
Subject
to the limitations set forth in Section 10.6, the Company hereby agrees to
indemnify, defend and hold the Physician Parties and their respective officers,
directors, employees, partners and shareholders (collectively “Physician
Indemnified Persons”)
harmless from and against any Indemnity Loss asserted against or suffered or
incurred by any of the Physician Indemnified Persons and resulting
from:
(a)
any
misrepresentation in or breach of the representations and warranties of the
Company or the failure of the Company to perform any of their respective
covenants or obligations contained in this Master Transaction Agreement or
in
the Asset Purchase Agreements;
(b)
the
use
of the Assets after the Closing and the conduct of its business and the New
PA
after Closing;
(c)
any
liability for Taxes arising out of, or by virtue of, or based on the Company;
(d)
any
Environmental Claim arising out of or based upon the operation of the business
of the Company; and
(e) any
claim
of any investor, purchaser or shareholder of the Company.
10.3
Notice.
If any
person or entity has reason to believe that he, she or it has suffered or
incurred (or has a reasonable belief that he, she or it will suffer or incur)
any Indemnity Loss subject to indemnity hereunder, such person or entity shall
so notify the indemnifying party promptly in writing describing such loss or
expense, the amount thereof, if known, and the method of computation of such
Indemnity Loss, all with reasonable particularity. If the nature of the
Indemnity Loss set forth in the notice does not involve any third party claim,
and if the indemnifying party does not respond to the indemnified party in
writing contesting the existence of amount of any Indemnity Loss within thirty
(30) days after delivery of such notice, then such indemnifying party shall
be
obligated to pay, and shall pay in accordance with Section 10.5, the amount
of
the Indemnity Loss set forth in such notice to the indemnified party. If any
action at law, suit in equity, administrative action or arbitration or mediation
proceeding is instituted by or against a third party with respect to which
any
person intends to claim any liability or expense as an Indemnity Loss under
this
Article 10, such person shall promptly notify the indemnifying party of such
action. The failure to give or to timely give any notice required by this
Section 10.3 shall not relieve the party from whom indemnity is sought of any
of
its obligations under this Article 10, except to the extent that such failure
results in actual prejudice to the indemnifying party.
42
(a)
With
respect to any action at law, suit in equity, administrative action or
arbitration or mediation proceeding that is instituted by or against a third
party with respect to which any person intends to claim any liability or expense
under this Article 10, the indemnifying party shall have fourteen (14) business
days after receipt of the notice with respect thereto referred to in the first
sentence of Section 10.3 to notify the indemnified party that it elects to
conduct and control any action, suit or proceeding with respect to such claim;
provided, however, that no such election may be made with respect to any action,
suit or proceeding by a taxing authority with respect to any consolidated,
combined or unitary return filed by the Company or any of its affiliates. If
the
indemnifying party does not give such notice, the indemnified person shall
have
the right to defend, contest, settle or compromise such action, suit or
proceeding in the exercise of its exclusive discretion, and the indemnifying
party shall, upon request from the indemnified person, promptly pay the
indemnified person in accordance with the other terms and conditions of this
Article 10 the amount of any Indemnity Loss subject to indemnity hereunder
resulting from its liability to the third party claimant. If the indemnifying
party gives such notice, it shall have the right to participate in, and, to
the
extent that it shall desire, to undertake, conduct and control, through counsel
of its own choosing (which counsel shall be satisfactory to the indemnified
party in the reasonable judgment of the indemnified party and shall not, except
with the consent of the indemnified party, be counsel to the indemnified party)
and at its sole expense, the conduct and settlement of such action, suit or
proceeding, and the indemnified person shall cooperate with the indemnifying
party in connection therewith; provided, however, that (i) the indemnifying
party shall not thereby permit to exist any lien, encumbrance or other adverse
charge securing the claims indemnified hereunder upon any asset of the
indemnified person, (ii) the indemnifying party shall not thereby consent to
the
imposition of any injunction against the indemnified person without the written
consent of the indemnified person, (iii) the indemnifying party shall permit
the
indemnified person to participate in such conduct or settlement through counsel
chosen by the indemnified person, but the fees and expenses of such counsel
shall be borne by the indemnified person except as provided below, and (iv)
upon
a final determination of such action, suit or proceeding, the indemnifying
party
shall promptly reimburse to the extent required under this Article 10 the
indemnified person for the full amount of any Indemnity Loss resulting from
such
action, suit or proceeding and all reasonable and related expenses incurred
by
the indemnified person, other than fees and expenses of counsel for the
indemnified person incurred after the assumption of the conduct and control
of
such action, suit or proceeding by the indemnifying party (except as provided
below); provided further, however, that such fees and expenses of counsel for
the indemnified party shall be borne by the indemnifying party if (i) the
employment of counsel by the indemnified party has been authorized in writing
by
the indemnifying party, (ii) the indemnified party has reasonably concluded
(based on the advice of counsel) that there may be legal defenses available
to
it that are different from or in addition to those available to the indemnifying
party, (iii) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between such party and the indemnifying party in
which
case the indemnifying party will not have the right to direct the defense of
such action on behalf of the indemnified party, or (iv) the indemnifying party
has not in fact employed counsel to assume the defense of such action within
a
reasonable time after giving notice of its intent to assume such defense. So
long as the indemnifying party is contesting any such action in good faith,
the
indemnified person shall not pay or settle any such action, suit or proceeding.
Notwithstanding the foregoing, the indemnified person shall have the right
to
pay or settle any such action, suit or proceeding, provided that in such event
the indemnified person shall waive any right to indemnity therefor from the
indemnifying party and no amount in respect thereof shall be claimed as an
Indemnity Loss under this Article 10.
43
(b)
If
requested by the indemnifying party, the indemnified person agrees to cooperate
with the indemnifying party and its counsel in contesting any claim which the
indemnifying party elects to contest or, if appropriate, in making any
counterclaim against the person asserting the claim, or any cross-complaint
against any person asserting the claim, or any cross-complaint against any
person and further agrees to take such other action as reasonably may be
requested by an indemnifying party to reduce any loss or expense for which
the
indemnifying party would have responsibility, but the indemnifying party will
reimburse the indemnified person for any reasonable expenses incurred by it
in
so cooperating or acting at the request of the indemnifying party.
(c)
The
indemnified person agrees to afford the indemnifying party and its counsel
the
opportunity to be present at, and to participate in, conferences with all
persons, including governmental authorities, asserting any claim against the
indemnified person or conferences with representatives of or counsel for such
persons.
10.5
Payment
of Losses.
Except
as specifically set forth in any other section of this Master Transaction
Agreement or the Asset Purchase Agreements with respect to payment of losses,
which section shall govern payment of losses with respect to matters set forth
therein, the indemnifying party shall pay to the indemnified person in cash
the
amount of any Indemnity Loss to which the indemnified person may become entitled
by reason of the provisions of this Master Transaction Agreement, such payment
to be made within sixty (60) business days after any such amount of losses
is
finally determined either pursuant to mutual agreement of the parties, pursuant
to the second sentence of Section 10.3, pursuant to the provisions of Section
10.4(a), pursuant to the provisions of Section 11.4 or Section 11.5, or pursuant
to the dispute resolution provisions set forth in Article 12 or pursuant to
a
final, unappealable binding judgment of a court with jurisdiction. If Physician
is the indemnifying party and fails to make payment as contemplated by this
Section 10.5, the Company, at its election, shall be entitled to set off such
amount payable under the Note held by the Physician; representing an amount
equal to or less than the amount of the Indemnity Loss, but in no event shall
the Company be entitled to offset amounts in excess of the Indemnity Loss
pursuant to this Section 10.5. Such indemnifying party agrees to redeliver
to
the Company any Note that, as a result of the exercise of set-off rights, is
paid in full.
44
10.6
Damages;
Limitations.
Notwithstanding anything contained to the contrary in this Master Transaction
Agreement, a Party’s right to recover any amounts under the indemnification
provisions of this Article 10 shall be determined or limited as provided in
this
Section 10.6.
(a)
[intentionally deleted]
(b)
All
representations, warranties and indemnities made by the parties shall survive
the Closing and shall thereafter terminate and expire twenty-four (24) months
after the Closing Date, except that representations, warranties (Section 3.1(j))
and associated indemnities with respect to tax matters, and representations,
warranties and associated indemnities with respect to environmental matters
(Section 3.1(m)), shall survive for a period equal to the statute of limitations
applicable to any claim arising from or attributable to such matters; provided,
however, that notwithstanding the foregoing, the rights and obligations with
respect to indemnification as provided in this Article 10 shall continue with
respect to any matter for which indemnification has been properly sought
pursuant to the terms and conditions of this Master Transaction Agreement prior
to the expiration of any such survival period.
(c)
Notwithstanding anything herein to the contrary, the Physician Parties shall
not
be obligated to indemnify the Company under this Article 10:
(i) unless the aggregate of all Indemnity Losses of the Company exceeds Ten
Thousand Dollars ($10,000) (the “Seller’s
Basket”),
in
which case the Company shall be entitled to recover all Indemnity Losses,
including the amount equal to the Seller’s Basket. Nothing contained in this
Section 10.6(c) shall be deemed to limit or impair the Company’s right to seek
injunction or other equitable relief for a Physician Party’s breach of any
provision set forth in the Non-Competition Covenant.
(d)
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to indemnify Physician Parties under this Article 10:
(i) unless the aggregate of all Indemnity Losses of the Physician Parties
exceeds Ten Thousand Dollars ($10,000) (the “Buyer’s
Basket”),
in
which case the Physician Parties shall be entitled to recover all damages to
the
Physician Parties, including the amount equal to the Buyer’s
Basket.
ARTICLE
11
11.1
Taxes.
The
Physician Parties will pay all transfer taxes, sales and other taxes and
charges, if any, which may become payable in connection with the transactions
contemplated by the Transaction Documents.
45
11.2
Remedies
Not Exclusive.
No
remedy conferred by any of the specific provisions of this Master Transaction
Agreement or any other Transaction Document is intended to be exclusive of
any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing
at
law or in equity or by statute or otherwise. Provided, however the right to
recover any amount under the indemnification provision of Article 10 shall
be
determined and limited exclusively as provided in Section 10.6. The election
of
any one or more remedies by any party hereto shall not constitute a waiver
of
the right to pursue other available remedies.
11.3
Expenses.
Whether
or not the transactions contemplated by this Master Transaction Agreement are
consummated, each of the parties hereto shall pay the fees and expenses of
its
counsel, accountants and other experts incident to the negotiation and
preparation of the Transaction Documents and consummation of the transactions
contemplated thereby, except that the Company agrees to pay all (i) auditing
fees in connection with the preparation of the Audited Financial Statements
and
Interim Financial Statement, and (ii) Physician Parties’ reasonable attorneys’
fees for finalizing this Master Transaction Agreement and the
other
Transaction Documents
which
shall be documented in reasonable detail, provided however that the fees in
this
subsection (ii) shall be paid only upon consummation of the Closing.
11.4
Parties
Bound.
Except
to the extent otherwise expressly provided herein, this Master Transaction
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, representatives, administrators, guardians,
successors and assigns; and no other person shall have any rights, benefits
or
obligations hereunder.
11.5
Notices.
All
notices, reports, records or other communications that are required or permitted
to be given to the parties under this Master Transaction Agreement shall be
sufficient in all respects if given in writing and delivered in person, by
telecopy, by overnight courier or by registered or certified mail, postage
prepaid, return receipt requested, to the receiving party at the following
address:
If
to
the Company, addressed to:
Xxxxxx
X.
Xxxxxxxx, CEO
Basic
Healthcare Networks of Texas, L.P. L.P.
0000
Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxx
Xxx Xxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
With
copies to:
Xxxxx
X.
Xxxxx, Esq.
Xxxxxxxxxx
& Xxxxx, LLP
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
46
If
to
the Physician Parties, addressed to:
Xx.
Xxxxx
Xxxxxxx
00000
Xxxxxxx Xxxx, 000X
Xxxxxxxxx,
XX 00000
e-mail:
xxxxxxxxxxx@xxxxxxx.xxx
Facsimile:
(000) 000-0000
or
to
such other address as the party to whom notice is to be given may have furnished
to each other party in writing in accordance herewith. Any such communication
shall be deemed to have been given (i) when delivered if personally delivered
or
sent by telecopier, (ii) on the Business Day after dispatch if sent by
nationally-recognized, overnight courier and (iii) on the fifth Business Day
after dispatch, if sent by mail. As used herein, “Business Day” means a day that
is not a Saturday, Sunday or a day on which banking institutions in Texas are
not required to be open.
(a)
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Texas without giving effect to the laws and principles
thereof, or of any other jurisdiction, which would direct the application of
the
laws of another jurisdiction.
(b) Any
claim, dispute or other controversy involving a monetary value of $100,000
or
less (a “Controversy”)
relating to this Agreement shall be settled and resolved by binding arbitration
in Dallas, Texas, before a single arbitrator under the rules of the American
Arbitration Association (“AAA”)
in
effect at the time a demand for arbitration is made. If there is any conflict
between the AAA rules and this arbitration clause, this arbitration clause
will
govern and determine the rights of the parties. The parties to this Agreement
(the “Parties”)
shall
be entitled to full discovery regarding the Controversy as permitted by
applicable codes of civil procedure. The arbitrator’s decision on the
Controversy shall be a final and binding determination of the Controversy and
shall be fully enforceable as an arbitration award in any court having
jurisdiction and venue over the Parties. The arbitrator shall also award the
prevailing Party any reasonable attorneys’ fees and reasonable expenses the
prevailing Party incurs in connection with the arbitration, and the
non-prevailing Party shall pay the arbitrator’s fees and expenses. The
arbitrator shall determine who is the prevailing Party. Each Party also agrees
to accept service of process for all arbitration proceedings in accordance
with
AAA’s rules.
(c) The
obligation to arbitrate shall not be binding upon either party with respect
to a
controversy involving a monetary amount exceeding $100,000, requests for
temporary restraining orders, preliminary injunctions or other procedures in
a
court of competent jurisdiction to obtain interim relief when deemed necessary
by such court to preserve the status quo or prevent irreparable injury pending
resolution by arbitration of the actual dispute between the
Parties.
47
(d)The
provisions of this Section shall be construed as independent of any other
covenant or provision of this Agreement; provided that, if a court of competent
jurisdiction determines that any such provisions are unlawful in any way, such
court shall modify or interpret such provisions to the minimum extent necessary
to have them comply with the law.
(e)This
arbitration provision shall be deemed to be self-executing and shall remain
in
full force and effect after expiration or termination of this Agreement. In
the
event either party fails to appear at any properly noticed arbitration
proceeding, an award may be entered against such party by default or otherwise,
notwithstanding said failure to appear.
11.7
Entire
Agreement; Amendments and Waivers.
This
Master Transaction Agreement, together with other Transaction Documents and
all
exhibits and schedules hereto and thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes
all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written (including the letter of intent) of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof. No supplement,
modification or waiver of this Master Transaction Agreement shall be binding
unless it shall be specifically designated to be a supplement, modification
or
waiver of this Master Transaction Agreement and shall be executed in writing
by
the party to be bound thereby. No waiver of any of the provisions of this Master
Transaction Agreement shall be binding unless executed in writing by the party
to be bound thereby. No waiver of any of the provisions of this Master
Transaction Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute
a
continuing waiver unless otherwise expressly provided.
11.8
Reformation
Clause.
The
parties acknowledge that federal and state law and regulations applicable to
physicians, health care organizations, and business transactions in which
physicians and other health care providers participate are subject to change,
and that such changes in laws and regulations, and interpretations thereof
by
courts and regulatory authorities may affect the transactions contemplated
by
this Master Transaction Agreement, i.e.,
certain aspects of the contemplated transactions may become prohibited or
economically impractical as a result of such changes. If such event occurs,
the
parties each agree to negotiate in good faith such alterations to the structure
and terms of the transactions under this Master Transaction Agreement as may
be
necessary to make them lawful under then-applicable laws and regulations,
without materially disadvantaging either party.
11.9
Assignment.
The
Master Transaction Agreement may not be assigned by operation of law or
otherwise except that the Company shall have the right to assign this Master
Transaction Agreement, at any time, to any direct or indirect wholly owned
subsidiary of the Company. No such assignment shall relieve the Company of
its
obligations hereunder.
48
11.10
Attorneys’
Fees.
Except
as otherwise specifically provided herein, if any action or proceeding is
brought by any party with respect to this Master Transaction Agreement or the
other Transaction Documents, or with respect to the interpretation, enforcement
or breach hereof, the prevailing party in such action shall be entitled to
an
award of all reasonable costs of litigation or arbitration, including, without
limitation, attorneys’ fees, to be paid by the losing party, in such amounts as
may be determined by the court having jurisdiction of such action or proceeding
or by the arbitrators deciding such action or proceeding.
11.11
Further
Assurances.
From
time to time hereafter and without further consideration, each of the parties
hereto shall execute and deliver such additional or further instruments of
conveyance, assignment and transfer and take such actions as any of the other
parties hereto may reasonably request in order to more effectively consummate
the transactions contemplated by the Transaction Documents or as shall be
reasonably necessary in connection with the carrying out of the parties’
respective obligations hereunder or the purposes of this Master Transaction
Agreement.
11.12
Announcements
and Press Releases.
Any
press releases or any other public announcements concerning this Master
Transaction Agreement or the other Transaction Documents shall be approved
by
the Company; provided, however, that if Physician reasonably believes that
it
has a legal obligation to make a press release and the consent of the other
party cannot be obtained, then the release may be made without such
approval.
11.13
No
Tax
Representations.
Each
party acknowledges that it is relying solely on its advisors to determine the
tax consequences of the transactions contemplated hereunder and that no
representation or warranty has been made by any party as to the tax consequences
of such transactions.
11.14
Multiple
Counterparts.
This
Master Transaction Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11.15
Headings.
The
headings of the several Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Master Transaction Agreement.
11.16
Severability.
Each
article, section, subsection and lesser section of this Master Transaction
Agreement constitutes a separate and distinct undertaking, covenant or provision
hereof. In the event that any provision of this Master Transaction Agreement
shall finally be determined to be unlawful, such provision shall be deemed
severed from this Master Transaction Agreement, but every other provision of
this Master Transaction Agreement shall remain in full force and
effect.
49
11.17 Negotiation
of Agreement.
Each of
the parties acknowledge that it has been represented by independent counsel
of
its choice throughout all negotiations that have preceded the execution of
this
Agreement and that it has executed the same with consent and upon the advice
of
said independent counsel. Each party cooperated in the drafting and preparation
of this Agreement and the documents referred to herein, and any and all drafts
relating thereto shall be deemed the work product of the parties and may not
be
construed against any party by reason of its preparation. Accordingly, any
rule
of law, or any legal decision that would require interpretation of any
ambiguities in this Agreement against the party that drafted it, is of no
application and is hereby expressly waived.
11.18 Good
Faith and Fair Dealing.
The
parties agree that in all actions taken in performance of this Agreement and
in
their enforcement of all rights granted under this Agreement, they will act
in
good faith and practice fair dealing.
[Remainder
of Page Left Blank Intentionally]
50
IN
WITNESS WHEREOF, the parties have caused this Master Transaction Agreement
to be duly executed as of December 12, 2005.
COMPANY:
BASIC
HEALTH CARE NETWORKS
OF
TEXAS,
L.P.
a
Texas
limited partnership
By:
Basic
Health Care Networks of Texas I, LLC,
a Delaware limited liability company, General Partner
a Delaware limited liability company, General Partner
By:
/s/
Xxxxxx X. Xxxxxxxx
Xxxxxx
X.
Xxxxxxxx
Chief
Executive Officer
PHYSICIAN:
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx, an individual
CLINICS:
303
MEDICAL CLINIC, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
XXXXX
XXXXXX’, D.O., P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
51
IBERIA
MEDICAL CLINIC, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
XXXXXXXX
MEDICAL CLINIC, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
LAKE
JUNE
MEDICAL CENTER, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
NORTHSIDE
MEDICAL CLINIC, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
X’XXXXXX
MEDICAL CENTER, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
RED
BIRD
URGENT CARE CLINIC, P.A.
/s/
Xx. Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
52
EXHIBIT
A
ASSET
PURCHASE AGREEMENT
between
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
a
Texas
limited partnership
and
<CLINIC>
a
Texas
professional association
Effective
as of December 12, 2005
ASSET
PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (“Asset Purchase Agreement”) is entered into as of
December 12, 2005 (the “Effective
Date”),
by
and between BASIC HEALTH CARE NETWORKS OF TEXAS, L.P., a Texas limited
partnership (the “Company”),
and
<CLINIC>, a Texas professional association (the “Clinic”).
All
capitalized terms used herein and not defined shall have the same respective
meanings assigned to such terms in the Master Transaction Agreement (hereinafter
defined).
A.
This
Asset Purchase Agreement is one of a series of Asset Purchase Agreements for
the
purchase of medical clinics, entered into pursuant to a certain MASTER
TRANSACTION AGREEMENT (“Master
Transaction Agreement”),
dated
and effective as of December 12, 2005, is by and among the Company on the one
hand, and 303 MEDICAL CLINIC, P.A. , a Texas professional association, XXXXX
XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL CLINIC,
P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas
professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional
association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association,
X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT
CARE CLINIC, P.A., a Texas professional association, and (collectively, the
“Clinics”);
and
Xxxxx X. Xxxxxxx, D.O.
B.
The
Clinic is engaged in the practice (the “Practice”)
of
providing family medical, general medical, urgent care and ancillary services
to
patients.
C.
The
Company is engaged in the business of providing management, administrative,
strategic, financial, marketing, information technology, and related services
to
professional medical organizations.
D.
Pursuant to the Master Transaction Agreement, the Company shall acquire certain
assets of the Clinics as provided in this Asset Purchase Agreement. The Master
Transaction Agreement, together with each of the exhibits attached thereto,
including this Asset Purchase Agreement and each of the other Asset Purchase
Agreements of like tenor (and documents to be executed in connection therewith),
are hereinafter collectively referred to as the “Transaction
Documents.”
E.
The
Clinic desires to sell, transfer, convey and assign to the Company and the
Company desires to purchase from the Clinic, certain of the assets of the Clinic
upon the terms and subject to the conditions hereinafter set forth.
2
ARTICLE
I
THE
TRANSACTION
1.1.
Purchased
Assets.
On the
terms and subject to the conditions of this Asset Purchase Agreement, at the
Closing (as hereinafter defined), the Clinic shall sell, transfer, convey and
assign to the Company, and the Company shall purchase, assume, and accept from
the Clinic, the following assets (the “Assets”),
as
the same shall exist immediately prior to the Closing, free and clear of all
Encumbrances:
(a)
Accounts
Receivable.
The
accounts receivable of the Clinic, relating to patient services only, as of
the
Closing Date (the “Accounts
Receivable”);
(b)
Supplies
and Inventory.
All
supplies and inventory of the Clinic held on the date of this Agreement (or
replacement or replenishment thereof) (“Supplies”);
(c)
Intellectual
Property.
All
Intellectual Property owned by the Clinic that is related to the Practice;
(d)
Books
and Records.
All
books, files, papers, agreements, correspondence, databases, information
systems, programs, software, documents, records and documentation thereof
related to any of the Assets or the Assumed Liabilities, or used in the conduct
of the Practice, on whatever medium, excluding personal or entity tax records
of
the Physician or Clinic and financial records of the Physician (the
“Books
and Records”);
provided, however, that the Company shall make all such books and records
available to the Physician or Clinic for a period of not less than ten (10)
years from the date of this Agreement during regular working hours;
(e) Trade
Names.
All
trade names and trademarks owned or used by the Clinic in the operation of
its
business; and
(f) Telephone
Numbers.
All
telephone numbers used by the Clinic in the operation of its business.
1.2.
Excluded
Assets.
Notwithstanding Section 1.1, the following assets of Clinic (the
“Excluded
Assets”)
shall
not be included in the Assets:
(a)
Certain
Debt.
Any
intercompany or intracompany receivables between Clinic and any of its
Affiliates or between any of its Affiliates;
(b)
Equipment.
All
medical equipment, furnishings and fixtures;
(c)
Deposits.
Any
Deposits and Advances, Rebates and Credits of Claims related to any Excluded
Liability (as hereinafter defined);
3
(d)
Rights
Under Certain Agreements.
All
rights under the Transaction Agreements; and
(e) Cash
and Bank Accounts.
All
cash on hand and in banks or other depository institutions in the name of or
subject to the control of any Clinic or the Physician immediately prior to
the
Closing Date.
1.3.
Liabilities.
The
Company is not assuming any liabilities or obligations of the Clinic (fixed
or
contingent, known or unknown, matured or unmatured) whatsoever.
1.4.
Instruments
of Conveyance and Transfer, Etc.
At the
Closing, the Clinic shall deliver (or cause to be delivered) to the Company
such
deeds, bills of sale, endorsements, assignments and other good and sufficient
instruments of sale, transfer, conveyance and assignment as shall be necessary
to sell, transfer, convey and assign to the Company, in accordance with the
terms hereof, title to the Assets, free and clear of all Encumbrances,
including, without limitation, the delivery of a Xxxx of Sale (the “Xxxx
of Sale”)
substantially in the form of Exhibit
A.
Simultaneously therewith, the Clinic shall take all steps as may be reasonably
required to put the Company in possession and operating control of the Assets.
1.5.
Right
of Endorsement, Etc.
Effective upon the Closing, the Clinic hereby constitutes and appoints the
Company, its successors and assigns, the true and lawful attorney-in-fact of
the
Clinic with full power of substitution, in the name of the Company, or the
name
of the Clinic, on behalf of and for the benefit of the Company, to collect
all
accounts receivable assigned to the Company as provided herein, to endorse,
without recourse, checks, notes and other instruments received in payment of
such accounts receivable in the name of the Clinic, and to institute and
prosecute, in the name of the Clinic or otherwise, all proceedings which the
Company may deem proper in order to assert or enforce any claim, right or title
of any kind in or to the Assets, to defend and compromise any and all actions,
suits or proceedings in respect of any of the Assets and to do all such acts
and
things in relation thereto as the Company may deem reasonably advisable. The
foregoing powers are coupled with an interest and shall be irrevocable by the
Clinic, directly or indirectly, whether by the dissolution of the Clinic or
in
any other manner or for any other reason. The power of attorney granted herein
is restricted to collection of the accounts receivable transferred pursuant
to
this Agreement. Any exercise of this power of attorney must be done in a lawful
and commercially reasonable manner. The power of attorney granted herein is
restricted to collection of the accounts receivable and enforcement of rights
with respect to assets transferred pursuant to this Agreement. Any exercise
of
this power of attorney must be done in a lawful and commercially reasonable
manner.
1.6.
Further
Assurances.
The
Clinic shall pay or cause to be paid to the Company promptly any amounts that
shall be received by the Clinic after the Closing which constitute Assets,
including all amounts paid to the Clinic on account of the Accounts Receivable.
The Clinic shall, upon the reasonable request of the Company, execute,
acknowledge, deliver and file, or cause to be done, executed, acknowledged,
delivered or filed, such further acts, transfers, conveyances, assignments
or
assurances as may reasonably be required for selling, transferring, conveying
and, assigning to the Company the Assets being purchased by the Company
hereunder. Nothing in this Agreement shall be interpreted to permit or imply
that the Company shall have any control over the Excluded Assets or Excluded
Liabilities.
4
ARTICLE
II
PURCHASE
PRICE; ALLOCATION
Purchase
Price; Payment. The purchase price (the “Purchase Price”) to be paid for the
Assets pursuant to this Asset Purchase Agreement shall consist of the applicable
portion of the Aggregate Consideration under the Master Transaction Agreement,
which allocation may be determined by each party hereto; provided, however,
that
the aggregate Purchase Price under all of the Assets Purchase Agreements shall
equal 100% of the Aggregate Consideration as defined in the Master Transaction
Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1.
Representations
and Warranties of the Clinic.
The
Clinic hereby represents and warrants to the Company that the representations
and warranties set forth in Section 3.1 of the Master Transaction Agreement
are
true, correct and complete with respect to the Clinic as of (and as if made
on)
the Effective Date. Further, the Clinic hereby represents and warrants to the
Company that (a) the execution, delivery and performance of this Asset Purchase
Agreement, the Xxxx of Sale, and the Assignment and Assumption Agreement and
the
consummation of the transactions contemplated hereby and thereby have been
duly
and validly authorized by the Clinic; (b) to the best of the Clinic’s knowledge
and belief, after reasonable investigation, this Asset Purchase Agreement and
the Xxxx of Sale have been duly and validly executed and delivered by the Clinic
and constitute legal, valid, and binding obligations; (c) to the best of the
Clinic’s knowledge and belief, after reasonable investigation neither the
execution, delivery or performance by the Clinic of this Asset Purchase
Agreement or the Xxxx of Sale nor the consummation by the Clinic of the
transactions contemplated hereby or thereby, nor compliance by the Clinic with
any provision hereof or thereof will (i) conflict with or result in a breach
of
any provision of the charter or bylaws of the Clinic, (ii) cause a default
(with
due notice, lapse of time or both), or give rise to any right of termination,
cancellation or acceleration, under any of the terms, conditions or provisions
of any note, bond, lease, mortgage, indenture, license or other instrument,
obligation or agreement to which the Clinic is a party or by which it or any
of
its respective properties or assets may be bound or (iii) to the best of the
Clinic’s knowledge, violate any law, statute, rule or regulation or order, writ,
judgment, injunction or decree of any court, administrative agency or
governmental body applicable to the Clinic or any of its respective properties
or assets of which the Clinic has actual knowledge; and (d) to the best of
the
Clinic’s knowledge and belief, after reasonable investigation no permit,
authorization, consent or approval of or by, or any notification of or filing
with, any person (governmental or private) is required in connection with the
execution, delivery or performance by the Clinic of this Asset Purchase
Agreement or the consummation of the transactions contemplated hereby.
5
3.2.
Representations
and Warranties of the Company.
The
Company represents and warrants to the Clinic, that the representations and
warranties set forth in Section 3.2 of the Master Transaction Agreement are
true, correct and complete with respect to the Company as of (and as if made
on)
the Effective Date. Further, the Company hereby represents and warrants to
the
Clinic that (a) the execution, delivery and performance of this Asset Purchase
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
on the part of the Company; (b) this Asset Purchase Agreement has been duly
and
validly executed and delivered by the Company and constitutes a legal, valid
and
binding obligation of the Company enforceable in accordance with its respective
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights
of
creditors generally; (c) neither the execution, delivery or performance by
the
Company of this Asset Purchase Agreement nor the consummation by the Company
of
the transactions contemplated hereby or thereby, nor compliance by the Company
with any provision hereof will (i) conflict with or result in a breach of any
provision of the charter or bylaws of the Company, (ii) cause a default (with
due notice, lapse of time or both), or give rise to any right of termination,
cancellation or acceleration, under any of the terms, conditions or provisions
of any note, bond, lease, mortgage, indenture, license or other instrument,
obligation or agreement to which the Company is a party or by which it or any
of
its respective properties or assets may be bound or (iii) violate any law,
statute, rule or regulation or order, writ, judgment, injunction or decree
of
any court, administrative agency or governmental body applicable to the Company
or any of its respective properties or assets; and (d) no permit, authorization,
consent or approval of or by, or any notification of or filing with, any person
(governmental or private) is required in connection with the execution, delivery
or performance by the Company of this Asset Purchase Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE
IV
CONDITIONS
OF CLOSING
4.1.
Conditions
of Each Party’s Obligations.
The
obligations of the Clinic to sell the Assets, and of the Company to purchase
the
Assets, are subject to the satisfaction of the following conditions unless
waived in writing (to the extent such conditions can be waived) by the Clinic
and the Company:
(a)
Approvals.
All
authorizations, consents, orders or approvals of, or declarations or filings
with, or expiration of waiting periods imposed by, any governmental agency
or
authority necessary for the consummation of the transactions contemplated hereby
shall have been filed, occurred or been obtained.
6
(b)
Legal
Action.
No
temporary restraining order, preliminary injunction or permanent injunction
or
other order preventing the consummation of transactions contemplated hereby
shall have been issued by any Federal or state court and remain in effect.
Each
party agrees to use its best efforts to have any such injunction or order
lifted.
(c)
Legislation.
No
Federal, state, local or foreign statute, rule or regulation shall have been
enacted which prohibits, restricts or delays the consummation of the
transactions contemplated by this Asset Purchase Agreement or any of the
conditions to the consummation of such transactions.
(d)
Related
Agreements.
Each of
the related agreements identified in Section 3.4 hereof (collectively, the
“Related
Agreements”)
shall
have been fully executed and delivered prior to or at the Closing by all of
the
parties required to execute and deliver such agreements.
4.2.
Conditions
of Obligations of the Company.
The
obligation of the Company to purchase the Assets is subject to the satisfaction
of the following conditions unless waived in writing (to the extent such
conditions can be waived) by the Company:
(a)
Representations
and Warranties.
The
representations and warranties of the Clinic set forth in Section 3.1 shall
in
each case be true and correct in all material respects as of the date of this
Asset Purchase Agreement and as of the Closing as though made at and as of
the
Closing.
(b)
Performance
of Obligations.
The
Clinic shall have performed all obligations required to be performed by it
under
this Asset Purchase Agreement prior to and at the Closing.
(c)
Authorization.
All
action necessary to authorize the execution, delivery and performance of this
Asset Purchase Agreement by the Clinic and the consummation of the transactions
contemplated hereby and thereby shall have been duly and validly taken by the
Clinic and the Clinic shall have full power and right to consummate the
transactions contemplated hereby and thereby.
4.3.
Conditions
of Obligations of the Clinic.
The
obligation of the Clinic to sell the Assets to the Company is subject to the
satisfaction of the following conditions unless waived in writing (to the extent
such conditions can be waived) by the Clinic:
(a)
Representations
and Warranties.
The
representations and warranties of the Company set forth in Section 3.2 shall
in
each case be true and correct in all material respects as of the date of this
Asset Purchase Agreement and as of the Closing Date as though made at and as
of
the Closing.
(b)
Performance
of Obligations.
The
Company shall have performed all obligations required to be performed by it
under this Asset Purchase Agreement prior to and at the Closing, and the Clinic
shall have received a certificate signed by an authorized officer of the Company
to that effect.
7
(c)
Authorization.
All
action necessary to authorize the execution, delivery and performance of this
Asset Purchase Agreement by the Company and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the Company.
4.4.
Related
Agreements.
The
Related Agreements referred to in this Asset Purchase Agreement consist of
the
following:
(a)
the
Consulting Agreements between each of the Key Persons and the Company;
(b)
the
Non-Competition Agreements between each of the Key Persons and the Company;
and
(c)
the
Master Lease Agreement.
ARTICLE
V
CLOSING
5.1.
Closing
Date.
The
closing (the “Closing”)
for
the consummation of the transactions contemplated by this Asset Purchase
Agreement shall occur at the date and time provided in the Master Transaction
Agreement. (the “Closing
Date”).
5.2.
Closing
Transactions.
At the
Closing, the parties shall take the actions and deliver the documents identified
in this Section 5.2. The Closing shall not be deemed to have taken place, and
the transactions contemplated by this Asset Purchase Agreement shall not be
deemed to have been consummated, unless all of the closing transactions
identified in this Section 5.2 have been completed or waived in writing by
the
parties.
(a)
The
Clinic shall deliver to the Company an executed Xxxx of Sale in the form
attached as Exhibit
A
of this
Agreement;
(b)
The
Company shall deliver the Aggregate Consideration pursuant to the terms and
conditions of the Master Transaction Agreement; and
(c)
BEW
Financing, LP and the Company shall execute and deliver the Master Lease
Agreement in the form attached as Exhibit
E
to the
Master Transaction Agreement;
(d) Each
of
the Key Persons and the Company shall execute and deliver a Consulting
Agreements in the form attached as Exhibit
B
to the
Master Transaction Agreement; and
8
(e) Each
of
the Key Persons and the Company shall execute and deliver a Non-Competition
Agreement in the form attached as Exhibit
C
to the
Master Transaction Agreement.
ARTICLE
VI
INDEMNIFICATION
The
parties hereby acknowledge that they have entered into an agreement providing
for indemnification of the Company and Clinic relating to the subject matter
hereto, as set forth in Article 10 of the Master Transaction Agreement, which
terms are incorporated into this agreement by reference.
ARTICLE
VII
AMENDMENT,
MODIFICATION AND WAIVER
This
Asset Purchase Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each of the parties. The waiver
by one party of the performance of any covenant, condition or promise shall
not
invalidate this Asset Purchase Agreement, nor shall it be considered as a waiver
by such party of any other covenant, condition or promise. The delay in pursuing
any remedy or in insisting upon full performance for any breach or failure
of
any covenant, condition or promise shall not prevent a party from later pursuing
any remedies or insisting upon full performance for the same or any similar
breach or failure.
ARTICLE
VIII
MISCELLANEOUS
8.1.
Transfer
Taxes, Etc.
Each
party agrees to be responsible for and to pay all transfer taxes, sales and
other taxes and charges, if any, levied against such party which may become
payable in connection with the transactions executed pursuant to this Asset
Purchase Agreement.
8.2.
Entire
Agreement.
This
Asset Purchase Agreement (including the recitals hereof and the Schedules and
the Exhibits attached hereto), together with the related agreements referenced
herein, contains the entire agreement between the parties hereto with respect
to
the transactions contemplated hereby and supersedes all prior agreements,
representations, warranties and understandings, either oral or written, between
the parties with respect thereto.
8.3.
Definitions;
Headings.
Capitalized terms used throughout this Asset Purchase Agreement shall have
the
meanings assigned to such terms set forth in Appendix
A,
and to
the extent not defined in said Appendix or elsewhere in this Asset Purchase
Agreement, capitalized terms used herein and not defined shall have the same
meanings as provided in the Master Transaction Agreement. Section headings
are
used herein for convenience only and shall in no way affect the construction
of
this Asset Purchase Agreement.
9
8.4.
Notices.
All
notices or other communications which are required or permitted hereunder shall
be in writing and sufficient if delivered personally or sent by telecopier
(if
an addressee has set forth a telecopy number below), sent by
nationally-recognized overnight courier, sent by certified mail, postage
prepaid, return receipt requested, or sent by facsimile if also sent by
nationally-recognized overnight courier for next day delivery, addressed as
follows:
If
to
the Company, to:
Xxxxxx
X.
Xxxxxxxx, CEO
Basic
Health Care Networks of Texas, L.P.
0000
Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxx
Xxx Xxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
With
a copy to:
Xxxxx
X.
Xxxxx, Esq.
Xxxxxxxxxx
& Xxxxx, LLP
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
If
to
the Clinic, to:
Xx.
Xxxxx
Xxxxxxx
00000
Xxxxxxx Xxxx, 000X
Xxxxxxxxx
XX 00000
Facsimile:
(000) 000-0000
or
to
such other address as the party to whom notice is to be given may have furnished
to each other party in writing in accordance herewith. Any such communication
shall be deemed to have been given (i) when delivered if personally delivered
or
sent by telecopier, (ii) on the Business Day after dispatch if sent by
nationally-recognized, overnight courier and (iii) on the fifth Business Day
after dispatch, if sent by mail. As used herein, “Business Day” means a day that
is not a Saturday, Sunday or a day on which banking institutions in Texas are
not required to be open.
8.5.
Counterparts.
This
Asset Purchase Agreement may be executed in any number of counterparts, and
each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
10
8.6.
Governing
Law; Arbitration.
(a)
This
Asset Purchase Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas without giving effect to the
laws
and principles thereof, or of any other jurisdiction, which would direct the
application of the laws of another jurisdiction.
(b) Any
claim, dispute or other controversy having a monetary value of $100,000 or
less
(a “Controversy”)
relating to this Agreement shall be settled and resolved by binding arbitration
in Dallas, Texas before a single arbitrator under the rules of the American
Arbitration Association (“AAA”)
in
effect at the time a demand for arbitration is made. If there is any conflict
between the AAA rules and this arbitration clause, this arbitration clause
will
govern and determine the rights of the parties. The parties to this Agreement
(the “Parties”)
shall
be entitled to full discovery regarding the Controversy as permitted by
applicable codes of civil procedure. The arbitrator’s decision on the
Controversy shall be a final and binding determination of the Controversy and
shall be fully enforceable as an arbitration award in any court having
jurisdiction and venue over the Parties. The arbitrator shall also award the
prevailing Party any reasonable attorneys’ fees and reasonable expenses the
prevailing Party incurs in connection with the arbitration, and the
non-prevailing Party shall pay the arbitrator’s fees and expenses. The
arbitrator shall determine who is the prevailing Party. Each Party also agrees
to accept service of process for all arbitration proceedings in accordance
with
AAA’s rules.
(c) The
obligation to arbitrate shall not be binding upon either party with respect
to
any Controversy exceeding $100,000, requests for temporary restraining orders,
preliminary injunctions or other procedures in a court of competent jurisdiction
to obtain interim relief when deemed necessary by such court to preserve the
status quo or prevent irreparable injury pending resolution by arbitration
of
the actual dispute between the Parties.
(d) The
provisions of this Section shall be construed as independent of any other
covenant or provision of this Agreement; provided that, if a court of competent
jurisdiction determines that any such provisions are unlawful in any way, such
court shall modify or interpret such provisions to the minimum extent necessary
to have them comply with the law.
(e) This
arbitration provision shall be deemed to be self-executing and shall remain
in
full force and effect after expiration or termination of this Agreement. In
the
event either party fails to appear at any properly noticed arbitration
proceeding, an award may be entered against such party by default or otherwise
notwithstanding said failure to appear.
8.7.
Attorneys’
Fees.
Notwithstanding anything contained herein to the contrary, in the event of
any
dispute or controversy arising out of or relating to this Asset Purchase
Agreement, the prevailing party shall be entitled to recover from the other
party all costs and expenses, including arbitrators’ fees and expenses,
attorneys’ fees and accountants’ fees, incurred in connection with such dispute
or controversy.
11
8.8.
Benefits
of Agreement.
The
terms and provisions of this Asset Purchase Agreement shall be binding upon
and
inure to the benefit of the parties and their respective successors and
permitted assigns. Anything contained herein to the contrary notwithstanding,
this Asset Purchase Agreement shall not be assignable by any party without
the
consent of the other parties hereto, and any purported assignment without such
consent shall be null and void.
8.9.
Pronouns.
As used
herein, all pronouns shall include the masculine, feminine, neuter, singular
and
plural thereof whenever the context and facts require such construction.
8.10. Negotiation
of Agreement.
Each of
the parties acknowledge that it has been represented by independent counsel
of
its choice throughout all negotiations that have preceded the execution of
this
Asset Purchase Agreement and that it has executed the same with consent and
upon
the advice of said independent counsel. Each party cooperated in the drafting
and preparation of this Asset Purchase Agreement and the documents referred
to
herein, and any and all drafts relating thereto shall be deemed the work product
of the parties and may not be construed against any party by reason of its
preparation. Accordingly, any rule of law, or any legal decision that would
require interpretation of any ambiguities in this Asset Purchase Agreement
against the party that drafted it, is of no application and is hereby expressly
waived.
[Remainder
of Page Left Blank Intentionally]
12
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
a
Texas
limited partnership
By:
BASIC
HEALTH CARE NETWORKS OF TEXAS I, LLC,
a Delaware limited liability company, General Partner
a Delaware limited liability company, General Partner
By: ____________________________
Xxxxxx
X.
Xxxxxxxx
Chief
Executive Officer
<CLINIC>
____________________________
Xx.
Xxxxx
Xxxxxxx
President
13
APPENDIX
A
As
used
herein, the following terms shall have the following meanings (all Section
references in this Appendix A shall refer to Sections of this Asset Purchase
Agreement unless otherwise provided):
“Accounts
Receivable”
shall
have the meanings set forth in Section 1.1(a).
“Affiliate”
shall
mean any member of the immediate family (including spouse, brother, sister,
descendant, ancestor or in-law) of any officer, director or stockholder of
any
Physician Party or any corporation, partnership, trust or other entity in which
a Physician Party or any such family member has a five percent (5%) or greater
interest or is a director, officer, partner or trustee. The term Affiliate
shall
also include any entity which controls, or is controlled by, or is under common
control with any of the individuals or entities described in the preceding
sentence.
“Asset
Purchase Agreement”
means
this Asset Purchase Agreement.
“Xxxx
of Sale”
shall
have the meaning set forth in Section 1.5 hereof.
“Excluded
Assets”
shall
have the meanings set forth in Section 1.2.
“Master
Transaction Agreement”
means
the Master Transaction Agreement dated December 12, 2005, to which this Asset
Purchase Agreement is an exhibit, by and among BASIC HEALTH CARE NETWORKS OF
TEXAS, L.P., a Texas limited partnership (the “Company”) on the one hand and 303
MEDICAL CLINIC, P.A. , a Texas professional association, XXXXX XXXXXX’, D.O.,
P.A., a Texas professional association, IBERIA MEDICAL CLINIC, P.A., a Texas
professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas professional
association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional association,
NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association, X’XXXXXX
MEDICAL CENTER, P.A., a Texas professional association, and RED BIRD URGENT
CARE
CLINIC, P.A., a Texas professional association (collectively, the “Clinics”)
and
Xxxxx X. Xxxxxxx, D.O
“Purchase
Price”
shall
mean the purchase price to be paid in consideration for the Assets of the Clinic
under this Asset Purchase Agreement, as defined in Section 2.1 hereof.
“Assets”
for
purposes of this Asset Purchase Agreement, shall have the meaning set forth
in
Section 1.1 hereof.
14
EXHIBIT
A
XXXX
OF SALE
<CLINIC>,
a Texas professional association (the “Clinic”),
hereby sells, conveys, transfers, signs and delivers to Basic Health Care
Networks of Texas, L.P., a Texas limited partnership (the “Company”),
the
following assets, properties, interests in properties and rights of the Clinic
(collectively, the “Assets”):
1.
|
the
accounts receivable described on Exhibit “A” attached hereto and made a
part hereof for all purposes;
|
2.
|
the
supplies and inventory described on Exhibit “B” attached hereto and made a
part hereof for all purposes
|
3.
|
all
Intellectual Property of the
Clinic;
|
4.
|
all
books, files, papers, agreements, correspondence, databases, information
systems, programs, software, documents, records and documentation
thereof
related to any of the Assets, or used in the conduct of the Practice,
on
whatever medium (the “Books and Records”); all goodwill, trade names and
trademarks owned or used by the Clinic in the operation of its business;
and
|
5.
|
all
telephone numbers used by the Clinic in the operation of its
business.
|
All
assets, properties, interests in properties, and rights of the Clinic not
expressly identified above or in the schedules referenced in the Asset Purchase
Agreement (the “Excluded
Assets”)
are
expressly excluded from the assets of the Clinic being sold, assigned, or
otherwise transferred to the Company.
To
the
extent there is a conflict between the terms and provisions of this Xxxx of
Sale
and the Asset Purchase Agreement, the terms and provisions of the Asset Purchase
Agreement shall govern.
[Signature
Page Follows]
15
<CLINIC>
______________________________
Xx.
Xxxxx
Xxxxxxx
President
16
EXHIBIT
B
CONSULTING
AGREEMENT
This
Consulting Agreement (“Agreement”)
is
made as of _______, 2006, by and between the undersigned Key Person (as defined
in the Master Transaction Agreement) (“Consultant”),
and
Basic Health Care Networks of Texas, L.P., a Texas limited partnership (the
“Purchaser”),
in
reference to the following:
A. The
Consultant is a physician licensed in Texas, engaged in the business of
providing physician practice management and administrative services in
connection with various clinics in the State of Texas providing general
practice, family practice, urgent care, physical medicine, rehabilitation and
other ancillary medical services.
B. This
Consulting Agreement is being entered into pursuant to a certain MASTER
TRANSACTION AGREEMENT (“Master
Transaction Agreement”),
dated
and effective as of December ___, 2005, is by and among Purchaser on the one
hand, and 303 MEDICAL CLINIC, P.A., a Texas professional association, XXXXX
XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL CLINIC,
P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas
professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional
association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association,
X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association, and RED BIRD
URGENT CARE CLINIC, P.A., a Texas professional association (collectively, the
“Clinics”)
and
Xx. Xxxxx Xxxxxxx.
C. Pursuant
to the Master Transaction Agreement, the Purchaser shall acquire certain assets
(“Acquired
Assets”)
of the
Clinics (the “Acquisition”)
under
a series of separate acquisition agreements. The Master Transaction Agreement,
together with each of the exhibits attached thereto, including each of the
Asset
Purchase Agreements (and documents to be executed in connection therewith),
are
hereinafter collectively referred to as the “Transaction
Documents.”
Concurrently herewith, the Consultant will enter into a Non-Competition
Agreement with the Purchaser.
D. In
connection with the Acquisition, one or more newly formed Texas professional
associations (“New
PA”)
shall
be formed by Texas-licensed physicians who shall conduct the medical practices
formerly conducted by the Clinics, and such New PA will hire certain physicians
and staff of the former Clinics.
E.
The
Consultant has valuable knowledge, relationships, experience and expertise
in
the management and operation of clinics for the delivery of general family
and
urgent care and ancillary medical services such as rehabilitation and physical
medicine; the Purchaser desires that the Consultant advise the Purchaser in
connection with the provision of management services to the New PA.
F. The
Purchaser desires to engage Consultant, and Consultant desires to enter into
a
consulting agreement with the Purchaser, to provide consulting services and
assistance to the Purchaser with respect to the management and operation of
the
New PA and the development of the New Clinics.
G.
Nothing
in this Agreement is intended to obligate the Consultant to render medical
advice, or engage in patient care.
NOW,
THEREFORE,
the
Purchaser and the Consultant agree as follows:
1. Term.
The term
of this Agreement shall commence on the date of Closing (as defined in the
Master Transaction Agreement) and continue until December 31, 2006, renewable
for an additional one (1) year period at the option of the Purchaser upon
written notice to the Consultant prior to December 31, 2006, unless and until
this Agreement is earlier terminated pursuant to Section 5 below (the
“Term”).
2.
Duties
of Consultant.
2.1 Consultant
shall, to the best of its ability, render the services set forth in Section
2.2
below (the “Services”),
in a
timely and professional manner in accordance with this Agreement. Subject to
the
foregoing, the manner and means by which Consultant chooses to complete the
Services are in Consultant’s sole discretion and control. Further, the parties
shall cooperate in good faith to agree upon and implement such further services
and agreements as may be requested by Purchaser relating to the Services. If
Consultant performs any work on Purchaser’s premises, Consultant shall comply
with all security, confidentiality, safety and health policies of Purchaser.
2.2 The
Services under this Agreement shall include:
(a) Ongoing
Consultation.
During
the Term of this Agreement, Consultant shall advise the Purchaser regarding
all
aspects of the operation and management of the Clinics, specifically, under
the
Management Services Agreement between the Purchaser on the one hand, and the
New
PA on the other hand, as applicable; provided,
however, that the Services shall not include the provision of medical advice,
patient care or advice regarding patient care protocols, and that no additional
Services shall be performed other than as set forth in this Agreement or
otherwise agreed between the parties.
(b)
Other
Services.
Additional services for compensation as agreed in writing by the parties.
2
(c) Availability
of Consultant.
Consultant shall make himself reasonably available for consultation during
normal business hours. Consultant shall not be required to maintain an office
and is not required by any provision of this Agreement to provide a specific
number of hours of service. Consultant may provide advisory services in person,
by telephone, or by other remote means of communication as appropriate, so
long
as the Services are rendered effectively.
(d)
Substance
of Services.
The
services of Consultant shall apply only to the provision of advise and opinions
on the general terms of all aspects of the operation and management of the
Clinics. Consultant shall not be required to provide specific detailed
instructions on the particular duties of any particular agent, representative,
employee, officer or director of the Purchaser. Purchaser shall designate not
more than two agents, representatives and employees, at any one time, as
contacts with Consultant and all advise and opinions rendered by Consultant
shall be communicated to Purchaser by and through such agents, representatives
or employees. The responsibility for the use of and acting upon any information,
advise or opinions given by Consultant shall be that of the Purchaser and
Consultant shall bear no liability for the use, failure to use or misuse of
such
information and opinions.
3.
Compensation.
3.1 Calculation
of Compensation.
The
Purchaser shall pay to the Consultant, as compensation for the Services, the
following amounts consisting of performance incentive bonuses for each completed
year of service:
(a)
For the
quarter ending March 31, 2007, Purchaser shall pay Consultant a performance
incentive bonus based on the amount, if any, that Pre-Tax Profits from the
Practice for such twelve month period ending March 31, 2007, exceeds 2005
Pre-Tax Profits (“2006
Increased Profit”),
calculated as set forth in the table in Annex
3.1
(“2006
Performance Incentive Bonus”).
(b)
For
the
quarter ending March 31, 2008, beginning as of the first anniversary of the
Closing Date, Purchaser shall pay Consultant a performance incentive bonus
based
on the amount, if any, that Pre-Tax Profits from the Practice for such twelve
month period ending March 31, 2008, exceeds 2006 Pre-Tax Profits (“2007
Increased Profit”),
calculated as set forth in the table in Annex
3.1
(“2007
Performance Incentive Bonus”).
For
purposes of this Section 3.1, the term “Practice”
shall
mean the medical practices established from assets purchased and/or acquired
by
the Company from FT. WORTH REHABILITATION, INC. and REHABILITATION PHYSICIANS
NETWORK, INC. (the assets of which were also acquired in connection with the
Master Transaction Agreement), and the Clinics, provided however, the term
“Practice” shall not include additional practices, clinics or management
services companies established after the date hereof by the Company, wherever
located.
3
For
purposes of this Agreement, “Pre-Tax Profits,” with respect to any given year,
shall mean the consolidated net income of the Practice for the 12 month period
ending March 31 of that year, before provision for all federal, state and local
income taxes for such period, determined by an independent accountant mutually
designated by the parties, in accordance with GAAP; provided, however, that
in
making the foregoing determinations Pre-Tax Profits:
(i) neither
the proceeds from nor any dividends or refunds with respect to, nor any
increases in the cash surrender value of, any life insurance policy under which
the Purchaser or the Clinics is the named beneficiary or is otherwise entitled
to recovery, shall be included as income, and the premium expense related to
any
such life insurance policy shall not be treated as an expense;
(ii)
any
extraordinary or unusual gains or losses and any gains or losses from the sale
of any capital assets used by the Purchaser or the Clinics or
any
subsidiary thereof
in its
operations during the applicable period (as opposed to assets acquired in the
ordinary course of the business of the Clinics and its subsidiaries for resale
or other disposition) shall be excluded from income;
3.2 Payment
Terms.
The
Purchaser shall pay Consultant the amounts due hereunder within sixty (60)
days
after the end of each calendar year (beginning after completion of the 2006
calendar year). The payment terms in Section 3.1 and 3.2 shall survive the
termination of this Agreement until all payments due to Consultant under this
Section 3 are calculated and paid, except that in the event of an automatic
termination or termination by default of the Consultant under Sections 5.1
or
5.2 the payment obligations under this Section 3 shall immediately terminate.
4. Nondisclosure
and Noninterference.
4.1 Access
to Confidential Information. The
Consultant agrees that during the course of the business relationship between
the Consultant and the Purchaser, the Consultant will have access to and become
acquainted with confidential proprietary information (“Confidential
Information”)
which
is owned by the Purchaser and is regularly used in the operation of the
Purchaser’s business. The Consultant agrees that the term “Confidential
Information” as used in this Agreement is to be broadly interpreted and includes
(i)
information that has, or could have, commercial value for the business in which
the Purchaser is engaged, and
(ii)
information that, if disclosed without authorization, could be detrimental
to
the economic interests of the Purchaser. The Consultant agrees that the term
“Confidential Information” includes, without limitation, any proprietary or
otherwise undisclosed information about present and future patents, patent
applications, copyrights, trademarks, trade names, service marks, service names,
“know-how,” trade secrets, customer and supplier identities, characteristics and
terms of agreement, details of customer or consultant contracts, pricing
policies, operational methods, marketing plans or strategies, product
development techniques or plans, business acquisitions plans, science or
technical information, ideas, discoveries, designs, computer programs (including
source codes), financial forecasts, unpublished financial information, budgets,
processes, procedures, formulae, improvements or other proprietary or
intellectual property of the Purchaser, whether or not in written or tangible
form, and whether or not registered, and including all memoranda, notes,
summaries, plans, reports, records, documents and other evidence thereof. The
Consultant acknowledges that all Confidential Information, whether prepared
by
the Consultant or otherwise acquired by the Consultant in any other way
in
connection with this Agreement or the Master Transaction Agreement,
shall,
as between the Purchaser and the Consultant, remain the exclusive property
of
the Purchaser.
4
4.2 No
Unfair Use by Consultant.
The
Consultant promises and agrees that the Consultant (which shall include the
Consultant’s employees and contractors) shall not misuse, misappropriate, or
disclose in any way to any person or entity any of the Purchaser’s Confidential
Information, either directly or indirectly, nor will the Consultant use the
Confidential Information in any way or at any time except as required in the
course of the Consultant’s business relationship with the Purchaser. The
Consultant agrees that the sale or unauthorized use or disclosure of any of
the
Purchaser’s Confidential Information constitutes unfair competition. The
Consultant promises and agrees not to engage in any unfair competition with
the
Purchaser.
4.3 Termination
of Confidentiality Obligation.
Confidential Information ceases to be confidential and subject to the terms
of
this Agreement if (a) such information becomes generally known to the public
through no fault of the Consultant; (b) the Purchaser conveys such information
to a third party without designating it as confidential; and/or (c) the
Consultant learns of such information from a third party who did not breach
any
obligation of confidentiality. Additionally, the Consultant shall have the
right
to disclose Confidential Information if required to do so by court order,
provided that prior to so disclosing, the Consultant shall inform the Purchaser
of the court order and give the Purchaser an opportunity to seek a protective
order respecting such Confidential Information.
4.4 Noninterference.
Consultant acknowledges that Purchaser’s relationships with its employees,
agents, suppliers, customers and vendors are valuable business assets.
Accordingly, Consultant agrees that, during the period of this Agreement
Consultant shall not (for itself or for any third party) divert or attempt
to
divert from Purchaser any business, employee, agent, supplier, client, customer
or vendor, through solicitation or otherwise. Consultant further acknowledges
that its engagement or participation, directly or indirectly, in any business
in
competition with Purchaser would inherently involve the unauthorized use or
disclosure of Confidential Information. Accordingly, to prevent any such
unauthorized use or disclosure, Consultant agrees that it shall not, during
the
term of this Agreement, engage or participate, directly or indirectly, in any
such competitive business unless it can demonstrate to Purchaser’s reasonable
satisfaction that there is no reasonable possible risk of such unauthorized
use
or disclosure. Prior to any such engagement or participation in any such
competitive business, Consultant shall notify Purchaser and shall give Purchaser
a reasonable opportunity to determine the degree of any such risk of
unauthorized use or disclosure. Accordingly,
to prevent any such unauthorized use or disclosure, Consultant agrees that
it
shall not, during the term of this Agreement, engage or participate, directly
or
indirectly, in any such competitive business unless it can demonstrate to
Purchaser’s reasonable satisfaction that there is no reasonable possible risk of
such unauthorized use or disclosure. Prior to any such engagement or
participation in any such competitive business, Consultant shall notify
Purchaser and shall give Purchaser a reasonable opportunity to determine the
degree of any such risk of unauthorized use or disclosure. Notwithstanding
the
foregoing, Purchaser expressly acknowledges and agrees that this section 4.4
shall in no event apply to Consultant’s management, participation, ownership or
other interest in the clinics and entities listed on Exhibit
“A”
attached
hereto and made a part hereof for all purposes.
5
4.5 Obligations
Survive Agreement.
The
Consultant’s obligations under this section 4 shall survive the expiration or
termination of this Agreement.
5. Termination.
5.1 Termination
on Default. Should
either party default in the performance of this Agreement or materially breach
any of its provisions, the non-breaching party may terminate this Agreement
by
giving written notification to the breaching party. Termination shall be
effective upon two days notice (which notice shall be given in accordance with
Section 9 below). For purposes of this section, material breaches of this
Agreement shall include, but not be limited to any of the
following:
(a)
the
failure by the Purchaser to pay the compensation set forth in section 3 above
when due, if the Purchaser has not cured such breach within 10 days after
receipt of written notice from the Consultant;
(b)
the
material breach or refusal to perform any term of this Agreement by Consultant,
if the Consultant has not cured such breach within twenty (20) days after
receipt of written notice from the Purchaser;
(c)
the
failure, on more than one occasion, to perform duties which are required to
be
performed under the terms of this Agreement on the part of the Consultant;
(d)
the
Consultant’s commission of acts of dishonesty, fraud, or misrepresentation by
any of the Consultants members, managers or employees;
(e)
the
failure by the Consultant to conform to all laws and regulations governing
the
Consultant’s duties under this Agreement;
(f)
the
commission by the Consultant of any act that brings the Purchaser into public
scandal or which will reflect unfavorably on the reputation of the Purchaser;
6
(g)
the
failure of Consultant to be reasonably available for consultation by Purchaser,
except in the case of death or Disability (hereinafter defined) of Consultant;
(h) the
cessation of Continuous Service (hereinafter defined) under this Agreement
by
Consultant, except in the case of death or Disability of Consultant; “Continuous
Service” means that the provision of services to the Purchaser under this
Agreement is not interrupted or terminated. Continuous Service shall not be
considered interrupted in the case of a leave of absence of up to one month
during any twelve month period unless approved by the Purchaser;
and
(i) the
breach by Consultant of any term of the Transaction Documents to which it is
a
party, if the Consultant has not cured such breach within twenty days after
the
Purchaser delivers written notice to the Consultant.
For
purposes of this Agreement, “Disability” means when an individual is permanently
and totally disabled if he or she is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.
5.2 Automatic
Termination. This
Agreement will terminate without any further action on the part of either party
upon the occurrence of any of the following events: (a) an agreement by the
parties to terminate, as contemplated by section 1 above, or (b) the voluntary
dissolution or winding up of the Consultant.
5.3 Return
of Purchaser Property.
Upon the
termination or expiration of this Agreement, the Consultant shall immediately
transfer to the Purchaser all files (including, but not limited to, electronic
files), records, documents, drawings, specifications, equipment and similar
items in his possession relating to the business of the Purchaser or its
Confidential Information (including the work product of the Consultant created
pursuant to this Agreement) and the Purchaser shall immediately transfer to
the
Consultant all files (including, but not limited to, electronic files) records,
documents, drawings, specifications, equipment and similar items in its
possession belonging to the Consultant, so long as such property does not
include or encompass Confidential Information belonging to the Purchaser. If
property otherwise belonging to the Consultant includes or encompasses
Confidential Information belonging to the Purchaser, then such Confidential
Information shall be removed from the property, if possible, but if it is not
possible to remove the Confidential Information then the Purchaser and the
Consultant will negotiate in good faith to find a mutual solution to the
disposition of the property.
5.4 Remedies
for Breach.
Consultant recognizes that the covenants contained in Section 4 hereof are
reasonable and necessary to protect the legitimate interests of Purchaser,
that
Purchaser would not have entered into this Agreement in the absence of such
covenants, and that Consultant’s breach or threatened breach of such covenants
shall cause Purchaser irreparable harm and significant injury, the amount of
which shall be extremely difficult to estimate and ascertain, thus, making
any
remedy at law or in damages inadequate. Therefore, Consultant agrees that
Purchaser shall be entitled, without the necessity of posting of any bond or
security, to the issuance of injunctive relief by any court of competent
jurisdiction enjoining any breach or threatened breach of such covenants and
for
any other relief such court deems appropriate. This right shall be in addition
to any other remedy available to Purchaser at law or in equity.
7
6. Status
of Consultant.
The
Consultant understands and agrees that the Consultant is not an employee of
the
Purchaser and that the Consultant will not be entitled to receive employee
benefits from the Purchaser, including, but not limited to, sick leave,
vacation, retirement or death benefits. Furthermore, the Consultant shall pay,
when and as due, any and all taxes incurred as a result of the Consultant’s
compensation hereunder, including estimated taxes, and shall provide the
Purchaser with proof of said payments, upon demand. The Consultant hereby agrees
to indemnify the Purchaser for any claims, losses, costs, fees, liabilities,
damages or injuries suffered by the Purchaser arising out of the Consultant’s
breach of this section.
7.
Representations
and Warranties of Consultant.
(a) The
Consultant represents that the Consultant has the qualifications and ability
to
perform the services in a professional manner, without the advice, control,
or
supervision of the Purchaser.
(b) Consultant
represents and warrants that, to the best of his knowledge, the Consultant
is
not a party to any other agreement that would prevent Consultant from performing
his obligations under this Agreement.
8.
Disclaimer.
Each
of
the parties hereto disclaims any representations, warranties, guarantees, or
projections relating to the future earnings, revenues or profits of any
business, any descriptions of the value of any property or intangibles
(including but not limited to good will, “going concern” value, accounts
receivable), any statements as to return on investment, or any other matter
whatsoever with respect to any party, affiliate of any party, entity, and New
PA
(as described in the Master Transaction Agreement).
9. Notices.
All
notices, consents and other communications hereunder shall be in writing and
shall be deemed to have been given when delivered personally, on the next
business day when sent overnight by Federal Express or other nationally
recognized overnight courier service, or five (5) days after being mailed if
mailed by first-class, registered or certified mail, postage prepaid, addressed:
If
to
Purchaser, addressed to:
Xxxxxx
X.
Xxxxxxxx, CEO
Basic
Health Care Networks of Texas, L.P.
0000
Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxx
Xxx Xxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
8
With
copies to:
Xxxxx
X.
Xxxxx, Esq.
Xxxxxxxxxx
& Xxxxx, LLP
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
If
to
the Obligor, addressed to:
Xx.
Xxxxx
Xxxxxxx
00000 Xxxxxxx Xxxx, 000X
Xxxxxxxxx, XX 00000
e-mail: xxxxxxxxxxx@xxxxxxx.xxx
Facsimile: (000) 000-0000
00000 Xxxxxxx Xxxx, 000X
Xxxxxxxxx, XX 00000
e-mail: xxxxxxxxxxx@xxxxxxx.xxx
Facsimile: (000) 000-0000
or
at
such other address or addresses as the respective parties shall have furnished
to the other parties in writing.
10. Additional
Covenants.
The
Consultant agrees to promptly notify the Purchaser in writing of any change
in
status of the Consultant, including: (i) the disassociation, departure,
separation, termination of any Key Person from the Consultant, (ii) the
termination or expiration of the Operating Agreement of the Consultant; or
(iii)
the voluntary dissolution or winding up of the Consultant. The parties agree
that in all actions taken in performance of this Agreement and in their
enforcement of all rights granted under this Agreement, they will act in good
faith and practice fair dealing.
11.
Choice
of Law and Venue.
This
Agreement shall be governed according to the laws of the State of Texas. Venue
for any legal or equitable action between the Purchaser and the Consultant
which
relates to this Agreement shall be in the county of Dallas.
12. Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the services to be rendered by the
Consultant to the Purchaser, and except for the Master Transaction Agreement
and
agreements referenced therein, this Agreement contains all of the covenants
and
agreements between the parties with respect to the services to be rendered
by
the Consultant to the Purchaser in any manner whatsoever. Each party to this
agreement acknowledges that except as set forth in the Master Transaction
Agreement and the agreements referenced therein, no representations,
inducements, promises, or agreements, orally or otherwise, have been made by
any
party, or anyone acting on behalf of any party, which are not embodied herein,
and that no other agreement, statement, or promise not contained in this
Agreement shall be valid or binding on either party.
9
13. Counterparts.
This
Agreement may be executed manually or by facsimile signature in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute but one and the same instrument.
14. Severability.
If any
term or provision of this Agreement or the application thereof to any person
or
circumstance shall, to any extent, be determined to be invalid, illegal or
unenforceable under present or future laws effective during the term of this
Agreement, then and, in that event: (A) the performance of the offending term
or
provision (but only to the extent its application is invalid, illegal or
unenforceable) shall be excused as if it had never been incorporated into this
Agreement, and, in lieu of such excused provision, there shall be added a
provision as similar in terms and amount to such excused provision as may be
possible and be legal, valid and enforceable, and (B) the remaining part of
this
Agreement (including the application of the offending term or provision to
persons or circumstances other than those as to which it is held invalid,
illegal or unenforceable) shall not be affected thereby and shall continue
in
full force and effect to the fullest extent provided by law.
15. Preparation
of Agreement.
It
is
acknowledged by each party that such party either had separate and independent
advice of counsel or the opportunity to avail itself or herself of same. In
light of these facts it is acknowledged that no party shall be construed to
be
solely responsible for the drafting hereof, and therefore any ambiguity shall
not be construed against any party as the alleged draftsman of this
Agreement.
16. Assignment.
Consultant acknowledges that Purchaser has entered into this Agreement on the
basis of the particular abilities of Consultant. Accordingly, the Purchaser
shall be entitled to assign, sell, transfer, delegate or otherwise dispose
of,
whether voluntarily or involuntarily, by operation of law or otherwise, this
Agreement and any of its rights or obligations of this Agreement, but Consultant
shall not and shall not have the right to assign, sell, transfer, delegate
or
otherwise dispose of, whether voluntarily or involuntarily, by operation of
law
or otherwise, this Agreement or any of its rights or obligations under this
Agreement without the prior written consent of Purchaser. Except as provided
herein, any purported assignment, transfer or delegation by Consultant shall
be
null and void. Subject to the foregoing, this Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective successors
and permitted assigns.
17. Electronically
Transmitted Documents.
If a
copy or counterpart of this Agreement is originally executed and such copy
or
counterpart is thereafter transmitted electronically by facsimile or similar
device, such facsimile document shall for all purposes be treated as if manually
signed by the party whose facsimile signature appears.
[Remainder
of Page Left Blank Intentionally]
10
IN
WITNESS WHEREOF,
the
parties have executed this Consulting Agreement on the date first written
above.
CONSULTANT:
___________________________________
Xxxxx
Xxxxxxx
PURCHASER:
BASIC
HEALTH CARE NETWORKS OF TEXAS, LP,
A TEXAS LIMITED PARTNERHSIP
A TEXAS LIMITED PARTNERHSIP
By: BASIC
HEALTH CARE NETWORKS OF TEXAS I, LLC,
a Delaware limited liability company, General Partner
a Delaware limited liability company, General Partner
By:
Xxxxxx
Xxxxxxxx
Chief
Executive Officer
11
ANNEX
3.1
PERFORMANCE
INCENTIVE BONUS
The
“2006 Performance Incentive Bonus” shall equal one-third (33.33%)
of:
20%
of
2006 Increased Profit between $1 million and $1,999,999; and
25%
of
2006 Increased Profit between $2 million and $2,999,999; and
30%
of
2006 Increased Profit between $3 million and $3,999,999; and
35%
of
2006 Increased Profit between $4 million and $4,999,999; and
40%
of
2006 Increased Profit between $5 million and $5,999,999; and
50%
of
2006 Increased Profit over $6 million
The
“2007 Performance Incentive Bonus” shall equal one-third (33.33%)
of:
20%
of
2007 Increased Profit between $1 million and $1,999,999; and
25%
of
2007 Increased Profit between $2 million and $2,999,999; and
30%
of
2007 Increased Profit between $3 million and $3,999,999; and
35%
of
2007 Increased Profit between $4 million and $4,999,999; and
40%
of
2007 Increased Profit between $5 million and $5,999,999; and
50%
of
2007 Increased Profit over $6 million
12
EXHIBIT
D
NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED
IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER
OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
COMMON
STOCK PURCHASE WARRANT
To
Purchase Shares of Common Stock of
BASIC
CARE NETWORKS, INC.
a
Delaware corporation
THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”)
certifies that, for value received, Xxxxx Xxxxxxx (the “Holder”),
is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, during the applicable Exercise Periods as
set
forth in Section 3(b) hereof, and prior to the close of business on the fifth
anniversary of the Closing Date (the “Termination
Date”)
but
not thereafter, to subscribe for and purchase from BASIC CARE NETWORKS, INC.,
a
corporation incorporated in the State of Delaware (the “Company”),
up to
the number of shares of common stock of the Company calculated by dividing
$1,500,000 by the Exercise Price (the “Warrant
Shares”),
par
value $0.001 per share, of the Company (the “Common
Stock”),
subject to the limitations and adjustments as provided herein. This Warrant
is
issued pursuant to and as part of the consideration under that certain Master
Transaction Agreement dated December __, 2005 (the “Master
Transaction Agreement”)
by and
among BASIC HEALTH CARE NETWORKS OF TEXAS, L.P., a Texas limited partnership
on
the one hand and 303 MEDICAL CLINIC, P.A. , a Texas professional association,
XXXXX XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL
CLINIC, P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A.,
a
Texas professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas
professional association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional
association, X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association,
RED BIRD URGENT CARE CLINIC, P.A., a Texas professional association
(collectively, the “Clinics”)
and
the Holder. The purchase price of one share of Common Stock (the “Exercise
Price”)
under
this Warrant shall be (as applicable): (i) in the case of an initial public
offering, equal to 120% of the per-share price for shares sold by the Company
in
the Company’s firm commitment initial public offering of its shares of common
stock, or (ii) in the case of a private placement, the per share price
calculated by dividing the total number of shares of common stock
then-outstanding (including, if any, preferred stock convertible into common
stock at the then-applicable conversion ratio), by the Company valuation
determined by multiplying EBITDA (based on the last completed calendar year)
times seven, less debt. The Exercise Price and the number of Warrant Shares
for
which the Warrant is exercisable shall be subject to adjustment as provided
herein. Capitalized terms used and not otherwise defined herein shall have
the
meanings set forth in the Master Transaction Agreement.
1. Title
to Warrant.
Prior
to the Termination Date and subject to compliance with applicable laws and
Section 7 of this Warrant, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by
the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
together with the Assignment Form annexed hereto properly endorsed. The
transferee shall sign an investment letter in form and substance reasonably
satisfactory to the Company.
2. Authorization
of Shares.
The
Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the
purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges in
respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
3.
Exercise
of Warrant.
The
exercise of this Warrant shall be subject to each of the conditions,
restrictions and limitations set forth in this Section 3.
(a) This
Warrant shall be exercised only if the Company shall have completed (i) its
firm
commitment underwritten initial public offering (“IPO”)
or
(ii) the Company shall have completed a bona fide private placement financing
resulting in gross proceeds of at least $10 million.
(b) This
Warrant shall be exercisable within the following periods (the “Exercise
Periods”)
for
the number of Warrant Shares set forth in this Section 3(b) as follows:
(i) at
any
time after the completion of the Company’s unaudited financial statements for
the quarter ending March 31, 2007, through and up to the Termination Date,
for
the purchase of up to 50% of the Warrant Shares, if and only if the EBITDA
of
the Company derived from the Practice (defined below) for the twelve month
period ending March 31, 2007, shall exceed $4,500,000;
(ii) at
any
time after the completion of the Company’s unaudited financial statements for
the quarter ending March 31, 2008, through and up to the Termination Date,
for
the purchase of up to 50% of the Warrant Shares, if and only if the EBITDA
of
the Company derived from the Practice (defined below) for the twelve month
period ending March 31, 2008, shall exceed $5,500,000; and
2
(iii) at
any
time after the completion of the Company’s unaudited financial statements for
the quarter ending March 31, 2008, through and up to the Termination Date,
for
the purchase of up to 100% of the Warrant Shares, if and only if the EBITDA
of
the Company derived from the Practice (defined below) for the twenty-four (24)
month period ending March 31, 2008, shall exceed $10,000,000.
For
purposes of this Section 3(b), the term “Practice”
shall
mean the medical practices established from assets purchased and/or acquired
by
the Company from FT. WORTH REHABILITATION, INC. and REHABILITATION PHYSICIANS
NETWORK, INC. (the assets of which were also acquired in connection with the
Master Transaction Agreement), and the Clinics, provided however, the term
“Practice” shall not include additional practices, clinics or management
services companies established after the date hereof by the Company, wherever
located.
(c) The
aggregate Exercise Price for Warrant Shares being purchased hereunder may be
paid either (i) by cash or wire transfer of immediately available funds, or
(ii)
by surrender of a number of Warrant Shares which have a fair market value equal
to the aggregate purchase price of the Warrant Shares being purchased
(“Net
Issuance”)
as
determined herein. If the Holder elects the Net Issuance method of payment,
the
Company shall issue to Holder upon exercise a number of shares of Warrant Shares
determined in accordance with the following formula:
X
=
|
Y(A-B)
A
|
where: X
=
|
the number of Warrant Shares to be issued to the Holder; | |
Y
=
|
the number of Warrant Shares with respect to which the Holder is exercising its purchase rights under this Warrant; | |
A
=
|
|
the fair market value of one (1) share of the Warrant Shares on the date of exercise; and |
B
=
|
the Exercise Price. |
For
purposes of the above calculation, the fair market value of one (1) share of
the
Warrant Shares shall mean (a) if the date of exercise is after the commencement
of trading of the Common Stock on a securities exchange or over-the-counter
but
prior to the closing of the IPO, the price per share to the public set forth
on
the final prospectus relating to the IPO, (b) if the Common Stock is then traded
on a securities exchange, the average of the closing prices of such Common
Stock
on such exchange over the thirty (30) calendar day period (or portion thereof)
ending three (3) days prior to the date of exercise, (c) if the Common Stock
is
then regularly traded over-the-counter, the average of the closing sale prices
or secondarily the closing bid of such Common Stock over the thirty (30)
calendar day period (or portion thereof) ending three (3) days prior to the
date
of exercise, or (d) if there is no active public market for the Common
Stock,
the fair
market value thereof as determined in good faith by the Board of Directors
of
the Company.
3
(d) This
Warrant may be exercised during the permitted periods by delivery to the Company
of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto
(or such other office or agency of the Company as it may designate by notice
in
writing to the registered Holder at the address of such Holder appearing on
the
books of the Company); provided,
however,
in
connection with its exercise, within five (5) Trading Days of the date said
Notice of Exercise is delivered to the Company, the Holder shall have
surrendered this Warrant to the Company and the Company shall have received
payment of the aggregate Exercise Price of the shares thereby purchased by
wire
transfer or cashier’s check drawn on a United States bank. Certificates for
shares purchased hereunder shall be delivered to the Holder within fifteen
(15)
Trading Days from the delivery to the Company of the Notice of Exercise Form
by
facsimile copy, surrender of this Warrant and payment of the aggregate Exercise
Price as set forth above. For purposes hereof, a “Trading Day” shall mean a day
on which the applicable exchange or service on which the Common Stock is listed
or traded, is open for business.
(c) If
this
Warrant shall have been exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing Warrant Shares, deliver
to Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
4
4. No
Fractional Shares or Scrip.
No
fractional shares or scrip representing fractional shares, arising out of the
formula in Section 3(c) hereof or otherwise, shall be issued upon the exercise
of this Warrant. As to any fraction of a share which Holder would otherwise
be
entitled to purchase upon such exercise, the Company shall pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise.
5.
Charges,
Taxes and Expenses.
Issuance of certificates for Warrant Shares shall be made without charge to
the
Holder for any issue or transfer tax or other incidental expense in respect
of
the issuance of such certificate, all of which taxes and expenses shall be
paid
by the Company, and such certificates shall be issued in the name of the Holder
or in such name or names as may be directed by the Holder; provided,
however,
that in
the event certificates for Warrant Shares are to be issued in a name other
than
the name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.
6.
Closing
of Books.
The
Company will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
7.
Transfer,
Division and Combination.
(a) Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 1 and 7(e) hereof, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder
or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in
the
name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor
a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having
a
new Warrant issued.
(b) This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 7(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
5
(c) The
Company shall prepare, issue and deliver at its own expense (other than transfer
taxes) the new Warrant or Warrants under this Section 7.
(d)
The
Company agrees to maintain, at its aforesaid office, books for the registration
and the registration of transfer of the Warrants.
(e)
If,
at the
time
of
the surrender of this Warrant in connection with any transfer of this Warrant,
the transfer of this Warrant shall not be registered pursuant to an effective
registration
statement under the Securities Act
and
under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer (i) that the Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of counsel
(which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions and reasonably acceptable to the Company)
to
the effect that such transfer may be made without
registration under
the
Securities Act and under applicable state securities or blue sky laws, (ii)
that
the holder or transferee execute and deliver to the Company an investment letter
in form and substance acceptable to the Company and (iii) that the transferee
be
an “accredited investor” as defined in Rule 501(a) promulgated under the
Securities Act.
8.
No
Rights as Shareholder until Exercise.
This
Warrant does not entitle the Holder to any voting rights or other rights as
a
shareholder of the Company prior to the exercise hereof. Upon the surrender
of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to such Holder as the record
owner of such shares as of the close of business on the later of the date of
such surrender or payment. Upon Exercise of this Warrant in accordance with
its
terms, the Holder shall be entitled to voting rights and all other rights of
holders of common stock of the Company.
9.
Loss,
Theft, Destruction or Mutilation of Warrant.
The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
or any stock certificate relating to the Warrant Shares, and in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it
(which, in the case of the Warrant, shall not include the posting of any bond),
and upon surrender and cancellation of such Warrant or stock certificate, if
mutilated, the Company will make and deliver a new Warrant or stock certificate
of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.
10.
Saturdays,
Sundays, Holidays, etc.
If the
last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday or a legal holiday,
then such action may be taken or such right may be exercised on the next
succeeding day not a Saturday, Sunday or legal holiday.
6
11.
Stock
Splits, Adjustments.
The
number of Warrant Shares purchasable upon the exercise of this Warrant, and
the
Exercise Price, shall be subject to adjustment from time to time upon the
occurrance of any of the following: In case the Company shall (i) pay a dividend
in shares of Common Stock or make a distribution in shares of Common Stock
to
holders of its outstanding Common Stock, (ii) subdivide its outstanding shares
of Common Stock into a greater number of shares, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock, or
(iv)
issue any shares of its capital stock in a reclassification of the Common Stock,
then the number of Warrant Shares purchasable upon exercise of this Warrant
immediately prior thereto shall be adjusted so that the Holder shall be entitled
to receive the kind and number of Warrant Shares or other securities of the
Company which it would have owned or have been entitled to receive had such
Warrant been exercised in advance thereof. Upon
each
such adjustment of the kind and number of Warrant Shares or other securities
of
the Company which are purchasable hereunder, the Holder shall thereafter be
entitled to purchase the number of Warrant Shares or other securities resulting
from such adjustment at an Exercise Price per Warrant Share or other security
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Shares purchasable pursuant hereto
immediately prior to such adjustment and dividing by the number of Warrant
Shares or other securities of the Company resulting from such adjustment.
An
adjustment made pursuant to this paragraph shall become effective immediately
after the effective date of such event retroactive to the record date, if any,
for such event.
12.
Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets.
In case
the Company shall reorganize its capital, reclassify its capital stock,
consolidate or merge with or into another corporation (where the Company is
not
the surviving corporation or where there is a change in or distribution with
respect to the Common Stock of the Company), or sell, transfer or otherwise
dispose of its property, assets or business to another corporation and, pursuant
to the terms of such reorganization, reclassification, merger, consolidation
or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of
any
nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common stock of the successor or acquiring
corporation (“Other
Property”),
are
to be received by or distributed to the holders of Common Stock of the Company,
then the Holder shall have the right thereafter to receive, at the option of
the
Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock
of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and Other Property receivable upon or as a result of
such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant
is
exercisable immediately prior to such event or (b) cash equal to the value
of
this Warrant as determined in accordance with the Black Scholes option pricing
formula. In case of any such reorganization, reclassification, merger,
consolidation or disposition of assets, the successor or acquiring corporation
(if other than the Company) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Company and all the obligations
and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined in good faith by resolution of the Board of Directors
of the Company) in order to provide for adjustments of Warrant Shares for which
this Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 12. For purposes of this Section
12, “common stock of the successor or acquiring corporation” shall include stock
of such corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is not
subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable
for any such stock, either immediately or upon the arrival of a specified date
or the happening of a specified event and any warrants or other rights to
subscribe for or purchase any such stock. The foregoing provisions of this
Section 12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
7
13.
Voluntary
Adjustment by the Company.
The
Company may at any time during the term of this Warrant reduce the then current
Exercise Price to any amount and for any period of time deemed appropriate
by
the Board of Directors of the Company.
14.
Notice
of Adjustment.
Whenever the number of Warrant Shares or number or kind of securities or other
property purchasable upon the exercise of this Warrant or the Exercise Price
is
adjusted, as herein provided, the Company shall give notice thereof to the
Holder, which notice shall state the number of Warrant Shares (and other
securities or property) purchasable upon the exercise of this Warrant and the
Exercise Price of such Warrant Shares (and other securities or property) after
such adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made.
15.
Authorized
Shares.
The
Company covenants that during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise
of
any purchase rights under this Warrant. The Company further covenants that
its
issuance of this Warrant shall constitute full authority to its officers who
are
charged with the duty of executing stock certificates to execute and issue
the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant.
16.
Miscellaneous.
(a) Restrictions.
The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.
(b) Nonwaiver
and Expenses.
No
course of dealing or any delay or failure to exercise any right hereunder on
the
part of Holder shall operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding all rights hereunder
terminate on the Termination Date. If the Company willfully and knowingly fails
to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall
be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.
8
(c) Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Master Transaction Agreement.
(d) Limitation
of Liability.
No
provision hereof, in the absence of any affirmative action by Holder to exercise
this Warrant or purchase Warrant Shares, and no enumeration herein of the rights
or privileges of Holder, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the
Company.
(e) Remedies.
The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
its
rights under this Warrant. The Company agrees that monetary damages would not
be
adequate compensation for any loss incurred by reason of a breach by it of
the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
(f) Successors
and Assigns.
Subject
to applicable securities laws, this Warrant and the rights and obligations
evidenced hereby shall inure to the benefit of and be binding upon the
successors of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit of all Holders
from time to time of this Warrant and shall be enforceable by any such Holder
or
holder of Warrant Shares.
(g)
Amendment.
This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the Holder.
(h)
Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
(i) Headings.
The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.
*
*
*
9
Dated:
___________ __, 2006
BASIC
CARE NETWORKS, INC.
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By: | ||
Xxxxxx
Xxxxxxxx
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Chief
Executive Officer
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10
NOTICE
OF EXERCISE
To: Basic
Care Networks, Inc.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of Basic Care
Networks, Inc. pursuant to the terms of the attached Warrant, and tenders
herewith payment of the exercise price in full, together with all applicable
transfer taxes, if any.
(2) Payment
shall take the form of lawful money of the United States.
(3) Please
issue a certificate or certificates representing said Warrant Shares in the
name
of the undersigned or in such other name as is specified below:
The
Warrant Shares shall be delivered to the following:
(4)
Accredited
Investor.
The
undersigned is an “accredited investor” as defined in Regulation D promulgated
under the Securities Act of 1933, as amended.
HOLDER:
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By: ________________________________ | ||
Name: ______________________________ | ||
Title:
_______________________________
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Dated:
______________________
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1
ASSIGNMENT
FORM
(To
assign the foregoing warrant, execute
this
form
and supply required information.
Do
not
use this form to exercise the warrant.)
FOR
VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to
________________________________________________________________whose
address is
|
_____________________________________________________________________________,
|
_____________________________________________________________________________ |
Dated:
_______________,
____
|
Holder’s Signature: |
_________________________
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|
Holder’s Address: | _________________________ | |
_________________________ |
Signature
Guaranteed:____________________________________________________________
|
NOTE:
The
signature to this Assignment Form must correspond with the name as it appears
on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing
Warrant.
2
EXHIBIT
E
MASTER
LEASE AGREEMENT
Dated
as
of December 12, 2005
between
BEW
FINANCING, L.P.
a
Texas
limited partnership, as Lessor
and
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
a
Texas
limited partnership, as Lessee
TABLE
OF CONTENTS
(Master
Lease Agreement)
ARTICLE
I
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DEFINITIONS
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ARTICLE
II
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LEASE
OF LEASED PROPERTY
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2.1
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Site
Leases
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2.2
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Term
|
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2.3
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Certain
Definitions
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ARTICLE
III
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RENT
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3.1
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Basic
Rent
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3.2
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Supplemental
Rent
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3.3
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Method
of Payment
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3.4
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Late
Payment
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3.5
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Taxes,
Insurance and Utilities
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ARTICLE
IV
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4.1
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General
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4.2
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Lessor's
Representations and Warranties
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ARTICLE
V
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LIENS;
EASEMENTS; PARTIAL CONVEYANCES
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ARTICLE
VI
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MAINTENANCE
AND REPAIR; ALTERATIONS, MODIFICATIONS AND ADDITIONS
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|
6.1
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Maintenance
and Repair; Compliance With Law
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6.2
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Alterations
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6.3
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Title
to Alterations
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6.4
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Equipment
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ARTICLE
VII
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USE
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ARTICLE
VIII
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8.1
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Casualty
Events
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8.2
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Election
Not to Repair
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8.3
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Partial
Damage; Election to Repair
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ARTICLE
IX
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9.1
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Sublease
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9.2
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No
Mortgage or Pledge
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9.3
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Sale
of Properties
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ARTICLE
X
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EVENTS
OF DEFAULT
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ARTICLE
XI
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REMEDIES;
ENFORCEMENT
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11.1
|
|
|
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11.2
|
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Remedies
Cumulative
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ARTICLE
XII
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LESSEE'S
EQUIPMENT
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|
ARTICLE
XIII
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RIGHT
TO PERFORM FOR LESSEE
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ARTICLE
XIV
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TERMINATION
|
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ARTICLE
XV
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MISCELLANEOUS
|
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15.1
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|
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15.2
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Binding
Effect; Successors and Assigns; Survival
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15.3
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Quiet
Enjoyment
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15.4
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No
Joint Venture
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15.5
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Severability
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15.6
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|
Notices
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15.7
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|
Choice
of Law
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15.8
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|
Arbitration
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|
15.9
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|
Entire
Agreement; Amendments and Waivers
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15.10
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Reformation
Clause
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15.11
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Expenses
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15.12
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Further
Assurances
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15.13
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Multiple
Counterparts
|
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15.14
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|
Headings
|
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SCHEDULES
|
|
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Schedule
1
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Sites;
Leased Properties
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Schedule
2
|
|
Disclosure
Schedule
|
|
EXHIBITS
|
|
|
|
Exhibit
A-1
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|
Site
Lease for 000 X. Xxxx 000, Xxxxx Xxxxxxx, XX 00000
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Exhibit
A-2
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Site
Lease for 0000 Xxxx Xxxxxxxxx Xxxx., Xxxxxx, XX 00000
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Exhibit
A-3
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|
Site
Lease for 0000 Xxxx Xxxx Xxxx, Xxxxxx, XX 00000
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Exhibit
A-4
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|
Site
Lease for 000 X. X'Xxxxxx Xxxx, Xxxxxx, XX 00000
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|
Exhibit
A-5
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Site
Lease for 0000 X. Xxxxxxx Xxxx, Xxxxxx, XX 00000
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Exhibit
A-6
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|
Site
Lease for 0000 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx, XX 00000
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|
Exhibit
A-7
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|
Site
Lease for 000 Xxxx Xxxxxxxx Xx., Xx. Xxxxx, XX 00000
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|
Exhibit
A-8
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|
Site
Lease for 000 X. Xxxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000
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Exhibit
A-9
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|
Site
Lease for 000 X. Xxxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000
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Exhibit
A-10
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Site
Lease for 0000 X. Xxxx 00xx Xxxxxx, Xxxxx X, Xx. Xxxxx, XX
00000
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Exhibit
A-11
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Site
Lease for 000 X. Xxxxxxxx Xx., Xx. Xxxxx 00000
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Exhibit
B
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Termination
of Prior Leases
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MASTER
LEASE AGREEMENT
THIS
MASTER LEASE AGREEMENT (as from time to time amended or supplemented, this
“Master
Lease”),
dated
as of December 12, 2005, is among BEW FINANCING, L.P., a Texas limited
partnership (together with its successors and assigns hereunder, the
“Lessor”),
as
Lessor, and BASIC HEALTH CARE NETWORKS OF TEXAS, L.P., a Texas limited
partnership (“Company”
or
the
“Lessee”).
A.
Lessee
has entered into a Master Transaction Agreement dated as of December __,
2005
(as amended, supplemented or otherwise modified from time to time, the
“Master
Transaction Agreement”)
with
303 MEDICAL CLINIC, P.A., a Texas professional association, XXXXX XXXXXX’, D.O.,
P.A., a Texas professional association, IBERIA MEDICAL CLINIC, P.A., a Texas
professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas professional
association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional association,
NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association, X’XXXXXX
MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT CARE
CLINIC, P.A., a Texas professional association and Xxxxx X. Xxxxxxx, D.O.
(“Physician”)
pursuant to which the Lessee shall acquire certain assets of the foregoing
clinics.
B.
In
addition, Physician is entering into asset purchase agreements with FT.WORTH
REHABILITATION, INC. d/b/a North Texas Rehab Center, 000 X. Xxxxxxxx Xxxxx,
Xxxx
Xxxxx, Xxxxx 00000, and REHABILITATION PHYSICIANS NETWORK, INC., a Texas
corporation d/b/a North Texas Rehab Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000 (the “Work
Hardening Purchase Agreements”),
pursuant to which Physician shall acquire certain assets including good will
and
receivables, of certain medical clinics (the “Work
Hardening Centers”)
operated by these entities, which assets shall in turn be assigned to the
Company. The Work Hardening Centers and the clinics a party to the Master
Transaction Agreement are referred to collectively in this Master Lease as
the
“Clinics”).
C.
The
Clinics have been engaged in the practice (the “Practice”)
of
providing urgent care, general, family, rehabilitation and/or ancillary services
to patients.
D.
The
Master Transaction Agreement, together with each of the exhibits attached
thereto, including the Work Hardening Purchase Agreements, and each of the
other
Asset Purchase Agreements of like tenor (and documents to be executed in
connection therewith), are hereinafter collectively referred to as the
“Transaction
Documents.”
E.
Except
as
otherwise provided herein, the real property, equipment, furnishings and
fixtures used in the Practice are owned by Lessor.
F.
Each
Clinic is situated in a property identified by street address and/or suite
number (each, a “Site”).
1
X.
Xxxxxx
desires to lease to Lessee, and Lessee desires to lease from Lessor, each
Site,
together with the Equipment, Furnishings and Fixtures at each such Site,
pursuant to the terms of each Site Lease (each of which incorporates the
terms
of this Master Lease).
H.
Physician
has designated Lessor to act as Physician’s agent with respect to the leasing
and management of the property located at 7716 Lake June Road. Iberia Medical
Clinic, P.A., Northside Medical Clinic, P.A. and Xxxxxxxx Medical Clinic,
P.A.
have designated Lessor to act as their respective agents in the leasing and
management of the properties located at 000 X. Xxxxxxxx Xx., Xx. Xxxxx, Xxxxx;
0000 X. Xxxx 00xx
Xx.,
Xxxxx X, Xx. Xxxxx, Xx. 76106,; 000 X. Xxxxxxxx, Xxxxx 000 and 322, Garland.
Texas.
ARTICLE
I.
GENERAL
Terms
used herein and not otherwise defined shall have the meanings assigned thereto
in the Master Transaction Agreement. This Master Lease is being entered into
as
a condition of Closing under the Master Transaction Agreement. Concurrently
herewith the parties are entering into separate Site Leases attached as
Exhibits
A-1 through A-11
hereto,
into which the terms of this Master Lease are incorporated by reference.
Unless
otherwise set forth in a Site Lease, the terms of this Master Lease shall
apply
to each Site Lease.
ARTICLE
II.
LEASE
OF
LEASED PROPERTY
Section
2.1 Site
Leases.
On the
Closing Date under the Master Transaction Agreement, subject to the terms
and
conditions provided therein, the parties hereto shall execute and deliver
the
Site Leases attached hereto as Exhibits
A-1 through A-11,
for
lease of the Premises, Equipment and Furnishings (as such terms are hereinafter
defined) of each Site listed on Schedule
1
(collectively, the “Leased
Property”
or
“Leased
Properties”).
In
addition, on the Closing Date, and as a condition to the effectiveness of
this
Master Lease and the Site Leases hereunder, the Lessor and the Clinics shall
have executed and delivered the lease termination agreement attached hereto
as
Exhibit
B,
to
terminate the prior leases between the Lessor and the Clinics.
Section
2.2 Term.
This
Master Lease shall remain in effect so long as any Site Lease shall continue
in
effect, and shall terminate upon the termination or expiration of all of
the
Site Leases hereunder.
Section
2.3 Certain
Definitions.
For
purposes of this Master Lease, the following terms shall have the following
respective definitions:
2
“Agent”
shall
initially be Lessor (acting as its own Agent) until and unless Lessor shall
appoint an agent to act on its behalf pursuant to Section 3.1.
“Basic
Rent”
shall
mean Initial Term Basic Rent or Renewal Term Basic Rent, as the case may
be.
“Closing
Date”
shall
have the meaning assigned to such term in the Master Transaction Agreement.
“Equipment
and Furnishings”
shall
mean all of the medical equipment, office equipment and furnishings used
in the
Practice at the time of the execution of this Master Lease Agreement, but
not
including the laser equipment located at the 303 Medical Clinic property,
which
will be governed by a separate lease agreement.
“Initial
Term”
shall
mean the initial three year term as set forth in Section 2 of each Site Lease.
“Initial
Term Basic Rent”
shall
have the meaning set forth in Section 3.1.
“Insurance”
shall
mean the insurance policies required under Section 3.5(b).
“Insurance
Premiums”
shall
mean all premiums, expenses and fees payable insurance carriers in connection
with the maintenance of the policies of Insurance.
“Leased
Property”
or
“Leased
Properties”
shall
have the meaning set forth above in Section 2.1.
“Lease
Term”
shall
mean the term of this Master Lease as provided for in Section 2.2 hereof.
“Lease
Termination Date”
shall
have the meaning set forth in Article XIV hereof.
“Master
Transaction Agreement”
shall
have the meaning set forth in Recital A.
“Overdue
Rate”
shall
mean the simple rate of six percent (6%) per annum.
“Premises”
shall
mean the office space described for each Site as set forth on Schedule 1
hereto.
“Renewal
Term”
shall
mean each successive renewal term of three years as provided in Section 2
of
each Site Lease.
“Renewal
Term Basic Rent” shall have the meaning set forth in Section 3.1.
“Rent”
shall
mean Basic Rent and Supplemental Rent.
3
“Site”
shall
refer to each separate individual site formerly used by each Clinic, and
to be
occupied and used by the New Clinic, as listed in Schedule 1; as used herein,
“Sites”
shall
refer to all said sites collectively.
“Site
Lease”
or
“Site
Leases”
means
the leases referenced in Section 2.1 hereof for each of the Sites, attached
hereto as Exhibits A-1 through A-11 hereto.
“Supplemental
Rent”
shall
have the meaning set forth in Section 3.2.
“Taxes”
shall
have the meaning set forth in Section 3.5(a).
“Transaction
Documents”
shall
have the meaning set forth in Recital C.
“Utility
Expenses”
shall
have the meaning set forth in Section 3.5(c).
ARTICLE
III.
TERMS
Section
3.1 Basic
Rent.
Basic
Rent for each Site shall be set forth in each applicable Site Lease, listed
in
Schedule
1
hereto,
and shall consist of the Initial Term Basic Rent (as adjusted annually pursuant
to Section 3.1(a)) for the Initial Term, and the Renewal Term Basic Rent
(as
adjusted annually pursuant to Section 3.1(a)) for each subsequent Renewal
Term
(as applicable to each Site and applicable term, the “Basic
Rent”).
The
parties agree and acknowledge that the parties have reduced aggregate rent
under
all Site Leases during the Initial Term by $300,000 per annum (“Initial
Term Credit”),
and
such reduction has been applied pro rata among all Site Leases as reflected
in
Schedule
1
and set
forth under the columns marked “Initial Term Basic Rent”. The parties further
agree that in the event that any Site Lease shall terminate prior to the
end of
the Initial Term, that the Initial Term Credit shall be applied ratably among
all Site Leases remaining in effect, and in such event the Initial Term Basic
Rent applicable to each Site Lease shall be appropriately and ratably adjusted
to reflect such Initial Term Credit.
Rent
shall be payable on the first of each calendar month, beginning with the
first
full month following the Closing Date. The first payment of rent by Lessee
shall
include an amount representing applicable Basic Rent prorated for the partial
month immediately following the Closing Date. Lessor may appoint an agent
to
receive rent payable to the Lessor, and to act on behalf of Lessor as provided
in this Agreement, provided that Lessor shall give Lessee at least 30 days
prior
written notice of such designation. Beginning one year from the Commencement
Date or commencement of the first Renewal Term, as applicable, Basic Rent
will
be adjusted on each anniversary of such date (the “Adjustment
Date”)
to
reflect increases in the Consumer Price Index for “All Urban Consumers, U.S.
City Average, All Items,” issued by the Bureau of Labor Statistics of the United
States Department of Labor.
4
a.
|
The adjustments in the Basic Rent will be determined by multiplying the applicable Basic Rent specified in the lease by a fraction, the numerator of which is the index number for the last month before the adjustment and the denominator of which is the index number for the first month of the first year of the Term. If the product is greater than the Initial Term Basic Rent, Lessee will pay this greater amount as Basic Rent until the next rental adjustment. Basic Rent will never be less than the Initial Term Basic Rent or Renewal Term Rent. |
x.
|
Xxxxxx
will notify Lessee of each adjustment to Basic Rent no later than
sixty
days after the Adjustment Date.
|
Section
3.2 Supplemental
Rent.
“Supplemental Rent” shall include interest due on late payments pursuant to
Section 3.4, ad valorem taxes (paid in equal monthly installments on the
same
date that Basic Rent is due, based on the prior years’ taxes), and insurance
(paid in equal monthly installments based upon the prior years’ insurance
premium expense on the same date that Basic Rent is due); provided,
however, Supplemental Rent shall not include Utility Expenses and maintenance
expenses incurred by Lessee under Section 6.1. Lessee shall pay to the Agent,
or
to whomever shall be entitled thereto as expressly provided herein, any and
all
Supplemental Rent on the date the same shall become due and payable and in
the
event of any failure on the part of such Lessee to pay any Supplemental Rent,
the Lessor shall have all rights, powers and remedies provided for herein
or by
law or in equity or otherwise in the case of nonpayment of Basic Rent. All
Supplemental Rent to be paid pursuant to this Section 3.2 shall be payable
in
the type of funds and in the manner set forth in Section 3.3. For purposes
of
this Section, taxes and insurance with respect to each Site for the 2004
calendar year are set forth on Schedule
1
attached
hereto. Taxes and insurance costs for each subsequent year shall be calculated
after the end of each such year.
Section
3.3 Method
of Payment.
Basic
Rent shall be paid to the Agent, and Supplemental Rent shall be paid to the
Agent (or to such Person as may be entitled thereto) or, in each case, to
such
Person as the Agent (or such other Person) shall specify in writing to the
Lessee, and at such place as the Agent (or such other Person) shall specify
in
writing to the Lessee. Each payment of Rent shall be made in lawful currency
of
the United States of America which shall be immediately available on the
scheduled date when such payment shall be due, unless such scheduled date
shall
not be a Business Day, in which case such payment shall be made on the next
succeeding Business Day.
Section
3.4 Late
Payment.
If any
Basic Rent shall not be paid within five Business Days after the date when
due,
the Lessee shall pay to the Agent, as Supplemental Rent, interest (to the
maximum extent permitted by law) on such overdue amount from and including
the
due date thereof to but excluding the Business Day of payment thereof at
the
Overdue Rate. It
is not
the intent of this provision to charge any amount of usurious interest and,
should any charge under this clause amount to usurious interest, then the
amount
of such excess interest shall be deemed not to be due and owing and, should
excess interest be collected by Lessor, it shall be returned to Lessee within
seven (7) days of Lessee’s written request for such reimbursement.
5
Section
3.5 Taxes,
Insurance and Utilities.
Lessee
shall pay all Basic Rent and Supplemental Rent, and except as set forth in
this
Master Lease, Lessee shall pay all costs, charges, assessments and other
expenses arising out of the possession, use, occupancy, maintenance, subleasing,
repair of, or addition to, the Leased Properties or any portion
thereof,
including, without limitation, all heating and air-conditioning systems,
plumbing, electrical, interior and exterior painting, and plate glass. In
addition, Lessee shall be responsible for up to $2,000 per year for all expenses
associated with the maintenance, upkeep and repair of the roof on any buildings
located on the Leased Properties (the “Roof Expense”). Lessor and Lessee shall
each be responsible for fifty percent (50%) of Roof Expenses exceeding $2,000
per year. (a)
Certain
Taxes.
Without
limiting the generality of this Section 3.5, Lessor agrees to pay when due
all
real estate taxes, personal property taxes on property owned by Lessor, lease
taxes imposed upon the rental payments hereunder, and assessments on the
real
property for public works by the city, county or other municipality in which
Lessor’s property is located (the “Tax(es)”),
when
the same shall be due and payable; provided,
however, that this Section shall not apply to any of the taxes agreed to
be paid
by a particular party under the Master Transaction Agreement. Any Tax incurred
prior to the beginning of the Lease Term shall not be included as Supplemental
Rent, and Lessor accepts responsibility for and agrees to pay such Taxes.
(b)
Insurance.
Lessee
shall procure and maintain a policy or policies of general commercial insurance
with respect to the Premises included in the Leased Properties, which includes
bodily injury and property damage coverage with a combined single limit of
at
least one million dollars ($1,000,000) per occurrence, which shall insure,
on an
occurrence basis, against any
negligence, claims, suits or liability
of Lessee, its employees and agents arising out of or in connection with
Lessee’s use, occupancy and maintenance of the Premises (“Insurance”).
Lessee shall, within
14
days after to the date on which Lessee takes possession of each
Site,
provide
the Lessor with a certificate of insurance evidencing the foregoing coverage,
and shall name the Lessor as an additional insured on such policy or policies.
(c)
Utility
Charges.
Lessee
agrees to pay or cause to be paid as and when the same are due and payable
all
charges for gas, electricity, lights, heat, water charges, sewer charges,
power,
telephone or other communication service rendered or supplied to, upon or
in
connection with the Leased Properties leased under each Site Lease
(“Utility
Expenses”).
ARTICLE
IV.
WAIVERS;
REPRESENTATIONS AND WARRANTIES
Section
4.1 General.
During
the Lease Term, Lessor’s interest in the Leased Properties, including the
Equipment and Furnishings for each Site, is demised and let by Lessor “as is,”
“with all faults” and subject to (a) the state of the title thereto existing at
the time Lessor acquired its interest in the Leased Properties, (b) any state
of
facts which an accurate survey or physical inspection might show (including
the
survey delivered on the related Closing Date), (c) all Applicable Law, and
(d)
any violations of Applicable Law which may exist upon or subsequent to the
commencement of the Lease Term.
Section
4.2 Lessor’s
Representations and Warranties.
Lessor
hereby represents and warrants as follows:
6
(a)
|
Lessor
owns all Equipment and Furnishings for each Site, free of Liens,
and has
access to and the right to lease said Equipment and Furnishings
to the
Lessee pursuant to the terms hereof;
|
(b)
|
Except
as set forth on Schedule
2
hereto, the Equipment and Furnishings are in good working condition,
suitable for use in the Practice as conducted immediately prior
to the
Closing Date, and to the Lessor’s actual knowledge there are no material
defects in such Equipment and Furnishings, except for those disclosed
to
Lessee;
|
(c)
|
Lessor
either has valid and subsisting lease agreements with the respective
property owners, or owns all right, title and interest in the Premises
for
each Site, free of Liens, except as set forth on Schedule
2
attached hereto, and has access to and the right to lease said
Premises to
the Lessee pursuant to the terms hereof;
|
(d)
|
Lessor
has no actual knowledge of any fact, circumstance or condition
which
individually or in the aggregate would or is likely to materially
interfere with the Lessee’s quiet use and enjoyment of the Premises, so
long as Lessee fully performs its obligations hereunder.
|
ARTICLE
V.
LIENS;
EASEMENTS; PARTIAL CONVEYANCES
Lessee
shall not directly or indirectly create, incur or assume, and Lessee shall
promptly discharge, any Lien on or with respect to any Leased Property, the
title thereto, or any interest therein, including any Liens which arise out
of
the possession, use, occupancy, construction, repair or rebuilding of any
Leased
Property or by reason of labor or materials furnished or claimed to have
been
furnished to a Lessee, or any of its contractors or agents or alterations
constructed by a Lessee.
ARTICLE
VI.
MAINTENANCE
AND REPAIR;
Section
6.1 Maintenance
and Repair; Compliance with Law.
Lessee,
at its own expense, shall at all times (a) maintain each Leased Property
leased
by it in good repair and condition (subject to ordinary wear and tear), in
accordance with all
Applicable Laws and insurance requirements, (b) maintain the Leased Property
(whether or not such maintenance requires structural modifications or
alterations) in accordance with all Applicable Laws and insurance requirements
and (c) operate and otherwise keep each Leased Property in compliance in
all
material respects with, all Applicable Laws and insurance requirements,
provided, however, Lessee’s obligations in this Section 6.1 shall not apply in a
Casualty Event (as defined in Section 8.1). At all times, Lessee shall maintain,
repair, operate, and otherwise keep the Leased Premises in such condition
that
poses no obvious risk of injury to any invitees, licensees, or
trespassers.
7
Section
6.2 Alterations.
Lessee
may make alterations to the Leased Property only if Lessee obtains the prior
written consent of Lessor (which consent shall not be unreasonably withheld);
provided that Lessee delivers to Lessor: (a) proposed plans and specifications
for any such alterations; (b) the name, address and phone number of the proposed
contractor(s); (3) the proposed budget for the alterations; and (4) such
other
and further information or documents as the Lessor may reasonably require;
and
provided further, however that notwithstanding the foregoing, no prior consent
shall be required for ordinary repairs, maintenance, or minor modifications
costing less than $2,000.
Section
6.3 Title
to Alterations.
Title
to all approved alterations shall without further act vest in Lessor and
shall
be deemed to constitute a part of the Leased Properties and be subject to
this
Master Lease; provided, however, that as long as Lessee is not in default
hereunder, Lessee
shall have the right to remove its trade
fixtures, personal property and equipment (which were not previously provided
by
Lessor under the terms of this or any Site Lease, which do not constitute
alterations and which were not acquired with funds provided by Lessor).
Section
6.4 Equipment
and Furnishings.
No
Equipment and Furnishings shall be removed from any of the Premises by either
party without the mutual consent of the parties.
ARTICLE
VII.
USE
Lessee
may use each Leased Property or any part thereof for any lawful purpose,
but in
a manner consistent with the standards applicable to properties of a similar
nature in the geographic area in which such Leased Property is located, and
provided that such use does not materially adversely affect the fair market
sales value, utility, remaining useful life or residual value of such Leased
Property, and does not materially violate or conflict with, or constitute
or
result in a material default under, any Applicable Law or any insurance policy
required hereunder. In the event that any use of any Leased Property changes
the
character or original intended use of such Leased Property, as such character
and intended use existed on the Closing Date, the Lessee, upon request of
Lessor, shall restore such Leased Property to its general character and intended
use as it existed on the Closing Date, ordinary wear and tear excepted.
In
no
event shall Lessee cause or allow any nuisance within the Leased
Premises.
Lessee
shall not use the Leased Premises for any of the following: adult-oriented
businesses, sexually-oriented businesses, manufacture, repair, environmentally
dangerous activities, headshops, liquor establishments, veterinarian offices,
or
the preparation or sale of foodstuffs. Lessee is solely liable and responsible
for acquiring any permits or licenses necessary to the conduct of its business
on the Leased Premises.
ARTICLE
VIII.
DAMAGE
BY
CASUALTY AND DUTY TO REPAIR
8
Section
8.1 Casualty
Events.
If
the
Leased Property is damaged by casualty (including but not limited to fire,
flood, Act of God, Act of War, riot, insurrection, terrorism or natural
disaster) in such a percentage or amount that the Lessor deems, in his exclusive
discretion that the Leased Property cannot be used for its intended purpose,
Lessor has an option to restore the Leased Property. Lessor shall notify
Lessee
within thirty (30) days of the Casualty Event of Lessor’s intentions with
respect to the Leased Property. In the event Lessor fails to notify Lessee
within such thirty (30) day period, Lessor shall
be
deemed to have elected to
restore the Leased Premises. If Lessor chooses not to restore, this Lease
will
terminate. If Lessor chooses to restore, Lessor will notify Lessee of its
good
faith estimate of the time to restore and will begin repairs reasonably
promptly, but in no event later than ten days after the casualty event. If
the
estimated time to repair exceeds one hundred eighty (180) days, if the Lessor
does not commence repairs within ten days of the casualty event, the Lessee
may
terminate the Site Lease for the affected Leased Property. In the event that
Lessor chooses to restore, Lessor will, at its expense, restore the Leased
Property to substantially the same condition that existed before the casualty,
provided, however that the Lessor shall not be obligated to repair the Lessee’s
trade fixtures or personal property.
If
Lessor
fails to complete the portion of the restoration for which Lessor is responsible
within one hundred eighty (180) days from the commencement of repairs by
Lessor,
Lessee may terminate this lease by written notice delivered to Lessor before
Lessor completes Lessor’s restoration obligations.
Section
8.2 Abatement.
Rent
abatement shall apply during the period of time between the date of occurrence
of the damage, until the date that such repairs are complete. If, however,
the
Lessee is able to conduct the Practice without material interference due
to the
damage, no abatement of Rent shall apply, and the Lessor shall repair the
damage
as soon as reasonably practicable.
Section
8.3. Business
Interruption.
In no
event shall Lessor be liable for any loss of income sustained by Lessee as
a
result of Act of God with respect to the Leased Premises. Lessee recognizes
that
it may purchase a policy of business interruption insurance to cover such
matters and that Lessor is not providing such insurance and is not to act
as an
insurer of Lessee’s business.
Section
8.4. Damage
to Property.
In no
event shall Lessor be liable for any damage to the personal property of Lessee
unless such damage is caused by the gross negligence of the Lessor.
ARTICLE
IX.
ASSIGNMENT
AND SUBLEASING
Section
9.1 Sublease.
Lessee
may not assign any of its right, title or interest in, to or under this Master
Lease or any Site Lease, except as set forth in this Article IX. Lessee may
sublease,
with
Lessor’s prior written consent (which
consent shall not be unreasonably withheld),
all or
any portion of any Leased Property, provided that with respect to a sublease
(a)
all obligations of Lessee shall continue in full effect as the obligations
of a
principal and not as the obligation of a guarantor or surety, and Lessee
shall
remain fully responsible for performance of each clause of this Master Lease
and
of any applicable Site Lease unless assigned pursuant to Section 9.2 below;
(b)
such sublease shall be expressly subject and subordinate to this Master Lease;
(c)
each
such sublease shall terminate on or before the applicable Lease Termination
Date;
and (d)
Lessee
shall provide
Lessor
with
a
copy of
such
sublease
including the proposed use by the sublessee of the Leased Property
and the
Sublessee shall expressly assume all obligations, duties and responsibilities
hereunder and shall expressly be subject to all terms of this Master
Lease.
9
Section
9.2 Assignment.
Lessee
shall not, without the prior written consent of the Lessor, assign or transfer
this Agreement, provided, however, that a Change in Control (as hereinafter
defined) of the Lessee shall not be deemed to constitute an assignment. For
purposes of this Master Lease, a “Change in Control” shall mean a change in
ownership or control of the Lessee through the direct or indirect acquisition
by
any person or related group of persons of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Lessee’s outstanding securities.
Section
9.3 Sale
of Property.
In the
event the Lessor intends to sell all or a portion of the Leased Property,
or
enters into an agreement to sell such Leased Property, the Lessor agrees
to
provide Lessee prompt written notice of such sale (but in no event later
than 20
days after such event).
ARTICLE
X.
EVENTS
OF
DEFAULT
Section
10.1 Events
of Default.
The
following events shall constitute Events of Default hereunder and under each
Site Lease (whether any such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance
with
any judgment, decree or order of any court or any order, rule or regulation
of
any administrative or governmental body):
(a)
Lessee
shall fail to make any payment of Basic Rent or Supplemental Rent within
five
(5) Business Days after the date that such Basic Rent or Supplemental Rent
is
due, under a Site Lease.
(b)
(i)
at
the
discretion of Lessor, the filing of a voluntary or involuntary petition in
bankruptcy against Lessee, unless Lessee obtains an Order from the Bankruptcy
Court specifically allowing payment of rent and discharge of all other
obligations under this Lease or the applicable Site Lease, or
(ii) the
consent by Lessee to the appointment of a conservator, receiver, liquidator
or
trustee for the Lessee in any bankruptcy, receivership, conservatorship,
insolvency or similar proceedings of or relating to the Lessee or relating
to
substantially all its property, the admission in writing by the Lessee of
its
inability to pay its debts generally as they become due, the filing by the
Lessee of a petition to take advantage of any applicable bankruptcy,
receivership, conservatorship, insolvency or similar statue, the making by
the
Lessee of an assignment for the benefit of its creditors or the voluntary
suspension by the Lessee of payment of its obligations.
10
(c) Lessee
shall fail to perform any material nonmonetary obligation of Lessee under
this
Master Lease Agreement or any Site Lease and such nonperformance shall continue
for a period of thirty (30) days after written notice to Lessee of such
default.
(d) An
Event
of Default under this Master Lease Agreement or under any Site Lease shall
be
deemed an Event of Default under all Site Leases and the Master Lease Agreement.
In such event, Lessor may exercise any and all remedies available to it pursuant
to Article XI hereof, with respect to any Site, whether or not the Event
of
Default occurred under that specific Site Lease.
ARTICLE
XI.
REMEDIES;
ENFORCEMENT
Section
11.1 Remedies.
Upon
the occurrence and during the continuance of any Event of Default under a
Site
Lease, Lessor may do one or more of the following as Lessor in its sole
discretion shall determine, without limiting any other right or remedy Lessor
may have on account of such Event of Default with respect to such Site Lease:
(a)
Lessor
may, by notice to Lessee, rescind or terminate the Site Lease under which
such
Event of Default occurred, provided that such default is uncured and continuing,
and Lessor shall have delivered thirty (30) days prior written notice to
Lessee
of intent to terminate.
(b)
Lessor
may (i) demand that the Lessee, and the Lessee shall upon the written demand
of
Lessor, return possession of the Leased Propert(ies) with respect to the
applicable Site or Sites promptly to Lessor in the manner and condition required
by, and otherwise in accordance with all of the provisions of, Article VI
hereof
as if the Leased Properties were being returned at the end of the Lease
Term.
(c)
Lessor
may, at its option, not terminate this Master Lease or the Site Lease under
which an Event of Default occurred, and continue to collect all Basic Rent,
Supplemental Rent, and all other amounts due Lessor (together with all costs
of
collection, including but not limited to reasonable and necessary attorney’s
fees) and enforce the Lessee’s obligations under this Master Lease or applicable
Site Lease as and when the same become due or are to be performed, and at
the
option of Lessor, upon any abandonment of any Leased Property by Lessee or
re-entry of same by Lessor, Lessor may, in its sole and absolute discretion,
elect not to terminate this Master Lease or the Site Lease with respect thereto
and may make such reasonable alterations and necessary repairs in order to
relet
such Leased Property, and relet such Leased Property or any part thereof
for
such term or terms (which may be for a term extending beyond the term of
this
Master Lease or the Site Lease) and at such rental or rentals and upon such
other terms and conditions as Lessor in its reasonable discretion may deem
advisable; and upon each such reletting all rentals actually received by
Lessor
from such reletting shall be applied to the Lessee’s obligations hereunder and
under the Site Lease. In the event of such reletting, Lessee shall remain
liable
for any amount by which the Rent due hereunder and under the Site Lease is
greater than the amount of rent to be paid by the new Lessee. Lessee shall
be
liable to Lessor for all costs of reletting, including but not limited to
broker’s or agent’s fees or advertising costs.
11
(d) Lessor
may retain and apply against Lessor’s damages all sums which Lessor would,
absent such Event of Default, be required to pay to, or turn over to, Lessee
pursuant to the terms of this Master Lease or the Site Lease.
Section
11.2 Remedies
Cumulative.
To the
extent permitted by, and subject to the mandatory requirements of, Applicable
Law, each and every right, power and remedy held by either of the parties
hereto
or otherwise provided in this Master Lease shall be cumulative and shall
be in
addition to every other right, power and remedy herein specifically given
or now
or hereafter existing at law, in equity or by statute, and each and every
right,
power and remedy whether specifically herein given or otherwise existing
may be
exercised from time to time and as often and in such order as may be deemed
expedient by Lessor, and the exercise or the beginning of the exercise of
any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy.
ARTICLE
XII.
LESSEE’S
EQUIPMENT
Any
of
Lessee’s trade fixtures, personal property and equipment not removed by such
Lessee at the end of the lease term shall be considered abandoned by such
Lessee, and title thereto shall without further act vest in Lessor, and may
be
appropriated, sold, destroyed or otherwise disposed of by Lessor without
notice
to any Lessee and without obligation to account or pay therefor and the Lessee
will pay Lessor, upon written demand, all reasonable costs and expenses incurred
by Lessor in removing, storing or disposing of the same and all costs and
expenses incurred by Lessor to repair any damage to such Leased Property
caused
by such removal. Lessee will immediately repair at its expense all damage
to
such Leased Property caused by any such removal (unless such removal is effected
by Lessor, in which event such Lessee shall pay all reasonable costs and
expenses incurred by Lessor for such repairs). Lessor shall have no liability
in
exercising Lessor’s rights under this Article XII, nor shall Lessor be
responsible for any loss of or damage to any Lessee’s personal property and
equipment.
ARTICLE
XIII.
RIGHT
TO
PERFORM FOR LESSEE
If
Lessee
shall fail to perform or comply with any of its agreements contained herein
and
either such failure shall continue for a period of twenty (20) or more days
after notice to Lessee by Lessor or the Agent or such failure has resulted
in
immediate material danger to any Leased Property or Lessor’s or the Agent’s
interest therein, Lessor, upon reasonable notice to Lessee, may perform or
comply with such agreement, and Lessor shall not thereby be deemed to have
waived any default caused by such failure, and the amount of such payment
and
the amount of the actual and reasonable expenses of Lessor (including actual
and
reasonable attorneys’ fees and expenses) incurred in connection with such
payment or the performance of or compliance with such agreement, as the case
may
be, shall be deemed Supplemental Rent, payable by the Lessee to Lessor within
twenty (20) days after written demand therefor.
12
ARTICLE
XIV.
TERMINATION
Section
14.1 Termination.
Each
Site Lease shall terminate without further liability upon the occurrence
of one
or more of the following events (each date of such termination, a “Lease
Termination Date”):
(a)
|
Upon
election of the Lessor in the case of an Event of Default under
such Site
Lease, provided that Lessor has delivered to Lessee a written notice
of an
Event of Default which is uncured and continuing, thirty (30) days
prior
to the date of termination;
|
(b)
|
occurrence
of a Casualty Event which the Lessor elects not to repair pursuant
to
Section 8.2;
|
(c)
|
termination
of the Master Transaction Agreement without consummation of the
transactions contemplated therein;
|
(d)
|
a
date mutually agreed in writing by the parties;
or
|
(e)
|
with
respect to a Site, as set forth in the applicable Site Lease.
|
ARTICLE
XV.
MISCELLANEOUS
Section
15.1 Reports.
To the
extent required under Applicable Law and to the extent it is reasonably
practical for a Lessee to do so, such Lessee shall prepare and file in timely
fashion, or, where such filing is required to be made by Lessor or it is
otherwise not reasonably practical for a Lessee to make such filing, Lessee
shall prepare and deliver to Lessor (with a copy to the Agent if applicable)
within a reasonable time prior to the date for filing (but in no event less
than
seven days prior to the date for filing) and Lessor shall file, any material
reports with respect to the condition or operation of such Leased Property
that
shall be required to be filed with any Governmental Authority.
Section
15.2 Binding
Effect; Successors and Assigns; Survival.
The
terms and provisions of this Master Lease, and the respective rights and
obligations hereunder of Lessor and the Lessee, shall be binding upon their
respective successors, legal representatives and assigns (including, in the
case
of Lessor, any Person to whom Lessor may transfer any Leased Property or
any
interest therein in accordance with the provisions of the Transaction
Documents), and inure to the benefit of their respective permitted successors
and assigns, and the rights granted hereunder to the Agent and the Lenders
shall
inure (subject to such conditions as are contained herein) to the benefit
of
their respective permitted successors and assigns.
13
Section
15.3 Quiet
Enjoyment.
Lessor
covenants that it will not interfere in the Lessee’s or any of its permitted
sublessees’ quiet enjoyment of the Leased Properties in accordance with this
Master Lease during the Lease Term, so long as no Event of Default has occurred
and is continuing. Such right of quiet enjoyment is independent of, and shall
not affect, Lessor’s rights otherwise to initiate legal action to enforce the
obligations of the Lessee under this Master Lease.
Section
15.4 No
Joint Venture.
Nothing
in this Master Lease shall be construed to create or constitute a partnership,
joint venture, or other similar relationship between the Lessor and Lessee,
and
such relationship is hereby expressly disclaimed by the parties.
Section
15.5. Severability.
The
parties hereto intend that the lease of the Premises for each Site (individually
with respect to each Site), and the lease of Equipment for each Site (with
each
set of Equipment for a Site treated separately) pursuant to each Site Lease
hereunder, shall be treated and considered as a separate lease agreement
hereunder between the Lessor and the Lessee. Additionally, each article,
section, subsection and lesser section of this Master Lease constitutes a
separate and distinct undertaking, covenant or provision hereof. The breach,
violation, or Event of Default under any Site Lease shall not be deemed to
be,
and shall not constitute, a breach, violation or Event of Default under any
other Site Lease. In the event that any provision of this Master Lease shall
finally be determined to be unlawful, such provision shall be deemed severed
from this Master Transaction Agreement, but every other provision of this
Master
Transaction Agreement shall remain in full force and effect.
Section
15.6 Notices.
All
notices, reports, records or other communications that are required or permitted
to be given to the parties under this Master Lease shall be sufficient in
all
respects if given in writing and delivered in person, by telecopy, by overnight
courier or by registered or certified mail, postage prepaid, return receipt
requested, to the receiving party at the following address:
If
to
Lessee, addressed to:
Xxxxxx
X.
Xxxxxxxx, CEO
Basic
Health Care Networks of Texas, L.P.
0000
Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxx
Xxx Xxx, Xxxxxxxxxx 00000
Telecopy:
(000) 000-0000
With
copies to:
Xxxxx
X.
Xxxxx, Esq.
Xxxxxxxxxx
& Xxxxx, LLP
00000
Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
14
If
to
the Lessor, addressed to:
Attn:
Xx.
Xxxxx Xxxxxxx
XXX
Financing, LP
00000
Xxxxxxx Xxxx, 000X
Xxxxxxxxx,
XX 00000
e-mail:
xxxxxxxxxxx@xxxxxxx.xxx
Facsimile:
(000) 000-0000
or
to
such other address as the party to whom notice is to be given may have furnished
to each other party in writing in accordance herewith. Any such communication
shall be deemed to have been given (i) when delivered if personally delivered
or
sent by telecopier, (ii) on the Business Day after dispatch if sent by
nationally-recognized, overnight courier and (iii) on the third Business
Day
after dispatch, if sent by mail. As used herein, “Business Day” means a day that
is not a Saturday, Sunday or a day on which banking institutions in Texas
are
not required to be open.
Section
15.7 Choice
of Law.
This
Master Lease Agreement shall be construed, interpreted, and the rights of
the
parties determined in accordance with, the laws of the State of Texas except
with respect to matters of law concerning the internal affairs of any
corporation or professional association which is a party to or the subject
of
this Master Lease Agreement, and as to those matters the law of the state
of
incorporation or organization of the respective entity shall govern. The
parties
agree that if a controversy or claim between or among them arises out of
or in
relation to this Master Lease Agreement and results in litigation, the courts
of
the State of Texas shall have jurisdiction to hear and decide such matter,
and
the parties hereto submit to jurisdiction to such courts.
Section
15.8 Entire
Agreement; Amendments and Waivers.
This
Master Lease Agreement, together with each Site Lease and all exhibits and
schedules hereto and thereto, constitutes the entire agreement between the
parties pertaining to the subject matter hereof and supersedes all prior
and
contemporaneous agreements, understandings, negotiations and discussions,
whether oral or written (including the letter of intent) of the parties,
and
there are no warranties, representatives or other agreements between the
parties
in connection with the subject matter hereof. No supplement, modification
or
waiver of this Master Lease Agreement shall be binding unless it shall be
specifically designated to be a supplement, modification or waiver of this
Master Lease Agreement and shall be executed in writing by the party to be
bound
thereby. No waiver of any of the provisions of this Master Lease Agreement
shall
be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Master Lease Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
Section
15.9 Reformation
Clause.
The
parties acknowledge that federal and state law and regulations applicable
to
physicians, health care organizations, and business transactions in which
physicians and other health care providers participate are subject to change,
and that such changes in laws and regulations, and interpretations thereof
by
courts and regulatory authorities may affect the transactions contemplated
by
this Master Lease Agreement , i.e.,
certain aspects of the contemplated transactions may become prohibited or
economically impractical as a result of such changes. If such event occurs,
the
parties each agree to negotiate in good faith such alterations to the structure
and terms of the transactions under this Master Lease Agreement as may be
necessary to make them lawful under then-applicable laws and regulations,
without materially disadvantaging either party.
15
Section
15.10 Expenses.
Each of
the parties hereto shall pay the fees and expenses of its counsel, accountants
and other experts incident to the negotiation and preparation of this Master
Lease.
Section
15.11 Further
Assurances.
From
time to time hereafter and without further consideration, each of the parties
hereto shall execute and deliver such additional or further instruments of
conveyance, assignment and transfer and take such actions as any of the other
parties hereto may reasonably request in order to more effectively consummate
the transactions contemplated by the Transaction Documents or as shall be
reasonably necessary or appropriate in connection with the carrying out of
the
parties’ respective obligations hereunder or the purposes of this Master Lease
Agreement.
Section
15.12 Multiple
Counterparts.
This
Master Lease Agreement may be executed in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Section
15.13 Headings.
The
headings of the several Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to
affect
the meaning or interpretation of this Master Lease Agreement.
Section
15.14. Landlord’s
Lien.
In
addition to the statutory landlord's lien, Lessor shall have at all times
a
valid contractual lien securing the payment of all rentals and other sums
of
money becoming due under this Lease from Lessee, and Lessee hereby grants
to
Lessor a security interest in and a lien upon all goods, wares, equipment,
fixtures, furniture and other personal property of the Lessee situated on
the
Leased Property, and such property shall not be removed from the Leased Property
without the written consent of Lessor until all arrearages in rent as well
as
any and all other sums of money then due to Lessor shall have been paid and
discharged. Upon the occurrence of an event of default by Lessee, Lessor,
in
addition to any other remedies provided herein or by law, may enter upon
the
Leased Property and take possession of any and all goods, wares, equipment,
fixtures, furniture and any other personal property of the Lessee situated
on
the Leased Property without liability for trespass or conversion, and sell
the
same in accordance with applicable provisions of the Texas Uniform Commercial
Code.
16
Section
15.15. Liability.
Lessor
shall not be liable to Lessee or Lessee’s employees, agents, invitees or
licensees or to any other person whomsoever, for any injury to person or
damage
to property on or about the Leased Property caused by the negligence or
misconduct of Lessee, its agents, servants, employees, invitees or licensees
or
caused by the building or improvements located on the Leased Property, and
Lessee agrees to indemnify and hold Lessor harmless from and against any
and all
suits, judgments, loss, expense, and claim arising out of such damage or
injury,
including but not limited to attorneys' fees. The liability of Lessor to
Lessee
for any default by Lessor under the terms of this Master Lease Agreement
or any
Site Lease shall be limited to the value
of the
property leased under the applicable Site Lease and
neither Lessor, any party comprising Lessor, nor any affiliate of Lessor
shall
be personally liable for any deficiency.
Section
15.16. Holding
Over.
Any
holding over by Lessee after the term of this Lease shall operate and be
construed as a tenancy from week to week at a rental rate equal to one hundred
twenty-five percent (125%) of the then rental rate being charged to
Lessee.
Section
15.17. Access
by Lessor.
Lessor,
and its agents and employees shall have access to and the right to enter
upon
any and all parts of the Leased Property at any reasonable time to examine
the
condition thereof, to clean, to show the Leased Property to prospective
purchasers or tenants and for any other purpose deemed reasonable by Lessor;
provided, however, that Lessor shall use its best efforts to provide Lessee
with
at least 24 hours’ prior notice of such access or entry.
Section
15.18. Exception
to Covenant Not to Compete.
Reference is made to the Non-Competition Agreement dated of even date herewith
between the Lessee and Xx. Xxxxx Xxxxxxx, entered into pursuant to the Master
Transaction Agreement (the “Non-Competition
Agreement”).
The
Lessor and the Lessee hereby expressly agree that in the event that the Master
Lease Agreement (or any “Site Lease” hereunder) is terminated or if Lessee is in
default under this Master Lease Agreement (or any Site Lease) and Lessor
elects
to not terminate the Master Lease Agreement or any such Site Lease, the
re-leasing of the same office space thereafter by Lessor to a third party
clinic, medical practice, or management company in the same or similar line
of
business as, or in direct or indirect competition with the Lessee, shall
not be
deemed to be a violation of the non-competition covenants set forth in Sections
1.1 and 1.2 of the Non-Competition Agreement or the non-competition covenants
set for in Section 4.4 of the Consulting Agreement entered into by and between
Xxxxx X. Xxxxxxx as Consultant and the Lessee as Purchaser.
Section
15.20. Indemnification.
Lessee
shall indemnify Lessor against any and losses, claims, suits, damages or
judgments arising out of or in consequence of any breach by Lessee of this
Lease, any breach by Lessee of any Transaction Document (as defined in the
Master Transaction Agreement), or any violation solely on the part of Lessee
of
any court ruling, law or regulation..
Section
15.21. Failure
to Exercise Remedy.
The
failure of Lessor to enforce any default or breach or the failure to exercise
any remedy under this contract against Lessee on one or more occasions shall
not
constitute a waiver of the right of Lessor to enforce such default or breach
or
to exercise such remedy in the future.
17
[page
intentionally blank]
18
BASIC
HEALTH CARE NETWORKS
OF
TEXAS,
L.P.
a
Texas
limited partnership
By:
Basic
Health Care Networks of Texas I, LLC
its
General Partner
By: /s/
Xxxxxx Xxxxxxxx
Xxxxxx
Xxxxxxxx
Chief
Executive Officer
BEW
FINANCING, L.P., a Texas limited partnership
By:
Wardlay Farms and Ranches, Inc, a Texas corporation, General
Partner
By: /s/
Xxxxx Xxxxxxx
Xxxxx
X.
Xxxxxxx, President
19
CALIFORNIA
ALL-PURPOSE ACKNOWLEDGMENT
State of California | ) |
) | |
County of Los Angeles | ) |
On
12/14/05 before me, Xxxxxx Xxxxxxx, personally appeared Xxxxxx Xxxxxxxx,
o
|
personally known to me | |
x
|
proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. |
[Notarial
Seal]
[XXXXXX
XXXXXXX
Commission
# 1383506
Notary
Public - California
Los
Angeles County
My
Comm. Expires Nov 5, 2006]
|
WITNESS
my hand and official seal.
/s/
Xxxxxx Xxxxxxx
Signature
of Notary Public
|
20
STATE OF TEXAS | ) |
) | |
COUNTY OF TARRANT | ) |
The
foregoing Master Lease Agreement was acknowledged before me, the undersigned
Notary Public, in the County of Tarrant this 12th day of December, 2005,
by
Xxxxx X. Xxxxxxx, president of Wardlay Farms and Ranches, Inc., a Texas
corporation, and the general partner of BEW Financing, L.P., a Texas limited
partnership on behalf of such corporation and partnership.
[Notarial
Seal]
[XXXXXXXX
X. XXXXXXXX
MY
COMMISION EXPIRES
December
9, 2008]
|
/s/
Xxxxxxxx X. Xxxxxxxx
Notary
Public
Printed
Name: Xxxxxxxx
X. Xxxxxxxx
County
of Residence: Tarrant
My
commission expires: 12-9-08
|
21
SCHEDULE
1
SITES;
LEASED PROPERTIES
Exhibit
|
Address
of Site; Former Clinic Name
(according
to former occupant Clinic)
|
Initial
Term Taxes and Insurance
(monthly)
|
Initial
Term Basic Rent* (monthly)
|
Initial
Term Basic Rent* (annual)
|
Renewal
Term
Basic
Rent*
(monthly)
|
Renewal
Term
Basic
Rent*
(annual)
|
A-1
|
303
MEDICAL CLINIC, P.A.
000
X. Xxxx 000
Xxxxx
Xxxxxxx, XX 00000
|
$
875.79
|
$2,529.00
|
$30,347.52
|
$
4,400.00
|
$
52,800.00
|
A-2
|
XXXXX
XXXXXX’, D.O., P.A.
(d.b.a.
OAK CLIFF MEDICAL TREATMENT CLINIC)
0000
Xxxx Xxxxxxxxx Xxxx.
Xxxxxx,
XX 00000
|
$
1275.15
|
$5,748.00
|
$68,971.64
|
$
10,000.00
|
$120,000.00
|
A-3
|
LAKE
JUNE MEDICAL CENTER, P.A.
0000
Xxxx Xxxx Xxxx
Xxxxxx,
XX 00000
|
$
713.15
|
$2,874.00
|
$34,485.82
|
$
5,000.00
|
$
60,000.00
|
A-4
|
X’XXXXXX
MEDICAL CENTER, P.A.
000
X. X’Xxxxxx Xxxx
Xxxxxx,
XX 00000
|
$
923.23
|
$2,874.00
|
$34,485.82
|
$
5,000.00
|
$
60,000.00
|
A-5
|
RED
BIRD URGENT CARE CLINIC, P.A.
0000
X. Xxxxxxx Xxxx
Xxxxxx,
XX 00000
|
$
2,807.63
|
$5,748.00
|
$68,971.64
|
$
10,000.00
|
$120,000.00
|
A-6
|
REHABILITATION
PHYSICIANS NETWORK, INC.
D/b/a
North Texas Rehab Center
0000
Xxxx Xxxxxx (xxxxx xxxxx)
Xxxxxx,
XX 00000
|
$
1,363.90
|
$3,276.00
|
$39,313.83
|
$
5,700.00
|
$
68,400.00
|
A-7
|
IBERIA
MEDICAL CLINIC, P.A.
(d.b.a.
Southside Rehabilitation)
Note
- also houses Ft. Worth Rehabilitation, Inc.
000
Xxxx Xxxxxxxx Xx.
XX
Xxxxx, XX 00000
|
$
913.07
|
$1,932.00
|
$23,181.94
|
$3,361.00
|
$
40,333.00
|
*
Subject
to adjustment as provided in Section 3.1 hereof.
22
SUBLEASES
Exhibit
|
Address
of Site; Former Clinic Name
(according
to former occupant Clinic)
|
Tax
and Insurance
(monthly)
|
Initial
Term Basic Rent* (monthly)
|
Initial
Term Basic Rent* (annual)
|
Renewal
Term
Basic
Rent*
(monthly)
|
Renewal
Term
Basic
Rent*
(annual)
|
A-8
|
XXXXXXXX
MEDICAL CLINIC, P.A.
(d.b.a.
RIDGEWOOD MEDICAL CLINIC)
000
X. Xxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
|
$242.08
|
$1,690.00
|
$20,277.66
|
$
2,940.00
|
$35,280.00
|
A-9
|
XXXXXXXX
MEDICAL CLINIC, P.A.
(d.b.a.
RIDGEWOOD MEDICAL REHAB)
000
X. Xxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
|
$242.08
|
$2,450.00
|
$29,402.61
|
$
4,263.00
|
$51,156.00
|
A-10
|
NORTHSIDE
MEDICAL CLINIC, P.A.
0000
X. Xxxx 00xx
Xxxxxx, Xxxxx X
XX
Xxxxx, XX 00000
|
$273.83
|
$2,874.00
|
$34,485.82
|
$
5,000.00
|
$60,000.00
|
A-11
|
IBERIA
MEDICAL CLINIC, P.A.
(d.b.a.
Southside Medical Clinic)
000
X. Xxxxxxxx Xx.
XX
Xxxxx, XX 00000
|
$234.33
|
$3,161
|
$37,934.40
|
$
5,500.00
|
$66,000.00
|
SUMMARY
- LEASES AND SUBLEASES
Address
of Site; Former Clinic Name
(according
to former occupant Clinic)
|
Tax
and Insurance
(monthly)
|
Initial
Term Basic Rent* (monthly)
|
Initial
Term Basic Rent* (annual)
|
Renewal
Term
Basic
Rent*
(monthly)
|
Renewal
Term
Basic
Rent*
(annual)
|
TOTAL
LEASES
|
$8,871.92
|
$24,980.00
|
$299,758.21
|
$43,461.00
|
$521,533.00
|
TOTAL
SUBLEASES
|
$992.32
|
$8,811.00
|
$105,731.79
|
$15,330.00
|
$183,957.00
|
GRAND
TOTAL
|
$9,864.24
|
$33,790.83
|
$405,490.00
|
$58,790.83
|
$705,490.00
|
*
Subject
to adjustment as provided in Section 3.1 hereof.
23
SCHEDULE
2
DISCLOSURE
SCHEDULE
Liens
on
Property
Property
not owned by Lessor
24
EXHIBIT
A-1-A-7
SITE
LEASE
[ADDRESS
OF PROPERTY]
THIS
SITE
LEASE (as from time to time amended or supplemented, this “Lease”),
dated
as of ____________, 2006, is among BEW FINANCING, LP., a Texas limited
partnership (together with its successors and assigns hereunder, the
“Lessor”),
as
Lessor, and BASIC HEALTH CARE NETWORKS OF TEXAS, L.P., a Texas limited
partnership (“Company”or
the
“Lessee”).
A.
Lessee
has entered into a Master Transaction Agreement dated as of November __,
2005
(as amended, supplemented or otherwise modified from time to time, the
“Master
Transaction Agreement”)
with
303 MEDICAL CLINIC, P.A., a Texas professional association, XXXXX XXXXXX’, D.O.,
P.A., a Texas professional association, IBERIA MEDICAL CLINIC, P.A., a Texas
professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas professional
association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional association,
NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association, X’XXXXXX
MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT CARE
CLINIC, P.A., a Texas professional association (collectively, the “Clinics”)
and
Xxxxx X. Xxxxxxx, D.O. (“Physician”).
B.
In
addition, Physician is entering in to asset purchase agreements with FT.WORTH
REHABILITATION, INC. d/b/a North Texas Rehab Center, 000 X. Xxxxxxxx Xxxxx,
Xxxx
Xxxxx, Xxxxx 00000, and REHABILITATION PHYSICIANS NETWORK, INC., a Texas
corporation d/b/a North Texas Rehab Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000 (the “Work
Hardening Purchase Agreements”),
pursuant to which Physician shall acquire certain assets including good will
and
receivables, of certain medical clinics (the “Work
Hardening Centers”)
operated by these entities, which assets shall in turn be assigned to the
Company. The Work Hardening Centers and the clinics a party to the Master
Transaction Agreement are referred to collectively in this Master Lease as
the
“Clinics”).
X. Xxxxxx
and Lessee have entered into a Master Lease Agreement (herein so called)
governing the lease of the Sites (hereinafter defined), including the property
covered by this Site Lease.
D.
The
Master Transaction Agreement, together with each of the exhibits attached
thereto, the Asset Purchase Agreement and each of the other Asset Purchase
Agreements of like tenor (and documents to be executed in connection therewith)
and the Master Lease Agreement, are hereinafter collectively referred to
as the
“Transaction
Documents.”
E.
Except
as
noted in Schedule 2 of the Master Lease Agreement, the real property, equipment,
furnishings and fixtures used in the Practice are owned by Lessor.
25
X.
Xxxxxx
desires to lease to Lessee, and Lessee desires to lease from Lessor, each
Site,
together with the Equipment, Furnishings and Fixtures at each such Site,
pursuant to the terms hereof and of a Master Lease Agreement dated an even
date
herewith, under which the parties are entering into a series of Site Leases,
including this Lease.
1.
Acceptance
and Lease of Property.
On the
Closing Date under the Master Transaction Agreement, subject to the terms
and
conditions provided therein, Lessor hereby agrees to lease to Lessee the
property described as:
[Address
of Property]
including
the Equipment and Furnishings (as such terms are defined in the Master Lease
Agreement) at such location (the “Leased
Property”).
2.
Lease
Term.
The
initial term (“Initial
Term”)
of
this Lease shall be three (3) years commencing on the Closing Date. Lessee
shall
have the option to renew this Lease for an unlimited number of successive
terms
of three years each (each, a “Renewal
Term”)
(subject to the terms hereof and Article XIV of the Master Lease Agreement),
as
follows: (a) each of the renewal terms shall commence on the day following
the
expiration of the preceding term; (b) the option shall automatically be
exercised and the lease thereby renewed, unless written notice is delivered
to
the Lessor by the Lessee not less than sixty (60) days prior to the last
day of
the expiring term; and (c) the terms and conditions for each renewal term
shall
be identical with the initial term.
3. Rental
Rate.
During
the Initial Term of this Lease, Lessee agrees to pay to Lessor as Initial
Term
Basic Rent the sum of _________________ ($________) per month and Supplemental
Rent of ____________ per month, subject to adjustment as provided herein.
During
each Renewal Term of this Lease, Lessee agrees to pay to Lessor as Renewal
Term
Basic Rent the sum of _________________ ($________) per month and Supplemental
Rent of ____________ per month, subject to adjustment as provided herein.
Notwithstanding anything herein to the contrary, the Initial Term Basic Rent
shall be subject to adjustment as provided in Section 3.1 of the Master Lease
Agreement.
Beginning
one year from the Commencement Date, the Basic Rent will be adjusted on
each
anniversary of the commencement of the Initial Term or the first Renewal
Term,
as applicable (the “Adjustment
Date”)
to
reflect increases in the Consumer Price Index for “All Urban Consumers, U.S.
City Average, All Items,” issued by the Bureau of Labor Statistics of the United
States Department of Labor.
26
a. The
adjustments in the Basic Rent will be determined by multiplying the applicable
Basic Rent specified in the lease by a fraction, the numerator of which is
the
index number for the last month before the adjustment and the denominator
of
which is the index number for the first month of the first year of the Term.
If
the product is greater than the Initial Term Basic Rent, Lessee will pay
this
greater amount as Basic Rent until the next rental adjustment. Basic Rent
will
never be less than the Initial Term Basic Rent.
x. Xxxxxx
will notify Lessee of each adjustment to Basic Rent no later than sixty days
after the Adjustment Date.
4.Incorporation
of Terms.
This
Site Lease is entered into under pursuant to a Master Lease Agreement, and
the
terms of the Master Lease Agreement are incorporated into this Site Lease
by
reference, provided, however, that if any of the terms of this Site Lease
shall
be found to conflict with the Master Lease, the terms of this Site Lease
shall
control.
5.Definitions.
Capitalized terms used herein and not defined shall have the same meanings
assigned to such terms in the Master Lease Agreement.
6.Condition
Precedent.
This
Site Lease and the obligations of the Lessee hereunder are expressly conditioned
upon the termination of any and all prior leases to which the Leased Property
is
subject. Lessor agrees to take any and all actions reasonably necessary to
terminate the prior leases, and provide documentation of the termination
of
prior leases (including an executed termination in the form attached as Exhibit
B to the Master Lease), as reasonably satisfactory to the Lessor.
[Remainder
of Page Left Blank Intentionally]
27
SIGNATURE
PAGE
SITE
LEASE FOR [PROPERTY]
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
A
Texas
limited partnership
By:
Basic
Health Networks of Texas I, LLC, a limited liability company, General
Partner
____________________________________
Xxxxxx
Xxxxxxxx
Chief
Executive Officer
BEW
FINANCING, L.P.
a
Texas
limited partnership
By:
Wardlay Farms and Ranches, Inc., a Texas corporation, general
partner
By:
/s/
Xxxxx Xxxxxxx
Xxxxx
X. Xxxxxxx,
President
28
EXHIBITS
A-8-A-11
SITE
LEASE
[ADDRESS
OF PROPERTY]
THIS
SITE
LEASE (as from time to time amended or supplemented, this “Lease”),
dated
as of __________, 2006, is among BEW FINANCING, LP., a Texas limited partnership
(together with its successors and assigns hereunder, the “Lessor”),
as
Lessor, and BASIC HEALTH CARE NETWORKS OF TEXAS, L.P., a Texas limited
partnership (“Company”
or
the
“Lessee”).
A.
Lessee
has entered into a Master Transaction dated as of December __, 2005 (as amended,
supplemented or otherwise modified from time to time, the “Master
Transaction Agreement”)
with
303 MEDICAL CLINIC, P.A., a Texas professional association, XXXXX XXXXXX’, D.O.,
P.A., a Texas professional association, IBERIA MEDICAL CLINIC, P.A., a Texas
professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas professional
association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional association,
NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association, X’XXXXXX
MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT CARE
CLINIC, P.A., a Texas professional association (collectively, the “Clinics”)
and
Xxxxx X. Xxxxxxx, D.O. (“Physician”);
B.
In
addition, Physician is entering into asset purchase agreements with FT.WORTH
REHABILITATION, INC. d/b/a North Texas Rehab Center, 000 X. Xxxxxxxx Xxxxx,
Xxxx
Xxxxx, Xxxxx 00000, and REHABILITATION PHYSICIANS NETWORK, INC., a Texas
corporation d/b/a North Texas Rehab Center, 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx
00000 (the “Work
Hardening Purchase Agreements”),
pursuant to which Physician shall acquire certain assets including good will
and
receivables, of certain medical clinics (the “Work
Hardening Centers”)
operated by these entities, which assets shall in turn be assigned to the
Company. The Work Hardening Centers and the clinics a party to the Master
Transaction Agreement are referred to collectively in this Master Lease
Agreement as the “Clinics”).
X. Xxxxxx
and Lessee have entered into a Master Lease Agreement (herein so called)
governing the lease of the Sites (hereinafter defined), including the property
covered by this Site Lease.
D.
The
Master Transaction Agreement, together with each of the exhibits attached
thereto, the Asset Purchase Agreement and each of the other Asset Purchase
Agreements of like tenor (and documents to be executed in connection therewith)
and the Master Lease Agreement, are hereinafter collectively referred to
as the
“Transaction
Documents.”
29
X. Xxxxxx,
as tenant, and ____________________, as landlord executed that certain lease
agreement (the “Base Lease”) dated ________________________, covering the
premises located at ________________________ (the “Premises”).
X.
Xxxxxx
desires to sublease to Lessee, and Lessee desires to sublease from Lessor,
the
Premises, together with the Equipment, Furnishings and Fixtures located on
the
Premises, pursuant to the terms of the Master Lease Agreement dated an even
date
herewith, under which the parties are entering into a series of Site Leases,
including this Site Lease.
1.
Acceptance
and Lease of Property.
On the
Closing Date under the Master Transaction Agreement, subject to the terms
and
conditions provided therein, Lessor hereby agrees to sublease to Lessee the
property described as:
[Address
of Property]
including
the Equipment and Furnishings (as such terms are defined in the Master Lease)
at
such location (the “Leased
Property”).
2.
Lease
Term.
The
initial term (“Initial
Term”)
of
this Lease shall be three (3) years commencing on the Closing Date. Lessee
shall
have the option to renew this Lease for an unlimited number of successive
terms
of three years each (each, a “Renewal
Term”)
(subject to the terms hereof and Article XIV of the Master Lease), as follows:
(a) each of the renewal terms shall commence on the day following the expiration
of the preceding term; (b) the option shall automatically be exercised and
the
lease thereby renewed, unless written notice is delivered to the Lessor by
the
Lessee not less than sixty (60) days prior to the last day of the expiring
term;
and (c) the terms and conditions for each renewal term shall be identical
with
the initial term; provided, however, that the term of this Lease shall in
no
event extend beyond the term of the Base Lease.
3. Rental
Rate.
During
the Initial Term of this Lease, Lessee agrees to pay to Lessor as Initial
Term
Basic Rent the sum of _________________ ($________) per month and Supplemental
Rent of ____________ per month, subject to adjustment as provided herein.
During
each Renewal Term of this Lease, Lessee agrees to pay to Lessor as Renewal
Term
Basic Rent the sum of _________________ ($________) per month and Supplemental
Rent of ____________ per month, subject to adjustment as provided herein.
Notwithstanding anything herein to the contrary, the Initial Term Basic Rent
shall be subject to adjustment as provided in Section 3.1 of the Master Lease
Agreement.
Beginning
one year from the Commencement Date, the Basic Rent will be adjusted on each
anniversary of the commencement of the Initial Term or the first Renewal
Term,
as applicable, of this Site Lease (the “Adjustment
Date”)
to
reflect increases in the Consumer Price Index for “All Urban Consumers, U.S.
City Average, All Items,” issued by the Bureau of Labor Statistics of the United
States Department of Labor.
30
a.
|
The
adjustments in the Basic Rent will be determined by multiplying
the
applicable Basic Rent specified in the lease by a fraction, the
numerator
of which is the index number for the last month before the adjustment
and
the denominator of which is the index number for the first month
of the
first year of the Term. If the product is greater than the Initial
Term
Basic Rent, Lessee will pay this greater amount as Basic Rent until
the
next rental adjustment. Basic Rent will never be less than the
Initial
Term Basic Rent.
|
x.
|
Xxxxxx
will notify Lessee of each adjustment to Basic Rent no later than
sixty
days after the Adjustment Date.
|
4.Incorporation
of Terms.
This
Site Lease is entered into under pursuant to a Master Lease Agreement, and
the
terms of the Master Lease Agreement are incorporated into this Site Lease
by
reference, provided, however, that if any of the terms of this Site Lease
shall
be found to conflict with the Master Lease Agreement, the terms of this Site
Lease shall control.
5.Definitions.
Capitalized terms used herein and not defined shall have the same meanings
assigned to such terms in the Master Lease Agreement.
6.Condition
Precedent.
This
Site Lease and the obligations of the Lessee hereunder are expressly conditioned
upon the termination of any and all prior leases to which the Leased Property
is
subject. Lessor agrees to take any and all actions reasonably necessary to
terminate the prior leases, and provide documentation of the termination
of
prior leases (including an executed termination in the form attached as Exhibit
B to the Master Lease Agreement), as reasonably satisfactory to the Lessor.
7. Lessee’s
Obligations and Acknowledgements.
In
addition to Lessee’s obligations under the Master Lease Agreement, Lessee is
obligated and hereby acknowledges the following:
(a)
|
Lessee
shall comply with tenant’s obligations under the Base
Lease;
|
(b)
|
This
sublease is subordinate to the Base Lease, a copy of which Sublessee
acknowledges as received;
|
(c)
|
Lessor
has all the rights of Landlord under the Base Lease as to
Lessee.
|
(d)
|
A
default under the Base Lease shall constitute a default hereunder
and
under the Master Lease Agreement.
|
[Remainder
of Page Left Blank Intentionally]
31
SIGNATURE
PAGE
SITE
LEASE FOR [PROPERTY]
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
A
Texas
limited partnership
By:
Basic
Health Care Networks of Texas I, LLC, a Delaware limited liability company,
General Partner
____________________________________
Xxxxxx
Xxxxxxxx
Chief
Executive Officer
BEW
FINANCING, L.P.
a
Texas
limited partnership
By:
Wardlay Farms and Ranches, Inc., a Texas corporation, general
partner
By:
/s/
Xxxxx Xxxxxxx
Xxxxx
X. Xxxxxxx,
President
32
EXHIBIT
B
CONTINGENT
TERMINATION OF PRIOR LEASES
Reference
is made to the lease agreements (“Prior
Leases”)
between BEW Financing, Inc., now known as BEW Financing, LP (“Landlord”) and 303
MEDICAL CLINIC, P.A., a Texas professional association, XXXXX XXXXXX’, D.O.,
P.A., a Texas professional association, IBERIA MEDICAL CLINIC, P.A., a Texas
professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas professional
association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional association,
NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association, X’XXXXXX
MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT CARE
CLINIC, P.A., a Texas professional association (collectively, the “Clinics”).
The
Landlord and each of the Clinics hereby agree that the Prior Leases shall
terminate, upon the closing and funding (the “Closing”)
of the
transactions contemplated in that certain Master Transaction Agreement dated
December 12, 2005 by and among Basic Health Care Networks of Texas, L.P.,
the
Clinics, and Xxxxx X. Xxxxxxx, D.O. This Agreement is deemed executed and
delivered to the respective parties as of the Closing Date. In the event
the
transactions contemplated in the Master Transaction Agreement fail to close,
this Termination Agreement shall be null and void and of no further force
or
effect.
LANDLORD:
BEW
FINANCING, L.P.,
a
Texas
limited partnership
By:
Wardlay Farms and Ranches, Inc., a Texas corporation, general
partner
By:
/s/ Xxxxx Xxxxxxx
Xxxxx
X. Xxxxxxx,
President
CLINICS:
303
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
33
XXXXX
XXXXXX’, D.O., P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
IBERIA
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
XXXXXXXX
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
LAKE
JUNE
MEDICAL CENTER, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
NORTHSIDE
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
34
X’XXXXXX
MEDICAL CENTER, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
RED
BIRD
URGENT CARE CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
35
EXHIBIT
G
FORM
OF PROMISSORY NOTE
$500,000 |
___________,
2006
|
Basic
Health Care Networks of Texas, L.P. (the “Maker”), for value received, hereby
promises to pay to the order of Xxxxx
Xxxxxxx
(the
“Payee”), at 00000 Xxxxxxx Xxxx, 000X, Xxxxxxxxx, XX 00000, the principal sum of
Five
Hundred Thousand Dollars ($500,000) Dollars.
This
Note
has been issued pursuant to a Master Transaction Agreement (the “Master
Transaction Agreement”) dated December __, 2005 by and among Maker on the one
hand and 303 MEDICAL CLINIC, P.A., a Texas professional association, XXXXX
XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL CLINIC,
P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A., a Texas
professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional
association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association,
X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT
CARE CLINIC, P.A., a Texas professional association, and Xxxxx X. Xxxxxxx,
D.O.
All
unpaid accrued interest and principal under this Note shall be due and payable
twelve (12) months following the issuance hereof on the Closing Date (as defined
in the Master Transaction Agreement). This Note shall bear simple interest
from
the date hereof, at a rate equal to six percent (6%) per annum.
All
payments shall be made in lawful money of the United States of America. This
Note may be prepaid in full at any time, or in part from time to time, without
penalty or premium, but with interest accrued on all outstanding principal
to
the date of such payment. All payments on this Note shall be applied first
to
accrued but unpaid interest and then to the outstanding principal balance
hereof.
If
any
installment of this Note becomes due and payable on a Saturday, Sunday, or
public or other banking holiday under the laws of the State of Texas, the
maturity thereof shall be extended to the next succeeding business day, and
interest shall be payable thereon at the rate herein specified during such
extension.
Except
as
otherwise provided herein, the Maker waives presentment, demand, demand for
payment, protest, notice of dishonor or notice of any kind in connection with
this Note.
The
occurrence of any one or more of the following shall constitute an event of
default under this Note (“Event of Default”):
1
1. The
Maker
shall fail to make any payment hereunder or under any other Note payable by
the
Maker under the Agreement when due and such failure shall continue for a period
of twenty (20) days following its due date.
2. A
default
or event of default shall occur, which is not cured within any applicable grace
or cure period provided therein.
3. The
Maker
shall cease doing business as a going concern, make an assignment for the
benefit of creditors, admit in writing its inability to pay its debts as they
become due, file a petition commencing a voluntary case under any chapter of
Title 11 of the United States Code (the “Bankruptcy Code”), be adjudicated an
insolvent, file a petition seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar arrangement
under
any present or future statute, law, rule or regulation or file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, consent to the filing of such a petition or acquiesce in the
appointment of a trustee, receiver or liquidator of it or of all or any part
of
its assets or properties, or take any action looking to its dissolution or
liquidation; or
4. An
order
for relief against the Maker shall have been entered under any chapter of the
Bankruptcy Code or a decree or order by a court having jurisdiction in the
premises shall have been entered approving as properly filed a petition seeking
reorganization, arrangement, readjustment, liquidation, dissolution or similar
relief against the Maker under any present or future statute, law, rule or
regulation, or any trustee, receiver or liquidator of the Maker or of all or
any
part of its assets and properties shall be appointed; or if there is commenced
against the Maker any proceeding seeking any such relief or the appointment
of
any such trustee, receiver or liquidator which remains undismissed for a period
of sixty (60) days.
Upon
the
occurrence of an Event of Default, at the option of the Payee, this Note shall
become immediately due and payable together with all accrued and unpaid interest
hereunder up through the date of payment, upon the giving of notice by the
Payee.
Except
as
otherwise provided herein, each party shall bear its own expenses attributable
to the performance of, compliance with or enforcement of this Note, including
but not limited to each parties fees and expenses of their respective counsel.
2
Notwithstanding
anything to the contrary contained in this Note or in any other agreement
entered into in connection with or securing the indebtedness evidenced by this
Note, whether now existing or hereafter arising and whether written or oral,
it
is agreed that the aggregate of all interest and any other charges constituting
interest, or adjudicated as constituting interest, and contracted for,
chargeable or receivable under this Note or otherwise in connection with this
loan transaction, shall under no circumstances exceed the total amount of
interest that would have been earned at the Maximum Rate. In the event the
maturity of this Note is accelerated by the Payee as a result of a default
under
this Note or under any other document executed as security for or in connection
with this Note, or by voluntary prepayment of this Note by Maker, or otherwise,
then the total amount of earned interest may never exceed the total amount
of
interest that would have been earned at the Maximum Rate, computed from the
dates each advance of the loan proceeds is made until payment. If from any
circumstances the Payee shall ever receive interest, or any other charges
constituting interest, or adjudicated as constituting interest, in excess of
the
total amount of interest that would have been earned at the Maximum Rate, the
amount of such excess interest shall be applied to the reduction of the
principal amount owing on this Note or on account of any other principal
indebtedness of Maker to the Payee pursuant to any instrument securing this
Note
by express reference hereto, and not to the payment of interest; or if the
amount of such excess interest exceeds that unpaid principal balance of this
Note and such other indebtedness, the amount of such excess interest that
exceeds the unpaid principal balance of this Note and such other indebtedness
shall be refunded to Maker. All sums paid or agreed to be paid to the Payee
for
the use, forbearance or detention of the indebtedness of Maker to the Payee
shall be amortized, prorated, allocated and spread throughout the full term
of
this Note until payment in full so that the actual rate of interest on account
of such indebtedness is uniform throughout the term of this Note. As used
herein, the term "Maximum Rate" means the maximum nonusurious interest rate
that
at any time or from time to time may be contracted for, taken, reserved, charged
or received on the indebtedness evidenced by this Note under the laws of the
United States of America or the State of Texas that are presently in effect,
or
that may hereafter be in effect and that allow a higher maximum nonusurious
interest rate than that which is now allowed. To the extent that article
5069--1.04, Title 79, Texas Revised Civil Statutes, 1925, as amended (the "Act")
is relevant to the determination of the Maximum Rate, the Payee hereby elects
to
determine such applicable legal rate under the Act pursuant to the "indicated
rate ceiling" from time to time in effect, as referred to and defined in article
1.04(a)(1) of the Act; subject, however, to the limitations of such indicated
rate ceiling referred to and defined in article 1.04(b)(2) of the Act, and
further subject to any right the Payee may have in the future to change the
method of determining the Maximum Rate.
No
delay
on the part of the Payee in exercising any of its options, powers or rights,
or
partial or single exercise thereof, shall constitute a waiver thereof. No waiver
of any of its rights hereunder shall be deemed to be made by the Payee unless
the same shall be in writing, duly signed on behalf of the Payee, and each
such
waiver, if any, shall apply only with respect to the specific instance involved,
and shall in no way impair the rights of the Payee or the obligations of the
Maker to the Payee in any other respect at any other time. This Note may be
modified or amended only in a writing duly executed by Payee and
Maker.
This
Note
shall be binding upon the Maker and the Payee and their respective successors
and permitted assigns.
This
Note
shall be governed and construed in accordance with the laws of the State of
Texas without reference to the conflict of laws provisions thereof.
3
The
courts of record of the State of Texas or of the United States District Courts
within the State of Texas shall have exclusive jurisdiction with respect to
any
legal action or proceeding relating to or arising under this Note.
IN
WITNESS WHEREOF, this Note has been executed and delivered by the undersigned
on
the date hereof.
BASIC
HEALTH CARE NETWORKS OF TEXAS, L.P.
a
Texas limited partnership
By:
Basic Health Care Networks of Texas I, a Delaware limited liability
company, General Partner
|
|
By:
________________________________
Xxxxxx
Xxxxxxxx, Chief Executive
Officer
|
4
FIRST
AMENDMENT TO THE
MASTER
TRANSACTION AGREEMENT
THIS
FIRST AMENDMENT (“Amendment”), is made by and among BASIC HEALTH CARE NETWORKS
OF TEXAS, L.P., a Texas limited partnership (the “Company”)
on the
one hand and 303 MEDICAL CLINIC, P.A. , a Texas professional association,
XXXXX
X. XXXXXX’, D.O., P.A., a Texas professional association, IBERIA MEDICAL CLINIC,
P.A., a Texas professional association, XXXXXXXX MEDICAL CLINIC, P.A., a
Texas
professional association, LAKE JUNE MEDICAL CENTER, P.A., a Texas professional
association, NORTHSIDE MEDICAL CLINIC, P.A., a Texas professional association,
X’XXXXXX MEDICAL CENTER, P.A., a Texas professional association, RED BIRD URGENT
CARE CLINIC, P.A., a Texas professional association (collectively, the
“Clinics”)
and
Xxxxx X. Xxxxxxx, D.O. (“Physician”)
is an
amendment to that certain Master Transaction Agreement, dated December 12,
2005,
by and among the Company, the Clinics and the Physician (the “Agreement”). The
Company, the Clinics and the Physician may hereinafter be referred to
individually as a "Party" and collectively as the "Parties." This Amendment
is
effective as of December 31, 2005.
1. The
Parties mutually agree that Section 2.2 of the Agreement is hereby amended
and
restated to read in its entirety as follows:
“2.2
Closing.
The
Closing shall take place on or
before
(a) May 15, 2006, provided that the conditions in Article 7 are satisfied,
or
(b) on a date mutually agreed by the parties.
The date
on which the Closing occurs is hereinafter referred to as the “Closing
Date.”
At
the
Closing, each of the Clinics and the Company shall execute and deliver an
executed Asset Purchase Agreement in the form attached as Exhibit
A
hereto
with respect to each such Clinic, including each of the closing deliverables
set
forth in such Asset Purchase Agreement.”
2. The
Parties also mutually agree that Section 9.4 of the Agreement is hereby amended
and restated to read in its entirety as follows:
“9.4
Termination
Date.
Unless
terminated by mutual agreement of the parties prior to Closing, this Master
Transaction Agreement shall terminate upon the first to occur of the following
events: (a) at the discretion of the Physician if no registration statement
shall have been filed by the Company with the SEC with respect to the initial
public offering of the Company on or before Xxxxx 00, 0000, (x) a date mutually
agreed in writing by the Company and the Physician on which this Agreement
shall
terminate, (c) thirty (30) days after delivery of notice by a non-breaching
party to the other party or parties of a material breach by such party or
parties, provided that such material breach has not been cured (“Termination
Date”).
If
Closing fails to occur as a result of the breach of this Master Transaction
Agreement by the Company on the one hand, or any of the Physician Parties,
on
the other, this Master Transaction Agreement may be extended for a reasonable
time to facilitate Closing at the election of the non-breaching party. In
the
event of termination of this Master Transaction Agreement pursuant to the
provisions of this Section, a party that is not in material breach of this
Master Transaction Agreement shall stand fully released and discharged with
respect to any and all obligations under this agreement. In the event that
the
Conditions Precedent to Closing are not satisfied because of the breach of
any
representation, warranty or covenant of any party hereto, each party shall
be
entitled to pursue, exercise and enforce any and all remedies, rights, powers
and privileges available hereunder or at law or in equity.”
[Remainder
of Page Left Blank Intentionally]
COMPANY:
BASIC
HEALTH CARE NETWORKS
OF
TEXAS,
L.P.
a
Texas
limited partnership
By:
Basic
Health Care Networks of Texas I, LLC,
a
Delaware limited liability company, General Partner
By:
/s/
Xxxxxx Xxxxxxxx
Xxxxxx
X.
Xxxxxxxx
Chief
Executive Officer
PHYSICIAN:
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx, an individual
CLINICS:
303
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
XXXXX
XXXXXX’, D.O., P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
IBERIA
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
XXXXXXXX
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
LAKE
JUNE
MEDICAL CENTER, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
NORTHSIDE
MEDICAL CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
X’XXXXXX
MEDICAL CENTER, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President
RED
BIRD
URGENT CARE CLINIC, P.A.
/s/
Xxxxx Xxxxxxx
Xx.
Xxxxx
Xxxxxxx
President