ASSET PURCHASE AGREEMENT by and among BRUCE WARDLAY, D.O. and FT. WORTH REHABILITATION, INC. and JOEL BROCK and JEFF ALAN KING and ALWYN LORENZO
EXHIBIT
2.7
by
and among
XXXXX
XXXXXXX, D.O.
and
FT.
WORTH
REHABILITATION, INC.
and
XXXX
XXXXX
and
XXXX
XXXX
XXXX
and
XXXXX
XXXXXXX
SCHEDULES
AND EXHIBITS
Exhibit A | Agreement to Transition Management Services |
Exhibit B | Xxxx of Sale |
Exhibit C | Xxxx of Sale-Equipment |
Exhibit D | Form of Non-Competition Agreement |
Disclosure
Schedule
2
THIS
ASSET PURCHASE AGREEMENT (“Asset
Purchase Agreement”),
dated
and effective as of December 12, 2005, is by and among Xxxxx Xxxxxxx, D.O.
(the
“Purchaser”)
on the
one hand and FT. WORTH REHABILITATION, INC., a Texas corporation (collectively,
the “Clinic”),
Xx.
Xxxx Xxxxx, Dr. Xxxx Xxxx Xxxx and Xx. Xxxxx Xxxxxxx (the “Physicians”)
on the
other hand.
R
E C I T
A L S
A. |
The
Physicians are licensed to practice chiropractic medicine in the
State of
Texas. The Physicians currently own and conduct a chiropractic practice
through the Clinic, which is wholly owned by the
Physicians.
|
B. |
The
Physicians are entering in to this agreement to sell and transfer
to the
Purchaser certain assets of the Clinic, including but not necessarily
limited to the accounts receivable and good will of the Clinic, the
right
to business and operational records, the trade names, trademarks
and
service marks used by the Clinic, and protocols and procedures and
other
intellectual property, through the consummation of the transactions
described in this Asset Purchase Agreement.
|
C. |
Concurrently
with this Asset Purchase Agreement, the Purchaser is entering into
a
Master Transaction Agreement (hereinafter defined) with Basic Care
Networks of Texas, LP, a Texas limited partnership, and (ii) an Asset
Purchase Agreement dated an even date herewith for the purchase of
assets
from Rehabilitation Physicians Network, Inc.
|
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
assignee of the Purchaser shall hire employees of the Clinic and
shall
continue to conduct the practice of the Clinic following the closing
of
the transactions under this Agreement.
|
E. |
The
parties to this Asset Purchase 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.
|
NOW,
THEREFORE, in consideration of the mutual agreements contained herein, and
other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
3
ARTICLE
1
DEFINITIONS
For
purposes of this Asset Purchase Agreement, the following terms shall have the
following meanings:
“Accounts
Receivable”
shall
mean, collectively, all accounts and notes receivable, checks, negotiable
instruments and chattel papers, as described in Section 2.1(a) of this Asset
Purchase Agreement.
“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.
“Agreement
to Transition Management Services”
shall
have the meaning set forth in Section 6.13 hereof.
“Asset
Purchase Agreement”
means
this Asset Purchase Agreement.
“Audited
Financial Statements”,
with
respect to the Clinic, shall have the meaning set forth in Section 3.1(d)
hereof.
“Aggregate
Consideration”
shall
have the meaning set forth in Section 3.5 hereof.
“Balance
Sheet Date”
shall
mean September 30, 2005.
“Xxxx
of Sale”
shall
mean the xxxx of sale in the form attached as Exhibit
B
hereto.
“Closing
Date”
shall
have the same meaning as set forth in Section 3.1(a) hereof.
“Closing”
means
the closing of the transactions contemplated by this Asset Purchase
Agreement.
“Code”
means
the Internal Revenue Code of 1986, as amended.
“Contracts”
shall
mean all contracts, commitments, understandings and arrangements between the
Clinic and parties other than parties to this Agreement, that are outstanding
and in effect on the date hereof or at the Closing Date (as applicable),
together with all amendments thereto.
“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 Asset Purchase Agreement, certain
information and exceptions to the representations, warranties and covenants
of
the Physician Parties.
4
“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 4.1(m) hereof.
“ERISA”
shall
have the meaning set forth in Section 4.1(l) hereof.
“Exchange
Act”
shall
mean The Securities Exchange Act of 1934, as amended.
“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.
“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 4.1(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 Basic Care
Networks of Texas, LP, a Texas limited partnership.
“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.
5
“Master
Transaction Agreement”
shall
mean that certain Master Transaction Agreement dated as of December 12, 2005
(as
amended, supplemented or otherwise modified from time to time) by and among
the
Purchaser, 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 and Xxxxx X. Xxxxxxx, D.O.
“Material
Adverse Effect”
means
(i) with respect to the Purchaser, 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 have an adverse effect upon the
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects of the Purchaser in the amount
of
at least twenty-five thousand dollars ($25,000), or (b) to prevent or
materially delay consummation of the Transaction or otherwise to prevent the
Purchaser 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 have an adverse effect
upon the
condition (financial or otherwise), properties, assets (including Assets),
liabilities business, operations, results of operations or prospects of
Physician Parties or the Practice in the amount of at least twenty-five thousand
dollars ($25,000) 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.
“NASD”
means
the National Association of Securities Dealers, Inc.
“NASDAQ”
means
the National Association of Securities Dealers Automated Quotation
System.
“Non-Competition
Agreements”
shall
mean the non-competition agreements substantially in the form attached hereto
as
Exhibit
D,
to be
entered into between the Purchaser or permitted assignee and each of the
Physicians.
“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.
6
“Physician
Indemnified Persons”
shall
have the meaning set forth in Section 10.2 hereof.
“Physician
Parties”
means,
collectively, each of the Physicians and the Clinic.
“Practice”
means
the physical therapy, rehabilitation and all other related health-care practices
conducted from time to time by the Clinic.
“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.
“Purchaser
Indemnified Persons”
shall
have the meaning set forth in Section 10.1(a) hereof.
“Real
Property Lease”
shall
mean the real property lease referenced in Schedule 3.1(u) hereof. “Registration
Statement”
shall
have the meaning set forth in Section 7.1(a) hereof.
“SEC”
shall
mean the Securities and Exchange Commission.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended.
“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.
7
“Termination
Date”
shall
have the meaning set forth in Section 9.4 hereof.
“Transaction”
shall
mean, collectively, the transactions contemplated by this Agreement.
“Transaction
Documents”
means
this Asset Purchase Agreement, the Xxxx of Sale, the Employment Agreements,
the
Non-Competition Agreements, and each other document and instrument required
by
this Asset Purchase Agreement to be executed and delivered at the
Closing.
ARTICLE
2
THE
SALE
AND PURCHASE OF ASSETS
2.1.
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 Purchaser, and the Purchaser 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 (hereinafter defined) 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 Physicians or Clinic and financial records of the Physicians (the
“Books
and Records”);
provided, however, that the Purchaser shall make all such books and records
available to the Physicians 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;
(f) Telephone
Numbers.
All
telephone numbers used by the Clinic in the operation of its business; and
(g)Equipment.
All
furnishings, fixtures, motor vehicles, and other equipment owned by the Clinic
including, without limitation all medical and physical therapy equipment.
8
2.2.
Excluded
Assets.
Notwithstanding Section 2.1, the following assets of Clinic (the
“Excluded
Assets”)
shall
not be included in the Assets:
(a)
Deposits.
Any
deposits, advances, rebates, credits or claims related to any Excluded Liability
(as hereinafter defined);
(b) 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 the Clinic or the Physicians immediately prior to
the
Closing Date;
(c) Certain
Debt.
Any
intercompany or intracompany receivables between Clinic and any of its
Affiliates or between any of its Affiliates; and
(d) Real
Estate.
Any
real property owned by the Clinic.
2.3.
Excluded
Liabilities.
The
Purchaser is not assuming any liabilities or obligations of the Clinic (fixed
or
contingent, known or unknown, matured or unmatured) whatsoever.
2.4.
Instruments
of Conveyance and Transfer, Etc.
At the
Closing, the Clinic shall deliver (or cause to be delivered) to the Purchaser
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 Purchaser, in accordance
with the terms hereof, title to the Assets, free and clear of all Encumbrances,
including, without limitation, the delivery of Bills of Sale (the “Bills
of Sale”)
substantially in the form of Exhibit
B and Exhibit C.
Simultaneously therewith, the Clinic shall take all steps as may be reasonably
required to put the respective assignees of the Purchaser in possession and
operating control of the Assets.
2.5.
Right
of Endorsement, Etc.
Effective upon the Closing, the Clinic hereby constitutes and appoints the
Purchaser and its successors and assigns, the true and lawful attorney-in-fact
of the Clinic with full power of substitution, in the name of the Purchaser,
or
the name of the Clinic, on behalf of and for the benefit of the Purchaser,
to
collect all accounts receivable assigned to the Purchaser 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
Purchaser 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 Purchaser 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.
9
2.6.
Further
Assurances.
The
Clinic shall pay or cause to be paid to the Purchaser 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 Purchaser, 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 Purchaser the Assets being purchased by the Purchaser
hereunder. Nothing in this Agreement shall be interpreted to permit or imply
that the Purchaser shall have any control over the Excluded Assets or Excluded
Liabilities.
ARTICLE
3
CLOSING
3.1
Closing.
(a)
The
Closing shall take place simultaneously with the “Closing Date” as set forth in
the Master Transaction Agreement. The Purchaser agrees to provide reasonable
notice to the Physicians of the anticipated date of Closing. The date on which
the Closing occurs is hereinafter referred to as the “Closing
Date.”
At
the
Closing, the Clinic shall execute and deliver the Bills of Sale in the form
attached as Exhibit
B
and
Exhibit
C
hereto,
including each of the closing deliverables set forth in this Asset Purchase
Agreement.
(b)
The
Closing shall take place at the offices of Xxxxxx Financial, LLP, 00000 Xxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx, or at such other location mutually agreed
by
the parties, on the Closing Date.
3.2
Deliveries
to the Purchaser at the Closing.
At the
Closing, and simultaneously with the deliveries to the Physician Parties
specified in Section 3.3 hereof, and in addition to any other deliveries
required to be made to the Purchaser pursuant to any other Transaction Document
at the Closing, the Physician Parties (as applicable) shall deliver or cause
to
be delivered to the Purchaser the following:
(a)
the
Bills
of Sale, duly executed by the Clinic;
(b)
a
Non-Competition Agreement duly executed by each of the Key Persons;
10
(c)
an
Agreement to Transition Management Services duly executed by the parties
thereto;
(d)
written
evidence reasonably satisfactory to the Purchaser documenting the termination
of
existing real property leases to which the Clinic is 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
Purchaser and as are customarily delivered in connection with transactions
of
the type contemplated herein.
3.3
Deliveries
to the Physician Parties at the Closing.
At the
Closing, and simultaneously with the deliveries to the Purchaser 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
Purchaser shall deliver or cause to be delivered to the Physician Parties the
following:
(a)
all
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
(b)
the
consideration required to be delivered by the Purchaser at the Closing pursuant
to the Transaction Documents.
3.4
Payment
of Consideration.
At the
Closing, after the occurrence of the events described above in this Article
3,
and the satisfaction of each condition set forth in Article 8, as full
consideration for the sale, assignment, transfer and delivery of the Assets
of
the Clinic and the mutual execution and delivery of the Transaction Documents,
the Purchaser shall deliver to the Clinic at the Closing in immediately
available funds the aggregate consideration (“Aggregate
Consideration”)
of One
Hundred Fifty Thousand and no/100 Dollars ($150,000.00).
3.5
Noncompetition
and Confidentiality Covenants.
In
connection with the consummation of the transactions contemplated by this Asset
Purchase Agreement, and by executing and delivering certain of the other
Transaction Documents, the Physicians will be entering into certain
non-competition and confidentiality covenants. The Physicians recognize that
such covenants are an essential part of the transactions contemplated by this
Asset Purchase Agreement and certain other Transaction Documents and that,
but
for the contemplated agreement of the Physician Parties to comply with such
covenants, the Purchaser would not have entered into this Asset Purchase
Agreement.
11
3.6 Allocation
of Purchase Price.
Purchaser
and the Clinic agree to cooperate in the preparation of Form 8594 - Asset
Acquisition Statement in accordance with the allocation of purchase price set
forth in this Agreement and to timely file such form with the Internal Revenue
Service in accordance with applicable law. That portion of the purchase price
allocated to the equipment shall be equal to the depreciated value as reflected
on the Interim Financial Statements (hereinafter defined).
ARTICLE
4
REPRESENTATIONS
AND WARRANTIES OF THE PHYSICIAN PARTIES
4.1
Representations
and Warranties of the Physician Parties.
The
Physician Parties jointly and severally represent and warrant to the Purchaser
that:
(a)
Organization,
Valid Authorization and Good Standing.
The
Clinic is a Texas corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. The Clinic has the corporate
power and authority to own all of its properties and assets and to conduct
the
Practice. The Clinic 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 the Clinic
is a
party and the consummation of the transactions contemplated thereby have been
duly and validly authorized by the Clinic, and no other corporate or other
proceedings on the part of the Clinic is necessary to authorize the execution
and delivery of such Transaction Documents and the transactions contemplated
thereby. This Asset Purchase Agreement has been duly and validly executed and
delivered by the Clinic and constitutes the valid and binding agreement of
the
Clinic enforceable against it in accordance with its terms. Each Transaction
Document executed and delivered by the Clinic will upon such execution and
delivery constitute the valid and binding agreement of the Clinic 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 Clinic and Rehabilitation Physicians Network, Inc.
and
except as set forth in the Disclosure Schedule, the Physicians do not own any
shares of capital stock or other securities of, or control, directly or
indirectly, any other Entity which provides medical services.
(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 the Clinic will not (i) violate any provision of its 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 Clinic is
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
the
Clinic 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
Clinic or its properties are or will be subject
12
(c)
Approvals.
To the
best of Physician Parties’
knowledge, except as set forth on the Disclosure Schedule, 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 Clinic or the
consummation by such Clinic of the transactions contemplated thereby.
(d)
Financial
Statements.
The
Clinic has furnished to the Purchaser such Clinic’s 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”),
consisting of a balance sheet, the related statements of income and changes
in
stockholders’ equity.
(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 the Clinic giving rise to any liability, except as
set
forth on the Financial Statements of the Clinic, or on the Disclosure Schedule.
(f)
Absence
of Changes or Events.
Except
as set forth on the Disclosure Schedule, since the Balance Sheet Date, the
Clinic has conducted its Practice only in the ordinary course of business,
and
Clinic has not:
(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 the Clinic;
(iv)
suffered
any damage, destruction or loss that, individually or in the aggregate, has
had
or might have a material adverse effect on the 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
the Clinic and its Practice;
13
(vii)
failed
to
pay any accounts or note payable or any other obligations on a timely basis
consistent with the practice of the Clinic;
(viii)
except
as
contemplated in this Asset Purchase Agreement and the related Transaction
Documents, entered into any material transaction, contract or commitment other
than in the ordinary course of the business of the 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 Parties’ 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.
(h)
Compliance
with Laws.
To the
best of the Physician Parties’ knowledge, the Clinic has all permits, licenses,
orders, and approvals of all Governmental Authorities necessary for the conduct
of its Practice in conformity with all applicable Legal Requirements. 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 the Clinic 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 the Clinic, including without
limitation, agencies concerned with occupational safety, environmental
protection, employment practices, and Medicare and Medicaid requirements
applicable to the billing procedures of the Clinic (except denials of claims
in
the ordinary course of business).
14
(i)
Insurance.
To the
best knowledge of the Physician Parties, all insurance policies maintained
by
the Clinic or the Physicians in connection with the operation of the Practice
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.
Except
as set forth on the Disclosure Schedule, the Clinic is not a party to any
Contract that may not be terminated by either party to such contract on thirty
days notice. The Clinic has made available to the Purchaser 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.
(l)
Employee
Benefit Plans.
Except
as set forth on the Disclosure Schedule, neither the Clinic 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
the Clinic (“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 the Clinic 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 the Clinic pursuant to Section
412(c)(11) of the Code or Section 302(c)(11) of ERISA. Neither the Clinic 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 the Clinic to the Pension Benefit Guaranty Corporation or
that
would result in the imposition of a lien on any assets of the Clinic pursuant
to
Section 4068 of ERISA.
15
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 the Clinic 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 the 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, the Clinic 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 Asset Purchase
Agreement. To the best of the Physician Parties’ knowledge neither the Clinic
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 Clinic 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 the Clinic, 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 the Clinic, or which could be
material to the business, financial condition or results of operations of the
Clinic. The Clinic does not maintain a welfare benefit plan (as defined in
Section 3(1) of ERISA) that provides for or promises retiree medical, disability
or life insurance benefits to any current or former employee, officer or
director of the Clinic 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 the Clinic 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. The
Clinic 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 Purchaser 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.
(m)
Environmental
Protection.
To the
best of the Physician Parties’ knowledge the Clinic 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 the Clinic 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 the Clinic 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 Clinic, 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.
16
(p)
Employees
and Consultants.
(i) Employees
and Contracts.
No
employee of the Clinic has been granted the right to continued employment by
the
Clinic or to any material compensation following termination of employment
with
the Clinic. Physician Parties have no knowledge that any officer, director,
employee or consultant of the Clinic (collectively, the “Contractors”)
intends to terminate his or her employment or other engagement with the 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.
The
Clinic has not 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 the 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 the Clinic has no
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 the Clinic is in full compliance with
the Worker Readjustment and Notification Act (the “WARN
Act”)
(29
USC §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.
17
(vi)
Unions.
The
Clinic does not have any collective bargaining agreement 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
the
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.
(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.
All
Supplies are being sold hereunder “as is.”
18
(t)
Title,
Sufficiency of Assets.
The
Clinic is the exclusive legal and equitable owner of, and has the unrestricted
power and right to sell, assign and deliver the Assets of the Clinic. The Assets
are free and clear of all Encumbrances.
(u)
Real
Property Lease.
Schedule 3.1(u)
sets
forth an accurate, correct and complete list of all locations leased by the
Clinic (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). To the best of the Physician Parties’ knowledge, the 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. The Clinic or the
Physicians have delivered to the Purchaser accurate, correct and complete copies
of each real property lease. The Clinic is 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 Clinic from possession of the covered premises.
(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 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.
19
(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.
(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 Purchaser being
bound
by, or subject to, any non-compete or other restriction on the operation or
scope of its businesses, including the Practice; or (B) the Purchaser 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
Asset Purchase Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to the Purchaser in accordance with this Asset Purchase 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.
4.2
Representations
and Warranties of the Physicians.
The
Physicians jointly and severally represent and warrant to the Purchaser
that:
(a)
Valid
Authorization.
The
Physicians have full power, capacity and authority to enter into the Transaction
Documents to which such Physician is a party and to carry out his obligations
thereunder. This Asset Purchase Agreement has been duly and validly executed
and
delivered by the Physicians and constitutes the valid and binding agreement
of
Physicians enforceable against them in accordance with its terms. Each
Transaction Document executed and delivered at the Closing by the Physicians
will upon such execution and delivery constitute the valid and binding agreement
of the Physicians enforceable against the Physicians 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.
20
(b)
Compliance.
To the
best of the Physicians 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 the Physicians 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 any of the Physicians are
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
Physicians 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 Physicians or the property of the Physicians are subject.
(c)
Approvals.
To the
best of the Physicians’ 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 Physicians or the consummation by the Physicians
of
the transactions contemplated thereby.
(d)
Litigation.
To the
best of the Physicians’ knowledge, except as disclosed on the Disclosure
Schedule, there are no claims, actions, suits or proceedings (arbitration or
otherwise) pending or, to the Physicians’ knowledge, threatened against any of
the Physicians at law, or in equity, in any court or before or by any
Governmental Authority arising out of or otherwise relating to the Physicians’
practice of medicine, and to Physicians’ 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 Physicians’ knowledge none of the Physicians
are in default in respect of any judgment, order, writ, injunction or decree
of
any court or other Governmental Authority known to the Physicians. 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 Physicians or of the Clinic within
the last five (5) years.
(e)
Permits.
To the
best of the Physicians’ knowledge, the Physicians have all permits, licenses,
orders and approvals of all Governmental Authorities necessary to perform the
services performed by the Physicians in connection with the conduct of the
Practice. To the best of the Physicians’ 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 Physicians 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.
21
(f)
Brokers.
To the
best of the Physicians’ 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 Physicians 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 Physicians in this Asset
Purchase Agreement or any of the exhibits or schedules hereto, or any
agreements, certificates, documents or instruments delivered or to be delivered
to the Purchaser in accordance with this Asset Purchase 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. The Physicians disclaim any representations, opinions, forecasts,
predictions, agreements or promises with respect to the value of the Clinic
and
their business and with respect to the past and future profitability of the
Clinic.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
5.1
Representations
and Warranties of the Purchaser.
The
Purchaser represents and warrants to the Physicians that:
(a)
Valid
Authorization.
The
Purchaser has the power and authority to enter into the Transaction Documents
to
which it is a party and to carry out its obligations thereunder. This Asset
Purchase Agreement has been duly and validly executed and delivered by the
Purchaser and constitutes the valid and binding agreement of the Purchaser
enforceable against the Purchaser, in accordance with its terms. Each
Transaction Document executed and delivered at the Closing by the Purchaser
will
upon such execution and delivery constitute the valid and binding agreement
of
the Purchaser, enforceable against the Purchaser in accordance with its
terms.
(b)
Compliance.
To the
Purchaser’s knowledge, the execution and delivery of the Transaction Documents
and the consummation of the transactions contemplated thereby by the Purchaser
will not 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 Purchaser is a party.
22
(c)
Approvals.
To the
Purchaser’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 Purchaser or the consummation by the Purchaser
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)
Litigation.
Except
as disclosed on the Disclosure Schedule, there are no claims, actions, suits,
proceedings (arbitration or otherwise) or investigations pending or, to the
Purchaser’s knowledge, threatened against the Purchaser at law or in equity in
any court or before or by any Governmental Authority, and, to the Purchaser’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 Purchaser is not in default in respect of
any
judgment, order, writ, injunction or decree of any court or other Governmental
Authority.
(e)
Brokers.
To the
Purchaser’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 Purchaser in such manner
as
to give rise to any valid claim for any broker’s or finder’s fee or similar
compensation.
ARTICLE
6
PRE-CLOSING
COVENANTS OF CLINICS AND THE PHYSICIAN
6.1
Conduct
of Business.
From
the date hereof to the Closing, except with the prior written consent of the
Purchaser, or except as otherwise provided for in this Asset Purchase Agreement,
the Clinic will, and the Physicians will use their best efforts to cause each
of
the Clinic 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;
23
(e)
comply
with all statutes, laws, ordinances, rules and regulations applicable to it
and
to the conduct of its business;
(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 Purchaser 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 the
Clinic;
(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 the Clinic, 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 with respect to the 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; and
(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).
6.2
Access
to Information and Records Before Closing.
The
Purchaser and its permitted assignee may, at their 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 the Clinic and of its
financial and legal condition as the Purchaser deems necessary or advisable
to
familiarize itself with such matters. The Clinic shall permit the Purchaser
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 the Clinic and of the Practice, at reasonable business hours, and
will cause its employees to furnish the Purchaser with such financial and
operating data and other information and copies of documents with respect to
the
services, operations and properties of the Clinic and the Practice as the
Purchaser may from time to time request.
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6.3
No
Solicitation.
Until
the earlier of (a) the Closing or (b) the termination of this Asset
Purchase 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 Asset Purchase
Agreement pursuant to its terms, the Physicians are approached in any manner
by
a third party concerning a Competing Transaction (a “Competing
Party”),
the
Physicians shall promptly inform Purchaser regarding such contact and furnish
Purchaser 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
Physicians shall keep the Purchaser informed of the status and details of any
future notices, requests, correspondence or communications related
thereto.
6.4
Certain
Notifications.
From
the date of this Asset Purchase Agreement until the Closing, the Physicians
shall promptly notify the Purchaser 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
25
(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
8
of this
Agreement.
6.5
Updating
the Disclosure Schedule.
If any
event, condition, fact or circumstance that is required to be disclosed pursuant
to Section 6.4 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 Physicians
shall promptly deliver to the Purchaser an update to the Disclosure Schedule
specifying such change and shall use its best efforts to remedy same, as
applicable.
ARTICLE
7
ADDITIONAL
AGREEMENTS
7.1
Purchaser
Registration Statement; Other Action.
(a) The
Physician Parties shall use reasonable efforts to cooperate with the Purchaser’s
permitted assignee(s) in the preparation of its registration statement on Form
S-1 (or other appropriate Form) to be filed by the assignee with the SEC under
the Securities Act in connection with the Initial Public Offering (including
the
prospectus constituting a part thereof, the “Registration
Statement”).
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 Purchaser or its permitted assignee, factual information
specifically regarding the Clinic and its 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 Purchaser 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 the Clinic’s 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 Purchaser, the Affiliates of the Purchaser, 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 Clinic
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.
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7.2
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 8 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 Asset Purchase 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 Asset Purchase 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.
7.3
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 8.
7.4
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 Disclosure Schedule
with respect to any matter that would have been or would be required to be
set
forth or described in the Disclosure Schedule in order to not materially breach
any representation, warranty or covenant of such party contained herein;
provided that no amendment or supplement to the Disclosure Schedule that
constitutes or reflects, individually or in the aggregate, a Material Adverse
Effect to the Practice or the Assets may be made unless the Purchaser consents
to such amendment or supplement, and no amendment or supplement to the
Disclosure Schedule that constitutes or reflects a Material Adverse Effect
to
the Purchaser may be made unless the Physicians and the Clinic 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 8.1, 8.2 and 8.3 have been fulfilled, the Disclosure Schedule hereto
shall be deemed to be the Disclosure Schedule as amended or supplemented
pursuant to this Section 7.4. In the event that the Physician Parties seek
to
amend or supplement the Disclosure Schedule pursuant to this Section 7.4 and
the
Purchaser does not consent to such amendment or supplement, or the Purchaser
seeks to amend or supplement the Disclosure Schedule pursuant to this Section
7.4 and Physicians and the Clinic do not consent, this Agreement shall be deemed
terminated by mutual consent.
27
7.5
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 Asset
Purchase 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.
7.6
Reasonable
Efforts; Further Assurances; Cooperation.
Subject
to the other provisions of this Asset Purchase 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 Asset Purchase Agreement.
7.7 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.
7.8
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 Asset Purchase
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 Asset Purchase 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.
28
7.9
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 permitted assignee of the Purchaser to evaluate and
hire
at its discretion, the personnel (including both medical and non-medical staff)
who were employed by the Clinic prior to the Closing.
7.10 Agreement
to Provide Information.
Physicians agree, either directly or through his accountant, to provide
information concerning the Assets reasonably requested by the Purchaser or
its
permitted assignee, as necessary for the preparation and filing of such party’s
Tax returns.
7.11 Maintenance
of Patient Records.
The
Purchaser and its permitted assignee 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 HIPAA rules.
7.12 Employee
Information.
In
order to facilitate the selection and hiring of employees of the Clinic by
a
professional association to be designated by the Purchaser or permitted
assignee, on or prior to the Closing Date, the Physician Parties shall use
their
reasonable efforts to provide the Purchaser and its permitted assignee, at
the
reasonable request of the Purchaser or permitted assignee, an accurate list
of
(i) all employees of the Clinic, 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 the Clinic
related to the Practice who are classified as “consultants” or “independent
contractors.”
7.13 Transition
of Management Services.
The
Physician Parties agree and acknowledge that the Clinic will terminate its
existing management services arrangement with Myers, Trager, Do Management
Consulting, LLC. Accordingly, the Physician Parties shall enter into the
Agreement to Transition Management Services in the form attached hereto as
Exhibit
A
hereto
(“Agreement
to Transition Management Services”).
7.14 Termination
of Lease.
The
Physician Parties agree to execute any and all documents requested by the
Purchaser (or its permitted assignee) prior to the Closing Date, in order to
effectively terminate its existing real property lease(s) as of the Closing
Date.
29
ARTICLE
8
CONDITIONS
8.1
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 a professional association
designed by the Purchaser or assignee to own and operate a 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 a
professional association to be designated by the Purchaser or its permitted
assignee to own and operate a medical practice.
8.2
Conditions
Precedent to the Obligations of the Purchaser.
The
obligations of the Purchaser 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 Asset Purchase Agreement,
the representations and warranties of the Physician Parties contained in this
Asset Purchase 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;
(c)
since
the
date of this Asset Purchase 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 the Clinic or the Practice;
30
(d)
the
Purchaser shall have received all of the instruments, documents and other items
described in Section 3.2 hereof;
(e)
the
Physician Parties shall have agreed, and such agreement shall continue to be
in
effect, to terminate all real property leases to which the Clinic is a party
as
of the Closing Date; and
(f)
the
Purchaser and its permitted assignee shall have received all information
reasonably requested from the Physician Parties with respect to employees of
the
Clinic, in connection with its evaluation of employees of the
Clinic.
8.3
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 Asset Purchase Agreement
and, the representations and warranties of the Purchaser contained in this
Asset
Purchase 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
Purchaser 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 Asset Purchase 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 Purchaser; and
(d)
the
Physician Parties shall have received from the Purchaser all of the instruments,
documents and other items described in Section 8.3 hereof.
ARTICLE
9
TERMINATION
9.1
Termination
by Mutual Agreement.
If the
Master Transaction Agreement shall terminate, or the transactions contemplated
in the Master Transaction Agreement shall fail to close for any reason, this
Asset Purchase Agreement shall automatically terminate.
31
9.2
Termination
by the Purchaser.
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 Asset
Purchase Agreement or the other Transaction Documents and such failure has
not
been or cannot be cured to the reasonable satisfaction of the Purchaser 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 3.2; or (d) any of the
conditions set forth in Sections 8.1 or 8.2 shall not have been satisfied in
any
respect (and such failure cannot be cured to the reasonable satisfaction of
the
Purchaser prior to Closing) or waived in writing by the Purchaser, all
obligations of the Purchaser under this Asset Purchase Agreement may be
terminated by the Purchaser.
9.3
Termination
by the Physician Parties.
If at
any time prior to or at the Closing (a) the Purchaser 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 Asset Purchase 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 Purchaser contained
herein or in any of the other Transaction Documents is false or misleading
in
any material respect; (c) the Purchaser shall fail to make any deliveries
specified in Section 3.3; or (d) any of the conditions set forth in Sections
8.1
or 8.3 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 Asset Purchase Agreement (other than their obligations under
Sections 7.7 and 7.8) may be terminated by the Physician Parties.
9.4
Termination
Date.
Unless
terminated by mutual agreement of the parties prior to Closing, this Asset
Purchase Agreement shall terminate upon the first to occur of the following
events: (a) a date mutually agreed in writing by the Purchaser and the Physician
Parties on which this Agreement shall terminate, or (b) 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 Asset Purchase
Agreement by the Purchaser on the one hand, or any of the Physician Parties,
on
the other, this Asset Purchase 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 Asset Purchase Agreement pursuant to the provisions
of
this Section, a party that is not in material breach of this Asset Purchase
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.
32
ARTICLE
10
INDEMNIFICATION
10.1
Indemnification
by the Physician Parties.
(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 Purchaser and its permitted assignee,
and their respective officers, directors, employees and shareholders
(collectively, the “Purchaser
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
Purchaser 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 Asset Purchase Agreement;
(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 the Clinic 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 Purchaser Indemnified Parties harmless from and against any Indemnity
Losses asserted against or suffered or incurred by any of the Purchaser
Indemnified Parties and resulting from any material misrepresentation in or
material breach of any representation of the Physicians contained in Section
4.2
hereof or from the failure of the Physicians to perform any of the Physicians’
covenants or obligations contained in the Non-Competition Agreements. In each
of
these cases, the Physicians shall severally and not jointly indemnify, defend
and hold the Purchaser and its permitted assignee harmless from and against
all
Indemnity Losses asserted against or suffered or incurred by any of the
Purchaser Indemnified Parties and resulting from any material misrepresentation
in or material breach of such representations of the Physicians or its permitted
assignee or from the failure of the Physicians or permitted assignee to perform
any of such covenants or obligations.
33
10.2
Indemnification
by the Purchaser.
Subject
to the limitations set forth in Section 10.6, the Purchaser and its permitted
assignee hereby agree 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
Purchaser or the failure of the Purchaser or permitted assignee to perform
any
of their respective covenants or obligations contained in this Asset Purchase
Agreement or in the Asset Purchase Agreements;
(b)
the
use
of the Assets after the Closing and the conduct of business by the Purchaser’s
permitted assignee after the Closing; or
(c) the
Initial Public Offering or any document filed by Purchaser, any permitted
assigns of Purchaser, or any Affiliate thereof as required by the Securities
Act, the Exchange Act, or any state securities or blue sky laws unless, and
then
only to the extent that, the Indemnity Loss arises out of or is based upon
written information furnished by the Physician Parties that contains an untrue
statement or omits to state a material fact necessary to make the statements
therein not misleading.
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.
34
10.4
Defense
of Third Party Claim.
(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 Purchaser 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.
35
(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 Asset Purchase Agreement
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
Asset
Purchase 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.
10.6
Damages;
Limitations.
Notwithstanding anything contained to the contrary in this Asset Purchase
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)
Notwithstanding anything herein to the contrary, neither party shall be
obligated to indemnify the other under this Article 10
in
excess of the amount of the Aggregate Consideration.
(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 4.1(j))
and associated indemnities with respect to tax matters, and representations,
warranties and associated indemnities with respect to environmental matters
(Section 4.1(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 Asset Purchase Agreement prior
to
the expiration of any such survival period.
36
(c)
Notwithstanding anything herein to the contrary, the Physician Parties shall
not
be obligated to indemnify the Purchaser Indemnified Persons under this
Article 10:
(i) unless the aggregate of all Indemnity Losses of the Purchaser
Indemnified Persons exceeds Ten Thousand Dollars ($10,000) (the “Seller’s
Basket”),
in
which case the Purchaser Indemnified Persons 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
Purchaser’s or Purchaser’s permitted assignee’s right to seek injunction or
other equitable relief for a Physician Party’s breach of any provision set forth
in the Non-Competition Agreement.
(d)
Notwithstanding anything herein to the contrary, the Purchaser or its permitted
assignee 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
MISCELLANEOUS
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.
11.2
Remedies
Not Exclusive.
No
remedy conferred by any of the specific provisions of this Asset Purchase
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 Asset Purchase 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.
11.4
Parties
Bound.
Except
to the extent otherwise expressly provided herein, this Asset Purchase 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 Asset Purchase 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 Purchaser, addressed to:
Xx.
Xxxxx
Xxxxxxx
00000
Xxxxxxx Xxxx, 000X
Xxxxxxxxx,
XX 00000
e-mail:
xxxxxxxxxxx@xxxxxxx.xxx
Facsimile:
(000) 000-0000
With
copies to:
Xxxxxx
X.
Xxxxxxxx, CEO
Basic
Healthcare Networks of Texas, L.P.
0000
Xxxxxxxxx Xxx, Xxxxx 000
Xxxxxx
Xxx Xxx, Xxxxxxxxxx 00000
Facsimile:
(000) 000-0000
If
to
the Physician Parties, addressed to:
Dr.
Xxxx
Xxxx Xxxx
Fort
Worth Rehabilitation Center
000
X.
Xxxxxxxx Xxxxx
Xxxx
Xxxxx, Xxxxx 00000
Facsimile:
_____________
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.
37
11.6
Choice
of Law; Arbitration.
(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.
(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
Asset Purchase 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 Asset Purchase Agreement shall be binding unless
it shall be specifically designated to be a supplement, modification or waiver
of this Asset Purchase Agreement and shall be executed in writing by the party
to be bound thereby. No waiver of any of the provisions of this Asset Purchase
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Asset Purchase 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.
38
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 Asset Purchase 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 Asset Purchase Agreement as may be
necessary to make them lawful under then-applicable laws and regulations,
without materially disadvantaging either party.
11.9
Assignment.
This
Asset Purchase Agreement may not be assigned by operation of law or otherwise
except that the Purchaser shall have the right to assign all or a portion of
its
rights under this Asset Purchase Agreement, including its rights, proceeds,
rights to receive and obtain title to assets, claims and benefits of the
Purchaser hereunder, to Basic Health Care Networks of Texas, L.P. or its
affiliates and/or BEW Financing, LP or its affiliates.
11.10
Attorneys’
Fees.
Except
as otherwise specifically provided herein, if any action or proceeding is
brought by any party with respect to this Asset Purchase 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 Asset Purchase
Agreement.
39
11.12
Announcements
and Press Releases.
Any
press releases or any other public announcements concerning this Asset Purchase
Agreement or the other Transaction Documents shall be approved by the
Purchaser.
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
Asset Purchase 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 Asset Purchase Agreement.
11.16
Severability.
Each
article, section, subsection and lesser section of this Asset Purchase Agreement
constitutes a separate and distinct undertaking, covenant or provision hereof.
In the event that any provision of this Asset Purchase Agreement shall finally
be determined to be unlawful, such provision shall be deemed severed from this
Asset Purchase Agreement, but every other provision of this Asset Purchase
Agreement shall remain in full force and effect.
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 Survival.
Sections 7.7 and 7.8 shall survive the termination of this Agreement for two
(2)
years.
11.19 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]
40
IN
WITNESS WHEREOF, the parties have caused this Master Transaction Agreement
to be duly executed as of ___________, 2005.
PURCHASER: | ||
|
|
|
By: | /s/ Xxxxx Xxxxxxx | |
Xxxxx Xxxxxxx |
||
PHYSICIANS: | ||
|
|
|
/s/ | Xx. Xxxx Xxxxx | |
Xx. Xxxx Xxxxx, an individual |
||
|
|
|
/s/ | Dr. Xxxx Xxxx Xxxx | |
Dr. Xxxx Xxxx Xxxx, an individual |
||
|
|
|
/s/ | Xx. Xxxxx Xxxxxxx | |
Xx. Xxxxx Xxxxxxx |
||
CLINIC: | ||
FT. WORTH REHABILITATION , INC. | ||
|
|
|
By: | /s/ Dr. Xxxx Xxxx Xxxx | |
Dr. Xxxx Xxxx Xxxx |
||
President |
41
EXHIBIT
A
AGREEMENT
TO TRANSITION MANAGEMENT SERVICES
THIS
AGREEMENT TO TRANSITION MANAGEMENT SERVICES (“Agreement”)
is
dated December __, 2005, and is made by and between REHABILITATION PHYSICIANS
NETWORK, INC. (“RPN”),
FT.
WORTH REHABILITATION, INC. (“FWR”), MYERS, TRAGER, DO MANAGEMENT CONSULTING,
LLC., d.b.a. Texas Physicians Network (“TPN”)
and
Xx. Xxxxx Xxxxxxx, D.O. (“Purchaser”).
WHEREAS,
RPN owns and operates a chiropractic and physical therapy practice located
at
0000 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx, Xxxxx 00000.
WHEREAS,
FWR owns and operates a chiropractic and physicial therapy practice located
at
000 Xxxx Xxxxxxxx Xxxxx, Xx. Xxxxx, Xxxxx 00000. RPN and FWR are collectively
referred to as the “Clinics”.
WHEREAS,
TPN is a consulting group that provides medical management services, among
other
professional services.
WHEREAS,
TPN and RPN are parties to a Management Services Agreement dated _______, 2000
(the “RPN
Management Services Agreement”),
and
TPN and FWR are parties to a Management Services Agreement dated _______, 2000
(the “FWR
Management Services Agreement”),
under
which TPN provides medical management services to RPN and FWR, respectively,
for
compensation (collectively, the “Management
Services Agreements”).
WHEREAS,
it is contemplated that RPN and FWR will enter into an agreement to sell certain
assets to the Purchaser pursuant to Asset Purchase Agreements dated December
__,
2005 (the “Asset
Purchase Agreements”),
a
portion of which assets will be assigned to Basic Health Care Networks of Texas,
L.P. (“Basic Care”) as a part of a series of transactions involving the
acquisition by Basic Care of certain assets of clinics owned and operated by
the
Purchaser, and the filing of a registration statement for a public offering
by
Basic Care.
WHEREAS,
the parties are entering into this Agreement as a condition of closing under
the
Asset Purchase Agreements.
NOW,
THEREFORE, in consideration of the mutual agreements contained herein, and
other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:
42
1.
Termination
of Management Services Agreement.
(a)
TPN
and
RPN agree that, effective as of the Closing Date and expressly conditioned
upon
occurrence of the Closing, the RPN Management Services Agreement shall
terminate.
(b)
TPN
and
FWR agree that, effective as of the Closing Date and expressly conditioned
upon
occurrence of the Closing, the FWR Management Services Agreement shall
terminate.
(c)
TPN
agrees to assign, convey or transfer all receivables, notes, and indebtedness
outstanding on the Closing Date and arising from the Management Services
Agreements, to the Purchaser or its permitted assignee at the Closing.
2.
Consideration.
At the
Closing, as full consideration for the covenants and agreements herein, and
the
mutual execution and delivery of the Transaction Documents to which TPN is
a
party, the Purchaser shall deliver at the Closing the consideration referenced
in that certain Termination of Management Services Agreements dated of even
date
herewith by and between TPN, Xxxxxx-Xxxxx Management Consulting, LLC, Purchaser
and various clinics owned by Purchaser.
3.
Registration
Statement; Other Action.
(a)
TPN
shall
use reasonable efforts to cooperate with the Purchaser and its permitted
assignee in the preparation of a registration statement on Form S-1 (or other
appropriate Form) to be filed by the assignee of the Purchaser with the SEC
under the Securities Act in connection with its initial public offering
(including the prospectus constituting a part thereof, the “Registration
Statement”).
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)
TPN
agrees to use its reasonable efforts to promptly furnish, upon request of the
Purchaser or its permitted assignee, factual information specifically regarding
the Clinics and their practices 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 Purchaser or its
permitted assignees 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)
TPN
represents and warrants that to its best knowledge, the Clinic Information,
when
furnished by the Physician Parties (as defined in the Asset Purchase
Agreements), 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 Purchaser or
its
permitted assignees, the Affiliates of the Purchaser, 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 their
practices. 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.
43
4.
Expenses.
Except
as provided in this Agreement, each party shall bear its own expenses in the
execution, delivery and performance of this Agreement.
5.
Parties
Bound.
Except
to the extent otherwise expressly provided herein, this 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.
6.
Notices.
All
notices, reports, records or other communications that are required or permitted
to be given to the parties under this 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
TPN, addressed to:
Xxxx
Xxxxxx
Trager,
Myers, Do Management Consulting, L.P.
[address]
[fax]
If
to
RPN or FWR, addressed to:
Dr.
Xxxx
Xxxx Xxxx
North
Texas Rehabilitation Center
0000
Xxxx
Xxxxxx (xxxxx xxxxx)
Xxxxxx,
XX 00000
Facsimile:
_____________
If
to
the Purchaser, addressed to:
Xx.
Xxxxx
Xxxxxxx
00000
Xxxxxxx Xxxx, 000X
Xxxxxxxxx,
XX 00000
e-mail:
xxxxxxxxxxx@xxxxxxx.xxx
Facsimile:
(000) 000-0000
With
copies 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
44
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.
7.
Choice
of Law; Arbitration.
(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.
45
(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. Entire
Agreement; Amendments and Waivers.
This
Agreement, together with other agreements and transactions referenced herein,
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 Agreement
shall be binding unless it shall be specifically designated to be a supplement,
modification or waiver of this Agreement and shall be executed in writing by
the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
No
waiver of any of the provisions of this 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.
10. Assignment.
The
Agreement may not be assigned by operation of law or otherwise except that
the
Purchaser shall have the right to assign this Agreement, including all rights,
proceeds, claims and benefits of the Purchaser hereunder, to Basic Health Care
Networks of Texas, L.P. or its affiliates. No such assignment shall relieve
the
Purchaser of its obligations hereunder.
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 this Agreement or as shall be reasonably
necessary in connection with the carrying out of the parties’ respective
obligations hereunder or the purposes of this Agreement.
46
12.
Announcements
and Press Releases; 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 the Master Transaction
Agreement and the transactions contemplated thereby of any Governmental Entity)
or by other requirements of law, 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 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. Any press releases
or any other public announcements concerning this Agreement or the other
transactions references herein shall be approved by the Purchaser.
13.
Multiple
Counterparts.
This
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.
14.
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 Agreement.
15.
Severability.
Each
article, section, subsection and lesser section of this Agreement constitutes
a
separate and distinct undertaking, covenant or provision hereof. In the event
that any provision of this Agreement shall finally be determined to be unlawful,
such provision shall be deemed severed from this Agreement, but every other
provision of this Agreement shall remain in full force and effect.
16. 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.
17. 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]
47
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as
of _________________, 2005.
TPN: | MYERS, TRAGER, DO MANAGEMENT CONSULTING, LLC | |
|
|
|
Xxxx Xxxxxx |
||
RPN: | REHABILITATION PHYSICIANS NETWORK, INC. | |
|
|
|
Dr. Xxxx Xxxx Xxxx |
||
President |
FWR: | FT. WORTH REHABILITATION, INC. | |
|
|
|
Dr. Xxxx Xxxx Xxxx |
||
President |
PURCHASER: | ||
|
|
|
By: | ||
Xxxxx Xxxxxxx |
||
48
EXHIBIT
B
XXXX
OF SALE
FT.
WORTH
REHABILITATION, INC., a Texas corporation (the “Clinic”),
hereby sells, conveys, transfers, signs and delivers to Basic Health Care
Networks of Texas, L.P., a Texas limited partnership (the ”Company”),
as
assignee of the Purchaser under that certain Asset Purchase Agreement dated
December __, 2005 by and between the Clinic, Xx. Xxxxx Xxxxxxx (as Purchaser),
Xx. Xxxx Xxxxx, Dr. Xxxx Xxxx Xxxx and Xx. Xxxxx Xxxxxxx, 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
rights in and to intellectual property and intangible industrial
property
rights of the Clinic, 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;
|
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
(as
defined in the Asset Purchase Agreement), 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]
49
IN
WITNESS WHEREOF, the Clinic has executed this instrument, by its duly authorized
signatory as of ____________, _____, effective as of such date.
FT. WORTH REHABILITATION, INC. | |||
Dr. Xxxx Xxxx Xxxx |
|||
President |
50
EXHIBIT
C
XXXX
OF
SALE - EQUIPMENT
FT.
WORTH
REHABILITATION, INC., a Texas corporation (the “Clinic”),
hereby sells, conveys, transfers, signs and delivers to BEW Financing, LP,
a
Texas limited partnership (the ”Company”), as assignee of the Purchaser under
that certain Asset Purchase Agreement dated December __, 2005 by and between
the
Clinic, Xx. Xxxxx Xxxxxxx (as Purchaser), Xx. Xxxx Xxxxx, Dr. Xxxx Xxxx Xxxx
and
Xx. Xxxxx Xxxxxxx, the following assets, properties, interests in properties
and
rights of the Clinic (collectively, the “Assets”):
All
equipment, motor vehicles, furnishings and fixtures, including all medical
and/or physical therapy equipment owned by the Clinic
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]
51
IN
WITNESS WHEREOF, the Clinic has executed this instrument, by its duly authorized
signatory as of ____________, _____, effective as of such date.
FT. WORTH REHABILITATION, INC. | |||
Dr. Xxxx Xxxx Xxxx |
|||
President |
52