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EXHIBIT 2.4
RESTRUCTURE AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP,
XXXXXX XXXXX, M.D.,
XXXXX XXXXX, M.D.,
XXXX X. XXXXX, M.D.
XXXXXXX XXXXXXXXX, M.D.,
XXXXXXXXX XXXXXXX, M.D.
XXXXXX XXXXX, M.D., P.C.
AND
ROCKVILLE CENTRE ARTHROSCOPIC ASSOCIATES, P.C.
DATED AS OF DECEMBER 31, 1998
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS.......................................................................................................1
ARTICLE II
BASIC TRANSACTION.................................................................................................4
2.1 Purchase and Sale of Assets.........................................................................4
2.2 Amendment and Restatement of Service Agreement......................................................5
2.3 Assumption of Term Debt and Assumed Liabilities.....................................................5
2.4 Purchase of Promissory Note and SCN Shares..........................................................5
2.5 The Closing.........................................................................................5
2.6 Deliveries at Closing...............................................................................5
2.7 Taxes and Expenses..................................................................................6
2.8 Employees...........................................................................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SCN.............................................................................6
3.1 Organization, Qualification, and Power..............................................................6
3.2 Authorization of Transaction........................................................................6
3.3 Noncontravention....................................................................................6
3.4 Title; Condition....................................................................................6
3.5 Tax Matters.........................................................................................6
3.6 Brokers' Fees.......................................................................................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OCOA AND THE PHYSICIAN OWNERS...................................................7
4.1 Organization........................................................................................7
4.2 Ownership Interest of OCOA..........................................................................7
4.3 Authorization of Transaction........................................................................7
4.4 Noncontravention....................................................................................7
4.5 Brokers' Fees.......................................................................................7
4.6 Title to SCN Shares and Promissory Note..............................................................7
ARTICLE V
COVENANTS.........................................................................................................8
5.1 General.............................................................................................8
5.2 Notices and Consents................................................................................8
5.3 Regulatory Matters and Approvals....................................................................8
5.4 Operation of Business...............................................................................8
5.5 Further Acts and Assurances.........................................................................8
5.6 Full Access.........................................................................................8
5.7 Notice of Developments..............................................................................8
5.8 Collection of Accounts Receivable...................................................................9
5.9 Employee Benefit Plans..............................................................................9
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ARTICLE VI
CONDITIONS TO OBLIGATIONS TO CLOSE................................................................................9
6.1 Conditions to Obligation of OCOA and the Physician Owners...........................................9
6.2 Conditions to Obligation of SCN....................................................................10
ARTICLE VII
PRE-CLOSING AND CLOSING DELIVERIES...............................................................................10
7.1 By SCN.............................................................................................11
7.2 By OCOA and the Physician Owners...................................................................11
ARTICLE VIII
TERMINATION......................................................................................................12
8.1 Termination of Agreement...........................................................................12
8.2 Effect of Termination..............................................................................12
ARTICLE IX
INDEMNIFICATION..................................................................................................12
9.1 Indemnification by OCOA and the Physician Owners...................................................12
9.2 Notice to OCOA and the Physician Owners; Opportunity to Defend.....................................13
9.3 General Indemnification by SCN.....................................................................13
9.4 Notice to SCN; Opportunity to Defend...............................................................13
ARTICLE X
MISCELLANEOUS....................................................................................................13
10.1 Survival...........................................................................................13
10.2 No Third-Party Beneficiaries......................................................................13
10.3 Entire Agreement..................................................................................13
10.4 Succession and Assignment.........................................................................14
10.5 Counterparts......................................................................................14
10.6 Headings..........................................................................................14
10.7 Notices...........................................................................................14
10.8 Governing Law.....................................................................................14
10.9 Amendments and Waivers............................................................................15
10.10 Severability.....................................................................................15
10.11 Expenses.........................................................................................15
10.12 Construction.....................................................................................15
10.13 No Referrals Required............................................................................15
10.14 Incorporation of Exhibits and Schedules..........................................................15
SCHEDULE 1.1 EXCLUDED ASSETS...........................................................Schedule 1.1-1
SCHEDULE 1.2 PHYSICIAN OWNERS..........................................................Schedule 1.2-1
SCHEDULE 1.3 TERM DEBT.................................................................Schedule 1.3-1
SCHEDULE 2.3 ASSUMED LIABILITIES.......................................................Schedule 2.3-1
SCHEDULE 3.3 CONSENTS..................................................................Schedule 3.3-1
EXHIBIT 2.1(a) OCOA NOTE...............................................................Exhibit 2.1(a) - 1
EXHIBIT 2.1(b) PURCHASE PRICE ALLOCATION AGREEMENT.....................................Exhibit 2.1(b) - 1
EXHIBIT 2.4 SCN NOTES...............................................................Exhibit 2.4 - 1
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EXHIBIT 7.1(c) XXXX OF SALE............................................................Exhibit 7.1(c)-1
EXHIBIT 7.1(d) ASSIGNMENT AND ASSUMPTION AGREEMENT.....................................Exhibit 7.1(d)-1
EXHIBIT 7.1(e) MANAGEMENT SERVICES AGREEMENT...........................................Exhibit 7.1(e)-1
EXHIBIT 7.2(c) RELEASE.................................................................Exhibit 7.2(c)-1
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RESTRUCTURE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of
December 31, 1998, by and among XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP, a New
York limited liability partnership ("OCOA") the undersigned Physician Owners
(as defined herein), and the Sellers (as defined herein), on the one hand, and
SPECIALTY CARE NETWORK, INC., a Delaware corporation ("SCN"), on the other
hand. OCOA, the Physician Owners, the Sellers, and SCN are referred to
individually herein as a "Party" or collectively herein as the "Parties."
R E C I T A L S:
WHEREAS, OCOA is engaged in the practice of medicine at its offices in
Rockville Centre, New York;
WHEREAS, the Parties entered into an Asset Purchase Agreement, as
amended, dated March 31, 1998, pursuant to which SCN acquired certain assets of
OCOA, and, in connection therewith, the Parties entered into that certain
Service Agreement and Agreement, each dated March 31, 1998 (collectively,
the"Service Agreement");
WHEREAS, OCOA has been managed by SCN pursuant to the Service
Agreement;
WHEREAS, the Parties intend to amend and restate the Service Agreement
as a Management Services Agreement;
WHEREAS, the Parties intend that OCOA purchase, or repurchase, as the
case may be, certain assets heretofore utilized by SCN in its management of
OCOA's medical practice; and
WHEREAS, the Parties intend that OCOA assume certain liabilities of
SCN which were generated or incurred by SCN in connection with its management
of OCOA's medical practice, and to make certain other agreements among
themselves, all on the terms and conditions as set forth herein.
NOW, THEREFORE, for and in consideration of the premises above, the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply:
"Accounts Receivable" means the Purchased A/R (as defined in the
Service Agreement) of OCOA, including collections on Purchased A/R which have
not been transferred to SCN as of the Closing Date that have been purchased by
SCN prior to the Closing Date.
"Affidavit of Lost Promissory Note" has the meaning set forth in
SECTION 2.4.
"Agreement" has the meaning set forth in the preface above.
"Applicable Law" means all federal, state, county, municipal or other
local laws, constitutions, ordinances, statutes, rules, regulations, and orders
applicable thereto.
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"Asset Purchase" means the acquisition of the assets of OCOA, or its
predecessor Person in the practice of medicine, pursuant to the Asset Purchase
Agreement.
"Asset Purchase Agreement" means that certain Asset Purchase
Agreement, dated March 31, 1998, by and among the SCN and OCOA.
"Asset Purchase Price" has the meaning set forth in SECTION 2.1.
"Assumed Liabilities" has the meaning set forth in SECTION 2.3.
"Closing" has the meaning set forth in SECTION 2.5.
"Closing Date" has the meaning set forth in SECTION 2.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Delaware General Corporation Law" means the General Corporation Law
of the State of Delaware, as amended.
"Escrow Agreement" has the meaning set forth in SECTION 2.4.
"Excluded Assets" means certain assets of SCN not used specifically
and exclusively in connection with the management of OCOA's medical practice,
as set forth on SCHEDULE 1.1.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity or other practices or procedures as may be
approved or adopted by a significant segment of the accounting profession. For
purposes of this Agreement, GAAP shall be applied in a manner consistent with
the historic practices used by SCN with respect to OCOA, as applicable.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, board, body, agency, bureau or entity or any
arbitrator with authority to bind a party at law.
"Knowledge" means actual knowledge after reasonable investigation.
"Lender" means any lender to SCN that has a security interest in any
of the Purchased Assets, or whose consent would otherwise be required under any
loan agreement or similar agreement with SCN.
"License Agreement" means that certain License Agreement by and
between SCN and OCOA, executed by SCN on April 1, 1998, and by OCOA on April
20, 1998.
"Loss" has the meaning set forth in SECTION 9.1.
"Management Services Agreement" means that certain Management Service
Agreement by and among SCN, OCOA and the Physician Owners dated as of January
1, 1999, substantially in the form of EXHIBIT 7.1(E) attached hereto.
"OCOA" has the meaning set forth in the preface above.
"OCOA Health Plan" has the meaning set forth in SECTION 5.9.
"OCOA Note" has the meaning set forth in SECTION 2.1.
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"OCOA Ownership Interests" has the meaning set forth in SECTION 4.2.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other governmental body or by any arbitrator.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" or "Parties" has the meaning set forth in the preface above.
"Person" means an individual, corporation, partnership, association,
limited liability company, limited liability partnership, joint stock company,
joint venture, trust, unincorporated organization, or governmental entity (or
any department, agency or political subdivision thereof).
"Physician Owners" means the Persons set forth on SCHEDULE 1.2.
"Practice Offices" has the meaning set forth in the Management
Services Agreement.
"Prepaid Expenses" means those expenses incurred and paid by SCN in
connection with SCN's management of OCOA's medical practice which confer a
benefit on SCN, OCOA or the Physician Owners, including but not limited to
professional liability insurance, and for which OCOA has not paid or reimbursed
SCN pursuant to the Service Agreement or otherwise as of the Closing Date.
"Proceedings" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any governmental body or arbitrator
"Promissory Note" has the meaning set forth in SECTION 2.4.
"Purchased Assets" means all of SCN's right, title, and interest in
and to the following assets of SCN owned as of the Closing Date:
(a) Accounts Receivable;
(b) assets purchased or acquired in the Asset Purchase other than
those assets disposed of in the Ordinary Course of Business;
(c) Prepaid Expenses;
(d) inventory used directly and exclusively in connection with SCN's
management of OCOA's medical practice which has not been previously purchased
by OCOA pursuant to the Service Agreement or otherwise;
(e) the name "Xxxxx & Xxxxx Orthopedic Associates"; and
(f) all other assets, tangible and intangible, acquired by SCN and
used directly and exclusively in connection with the SCN's management of OCOA's
medical practice, other than the Excluded Assets.
"Requisite OCOA Approval" means the affirmative vote of the holders of
the requisite percentage of the partnership interests of OCOA which is required
by the New York Limited Liability Partnership Act to approve the transactions
contemplated by this Agreement.
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"Requisite SCN Approval" means (i) approval by the requisite vote of
the directors of SCN, and (ii) the approval of any Lender, in order to approve
this Agreement and carry out the terms and conditions hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Agreement" has the meaning set forth in SECTION 2.1.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, or any conditional sales agreement, option,
or right of first refusal other than (a) mechanic's, materialmen's or similar
lien, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Sellers" means Xxxxxx Xxxxx, M.D., P.C. and Rockville Centre
Arthroscopic Associates, P.C., both New York professional corporations.
"Service Agreement" has the meaning set forth in the Recitals of this
Agreement.
"Service Fee" means any reimbursable expense or Service Fee owed, or
payable to, SCN by OCOA or the Physician Owners pursuant to the Service
Agreement.
"SCN" means Specialty Care Network, Inc., a Delaware corporation,
together with its affiliates, successors and assigns.
"SCN Notes" has the meaning set forth in SECTION 2.4.
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"Term Debt" means the debt and obligations set forth on SCHEDULE 1.3.
"Transferred Employee" means the terminated employees of SCN described
in SECTION 2.8 and all other individuals employed at the Practice Offices on
the Closing Date.
ARTICLE II
BASIC TRANSACTION
II.1 Purchase and Sale of Assets. At the Closing, on and subject to
the terms and conditions of this Agreement and subject to SCN's security
interest in the Purchased Assets as described in that certain Security
Agreement by and between SCN and OCOA of even date herewith (the "Security
Agreement"), which such security interest shall be released by SCN upon receipt
by SCN of payment in full for the OCOA Promissory Note, as hereinafter defined,
SCN shall transfer, sell, assign, convey and deliver to OCOA, and OCOA shall
purchase and otherwise assume, all of the Purchased Assets. The purchase price
for the Purchased Assets (the "Asset Purchase Price") shall equal Five Million
Six Hundred Nineteen Thousand Fifty-Two and No/100 Dollars ($5,619,052.00).
OCOA and the Physician Owners shall satisfy the Asset Purchase Price at Closing
by delivering to SCN a non-negotiable promissory note (the "OCOA Note")
substantially in the form attached hereto as EXHIBIT 2.1(A), in a principal
amount that is equal to, or the economic equivalent of (after taking into
account certain adjustments for interest payable to certain Parties), the Asset
Purchase Price. The Parties agree to allocate the Asset Purchase Price (and all
other capitalizable costs) among the Purchased Assets for all purposes
(including
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financial accounting and tax purposes) in accordance with the Purchase Price
Allocation Agreement attached hereto as EXHIBIT 2.1(B).
II.2 Amendment and Restatement of Service Agreement. At the Closing,
on and subject to the terms and conditions of this Agreement, the Parties shall
amend and restate the Service Agreement, as defined herein, in substantially
the form of the Management Services Agreement attached hereto as EXHIBIT
7.1(D), and such Management Services Agreement shall control the rights,
obligations and duties of the Parties with respect to SCN's management of
OCOA's medical practice from and after the Closing Date; provided, however,
that the Service Agreement shall be effective and shall control the
relationship of the Parties prior to the Closing Date.
II.3 Assumption of Term Debt and Assumed Liabilities. Except as
otherwise provided herein, OCOA shall assume at the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) the Term Debt set forth
on SCHEDULE 1.3, and (ii) the commitments, obligations and liabilities of SCN,
as of the Closing Date, which are listed on SCHEDULE 2.3 attached hereto
(collectively the "Assumed Liabilities") with respect to OCOA and the Physician
Owners, including without limitation, any and all accounts payable, payroll,
accrued employee vacation time and sick leave, and any employee benefits;
provided, however, that the Assumed Liabilities shall not include any expenses
for which OCOA has paid SCN pursuant to the Service Agreement but which are
accrued but unpaid expenses of SCN.
II.4 Purchase of Promissory Note and SCN Shares. At the Closing, on
and subject to the terms and conditions of this Agreement, SCN shall purchase
from OCOA, the Physician Owners, and/or the Sellers (a) that certain promissory
note dated March 31, 1998, executed by SCN in favor of OCOA (the "Promissory
Note"), evidenced by that certain Affidavit of Lost Promissory Note of even
date herewith (the "Affidavit of Lost Promissory Note") in cancellation of the
Promissory Note and all amounts owed by SCN with respect thereto (including
without limitation all amounts of unpaid principal and interest), for a
purchase price, which shall be paid to the Sellers, equal to Eight Hundred
Seventy-One Thousand Eight Hundred Seventy-Two and No/100 Dollars ($871,872.00)
and (b) four hundred fifty-nine thousand five hundred sixty-two (459,562) SCN
shares free and clear of all liens and encumbrances for a purchase price, which
shall be paid to the Sellers, equal to Four Hundred Thirteen Thousand Six
Hundred Six and No/100 Dollars ($413,606.00). SCN shall satisfy the purchase
price for the Promissory Note and the SCN Shares at Closing by delivery to the
Sellers of one or more non-negotiable promissory notes (the "SCN Notes"),
substantially in the form of EXHIBIT 2.4 attached hereto, with a cumulative
stated principal amount equal to $1,285,478.00. The Parties acknowledge and
agree that three hundred thirty-seven thousand nineteen (337,019) SCN Shares
shall be delivered by NationsBank of Tennessee, N.A. as escrow agent pursuant
to that certain escrow agreement between SCN and OCOA effective March 31, 1998
(the "Escrow Agreement"). OCOA, the Physician Owners and/or the Sellers agree
that any SCN Shares delivered pursuant to this SECTION 2.4 shall be properly
endorsed for transfer by OCOA, the Physician Owners and/or the Sellers, and
shall be delivered by OCOA, the Physician Owners, and/or the Sellers.
Simultaneously and in connection with the delivery of the SCN Shares by OCOA,
the Physician Owners, and/or the Sellers, the Parties shall terminate the
Escrow Agreement.
II.5 The Closing. The closing of the transaction (the "Closing") shall
take place at the offices of SCN, 00 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000, commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby or such other
date as the Parties may mutually determine (the "Closing Date"); provided,
however, that the Closing Date shall be no later than December 31, 1998. Time
is of the essence for this Agreement. The Parties may agree to close the
transactions contemplated by the Agreement via facsimile, with executed
original agreements, instruments, or other documents to be sent to the
appropriate party via FedEx (or other nationally recognized delivery company
that guarantees delivery of such documents on the following day) the next day;
provided, however, the Parties shall execute a written agreement governing the
terms and conditions of a Closing via facsimile.
II.6 Deliveries at Closing. At the Closing, (i) SCN will deliver to
OCOA the various certificates, instruments, and documents referred to in
SECTION 7.1 below; (ii) OCOA and the Physician Owners, as applicable, will
deliver to SCN the various certificates, instruments, and documents referred to
in SECTION 7.2 below.
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II.7 Taxes and Expenses. SCN and OCOA shall be responsible for any
business, occupation, withholding or similar tax or taxes of any kind related
to SCN's or OCOA's business, respectively, for any period prior to the Closing
Date. All applicable sales, use and tangible taxes, documentary stamp taxes,
filing and recording costs and other transfer taxes, costs and fees relating to
the transfer of title to the Purchased Assets, and the consummation of the
transactions described herein, shall be paid by OCOA.
II.8 Employees. As of the Closing Date and subject to Applicable Law,
SCN shall terminate all the employees of SCN utilized at the Practice Offices.
OCOA shall hire such terminated employees and pay to such terminated employees
substantially the same compensation and benefits as SCN had paid such
terminated employees prior to the Closing Date. OCOA shall assume
responsibility under any and all employment agreements with respect to such
terminated employees.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SCN
SCN represents and warrants to OCOA and the Physician Owners that the
statements contained in this ARTICLE III are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this ARTICLE III).
III.1 Organization, Qualification, and Power. SCN is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
in which the character or location of the properties owned or the business
conducted by SCN makes such qualifications necessary. SCN has the full power
and authority to carry on the business in which it is engaged and to own and
use the properties owned, leased and used by it. SCN is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.
III.2 Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder; subject, however, to SCN
obtaining the Requisite SCN Approval. Upon receiving the Requisite SCN
Approval, this Agreement will constitute the valid and legally binding
obligation of SCN, enforceable in accordance with its terms and conditions.
III.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which SCN
is subject or any provision of the Delaware General Corporation Law or bylaws
of SCN or (ii) upon receipt of all consents set forth on SCHEDULE 3.3, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice (other than such notice as may be
required by a Lender) under any agreement, contract, lease, license, instrument
or other arrangement to which SCN is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). SCN is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
III.4 Title; Condition. SCN has, or will have at the Closing Date, and
will convey to OCOA good and marketable title to all of the Purchased Assets
subject to no Security Interest. SCN agrees to remove all Security Interests on
the Purchased Assets reflected on any search of public records, if any, prior
to the Closing Date and to remove any other Security Interest on the Purchased
Assets created with respect to the Purchased Assets between the date of such
search of public records and the Closing Date.
III.5 Tax Matters. All federal and state tax returns required by law
to filed with respect to payroll taxes have been filed and SCN has paid or
adequately provided for all such taxes. SCN has withheld from each payment made
to employees of SCN the amount of all taxes (including, but not limited to,
federal, state and local income taxes and Federal Insurance Contribution Act
taxes) required to be withheld therefrom and all amounts customarily withheld
therefrom, and has set aside all other employee contributions or payments
customarily set aside with respect to such wages and has paid or will pay the
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same to, or has deposited or will deposit such payment with, the proper tax
receiving officers or other appropriate authorities. There are no tax liens on
any of Purchased Assets except those with respect to taxes not yet due and
payable.
III.6 Brokers' Fees. SCN does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which OCOA or the Physician
Owners may be obligated.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OCOA AND THE PHYSICIAN OWNERS
OCOA, the Physician Owners, and the Sellers, jointly and severally,
represent and warrant to SCN that the statements contained in this ARTICLE IV
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
ARTICLE IV).
IV.1 Organization. OCOA is a limited liability partnership duly
organized, validly existing, and in good standing under the laws of the State
of New York. OCOA is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction in which the character or location
of the properties owned or the business conducted by OCOA makes such
qualification necessary. OCOA has the full power and authority to carry on the
business in which it is engaged and to own and use the properties owned, leased
and used by it.
IV.2 Ownership Interest of OCOA. OCOA is owned solely by the Physician
Owners or the Sellers. Except for the partnership interests (the "OCOA
Ownership Interests") owned by the Physician Owners or the Sellers, there are
no other OCOA Ownership Interests or any other interest convertible into an
OCOA Ownership Interest authorized or outstanding.
IV.3 Authorization of Transaction. OCOA has the full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of OCOA, the Physician Owners, and the Sellers, enforceable in accordance with
its terms and conditions.
IV.4 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which
OCOA is subject or the partnership agreement of OCOA or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument
or other arrangement to which OCOA is a party (except for such defaults which
in the aggregate do not result in a material adverse effect on the business of
OCOA or the Physician Owners taken as a whole) or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). OCOA is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
IV.5 Brokers' Fees. Neither OCOA, the Physician Owners, nor the
Sellers have any liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement for which SCN could become liable or obligated.
IV.6 Title to SCN Shares and Promissory Note. OCOA, the Physician
Owners, and/or the Sellers (as applicable) have, or will have at the Closing
Date, unencumbered ownership of, and good and marketable title to, the
Promissory Note and all of the SCN Shares delivered pursuant to SECTION 2.4
subject to no mortgage, pledge, lien, lease, conditional sales agreement,
option, right of first refusal or any other encumbrance or charge, including
taxes, other than the terms and conditions of the Escrow Agreement. OCOA, the
Physician Owners, and/or the Sellers (as applicable) agree to remove all
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Security Interests reflected on any search of public records, if any, prior to
the Closing Date and to remove any other Security Interest created with respect
to such SCN Shares between the date of such search of public records and the
Closing Date.
ARTICLE V
COVENANTS
The Parties agree as follows with respect to the period from and after
the execution of this Agreement:
V.1 General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in ARTICLE VI below) to be
satisfied by him or it, subject to the exercise of the SCN directors' fiduciary
duties under Delaware law. This SECTION 5.1 shall not be construed to obligate
any of the Parties to waive any condition precedent to his or its obligations
to perform hereunder.
V.2 Notices and Consents. OCOA and SCN will give any notices to third
parties, and will use their best efforts to obtain any third party consents,
necessary or required to consummate the transaction contemplated hereby.
V.3 Regulatory Matters and Approvals. Each of the Parties will give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies required in connection with the transactions contemplated
by this Agreement.
V.4 Operation of Business. From the date of this Agreement through the
Closing Date, SCN and OCOA will not (and will not commit to) engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing:
(a) Neither SCN nor OCOA will authorize or effect any change
in its charter, or equivalent thereof, or bylaws that would delay or
prevent consummation of the transactions contemplated by this
Agreement; and
(b) SCN will not impose any Security Interest upon any of the
Purchased Assets outside the Ordinary Course of Business.
V.5 Further Acts and Assurances. SCN, and OCOA and the Physician
Owners shall, at any time and from time to time at and after the Closing, upon
request of the other, (a) take any and all steps necessary to (i) place OCOA in
possession and operating control of the Purchased Assets, (ii) deliver and
otherwise transfer the Promissory Note and the SCN shares pursuant to SECTION
2.4, (iii) enter into the Management Services Agreement, and (iv) enter into
any agreement or arrangement contemplated hereby; and (b) will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be required for the better
transferring and confirming to OCOA or SCN, as applicable, or their respective
successors or assigns, or for reducing to possession, any or all of (x) the
Purchased Assets, and (y) the SCN shares to be delivered pursuant to SECTION
2.4.
V.6 Full Access. Upon five (5) business days prior notice, SCN will
permit representatives of OCOA to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to SCN during normal business hours; provided, however, such
access shall be limited to such premises, properties, personnel, books,
records, contracts and documents as are directly pertinent to the operations of
OCOA and the Physician Owners as such are relevant to the transactions
contemplated by this Agreement.
V.7 Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of
any of its own representations and warranties in ARTICLE III or ARTICLE IV
above. No disclosure by any Party pursuant to this SECTION 5.7, however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
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V.8 Collection of Accounts Receivable. SCN agrees to cooperate with
Physician Owners in the collection of Accounts Receivable owned by SCN as of
the Closing Date and acquired by OCOA pursuant to this Agreement. In connection
therewith, SCN agrees to execute the necessary documents to accommodate the
collection of the accounts receivable in such manner.
V.9 Employee Benefit Plans.
(a) Welfare Plans. As of the Closing Date, the Transferred
Employees shall cease participating in all SCN welfare benefit plans,
including, but not limited to, the Speciality Care Network
Medical/Dental Plan, the Speciality Care Network Like Insurance Plan,
the Speciality Care Network Disability Plan, and the Speciality Care
Network Flexible Spending Plan. As of the Closing Date, OCOA shall,
with respect to Transferred Employees, designate one or more plans
("OCOA Health Plan") to provide health benefits substantially similar
to the Specialty Care Network Medical/Dental Plan to Transferred
Employees and their eligible dependents, and OCOA shall allow all
Transferred Employees and their eligible dependents to enroll, without
any waiting period, in the OCOA Health Plan. With respect to
Transferred Employees, the OCOA Health Plan shall waive any
restrictions and limitations for pre-existing conditions. Any service
of Transferred Employees recognized by SCN under the Specialty Care
Network welfare plan shall be recognized by the OCOA welfare plans.
SCN and the Specialty Care Network Medical/Dental Plan shall only be
responsible for health expenses of Transferred Employees and their
dependents to the extent such expenses are covered under the terms are
covered under the terms of the Specialty Care Network Medical/Dental
Plan and are incurred prior to the Closing Date. The OCOA Health Plan
shall take into account expenses incurred under the Specialty Care
Network Medical/Dental Plan on or after January 1, 1999, and up to the
Closing Date, for purposes of determining deductibles and
out-of-pocket limits under the OCOA Health Plan.
(b) Amendments and Termination. The SCN employees benefit
plans described in this SECTION 5.9 are hereby amended, effective as
of the Closing Date, by making any changes necessary or appropriate to
effectuate the provisions of this SECTION 5.9. SCN reserves the right
to terminate any of the employee benefit plans described in this
SECTION 5.9 at any time before or after the Closing Date.
ARTICLE VI
CONDITIONS TO OBLIGATIONS TO CLOSE
VI.1 Conditions to Obligation of OCOA, Sellers and the Physician
Owners. The obligation of OCOA, Sellers and the Physician Owners to consummate
the transactions contemplated by this Agreement is subject to satisfaction of
the following conditions:
(a) the transactions contemplated by this Agreement shall be
approved by OCOA's partners and the Requisite OCOA Approval shall have
been obtained;
(b) the representations and warranties set forth in ARTICLE
III above shall be true and correct in all material respects at and as
of the Closing Date;
(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the rights of OCOA or the
Physician Owners to own the Purchased Assets;
(d) all actions to be taken by SCN in connection with the
consummation of the transactions contemplated hereby and all
certificates, instruments, agreements and other documents required to
effect the transactions contemplated hereby, have been taken or
delivered to OCOA, the Physician Owners and/or the Sellers and are
satisfactory in form and substance;
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(e) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
(f) neither surrender of the SCN Shares by OCOA, the
Physician Owners or the Sellers, nor the issuance of the OCOA Note
will violate federal securities laws or the securities laws of any
state of the United States.
OCOA, the Physician Owners, and/or the Sellers may waive any condition
specified in this SECTION 6.1 by executing a writing so stating at or prior to
the Closing.
VI.2 Conditions to Obligation of SCN. The obligation of SCN to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) SCN shall have procured all of the consents set forth on
SCHEDULE 3.3 necessary to transfer the Assumed Liabilities or shall
have made for adequate provision thereof;
(b) the Requisite SCN Approval shall have been obtained;
(c) the representations and warranties set forth in ARTICLE
IV above shall be true and correct in all material respects at and as
of the Closing Date;
(d) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of OCOA to own the
Purchased Assets;
(e) all actions to be taken by OCOA, the Physician Owners,
and/or the Sellers in connection with the consummation of the
transactions contemplated hereby and all certificates, instruments,
agreements and other documents required to effect the transactions
contemplated hereby, have been taken or delivered to SCN and are
satisfactory in form and substance;
(f) OCOA and the Physician Owners shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing; and
(g) the issuance of the SCN Notes to OCOA will not violate
federal securities laws or the securities laws of any state of the
United States.
(h) Xxxxxxx Xxxxxx shall have (i) agreed to terminate that
certain employment agreement dated May 6, 1998, by and between Xxxxxxx Xxxxxx
and SCN and (ii) released SCN from any liability for any and all termination
payments, compensation payments, bonus payments and benefits thereunder,
whether accrued or unaccrued.
SCN may waive any condition specified in this SECTION 6.2 by executing a
writing so stating at or prior to the Closing.
ARTICLE VII
PRE-CLOSING AND CLOSING DELIVERIES
VII.1 By SCN. SCN shall execute and deliver to OCOA and the Physician
Owners, prior to or at the Closing:
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(a) Certified resolutions of SCN authorizing the execution of
all documents and the consummation of all transactions contemplated
hereby;
(b) The SCN Notes;
(c) A Xxxx of Sale in substantially the form attached hereto
as EXHIBIT 7.1(C);
(d) An Assignment and Assumption Agreement in substantially
the form attached hereto as EXHIBIT 7.1(D);
(e) A Management Services Agreement in substantially the form
attached hereto as EXHIBIT 7.1(E);
(f) A certificate duly executed by the President, or other
duly authorized executive officer, of SCN that as of the Closing Date,
all representations and warranties of SCN are true and correct in all
material respects, all covenants and agreements contained in the
Agreement to be performed by SCN have been performed or complied with,
and all conditions to Closing have been satisfied;
(g) An agreement, or other instrument, terminating the Escrow
Agreement and the License Agreement; and
(h) Such other instruments as may be reasonably requested by
OCOA in order to effect to or carry out the intent of this Agreement.
VII.2 By OCOA and the Physician Owners. OCOA, the Physician Owners,
and/or the Sellers shall deliver to SCN at or prior to the Closing:
(a) The Asset Purchase Price, the OCOA Note, the Affidavit of
Lost Promissory Note and the stock certificates, representing the SCN
Shares, being sold to SCN by OCOA, the Physician Owners, and/or the
Sellers;
(b) An Assignment and Assumption Agreement in substantially
the form of EXHIBIT 7.1(D);
(c) A Release in substantially the form attached hereto as
EXHIBIT 7.2(C);
(d) Written consent of the partners of OCOA authorizing the
execution of all documents and the consummation of all transactions
contemplated hereby;
(e) A Management Services Agreement in substantially the form
attached hereto as EXHIBIT 7.1(E);
(f) A certificate, duly executed by the managing partner, or
other duly authorized officer (or equivalent thereof), of OCOA,
stating as of the Closing Date, all representations and warranties of
OCOA are true and correct in all material respects, all covenants and
agreements contained in the Agreement to be performed by OCOA have
been performed or complied with and all conditions to Closing have
been satisfied;
(g) An agreement, or other instrument, terminating the Escrow
Agreement and the License Agreement; and
(h) Such other instruments as may be reasonably requested by
SCN in order to effect to or carry out the intent of this Agreement.
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ARTICLE VIII
TERMINATION
VIII.1 Termination of Agreement. Either of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after SCN board of directors approval) as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing Date;
(b) OCOA and the Physician Owners may terminate this
Agreement by giving written notice to SCN at any time prior to the
Closing Date (A) in the event SCN has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, OCOA and the Physician Owners have notified SCN of the
breach, and the breach has continued without cure on or before
December 31, 1998, after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1998, by reason of
the failure of any condition precedent under SECTION 6.1 hereof
(unless the failure results primarily from OCOA's or the Physician
Owners' breaching any representation, warranty, or covenant contained
in this Agreement); or
(c) SCN may terminate this Agreement by giving written notice
to OCOA or the Physician Owners at any time prior to the Closing Date
(A) in the event OCOA or the Physician Owners has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, SCN has notified OCOA or the Physician Owners of
the breach, and the breach has continued without cure on or before
December 31, 1998, after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1998, by reason of
the failure of any condition precedent under SECTION 6.2 hereof
(unless the failure results primarily from SCN's breaching any
representation, warranty, or covenant contained in this Agreement).
VIII.2 Effect of Termination. If any Party terminates this Agreement
pursuant to SECTION 8.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach). Notwithstanding the
foregoing, in the event the transaction contemplated by this Agreement is not
consummated due to the fault of, or failure to perform hereunder by (i) OCOA or
the Physician Owners, then OCOA and the Physician Owners agree to reimburse SCN
for SCN's out-of-pocket expenses, including but not limited to professional
fees or (ii) SCN, then SCN agrees to reimburse OCOA and the Physician Owners
for their out-of-pocket expenses, including but not limited to professional
fees.
ARTICLE IX
INDEMNIFICATION
IX.1 Indemnification by OCOA and the Physician Owners. OCOA and the
Physician Owners shall defend, indemnify and hold harmless SCN, its successors
and assigns, officers and directors from or against any and all losses,
liabilities, claims, damages, actions, suits, costs, deficiencies, penalties,
and expenses (including without limitation reasonable attorney's fees)
(collectively referred to herein as "Loss") (i) resulting from or arising out
of the breach, untruth or inaccuracy of any representation, warranty or
covenant of OCOA or the Physician Owners set forth in this Agreement, or (ii)
resulting from or arising out of any of the Assumed Liabilities. In addition to
any indemnification rights granted to SCN under this Agreement, SCN shall
continue to be entitled to any indemnification under any prior agreements
between or among SCN, OCOA, or the Physician Owners, including without
limitation any SCN rights to indemnification under the Service Agreement or the
Asset Purchase Agreement. The Physician Owners hereby acknowledge and agree
that if it is finally determined SCN is entitled to a payment from OCOA
pursuant to this SECTION 9.1 and OCOA fails to make such payment for thirty
(30) days after written demand, then the Physician Owners, severally but not
jointly, shall be responsible for and shall pay to SCN the amount of OCOA's
unpaid indemnification obligations pursuant to this Agreement. Notwithstanding
the foregoing or anything contained in the Asset Purchase Agreement or the
Service Agreement, as herein defined, to the contrary, SCN acknowledges and
agrees that (i) Xxxx X. Xxxxx'x obligation to indemnify SCN hereunder or under
the Asset Purchase Agreement or under the Service Agreement, as herein defined,
shall be limited to Seven Hundred Twenty-Five Thousand Dollars ($725,000) (ii)
Xxxxxxxxx Xxxxxxx'x obligation to indemnify SCN hereunder or under the Asset
Purchase Agreement or under the Service Agreement, as herein defined, shall be
limited to Six Hundred Thousand
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Dollars ($600,000) and (iii) Xxxxxxx Xxxxxxxxx'x obligation to indemnify SCN
hereunder or under the Asset Purchase Agreement or under the Service Agreement,
as herein defined, shall be limited to Six Hundred Twenty-Five Thousand Dollars
($625,000); Xxxxxx Xxxxx'x obligation to indemnify SCN hereunder or under the
Asset Purchase Agreement or under the Service Agreement, as herein defined,
shall be limited to Four Million Seven Hundred Twenty-Nine Thousand Four
Hundred Thirty-Nine Dollars ($4,729,439); and Xxxxx Xxxxx'x obligation to
indemnify SCN hereunder or under the Asset Purchase Agreement or under the
Service Agreement, as herein defined, shall be limited to Four Million Seven
Hundred Twenty-Nine Thousand Four Hundred Thirty-Nine Dollars ($4,729,439).
IX.2 Notice to OCOA and the Physician Owners; Opportunity to Defend.
SCN agrees to give prompt notice to OCOA and the Physician Owners of the
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought under SECTION 9.1. OCOA and the
Physician Owners may participate in and at their election, or at the request of
SCN, assume the defense of any such suit, action or proceeding at OCOA or the
Physician Owners' expense. Neither OCOA nor the Physician Owners shall be
liable under SECTION 9.1 for any settlement effected without their consent of
any claim, litigation or proceeding in respect of which indemnity may be sought
under SECTION 9.1, which consent shall not be unreasonably withheld.
IX.3 General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless OCOA, its successors and assigns, Physician Owners,
officers and managers, from or against any Loss (i) resulting from or arising
out of the breach, untruth or inaccuracy of any representation, warranty or
covenant of SCN set forth in this Agreement or (ii) resulting from or arising
out of any liability that is not an Assumed Liability (other than a liability
to which SCN is entitled to indemnification under this Agreement or any other
agreement).
IX.4 Notice to SCN; Opportunity to Defend. The Physician Owners agree
to give prompt notice to SCN of the assertion of any claim, or the commencement
of any suit, action or proceeding in respect of which indemnity may be sought
under SECTION 9.3. SCN may participate in and at its election, or at the
request of the Physician Owners, assume the defense of any such suit, action or
proceeding at SCN's expense. SCN shall not be liable under SECTION 9.3 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought under SECTION 9.3 which consent
shall not be unreasonably withheld.
ARTICLE X
MISCELLANEOUS
X.1 Survival. The representations, warranties, and covenants of the
Physician Owners, OCOA and SCN contained in this Agreement and the
indemnifications contained herein shall survive the Closing. Except as provided
in this SECTION 10.1 below, no claim for indemnification with respect to any
alleged misrepresentation or breach of warranty may be made after three (3)
years following the Closing Date. SCN shall be entitled to indemnification for
(i) claims for breaches of representations, warranties or covenants relating to
matters involving the payment of taxes (including interest and/or penalties
thereon), (ii) claims arising from reimbursement of any amounts to Third Party
Payors (including interest and penalties thereon), and (iii) claims relating to
a matter involving compliance with Applicable Laws as described in ARTICLE IV
and ARTICLE V above and such right of indemnification shall survive for the
applicable statute of limitations for the underlying claim asserted. In
addition, any matter to which indemnification pertains and with respect to
which a claim has been asserted or threatened following the Closing Date and
prior to termination of the applicable survival period shall, notwithstanding
the expiration of the applicable survival period, continue to be subject to the
indemnification under this Agreement.
X.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
X.3 Entire Agreement. Except as otherwise set forth herein, this
Agreement (including the documents referred to herein) constitutes the entire
agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, to
the extent they related in any way to the subject matter hereof.
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X.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties.
X.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
X.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
X.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to OCOA: Copy to:
Xxxxx & Xxxxx Orthopedic Associates, LLP Xxxxxx Xxxxxx & Zavis
00 Xxxxxxx Xxxxxx 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxx 00000 Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx Xxxxx, M.D. Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to SCN: Copy to:
Specialty Care Network, Inc. Baker, Donelson, Bearman & Xxxxxxxx, P.C.
00 Xxxxx Xxxxxxxxx, Xxxxx 000 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000 Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, President Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
X.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Colorado without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Colorado or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Colorado. Each of the parties
submits to the jurisdiction of any state or federal court sitting in Denver,
Colorado, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other party with
respect thereto.
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X.9 Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Closing Date with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to SCN board approval will be subject to
any restrictions contained in the laws of the State of Delaware. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by each of the Parties. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
X.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
X.11 Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
X.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
X.13 No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between
OCOA and SCN that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant
patients.
X.14 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:
--------------------------------------------------
Title:
-----------------------------------------------
XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP
By:
--------------------------------------------------
Title:
-----------------------------------------------
PHYSICIAN OWNERS:
-----------------------------------------------------
XXXXXX XXXXX, M.D.
-----------------------------------------------------
XXXXX XXXXX, M.D.
-----------------------------------------------------
XXXX X. XXXXX, M.D.
-----------------------------------------------------
XXXXXXXXX XXXXXXX, M.D.
-----------------------------------------------------
XXXXXXX XXXXXXXXX, M.D.
SELLERS:
-----------------------------------------------------
XXXXXX XXXXX, M.D., P.C.
-----------------------------------------------------
ROCKVILLE CENTRE ARTHROSCOPIC
ASSOCIATES, P.C.
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SCHEDULE 1.1
EXCLUDED ASSETS
None.
22
SCHEDULE 1.2
PHYSICIAN OWNERS
Xxxxxx Xxxxx, M.D.
Xxxxx Xxxxx, M.D.
Xxxx X. Xxxxx, M.D.
Xxxxxxxxx Xxxxxxx, M.D.
Xxxxxxx Xxxxxxxxx, M.D.
23
SCHEDULE 1.3
TERM DEBT
None.
24
SCHEDULE 2.3
ASSUMED LIABILITIES
Accounts Payable
Accrued Personnel Costs (payroll, vacation, sick
leave, etc.) Other Accrued Expenses (employee benefits,
valuation of charges, rents, etc.)
25
SCHEDULE 3.3
CONSENTS
See attached.
26
EXHIBIT 2.1(a)
OCOA NOTE
See attached.
27
EXHIBIT 2.1(b)
PURCHASE PRICE ALLOCATION AGREEMENT
THIS AGREEMENT is made and entered into as of December ___, 1998 by
and between SPECIALTY CARE NETWORK, INC., a Delaware corporation (the
"Purchaser") and XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP, a New York limited
liability partnership (the "Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have entered into an Restructure
Agreement dated as of December 31, 1998, pursuant to which Seller has agreed to
sell and Purchaser has agreed to buy certain of the assets (the "Purchased
Assets") of Seller (the "Restructure Agreement");
WHEREAS, the Restructure Agreement provides that the parties shall
allocate the price to be paid for the Purchased Assets (the "Purchase Price")
in a manner which shall conform with and include the information required by
Section 1060 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the parties hereto desire to set forth herein with
particularity the allocation of the Purchase Price.
NOW, THEREFORE, in consideration of the foregoing recitals, the
covenants, conditions, representations, warranties, stipulations and agreements
contained herein, and other good and valuable consideration, the full receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Allocation of Asset Purchase Price. The Asset Purchase Price set
forth in the Restructure Agreement is hereby allocated among the Purchased
Assets as follows:
Description Fair Market Value Allocation
----------- ----------------- ----------
Class I
Class II
Class III
Class IV
Class V
2. Asset Acquisition Statement. The parties agree that they will
allocate the Purchase Price as set forth herein on the Asset Acquisition
Statement reported to the Internal Revenue Service on Internal Revenue Form
8594.
3. Purchaser and Seller Acknowledgment. The Purchaser and Seller
acknowledge that they have inspected the Purchased Assets and that the amounts
set forth herein as the fair market values of such Purchased Assets are true
and accurate as of the date hereof.
28
4. Entire Agreement; Modifications. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter and
supersedes all negotiations, prior discussions, agreements and understandings
relating to the subject matter of this Agreement. Any modifications to this
Agreement must be approved in writing by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Price Allocation Agreement as of the day and date first written above.
XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP
By:
--------------------------------------
Title:
-----------------------------------
SPECIALTY CARE NETWORK, INC.
By:
--------------------------------------
Title:
-----------------------------------
29
EXHIBIT 2.4
SCN NOTES
See attached.
30
EXHIBIT 7.1(c)
XXXX OF SALE
THIS XXXX OF SALE is made and delivered by and from SPECIALTY CARE
NETWORK, INC., a Delaware Corporation ("Seller"), to XXXXX & XXXXX ORTHOPEDIC
ASSOCIATES, LLP, a New York limited liability partnership ("Purchaser"),
pursuant to and in accordance with the terms and provisions of that certain
Restructure Agreement dated as of December 31, 1998 (the "Restructure
Agreement"), by and between Seller and Purchaser. Capitalized terms, unless
otherwise defined herein, shall have the meanings ascribed to them in the
Restructure Agreement.
In connection therewith, for good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, Seller does hereby
grant, bargain, sell, transfer, convey and deliver unto Purchaser, its
successors and assigns, all legal and beneficial right, title and interest in
and to the Purchased Assets; to have and to hold the same unto Purchaser and
its successors and assigns from and after the date hereof, subject to the
representations and warranties of Seller and other terms and conditions
contained in the Restructure Agreement, and subject to Seller's security
interest in the Purchased Assets pursuant to that certain Security Agreement by
and between Seller and Purchaser of even date herewith. The foregoing expressly
does not include any of the Excluded Assets set forth in the Restructure
Agreement.
Subject to the terms and conditions of the Restructure Agreement, each
of the parties hereto will use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary to consummate
and make effective the purchase of the Purchased Assets and the other
transactions contemplated by the Restructure Agreement. From time to time after
the date hereof, Seller will, at Seller's expense, execute and deliver such
instruments and documents to Purchaser, as Purchaser may reasonably request, in
order to more effectively vest in Purchaser good title to the Purchased Assets
and to more effectively consummate the transactions contemplated by the
Restructure Agreement.
All of the representations and warranties of Seller set forth in the
Restructure Agreement regarding the Purchased Assets are incorporated herein by
reference in their entirety, to the same extent and with the same limitations
as set forth in the Restructure Agreement. Seller represents and warrants that
the title conveyed is good and marketable, its transfer rightfully made; that
the Purchased Assets are delivered free and clear of all liens and
encumbrances; and that Seller will warrant and defend same against the lawful
claims and demands of all persons whomsoever.
This instrument shall be binding upon Seller, its successors and
assigns, and shall inure to the benefit of Purchaser, its successors and
assigns. This instrument shall be effective as to the transfer of all of the
Purchased Assets as of the Closing Date.
Nothing herein contained shall be deemed or construed as an assumption
by Purchaser of, or to impose upon Purchaser, any liabilities or obligations of
Seller, except as otherwise provided in that certain Assignment and Assumption
Agreement of even date herewith.
This Xxxx of Sale shall be governed by and construed in accordance
with the laws of the State of New York.
31
IN WITNESS WHEREOF, Seller has caused its duly authorized
representative to execute and deliver this Xxxx of Sale as of the ____ day of
December, 1998.
SPECIALTY CARE NETWORK, INC.
By:
--------------------------------------
Title:
-----------------------------------
32
EXHIBIT 7.1(d)
ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR THE SUM OF $10.00 CASH IN HAND, and other good and valuable
consideration, including the assumption by XXXXX & XXXXX ORTHOPEDIC ASSOCIATES,
LLP, a New York limited liability partnership ("OCOA"), of liabilities as
hereinbelow set forth, SPECIALTY CARE NETWORK, INC., a Delaware corporation
("SCN") hereby assigns, transfers, conveys, and delivers to OCOA, all of its
legal and beneficial right, title and interest in and to the Purchased Assets
not otherwise transferred by that certain Xxxx of Sale of even date herewith.
All capitalized terms not otherwise defined herein having the meanings ascribed
to those terms in that certain Restructure Agreement ("Restructure Agreement")
by and among SCN, OCOA, and the Physician Owners of OCOA, dated as of December
31, 1998, and said terms are incorporated herein by this reference.
In partial consideration of the foregoing, OCOA and the Physician
Owners, jointly and severally, hereby assume and agree to perform, pay and
discharge all Assumed Liabilities.
This Assignment and Assumption Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns, but no assignment shall relieve any party of its obligations
hereunder.
This Assignment and Assumption Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, OCOA, the Physician Owners and SCN, by their
duly-authorized officers, have signed and delivered this Assignment and
Assumption Agreement as of December __, 1998.
SPECIALTY CARE NETWORK, INC.
By:
--------------------------------------------
Its:
-------------------------------------------
XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP
By:
--------------------------------------------
Its:
-------------------------------------------
PHYSICIAN OWNERS:
-----------------------------------------------
XXXXXX XXXXX, M.D.
-----------------------------------------------
XXXXX XXXXX, M.D.
-----------------------------------------------
XXXX X. XXXXX, M.D.
-----------------------------------------------
XXXXXXXXX XXXXXXX, M.D.
-----------------------------------------------
XXXXXXX XXXXXXXXX, M.D.
33
EXHIBIT 7.1(e)
MANAGEMENT SERVICES AGREEMENT
See attached.
34
EXHIBIT 7.2(c)
RELEASE
THIS RELEASE is being executed and delivered in accordance with
SECTION 7.2(C) of the Restructure Agreement dated December 31, 1998 (the
"Agreement") by and among SPECIALTY CARE NETWORK, INC., a Delaware corporation
("SCN"), XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP, a New York limited liability
partnership ("OCOA") and the Physician Owners. Capitalized terms used in this
Release without definition have the respective meanings given to them in the
Agreement.
OCOA and the Physician Owners acknowledge that execution and delivery
of this Release is a condition to SCN's obligation to consummate the
transaction contemplated by the Agreement and to amend and restate the Service
Agreement as the Management Services Agreement, and that SCN is relying on this
Release in connection with the foregoing.
OCOA and the Physician Owners, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and intending to be
legally bound, in order to induce SCN to consummate all transactions
contemplated by the Agreement, hereby agree as follows:
OCOA and the Physician Owners on behalf of OCOA and themselves
individually and each of their Related Persons, hereby releases and forever
discharges SCN and each of its respective individual, joint or mutual, past,
present and future representatives, affiliates, stockholders, controlling
persons, subsidiaries, employees, agents, successors, directors and assigns
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, Proceedings, causes of action, Orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which each of OCOA and the
Physician Owners or any of their respective Related Persons now has, have ever
had or may hereafter have against the respective Releasees arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date, including, but not limited to, any rights to indemnification
or reimbursement from SCN, whether pursuant to the Asset Purchase Agreement,
Service Agreement, that certain side agreement titled "Agreement" dated March
31, 1998 by and among SCN and the Physician Owners, and any other agreement
entered into prior to the date of the Agreement, and whether or not relating to
claims pending on, or asserted after, the Closing Date; provided, however, that
nothing contained herein shall operate to release any obligations of SCN
accruing after the Closing Date under the Agreement or the Management Services
Agreement, which are to remain in effect after Closing.
OCOA and the Physician Owners hereby irrevocably covenants to refrain
from, directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Releasee, based upon any matter purported to be released hereby.
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each OCOA and the Physician Owners, jointly and
severally, shall indemnify and hold harmless each Releasee from and against all
loss, liability, claim, damage (including incidental and consequential damages)
or expense (including costs of investigation and defense and reasonable
attorney's fees) whether or not involving third party claims, arising directly
or indirectly from or in connection with (i) the assertion by or on behalf of
OCOA or the Physician Owners or any of their Related Persons of any claim or
other matter purported to be released pursuant to this Release, and (ii) the
assertion by any third party of any claim or demand against any Releasee which
claim or demand arises directly or indirectly from, or in connection with, any
assertion by or on behalf of OCOA or the Physician Owners or any of their
Related Persons against such third party of any claims or other matters
purported to be released pursuant to this Release.
If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
35
This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of New York without
regard to principles of conflicts of law.
All words used in this Release will be construed to be of such gender
or number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned have executed and
delivered this Release as of this ___ day of December, 1998.
OCOA:
XXXXX & XXXXX ORTHOPEDIC ASSOCIATES, LLP
By:
--------------------------------------
Its:
-------------------------------------
.
PHYSICIAN OWNERS:
-----------------------------------------
XXXXXX XXXXX, M.D.
-----------------------------------------
XXXXX XXXXX, M.D.
-----------------------------------------
XXXX X. XXXXX, M.D.
-----------------------------------------
XXXXXXXXX XXXXXXX, M.D.
-----------------------------------------
XXXXXXX XXXXXXXXX, M.D.
