STOCK PURCHASE AGREEMENT
ANESTHESIA SOLUTIONS, INC.
Stock Purchase Agreement entered into as of this 1st day of
July, 1997, by and among EQUIMED, INC., a Delaware corporation
(the "Buyer") ANESTHESIA SOLUTIONS, INC., a Delaware corporation
(the "Company"), and XXXXXXX X. XXXXXXX, M.D. (the "Seller").
The Buyer, the Seller, and the Company are referred to
collectively herein as the "Parties".
This Agreement contemplates a transaction in which the Buyer
will acquire all of the outstanding capital stock of the Company
from the Seller in exchange for the Buyer's common stock through
a stock purchase.
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein made, and in consideration of the
representations, warranties and covenants herein contained, the
parties agree as follows:
ARTICLE I
Definitions
The Parties agree that, as used in this Agreement, the
following terms shall have the following meanings:
"Accredited Investor" has the meaning set forth in
Regulation D promulgated under the Securities Act.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement Liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of Code Sec. 1504 or any similar group defined under a
similar provision of state, local or foreign law.
"Aggregate EquiMed Common Stock Value" shall have the
meaning set forth in Section 2.4.
"Audit" shall mean the audited balance sheets and statements
of income, changes in retained earnings and cash flow as of and
for the fiscal years ended December 31, 1997.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any specified
consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section
2.2
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Assets" shall have the meaning set forth in Section
4.6(a).
"Company's Debts" shall have the meaning set forth in
Section 2.5(b).
"Company Share" shall mean each share of voting capital
stock of the Company issued and outstanding.
"Confidential Information" means any information concerning
the businesses and affairs of the Company that is not already
generally available to the public.
"Controlled Group of Corporations" has the meaning set forth
in Code Sec. 1563.
"Deferred Intercompany Transaction" has the meaning set
forth in Treasury Regulation Section 1.1502-13.
"Delaware General Corporation Law" means the General
Corporation Law of the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in preamble
to Article IV below.
"Effective Date" shall mean July 1, 1997.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee
Pension-Benefit Plan, (c) qualified defined benefit retirement
plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare
Benefit Plan or material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(l).
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
and the Occupational Safety and Health Act of 1970, each as
amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws
relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface
water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
"EquiMed Common Stock" shall have the meaning set forth in
Section 2.4(e).
"EquiMed Stock Value" shall have the meaning set forth in
Section 2.4.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excess Loss Account" has the meaning set forth in Treasury
Regulation Sections 1.1502-19.
"Fiduciary" has the meaning set forth in ERISA Section
3(21).
"Financial Statements" shall mean unaudited balance sheets
and statements of income, as of and for the fiscal year ended
December 31, 1996 for the Company and unaudited balance sheets
and statements of income, as of and for the five months ended
June 30, 1997 for the Company.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all
trade secrets and confidential business information (including
ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer
software (including data and related documentation),(g) all other
proprietary rights, and (h) all copies and tangible embodiments
thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
"Liens" means any mortgage, pledge, lien, encumbrance,
charge, option or other security interest, and, with respect to
any security, in addition to above, any restriction on voting.
"Most Recent Fiscal Month End" shall mean June 30, 1997.
"Multiemployer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with
respect to quantity and frequency).
"Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation,
"Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a trust, a joint venture,
an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
"Reportable Event" has the meaning set forth in ERISA Sec.
4043.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a)
mechanic's, materialmen's, and similar liens, (b) liens for Taxes
not yet due and payable, (c) other liens arising in the Ordinary
Course of Business and not incurred in connection with the
borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Share" means any share of the voting common stock of the
Company as described in Section 2.1.
"Stock Consideration" shall have the meaning set forth in
Section 2.4.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental
(including taxes under Code Sec. 59A), customs duties, capital
stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any
kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8.4
below.
ARTICLE II
Basic Transaction
2.1 Sale of Corporate Shares. The Seller shall sell to
the Buyer and the Buyer shall purchase from the Seller all of the
issued and outstanding shares of stock in the Company in exchange
for the Stock Consideration described in Section 2.4 below. The
Seller is the owner of all the issued and outstanding stock of
the Company as listed in Section 4.2 below (the "Shares").
2.2 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Xxxxxxxxxx, Xxxxxxxxx & Xxxxx in Pottsville PA,
commencing at 9:00 a.m. local time on the 5th business day
following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to
actions the respective Parties will take at the Closing itself)
or such other date as the Parties may mutually determine (the
"Closing Date").
2.3 Actions at the Closing. At the Closing, (a) the
Company and Seller will deliver to the Buyer the various
certificates, instruments, and documents referred to in (7.1
below, (b) the Buyer will deliver to the Company and Seller the
various certificates, instruments, and documents referred to in
(7.2 below and (c) Seller will deliver to the Buyer, free and
clear of all encumbrances, certificates for the Shares which he
is required to sell in negotiable form, with all requisite
transfer stamps attached.
2.4 (a) Stock Consideration. In exchange for the
Seller's Shares, the Buyer agrees to issue and Seller shall have
the right to receive as the stock consideration (the "Stock
Consideration") the number of shares of EquiMed Common Stock with
an aggregate value equal to 5.5 multiplied by the EBITDA for the
calendar year ended December 31, 1997 less an amount equal to the
Company's Debt (as defined in Section 2.5 below) as of June 30,
1997 (the "Aggregate EquiMed Common Stock Value"). For the
purposes of this Section 2.4, the "EquiMed Stock Value" for a
share of EquiMed Common Stock shall be (1) the average reported
closing sales price of EquiMed Common Stock for the ten (10)
trading days following August 1, 1997, as reported by NASDAQ,
plus (2) the average reported closing sales price of EquiMed
Common Stock for the ten (10) trading days following December 31,
1997, as reported by NASDAQ, divided by two (2).
(b) EBITDA Calculation. For the purposes of this
Section 2.4, EBITDA shall mean (a) Net Income, plus (b) the sum
of the following to the extent deducted in the determination of
Net Income: (i) income and franchise taxes, (ii) Interest Expense
and (iii) amortization, depreciation and other non-cash charges
(including amortization of goodwill, transaction expenses,
covenants not to compete and other intangible assets). Further,
for the purposes of calculating EBITDA in this Section 2.4, the
Company's billing costs shall be assumed to be 2.5% of Net
Patient Revenues for the year rather than the actual billing
costs incurred.
The term "Net Patient Revenues" shall mean gross
revenues minus contractual adjustments and uncollectable accounts
receivable, computed on accrual basis in accordance with GAAP
consistently applied.
The term "Net Income", as used in the definition of
EBITDA above, shall mean the net income (or loss) of the Company
for the year determined in accordance with GAAP; provided, that
there shall be excluded from net income (or loss) any after-tax
extraordinary gains or extraordinary losses.
The term, "Interest Expense", as used in the definition
of EBITDA above, shall mean the gross interest expense (including
without limitation, interest expense attributable to capital
leases and all net obligations pursuant to hedging agreements) of
the Company, less interest income of the Company, all determined
for such period in accordance with GAAP.
(c) 12/31/97 Financial Statements. As soon as
practical following December 31, 1997, but in no event later than
90 days thereafter, the Buyer shall cause to be prepared and
delivered to Seller audited financial statements including
audited balance sheet and statements of income, changes in
retained earnings and cash flow as of and for the fiscal year
ended December 31, 1997, audited by Xxxxxx and Xxxxx, Certified
Public Accountants (the "Accountants") or other certified public
accounting firm acceptable to Buyer and Seller (the "1997
Financial Statements"). The 1997 Financial Statements shall be
prepared in accordance with GAAP. The Accountants shall
calculate EBITDA as defined in this Section 2.4. The 1997
Financial Statements prepared by the Accountants and the EBITDA
calculation by the Accountants shall be deemed conclusive and
binding on the Buyer and Seller.
(d) Issuance of the Stock Consideration. The Stock
Consideration shall be issued to the Seller on the 15th day after
the Buyer's delivery of the 1997 Financial Statements and the
EBITDA calculation in final form to the Seller.
2.5 Adjustment to Stock Consideration; Company Debt.
(a) Seller agrees that to the extent that the
Company's working capital deficit as of June 30, 1997 exceeded
$10,000,000, as determined in the future by the amounts actually
collected and paid by the Company, an amount equal to the excess
of the working capital deficit over $10,000,000 (which amount
shall not include any debt owed to National Century Financial
Enterprises ("NCFE") or any of its affiliates with respect to
accounts receivable financing and/or any debt owed to EquiMed,
Inc or any of its affiliates, except to the extent that NCFE
liabilities and the liabilities owed to EquiMed for accounts
receivable financing as of June 30, 1997 exceeded the Company's
accounts receivable as of June 30, 1997 that are actually
collected by the Company) shall be offset against the Xxxxxxx
Payables owed to the Seller, or, if the Xxxxxxx Payables have
already been satisfied, shall be paid by the Seller to the
Company, or, at the election of Buyer, reduce the number of
shares issued as the Stock Consideration by subtracting the
excess from the Aggregate EquiMed Common Stock Value.
(b) The Stock Consideration shall also be subject to
adjustment if the Company's Debt (as herein defined) exceeds
$13,000,000. The Seller agrees to indemnify and hold harmless
the Company and the Buyer for all Liabilities related to the
Company's Debt in excess of $13,000,000 (the "Excess Debt"). In
addition to having an indemnification claim against the Seller
for the Excess Debt, the Company and the Buyer shall have the
right to offset the Excess Debt against the Xxxxxxx Payables and,
at the election of Buyer, reduce the Aggregate EquiMed Stock
Value payable to the Seller by all or a portion of the Excess
Debt. "Company's Debt" shall include all Liabilities including
the Xxxxxxx Payables and all the "Allegiant Obligations", which
shall include all amounts ultimately determined to be payable by
the Company to Allegiant, Xxxxxxx X. Xxxxxxx or others related
thereto, including but not limited to the amounts payable under
the Primary Note, the Variable Note and the Allegiant "Assumed
Liabilities" as those terms are described in the Allegiant Asset
Purchase Agreement, dated as of June 1, 1996 between the Company,
Allegiant Physician Services, Inc. and Xxxxxxx X. Xxxxxxx (and
specifically including any financing or refinancing by NCFE or
others of Allegiant Obligations or acquisition debt related to
ASI's acquisition of the business from Allegiant), but shall
exclude any accounts receivable financing liabilities debt with
NCFE or any of its affiliates and/or any and all debt with
EquiMed, Inc. or any of its affiliates, except to the extent that
NCFE liabilities and the liabilities owed to EquiMed for accounts
receivable financing as of June 30, 1997 exceed the Company's
accounts receivable as of June 30, 1997 that are actually
collected by the Company. The "Xxxxxxx Payables" include the
amounts owed by the Company to Seller whether reflected as a
shareholder payable or a shareholder receivable with a negative
balance.
ARTICLE III
Representations and Warranties Concerning the Transaction
3.1 Representations and Warranties of the Sellers.
The Seller represents and warrants to the Buyer that
the statements contained in this Section 3.1 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 Section 3.1) with respect to himself,
except as set forth in Schedule 3.1 attached hereto.
(a) Authorization of Transaction. The Seller has full
power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes
the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions. The
Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions
contemplated by this Agreement, except as described in Schedule
3.1(a).
(b) No Violation of Laws or Agreements. 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, or court to which the Seller
is subject, 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 the
Seller is a party or by which he is bound or to which any of his
assets is subject.
(c) Brokers' Fees. The Seller has no 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 the Buyer could become liable or obligated.
(d) Investment. The Seller (i) understands that the shares
to be issued as the Stock Consideration have not been, and will
not be, registered under the Securities Act or under any state
securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any
public offering, (ii) is acquiring the Stock Consideration solely
for his or its own account for investment purposes, and not with
a view to the distribution thereof, (iii) is a sophisticated
investor with Knowledge and experience in business and financial
matters, (iv) has received certain information concerning the
Buyer and has had the opportunity to obtain additional
information as desired in order to evaluate the merits and the
risks inherent in holding the Stock Consideration, (v) is able to
bear the economic risk and lack of liquidity inherent in holding
the Stock Consideration, and (vi) is an Accredited Investor for
the reasons set forth on Schedule 3.1.
(e) Seller's Shares. The Seller holds of record and owns
beneficially all the issued and outstanding shares of common
stock of the Company, free and clear of any restrictions on
transfer (other than any restrictions under the Securities Act
and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities,
claims, and demands. The Seller is not a party to any option,
warrant, purchase right, or other contract or commitment that
could require the Seller to sell, transfer, or otherwise dispose
of any capital stock of the Company (other than this Agreement).
The Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any
capital stock of Company.
3.2 Representations and Warranties of the Buyer.
The Buyer represents and warrants to the Seller that
the statements contained in this Section 3.2 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 Section 3.2) with respect to Buyer,
except as set forth in Schedule 3.2 attached hereto.
(a) Organization of the Buyer. The Buyer is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of Delaware.
(b) Authorization of Transaction. The Buyer has full power
and authority (including full corporate 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 the Buyer, enforceable in accordance with
its terms and conditions. The Buyer need not give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement,
except as described in Schedule 3.2(b).
(c) No Violation of Laws or Agreements. 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, or court to which the Buyer
is subject or any provision of its charter or bylaws 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 the Buyer is a party or by which it is
bound or to which any of its assets is subject.
(d) Brokers' Fees. The Buyer has no 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 any Seller could become liable or obligated.
ARTICLE IV
Representations and Warranties Concerning the Company.
The Seller and Company jointly represent and warrant to the
Buyer 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), except as set forth
in the disclosure schedules delivered by the Seller and Company
to the Buyer on the date hereof (the "Disclosure Schedules").
Nothing in the Disclosure Schedules shall be deemed adequate to
disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedules identify the
exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing or inclusion of a
copy of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein
unless the representation or warranty has to do with the
existence of the document or other item itself. The Disclosure
Schedules will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Article IV.
4.1 Organization, Qualification, and Corporate Power.
The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware. The Company is duly authorized to conduct business and
is in good standing under the laws of each jurisdiction where
such qualification is required which jurisdictions are listed on
Schedule 4.1. The Company operates under the registered
fictitious names and has filed fictitious name registrations for
such name in every jurisdiction where such registration is
required, which fictitious names and jurisdictions are listed in
Schedule 4.1. The Company has full corporate power and authority
and all licenses, permits, and authorizations necessary to carry
on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties
owned and used by it. Schedule 4.1 of the Disclosure Schedule
lists the directors and officers of the Company. The Seller has
delivered to the Buyer correct and complete copies of the
Articles of Incorporation and charter and bylaws of the Company
(as amended to date). The minute books (containing the records
of meetings of the stockholders, the board of directors, and any
committees of the board of directors), the stock certificate
books, and the stock record books of the Company are correct and
complete. The Company is not in default under or in violation of
any provision of its articles of incorporation, charter or
bylaws.
4.2 Capitalization.
The entire authorized capital stock of the Company
consists of 1500 Shares, of which 500 Shares are issued and
outstanding and owned by the Seller. No Shares are held in
treasury. All of the issued and outstanding Shares have been duly
authorized, are validly issued, fully paid, and nonassessable,
and are held of record by the Seller. There are no outstanding
or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with
respect to the Company. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of
the capital stock of the Company.
4.3 No Violations of Law or Agreements.
Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) violate, to the best Knowledge of Seller, any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company is
subject, (ii) violate any provision of the articles, charter or
bylaws of any of the Company or (iii) to the best Knowledge of
Seller 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 the Company 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). The Company does not need 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, except as maybe disclosed in Schedule 4.3.
4.4 Authorization and Enforceability.
The Company has full corporate power and authority to
make, execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by the
Company has been duly authorized by all necessary corporate
(including shareholder) action on the party of the Company. This
Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the
Company enforceable in accordance with its terms, except as may
be limited by bankruptcy, reorganization, insolvency or other
similar laws affecting the enforcement of creditors' rights or by
general principles of equity..
4.5 Brokers' Fees.
The Company 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.
4.6 Assets.
(a) Assets. All the assets of the Company as of June
30, 1997, excepting inventories and supplies, are listed on
Schedule 4.6(a) (the "Company Assets"). The Company has good and
marketable title to, or a valid leasehold interest in, the
Company Assets and any assets acquired subsequent to June 30,
1997, free and clear of all Security Interests excepting those
Security Interests described in Schedule 4.6(a), except for
properties and assets disposed of in the Ordinary Course of
Business since June 30, 1997.
(b) Notes and Accounts Receivable. All the accounts
and notes receivable of the Company as of June 30, 1997 are
listed on Schedule 4.6(b) (the "Accounts Receivable"). The
Company accounts receivable have been sold or transferred or will
be sold or transferred and are not included in this transaction
and all liabilities of the Company with respect to the accounts
receivable financing with EquiMed, Inc., NCFE, or others shall
remain the responsibility of the Seller and shall be subject to
indemnification claims against Seller under Article VIII and not
limited by the Threshold. The outstanding liabilities of the
Company to NCFE, EquiMed, Inc. and others with respect to the
sale of accounts receivable or the financing of accounts
receivable of the Company as of June 30, 1997 are listed on
Schedule 4.6(b).
4.7 Subsidiaries.
The Company has no Subsidiaries.
4.8 Financial Statements.
The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present
fairly the financial condition of the Company as of such dates
and the results of operations of the Company for such periods,
and are consistent with the books and records of the Company
(which books and records are correct and complete).
4.9 Events Subsequent to December 31, 1996.
Since December 31, 1996 there has not been any material
adverse change in the business, financial condition, operations,
results of operations, or future prospects of any of the Company.
Without limiting the generality of the foregoing, since that
date:
(a) no party (including any of the Company) has
accelerated, terminated, modified, or canceled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $5,000, to
which Company is a party or by which Company is bound;
(b) the Company has not imposed any Security Interest
upon any of its assets, tangible or intangible;
(c) the Company has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000 singly or $50,000
in the aggregate;
(d) the Company has not delayed or postponed the
payment of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(e) the Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion, exchange, or exercise) any of its capital stock or
recorded any stock transfers on its books;
(f) the Company has not declared, set aside, or paid
any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased or
otherwise acquired any of its capital stock;
(g) the Company has not made any loan to, or entered
into any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(h) the Company has not granted any increase in the
base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(i) the Company has not made any other change in
employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(j) there has not been any other material occurrence,
event, incident, action, failure to act, or transaction outside
the Ordinary Course of Business involving the Company; and
(k) the Company has not sold or otherwise disposed of
any Company Assets as defined in Section 4.6(a) above, including
any Company Assets acquired since December 31, 1996, except in
the Ordinary Course of Business.
4.10 Liabilities.
The Company does not have any Liability as of June 30,
1997 (and to the best Knowledge of Seller there is no Basis for
any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the
Company giving rise to any Liability), except for (i)
Liabilities listed and described in adequate detail on Schedule
4.10 and (ii) Liabilities which have arisen after June 30, 1997
in the Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement,
or violation of law).
4.11 Legal Compliance.
To the best Knowledge of Seller, the Company has
complied with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings,
and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them
alleging any failure so to comply.
4.12 Tax Matters.
(a) The Company has filed all Tax Returns that it was
required to file. All such Tax Returns were correct and complete
in all respects. All Taxes owed by any of the Company (whether
or not shown on any Tax Return) have been paid. The Company
currently is not the beneficiary of any extension of time within
which to file any Tax Return, except as described in Schedule
4.12(a). No claim has ever been made by any authority in a
jurisdiction where any of the Company does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of any of
the Company that arose in connection with any failure (or alleged
failure) to pay any Tax.
(b) The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(c) Schedule 4.12(c) lists all federal, state, local,
and foreign income Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of
audit.
(d) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
(e) The unpaid Taxes of the Company (i) did not, as of
the Most Recent Fiscal Month End, exceed the reserve for Tax
Liability (rather than any reserve for deferred Taxes established
to reflect timing differences between book and Tax income) set
forth on the face of the June 30, 1997 Balance Sheet (rather than
in any notes thereto) and (ii) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in
filing their Tax Returns.
4.13 Real Property.
(a) Real Property Owned.
The Company does not own any real property.
(b) Real Property Leased. Schedule 4.13(b) lists and
describes briefly all real property leased or subleased to the
Company (the "Leases"). The Sellers have made available to the
Buyer correct and complete copies of the Leases listed in
Schedule 4.13(b) (as amended to date). With respect to each
lease and sublease listed in Schedule 4.13(b):
(i) the transaction described in this Agreement does
not constitute a prohibited assignment under any lease and the
consent of any landlord is not required under any lease for the
lease to continue after this transaction;
(ii) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(iii) the lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions
contemplated hereby;
(iv) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) with respect to each sublease, the representations
and warranties set forth in subsections (i) through (v) above are
true and correct with respect to the underlying lease;
(vii) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest
in the leasehold or subleasehold;
(viii) all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection with the
operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations;
(ix) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities; and
4.14 Intellectual Property.
(a) The Company does not own or have the right to use
pursuant to license, sublicense, agreement, or permission any
Intellectual Property necessary or desirable for the operation of
the businesses of the Company as presently conducted and as
presently proposed to be conducted excepting appropriate licenses
for software used in its operations.
(b) To the Knowledge of the Seller and the directors
and officers (and employees with responsibility for Intellectual
Property matters) of the Company, the Company will not interfere
with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties
as a result of the continued operation of its business as
presently conducted and as presently proposed to be conducted.
4.15 Contracts.
Schedule 4.15 lists the following contracts and other
agreements to which the Company is a party:
(a) any and all anesthesiologist management services
contracts and all other management services contracts with all
hospitals and other providers (the "Management Contracts");
(b) any and all employment contracts (the "Employment
Contracts") or independent services contracts (the "Independent
Services Contracts") for the professional services of physicians
and certified nurse anesthesists.
(c) any operating leases or other agreements (or group
of related agreements) for the lease of personal property to or
from any Person;
(d) any notes, loans or capital leases (or group of
related agreements) under which it has created, incurred,
assumed, or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(e) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis in addition
to those described in Section 4.15(b) above;
(f) any agreement concerning a partnership or joint
venture;
(g) any agreement concerning confidentiality or
noncompetition;
(h) any agreement with the Seller and his Affiliates
(other than the Company);
(i) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of its current or former
directors, officers, and employees;
(j) any agreement under which it has advanced or
loaned any amount to any of its directors, officers, and
employees;
(k) any other agreement under which the consequences
of a default or termination could have an adverse effect on the
business, financial condition, operations, results of operations,
or future prospects of any of the Company.
The Seller has delivered to the Buyer a correct and complete copy
of each written agreement listed in Schedule 4.15 (as amended to
date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Schedule 4.15.
With respect to each such agreement: (i) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (ii)
the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby; (iii) no party is in breach or default and no event has
occurred which with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or
acceleration, under the agreement; and (iv) no party has
repudiated any provision of the agreement.
4.16 Powers of Attorney.
There are no outstanding powers of attorney executed on
behalf of the Company.
4.17 Insurance.
Schedule 4.17 sets forth a list of all insurance
policies (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety
arrangements) to which the Company has been a party, a named
insured, or otherwise the beneficiary of coverage at any time
within the past 2 years and indentifies the insurer, type
insurance, policy number, and whether there is any retroactive
premium adjustment provisions.
4.18 Litigation.
Schedule 4.18 sets forth each instance in which the
Company (a) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (b) is a party or, to the
best Knowledge of the Seller and the directors and officers (and
employees with responsibility for litigation matters) of the
Company, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator. None of
the actions, suits, proceedings, hearings, and investigations set
forth in Schedule 4.18 could result in any material adverse
change in the business, financial condition, operations, results
of operations, or future prospects of the Company. The Seller and
the directors and officers (and employees with responsibility for
litigation matters) of the Company do not have any reason to
believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Company.
4.19 Employees.
Schedule 4.19 contains a list of all the employees of
the Company. The Company is not a party to or bound by any
collective bargaining agreement, nor has the Company experienced
any strikes, grievances, claims of unfair labor practices, or
other collective bargaining disputes.
4.20 Employee Benefits.
(a) Schedule 4.20(a) lists each Employee Benefit Plan
that the Company maintains or to which any of the Company
contributes.
(i) To the best Knowledge of Seller, each such
Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA, the Code, and
other applicable laws.
(ii) To the best Knowledge of Seller, all required
reports and descriptions (including Form 5500 Annual Reports,
Summary Annual Reports, PBGC-ls, and Summary Plan Descriptions)
have been filed or distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Sec. 4980B have been
met with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(iii) To the best Knowledge of Seller, all
contributions (including all employer contributions and employee
salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension
Benefit Plan have been paid to each such Employee Pension Benefit
Plan or accrued in accordance with the past custom and practice
of the Company.
(iv) The Seller will cause to be delivered to the Buyer
upon Buyer's request, correct and complete copies of the plan
documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service,
the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that
the Company, maintains or ever has maintained or to which any of
them contributes, ever has contributed, or ever has been required
to contribute:
(i) To the best Knowledge of Seller, no such Employee
Benefit Plan which is in Employee Pension Benefit Plan (other
than any Multiemployer Plan) has been completely or partially
terminated or been the subject of a Reportable Event as to which
notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been
instituted or, to the Knowledge of any of the Sellers and the
directors and officers (and employees with responsibility for
employee benefits matters) of the Company threatened.
(ii) To the best Knowledge of Seller, there have been
no Prohibited Transactions with respect to any such Employee
Benefit Plan. No Fiduciary has any Liability for breach of
fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of
any such Employee Benefit Plan. No action, suit proceeding,
hearing, or investigation with respect to the administration or
the investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or, to the
Knowledge of any of the Sellers and the directors and officers
(and employees with responsibility for employee benefits matters)
of the Company, threatened. Neither the Seller nor any of the
directors and officers (and employees with responsibility for
employee benefits matters) of the Company has any Knowledge of
any Basis for any such action, suit, proceeding, hearing, or
investigation.
(iii) To the best Knowledge of Seller, the Company
has not incurred, and neither of the Seller nor any of the
directors and officers (and employees with responsibility for
employee benefits matters) of the Company has any reason to
expect that the Company will incur, any Liability to the PBGC
(other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal Liability) or under the Code with
respect to any such Employee Benefit Plan which is an Employee
Pension Benefit Plan.
(c) To the best Knowledge of Seller, neither the
Company nor any of the other members of the Controlled Group of
Corporations that includes the Company, if any, contributes to,
ever has contributed to, or ever has been required to contribute
to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(d) To the best Knowledge of Seller, the Company does
not maintain nor ever has maintained nor contributes, ever has
contributed, nor ever has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Sec. 4980B).
4.21 Guaranties.
The Company is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other
Person.
4.22 Environment, Health and Safety.
(a) The Company and its predecessors and Affiliates
has complied with all Environmental, Health, and Safety Laws, and
no action, suit, proceeding, hearing, investigation, charge,
complaint claim, demand, or notice has been filed or commenced
against any of them alleging any failure so to comply. Without
limiting the generality of the preceding sentence, the Company,
and its predecessors and Affiliates, has obtained and been in
compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and
has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all
Environmental, Health, and Safety Laws.
(b) The Company does not have any Liability (and the
Company and its predecessors and Affiliates has not handled or
disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any
substance or condition, or owned or operated any property or
facility in any manner that could form the Basis for any present
or future action, suit, proceeding, hearing, investigation,
charge, complaint claim, or demand against the Company giving
rise to any Liability) for damage to any site, location, or body
of water (surface or subsurface), for any illness of or personal
injury to any employee or other individual, or for any reason
under any Environmental, Health, and Safety Law.
4.23 Disclosure.
The representations and warranties contained in this
Article IV do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements and information contained in this Article IV not
misleading.
ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree that this Agreement will be executed in
final form the same day as or shortly before the Closing and each
of the Parties will use his or its reasonable 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, but not waiver, of the
closing conditions set forth in Article VII below). The
Schedules to this Agreement will be prepared and attached to this
Agreement prior to Closing.
ARTICLE VI
POST CLOSING COVENANTS
The Parties agree as follows with respect to the period
following Closing.
6.1 General.
In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of
this Agreement, including but not limited to the issuance of the
Stock Consideration at the time specified in Section 2.4(d), each
of the Parties will take such further action (including the
execution and delivery of such further instruments and documents)
as any other Party reasonably may request. The Seller
acknowledges and agrees that from and after the Closing the Buyer
will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data of any
sort relating to the Company.
6.2 Litigation Support.
In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, Claim, or demand in
connection with (a) any transaction contemplated under this
Agreement or (b) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing
Date involving the Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such
testimony and access to their books and records as shall be
necessary in connection with the contest or defense.
6.3 Transition.
The Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company
from maintaining the same business relationships with the Company
after the Closings as it maintained with the Company prior to the
Closing. The Seller will refer all customer inquiries relating to
the businesses of the Company to the Buyer from and after the
Closing Date.
6.4 Confidentiality.
The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the
Confidential Information except in connection with this
Agreement, and deliver promptly to the Buyer or destroy, at the
request and option of the Buyer, all tangible embodiments (and
all copies) of the Confidential Information which are in his
possession. In the event that the Seller is requested or
required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any
Confidential Information, that Seller will notify the Buyer
promptly of the request or requirement so that the Buyer may seek
an appropriate protective order or waive compliance with the
provisions of this Section 6.4. If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller
is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for
contempt, Seller may disclose the Confidential Information to the
tribunal; provided, however, that the Seller shall use his best
efforts to obtain, at the reasonable request of the Buyer, an
order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required
to be disclosed as the Buyer shall designate. The foregoing
provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the
time of disclosure.
6.5 Covenant Not to Compete.
For a period of 2 years from and after the Closing
Date, the Seller will not engage directly or indirectly in any
business that the Company conducts as of the Closing Date;
provided, however, that no owner of less than 10% of the
outstanding stock of any publicly traded corporation shall be
deemed to engage solely by reason thereof in any of its
businesses. If the final judgment of a court of competent
jurisdiction or an arbitrator declares that any term or provision
of this Section 6.5 is invalid or unenforceable, the Parties
agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid or unenforceable term
or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
The Seller's ownership interest in Buyer or National Medical
Financial Services, Inc. shall not be construed as a violation of
this covenant. Notwithstanding the above, the covenant not to
compete set forth in this Section 6.5 shall terminate
automatically (i) in the event that the Seller owns less than 51%
of the issued and outstanding common stock of the Buyer or (ii)
in the event that the Company sells its interests in the
Company's business operations and contracts to a third party.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Buyer with
Respect to the Closing.
The obligation of the Buyer to consummate the
transaction to be performed by it in connection with the Closing
is subject to the satisfaction, on or prior to the Closing Date,
of each of the following conditions (any one or more of which may
be waived in whole or in part by the Buyer at Buyer's option):
(a) Performance of Agreements. Seller and the Company
shall have performed all the covenants and complied with all the
provisions required by this Agreement to be performed or complied
with by them on or before the Closing Date and Buyer shall have
received a certificate to such effect signed by Seller and the
president of the Company.
(b) Representations and Warranties. The
representations and warranties of the Seller and the Company set
forth in Section 3.1 and Article IV shall have been true and
correct on the date when made and shall be true and correct on
and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on, as
of and with reference to the Closing Date.
(c) Opinion of Counsel. Buyer shall have received
from Xxxxx X. Xxxxxxx and Associates, P.C., counsel for Seller
and Company an opinion dated the Closing Date, in substantially
the form of Exhibit "B" hereto.
(d) No Injunction; Litigation; etc. No statute, rule
or regulation or order of any court or other authority shall be
in effect which restrains or prohibits the transactions
contemplated by this Agreement or which would limit or adversely
effect the Buyer's direct or indirect ownership of the Company or
which would limit or adversely effect Buyer's conduct of any of
the businesses of the Company following the Closing Date; nor
shall there be pending or threatened any litigation, suit, action
or proceeding by any party which (i) seeks to restrain or
prohibit the transactions contemplated by this Agreement; (ii)
challenges the legality or the validity of the transactions
contemplated by this Agreement; or (iii) seeks damages from Buyer
or Company as a result of the transactions contemplated by this
Agreement.
(e) Required Consents. All statutory and regulatory
consents and approvals which are required under the laws or the
regulations of the United States or any other Authority shall
have been obtained; all necessary consents and approvals of third
parties to the transactions contemplated hereby shall have been
obtained including those consents listed on Schedules 3.1(a) and
4.3 hereto.
(f) Audits. The Auditors shall have completed and
delivered to the Company and the Buyer the Audits.
(g) Due Diligence. Buyer shall be satisfied with
results of its financial, business and legal due diligence review
of the Company and the Audits.
(h) Actions by Sellers; Certificates. All actions to
be taken by the Seller and Company in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required
to effect the transactions contemplated hereby will be in
reasonably satisfactory form and substance satisfactory to the
Buyer.
(i) Stockholder Approval. This Agreement shall have
received any requisite approval of the stockholders of Buyer.
7.2 Conditions Precedent to the Obligations of Seller and
Company with Respect to the Closing.
The obligations of the Seller and the Company to
consummate the transactions to be performed by them in connection
with the Closing is subject to the satisfaction, on or prior to
the Closing Date, of each of the following conditions (any one or
more of which may be waived in whole or in part by the Seller at
the option of the Seller):
(a) Performance of Agreements. The Buyer shall have
performed all the covenants and complied with all the provisions
required by this Agreement to be performed or complied with by
Buyer on or before the Closing Date.
(b) Representations and Warranties. The
representations and warranties of Buyer set forth in Section 3.2
shall have been true and correct on the date when made and shall
be true and correct on and as of the Closing Date with the same
force and effect as though such representations and warranties
had been made on, as of and with reference to the Closing Date.
(c) Opinion of Counsel. Seller shall have received
from Xxxxxxxxxx, Friedberg & Xxxxx, counsel for Buyer an opinion
dated the Closing Date, in substantially the form of Exhibit "C"
hereto.
(d) No Injunction; Litigation, etc. No statute, rule
or regulation or order of any court or other authority shall be
in effect which restrains or prohibits the transactions
contemplated by this Agreement; nor shall there be pending or
threatened any litigation, suit, action or proceeding by any
party which (i) seeks to restrain or prohibit the transactions
contemplated by this Agreement; (ii) challenges the legality or
the validity of the transactions contemplated by this Agreement;
or (iii) seeks damages from Sellers or Company as a result of the
transactions contemplated by this Agreement.
(e) Required Consents. All statutory and regulatory
consents and approvals which are required under the laws or the
regulations of the United States or any other Authority shall
have been obtained; all necessary consents and approvals of third
parties to the transactions contemplated hereby shall have been
obtained including those consents listed on Schedule 3.2(b).
(f) Actions by Buyer; Certificates. All actions to be
taken by the Buyer in connection with the consummation of the
transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory
in form and substance satisfactory to the Seller.
ARTICLE VIII
REMEDIES FOR BREACH OF THIS AGREEMENT
8.1 Survival of Representations and Warranties.
All the representations and warranties of the parties
contained in this Agreement, including the Disclosure Schedules,
shall survive the Closing hereunder (even if the damaged party
knew or had reason to know of any misrepresentation or breach of
warranty at the time of the Closing) and continue in full force
and effect forever thereafter (subject to any applicable statute
of limitations).
8.2 Indemnification Provisions for Benefit of Buyer and
Company.
The Seller shall indemnify and hold harmless the
Company and the Buyer, at all times after the date of this
agreement, against and in respect all Adverse Consequences
resulting from:
(a) Undisclosed Liabilities. All Liabilities of the
Company of any nature, whether accrued, absolute, contingent, or
otherwise, existing as of the date of Closing excepting those
listed on Schedule 4.10, including, without limitation, any tax
liabilities, accrued in respect of, or measured by the Company's
income for any period prior to June 30, 1997, or arising out of
transactions entered into, or any state of facts existing, prior
to such date;
(b) Interim Liabilities. All Liabilities of, or
claims against, the Company arising out of the conduct of the
Company's business between December 31, 1996 and the Closing,
excepting those Liabilities disclosed on the June 30, 1997
unaudited balance sheet or incurred in the Ordinary Course of
Business since June 30, 1997;
(c) Taxes. All the Company's Taxes attributable to or
apportioned to any period on or before June 30, 1997 and Seller's
Taxes (including, but not limited to, those Taxes arising on
account of the transactions contemplated in this Agreement). For
the purposes of this section, Taxes shall be deemed attributable
to or apportioned to a period on or before June 30, 1997 if (i)
such Taxes are for the taxable year or other tax reporting period
that ends on or before or (ii) such Taxes are apportionable to
the pre-Closing portion of a straddle year.
(d) Misrepresentations. Any damage or deficiency
resulting from any misrepresentation, breach of warranty, or
nonfulfillment of any agreement on the part of the Seller, under
this agreement, or from any misrepresentation in or omission from
this Agreement or any Schedule to this Agreement; and
(e) Incidental Expenses. All actions, suits,
proceedings, demands, assessments, judgments, costs, reasonable
attorney's fees, and reasonable expenses incident to any of the
foregoing, to the extent that such items described in this
Section 8.2 exceed in the aggregate $50,000.00.
The Seller shall reimburse the Company or the Buyer, on
demand, for any payment made by the Company or the Buyer at any
time after the date of this Agreement, in respect of any
liability or claim to which the foregoing indemnity relates.
Seller and Buyer agree that any indemnification payments
made pursuant to this Section 9 shall be treated for tax purposes
as an adjustment to the Stock Consideration unless otherwise
required by applicable law.
Seller shall not be obligated to indemnify the Buyer and the
Company pursuant to this Section 8.2 unless the aggregate of all
such indemnification claims exceeds $50,000.00 (the "Threshold"),
in which event the Seller shall be liable for all amounts in
excess of the Threshold.
8.3 Recoupment from Stock Consideration.
The Buyer shall have the option of setting-off all or
any part of any Adverse Consequences it may suffer (in lieu of
seeking any indemnification to which it is entitled under this
Article VIII) by notifying any Seller that the Buyer is reducing
the number of shares to be issued as the Stock Consideration if
the claim is made before the issuance of the Stock Consideration
and the Buyer elects to exercise its right of set-off at Buyer's
option. The use of this set-off method shall in no way limit the
Seller's indemnification obligations under this Article VIII.
8.4 Time Limitations.
Seller shall not be required to indemnify Buyer under
Section 8.2(a), (b) or (d) for claims made for Adverse
Consequences (other than those related to the representations and
warranties in Sections 3.1(a), 3.1(d), 3.1(e), 4.2 and 4.12 which
shall not be subject to this time limitation), unless on or
before the date 2 years from the Closing Date, Buyer notifies
Seller of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer.
8.5 Matters Involving Third Parties.
(a) If any third party shall notify Buyer with respect
to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification against Seller under Section 8.2, then
the Buyer shall promptly notify Seller thereof in writing;
provided, however, that no delay on the part of the Buyer in
notifying Seller shall relieve the Seller from any obligation
hereunder unless (and then solely to that extent) the Seller is
prejudiced by such delay.
(b) Seller will have the right to defend the Buyer
against the Third Party Claim with counsel of Seller's choice so
long as (i) the Seller notifies the Buyer in writing within 15
days after the Buyer has given notice of the Third Party Claim
that the Seller will indemnify the Buyer from and against any
Adverse Consequences the Buyer may suffer, relating to the Third
Party Claim, (ii) the Third Party Claim involves only money
damages and does not seek an injunction or other equitable
relief, and (iii) the Seller conducts the defense of the Third
Party Claim actively and diligently.
(c) So long as the Seller is conducting the defense of
the Third Party Claim in accordance with Section 8.5 (b) above,
(i) the Buyer may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim,
(ii) the Buyer will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Seller (not to be
withheld unreasonably) and (iii) the Seller will not consent to
the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Buyer (not to be withheld unreasonably).
(d) In the event any of the conditions in Section
8.5(b) above is or becomes unsatisfied, however, after conferring
and consulting with the Seller (i) the Buyer may defend against,
and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner
it reasonably may deem appropriate, (ii) the Seller will
reimburse the Buyer promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable
attorneys' fees and reasonable expenses) to the extent that such
costs are in excess of the amount specified in Section 8.2(e),
and (iii) the Seller will remain responsible for any Adverse
Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim
to the fullest extent provided in this Article VIII.
(e) In the event that Seller exercises his right to
defend under Section 8.5(b), Buyer shall reimburse Seller for his
reasonable attorney's fees and reasonable defense costs up to an
amount not to exceed the amount specified in Section 8.2(e), less
any incidental expenses previously incurred or reimbursed by
Buyer under Section 8.2(e).
8.6 Other Indemnification Provisions.
The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable,
or common law remedy any Party may have for breach of
representation, warranty, or covenant. The Seller hereby agrees
that he will not make any claim for indemnification against the
Company by reason of the fact that he was a director, officer,
employee, or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director,
officer, employee, or agent of another entity (whether such claim
is for judgments, damages, penalties, fines, costs, amounts paid
in settlement losses, expenses, or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw,
agreement, or otherwise) with respect to any action, suit,
proceeding, complaint, claim, or demand brought by the Buyer
against such Seller (whether such action, suit, proceeding,
complaint, claim, or demand is pursuant to this Agreement,
applicable law, or otherwise).
ARTICLE IX
TERMINATION
9.1 Termination of Agreement.
Certain of the Parties may terminate this Agreement as
provided below:
(a) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(b) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing if
the Buyer is not reasonably satisfied with the results of its
continuing business, legal, and accounting due diligence
regarding the Company;
9.2 Effect of Termination; Survival.
If any Party terminates this Agreement pursuant to 9.1
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 arising from a breach of
this Agreement prior to such termination or from breaches of
obligations of confidentiality.
ARTICLE X
MISCELLANEOUS
10.1 Press Releases and Public Announcements.
No Party shall issue any press release or make any
public announcement relating to the subject matter of this
Agreement without the prior written approval of the Buyer and the
Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its
publicly-traded securities (in which case the disclosing Party
will use its reasonable efforts to advise the other Parties prior
to making the disclosure).
10.2 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.
10.3 Entire Agreement.
This Agreement, together with the exhibits and
schedules referred to herein, constitutes the entire agreement
among the parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject
matter hereof.
10.4 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 his or its rights, interests, or
obligations hereunder without the prior written approval of the
Buyer and the Seller; provided, however, that the Buyer may (i)
assign any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for
the performance of all of its obligations hereunder).
10.5 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.
10.6 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.
10.7 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
If to the Seller:
Xxxxxxx X. Xxxxxxx, M.D.
0000 Xxxxx Xxxx Xxxx
Xxxxxxxx XX 00000
Copy to:
Xxxx Xxxxxxxx, Esquire
Xxxx Xxxxx Xxxx & XxXxxx
Xxxxx X. Xxxx Building
000 Xxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxxxxxx XX 00000
If to the Buyer:
EquiMed, Inc.
0000 Xxx Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx XX 00000
Copy to:
Xxxxx Xxxxxxx, Esquire
X.X. Xxx 000
Xxxxxxx XX 00000-0000
and
Iles Xxxxxx, Esquire
Xxxxxxxxxx, Friedberg & Xxxxx
Ten Xxxxxxxx Xxxx, X.X. Xxx 0000
Xxxxxxxxxx XX 00000-0000
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, or messenger service, 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
Parties notice in the manner herein set forth.
10.8 Governing Law.
This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision
or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.
10.9 Amendments and Waivers.
The Parties may mutually amend any provision of this
Agreement at any time prior to the Closing with the prior
authorization of their respective boards of directors. No
amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by the Buyer and
the Seller. 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.
10.10 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.
10.11 Expenses.
Each of the Parties, will bear his or its own costs and
expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby. The Seller agrees that the Company has not borne or will
not bear any of the Seller's costs and expenses (including any of
their legal fees and expenses) in connection with this Agreement
or any of the transactions contemplated hereby.
10.12 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 requires otherwise. The word "including" shall mean
including without limitation. The Parties intend that each
representation, warranty, and covenant contained herein shall
have independent significance. If any Party has breached any
representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the
fact that the Party is in breach of the first representation,
warranty, or covenant.
10.13 Incorporation of Exhibits and Schedules.
The Exhibits and Schedules identified in this Agreement
are incorporated herein by reference and made a part hereof.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on as of the date first above written.
EQUIMED, INC.
BY:/s/ Xxxxxx Derdel, M.D.
XXXXXX DERDEL, M.D.
ANESTHESIA SOLUTIONS, INC.
BY:/s/ Xxxxxxx X. Xxxxxxx, M.D.
XXXXXXX X. XXXXXXX, M.D.,
PRESIDENT
