EXHIBIT 2.1
STOCK AND ASSET PURCHASE AGREEMENT
AMONG
OCCUCENTERS, INC.,
OCCUPATIONAL HEALTH CENTERS OF THE SOUTHWEST, P.A.,
AND
DRCA MEDICAL CORPORATION, XXXXXXX X. XXXXXXX, M.D.,
PHYSICARE, L.L.P., AND DRCA HOUSTON CLINICS, INC.
DECEMBER 31, 1996
TABLE OF CONTENTS
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PAGE
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Recitals......................................................... 1
ARTICLE 1 - Definitions.......................................... 2
ARTICLE 2 - Purchase of Assets................................... 6
ARTICLE 3 - The Closing and the Effective Time................... 8
ARTICLE 4 - Representations and Warranties....................... 9
ARTICLE 5 - Pre-Closing Covenants................................ 22
ARTICLE 6 - Conditions Precedent to Closing...................... 24
ARTICLE 7 - Indemnification...................................... 29
ARTICLE 8 - Post-Closing Covenants............................... 31
ARTICLE 9 - Termination.......................................... 38
ARTICLE 10 - Miscellaneous....................................... 38
EXHIBITS and SCHEDULES
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Exhibit A Escrow Agreement
Exhibit B Landlord's Agreement
Exhibit C Sellers' Legal Opinion Matters
Exhibit D General Conveyance, Xxxx of Sale and Assignment
Exhibit E Buyers' Legal Opinion Matters
Exhibit F Assumption Agreement
Schedule 1 Clinic Names and Locations
Schedule 2 Real Property Ownership and Leases
Schedule 3 Allocation of Purchase Price Payment Among Sellers
Schedule 1.1(a) List of Tangible Personal Property
Schedule 1.1(d) Contracts and Purchase Orders
Schedule 1.17 Excluded Assets
Schedule 4.1(f) Financial Statements
Schedule 4.1(j) Real Property Leases
Schedule 4.1(l) Bank Accounts
Schedule 4.1(m) Tax Returns and Audits
Schedule 4.1(n) Litigation and Proceedings
Schedule 4.1(o) Compensation and Benefits of Employees
Schedule 4.1(q) Required Consents and Notices
Schedule 4.1(r) Permits and Licenses
Schedule 4.1(s) Absence of Specified Changes
Schedule 4.1(t) Insurance Policies
Schedule 4.1(u) Employee Benefit Plans
Schedule 4.1(x) Real Property
Schedule 4.1(y) Depreciation Schedule
Schedule 6.1(n) Physicians and Employees to Sign Agreements
Schedule 8.5 Certain Equipment Debt
Schedule 8.6(b) Facility Locations
STOCK AND ASSET PURCHASE AGREEMENT
This Stock and Asset Purchase Agreement (the "Agreement") is made and
entered into as of the 31st day of December, 1996, by and among OccuCenters,
Inc., a Nevada corporation ("OCI"), and Occupational Health Centers of the
Southwest, P.A., a Texas professional association ("OHCSW") (OCI and OHCSW being
sometimes hereinafter referred to collectively as "Buyers" and, individually, as
a "Buyer"), and DRCA Medical Corporation, a Texas corporation ("DRCA"), Xxxxxxx
X. Xxxxxxx, M.D. ("Xxxxxxx"), PhysiCare, L.L.P., a Texas registered limited
liability partnership ("PCLLP"), and DRCA Houston Clinics, Inc., a Texas
corporation ("DRCA Houston") (DRCA, Donovan, PCLLP, and DRCA Houston being
sometimes hereinafter referred to collectively as "Sellers" and, individually,
as a "Seller").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, DRCA owns all of the issued and outstanding capital stock (the
"PhysiCare Stock") of PhysiCare Little Rock, Inc., an Arkansas corporation
("PhysiCare"); and
WHEREAS, Xxxxxxx owns all of the issued and outstanding capital stock (the
"Little Rock PA Stock") of Occupational Medicine Associates of Little Rock,
P.A., an Arkansas professional association ("Little Rock PA"); and
WHEREAS, PCLLP and DRCA Houston (sometimes hereinafter referred to
collectively as "Houston Asset Sellers") own certain Assets (as hereinafter
defined) in connection with the operation of OcMed Businesses (as hereinafter
defined) in the Houston, Texas, area (the "Houston Assets"); and
WHEREAS, Sellers are engaged in OcMed Businesses at and/or based from the
respective locations (the "Real Property") and under the respective business
names listed in Schedule 1 attached hereto; and
WHEREAS, Sellers, respectively, lease the Real Property from the lessors
(the "Landlords") pursuant to the lease agreements (the "Real Property Leases")
with the respective Landlords identified in Schedule 2 attached hereto; and
WHEREAS, OCI desires to purchase, and DRCA desires to sell, the PhysiCare
Stock, on the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, OHCSW desires to purchase, and Xxxxxxx desires to sell, the Little
Rock PA Stock, on the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, OCI desires to purchase, and Houston Asset Sellers desire to sell,
the Houston Assets, on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyers and Sellers
hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Assets" means all assets held for use in the operations of the
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Clinics and/or otherwise used or held for use in the operations of the OcMed
Businesses, including, without limitation, all Personal Property, Real Property
Leases, Names, General Intangibles, Accounts Receivable, and Goodwill (and
excluding only the Excluded Assets, as defined in Section 1.17), which are
defined as follows:
(a) "Personal Property" means all tangible personal property owned
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(but with respect only to the Houston Asset Sellers, only to the extent used
and/or held for use in the operations of the Clinics and/or the OcMed
Businesses), including, without limitation, all office furniture, fixtures,
leasehold improvements, supplies, prepaids, deposits, Inventory, Equipment,
vehicles, Books and Records, medical instruments, materials, and consumables,
together with any and all warranties thereon (to the extent same are
assignable), including without limitation those described on Schedule 1.1(a)
hereto.
(b) "Real Property Leases" shall have the meaning set forth on the
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first page of this Agreement.
(c) "Names" means all right, title, and interest in and to the Clinic
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names and the OcMed Businesses names set forth in Schedule 1 attached hereto,
the name "Physicare Little Rock, Inc." (but only with respect to use in the
State of Arkansas and/or any other area outside the State of Texas in which the
OcMed Businesses are presently, or have at any time during the preceding six (6)
months been, conducted), the name "Occupational Medicine Associates of Little
Rock" (but only with respect to use in the State of Arkansas and/or any other
area outside the State of Texas in which the OcMed Businesses are presently, or
have at any time during the preceding six (6) months been, conducted), and the
name (including all rights to the registered service xxxx thereof) "Medi-Stat,"
and any derivative or variation of any of the foregoing.
(d) "General Intangibles" means all right, title, and interest in and
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to any and all general intangibles and other intangible assets used or held for
use in the business of the Clinics and/or the OcMed Businesses, including,
without limitation, all of the Contracts and Purchase Orders described on
Schedule 1.1(d) hereto, all computer software (including computer software
licenses and, with respect only to the PhysiCare and/or the Little Rock PA
Clinics and/or OcMed Businesses, any proprietary billing and management
information system developed or under development), and all permits and licenses
(to the extent the same are transferable under applicable Laws).
(e) "Accounts Receivable" means all right, title, and interest in and
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to any and all accounts receivable, trade receivables, notes receivable, and
other receivables arising out of, related to, or connected with the OcMed
Businesses and/or the business of the Clinics.
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(f) "Goodwill" means the Purchase Price less the fair market value of
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the other Assets.
1.2 "Assumed Liabilities" shall have the meanings set forth in Section
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2.2.
1.3 "Balance Sheets" and "Balance Sheet Date" shall have the meanings set
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forth in Section 4.1(f).
1.4 "Books and Records" means (i) the minute books containing the minutes
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of all meetings and written consents of the shareholders and directors (and all
committees thereof), shareholder register, stock transfer ledgers, stock
certificate book, and corporate seal of PhysiCare and Little Rock PA, and (ii)
the books and records of PhysiCare, Little Rock PA, and Sellers relating to the
OcMed Businesses and/or to the development and/or business of the Clinics,
including, without limitation, all accounting records, medical records, files,
invoices, customer lists, and supply lists.
1.5 "Claim" means a claim pursuant to Article 7 that a party is entitled,
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or may become entitled, to indemnification under this Agreement.
1.6 "Clinics" means the businesses of PhysiCare, Little Rock PA, and/or
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Sellers conducted at the Real Property.
1.7 "Closing" means the closing of the transactions contemplated by this
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Agreement.
1.8 "Closing Date" shall have the meaning set forth in Section 3.1.
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1.9 "Contract" means a contract, commitment, lease, note, mortgage, or
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other agreement or instrument, but not including the Real Property Leases or the
Purchase Orders.
1.10 "Effective Time" means 11:59 p.m., on December 31, 1996.
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1.11 "Employee Benefit Liability" means any liability or obligation of any
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of the Sellers, or, with respect to periods prior to the Effective Time,
PhysiCare or Little Rock PA (a) that is an accrued but unpaid monetary
obligation to make a contribution under any Employee Benefit Plan, other than
any such obligation that is attributable to the transactions provided for
herein; (b) for accrued vacation pay or accrued sick pay; (c) for accrued
employee wages payable in the ordinary course of business and payroll taxes with
respect thereto; (d) that is due and owing to independent contractors (including
physician specialists); or (e) for other employee fringe benefits, including
without limitation insurance programs (including COBRA obligations), expense
reimbursement obligations, continuing education stipends, and automobile
allowances.
1.12 "Employee Benefit Plans" shall have the meaning set forth in Section
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4.1(u).
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1.13 "Encumbrance" means any security interest, lien, claim, condition,
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restriction, or other encumbrance.
1.14 "Equipment" means the machinery, equipment, tools, spare parts,
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furniture, vehicles, and other items of tangible personal property of any kind
(other than Inventory) which are used in the OcMed Businesses and/or in the
business or operations of the Clinics.
1.15 "Escrow Agent" means the Escrow Agent named in the Escrow Agreement.
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1.16 "Escrow Agreement" means the form of Escrow Agreement attached hereto
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as Exhibit A.
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1.17 "Excluded Assets" means the Assets described on Schedule 1.17 attached
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hereto.
1.18 "Excluded Liabilities" shall have the meaning set forth in Section
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2.3.
1.19 "Financial Statements" shall have the meaning set forth in Section
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4.1(f).
1.20 "Houston Assets" shall have the meaning set forth on the first page of
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this Agreement.
1.21 "Indemnified Party" shall have the meaning set forth in Section 7.3.
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1.22 "Indemnifying Party" shall have the meaning set forth in Section 7.3.
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1.23 "Inventory" means medical and office supplies (with respect to the
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Houston Asset Sellers, only to the extent used or held for use in the Clinics
and/or the OcMed Businesses), including, but not limited to, drugs, bandages,
and office materials.
1.24 "Landlords" shall have the meaning set forth on the first page of this
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Agreement.
1.25 "Landlord's Agreement" means the form of Landlord's Agreement attached
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hereto as Exhibit B.
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1.26 "Law" means any law, ordinance, code, rule, or regulation of any
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governmental unit or administrative or regulatory agency.
1.27 "Little Rock Assets" means the Assets owned by PhysiCare and the
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Assets owned by Little Rock PA.
1.28 "Loss" means any loss, damage, or expense (including, without
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limitation, attorneys' fees, and costs of investigation and litigation).
1.29 "Objection Period" shall have the meaning set forth in Section 7.3.
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1.30 "OcMed Businesses" means primary care practices, occupational
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medicine practices and business, and mobile testing businesses owned and/or
operated by PhysiCare, Little Rock PA, and/or any Seller, and including, without
limitation, the operations of the Clinics and/or the provision of, marketing of,
establishing networks of providers or payors for, or otherwise promoting,
occupational healthcare services or the practice of occupational medicine (i.e.,
employer or employer's insurance paid medical services relating to employees and
having specific reference to employment related matters, including without
limitation preplacement physical exams, laboratory testing, x-rays, audiometry,
spirometry, electrocardiography, drug screens, work related injuries and
illnesses, physical therapy and rehabilitation associated with work-related
injuries, work-related independent medical evaluations, and/or consulting with
employers regarding employer policies and case management).
1.31 "Purchase Order" means any order, contract, commitment, or agreement
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for the purchase of supplies, equipment, services, or other items used in the
business or operations of the Clinics or in the OcMed Businesses.
1.32 "Purchase Price" shall have the meaning set forth in Section 2.1.
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1.33 "Real Property" shall have the meaning set forth on the first page of
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this Agreement.
1.34 "Resolution Period" shall have the meaning set forth in Section 7.4.
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1.35 "Sellers' Affiliates" means (a) any relative of any Seller or entity
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that is controlled by, or a majority of the equity interests of which are owned
by, a Seller or any relatives of a Seller, or for which a Seller or any relative
of a Seller serves as an officer or a member of the board of directors or other
governing body, or (b) any entity which controls, is controlled by, or is under
common control with any entity described in clause (a) of this Section 1.36. As
used in this Section 1.36, a "relative" of a person is any parent, child, spouse
or sibling of a person, or any parent, child, or sibling of a person's spouse.
1.36 "Third-Party Suit" means a suit or proceeding by a third party with
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respect to which a Claim is made.
1.37 "Trade Accounts Payable" means recurring trade obligations (a) that
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arise from the acquisition of merchandise, materials, supplies, and services
used in the provision of goods and services at the Clinics or in the OcMed
Businesses, and (b) which are directly related to the continuing operations of
the Clinics or the OcMed Businesses, including, without limitation, drug screens
and medical supplies. Trade Accounts Payable shall be limited to amounts due
third parties for goods and services and shall not include any indebtedness or
any Employee Benefit Liabilities, accrued but unpaid interest, or real estate
taxes.
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ARTICLE 2
PURCHASE OF PHYSICARE STOCK,
LITTLE ROCK PA STOCK, AND HOUSTON ASSETS
2.1 Purchase Price; Payment. At the Closing on the Closing Date,
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subject to the terms and conditions set forth in this Agreement: (a) DRCA agrees
to sell, convey, transfer, and deliver the PhysiCare Stock to OCI, and OCI
agrees to purchase and accept the PhysiCare Stock from DRCA; (b) Xxxxxxx agrees
to sell, convey, transfer, and deliver the Little Rock PA Stock to OHCSW, and
OHCSW agrees to purchase and accept the Little Rock PA Stock from Xxxxxxx; and
(c) Houston Asset Sellers agree to sell, convey, transfer, and deliver the
Houston Assets to OCI, and OCI agrees to purchase and accept the Houston Assets
from Houston Asset Sellers. In full consideration for the sale, conveyance,
transfer, and delivery to OCI of the PhysiCare Stock at the Closing, to OHCSW of
the Little Rock PA Stock at the Closing, and to OCI of the Houston Assets at the
Closing, Buyers shall pay to Sellers an aggregate total of Seven Million Seven
Hundred Thousand Dollars ($7,700,000) (the "Purchase Price"), subject to
adjustment pursuant to the provisions of Section 8.5, and further reduced by any
amount agreed by Buyers and Sellers at or prior to the Closing. The Purchase
Price shall be allocated among Sellers in accordance with Schedule 3 attached
hereto and shall be paid in cash or other immediately available funds at the
Closing; provided, however, that a total of Five Hundred Thousand Dollars
($500,000) of the Purchase Price shall, in lieu of being paid to Sellers at the
Closing, be deposited with the Escrow Agent pursuant to the Escrow Agreement
(allocated among Sellers in accordance with Schedule 3 attached hereto).
2.2 Assumed Liabilities. The parties hereby acknowledge that the
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transactions contemplated by this Agreement are based on the assumption that, at
Closing, the liabilities and obligations of PhysiCare and Little Rock PA, and
the liabilities and obligations relating to or arising in connection with the
Houston Assets shall consist only of the following:
(a) All of PhysiCare's, Little Rock PA's, and the Houston Asset
Sellers' respective non-delinquent, executory obligations with respect to
periods after the Effective Time under the Real Property Leases, and the
Contracts and Purchase Orders that are described on Schedule 1.1(d); and
(b) Subject to the provisions of Section 8.5, all Trade Accounts
Payable of PhysiCare, Little Rock PA, and (to the extent arising and incurred in
connection with the operation of the Clinics and the OcMed Businesses) the
Houston Asset Sellers reflected in the Balance Sheets and/or incurred and
outstanding in the ordinary course of business at the Effective Time.
The foregoing liabilities are hereinafter collectively referred to as the
"Assumed Liabilities." On the terms and subject to the conditions set forth in
this Agreement, including, without limitation, in Section 8.5 hereof, Buyers
agree to assume at the Closing the Assumed Liabilities and to pay, perform, and
discharge (or cause to be paid, performed, or discharged) the obligations of
Sellers, PhysiCare, and/or Little Rock PA thereunder.
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2.3 Definition of Excluded Liabilities. Pursuant to Section 4.1(g),
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Sellers have represented and warranted that PhysiCare, Little Rock PA, and the
Houston Assets are not subject to any of the following liabilities (together
with the liabilities described in Section 4.1(g), collectively, the "Excluded
Liabilities"), none of which Excluded Liabilities, as between Buyers, on the one
hand, and Sellers, on the other hand, are hereby assumed by Buyers, and all of
which Excluded Liabilities, notwithstanding the provisions of Section 2.2, as
between Buyers, on the one hand, and Sellers, on the other hand, shall be and
remain the sole and absolute obligations of Sellers:
(a) Any liability for any taxes imposed on or payable by PhysiCare,
Little Rock PA, any Seller, or with respect to the Houston Assets relating to
periods prior to the Effective Time, including, without limitation, all
withholding and payroll taxes, any state or federal gross receipts or income
tax, real estate, and personal property taxes;
(b) Any liability under any litigation or administrative proceeding,
including, without limitation, workers' compensation claims, EEOC claims, age
discrimination or sexual harassment allegations, and other similar claims or
allegations by employees, former employees, or prospective employees of any
Seller, or, based upon acts or events occurring prior to the Effective Time,
PhysiCare or Little Rock PA;
(c) Any liability for personal injury, medical malpractice, or
property damage which relates to the OcMed Businesses, the Clinics, or the
operations of the OcMed Businesses or the Clinics and relates to the period
prior to the Effective Time or any liability for personal injury, medical
malpractice, or property damage which relates to any other business or other
medical practice, if any, of PhysiCare, Little Rock PA, or any Seller;
(d) Any liability under products liability, strict liability, or
implied warranty claims relating to services rendered or products sold by any
Seller, or, based upon acts or events occurring prior to the Effective Time, by
PhysiCare or Little Rock PA;
(e) All Employee Benefit Liabilities (including, without limitation,
any liability for vacation pay or accrued sick pay, all of which shall be paid
or satisfied on or prior to January 10, 1997), and any liability under any
theory for services rendered by any Seller or, based upon acts or events
occurring prior to the Effective Time, PhysiCare or Little Rock PA, or their
respective employees or independent contractors (including, without limitation,
taxes, penalties, and interest);
(f) Any debt or obligation owed by PhysiCare, Little Rock PA, or any
Seller to any Seller or any Sellers' Affiliate, including, without limitation,
any accrued but unpaid management fees owing to any Seller or Sellers'
Affiliate;
(g) Any indebtedness for borrowed money, other than the Equipment Debt
(as defined in Section 8.5);
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(h) Any obligation or liability under or relating to any Employee
Benefit Plan, and any amount payable or other consideration that any Seller
agrees in its discretion to pay to any employee or physician as an incentive or
inducement to enter into an employment agreement pursuant to Section 6.1(n)
hereof;
(i) Any Medicare, Medicaid, or CHAMPUS contract or any other possible
governmental liabilities of any Seller or any affiliate of any Seller (other
than PhysiCare or Little Rock PA), or, based upon acts or events occurring prior
to the Effective Time, of PhysiCare or Little Rock PA, it being the clear intent
of the parties to this Agreement that any liability with regard to the foregoing
is expressly rejected by Buyers and is expressly not assumed by Buyers;
(j) PhysiCare's, Little Rock PA's, or any Seller's costs and expenses
associated with this Agreement, as described in Section 5.5;
(k) Any liability related to or arising under certain Little Rock "MRI
Billing and Collection Agreements" described on Schedule 1.1(d) with respect to
cash collections received prior to the Effective Time; or
(l) All of PhysiCare's, Little Rock PA's, and the Houston Asset
Sellers' respective obligations with respect to periods prior to the Effective
Time under the Real Property Leases, and under the Contracts and Purchase Orders
that are described on Schedule 1.1(d).
2.4 Allocation of Purchase Price. The Purchase Price to be paid to
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the Houston Asset Sellers with respect to the Houston Assets shall be allocated
among the Houston Assets in a manner to be agreed to by Buyers and the Houston
Asset Sellers. The Houston Asset Sellers will provide Buyers with a proposed
allocation within thirty (30) days following the Closing Date. Buyers and
Sellers agree to utilize such agreed allocation with regard to any and all
federal and state tax matters and for all other purposes.
ARTICLE 3
THE CLOSING AND THE EFFECTIVE TIME
3.1 The Closing. The Closing referred to in Section 2.1 hereof (the
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"Closing") will take place at the offices of Xxxxxxxxx & Xxxxxx, L.L.P., 0000
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, at 2:00 p.m., local time, on
December 31, 1996, or at such other place or at such other date and time as the
parties hereto shall agree. Such time and date are referred to herein as the
"Closing Date."
3.2 Effective Time. The Closing shall be effective as of the
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Effective Time, and Buyers and Sellers agree to acknowledge and use said
Effective Time for all purposes, including for accounting and federal and state
tax reporting purposes.
3.3 Effect of Delays. Except as provided in Article 9, failure to
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consummate the Closing on the date and time and at the place selected pursuant
to this Article 3 shall not result
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in any termination of this Agreement and shall not relieve any party to this
Agreement of any obligation hereunder.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties by Sellers. As a material
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inducement for Buyers to enter into this Agreement and to consummate the
transactions contemplated hereby, DRCA and DRCA Houston hereby jointly and
severally make the following representations and warranties as of the date
hereof and as of the Effective Time (and Xxxxxxx and PCLLP hereby in and for
themselves only, respectively, and only to the extent related to Little Rock PA
and PCLLP and the Houston Assets sold by PCLLP, respectively, pursuant to this
Agreement hereby make the following representations and warranties as of the
date hereof and as of the Effective Time) each of which is relied upon by Buyers
regardless of any investigation made or information obtained by Buyers:
(a) Organization, Standing, etc. PhysiCare is a duly and validly
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organized and existing corporation in good standing under the laws of the State
of Arkansas, with full power and authority to carry on its business as presently
conducted. PhysiCare does not have any direct or indirect interest of any kind
in any other corporation, partnership, limited liability company, association,
or business, and it has never conducted any business or engaged in any activity
outside of the state of its incorporation. Little Rock PA is a duly and validly
organized and existing professional association in good standing under the laws
of the State of Arkansas, with full power and authority to carry on its business
as presently conducted. Little Rock PA does not have any direct or indirect
interest of any kind in any other corporation, partnership, limited liability
company, association, or business, and it has never conducted any business or
engaged in any activity outside of the state of its incorporation. PCLLP is a
duly and validly organized and existing registered limited liability partnership
under the laws of the State of Texas, with full power and authority to carry on
its business as presently conducted. DRCA Houston is a duly and validly
organized and existing corporation in good standing under the laws of the State
of Texas, with full power and authority to carry on its business as presently
conducted. Neither of the Houston Asset Sellers owns any direct or indirect
interest of any kind in any other corporation, partnership, limited liability
company, association, or business, and it has never conducted any business or
engaged in any activity outside of the state of its incorporation or
organization. DRCA is a duly and validly organized and existing corporation in
good standing under the laws of the State of Texas, with full power and
authority to carry on its business as presently conducted.
(b) Due Authorization; Compliance with Instruments and Agreements. The
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execution, delivery, and performance by Sellers of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate and shareholder action, and no other approvals or
authorizations are necessary in connection therewith. DRCA is the sole
shareholder of PhysiCare. Xxxxxxx is the sole shareholder of Little Rock PA.
This Agreement and all other agreements, instruments, certificates, and
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documents executed and delivered by or on behalf of Sellers are the valid and
binding obligations of Sellers, enforceable against Sellers in accordance with
their respective terms, subject as to enforcement only to applicable bankruptcy,
insolvency, reorganization or other laws affecting the rights of creditors
generally, or to equitable principles. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
result in any breach or violation of any of the terms or provisions of, or
constitute a default under, (i) the articles of incorporation or bylaws of any
of PhysiCare, Little Rock PA, either of the Houston Asset Sellers, or DRCA, (ii)
any statute, order, rule, or regulation of any court or governmental agency or
body having jurisdiction over any of PhysiCare, Little Rock PA, the Houston
Asset Sellers, or DRCA, or (iii) assuming that the required consents referred to
in Schedule 4.1(q) attached hereto are obtained at or prior to the Closing Date,
any agreement, instrument, or commitment to which the any of PhysiCare, Little
Rock PA, either of the Houston Asset Sellers, or DRCA is a party, by which it is
bound, or to which any of its property is subject.
(c) Capitalization and Indebtedness for Borrowed Moneys.
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(i) Capitalization and Dividends. The PhysiCare Stock to be conveyed
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to OCI pursuant to this Agreement constitutes all of the issued and outstanding
equity interests in PhysiCare. Sellers have delivered to Buyers true and
complete copies of the articles of incorporation and bylaws of PhysiCare. Since
January 1, 1996, PhysiCare has not (A) paid any dividend to any of its equity
owners, (B) made any other distribution on or with respect to, or redeemed or
otherwise acquired, any equity interest in PhysiCare, or (C) other than the
initial issuance of PhysiCare Stock to DRCA, made or permitted any change in the
authorized, issued, or treasury shares of its equity securities. The Little
Rock PA Stock to be conveyed to OHCSW pursuant to this Agreement constitutes all
of the issued and outstanding equity interests in Little Rock PA. Sellers have
delivered to Buyers true and complete copies of the articles of incorporation
and bylaws of Little Rock PA. Since January 1, 1996, Little Rock PA has not (A)
paid any dividend to any of its equity owners, (B) made any other distribution
on or with respect to, or redeemed or otherwise acquired, any equity interest in
Little Rock PA, or (C) made or permitted any change in the authorized, issued,
or treasury shares of its equity securities.
(ii) Indebtedness for Borrowed Moneys. Neither PhysiCare nor Little
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Rock PA has any outstanding indebtedness for borrowed moneys except as reflected
in the Balance Sheets included in Schedule 4.1(f) pursuant to subsection (f)
below. True and complete copies of every instrument, agreement, and other
document relating to any such indebtedness have been delivered to Buyers. At
the time of the Closing, neither PhysiCare nor Little Rock PA will be indebted
to or have any obligation to any Seller or Sellers' Affiliate.
(iii) Options or Rights. Except for this Agreement, there are no
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outstanding agreements, rights, subscriptions, options, warrants, convertible
securities, commitments, arrangements, or understandings of any character under
which either PhysiCare or Little Rock PA is or may be obligated to issue or
purchase any interest in PhysiCare or Little
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Rock PA or under which any Seller is or may be obligated to sell or transfer any
shares or other interest in PhysiCare or Little Rock PA.
(d) Title to Shares. DRCA has good and marketable title to all of the
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PhysiCare Stock, free and clear of all Encumbrances and restrictions, legal or
equitable, of every kind, except for restrictions on transfer imposed by federal
or state securities laws. Xxxxxxx has good and marketable title to all of the
Little Rock PA Stock, free and clear of all Encumbrances and restrictions, legal
or equitable, of every kind, except for restrictions on transfer imposed by
federal or state securities laws. Each of DRCA and Xxxxxxx, as applicable, has
full and unrestricted legal right, power, and authority to sell, assign, and
transfer the PhysiCare Stock and the Little Rock PA Stock without obtaining the
consent or approval of any other person, entity, or governmental authority, and
the delivery of the PhysiCare Stock and the Little Rock PA Stock to OCI and to
OHCSW, respectively, pursuant to this Agreement will transfer valid title
thereto, free and clear of all Encumbrances, claims, and restrictions of every
kind, except for restrictions on transferability imposed by federal and state
securities laws.
(e) Assets of the Corporation. PhysiCare and Little Rock PA,
-------------------------
respectively, have good and marketable title to all of the Little Rock Assets
(including leasehold interests as to such Assets that are leased), subject to no
Encumbrance or other charge, other than (i) the interests of equipment lessors
with respect to leased equipment, (ii) liens for taxes not yet due, and (iii)
liens created pursuant to the Contracts listed on Schedule 1.1(d) (collectively,
the "Little Rock Permitted Liens"). The Houston Asset Sellers, respectively,
have good and marketable title to all of the Houston Assets (including leasehold
interests as to such Assets that are leased), subject to no Encumbrance or other
charge, other than (i) the interests of equipment lessors with respect to leased
equipment, (ii) liens for taxes not yet due, and (iii) liens created pursuant to
the Contracts listed on Schedule 1.1(d) (collectively, the "Houston Permitted
Liens"). The assets so owned or leased by PhysiCare, Little Rock PA, and/or the
Houston Asset Sellers and included in the Little Rock Assets and the Houston
Assets constitute all of the assets currently in existence which are being used
in connection with the business of the Clinics and/or the OcMed Businesses.
(f) Financial Statements. Attached hereto as Schedule 4.1(f) are (i)
-------------------- ---------------
true, correct, and complete copies of the following financial statements of each
of PhysiCare and Little Rock PA on an accrual basis: (A) an unaudited balance
sheet (collectively, with respect to each such entity, the "Balance Sheets") of
each such entity as of November 30, 1996 (the "Balance Sheet Date"), and the
related consolidated statements of income, cash flow, and changes in
stockholders equity for the eleven (11) months then ended; and (B) unaudited
balance sheets of each such entity and the related consolidated statements of
income, cash flow, and changes in stockholders equity for the fiscal years ended
December 31, 1994, and December 31, 1995, including in each case the notes
thereto; and (ii) true, correct, and complete copies of the following financial
statements of PCLLP and DRCA Houston on an accrual basis: (A) an unaudited
listing of selected assets and liabilities of each such entity relating to the
Clinics and the OcMed Businesses as of the Balance Sheet Date (collectively,
with respect to such entities, the "Balance Sheet"), and an unaudited profit and
loss statement of each such entity relating to
11
the OcMed Businesses for the eleven (11) months then ended; and (B) an
unaudited listing of selected assets and liabilities of each such entity and
profit and loss statements of each such entity relating to the Clinics and the
OcMed Businesses for the fiscal years ended December 31, 1994, and December 31,
1995 (collectively, the "Financial Statements"). The Financial Statements (i)
are in accordance with the books and records of each such entity, (ii) fairly
present the financial condition and results of operations of each such entity at
the respective dates and for the periods therein specified, and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied (subject in the case of the Balance Sheets to normal
recurring year-end adjustments, the effect of which will not, individually or in
the aggregate, be materially adverse).
(g) Liabilities of PhysiCare, Little Rock PA, and the Houston Asset
---------------------------------------------------------------
Sellers. Except for the liabilities reflected in the Balance Sheets, the Real
-------
Property Leases, the Contracts and Purchase Orders described in Schedule 1.1(d),
the litigation matters described in Schedule 4.1(n), and all other obligations
incurred in the ordinary course of business since the Balance Sheet Dates, none
of PhysiCare, Little Rock PA, and/or the Houston Asset Sellers has or is subject
to any material liability of any nature, whether accrued, absolute, contingent,
or otherwise. Any other liabilities or obligations of PhysiCare, Little Rock
PA, and/or the Houston Asset Sellers are included in the Excluded Liabilities.
There are no facts in existence which might reasonably serve as the basis for
any liability or obligation of PhysiCare, Little Rock PA, or either of the
Houston Asset Sellers which is not fully disclosed in this Agreement and the
Schedules hereto. Except for Trade Accounts Payable and accrued liabilities
reflected on the Balance Sheets, the failure to be current in payment
obligations with respect to which does not and will not, either individually or
in the aggregate result in a material adverse effect to PhysiCare, Little Rock
PA, or either of the Houston Asset Sellers, PhysiCare, Little Rock PA, and, with
respect to the Houston Assets, the Clinics, and the OcMed Businesses, each of
the Houston Asset Sellers, is and as of the Closing Date will be current in all
payment obligations to which it is subject, except as otherwise agreed by
Buyers.
(h) Noncompetition Covenants. Neither PhysiCare, Little Rock PA, any
------------------------
Seller, nor (except for employment agreements with PhysiCare, Little Rock PA, or
any Seller) any physician, other professional, or other person who provides
services at any Clinic or in connection with the OcMed Businesses is subject to
any noncompetition covenant or other similar agreement restricting PhysiCare's,
Little Rock PA's, such Seller's, or such physician's, other professional's, or
other person's ability to engage in competitive businesses and, following the
Closing, Buyers and their respective affiliates will not be subject to any such
noncompetition covenant or restrictive agreement by virtue of the consummation
of the transactions contemplated by this Agreement.
(i) Accounts Receivable. A true and complete list of all outstanding
-------------------
Accounts Receivable of PhysiCare, Little Rock PA, and each of the Houston Asset
Sellers as of the Balance Sheet Date has been delivered to Buyers. All of such
Accounts Receivable are valid and enforceable claims for services rendered
and/or goods supplied by PhysiCare, Little Rock PA, and/or the Houston Asset
Sellers and are not subject to any defenses, offsets, claims, or
12
counterclaims of any kind. Except for (i) allowances for doubtful accounts and
contractual adjustments reflected in the Balance Sheets, and (ii) with respect
to claims on patients who are represented by personal injury attorneys, which
claims are subject to adjudication or settlement of the related personal injury
claim, Sellers do not know of any reason why such Accounts Receivable will not
be collected on a basis consistent with past collection history. The allowances
for doubtful accounts and contractual adjustments reflected in the Balance Sheet
are based upon historic collection activities and have been determined in
accordance with generally accepted accounting principles.
(j) Real Property Leases. Sellers have provided to Buyers true and
--------------------
complete copies of the Real Property Leases. None of PhysiCare, Little Rock PA,
or any of the Sellers has assigned, subleased, or conveyed any interest in any
Real Property Lease or the premises covered thereby. Each Real Property Lease
has been duly and validly executed by the lessee and is in full force and effect
and constitutes the valid and binding agreement of the parties thereto. Except
as described on Schedule 4.1(j) hereto, and except to the extent that any such
default does not and will not cause a material adverse effect to PhysiCare,
Little Rock PA, and/or the Clinics and OcMed Businesses, none of PhysiCare,
Little Rock PA, either of the Houston Asset Sellers, nor (to the best of
Sellers' knowledge) any other party is in default under any Real Property Lease
and no event or condition has occurred or exists which, with the passage of
time, the giving of notice or both, would cause any of PhysiCare, Little Rock
PA, either of the Houston Asset Sellers, or (to the best of Sellers' knowledge)
any other party to any Real Property Lease to be in default thereunder.
(k) Material Contracts. Sellers have delivered to Buyer an accurate
------------------
list (attached hereto as Schedule 1.1(d)) of all material Contracts, Purchase
Orders, leases (other than the Real Property Leases), and instruments to which
any of PhysiCare, Little Rock PA, or, to the extent related to the Houston
Assets, either of the Houston Asset Sellers is a party or by which it or any of
its assets are bound as of the date hereof. For purposes hereof, the term
"Material Contracts" shall mean the following (except to the extent that any of
the following is not an Assumed Liability): (i) all equipment leases where the
aggregate rent required to be paid on or after the Effective Time under the
terms of such lease is at least $5,000; (ii) all executory purchase agreements
relating to the purchase of equipment, supplies, or other goods where the amount
that is payable after the Effective Time is at least $5,000; (iii) all
agreements with any Seller or any Sellers' Affiliate, and Schedule 1.1(d) sets
forth the relationship (if any) of any party to any agreement, lease, or other
document listed in Schedule 1.1(d) with any Seller or Sellers' Affiliate; (iv)
all agreements with any physician, physician assistant, physical therapist, or
professional association or corporation; (v) all employment and consulting
agreements, including, without limitation, all incentive compensation plans or
commitments; (vi) all agreements with employers, health maintenance
organizations, insurance companies, physician provider organizations, and other
managed care entities, or other contracts whereunder any of PhysiCare, Little
Rock PA, or either of the Houston Asset Sellers is committed to provide goods or
services; (vii) all agreements with sales or marketing representatives; (viii)
all documents and instruments relating to any indebtedness reflected on the
Balance Sheets (except any such indebtedness that pursuant to the terms of this
Agreement is not an Assumed Liability); (ix) all
13
powers of attorney and agency agreements with third parties; and (x) all other
agreements and commitments (A) in which the financial obligation of PhysiCare,
Little Rock PA, or either of the Houston Asset Sellers as of the Effective Time
is at least $5,000 or (B) which cannot be canceled by PhysiCare, Little Rock PA,
or either of the Houston Asset Sellers, as applicable, without cause and without
premium or penalty, upon no more than thirty (30) days notice. Sellers have
delivered to Buyers true and complete copies of the documents and instruments
described in Schedule 1.1(d).
(l) Bank Accounts. Set forth on Schedule 4.1(l) attached hereto is an
-------------
accurate and complete list showing the name and address of each bank in which
PhysiCare or Little Rock PA has an account or safe deposit box, the number of
any such account or safe deposit box, and the names of all persons and entities
authorized to draw thereon or to have access thereto.
(m) Tax Returns and Audits. Each of PhysiCare, Little Rock PA, and
----------------------
each of the Sellers has accurately prepared and filed all federal, state, and
local income, property, and employment related tax returns and all information
statements required to be filed prior to the date of this Agreement. True and
complete copies of each of the most recent of any such material return or
statement, and such other returns and statements requested by Buyers, have been
provided to Buyers. Any federal, state, and local taxes required to be paid or
withheld with respect to the periods covered by such returns and statements have
been paid or withheld. The liabilities for unpaid taxes shown on the Balance
Sheets are and will be sufficient to pay all taxes accrued through the Balance
Sheet Date and not reported on and paid with returns filed by the respective
entities prior to the Effective Time. No tax liability will be incurred by
PhysiCare or Little Rock PA as a result of the transactions contemplated by this
Agreement. Except as described on Schedule 4.1(m), neither PhysiCare, Little
Rock PA, nor any Seller has been delinquent in the payment of any tax,
assessment, or governmental charge or in the filing of any tax return or
information statement. Except as described on Schedule 4.1(m), neither
PhysiCare, Little Rock PA, nor any Seller has had any tax deficiency proposed or
assessed against it or has executed any waiver of any statute of limitations on
the assessment or collection of any tax. Except as described on Schedule
4.1(m), neither the federal income tax returns, any employment related returns,
nor the state income or franchise tax returns (if any) of PhysiCare, Little Rock
PA, or any Seller have ever been audited by any governmental authority.
(n) Litigation and Proceedings. Except as described in Schedule
--------------------------
4.1(n) attached hereto, there are no outstanding legal claims, actions, suits,
arbitrations, or other legal, administrative, or governmental proceedings
pending or, to the knowledge of Sellers, threatened against PhysiCare, Little
Rock PA, or, to the extent relating to the Clinics and/or the OcMed Businesses,
any Seller or any properties, assets, or business of PhysiCare, Little Rock PA,
or, to the extent relating to the Clinics and/or the OcMed Businesses, any
Seller, or any person at any time employed, engaged, or otherwise associated by
PhysiCare, Little Rock PA, or, to the extent relating to the Clinics and/or the
OcMed Businesses, any Seller with respect to the services provided or period of
such employment, engagement, or association, and, to the knowledge of Sellers,
no facts exist which have been or should be reported under any professional
liability insurance policy covering PhysiCare, Little Rock PA, or, to the extent
14
relating to the Clinics and/or the OcMed Businesses, any Seller. None of
PhysiCare, Little Rock PA, nor any Seller is in default with respect to any
judgment, order, or decree of any court, governmental agency, or
instrumentality. Schedule 4.1(n) contains a complete and accurate description
of the status of any matter covered thereby and Sellers carry adequate insurance
to cover the costs, expenses, and damages of each of the matters described
therein, including, without limitation, those that include allegations of
medical malpractice. Except for normal collection efforts relating to accounts
receivable, none of PhysiCare, Little Rock PA, nor, to the extent relating to
the Clinics and/or the OcMed Businesses, any Seller is engaged in any legal
action to recover money due to or damages sustained by it.
(o) Compensation and Benefits. Attached hereto as Schedule 4.1(o) is
-------------------------
an accurate and complete list setting forth the names, dates of hire, salaries
or other remuneration, bonuses, and employee benefits of all current employees
and consultants of PhysiCare, Little Rock PA, and, with respect to the Houston
Assets and the Clinics and/or OcMed Businesses operated by the Houston Asset
Sellers, by the Houston Asset Sellers (including but not limited to vacation
time and pay, severance pay, physician malpractice insurance programs, incentive
compensation programs, sick time and pay, and group insurance and other benefit
plans, policies, and arrangements), whether such benefits are provided pursuant
to contract, policy, custom, or informal understanding. Sellers have delivered
to Buyers true and complete copies of DRCA's, PhysiCare's, Little Rock PA's, and
the Houston Asset Sellers' written employee policies and practices (including,
without limitation, any employee handbook). None of PhysiCare, Little Rock PA,
nor any Seller has any collective bargaining agreement with any labor union and
none is currently negotiating with a labor union. No employee of PhysiCare,
Little Rock PA, or any Seller has ever petitioned for a representation election.
Except as described on Schedule 4.1(o), no person has ever filed with any
governmental authority any claim asserting sexual harassment, age or racial
discrimination, or violation of OSHA by PhysiCare, Little Rock PA, any Seller,
any Sellers' Affiliate, or any officer, director, employee, or agent of any such
person or entity.
(p) Compliance with Law and Instruments. The business and operations
-----------------------------------
of PhysiCare, Little Rock PA, and, to the extent relating to the Clinics and/or
the OcMed Businesses, Sellers have been and are being conducted in compliance
with all applicable Laws, including but not limited to Laws relating to
occupational safety, health care, zoning, or environmental matters. None of
PhysiCare, Little Rock PA, nor, to the extent relating to the Clinics and/or the
OcMed Businesses, any Seller has ever received any notice from any governmental
unit or administrative or regulatory agency claiming any violation of any Law.
PhysiCare, Little Rock PA, and each Seller has complied with all applicable
federal and state securities Laws in connection with the sale or resale of all
equity interests in PhysiCare or Little Rock PA. The Clinics and the other
OcMed Businesses have never participated in the Medicare or Medicaid program.
Any certificates of need required for the construction or operation of the
Clinics and/or the OcMed Businesses were duly obtained, and such certificates of
need, if any, will remain in full force and effect immediately after the
consummation of the transactions provided for herein. Neither the U.S.
Department of Health and Human Services nor any state agency has conducted or
has given PhysiCare, Little Rock PA, or any Seller any notice that it
15
intends to conduct any audit or other review of their respective participation
in the Medicare or Medicaid programs, and no such audit or review would result
in any material liability by any such person or entity for any reimbursement,
penalty, or interest with respect to payments received thereunder. Sellers do
not know of any reason why PhysiCare, Little Rock PA, and Buyers will not or may
not be able to continue the OcMed Businesses, as presently conducted by any of
PhysiCare, Little Rock PA, or the Houston Asset Sellers, after the Closing.
(q) No Consent Required. Except for the consents and notice
-------------------
requirements described in Schedule 4.1(q), the execution and delivery of this
Agreement and the consummation of the transactions provided herein will not
require any governmental consent, review, or other process or the consent of any
party to any lease (including the Real Property Leases), contract, agreement, or
instrument to which any of PhysiCare, Little Rock PA, or any Seller is a party
or by which any of its assets is subject or may be bound.
(r) Permits and Licenses. Schedule 4.1(r) attached hereto lists all
-------------------- ---------------
of the permits, licenses, approvals, and authorizations that PhysiCare, Little
Rock PA, and/or any Seller holds in connection with the operation of the Clinics
and the OcMed Businesses. No other permit, license, approval, or authorization
of any governmental unit or administrative or regulatory agency is necessary for
the lawful conduct of the operation of the Clinics and/or the OcMed Businesses.
Sellers have delivered to Buyers copies of all permits, licenses, approvals, and
authorizations listed on Schedule 4.1(r), as well as copies of all licenses and
permits held by all licensed employees and independent contractors of PhysiCare,
Little Rock PA, and, to the extent related to the Houston Assets and/or the
Houston OcMed Businesses, of the Houston Asset Sellers.
(s) Absence of Specified Changes. Except for the transactions and
----------------------------
agreements provided for herein, and except as described in Schedule 4.1(s),
since the Balance Sheet Date there has not been: (i) any transaction by
PhysiCare, Little Rock PA, or any Seller except in the ordinary course of
business; (ii) any capital expenditure by PhysiCare, Little Rock PA, or either
of the Houston Asset Sellers exceeding $5,000; (iii) any material adverse change
in the working capital, financial condition, business, markets, properties,
assets, results of operation, or prospects of any Clinic or of the OcMed
Businesses, other than changes generally applicable to the occupational medicine
clinic business; (iv) any event which has materially affected or may materially
and adversely affect PhysiCare, Little Rock PA, or any Seller, including,
without limitation, any material reduction in the Clinics' or OcMed Businesses'
charge or fee schedule; (v) any material destruction, damage to, or loss of any
material asset of PhysiCare, Little Rock PA, or any Seller, whether or not
covered by insurance; (vi) any indebtedness for borrowed money incurred or the
creation or imposition of any mortgage, pledge, or other encumbrance on any
asset of PhysiCare, Little Rock PA, or either of the Houston Asset Sellers,
other than purchase money liens on newly acquired assets; (vii) any increase in
salaries or benefits to employees or independent contractors of PhysiCare,
Little Rock PA, or either of the Houston Asset Sellers, other than annual
increases implemented in accordance with past practices; (viii) any material
amendment to any Real Property Lease or any Material Contract listed in Schedule
1.1(d), other than in the ordinary course of business and except as provided
herein; (ix) any
16
sale, transfer, or disposition of any equipment that is material to any Clinic
or to the OcMed Businesses, other than dispositions in the ordinary course of
business where the equipment disposed of is replaced by equipment of at least
equal value and utility; (x) any transaction with any Sellers' Affiliate; or
(xi) any agreement by PhysiCare, Little Rock PA, or any Seller to do any of the
things described in this subsection (s).
(t) Insurance Policies. Sellers have provided to Buyers complete and
------------------
accurate copies of all insurance policies or certificates of insurance under
which PhysiCare, Little Rock PA, or either of the Houston Asset Sellers is
insured, including the coverage limits and deductibles applicable thereto (the
"Insurance Policies"). PhysiCare's, Little Rock PA's, and the Houston Asset
Sellers' medical malpractice insurance coverage (including the "tail" insurance
coverage to be obtained by Sellers at or prior to the Closing Date pursuant to
Section 6.1(l)) and the medical malpractice coverage of each physician and other
healthcare professional who provides services in connection with the operation
of the Clinics and/or the OcMed Businesses has or will have coverage limits of
at least $1,000,000 per occurrence and $3,000,000 in the aggregate. None of
PhysiCare, Little Rock PA, nor any Seller is in default with respect to any
provision contained in any of the Insurance Policies and none of such parties
has failed to give any notice or present any claim under any of such Insurance
Policies in a due and timely fashion. The Insurance Policies provide coverage
in such amounts and against such risks and losses as is customary for persons or
companies engaged in the OcMed Businesses. Except as set forth on Schedule
4.1(t), neither PhysiCare, Little Rock PA, nor any Seller has received any
notification from any insurance carrier denying or disputing any claim made by
any such person or entity, denying or disputing the coverage for any claim,
denying or disputing the amount of any claim, or regarding the possible
cancellation of any policies.
(u) Employee Benefit Plans. Except for the employee benefit plans
----------------------
(the "Employee Benefit Plans") described in Schedule 4.1(u) attached hereto,
none of PhysiCare, Little Rock PA, nor any of the Sellers maintains or
participates in, or has ever maintained or participated in, any pension, profit
sharing, or other retirement plan, any multi-employer plan as defined in Section
400(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), or
any other employee benefit, health, welfare, medical, disability, life
insurance, stock, stock purchase, or stock option plan, program, agreement,
arrangement, or policy of any kind. The written terms of the Employee Benefit
Plans are, and each Employee Benefit Plan has been administered, in compliance
with the requirements of ERISA and, where applicable, the Internal Revenue Code
of 1986, except only to the extent that any failure to so administer such
Employee Benefit Plans does not and will not have a material adverse effect on
PhysiCare, Little Rock PA, either Buyer, and/or the Clinics, and the OcMed
Businesses. Except to the extent otherwise expressly set forth herein, neither
of the Buyers nor PhysiCare or Little Rock PA will incur any obligation or
liability under or relating to the Employee Benefit Plans as a result of the
transactions contemplated by this Agreement, or otherwise.
(v) No Brokers or Finders. As a result of any act or failure to act
---------------------
by any Seller, Sellers' Affiliate, or PhysiCare or Little Rock PA, no person or
entity has, or as a result of the transactions contemplated hereby will have,
any right, interest, or valid claim against or
17
upon either Buyer, PhysiCare, or Little Rock PA for any commission, fee, or
other compensation as a broker, finder, or any similar capacity.
(w) Use of Names. The only names under which any of PhysiCare, Little
------------
Rock PA, or, with respect to the Houston Clinics and/or OcMed Businesses, the
Houston Asset Sellers has ever conducted business are the Names. PhysiCare,
Little Rock PA, and the Houston Asset Sellers, respectively, own the entire
right, title, and interest in and to each and every Name, together with all
derivatives thereof, and no third party has given notification that the use of
any Name is in violation of the rights of such third party.
(x) The Real Property. (i) Except as described on Schedule 4.1(x),
----------------- ---------------
none of PhysiCare, Little Rock PA, nor any Seller has ever received written
notice of a violation of any applicable ordinance or other law, order,
regulation, or requirement relating to the Real Property which could have a
material adverse effect on either of the Buyers, PhysiCare, Little Rock PA, the
Houston Asset Sellers, the Clinics, or the OcMed Businesses, and no such person
or entity has received written notice of any current violation of any applicable
ordinance or other law, order, regulation, and no such person or entity has
received notice of any condemnation, lien, assessment, or the like, relating to
any part of the Real Property or the operation thereof, and, to the best of
Sellers' knowledge, there is not presently contemplated or proposed any
condemnation or similar action or zoning action or proceeding with respect to
the Real Property or the operation thereof; (ii) except only to the extent that
any failure to be in compliance does not and will not have a material adverse
effect on PhysiCare, Little Rock PA, either Buyer, and/or the Clinics, and the
OcMed Businesses, the Real Property and the Clinics are in compliance with all
applicable zoning ordinances (including without limitation parking
requirements), and the consummation of the transactions contemplated herein will
not result in a violation of any applicable zoning ordinance or the termination
of any applicable zoning variance now existing; (iii) the Real Property and all
buildings, improvements, and fixtures thereon or therein, and all parts thereof
and appurtenances thereto, including, without limitation, the plumbing,
electrical, mechanical, heating, ventilation, and air conditioning systems, are
in good operating condition and in a reasonable state of maintenance and repair,
normal wear and tear excepted; (iv) to Sellers' knowledge, each Clinic has
adequate parking available to satisfy its current needs; (v) Sellers have
provided Buyers with complete and accurate copies of all property tax statements
for the current and the preceding year, and Sellers do not know of any proposed
increase in the assessed value of the Real Property for property tax purposes;
and (vi) Neither PhysiCare, Little Rock PA, nor, with respect to the Houston
Assets and/or the OcMed Businesses, either of the Houston Asset Sellers owns any
real property.
(y) Tangible Assets. The tangible Personal Property used in the
---------------
Clinics and/or the OcMed Businesses and/or constituting a part of the Little
Rock Assets and/or the Houston Assets is adequate to fully equip and operate the
Clinics and the OcMed Businesses at their present level of operation. Each item
of tangible Personal Property is in good operating condition, normal wear and
tear excepted. Attached hereto as Schedule 4.1(y) is a depreciation schedule as
of the Balance Sheet Date which takes into consideration all tangible Personal
Property included in the Little Rock Assets and/or the Houston Assets. Since
the Balance Sheet
18
Date, neither PhysiCare, Little Rock PA, nor either of the Houston Asset Sellers
has sold or otherwise disposed of any item of tangible Personal Property having
a value in excess of $500.00.
(z) Supplies. All of the Inventory which is still held by PhysiCare,
--------
Little Rock PA, and/or, with respect to the Houston OcMed Businesses, the
Houston Asset Sellers on the date hereof is of a quality and quantity usable in
the ordinary course of business.
(aa) Environmental Matters. (i) Except only to the extent that any
---------------------
failure to be in compliance does not and will not have a material adverse effect
on PhysiCare, Little Rock PA, either Buyer, and/or the Clinics, and the OcMed
Businesses, each of PhysiCare, Little Rock PA, and each of the Sellers is and at
all times has been in compliance with all Environmental Laws (as defined below),
which compliance includes, without limitation, the possession of all permits and
other governmental authorizations required under applicable Environmental Laws
to operate its businesses as currently operated, and each is and at all times
has been in compliance in all material respects with the terms and conditions
thereof; (ii) no Hazardous Substances (as defined below) have been generated or
stored on, at, or adjacent to the Real Property by PhysiCare, Little Rock PA, or
any Seller, except in compliance with applicable Environmental Laws; (iii) no
Hazardous Substances have been disposed of or released on, from, or adjacent to
the Real Property by PhysiCare, Little Rock PA, or any Seller, except in
compliance with applicable Environmental Laws; (iv) none of PhysiCare, Little
Rock PA, nor any Seller has ever received any written communication, whether
from a governmental authority, citizen's group, employee, consultant, or
otherwise, that alleges that any Clinic, the OcMed Businesses, or the Real
Property is not in full compliance with Environmental Laws, and there is no
Environmental Claim (as defined below) pending or, to Sellers' knowledge,
threatened against PhysiCare, Little Rock PA, any Seller, or any Landlord or
other owner of the Real Property; and (v) to Sellers knowledge, without
investigation or inquiry, the Real Property does not contain asbestos in any
form. "Environmental Claim" means any claim, action, cause of action,
investigation, or notice by any person or entity alleging potential liability
(including without limitation potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on, or resulting
from (A) the presence, or release on or from the Real Property or any Clinic or
the OcMed Businesses, of Hazardous Substances or (B) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means the federal, state, regional, county, or local
environmental, health, or safety laws, regulations, ordinances, and rules in
effect on the date hereof and the Closing Date relating to the use, refinement,
handling, treatment, removal, storage, production, manufacture, transportation
or disposal, emission, discharge, release, or threatened release of Hazardous
Substances, or otherwise relating to protection of human health or the
environment (including without limitation ambient air, surface water, ground
water, land surface, or subsurface strata), as the same may be amended or
modified to the date hereof and the Closing Date. "Hazardous Substances" means
any toxic or hazardous waste, pollutants, or substances, including, without,
limitation medical wastes, asbestos containing materials or substances, any
substance defined or listed as a "hazardous substance," "toxic substance,"
"toxic pollutant," or similarly identified
19
substances or mixture, in or pursuant to any Environmental Law, and medical or
infectious wastes.
(bb) Corporate Records. The Books and Records of PhysiCare and Little
-----------------
Rock PA are in Sellers' possession, are complete and accurate in all material
respects, and reflect all those transactions and corporate acts which properly
should have been set forth herein.
(cc) Patient Records. PhysiCare, Little Rock PA, and each of the
---------------
Sellers has maintained the confidentiality of all patient records as required by
and in conformance with all applicable state and federal laws and regulations.
Neither PhysiCare, Little Rock PA, nor any Seller has transferred any patient
records to any individual or entity against the request of any patient
prohibiting such person or entity from transferring his/her patient information
or records and shall concurrently with the execution and delivery of this
Agreement transfer patient records in accordance with applicable state and
federal laws and regulations.
(dd) Certain Remuneration. Neither PhysiCare, Little Rock PA, nor any
--------------------
Seller nor any authorized agent of any such person or entity and, to the best of
Sellers' knowledge, no other person or entity, has, at any time, directly or
indirectly, paid, delivered, or received or agreed to pay, deliver, or receive
any fee, commission, or other sum of money, item of property, or remuneration of
any kind, however characterized, to or from any person, government official, or
other party which is in any manner related to the Clinic and/or the OcMed
Businesses and which is illegal under any federal, state, or local law.
(ee) Fair Value. The Purchase Price represents fair equivalent value
----------
for the PhysiCare Stock, the Little Rock PA Stock, and the Houston Assets.
Sellers are able to pay their respective debts as the same become due. DRCA is
not insolvent as of the date hereof, and DRCA will not be rendered insolvent by
the consummation of the transactions contemplated by this Agreement.
(ff) "WARN" Act and Other Employee Issues. Neither PhysiCare, Little
------------------------------------
Rock PA, nor either of the Houston Asset Sellers is subject to the Worker
Adjustment and Retraining Notification Act, as amended ("WARN") or regulations
promulgated thereunder, which would require notification to employees of
PhysiCare, Little Rock PA, or either of the Houston Asset Sellers by Sellers or
Buyers pursuant to the provisions of WARN and the rules and regulations issued
thereunder. Sellers shall be solely responsible for and shall indemnify and
hold harmless (in accordance with the provisions of Article 7 of this Agreement)
Buyers, PhysiCare, Little Rock PA, and their respective directors, officers,
employees, agents, and affiliates, at all times after the Closing Date, against
and in respect of any Loss relating to or arising from (i) any layoff or
termination by either of the Houston Asset Sellers of any of its respective
employees at any time or by PhysiCare or Little Rock PA of any of its respective
employees prior to the Effective Time; (ii) the Houston Asset Sellers' failure
to terminate employees in accordance with the terms of this Agreement; and (iii)
any failure to pay all severance benefits and all other wages and benefit costs
to all employees pursuant to this Agreement.
20
(gg) Full Disclosure. None of the representations, warranties, or
---------------
disclosures made to Buyers by any Seller herein, or in any exhibit, schedule,
list, certificate, or memorandum furnished or to be furnished to Buyers by
PhysiCare, Little Rock PA, or any Seller in connection herewith, contains or
will contain any untrue statement of a material fact or omits or will omit any
material fact, the omission of which would tend to make the statements made
herein or therein misleading in any material respect.
4.2 Representations and Warranties by Buyers. As a material
----------------------------------------
inducement for Sellers to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyers hereby jointly and severally make the
following representations and warranties as of the date hereof and as of the
Effective Time, each of which is relied upon by Sellers regardless of any
investigation made or information obtained by Sellers:
(a) Organization and Good Standing. OCI and OHCSW have been duly
------------------------------
organized and are validly existing and in good standing under the laws of the
States of Nevada and Texas, respectively, with all requisite power and authority
to carry on their businesses as presently conducted.
(b) Due Authorization. The execution, delivery, and performance of
-----------------
this Agreement by Buyers have been duly authorized by all requisite board of
director and shareholder action of Buyers, and no further action is necessary to
make this Agreement valid and binding upon Buyers in accordance with its terms.
This Agreement and all other agreements, instruments, certificates, and
documents executed and delivered by or on behalf of Buyers are the valid and
binding obligations of Buyers, enforceable against Buyers in accordance with
their respective terms, subject as to enforcement only to applicable bankruptcy,
insolvency, reorganization, or other laws affecting the rights of creditors
generally, or to equitable principles.
(c) Compliance with Instruments and Agreements. The execution and
------------------------------------------
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not result in any breach or violation of any of the terms or
provisions of, or constitute a default under, the articles or certificate of
incorporation or bylaws of either Buyer, any statute, order, rule, or regulation
of any court or governmental agency or body having jurisdiction over Buyers, or
any agreement, instrument, or commitment to which either Buyer is a party or by
which it is bound or to which any of its property is subject or may be bound.
(d) No Consent Required. No authorization or consent of any federal
-------------------
or state administrative or regulatory agency or other third party is required
for the execution, delivery, and performance of this Agreement by Buyers or for
the performance by Buyers of the transactions contemplated by this Agreement.
(e) No Finders or Brokers. As a result of any act or failure to act
---------------------
by Buyers, or any of their affiliates, no person, firm, or corporation has, or
as a result of the transactions
21
contemplated hereby will have, any right, interest, or valid claim upon any
Seller for any commission, fee, or other compensation as a finder, broker, or in
any similar capacity.
(f) Investment Intent. Buyers acknowledge that the PhysiCare Stock
-----------------
and the Little Rock PA Stock have been offered and will be sold to Buyers
pursuant to an exemption from registration under the 1933 Act and all applicable
state securities laws. Buyers are purchasing the PhysiCare Stock and the Little
Rock PA Stock for investment purposes and have no present intent to distribute,
resell, pledge, or otherwise dispose of any of the PhysiCare Stock or the Little
Rock PA Stock. Each Buyer has had the opportunity to ask questions of, and
receive answers from, Sellers concerning the terms and conditions of the
transactions contemplated hereby and to obtain additional information as
necessary to satisfy inquiries regarding PhysiCare and Little Rock PA and their
respective operations. Buyers acknowledge that certain restrictions exist under
the 1933 Act and applicable state securities laws with respect to resale or
transfer of the PhysiCare Stock and the Little Rock PA Stock.
(g) Full Disclosure. None of the representations, warranties, or
---------------
disclosures made to Sellers by Buyers herein, or in any exhibit, schedule, list,
certificate, or memorandum furnished or to be furnished to Sellers by Buyers in
connection herewith, contains or will contain any untrue statement of a material
fact or omits or will omit any material fact, the omission of which would tend
to make the statements made herein or therein misleading in any material
respect.
ARTICLE 5
PRE-CLOSING COVENANTS
The parties agree that from the date hereof until the Closing Date or
the termination of this Agreement:
5.1 Due Diligence. Sellers, PhysiCare, and Little Rock PA will
-------------
afford officers and authorized representatives of Buyers with reasonable access
to the financial, operational, and statistical books and records of Sellers,
PhysiCare, and Little Rock PA and shall permit Buyers to conduct physical
inspections of the Real Property, the Clinics, and the OcMed Businesses at such
reasonable time or times as will not disrupt customary delivery of care to
patients.
5.2 Continuation of Business. Sellers shall cause each of PhysiCare,
------------------------
Little Rock PA, and each of the Houston Asset Sellers to: (a) conduct its
business only in the usual and ordinary course as it has previously been
conducted, including, without limitation, its policies and practices relating to
the collection of accounts receivable and the payment of Trade Accounts Payable
and other liabilities, and not introduce any new methods of management,
operations, or accounting, without Buyers' prior written consent (which shall
not be unreasonably withheld); (b) maintain the Little Rock Assets and the
Houston Assets in as good working order and condition as at present, ordinary
wear and tear excepted; (c) perform all material obligations under material
agreements and leases relating to or affecting PhysiCare, Little Rock PA, either
of the Houston Asset Sellers, the Clinics, and/or the OcMed Businesses; (d) keep
in full force
22
and effect present insurance policies; and (e) use its reasonable best efforts
to maintain and preserve the business organizations of PhysiCare, Little Rock
PA, and each of the Houston Asset Sellers intact, retain their present
employees, and maintain their relationships with employees, suppliers, patients,
payors, and others having business relations with them.
5.3 Transactions Requiring Consent. From the date hereof until the
------------------------------
Closing Date, without Buyers' prior written consent (which shall not be
unreasonably withheld), except as required or permitted by this Agreement,
Sellers shall not permit PhysiCare, Little Rock PA or either of the Houston
Asset Sellers to: (a) other than normal Trade Accounts Payable, prepay any debt
in excess of $5,000 prior to its stated maturity (except pursuant to an existing
amortization payment schedule) or enter into any contract or commitment or incur
or agree to incur any debt or make any capital expenditure requiring the payment
of amounts in excess of $5,000; (b) create or assume any mortgage, pledge, or
other lien or encumbrance upon any of its assets, whether now owned or hereafter
acquired; (c) make any loan; (d) incur any debt or other monetary obligation,
other than normal Trade Accounts Payable; (e) amend any Contract, Purchase
Order, or other agreement listed in Schedule 1.1(d), except changes made in the
ordinary course of business, or change any employee compensation (except normal
annual salary increases implemented in accordance with past practices); (f) fail
to pay any obligation in a timely manner prior to delinquency, consistent with
past practices; (g) declare, set aside, or pay any dividend or distribution to
its equity owners, or directly or indirectly purchase, redeem, or otherwise
acquire any outstanding equity interest; or (h) engage in any transaction with
any Sellers' Affiliate.
5.4 Performance Covenant. Each of the parties hereto covenants and
--------------------
agrees that it will take all action reasonably within its power and authority to
duly and timely carry out all of its obligations hereunder, to perform and
comply with all of the covenants, agreements, representations, and warranties
hereunder applicable to it, and to cause all conditions applicable to it to the
obligations of the other party to close the transactions contemplated by this
Agreement pursuant hereto to be satisfied as promptly as possible. Each party
will promptly notify the others in the event such party receives notice of the
institution or threat to institute any action that could cause the conditions
set forth in Section 6.1(b) or 6.2(b) not to be satisfied at the Closing Date.
5.5 Costs of Agreement. Buyers and Sellers agree to bear all of
------------------
their own expenses incurred in preparing or complying with this Agreement,
including, without limitation, all legal, investment banker, and accounting
expenses and fees. None of such expenses of Sellers shall be an Assumed
Liability or shall be charged to or paid by Buyers, PhysiCare, or Little Rock
PA, either before or after the Closing Date.
5.6 Governmental Approvals. Sellers shall assist and cooperate with
----------------------
Buyers and Buyers' representatives and counsel in obtaining all governmental
consents, approvals, and licenses which Buyers deem necessary or appropriate,
and in the preparation of any document or other materials which may be required
by any governmental agency, in connection with the transactions contemplated
herein.
23
5.7 No-Shop Clause. Neither any of the Sellers nor PhysiCare or
--------------
Little Rock PA shall, without the prior written consent of Buyers (which may be
withheld by Buyers in their sole discretion), (a) offer for sale any of the
PhysiCare Stock, the Little Rock PA Stock, the Little Rock Assets, the Houston
Assets, or any stock or other equity interest in either of the Houston Asset
Sellers (or any material portion thereof), (b) solicit offers to buy the
PhysiCare Stock, the Little Rock PA Stock, the Little Rock Assets, the Houston
Assets, or any stock or other equity interest in either of the Houston Asset
Sellers (or any material portion thereof), (c) hold discussions with any party
(other than Buyers) looking toward such an offer or solicitation or looking
toward a merger or consolidation of PhysiCare, Little Rock PA, or either of the
Houston Asset Sellers with or into any other entity, or (d) enter into any
letter of intent or agreement with any party (other than Buyers) with respect to
the sale or other disposition of any of the PhysiCare Stock, the Little Rock PA
Stock, the Little Rock Assets, the Houston Assets, or any stock or other equity
interest in either of the Houston Asset Sellers (or any material portion
thereof) or with respect to any merger, consolidation, or similar transaction
involving PhysiCare, Little Rock PA, PCLLP, or either of the Houston Asset
Sellers.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to Obligations of Buyers. The obligations
---------------------------------------------
of Buyers hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions (unless waived by Buyers):
(a) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Sellers contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date. All
of the agreements of Sellers to be performed on or before the Closing Date
pursuant to the terms hereof shall have been performed in all material respects.
(b) Action Restraining or Affecting Transaction. No action or
-------------------------------------------
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit all or any portion of the
transactions contemplated by this Agreement, and no third party or governmental
agency or body shall have taken or threatened any action with respect to this
Agreement as a result of which Buyers deem it inadvisable to proceed with the
transactions contemplated herein.
(c) Material Changes. PhysiCare, Little Rock PA, and the Houston
----------------
Asset Sellers shall not have suffered any change, loss, or damage between the
Balance Sheet Date and the Closing Date which materially and adversely affects
or impairs the financial condition (including, without limitation, the working
capital) of PhysiCare, Little Rock PA, the Clinics, and/or the OcMed Businesses
and/or the operations or prospects thereof.
24
(d) Governmental Permits. Buyers, Sellers, PhysiCare and/or Little
--------------------
Rock PA, as appropriate, shall have obtained all licenses, certificates,
permits, and rulings of, and made all notices to, all governmental authorities
that may be required in connection with Buyers' acquisition of the PhysiCare
Stock, the Little Rock PA Stock, and the Houston Assets and the continuation of
the operation of the businesses of the Clinics and the OcMed Businesses by
Buyers following the Closing, including, without limitation, compliance with any
applicable licensure, notification, and approval procedures of the state
agencies that regulate the Clinics and/or the OcMed Businesses.
(e) Consents, Approvals, and Authorizations. Except as otherwise
---------------------------------------
agreed to by Buyers, Sellers shall have obtained all consents, approvals, and
authorizations and given all notices required in connection with the
transactions provided for herein, including, without limitation, the consents
and notices described in Schedule 4.1(q).
(f) Legal Opinion. Sellers shall have delivered to Buyers an opinion
-------------
of Xxxxxxxxx & Xxxxxx, L.L.P., counsel to Sellers, dated the Closing Date,
covering the matters set forth in Exhibit C attached hereto and, otherwise, in
form and substance satisfactory to Buyers and their counsel. In rendering such
opinion, such counsel may rely as to factual matters upon certificates of public
officials and upon certificates of officers of Sellers.
(g) Resignation of Officers and Directors. Each of the elected and
-------------------------------------
acting directors and officers of PhysiCare and Little Rock PA shall have
delivered his or her resignation, effective as of the Effective Time.
(h) Transfer of Shares and Books and Records. DRCA shall have
----------------------------------------
delivered to OCI a certificate or certificates representing the PhysiCare Stock,
duly endorsed in blank or accompanied by appropriate stock powers endorsed in
blank. Xxxxxxx shall have delivered to OHCSW a certificate or certificates
representing the Little Rock PA Stock, duly endorsed in blank or accompanied by
appropriate stock powers endorsed in blank. PhysiCare, Little Rock PA, and
Sellers shall have delivered to Buyers all of the Books and Records described in
Section 1.4(i) of this Agreement and shall have made available to Buyers all of
the other Books and Records.
(i) Release of Liens. Buyers shall have received (or Sellers shall
----------------
have made arrangements satisfactory to Buyers to receive) properly executed
documents terminating any and all Encumbrances on any of the Little Rock Assets
and/or the Houston Assets, other than the Little Rock Permitted Liens and the
Houston Permitted Liens.
(j) Payments of Sellers' Liabilities to the Corporation. Any and all
---------------------------------------------------
payables owed by any Seller or Sellers' Affiliate to PhysiCare or Little Rock
shall have been paid in full.
(k) Landlords Agreements. Sellers shall have used their reasonable
--------------------
best efforts to obtain and deliver to Buyers a duly executed Landlord's
Agreement from each of the Landlords.
25
(l) Tail Insurance. Sellers shall have obtained, and provided Buyers
--------------
with evidence thereof satisfactory to Buyers, tail malpractice insurance
coverage for any potential claims for business conducted by PhysiCare, Little
Rock PA, and all medical practitioners who have provided services at the Clinics
or with respect to the OcMed Businesses prior to the Closing Date (which "tail"
insurance names the Buyers as additional insureds, has a term of at least four
(4) years, and has coverage limits of at least $1,000,000 per occurrence and
$3,000,000 annual aggregate). With respect to the Houston Asset Sellers,
Sellers shall either (i) have obtained, and provided Buyers with evidence
thereof satisfactory to Buyers, "tail" malpractice insurance coverage for any
potential claims for business conducted by either of the Houston Asset Sellers,
and all medical practitioners who have provided services at the Clinics or with
respect to the OcMed Businesses prior to the Closing Date (which tail insurance
names the Buyers as additional insureds, has a term of at least four (4) years,
and has coverage limits of at least $1,000,000 per occurrence and $3,000,000
annual aggregate), or (ii) covenant and agree to continue claims made
malpractice insurance coverage for the Houston Asset Sellers and all medical
practitioners who have provided services at the Clinics or with respect to the
OcMed Businesses prior to the Closing Date for a period of four (4) years after
the Closing Date and provide Buyers with evidence thereof, which claims made
insurance coverage shall include a required notice from the insurer to Buyers in
the event of any change in coverage.
(m) Certificates. Buyers shall have received a certificate, signed by
------------
the president or chief executive officer of each of DRCA and each of the Houston
Asset Sellers and by Xxxxxxx and dated as of the Closing Date, certifying that
(i) the representations and warranties of Sellers set forth herein are true and
correct as of the Closing Date, and (ii) each Seller has performed all of the
obligations under this Agreement that were required to be performed prior to or
at the Closing (except as performance may have been waived by Buyers prior to or
at the Closing). Sellers shall have delivered to Buyers (i) assignments of the
Contracts included in the Houston Assets, in form and substance reasonably
satisfactory to Buyers, fully executed and acknowledged by the Houston Asset
Sellers, conveying to Buyers all of the Houston Asset Sellers' interest in the
Contracts, (ii) copies of resolutions duly adopted by the board of directors of
DRCA and by the board of directors and by the shareholders of each of the
Houston Asset Sellers authorizing and approving Sellers' performance of the
transactions contemplated hereby and the execution and delivery of this
Agreement and the documents to be executed by Sellers as described herein,
certified as true and of full force as of the Effective Time, by the president
and secretary of the respective Sellers, (iii) certificates of incumbency for
the respective officers of the respective Sellers executing this Agreement or
making certifications pursuant hereto dated as of the Closing Date, in form and
substance reasonably satisfactory to Buyers, (iv) certificates of existence and
good standing (to the extent applicable) of PhysiCare, Little Rock PA, DRCA and
each of the Houston Asset Sellers from the state in which it is incorporated or
organized, dated no later than ten (10) business days prior to the Closing Date,
(v) copies of the articles of incorporation and bylaws of each of PhysiCare and
Little Rock PA, certified as true, correct, and complete as of the Closing Date
by the president and the secretary of each such entity, and (vi) such other
customary instruments, documents, and certificates reasonably satisfactory to
Buyers as shall be necessary to carry out the intent and effectuate the purposes
of this Agreement and sufficient to vest in Buyers good, valid, and
26
marketable title to the PhysiCare Stock, the Little Rock PA Stock, and the
Houston Assets, free and clear of all Encumbrances.
(n) Employment and Termination Agreements. Each of the physicians,
-------------------------------------
physical therapists, and other professionals listed in Schedule 6.1(n) attached
hereto shall have entered into an employment agreement with OHCSW and each of
the other persons listed in Schedule 6.1(n) shall have entered into an
employment agreement with OCI or termination agreement with DRCA, in each case
in form and substance satisfactory to OCI. Alternatively, Buyers may, in their
sole discretion, accept assignment to Buyers by Occupational Medicine Associates
of Houston, P.A., a Texas professional association and an affiliate of DRCA
("OMAH"), of employment agreements between OMAH and all or any number of such
persons. DRCA employee Xxxxxx Xxxxxxx shall have entered into a Termination
Agreement and Release in form and substance satisfactory to Buyers (the "Xxxxxxx
Termination Agreement").
(o) Xxxx of Sale. The Houston Asset Sellers shall have executed and
------------
delivered to Buyers a General Conveyance, Xxxx of Sale and Assignment
substantially in the form of Exhibit D attached hereto.
(p) Contract Terminations and Amendments. Sellers shall have executed
------------------------------------
terminations of and amendments to their respective management services
agreements, administrative services agreements, and contracts for services to
the extent necessary to consummate the transactions contemplated by this
Agreement.
(q) Escrow Agreement. Sellers and the Escrow Agent shall have executed
----------------
and delivered the Escrow Agreement to Buyers.
(r) Houston Personnel. Effective no later than 11:58 p.m. on the day
-----------------
upon which the Effective Time occurs, the Houston Asset Sellers shall have
terminated all of the employees and independent contractors of the Houston Asset
Sellers relating to the operations of the Clinics and/or the OcMed Businesses
(the "Houston Personnel"). Any and all of the Houston Personnel who are hired
or engaged by either of the Buyers following the Effective Time shall be
considered "new hires" by Buyers, and, accordingly, the terms and conditions of
any such persons' former employment or engagement with either of the Houston
Asset Sellers or otherwise shall not be applicable to their employment or
engagement by Buyers. Buyers shall have the sole right with respect to, and be
solely responsible for, establishing all terms and conditions relating to the
employment or engagement of any of the Houston Personnel. Nothing contained in
this Agreement or, except for actions taken by Buyers, otherwise shall obligate
either of the Buyers, after it has hired or engaged any of the Houston
Personnel, to continue to employ or engage any such person for any length of
time, and the employment or engagement of any such person shall be terminable at
will at any time.
(s) Bulk Sales. Prior to the Closing Date, Sellers shall comply with
----------
applicable bulk sales laws, if any, and shall indemnify Buyers from any
liability arising pursuant to the application of such laws.
27
6.2 Conditions Precedent to Obligations of Sellers. The obligations
----------------------------------------------
of Sellers hereunder are subject to the satisfaction, on or prior to the Closing
Date, of the following conditions (unless waived by Sellers):
(a) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of Buyers contained in this Agreement shall be true in all
material respects as of the Closing Date as though such representations and
warranties had been made at and as of that time. All of the agreements of
Buyers to be performed by Buyers on or before the Closing Date pursuant to the
terms hereof shall have been duly performed in all material respects.
(b) Action Restraining or Affecting Transaction. No action or
-------------------------------------------
proceeding before a court or any other governmental agency or body shall have
been instituted or threatened to restrain or prohibit the transfer of the
PhysiCare Stock, the Little Rock PA Stock, or the Houston Assets, and no third
party or governmental agency or body shall have taken or threatened any action
with respect to this Agreement as a result of which Sellers deem it inadvisable
to proceed with the transactions contemplated herein.
(c) Receipt of Consideration; Escrow Agreement. Buyers shall have
------------------------------------------
delivered to Sellers and deposited with the Escrow Agent the Purchase Price to
be delivered in accordance with Section 2.1, and Buyers shall have executed and
delivered the Escrow Agreement to Sellers.
(d) Legal Opinion. Buyers shall have delivered to Sellers an opinion
-------------
of Xxxxxxx X. Xxxx XX, General Counsel of OCI and counsel to OHCSW, dated the
Closing Date, covering the matters set forth in Exhibit E hereto and, otherwise,
in form and substance satisfactory to Sellers and Sellers' counsel. In
rendering such opinion, such counsel may rely as to factual matters upon
certificates of public officials and upon certificates of officers of Buyers.
(e) Certificate; Other Deliveries. Sellers shall have received a
-----------------------------
certificate, signed by appropriate officers of Buyers and dated as of the
Closing Date, certifying that (i) the representations and warranties of Buyers
set forth herein are true and correct as of the Closing Date, and (ii) each of
the Buyers has performed all of its obligations under this Agreement that were
required to be performed by it prior to or at the Closing Date (except as
performance may have been waived by Sellers prior to or at the Closing). Buyers
shall have delivered to Sellers (i) an assumption agreement substantially in the
form of Exhibit F hereto, fully executed and acknowledged by Buyers, pursuant to
which Buyers assume all of Sellers' interests in the Assumed Liabilities, (ii)
copies of resolutions duly adopted by the board of directors of Buyers
authorizing and approving Buyers' performance of the transactions contemplated
hereby and the execution and delivery of this Agreement and the documents to be
executed by Buyers as described herein, certified as true and of full force as
of the Effective Time, by a vice president and the secretary of the respective
Buyers, (iii) certificates of incumbency for the respective officers of the
respective Buyers executing this Agreement or making certifications pursuant
hereto dated as of the Closing Date, in form and substance reasonably acceptable
to Sellers, (iv)
28
certificates of existence and good standing (to the extent applicable) of Buyers
from the state in which each is incorporated, dated no more than ten (10) days
prior to the Closing Date, and (v) such other customary instruments, documents
and certificates reasonably satisfactory to Sellers as shall be necessary to
carry out the intent and effectuate the purposes of this Agreement.
(f) Equipment Debt. Buyers shall have paid or satisfied, or shall
--------------
have made arrangements satisfactory to Sellers to pay or satisfy, the Equipment
Debt (as defined in Section 8.5).
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by Buyers. Subject to the provisions of Section
-------------------------
10.6, Buyers jointly and severally covenant and agree that they will indemnify
and hold Sellers and their successors and assigns and their respective
affiliates and agents at all times harmless from and against any Loss (including
reasonable attorneys' fees and other costs of defense) caused by or arising out
of (a) any misrepresentation, breach of warranty, or breach or nonfulfillment of
any covenant or agreement on the part of either Buyer under this Agreement, (b)
any activity of PhysiCare or Little Rock PA on or after the Effective Time, (c)
Buyers' operation of the Clinics and/or the OcMed Businesses after the Effective
Time, or (d) any Assumed Liability.
7.2 Indemnification by Sellers. Subject to the provisions of Section
--------------------------
10.6, DRCA, PCLLP, and DRCA Houston jointly and severally covenant and agree
that they will indemnify and hold Buyers, PhysiCare, and Little Rock PA and
their successors and assigns and their respective affiliates, officers,
directors, employees, stockholders, and agents at all times harmless from and
against any Loss (including reasonable attorneys' fees and other costs of
defense) caused by or arising out of or in connection with (a) any
misrepresentation, breach of warranty, or breach or nonfulfillment of any
covenant or agreement on the part of any Seller under this Agreement (including,
without limitation, the covenant set forth in Section 8.6), (b) any Excluded
Liability, (c) the operation of the Clinics and/or the OcMed Businesses prior to
the Effective Time, (d) as set forth in Section 6.1(u), or (e) Sellers' failure
to obtain any of the Missing Consents (as such term is defined in Section 8.8).
7.3 Undisputed Claims. A party (the "Indemnified Party") may assert
-----------------
a Claim that it is entitled to, or may become entitled to, indemnification under
this Agreement by giving notice of its Claim to the party or parties that are,
or may become, required to indemnify the Indemnified Party (the "Indemnifying
Party," whether one or more), providing reasonable details of the facts giving
rise to the Claim and a statement of the Indemnified Party's loss, damage, or
expense (including attorneys' fees and costs) incurred, suffered, or paid
(collectively, the "Loss") in connection with the Claim, to the extent such Loss
is then known to the Indemnified Party and, otherwise, an estimate of the amount
of the Loss that it reasonably anticipates that it will incur or suffer. If the
Indemnifying Party does not object to the Claim during the twenty (20) day
period following the date of delivery of the Indemnified Party's notice of its
Claim (the "Objection Period"), the Claim shall be considered undisputed and the
29
Indemnified Party shall be entitled to recover the amount of its Loss. The fact
that a Claim is not disputed by the Indemnifying Party shall not constitute an
admission or create any inference that the asserted Claim is valid for any
purpose other than the indemnity obligation of the Indemnifying Party as to such
Claim pursuant to this Article 7.
7.4 Disputed Claims. If the Indemnifying Party gives notice to the
---------------
Indemnified Party within the Objection Period that the Indemnifying Party
objects to the Claim, then (a) the parties shall attempt in good faith to
resolve their differences during the thirty (30) day period following the date
of delivery of the Indemnifying Party's notice of its objection (the "Resolution
Period"), and (b) if the parties fail to resolve their disagreement during the
Resolution Period, either party may unilaterally submit the disputed Claim for
binding arbitration in Houston, Texas, in accordance with the American
Arbitration Association's rules for commercial arbitration in effect at the
time. The award of the arbitrator or panel of arbitrators shall include
reasonable attorneys' fees to the prevailing party and may be entered in any
appropriate court.
7.5 Third Party Suits. In the case of any Third Party Suit, the
-----------------
Indemnified Party shall control the defense of the Third Party Suit, and the
Indemnifying Party may, at its own expense, participate in (but not control) the
defense and employ counsel separate from the counsel employed by the Indemnified
Party; provided, however, that the Indemnified Party may demand that the
Indemnifying Party assume control of the defense of the Third Party Suit at any
time during the course of the suit. If the Indemnifying Party assumes control
of the defense of a Third Party Suit, (a) the Indemnifying Party shall consult
with the Indemnified Party with respect to the Third Party Suit upon the
Indemnified Party's reasonable request for consultation, and (b) the Indemnified
Party may, at its expense, participate in (but not control) the defense and
employ counsel separate from the counsel employed by the Indemnifying Party.
Regardless of whether the Indemnifying Party assumes the defense of the Third
Party Suit, all parties shall cooperate in its defense.
7.6 Settlement or Compromise. If the Indemnified Party is conducting
------------------------
the defense of a Third Party Suit, the Indemnified Party shall give the
Indemnifying Party at least fifteen (15) days prior written notice of any
proposed settlement or compromise, during which time the Indemnifying Party may
assume the defense of the Third Party Suit and, if it does so (or if the
Indemnifying Party has already assumed control of such Third Party Suit), the
proposed settlement or compromise may not be made without the Indemnifying
Party's and the Indemnified Party's consent, which shall not be unreasonably
withheld. If the Indemnifying Party does not so assume the defense of the Third
Party Suit, the Indemnified Party may enter into the proposed settlement. Any
settlement or compromise of any Third Party Suit by either the Indemnifying
Party or the Indemnified Party entered into in compliance with this Section 7.6
shall also be binding on the other party in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of the settlement or compromise.
7.7 Failure to Act by Indemnified Party. Any failure by the
-----------------------------------
Indemnified Party to defend a Third Party Suit shall not relieve the
Indemnifying Party of its indemnification obligations if the Indemnified Party
gives the Indemnifying Party at least thirty (30) days prior
30
written notice of the Indemnified Party's intention not to defend and affords
the Indemnifying Party the opportunity to assume the defense.
7.8 Insured Claims. In case any event shall occur which would
--------------
otherwise entitle either party to assert a Claim for indemnification hereunder,
no Loss shall be deemed to have been sustained by the Indemnified Party to the
extent of any proceeds received by the Indemnified Party from any insurance
policies with respect thereto.
ARTICLE 8
POST-CLOSING COVENANTS
8.1 Termination of Participation in the Employee Benefit Plans. As
----------------------------------------------------------
of the Effective Time, employees of PhysiCare, Little Rock PA, and of the
Houston Asset Sellers with respect to the Clinics and the OcMed Businesses shall
cease to participate in or accrue benefits under the Employee Benefit Plans.
DRCA and Xxxxxxx agree that, as soon as practicable following the Closing, at
DRCA's and Xxxxxxx'x expense, DRCA and Xxxxxxx will take all steps and make all
filings necessary or appropriate in order to terminate the participation of the
employees of PhysiCare and Little Rock PA in the Employee Benefit Plans, and
DRCA and Xxxxxxx shall take any and all action necessary to authorize and direct
the administrators of the Employee Benefit Plans to take such actions. DRCA and
Xxxxxxx acknowledge and agree that DRCA and Xxxxxxx will assume and retain
responsibility for the funding, administration, and distribution of benefits
under the Employee Benefit Plans. With respect to any and all employees of
PhysiCare, Little Rock PA, and the Houston Asset Sellers who become employees of
either Buyer immediately after the Effective Time (the "Seller OcMed
Employees"), Buyers covenant and agree that for all purposes with respect to any
employee welfare/benefit plans in which Buyers will allow the Seller OcMed
Employees to participate, each of such Seller OcMed Employees shall be allowed
to participate in such of Buyers' employee welfare/benefit plans in the same
manner as Buyers' other similarly situated employees are entitled to
participate.
8.2 Books and Records; Personnel. For a period of three years after
----------------------------
the Closing Date:
(a) Buyers shall not dispose of or destroy any of the material Books
and Records of PhysiCare, Little Rock PA, or the Houston Asset Sellers relating
to periods prior to the Effective Time without first offering to turn over
possession thereof to Sellers by written notice to Sellers at least thirty (30)
days prior to the proposed date of such disposition or destruction.
(b) Buyers shall allow Sellers and their agents access to all
PhysiCare, Little Rock PA, and Houston Asset Sellers Books and Records during
normal working hours at OCI's principal place of business or at any location
where any Books and Records are stored, and Sellers shall have the right, at
their expense, to make copies of any Books and Records; provided, however, that
any such access or copying shall be had or done in such a manner so
31
as not to interfere with the normal conduct of Buyers', PhysiCare's, and Little
Rock PA's businesses.
(c) Buyers shall make available to Sellers upon written notice (i)
copies of any PhysiCare, Little Rock PA, or Houston Asset Sellers Books and
Records, (ii) Buyers' personnel to assist in locating and obtaining any such
Books and Records, and (iii) any of Buyers' personnel whose assistance or
participation is reasonably required by Sellers or any of their affiliates in
anticipation of, or preparation for, any litigation, tax return filing, or other
matter in which any Seller is involved; provided, however, that any such copying
or assistance shall be had or done in such a manner so as not to interfere with
the normal conduct of Buyer's, PhysiCare's, and Little Rock PA's businesses.
Sellers shall reimburse Buyers for the reasonable out-of-pocket expenses
incurred by Buyers, PhysiCare, and Little Rock PA in performing the covenants
contained in this Section 8.2.
8.3 Release by Sellers and Sellers' Affiliates. Except for
------------------------------------------
liabilities and obligations to any Seller or Sellers' Affiliates expressly
described in Schedule 1.1(d) attached hereto, each Seller, on behalf of itself
and all Sellers' Affiliates, as of the Closing Date, hereby releases,
discharges, and acquits PhysiCare, Little Rock PA, and the Houston Asset Sellers
of and from any and all debts, liabilities, and obligations to such Seller or
any Sellers' Affiliate, including, without limitation, all management or
consulting fees, cost reimbursement obligations, and any guarantee of any
obligation of or to such Seller or Sellers' Affiliate. Each Seller hereby
agrees that the matters released hereby are not limited to matters which are
known or disclosed, and hereby waives any and all rights and benefits that such
Seller or any Sellers' Affiliate now has or in the future may have conferred
upon such Seller or any Sellers' Affiliate.
8.4 Post-Closing Tax Filings. If requested by Buyers either at the
------------------------
Closing or thereafter, each Seller shall execute a written consent authorizing
Buyers to make the election permitted under Section 338(h)(10) of the Internal
Revenue Code of 1986, as amended. The parties acknowledge that it is their
intention that Buyers shall include in their consolidated tax returns the
results of operations of PhysiCare, Little Rock PA, and the Clinics and OcMed
Businesses for all periods beginning on and after the Effective Time. Sellers
agree to prepare and file PhysiCare's and Little Rock PA's federal income tax
returns with respect to the periods prior to the Effective Time and to pay any
and all taxes due in connection with such returns. The parties hereto agree to
make any and all filings and elections necessary to accomplish the tax results
described above and to cooperate in all reasonable respects with all other
parties in providing all information and documents necessary for the other
parties to file the tax returns and elections contemplated hereby.
8.5 Post-Closing Calculation of Assumed Liabilities. Within one
-----------------------------------------------
hundred twenty (120) days after the Closing Date, Buyers shall prepare an
unaudited balance sheet and any other appropriate statements necessary to
establish the Trade Accounts Payable and the aggregate amount of the third party
indebtedness related to certain Equipment (as more fully described on Schedule
8.5 hereto, the "Equipment Debt") ("Buyers' Determination") as of the Effective
Time and shall deliver same to Sellers, together with reasonable supporting
information. Sellers shall
32
have twenty (20) days following the date of delivery to review Buyers'
Determination. If Sellers do not object to Buyers' Determination during such
twenty (20) day period, then Buyers' Determination shall be considered
undisputed, and Buyers shall be entitled to recover the appropriate amount from
the Escrow Agent pursuant to the appropriate provisions of the Escrow Agreement
as described below. In the event that Sellers object to Buyers' Determination,
the dispute shall be resolved in the manner set forth in Section 7.4 of this
Agreement. If Buyers' Determination indicates that the actual Trade Accounts
Payable plus Equipment Debt as of the Effective Time were greater than Three
Hundred Thousand Dollars ($300,000), Sellers agree that the Escrow Agent shall,
pursuant to the appropriate provisions of the Escrow Agreement, transfer to
Buyers cash equal to the amount by which the Trade Accounts Payable plus
Equipment Debt as of the Effective Time were greater than Three Hundred Thousand
Dollars ($300,000), and the Purchase Price shall be deemed adjusted accordingly.
8.6 Noncompetition and Nonsolicitation Covenants of Sellers.
-------------------------------------------------------
(a) During the period beginning on the Closing Date and ending
December 31, 2001 (the "Restricted Time Period"), each of the Sellers hereby
jointly and severally covenants and agrees to be bound and abide by the
restrictions set forth in this Section 8.6.
(b) During the Restricted Time Period, none of the Sellers, nor any
Sellers' Affiliate, will, directly or indirectly (including financial interests
held by any Sellers' Affiliate), either as an employee, employer, consultant,
agent, principal, partner, stockholder (other than any shares in a mutual fund,
regardless of amount, or as an owner of less than five percent (5%) of the
securities of a publicly held corporation), corporate officer, director,
investor or financier, or in any other individual or representative capacity,
engage or participate in, or consult with, any business or practice of medicine
which includes any of the OcMed Businesses, at any location within (i) a twenty
(20) mile radius of any of the Clinics, or (ii) a twenty (20) mile radius of any
other facility presently owned, operated, or managed by either Buyer or by any
affiliate of either Buyer in the States of Texas and Arkansas as identified on
Schedule 8.6(b) attached hereto (such area described in (i) and (ii) immediately
preceding being referred to in this Section 8.6(b) as the "Restricted Area");
provided, however, that, anything in this Section 8.6(b) to the contrary
notwithstanding, (x) the Restricted Area with respect to the mobile testing
portion of the OcMed Businesses shall not be limited to the defined radius from
facilities in the States of Arkansas and Texas but shall be defined to include
any area of any states in which OCI and its affiliates or DRCA or its affiliates
perform or have performed any mobile testing business as of or at any time
within six (6) months prior to the Closing Date, and (y) such noncompetition
covenants shall not prohibit Sellers and their affiliates from providing
employer or employer's insurance paid injury care medical services relating to
employees and having specific reference to employment related matters, including
without limitation laboratory testing, x-rays, work related injuries and
illnesses, physical therapy and rehabilitation associated with work-related
injuries, work-related independent medical evaluations, and/or consulting with
employers regarding case management in the Restricted Area, but only to the
extent strictly incidental to Sellers' orthopedic health care business and only
if and to the extent that neither Sellers nor any of their affiliates markets
itself to or, whether on its own behalf or for or on
33
behalf of any other person or entity, solicits business from employers,
patients, payors, or other related third parties as a primary care occupational
health care provider.
(c) During the Restricted Time Period, none of the Sellers nor any
Sellers' Affiliate will, either for any Seller or for any other person, firm,
corporation, or other entity, either directly or indirectly: (i) call on or
solicit, or attempt to call on or solicit, any of Buyers' or any affiliate of
Buyers' patients, customers or suppliers, in any manner which is competitive
with Buyer's or affiliate of Buyers OcMed Businesses, as such businesses are
operated from time to time in the areas identified in clauses (i) and (ii) of
Section 8.6(b) above; (ii) induce, or attempt to induce, any employee of either
Buyer or any affiliate of either Buyer to terminate his or her employment or
hire away, or attempt to hire away, any employee of either Buyer or any
affiliate of either Buyer; (iii) induce, or attempt to induce, any supplier of
services (including physician services) or resources (including investment and
other financing resources) to withdraw, curtail or cancel the furnishing of
supplies or services to either Buyer or any affiliate of either Buyer; or (iv)
engage in any act or activity which would reasonably be expected to materially
interfere with or harm any business relationship either Buyer or any affiliate
of either Buyer may have with any patient, customer, employee, employer,
independent contractor, principal, or supplier.
(d) Each of the Sellers expressly acknowledges that such Seller has
knowledge of certain business methods, trade secrets, and other proprietary
information in connection with Sellers', PhysiCare's, Little Rock PA's, and the
Houston Asset Sellers' businesses. Each of the Sellers expressly acknowledges
and agrees that the Confidential Information (as hereinafter defined) is owned
by PhysiCare, Little Rock PA, and/or the Houston Asset Sellers related to the
OcMed Businesses and is now proprietary and confidential, and if any of the
Confidential Information was imparted to, or became known by, any persons
engaging in a business in any way competitive with that of either Buyer or any
affiliate of either Buyer, such disclosure would result in hardship, loss,
irreparable injury and damage to Buyers or such affiliate of Buyers the
measurement of which would be difficult, if not impossible, to determine.
Accordingly, each of the Sellers expressly agrees that each Buyer has a
legitimate interest in protecting the Confidential Information and its business
goodwill, that it is necessary for Buyers to protect their respective businesses
and the businesses of its affiliates from such hardship, loss, irreparable
injury, and damage, that the following covenants are a reasonable means by which
to accomplish those purposes and that violation of any of the protective
covenants contained herein shall constitute a breach of trust and is grounds for
appropriate legal action for damages, enforcement, and/or injunction.
Notwithstanding the foregoing, neither this Section 8.6(d) nor Section 8.6(e)
shall apply to any information that was (i) known to the receiving party before
its disclosure, (ii) is publicly available through no fault of any Seller or the
party in possession of such information, or (iii) has been lawfully obtained
from a third party without breach of the restrictions set forth in this
Paragraph 8.6(d).
(e) The confidential information obtained from or held by PhysiCare,
Little Rock PA, and/or, with respect to the Clinics and/or the OcMed Businesses,
the Houston Asset Sellers (the "Confidential Information") includes, by way of
illustration and not by way of
34
limitation: (i) lists containing the names of patients (excluding patients that
have been referred to operations of Sellers other than the Clinics or OcMed
Businesses), customers (excluding customers of Sellers' operations other than
the Clinics or the OcMed Businesses), and employees of the Clinics and/or the
OcMed Businesses; (ii) to the extent related to the Clinics and/or the OcMed
Businesses, the past, present, and prospective methods, procedures, and
techniques utilized in identifying prospective referral sources, patients,
customers, and suppliers and in soliciting the business thereof; (iii) the
methods, procedures, and techniques used in the operation of the Clinics and/or
the OcMed Businesses, including the methods, procedures, and techniques utilized
in marketing, pricing, applying, and delivering occupational health products and
services; and (iv) compilations of information, records, and processes which are
used in the operation of the Clinics and/or the OcMed Businesses to the extent
relating thereto, including, without limitation, custom computer software
programs (except those included within the Excluded Assets).
(f) Each of the Sellers acknowledges that the Confidential Information
gives Buyers and their respective affiliates an advantage over its respective
competitors and that the same is not available to, or known by, their
competitors or the general public. Each of the Sellers acknowledges that
PhysiCare, Little Rock PA, and the Houston Asset Sellers have devoted, and
Buyers will devote, substantial time, money, and effort in the development of
the Confidential Information and in maintaining the proprietary and confidential
nature thereof. Each of the Sellers agrees to use its or his best efforts and
to exercise utmost diligence to protect and safeguard any of the Confidential
Information that is known to such Seller or that at any time is in its or his
possession. Except as required by law or a court order, each of the Sellers
agrees that such Seller will not disclose, disseminate, or distribute to
another, or induce any other person to disclose, disseminate, or distribute, any
Confidential Information, directly or indirectly, either for a Seller's own
benefit or for the benefit of another, whether or not acquired, learned,
obtained or developed by such Seller alone or in conjunction with others, and
none of the Sellers will use or cause to be used any Confidential Information in
any way except as is required in the course of such Seller's involvement with
Buyers. Each of the Sellers acknowledges and agrees that all Confidential
Information, whether prepared by one of the Sellers or otherwise, shall remain
the exclusive property of Buyers, PhysiCare, and Little Rock PA.
(g) Each covenant in this Section 8.6 shall be construed as an
agreement that is independent of any other provision of this Agreement and,
unless otherwise indicated herein, each such covenant shall survive the Closing
of the transactions contemplated by this Agreement. The existence of any claim
or cause of action of any of the Sellers against Buyers, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by Buyers of each of the covenants set forth in this Section 8.6.
(h) If any of the Sellers violates any of covenants set forth in this
Section 8.6 and Buyers or any of their affiliates brings legal action for
injunctive or other relief hereunder, Buyers shall not, as a result of the time
involved in obtaining the relief, be deprived of the benefit of the full
Restricted Time Period of the protective covenants contained in this Section
35
8.6. Accordingly, the Restricted Time Period shall have a duration equal to the
time period stated in Section 8.6(a), computed from the date relief is granted,
but reduced by the time between the period when the restriction began to run and
the date of the first violation of the covenant by any of the Sellers.
(i) Each of the Sellers agrees that the breach or attempted breach of
Sellers' obligations under this Agreement would cause irreparable injury to
Buyers and that any remedy at law would be inadequate. Each of the Sellers
therefore agrees, in addition to any other relief, that Buyers and their
affiliates will be entitled to injunctive and other equitable relief in case of
any such breach or attempted breach. Each of the Sellers expressly waives any
requirement that such Seller could assert for the securing or posting of any
bond in connection with the obtaining of such injunctive or other equitable
relief.
(j) If any of the restrictions set forth in this Section 8.6 are
adjudicated by a court of competent jurisdiction to be excessively broad, said
restrictions determined to be excessively broad shall be reduced to the minimum
extent necessary to make such restrictions enforceable, and the restrictions
shall be enforced subject to such reduction. Any provision of this Section 8.6
not so reduced shall remain in full force and effect as written.
8.7 Collection of Accounts Receivable. DRCA will make available
---------------------------------
qualified DRCA personnel to collect on the Buyers' behalf the pre-Effective Time
Accounts Receivable included in the Houston Assets and Accounts Receivable
related to the mobile testing portion of the OcMed Businesses (the "H/M Accounts
Receivable")on the following terms and conditions:
(a) DRCA hereby guarantees to Buyers the collection of H/M Accounts
Receivable equal to the lesser of: (i) Seventy-five percent (75%) of the gross
H/M Accounts Receivable outstanding as of the Effective Time, but in no event
less than One Million One Hundred Thousand Dollars ($1,100,000), or (ii) One
Million Three Hundred Thousand Dollars ($1,300,000) (the "Collection
Threshold"). At such time as such collections have reached the amount equal to
the Collection Threshold, Buyers shall take such steps as are necessary to
assign to DRCA any and all of Buyers' rights with respect to the H/M Accounts
Receivable remaining uncollected at such time.
(b) On a monthly basis, Buyers will pay DRCA a collection fee (the
"Collection Fee") in the amount of seven and one-half percent (7.5%) of the H/M
Accounts Receivable collected and paid to Buyers (up to a maximum aggregate
amount equal to the Collection Threshold).
(c) Payments shall be made to Buyers within fifteen (15) working days
from the previous month's end for all H/M Accounts Receivable (up to the
Collection Threshold) collected on behalf of Buyers. The Collection Fee shall
be paid by Buyers within fifteen (15) days from receipt of the monthly payment
from DRCA.
36
(d) Final payment of all amounts due and owing pursuant to this
arrangement shall be made not later than twelve (12) months from the Effective
Time. In the event that collections by DRCA during such twelve (12) month
period have not reached the Collection Threshold, then DRCA shall make a payment
to Buyers in amount equal to difference between the Collection Threshold and the
aggregate amounts collected and paid to Buyers during such period in accordance
with this Section 8.7. At the end of such twelve (12) month period, to the
extent not previously accomplished, Buyers shall take such steps as are
reasonably necessary to assign to DRCA any and all of Buyers' rights with
respect to the H/M Accounts Receivable remaining uncollected at such time.
(e) Anything herein to the contrary notwithstanding, in the event that
at least fifty percent (50%) of the Collection Threshold shall not have been
collected by DRCA and paid over to Buyers pursuant to this Section 8.7 on or
before June 30, 1997, Buyers may require that the Escrowed Funds (as defined in
the Escrow Agreement) held pursuant to the Escrow Agreement not be released as
provided therein, but, rather, that such Escrowed Funds shall be held by the
Escrow Agent (as defined in the Escrow Agreement) pending DRCA's payment to
Buyers of the Collection Threshold as provided in this Section 8.7. In the
event that the Collection Threshold is not thereafter paid over to Buyer on or
before December 31, 1997, as provided herein, a portion of the Escrowed Funds
equal to the unpaid portion of the Collection Threshold shall at Buyers'
direction be paid by the Escrow Agent to Buyers. To the extent that the
Escrowed Funds are insufficient to satisfy the then unpaid portion of the
Collection Threshold, DRCA shall remain obligated to Buyers with respect
thereto. Notwithstanding the foregoing, except as set forth in Section 2(b) of
the Escrow Agreement, at no time after June 30, 1997, shall Sellers be required
to maintain Escrowed Funds in excess of the difference between the Collection
Threshold and the amount of funds collected and paid over to Buyers pursuant to
this Section 8.7, and, to the extent that such excess exists, such excess
portion of the Escrowed Funds, less any funds held pursuant to Section 2(b) of
the Escrow Agreement, shall be released to Sellers. It is expressly agreed that
Buyers shall agree to release such excess Escrowed Funds, less any funds held
pursuant to Section 2(b) of the Escrow Agreement, after June 30, 1997, to the
extent such release is in accordance with the terms of this Section 8.7 and of
the Escrow Agreement, from time to time, within five (5) business days after
delivery of written notice from Sellers requesting such release.
8.8 Post-Closing-Consents. In the event that Sellers are unable to
---------------------
obtain any of the consents, approvals, and authorizations referred to in Section
6.1(e) or any of the Landlords' Agreements referred to in Section 6.1(k) prior
to the Closing (collectively, the "Missing Consents"), and Buyers nonetheless
agree to proceed with the Closing, Sellers hereby covenant and agree to continue
to use their reasonable best efforts following the Closing to obtain such
Missing Consents as soon as possible.
8.9 Certain Payments. On or prior to January 10, 1997, PhysiCare,
----------------
Little Rock PA, and each of the Houston Asset Sellers shall pay: (a) all accrued
and unpaid vacation, sick leave, and/or paid time off payable to their
respective employees, officers, and/or directors, and (b)
37
all capital leases and loans related to the Little Rock Assets, the Houston
Assets, and/or the OcMed Businesses which are not part of the Assumed
Liabilities.
ARTICLE 9
TERMINATION
9.1 By Mutual Consent. This Agreement may be terminated without
-----------------
further obligation of the parties at any time prior to Closing by mutual consent
of the parties hereto.
9.2 Damages. No party shall be liable in damages to any other party
-------
as a result of the failure to consummate the transactions contemplated by this
Agreement unless such failure is caused by the material breach of such party of
any of the terms or provisions of this Agreement.
9.3 Unilateral Termination. If, through no fault of or breach by a
----------------------
party hereto, the Closing is not consummated on or before December 31, 1996,
this Agreement may be unilaterally terminated by written notice given by such
party to the other parties (provided, that the failure to obtain required
consents and approvals from third parties despite the exercise of a party's
reasonable best efforts to do so shall not constitute fault or a breach by such
party for the purposes of this Section 9.3).
9.4 Effect of Termination. If this Agreement is terminated pursuant
---------------------
to the provisions of this Article 9, all further obligations of Buyers and
Sellers under this Agreement shall terminate without further liability of Buyers
and Sellers; provided, however, that such termination shall not constitute a
waiver by any party of any claim it may have for damages caused by reason of a
breach by any other party of a representation, warranty, covenant, or agreement
contained herein.
ARTICLE 10
MISCELLANEOUS
10.1 Confidentiality. Subject to Section 10.2, prior to the Closing,
---------------
each of the parties hereto shall keep confidential all information relating to
the other parties that it obtains pursuant to this Agreement and shall use such
information only for the purposes contemplated by this Agreement. In the event
that this Agreement is terminated pursuant to Article 9, or otherwise, or the
Closing does not occur by reason of failure of one of the conditions to the
Closing, each of the parties agrees (a) to return to the other parties all
documents, financial statements, and other information furnished or copied in
connection with the transactions contemplated by this Agreement, and (b) not to
disclose without the prior written consent of the other parties any information
obtained with respect to the business or operations of the other parties hereto
or any affiliate of such parties.
10.2 Publicity. Prior to Closing, no public announcement or other
---------
publicity regarding the transactions contemplated by this Agreement shall be
made by any party without the prior
38
written approval of all parties as to form, timing, and manner of distribution
or publication. The parties shall agree on the form and content of any joint
press release or other public announcement (including, for example, letters to
the Corporation's employees, customers, and suppliers) which is to be released
at or immediately following Closing. Nothing in this Section 10.2 or in Section
10.1 shall be considered to prohibit any party from making any disclosure
required by any Law, including, without limitation, any federal or state
securities law, rule, or regulation, any stock exchange rule, or any court
order.
10.3 Notices. All notices, requests, demands, and other
-------
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when received if delivered
personally, given by prepaid telegram, mailed first class, postage prepaid,
registered or certified mail, delivered by Federal Express or other courier
service, or sent by facsimile or other online transmission system, as follows
(or to such other address as any party may by written notice in accordance with
this Section notify the other parties hereto):
If to OCI or OHCSW:
OccuSystems, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Fax No. (000) 000-0000
If to DRCA, Donovan, PCLLP, or DRCA Houston:
DRCA Medical Corporation
Xxxxx Xxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: President
Fax No. (000) 000-0000
With a copy to:
E. Xxxxx Xxxxxxxxx, Esq.
Xxxxxxxxx & Grundy, L.L.P.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No. (000) 000-0000
10.4 Governing Law; Interpretation; Section Headings. THIS AGREEMENT
-----------------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF TEXAS. The section headings contained herein are for
purposes of convenience only and shall not be deemed to constitute a part of
this Agreement or to affect the meaning or interpretation of this Agreement in
any way.
39
10.5 Entire Agreement. This Agreement (including the Schedules and
----------------
Exhibits referred to herein) sets forth the entire agreement and understanding
of the parties with respect to the transactions contemplated hereby and
supersedes all prior agreements, arrangements, and understandings, whether
written or oral, related to the subject matter hereof, including, without
limitation, the letter of intent, dated as of December 9, 1996, between
OccuSystems, Inc., and DRCA Medical Corporation. No representation, promise,
inducement, or statement of intention has been made by any party hereto which is
not embodied in this Agreement, or in the Exhibits or Schedules attached hereto
or the written statements, certificates, or other documents delivered pursuant
hereto.
10.6 Survival; Limitation on Actions. Except as otherwise expressly
-------------------------------
set forth in this Section 10.6, all of the terms, provisions, covenants,
representations, warranties, and conditions of this Agreement shall survive the
Closing for a period of time equal to the lesser of (a) the applicable statute
of limitations with respect to any Claim arising therefrom, or (b) four (4)
years. Anything herein to the contrary notwithstanding, however, the applicable
statute of limitations shall be the only limitation with respect to any Claim
regarding tax matters or based on fraud. All of the terms, provisions,
covenants, representations, warranties, and conditions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective heirs, legal representatives, successors, and
permitted assigns.
10.7 Amendment; No Waiver. This Agreement may be amended, modified,
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superseded, or canceled, and any of the terms, provisions, covenants,
representations, warranties, or conditions hereof may be waived, only by a
written instrument executed by all parties hereto, or, in the case of a waiver,
by the party waiving compliance. The failure of any party at any time or times
to require performance of any provision hereof shall in no manner affect the
right to enforce the same. No waiver by any party of any condition, or of the
breach of any term, provision, covenant, representation, or warranty contained
in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or continuing waiver
of any such condition or breach or a waiver of any other condition or of the
breach of any other term, provision, covenant, representation, or warranty.
10.8 Severability. In the event that any one or more of the
------------
provisions of this Agreement shall be held or otherwise found to be invalid,
illegal, or unenforceable, all other provisions hereof shall be given effect
separately therefrom and shall not be affected thereby.
10.9 Assignment; No Third Party Beneficiary. None of the parties
--------------------------------------
hereto shall assign any of its rights or obligations hereunder without the prior
written consent of the other parties hereto; provided, however, and
notwithstanding the foregoing, that OCI and/or OHCSW may (a) prior to or at the
Closing assign all or any portion of their respective rights and obligations
pursuant to this Agreement to OccuSystems, Inc., a Delaware corporation
("OccuSystems") or to any other wholly owned subsidiary or affiliate of
OccuSystems, and (b) after the Closing, assign any or all of their respective
rights hereunder without any consent or approval of any other party to this
Agreement; and provided, further, that any such assignment by OCI or
40
OHCSW shall not relieve OCI or OHCSW of liability to DRCA, Donovan, PCLLP, or
DRCA Houston hereunder. Except for any such valid assignment, this Agreement is
for the sole benefit of the undersigned parties hereto and is not for the
benefit of any third party.
10.10 Further Assurances. Each party shall execute and deliver such
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other documents and instruments, and take such other actions, as the other
parties may reasonably request in order to effectuate the transactions
contemplated by this Agreement.
10.11 Counterpart and Facsimile Signatures. Separate copies of this
------------------------------------
Agreement may be signed by the parties hereto, with the same effect as though
all of the parties had signed one copy of this Agreement. Signatures
transmitted by facsimile shall be accepted as original signatures.
10.12 Attorneys' Fees. In any action at law or equity to enforce any
---------------
of the provisions or rights under this Agreement, the unsuccessful party or
parties to such litigation, as determined by the court in any final judgment or
decree, shall pay the successful party or parties all costs, expenses, and
reasonable attorneys' fees incurred therein by such party or parties (including,
without limitation, such costs, expenses, and fees on any appeal or in
connection with any bankruptcy proceeding), and if the successful party or
parties recover judgment in any such action or proceeding, such costs, expenses,
and attorneys' fees shall be included in and as a part of such judgment.
10.13 Interpretation of Agreement. The parties hereto acknowledge
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and agree that this Agreement has been negotiated at arm's length and between
parties equally sophisticated and knowledgeable in the matters dealt with in
this Agreement. Accordingly, any rule of law or legal decision that would
require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the intent of
the parties as set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stock and
Asset Purchase Agreement as of the day and year first above written.
OCCUCENTERS, INC.
By: /s/ Xxxxxxx X. Xxxx XX
-----------------------
Name: Xxxxxxx X. Xxxx XX
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Title: Executive Vice President
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OCCUPATIONAL HEALTH CENTERS OF THE
SOUTHWEST, P.A.
By: /s/ Xxxxxxx X. Xxxx XX
-----------------------
Name: Xxxxxxx X. Xxxx XX
-------------------
Title: Authorized Agent
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DRCA MEDICAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
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Title: President
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/s/ Xxxxxxx X. Xxxxxxx, M.D.
-----------------------------
Xxxxxxx X. Xxxxxxx, M.D.
PHYSICARE, L.L.P.
By: OCCUPATIONAL MEDICINE ASSOCIATES OF HOUSTON,
P.A., its managing partner
By: /s/ Xxxxxxx X. Xxxxxxx, M.D.
-----------------------------
Name: Xxxxxxx X. Xxxxxxx, M.D.
-------------------------
Title: President
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DRCA HOUSTON CLINICS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
-----------------
Title: President
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GUARANTEE
---------
OccuSystems, Inc., a Delaware corporation and an affiliate of Buyers,
hereby fully, completely, and unconditionally guarantees to Sellers the prompt
performance of each and every obligation of Buyers pursuant to the foregoing
Stock and Asset Purchase Agreement.
OCCUSYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxx XX
------------------------
Name: Xxxxxxx X. Xxxx XX
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Title: Executive Vice President
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SPOUSAL CONSENTS
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By her signature below, the undersigned spouse of Xxxxxxx X. Xxxxxxx, M.D.,
hereby acknowledges that she has been advised with regard to her rights, powers,
duties, and obligations pursuant to the foregoing Stock and Asset Purchase
Agreement and has read and understands said Stock and Asset Purchase Agreement
and agrees to be bound by its terms and provisions in all respects.
/s/ Xxxxxx X. Xxxxxxx
----------------------
XXXXXX X. XXXXXXX
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