BONE, MUSCLE AND JOINT, INC.
0000 X. Xxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
July 3, 1997
Xxxxxxx and Xxxxxxx, M.D.'s, P.A.
0000 X. Xxxxxxx Xxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Amendatory Agreement
--------------------
Dear Sirs:
Reference is made to the Management Services Agreement (the "Management
Services Agreement"), and the Asset Purchase Agreement (the "Asset Purchase
Agreement"), each dated as of the date hereof and effective as of June 1, 1997,
between Bone, Muscle and Joint, Inc. (the "Company"), and Xxxxxxx and Xxxxxxx,
M.D.'s, P.A. (the "Medical Group"). Capitalized terms used but not defined
herein have the meanings ascribed thereto in the Management Services Agreement.
1. Notwithstanding anything to the contrary contained in Section 4
and Schedule III of the Management Services Agreement or Sections 2.1 and 5.2(c)
of the Asset Purchase Agreement, on the date hereof the Company will pay by wire
transfer of funds to the account(s) designated by the Medical Group an amount
equal to $2,297,102 and will issue to Xxxx Xxxxxxx, M.D., Xxxxxx Xxxxxxx, M.D.
and Practice Solutions, Inc., 93,243, 93,243 and 3,806 shares of the Company's
common stock, $.001 par value (the "Common Stock"), in fulfillment of its
obligations under such Sections and Schedule; provided, however, that if Xxxxx
Xxxxxxxxxx, M.D. becomes an equity owner of the Medical Group and executes a
Restricted Stock Agreement and Stockholder Non-Competition Agreement at any time
on or before August 1, 1997, the Company will pay the remaining consideration,
$605,155 to the Medical Group (pursuant to the Asset Purchase Agreement) and an
aggregate of 50,130 shares of its Common Stock (pursuant to the Management
Services Agreement) to Xxxx Xxxxxxx, M.D., Xxxxxx Xxxxxxx, M.D., Practice
Solutions, Inc. and such other physician equity owners or employees of the
Medical Group as the Medical Group shall designate in writing to the Company
(which writing will also set forth the allocation of such shares of Common
Stock); provided further, however, that such designation shall allot 15,000
shares to Dr. Arlosoroff. Any such other physician equity owners or employees of
the Medical Group shall execute an Restricted Stock Agreement in the form of
agreement previously executed by Drs. Xxxxxxx and Xxxxxxx and a Stockholder
Non-Competition Agreement in a form satisfactory to
the Company. In connection with the execution of such agreements by Dr.
Arlosoroff, the Company will increase the consideration payable under the
Management Services Agreement by 7,500 shares of its Common Stock and such
shares will be issued simultaneously with the issuance referenced in the proviso
of the preceding sentence. The parties to the Management Services Agreement and
the parties to the Asset Purchase Agreement agree that in the event the
foregoing occurs and as a condition to the fulfillment of their respective
obligations under this Section 1, the parties shall execute and deliver an
amendment to each such agreement in the form of Exhibit A hereto; provided,
however, that if the foregoing does not take place, the parties to each such
agreement shall execute and deliver amendments in the form of Exhibit B hereto
(which shall, among other things, decrease the Base Year Collections).
2. In addition to the foregoing, the Company hereby agrees that in
the event that (a) each of Xxxx Xxxxxxxxxx, M.D. and Xxxxxx Xxxxx, M.D.,
physician employees of the Medical Group, executes and delivers a Restricted
Stock Agreement and Stockholder Noncompetition Agreement to the Company by
August 1, 1997 and (b) the Medical Group directs the Company in writing to issue
and deliver to such physician 10,000 shares of the Company's Common Stock
issuable pursuant to Schedule III of the Management Services Agreement, the
Company will increase the stock consideration payable to the Medical Group by
5,000 and 5,000 shares, respectively, of its Common Stock. In connection with
the foregoing and as a condition thereto, the parties to the Management Services
Agreement shall execute and deliver an amendment thereto in the form of Exhibit
C attached hereto.
3. None of the parties hereto, nor their respective employees,
stockholders, consultants or agents shall, at any time after the execution and
delivery of this Amendatory Agreement, directly or indirectly disclose the terms
of this agreement to any person, firm, corporation, association or other entity
without the prior written consent of the other parties hereto. Nothing contained
herein shall be construed to prevent any party hereto from disclosing the terms
of this agreement to his or its professional advisers for purposes of
evaluating, negotiating or otherwise assisting such party in connection with the
transactions contemplated by this Amendatory Agreement; provided that such party
shall be liable to the other parties for the disclosure by any of its
professional advisers of such information in violation of the preceding
sentence.
-2-
If the foregoing meets with your satisfaction, please acknowledge our
agreement by signing in the space indicated below and returning a copy of this
letter to the undersigned.
Very truly yours,
Bone, Muscle and Joint, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: VP
Agreed to and Acknowledged:
Xxxxxxx and Xxxxxxx, M.D.'s, P.A.
By: /s/ Xxxx X. Xxxxxxx, MD
__________________________
Xxxx X. Xxxxxxx, M.D.
President
By: /s/ Xxxxxx X. Xxxxxxx, MD
__________________________
Xxxxxx X. Xxxxxxx, M.D.
Secretary
/s/ Xxxx X. Xxxxxxx, Pres
-----------------------------
Xxxx X. Xxxxxxx, M.D.
/s/ Xxxxxx X. Xxxxxxx, MD
-----------------------------
Xxxxxx X. Xxxxxxx, M.D.
-3-
EXHIBIT A
AMENDMENT NO. 1 TO
MANAGEMENT SERVICES AGREEMENT and ASSET
PURCHASE AGREEMENT dated as of July __,
1997 (the "Amendment"), between BONE,
MUSCLE AND JOINT, INC., a Delaware
corporation (the "Management Company"),
and XXXXXXX AND XXXXXXX, M.D.'S, P.A.
(the "Medical Group").
Reference is made to the Management Services Agreement (the "Management
Services Agreement") and to the Asset Purchase Agreement (the "Asset Purchase
Agreement"), each between the Management Company and the Medical Group, dated as
of July 3, 1997, and effective as of June 1, 1997. Capitalized terms used but
not defined herein have the meanings ascribed thereto in the Management Services
Agreement.
Execution and delivery of this Amendment is a condition to the
Management Company's performance of its obligations set forth in Section 1 of
that certain Amendatory Agreement dated as of July 3, 1997 (the "Amendatory
Agreement"), among the Management Company, the Medical Group, Xxxx Xxxxxxx,
M.D., and Xxxxxx Xxxxxxx, M.D.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, in the Management Services Agreement and the Amendatory Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Section 23 of the Management Services Agreement is hereby amended
in its entirety to read as follows:
"SECTION 23. Entire Agreement; Amendments.
This Agreement and the exhibits and schedules
hereto contain the entire understanding of the
parties with respect to its subject matter, and
neither this Agreement nor any part of it may in
any way be altered, amended, extended, waived,
discharged or terminated except by a written
agreement signed by all of the parties against
whom enforcement is sought."
2. Schedule III to the Management Services Agreement is amended and
restated in its entirety to read as set forth in Annex I attached hereto.
3. Section 10.2 of the Asset Purchase Agreement is hereby amended in
its entirety to read as follows:
"10.2. Entire Agreement.
This Agreement (including the recitals hereof
and the Schedules and Exhibits attached hereto)
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."
4. Except as expressly provided in this Amendment, the Management
Services Agreement and the Asset Purchase Agreement remain in full force and
effect in accordance with their respective terms.
5. This Amendment may be executed in more than one counterpart, and by the
parties hereto in separate counterparts, and each such counterpart shall
constitute an original instrument, but all such counterparts taken together
shall constitute one and the same Amendment.
6. This Amendment shall be governed by, construed and interpreted in
accordance with the laws of the State of Florida.
* * * *
IN WITNESS WHEREOF, the undersigned have caused the Amendment to be duly
executed as of the date and year first above written.
BONE, MUSCLE AND JOINT, INC.
By:_____________________________
Name:
Title:
XXXXXXX AND XXXXXXX, M.D.'S, P.A.
By:_____________________________
Xxxx X. Xxxxxxx, M.D.
President
By:_____________________________
Xxxxxx X. Xxxxxxx, M.D.
Secretary
ANNEX I
SCHEDULE III
Equity Participation
In connection with the execution and delivery of this Agreement, the
Management Company is paying an aggregate consideration to the Medical Group of
247,922 shares of Common Stock of the Management Company (the "Practice
Compensation"). In order to accomplish the foregoing, the Company is entering
into a Restricted Stock Agreement with each of the Eligible Parties, pursuant to
which each such Eligible Party shall receive the number of shares set forth in
such agreement (which amount will be designated by the Medical Group in writing
to the Management Company). A portion of the stock consideration (an aggregate
of 4,808 shares of Common Stock) is being paid to an advisor of the Medical
Group in accordance with the schedule below. The Medical Group shall indemnify
and defend the Management Company from and against any and all liabilities,
losses, damages, claims, causes of action and expenses (including reasonable
attorneys' fees and expenses) arising out of or in connection with any claim by
any of the Eligible Parties or any other person with respect to such allocation
of shares.
The Practice Compensation has been determined based upon the
assumption that the Medical Group will achieve aggregate Collections for the
calendar year ending December 31, 1997 (the "Base Year") equal to $3,750,000
(the "Base Year Collections"). On or before October 31, 1998, the Management
Company will notify (the "Comparison Notice") the Medical Group of its actual
aggregate Collections for the period beginning on the Commencement Date and
ending on August 31, 1998 (the "Comparison Period"). In the event that the
actual Collections for the Comparison Period are less than the Base Year
Collections (the "Shortfall"), the Medical Group will be obligated to, and will
cause the Eligible Parties to, return to the Management Company the number of
shares (rounded to the nearest whole number) of Common Stock determined by
taking six times 15% of the Shortfall and dividing that number by $6.50. In the
event that the actual Collections for the Comparison Period are greater than the
Base Year Collections (the "Excess"), the Management Company will be obligated
to issue to the Medical Group the additional number of shares (rounded to the
nearest whole number) of Common Stock determined by taking six times 15% of the
Excess and dividing that number by $6.50. If there is an Excess and the
Management Company is required to issue additional shares of Common Stock to the
Medical Group, such shares will be allocated to the Eligible Parties as the
Medical Group may direct in writing within 30 days after receipt of the
Comparison Notice and such allocation shall be made according to the proportions
set forth in such written notice; provided that if the Medical Group fails to so
notify
the Management Company, the Excess shall be allocated equally between Xx.
Xxxxxxx and Xx. Xxxxxxx.
EXHIBIT B
AMENDMENT NO. 1 TO MANAGEMENT
SERVICES AGREEMENT and ASSET PURCHASE
AGREEMENT dated as of August 1, 1997
(the "Amendment"), between BONE, MUSCLE
AND JOINT, INC., a Delaware corporation
(the "Management Company"), and XXXXXXX
AND XXXXXXX, M.D.'S, P.A. (the "Medical
Group").
Reference is made to the Management Services Agreement (the "Management
Services Agreement") and to the Asset Purchase Agreement (the "Asset Purchase
Agreement"), each between the Management Company and the Medical Group, dated as
of July 3, 1997, and effective as of June 1, 1997. Capitalized terms used but
not defined herein have the meanings ascribed thereto in the Management Services
Agreement.
As of the date hereof Xxxxx Xxxxxxxxxx, M.D., has not executed and
delivered a Restricted Stock Agreement or Stockholder Non-Competition Agreement.
As a result thereof, the parties hereto are executing and delivering this
Amendment pursuant to the terms and provisions set forth in Section 1 of that
certain Amendatory Agreement dated as of July 3, 1997 (the "Amendatory
Agreement"), among the Management Company, the Medical Group, Xxxx Xxxxxxx,
M.D., and Xxxxxx Xxxxxxx, M.D.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, in the Management Services Agreement and the Amendatory Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Schedule III to the Management Services Agreement is hereby amended
in its entirety to read as set forth on Annex I attached hereto.
2. Section 2.1 of the Asset Purchase Agreement is hereby amended in its
entirety to read as follows:
"2.1. Purchase Price; Payment.
The purchase price (the "Purchase Price") to be paid for the Purchased
Assets shall equal the sum of the following amounts:
(a) $1,691,947; and
(b) $950,000 (the "A/R Amount"), subject to adjustment in
accordance with Section 2.3, which amount is a good faith estimate of the
aggregate face value of all Accounts Receivable outstanding as of the Closing
Date and set forth on Schedule 1.1(e)."
3. Except as expressly provided in this Amendment, the Management
Services Agreement and the Asset Purchase Agreement remain in full force and
effect in accordance with their respective terms.
4. This Amendment may be executed in more than one counterpart, and by
the parties hereto in separate counterparts, and each such counterpart shall
constitute an original instrument, but all such counterparts taken together
shall constitute one and the same Amendment.
5. This Amendment shall be governed by, construed and interpreted in
accordance with the laws of the State of Florida.
* * * *
IN WITNESS WHEREOF, the undersigned have caused the Amendment to be
duly executed as of the date and year first above written.
BONE, MUSCLE AND JOINT, INC.
By:_____________________________
Name:
Title:
XXXXXXX AND XXXXXXX, M.D.'S, P.A.
By:_____________________________
Xxxx X. Xxxxxxx, M.D.
President
By:_____________________________
Xxxxxx X. Xxxxxxx, M.D.
Secretary
ANNEX I
SCHEDULE III
Equity Participation
In connection with the execution and delivery of this Agreement, the
Management Company is paying an aggregate consideration to the Medical Group of
190,292 shares of Common Stock of the Management Company (the "Practice
Compensation"). In order to accomplish the foregoing, the Company is entering
into a Restricted Stock Agreement with each of the Eligible Parties, pursuant to
which each such Eligible Party shall receive the number of shares set forth in
such agreement (which amount will be designated by the Medical Group in writing
to the Management Company). A portion of the stock consideration (an aggregate
of 4,808 shares of Common Stock) is being paid to an advisor of the Medical
Group in accordance with the schedule below. The Medical Group shall indemnify
and defend the Management Company from and against any and all liabilities,
losses, damages, claims, causes of action and expenses (including reasonable
attorneys' fees and expenses) arising out of or in connection with any claim by
any of the Eligible Parties or any other person with respect to such allocation
of shares.
Eligible Party Common Stock Proportions
-------------- ------------ -----------
Xxxx X. Xxxxxxx, M.D. 93,243 50%
Xxxxxx X. Xxxxxxx, M.D. 93,243 50%
Advisor Common Stock
------- ------------
Practice Solutions, Inc. 3,806
============
Grand Total 190,292
The Practice Compensation has been determined based upon the assumption
that the Medical Group will achieve aggregate Collections for the calendar year
ending December 31, 1997 (the "Base Year") equal to $2,910,000 (the "Base Year
Collections"). On or before October 31, 1998, the Management Company will notify
(the "Comparison Notice") the Medical Group of its actual aggregate Collections
for the period beginning on the Commencement Date and ending on August 31, 1998
(the "Comparison Period"). In the event that the actual Collections for the
Comparison Period are less than the Base Year Collections (the "Shortfall"), the
Medical Group will be obligated to, and will cause the Eligible Parties to,
return to the Management Company the number of shares (rounded to the nearest
whole number) of Common Stock determined by taking six times 15% of the
Shortfall and dividing that number by $6.50. In the event that the actual
Collections for the Comparison Period are greater than the Base Year Collections
(the "Excess"), the Management Company will be obligated to issue to the Medical
Group the additional number of shares (rounded to the nearest whole number) of
Common Stock determined by taking six times 15% of the Excess and dividing that
number by $6.50. If there is an Excess and the Management Company is required to
issue additional shares of Common Stock to the Medical Group, such shares will
be allocated to the Eligible Parties as the Medical Group may direct in writing
within 30 days after receipt of the Comparison Notice and such allocation shall
be made according to the proportions set forth in such written notice; provided
that if the Medical Group fails to so notify the Management Company, the Excess
shall be allocated equally between Xx. Xxxxxxx and Xx. Xxxxxxx.
EXHIBIT C
AMENDMENT NO. 2 TO MANAGEMENT SERVICES
AGREEMENT dated as of July __, 1997 (the
"Amendment"), between BONE, MUSCLE AND
JOINT, INC., a Delaware corporation (the
"Management Company"), and XXXXXXX AND
XXXXXXX, M.D.'S, P.A. (the "Medical
Group").
Reference is made to the Management Services Agreement dated as of
July 3, 1997, and effective as of June 1, 1997 (the "Management Services
Agreement"). Capitalized terms used but not defined herein have the meanings
ascribed thereto in the Management Services Agreement.
Execution and delivery of this Amendment is a condition to the Management
Company's performance of its obligations set forth in Section 2 of that certain
Amendatory Agreement dated as of July 3, 1997 (the "Amendatory Agreement"),
among the Management Company, the Medical Group, Xxxx Xxxxxxx, M.D., and Xxxxxx
Xxxxxxx, M.D.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
in the Management Services Agreement and the Amendatory Agreement and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Schedule III to the Management Services Agreement is amended and
restated in its entirety to read as set forth in Annex I attached hereto.
2. Except as expressly provided in this Amendment, the Management
Services Agreement remains in full force and effect in accordance with their
respective terms.
3. This Amendment may be executed in more than one counterpart, and by
the parties hereto in separate counterparts, and each such counterpart shall
constitute an original instrument, but all such counterparts taken together
shall constitute one and the same Amendment.
4. This Amendment shall be governed by, construed and interpreted in
accordance with the laws of the State of Florida.
* * * *
IN WITNESS WHEREOF, the undersigned have caused the Amendment to be duly
executed as of the date and year first above written.
BONE, MUSCLE AND JOINT, INC.
By:_____________________________
Name:
Title:
XXXXXXX AND XXXXXXX, M.D.'S, P.A.
By:_____________________________
Xxxx X. Xxxxxxx, M.D.
President
By:_____________________________
Xxxxxx X. Xxxxxxx, M.D.
Secretary
ANNEX I
SCHEDULE III
Equity Participation
In connection with the execution and delivery of this Agreement, the
Management Company is paying an aggregate consideration to the Medical Group of
257,922 shares of Common Stock of the Management Company (the "Practice
Compensation"). In order to accomplish the foregoing, the Company is entering
into a Restricted Stock Agreement with each of the Eligible Parties, pursuant to
which each such Eligible Party shall receive the number of shares set forth in
such agreement (which amount will be designated by the Medical Group in writing
to the Management Company). A portion of the stock consideration (an aggregate
of 4,808 shares of Common Stock) is being paid to an advisor of the Medical
Group in accordance with the schedule below. The Medical Group shall indemnify
and defend the Management Company from and against any and all liabilities,
losses, damages, claims, causes of action and expenses (including reasonable
attorneys' fees and expenses) arising out of or in connection with any claim by
any of the Eligible Parties or any other person with respect to such allocation
of shares.
The Practice Compensation has been determined based upon the assumption
that the Medical Group will achieve aggregate Collections for the calendar year
ending December 31, 1997 (the "Base Year") equal to $3,750,000 (the "Base Year
Collections"). On or before October 31, 1998, the Management Company will notify
(the "Comparison Notice") the Medical Group of its actual aggregate Collections
for the period beginning on the Commencement Date and ending on August 31, 1998
(the "Comparison Period"). In the event that the actual Collections for the
Comparison Period are less than the Base Year Collections (the "Shortfall"), the
Medical Group will be obligated to, and will cause the Eligible Parties to,
return to the Management Company the number of shares (rounded to the nearest
whole number) of Common Stock determined by taking six times 15% of the
Shortfall and dividing that number by $6.50. In the event that the actual
Collections for the Comparison Period are greater than the Base Year Collections
(the "Excess"), the Management Company will be obligated to issue to the Medical
Group the additional number of shares (rounded to the nearest whole number) of
Common Stock determined by taking six times 15% of the Excess and dividing that
number by $6.50. If there is an Excess and the Management Company is required to
issue additional shares of Common Stock to the Medical Group, such shares will
be allocated to the Eligible Parties as the Medical Group may direct in writing
within 30 days after receipt of the Comparison Notice and such allocation shall
be made according to the proportions set forth in such written notice; provided
that if the Medical Group fails to so notify
the Management Company, the Excess shall be allocated equally between Xx.
Xxxxxxx and Xx. Xxxxxxx.
