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EXHIBIT 2.3
RESTRUCTURE AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
VERO ORTHOPAEDICS II, P.A.,
▇▇▇▇▇ ▇. ▇▇▇▇, M.D.,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.,
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.,
DATED AS OF DECEMBER 31, 1998
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TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS.......................................................................................................3
ARTICLE II.
BASIC TRANSACTION.................................................................................................4
2.1 Purchase and Sale of Assets.........................................................................5
2.2 Amendment and Restatement of Service Agreement......................................................5
2.3 Accounting; True-Up; Dispute Resolution.............................................................6
2.4 Assumption of Term Debt and Assumed Liabilities.....................................................6
2.5 The Closing.........................................................................................6
2.6 Deliveries at Closing...............................................................................6
2.7 Taxes and Expenses..................................................................................6
2.8 Employees...........................................................................................6
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SCN.............................................................................6
3.1 Organization, Qualification, and Power..............................................................6
3.2 Authorization of Transaction........................................................................6
3.3 Noncontravention....................................................................................6
3.4 Title; Condition....................................................................................6
3.5 Tax Matters.........................................................................................6
3.6 Brokers' Fees.......................................................................................6
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF VERO AND THE PHYSICIAN OWNERS...................................................7
4.1 Organization........................................................................................7
4.2 Ownership Interest of VERO..........................................................................8
4.3 Authorization of Transaction........................................................................8
4.4 Noncontravention....................................................................................8
4.5 Brokers' Fees.......................................................................................8
4.6 Title to SCN Shares..................................................................................8
ARTICLE V.
COVENANTS.........................................................................................................9
5.1 General.............................................................................................9
5.2 Notices and Consents................................................................................9
5.3 Regulatory Matters and Approvals....................................................................9
5.4 Operation of Business...............................................................................9
5.5 Further Acts and Assurances.........................................................................9
5.6 Full Access.........................................................................................9
5.7 Notice of Developments..............................................................................9
5.8 Collection of Accounts Receivable...................................................................9
5.9 Corporate Authorization............................................................................10
5.10 Employee Benefit Plans............................................................................10
ARTICLE VI.
CONDITIONS TO OBLIGATIONS TO CLOSE...............................................................................10
6.1 Conditions to Obligation of VERO and the Physician Owners..........................................10
6.2 Conditions to Obligation of SCN....................................................................11
ARTICLE VII.
PRE-CLOSING AND CLOSING DELIVERIES...............................................................................12
7.1 By SCN.............................................................................................12
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7.2 By VERO and the Physician Owners...................................................................12
ARTICLE VIII.
TERMINATION......................................................................................................13
8.1 Termination of Agreement...........................................................................13
8.2 Effect of Termination..............................................................................13
ARTICLE IX.
INDEMNIFICATION..................................................................................................14
9.1 Indemnification by VERO and the Physician Owners...................................................14
9.2 Notice to VERO and the Physician Owners; Opportunity to Defend.....................................14
9.3 General Indemnification by SCN.....................................................................14
9.4 Notice to SCN; Opportunity to Defend...............................................................14
ARTICLE X.
MISCELLANEOUS....................................................................................................14
10.1 Survival...........................................................................................14
10.2 No Third-Party Beneficiaries......................................................................15
10.3 Entire Agreement..................................................................................15
10.4 Succession and Assignment.........................................................................15
10.5 Counterparts......................................................................................15
10.6 Headings..........................................................................................15
10.7 Notices...........................................................................................15
10.8 Governing Law; Venue..............................................................................15
10.9 Amendments and Waivers............................................................................16
10.10 Severability.....................................................................................16
10.11 Expenses.........................................................................................16
10.12 Construction.....................................................................................16
10.13 No Referrals Required............................................................................16
10.14 Incorporation of Exhibits and Schedules..........................................................16
10.15 Transactions with Affiliated Practices............................................................16
SCHEDULE 1.1
EXCLUDED ASSETS......................................................................................Schedule 1.1-1
SCHEDULE 1.2
PHYSICIAN OWNERS.....................................................................................Schedule 1.2-1
SCHEDULE 1.3
TERM DEBT............................................................................................Schedule 1.3-1
SCHEDULE 2.4
ASSUMED LIABILITIES..................................................................................Schedule 2.4-1
SCHEDULE 3.3
CONSENTS.............................................................................................Schedule 3.3-1
EXHIBIT 2.1(a)
VERO NOTE..........................................................................................Exhibit 2.1(a)-1
EXHIBIT 2.1(b)
PURCHASE PRICE ALLOCATION AGREEMENT................................................................Exhibit 2.1(b)-1
EXHIBIT 7.1(b)
▇▇▇▇ OF SALE.......................................................................................Exhibit 7.1(b)-1
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EXHIBIT 7.1(c)
ASSIGNMENT AND ASSUMPTION AGREEMENT................................................................Exhibit 7.1(c)-1
EXHIBIT 7.1(d)
MANAGEMENT SERVICES AGREEMENT......................................................................Exhibit 7.1(d)-1
EXHIBIT 7.2(c)
RELEASE............................................................................................Exhibit 7.2(c)-1
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RESTRUCTURE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of
December 31, 1998, by and among VERO ORTHOPAEDICS II, P.A., a Florida
professional service corporation ("VERO") and the undersigned Physician Owners
(as defined herein) of VERO, on the one hand, and SPECIALTY CARE NETWORK, INC.,
a Delaware corporation ("SCN"), on the other hand. VERO, the Physician Owners,
and SCN are referred to individually herein as a "Party" or collectively herein
as the "Parties."
R E C I T A L S:
WHEREAS, VERO is engaged in the practice of medicine at its offices in
Vero Beach, Florida;
WHEREAS, certain of the Parties entered into an Merger Agreement dated
November 12, 1996, pursuant to which SCN acquired certain assets of VERO, or
VERO's predecessor entity that was engaged in the practice of medicine (the
"Merger"), and, in connection therewith, the Parties entered into that certain
Service Agreement dated November 12, 1996 (the"Service Agreement");
WHEREAS, VERO has been managed by SCN pursuant to the Service
Agreement;
WHEREAS, the Parties intend to amend and restate the Service Agreement
as a Management Services Agreement;
WHEREAS, the Parties intend that VERO, through the Physician Owners,
purchase, or repurchase, as the case may be, certain assets heretofore utilized
by SCN in its management of VERO's medical practice; and
WHEREAS, the Parties intend that VERO assume certain liabilities of
SCN which were generated or incurred by SCN in connection with its management
of VERO's medical practice, and to make certain other agreements among
themselves, all on the terms and conditions as set forth herein.
NOW, THEREFORE, for and in consideration of the premises above, the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply:
"Accounts Receivable" shall mean the Purchased A/R (as defined in the
Service Agreement) of VERO, including collections on Purchased A/R which have
not been transferred to SCN as of the Closing Date that have been purchased by
SCN prior to the Closing Date.
"Affected Participants" has the meaning set forth in SECTION 5.10(B).
"Affiliated Practice" has the meaning set forth in SECTION 10.15.
"Agreement" has the meaning set forth in the preface above.
"Ancillary Services" has the meaning set forth in the Management
Services Agreement.
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"Applicable Law" means all federal, state, county, municipal or other
local laws, constitutions, ordinances, statutes, rules, regulations, and orders
applicable thereto.
"Arbitration Notice" shall have the meaning as defined in SECTION
2.3(B).
"Asset Purchase Price" shall have the meaning as defined in SECTION
2.1.
"Assumed Liabilities" shall have the meaning as defined in SECTION 2.4.
"Book Value" shall mean the book value of the Purchased Assets as
carried on SCN's books in accordance with GAAP, as determined by SCN or SCN's
independent accountants.
"Closing" has the meaning set forth in SECTION 2.5.
"Closing Date" has the meaning set forth in SECTION 2.5.
"Closing Date Balance Sheet" has the meaning set forth in SECTION
2.3(A).
"Closing Price" has the meaning set forth in SECTION 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Delaware General Corporation Law" means the General Corporation Law
of the State of Delaware, as amended.
"Excluded Assets" means certain assets specifically set forth on
SCHEDULE 1.1 used in the provision of Ancillary Services at VERO and all assets
of SCN not used specifically and exclusively in connection with the management
of VERO's medical practice.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity or other practices or procedures as may be
approved by a significant segment of the accounting profession. For purposes of
this Agreement, GAAP shall be applied in a manner consistent with the historic
practices used by SCN with respect to VERO, as applicable.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, board, body, agency, bureau or entity or any
arbitrator with authority to bind a party at law.
"Independent Accounting Firm" shall have the meaning as defined in
SECTION 2.3(B).
"Knowledge" means actual knowledge after reasonable investigation.
"Lender" means any lender to SCN that has a Security Interest in any
of the Purchased Assets.
"Loss" has the meaning set forth in SECTION 9.1.
"Management Services Agreement" shall mean that certain Management
Service Agreement by and among SCN, VERO and the Physician Owners dated as of
January 1, 1999.
"Merger" means the acquisition of the assets of VERO, or its
predecessor Person in the practice of medicine, pursuant to the Merger
Agreement.
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"Merger Agreement" means that certain Merger Agreement, dated November
12, 1996, by and among the Parties.
"Most Recent Balance Sheet" has the meaning set forth in SECTION
2.3(A).
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other governmental body or by any arbitrator.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party or Parties" has the meaning set forth in the preface above.
"Person" means an individual, corporation, partnership, association,
limited liability company, limited liability partnership, joint stock company,
joint venture, trust, unincorporated organization, or governmental entity (or
any department, agency or political subdivision thereof, including without
limitation Third-Party Payors).
"Physician Owners" means the Persons set forth on SCHEDULE 1.2.
"Practice Offices" has the meaning set forth in the Management
Services Agreement.
"Prepaid Expenses" means those expenses incurred and paid by SCN in
connection with SCN's management of VERO's medical practice which confer a
benefit on SCN, VERO or the Physician Owners, including but not limited to
professional liability insurance, and which VERO has not paid SCN for pursuant
to the Service Agreement or otherwise as of the Closing Date.
"Proceedings" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any governmental body or arbitrator
"Purchased Assets" means all of SCN's right, title, and interest in
and to the following assets of SCN owned as of the Closing Date:
(a) Accounts Receivable;
(b) assets purchased or acquired in the Merger other than those assets
disposed of in the Ordinary Course of Business;
(c) Prepaid Expenses;
(d) inventory used directly and exclusively in connection with SCN's
management of VERO's medical practice which has not been previously purchased
by VERO pursuant to the Service Agreement or otherwise; and
(e) all other assets, tangible and intangible, acquired by SCN and
used directly and exclusively in connection with the SCN's management of VERO's
medical practice, other than the Excluded Assets.
"Requisite SCN Approval" means (i) the requisite vote of the Board of
Directors (or duly authorized committee thereof) of SCN and (ii) the approval
of any Lender, in order to approve this Agreement and carry out the terms and
conditions hereof.
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"Requisite VERO Approval" means the affirmative vote of the holders of
the requisite percentage of the directors and/or shareholder interests of VERO
which is required by the Florida Business Corporation Act to approve the
transactions contemplated by this Agreement.
"Restructuring Transaction" has the meaning set forth in SECTION 10.15.
"SCN" means Specialty Care Network, Inc., a Delaware corporation,
together with its affiliates, successors and assigns.
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"Savings Plan" has the meaning set forth in SECTION 5.10(B).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, or any conditional sales agreement, option,
or right of first refusal other than (a) mechanic's, materialmen's or similar
lien, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Service Agreement" shall have the meaning set forth in the Recitals
of this Agreement.
"Service Fee" means any reimbursable expense or Service Fee owed, or
payable to, SCN by VERO or the Physician Owners pursuant to the Service
Agreement.
"Successor Plan" has the meaning set forth in SECTION 5.10(B).
"Term Debt" means the debt and obligations set forth on SCHEDULE 1.3.
"Third-Party Payor" has the meaning set forth in the Management
Services Agreement.
"Transferred Employee" means the terminated employees of SCN described
in SECTION 2.8 and all other individuals employed at the Practice Offices on
the Closing Date.
"VERO" has the meaning set forth in the preface above.
"VERO Health Plan" has the meaning set forth in SECTION 5.10(B).
"VERO Note" has the meaning set forth in SECTION 2.1.
"VERO Ownership Interests" has the meaning set forth in SECTION 4.2.
ARTICLE II.
BASIC TRANSACTION
II.1 Purchase and Sale of Assets. At the Closing, on and subject to
the terms and conditions of this Agreement, SCN shall transfer, sell, assign,
convey and deliver to VERO, and VERO shall purchase and otherwise assume, all
of the
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Purchased Assets. The purchase price for the Purchased Assets (the "Asset
Purchase Price") shall equal (a) the Book Value of the Accounts Receivable as
of the Closing Date, plus (b) the Book Value of all furniture, fixtures, office
furnishings, tools and similar property, equipment and other capital assets of
SCN, not including the Excluded Assets, used directly and exclusively in
connection with SCN's management of VERO's medical practice as of the Closing
Date, plus (c) the Book Value of all Prepaid Expenses as of the Closing Date,
plus (d) the Book Value of all notes and other receivables owed to SCN by VERO
and/or the Physician Owners, including but not limited to any accrued but
unpaid Service Fees, owed by VERO to SCN as of the Closing Date, plus (e) cash
balance in the VERO ORTHOPAEDICS II, P.A. deposit account less (f) the Book
Value of the Assumed Liabilities. VERO and the Physician Owners shall satisfy
the Asset Purchase Price at Closing by delivering to SCN a non-negotiable
promissory note (the "VERO Note") substantially in the form attached hereto of
EXHIBIT 2.1(a), with a principal amount which is based on the Most Recent
Balance Sheet. The Asset Purchase Price and the VERO Note, shall be subject to
adjustment with respect to the cash amounts paid at Closing in accordance with
SECTION 2.3. The Parties agree to allocate the Purchase Price (and all other
capitalizable costs) among the Purchased Assets for all purposes (including
financial accounting and tax purposes) in accordance with the Purchase Price
Allocation Agreement attached hereto as EXHIBIT 2.1.
II.2 Amendment and Restatement of Service Agreement. At the Closing,
on and subject to the terms and conditions of this Agreement, the Parties shall
amend and restate the Service Agreement in substantially the form of the
Management Services Agreement attached hereto as EXHIBIT 7.1(D), and such
Management Services Agreement shall control the rights, obligations and duties
of the Parties with respect to SCN's management of VERO's medical practice from
and after the Closing Date; provided, however, that the Service Agreement shall
be effective and shall control the relationship of the Parties prior to the
Closing Date. As consideration for SCN's agreeing to amend and restate the
Service Agreement, VERO and the Physician Owners shall deliver to SCN at
Closing 488,705 SCN Shares, free and clear of all liens and encumbrances. VERO
or the Physician Owners may elect to pay cash lieu of delivering all or part of
the SCN shares required pursuant to subsection (b). For purposes of the
preceding sentence, each SCN share shall be deemed to have a value equal to the
lesser of (i) Three and No/100 Dollars ($3.00), or (ii) the average closing
price for an SCN Share on the NASDAQ market quotation system for the thirty
(30) trading days ending on the fifth (5th) day preceding the Closing Date (the
"Closing Price"). In the event that the Closing Price exceeds Three and No/100
Dollars ($3.00) and VERO or the Physician Owners elect to deliver cash in lieu
of all or part of the SCN Shares, then VERO or the Physician Owners, as
applicable, shall deliver to SCN contemporaneously with the delivery of such
cash written evidence that the SCN Shares for which such election to pay cash
was made were disposed of prior to the date of this Agreement in a broker
assisted trade. VERO and the Physician Owners agree that any SCN Shares
delivered pursuant to this SECTION 2.2 shall be properly endorsed for transfer
by VERO or the Physician Owners and shall be delivered by VERO and/or the
Physician Owners.
II.3 Accounting; True-Up; Dispute Resolution.
(a) No less than five (5) business days prior to Closing, SCN shall
deliver to VERO the most recently prepared month-end balance sheet (the "Most
Recent Balance Sheet") stating the Book Value of the Purchased Assets and
Assumed Liabilities. Within sixty (60) days from the Closing Date, SCN shall
prepare a balance sheet (the "Closing Date Balance Sheet") stating the Book
Value of the Purchased Assets and Assumed Liabilities as of the Closing Date.
In the event SCN determines that the Asset Purchase Price (as determined in
accordance with the Closing Date Balance Sheet) is greater than the amount paid
by VERO and the Physician Owners at Closing in accordance with the provisions
of SECTION 2.1 of this Agreement, then VERO and the Physician Owners shall pay
to SCN such excess in cash within two (2) days of the date SCN furnishes to
VERO and the Physician Owners the Asset Purchase Price computation. In the
event that SCN determines that the Asset Purchase Price (as determined in
accordance with the Closing Date Balance Sheet) is less than the amount paid by
VERO and the Physician Owners to SCN at Closing in accordance with the
provisions of SECTION 2.1 of this Agreement, then SCN shall pay to VERO and the
Physician Owners such excess in cash within two (2) days of the date SCN
furnishes to VERO and the Physician Owners the Asset Purchase Price
computation.
(b) If SCN and VERO are unable to resolve any disagreement within
twenty (20) days after SCN's receipt of such notice of disagreement, either SCN
or VERO may give notice (an "Arbitration Notice") to the other Party of an
intent to submit such disagreement to a certified independent public accounting
firm that is nationally recognized (the "Independent
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Accounting Firm") and mutually agreeable to SCN and VERO. If SCN and VERO
cannot agree upon such election within twenty (20) days after delivery of the
Arbitration Notice, the Independent Accounting Firm shall be selected by lot
from among the five largest independent public accounting firms in the United
States, excluding SCN's principal auditors. The dispute shall be immediately
submitted by VERO and SCN to the Independent Accounting Firm for resolution of
such dispute within twenty (20) days after submission to the Independent
Accounting Firm. At the time of the submission of such dispute to the
Independent Accounting Firm for resolution, SCN shall file with the Independent
Accounting Firm a written statement of its position with regard to any matters
in dispute, at which time VERO shall have ten (10) days to respond in writing
to SCN's position. Upon receipt of written position statements by each of SCN
and VERO, the Independent Accounting Firm shall resolve the dispute in
accordance with GAAP. The decision of the Independent Accounting Firm shall be
final and binding upon all Parties hereto. Each Party shall bear its own
expenses, including expenses of its accountants and attorneys in connection
with the resolution of any such dispute; provided, however, the fees and
expenses of the Independent Accounting Firm shall be paid by VERO.
II.4 Assumption of Term Debt and Assumed Liabilities. Except as
otherwise provided herein, VERO shall assume at the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) the Term Debt set forth
on SCHEDULE 1.3, and (ii) the commitments, obligations and liabilities of SCN
which are listed on SCHEDULE 2.4 attached hereto (collectively the "Assumed
Liabilities") with respect to VERO and the Physician Owners, including without
limitation, any and all accounts payable, payroll, accrued employee vacation
time and sick leave and any employee benefits.
II.5 The Closing. The closing of the transaction (the "Closing") shall
take place at the offices of SCN, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby or such other
date as the Parties may mutually determine (the "Closing Date"); provided,
however, that the Closing Date shall be no later than December 31, 1998. Time
is of the essence for this Agreement. The Parties may agree to close the
transactions contemplated by the Agreement via facsimile, with executed
original agreements, instruments, or other documents to be sent to the
appropriate party via FedEx (or other nationally recognized delivery company
that guarantees delivery of such documents on the following day) the next day;
provided, however, the Parties shall execute a written agreement governing the
terms and conditions of a Closing via facsimile.
II.6 Deliveries at Closing. At the Closing, (i) SCN will deliver to
VERO the various certificates, instruments, and documents referred to in
SECTION 7.1 below; (ii) VERO and the Physician Owners, as applicable, will
deliver to SCN the various certificates, instruments, and documents referred to
in SECTION 7.2 below.
II.7 Taxes and Expenses. SCN and VERO shall be responsible for any
business, occupation, withholding or similar tax or taxes of any kind related
to SCN's or VERO's business, respectively, for any period prior to the Closing
Date. All applicable sales, use and tangible taxes, documentary stamp taxes,
filing and recording costs and other transfer taxes, costs and fees relating to
the transfer of title to the Purchased Assets, and the consummation of the
transactions described herein, shall be paid by VERO.
II.8 Employees. As of the Closing Date and subject to Applicable Law,
SCN shall terminate all the employees of SCN utilized at the Practice Offices.
VERO shall hire such terminated employees and pay to such terminated employees
substantially the same compensation and benefits as SCN had paid such
terminated employees prior to the Closing Date. VERO shall assume
responsibility under any and all employment agreements with respect to such
terminated employees.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SCN
SCN represents and warrants to VERO and the Physician Owners that the
statements contained in this ARTICLE III are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this ARTICLE III).
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III.1 Organization, Qualification, and Power. SCN is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
in which the character or location of the properties owned or the business
conducted by SCN makes such qualifications necessary. SCN has the full power
and authority to carry on the business in which it is engaged and to own and
use the properties owned, leased and used by it. SCN is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.
III.2 Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder; subject, however, to SCN
obtaining the Requisite SCN Approval. Upon receiving the Requisite SCN
Approval, this Agreement will constitute the valid and legally binding
obligation of SCN, enforceable in accordance with its terms and conditions.
III.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which SCN
is subject or any provision of the Delaware General Corporation Law or bylaws
of SCN or (ii) upon receipt of all consents set forth on SCHEDULE 3.3, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice (other than such notice as may be
required by a lender) under any agreement, contract, lease, license, instrument
or other arrangement to which SCN is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). SCN is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
III.4 Title; Condition. SCN has, or will have at the Closing Date, and
will convey to VERO good and marketable title to all of the Purchased Assets
subject to no Security Interest. SCN agrees to remove all Security Interests on
the Purchased Assets reflected on any search of public records, if any, prior
to the Closing Date and to remove any other Security Interest on the Purchased
Assets created with respect to the Purchased Assets between the date of such
search of public records and the Closing Date.
III.5 Tax Matters. All federal and state tax returns required by law
to filed with respect to payroll taxes have been filed and SCN has paid or
adequately provided for all such taxes. SCN has withheld from each payment made
to employees of SCN the amount of all taxes (including, but not limited to,
federal, state and local income taxes and Federal Insurance Contribution Act
taxes) required to be withheld therefrom and all amounts customarily withheld
therefrom, and has set aside all other employee contributions or payments
customarily set aside with respect to such wages and has paid or will pay the
same to, or has deposited or will deposit such payment with, the proper tax
receiving officers or other appropriate authorities. There are no tax liens on
any of Purchased Assets except those with respect to taxes not yet due and
payable.
III.6 Brokers' Fees. SCN does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which VERO or the Physician
Owners may be obligated.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF VERO AND THE PHYSICIAN OWNERS
VERO and the Physician Owners, jointly and severally, represent and
warrant to SCN that the statements contained in this ARTICLE IV are correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE IV).
IV.1 Organization. VERO is a professional service corporation duly
organized, validly existing, and in good standing under
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the laws of the State of Florida. VERO is duly authorized to conduct business
and is in good standing under the laws of each jurisdiction in which the
character or location of the properties owned or the business conducted by VERO
makes such qualification necessary. VERO has the full power and authority to
carry on the business in which it is engaged and to own and use the properties
owned, leased and used by it.
IV.2 Ownership Interest of VERO. VERO is owned solely by the Physician
Owners. Except for the shares of all classes of stock (the "VERO Ownership
Interests") owned by the Physician Owners, there are no other VERO Ownership
Interests or any other interest convertible into a VERO Ownership Interest
authorized or outstanding.
IV.3 Authorization of Transaction. VERO has the full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of VERO and the Physician Owners, enforceable in accordance with its terms and
conditions.
IV.4 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which
VERO is subject or any provision of the Florida Business Corporation Act or
bylaws of VERO or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
VERO is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). VERO is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
IV.5 Brokers' Fees. Neither VERO nor the Physician Owners have any
liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which SCN could become liable or obligated.
IV.6 Title to SCN Shares. VERO or the Physician Owners have, or will
have at the Closing Date, good and marketable title to all of the SCN Shares
delivered pursuant to SECTION 2.2 subject to no mortgage, pledge, lien, lease,
conditional sales agreement, option, right of first refusal or any other
encumbrance or charge, including taxes. VERO and the Physician Owners agree to
remove all Security Interests reflected on any search of public records, if
any, prior to the Closing Date and to remove any other Security Interest filed
with respect to the SCN Shares between the date of such search of public
records and the Closing Date.
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ARTICLE V.
COVENANTS
The Parties agree as follows with respect to the period from and after
the execution of this Agreement:
V.1 General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in ARTICLE VI below) to be
satisfied by him or it, subject to the exercise of the SCN directors' fiduciary
duties under Delaware law. This SECTION 5.1 shall not be construed to obligate
any of the Parties to waive any condition precedent to his or its obligations
to perform hereunder.
V.2 Notices and Consents. VERO and SCN will give any notices to third
parties, and will use their best efforts to obtain any third party consents,
necessary or required to consummate the transaction contemplated hereby.
V.3 Regulatory Matters and Approvals. Each of the Parties will give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the transactions contemplated by this
Agreement.
V.4 Operation of Business. From the date of this Agreement through the
Closing Date, SCN and VERO will not (and will not commit to) engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing:
(a) Neither SCN nor VERO will authorize or effect any change
in its charter, or equivalent thereof, or bylaws; and
(b) SCN will not impose any Security Interest upon any of the
Purchased Assets outside the Ordinary Course of Business.
V.5 Further Acts and Assurances. SCN, and VERO and the Physician
Owners shall, at any time and from time to time at and after the Closing, upon
request of the other, (a) take any and all steps necessary to (i) place VERO in
possession and operating control of the Purchased Assets, (ii) transfer the SCN
Shares to be delivered pursuant to SECTION 2.1, (iii) enter into the Management
Services Agreement, and (iv) enter into any agreement or arrangement
contemplated hereby; and (b) will do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances
as may be required for the better transferring and confirming to VERO or SCN,
as applicable, or their respective successors or assigns, or for reducing to
possession, any or all of (x) the Purchased Assets, and (y) the SCN Shares to
be delivered pursuant to SECTION 2.1.
V.6 Full Access. Upon five (5) business days prior notice, SCN will
permit representatives of VERO to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to SCN during normal business hours; provided, however, such
access shall be limited to the operations of VERO and the Physician Owners as
such are relevant to the transactions contemplated by this Agreement.
V.7 Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of
any of its own representations and warranties in ARTICLE III or ARTICLE IV
above. No disclosure by any Party pursuant to this SECTION 5.7, however, shall
be deemed to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
V.8 Collection of Accounts Receivable. SCN agrees to cooperate with
Physician Owners in the collection of Accounts Receivable owned by SCN as of
the Closing Date and acquired by VERO pursuant to this Agreement. In
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connection therewith, SCN agrees to execute the necessary documents to
accommodate the collection of the Accounts Receivable in such manner.
V.9 Corporate Authorization. By execution of this Agreement, VERO and
the Physician Owners have taken any and all steps necessary and have done,
executed, acknowledged and delivered, or have caused to be done, executed,
acknowledged and delivered, all such acts, deeds and assurances required in
order to consummate the transactions contemplated by this Agreement, including
the Physician Owners voting as directors of VERO in favor of the transactions
contemplated by this Agreement and voting as an owners of VERO in favor of the
transactions contemplated by this Agreement at any meeting (or in any action by
written consent) required by the Florida Business Corporation Act.
V.10 Employee Benefit Plans.
(a) Welfare Plans. As of the Closing Date, the Transferred
Employees shall cease participating in all SCN welfare benefit plans,
including, but not limited to, the Speciality Care Network
Medical/Dental Plan, the Speciality Care Network Like Insurance Plan,
the Speciality Care Network Disability Plan, and the Speciality Care
Network Flexible Spending Plan. As of the Closing Date, VERO shall,
with respect to Transferred Employees, designate one or more plans
("VERO Health Plan") to provide health benefits substantially similar
to the Specialty Care Network Medical/Dental Plan to Transferred
Employees and their eligible dependents, and VERO shall allow all
Transferred Employees and their eligible dependents to enroll, without
any waiting period, in the VERO Health Plan. With respect to
Transferred Employees, the VERO Health Plan shall waive any
restrictions and limitations for pre-existing conditions. Any service
of Transferred Employees recognized by SCN under the Specialty Care
Network welfare plan shall be recognized by the VERO welfare plans.
SCN and the Specialty Care Network Medical/Dental Plan shall only be
responsible for health expenses of Transferred Employees and their
dependents to the extent such expenses are covered under the terms are
covered under the terms of the Specialty Care Network Medical/Dental
Plan and are incurred prior to the Closing Date. The VERO Health Plan
shall take into account expenses incurred under the Specialty Care
Network Medical/Dental Plan on or after January 1, 1999, and up to the
Closing Date, for purposes of determining deductibles and
out-of-pocket limits under the VERO Health Plan.
(b) Specialty Care Network Retirement Savings Plan. As of the
Closing Date, the Transferred Employees shall cease participating in
the Specialty Care Network Retirement Savings Plan ("Savings Plan").
As of the Closing Date, VERO shall establish, at its sole expense, a
defined contribution retirement plan that is qualified under sections
401(a) and 501(a) of the Code ("Successor Plan"). Within 90 days after
the Closing Date, SCN shall cause the assets and liabilities of the
Savings Plan attributable to the accounts of the Transferred Employees
and individuals formerly employed at the Practice Offices (the
"Affected Participants") to be transferred to the Successor Plan.
Effective upon the completion of the transfer of assets in accordance
with this Section, VERO shall cause Successor Plan to assume the
liabilities of the Savings Plan applicable to such Affected
Participants. With respect to Transferred Employees, the Successor
Plan shall waive all requirements for eligibility to participate.
Service of a Transferred Employee which is recognized by the Savings
Plan shall be recognized as service under the Successor Plan.
(c) Amendments and Termination. The SCN employees benefit
plans described in this SECTION 5.10 are hereby amended, effective as
of the Closing Date, by making any changes necessary or appropriate to
effectuate the provisions of this SECTION 5.10. SCN reserves the right
to terminate any of the employee benefit plans described in this
SECTION 5.10 at any time before or after the Closing Date.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS TO CLOSE
VI.1 Conditions to Obligation of VERO and the Physician Owners. The
obligation of VERO and the Physician Owners to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the following
conditions:
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(a) the Requisite VERO Approval shall have been obtained;
(b) the representations and warranties set forth in ARTICLE
III above shall be true and correct in all material respects at and as
of the Closing Date;
(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the rights of VERO or the
Physician Owners to own the Purchased Assets;
(d) all actions to be taken by SCN in connection with the
consummation of the transactions contemplated hereby and all
certificates, instruments, agreements and other documents required to
effect the transactions contemplated hereby, have been taken or
delivered to VERO and the Physician Owners and are satisfactory in
form and substance;
(e) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
(f) neither surrender of the SCN Shares by VERO and/or the
Physician Owners, nor the issuance of the VERO Note will violate
federal securities laws or the securities laws of any state of the
United States.
VERO and the Physician Owners may waive any condition specified in this SECTION
6.1 by executing a writing so stating at or prior to the Closing.
VI.2 Conditions to Obligation of SCN. The obligation of SCN to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) SCN shall have procured all of the third party consents
necessary to transfer the Assumed Liabilities or shall have made for
adequate provision thereof;
(b) the Requisite SCN Approval shall have been obtained;
(c) the representations and warranties set forth in ARTICLE
IV above shall be true and correct in all material respects at and as
of the Closing Date;
(d) VERO and the Physician Owners shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing; and
(e) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of SCN to own the
Purchased Assets;
(f) all actions to be taken by VERO and/or the Physician
Owners in connection with the consummation of the transactions
contemplated hereby and all certificates, instruments, agreements and
other documents required to effect the transactions contemplated
hereby, have been taken or delivered to SCN and are satisfactory in
form and substance.
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SCN may waive any condition specified in this SECTION 6.2 by executing a
writing so stating at or prior to the Closing.
ARTICLE VII.
PRE-CLOSING AND CLOSING DELIVERIES
VII.1 By SCN. SCN shall execute and deliver to VERO and the Physician
Owners prior to or at the Closing:
(a) Certified resolutions of SCN authorizing the execution of
all documents and the consummation of all transactions contemplated
hereby;
(b) A ▇▇▇▇ of Sale in substantially the form attached hereto
as EXHIBIT 7.1(B);
(c) An Assignment and Assumption Agreement in substantially
the form attached hereto as EXHIBIT 7.1(C);
(d) A Management Services Agreement in substantially the form
attached hereto as EXHIBIT 7.1(D);
(e) A certificate duly executed by the President, or other
duly authorized executive officer, of SCN that as of the Closing Date,
all representations and warranties of SCN are true and correct in all
material respects, all covenants and agreements contained in the
Agreement to be performed by SCN have been performed or complied with,
and all conditions to Closing have been satisfied;
(f) The Most Recent Balance Sheet pursuant to SECTION 2.3(A);
and
(g) Such other instruments as may be reasonably requested by
VERO in order to effect to or carry out the intent of this Agreement.
VII.2 By VERO and the Physician Owners. VERO and the Physician Owners
shall deliver to SCN at or prior to the Closing:
(a) The Asset Purchase Price, the VERO Note and the stock
certificates representing the SCN Shares being sold to SCN by VERO
and/or the Physician Owners;
(b) An Assignment and Assumption Agreement in substantially
the form of EXHIBIT 7.1(C);
(c) A Release in substantially the form attached hereto as
EXHIBIT 7.2(C);
(d) Certified resolutions of VERO authorizing the execution
of all documents and the consummation of all transactions contemplated
hereby;
(e) A Management Services Agreement in substantially the form
attached hereto as EXHIBIT 7.1(D);
(f) A certificate, duly executed by the President, or other
duly authorized officer, of VERO, stating as of the Closing Date, all
representations and warranties of VERO are true, all covenants and
agreements contained in the Agreement to be performed by VERO have
been performed or complied with and all conditions to Closing have
been satisfied; and
(g) Such other instruments as may be reasonably requested by
SCN in order to effect to or carry out the intent of this Agreement.
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ARTICLE VIII.
TERMINATION
VIII.1 Termination of Agreement. Either of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after SCN board of directors approval) as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing Date;
(b) VERO and the Physician Owners may terminate this
Agreement by giving written notice to SCN at any time prior to the
Closing Date (A) in the event SCN has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, VERO and the Physician Owners have notified SCN of the
breach, and the breach has continued without cure on or before
December 31, 1998, after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1998, by reason of
the failure of any condition precedent under SECTION 6.2 hereof
(unless the failure results primarily from VERO's or the Physician
Owners' breaching any representation, warranty, or covenant contained
in this Agreement); or
(c) SCN may terminate this Agreement by giving written notice
to VERO or the Physician Owners at any time prior to the Closing Date
(A) in the event VERO or the Physician Owners has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, SCN has notified VERO or the Physician Owners of
the breach, and the breach has continued without cure on or before
December 31, 1998, after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1998 by reason of
the failure of any condition precedent under SECTION 6.1 hereof
(unless the failure results primarily from SCN's breaching any
representation, warranty, or covenant contained in this Agreement).
VIII.2 Effect of Termination. If any Party terminates this Agreement
pursuant to SECTION 8.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach). Notwithstanding the
foregoing, in the event the transaction contemplated by this Agreement is not
consummated due to the fault, or failure to perform hereunder by (i) VERO or
the Physician Owners, then VERO and the Physician Owners agree to reimburse SCN
for SCN's out-of-pocket expenses, including but not limited to professional
fees or (ii) SCN, then SCN agrees to reimburse VERO and the Physician Owners
for their out-of-pocket expenses, including but not limited to professional
fees.
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ARTICLE IX.
INDEMNIFICATION
IX.1 Indemnification by VERO and the Physician Owners. VERO and the
Physician Owners agree to and shall, jointly and severally, defend, indemnify
and hold harmless SCN, its successors and assigns, officers and directors from
or against any and all losses, liabilities, claims, damages, actions, suits,
costs, deficiencies, penalties, and expenses (including without limitation
reasonable attorney's fees) (collectively referred to herein as "Loss") (i)
resulting from or arising out of the breach, untruth or inaccuracy of any
representation, warranty or covenant of VERO or the Physician Owners set forth
in this Agreement, or (ii) resulting from or arising out of any of the Assumed
Liabilities. In addition to any indemnification rights granted to SCN under
this Agreement, SCN shall continue to be entitled to any indemnification under
any prior agreements between or among SCN, VERO, or the Physician Owners,
including without limitation any SCN rights to indemnification under the
Service Agreement or the Merger Agreement.
IX.2 Notice to VERO and the Physician Owners; Opportunity to Defend.
SCN agrees to give prompt notice to VERO and the Physician Owners of the
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought under SECTION 9.1. VERO and the
Physician Owners may participate in and at their election, or at the request of
SCN, assume the defense of any such suit, action or proceeding at VERO or the
Physician Owners' expense. Neither VERO nor the Physician Owners shall be
liable under SECTION 9.1 for any settlement effected without their consent of
any claim, litigation or proceeding in respect of which indemnity may be sought
under SECTION 9.1 which consent shall not be unreasonably withheld.
IX.3 General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless VERO, its successors and assigns, officers and
managers, from or against any Loss resulting from or arising out of the breach,
untruth or inaccuracy of any representation, warranty or covenant of SCN set
forth in this Agreement.
IX.4 Notice to SCN; Opportunity to Defend. The Physician Owners agree
to give prompt notice to SCN of the assertion of any claim, or the commencement
of any suit, action or proceeding in respect of which indemnity may be sought
under SECTION 9.3. SCN may participate in and at its election, or at the
request of the Physician Owners, assume the defense of any such suit, action or
proceeding at SCN's expense. SCN shall not be liable under SECTION 9.3 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
be unreasonably withheld.
ARTICLE X.
MISCELLANEOUS
X.1 Survival. The representations, warranties, and covenants of the
Physician Owners, VERO and SCN contained in this Agreement and the
indemnifications contained herein shall survive the Closing. Except as provided
in this SECTION 10.1 below, no claim for indemnification with respect to any
alleged misrepresentation or breach of warranty may be made after three (3)
years following the Closing Date. SCN shall be entitled to indemnification for
(i) claims for breaches of representations, warranties or covenants relating to
matters involving the payment of taxes (including interest and/or penalties
thereon), (ii) claims arising from reimbursement of any amounts to Third Party
Payors (including interest and penalties thereon), and (iii) claims relating to
a matter involving compliance with Applicable Laws as described in ARTICLE IV
and ARTICLE V above and such right of indemnification shall survive for the
applicable statute of limitations for the underlying claim asserted. Any matter
to which indemnification pertains and with respect to which a claim has been
asserted or threatened following the Closing Date and prior to termination of
the applicable survival period shall, notwithstanding the expiration of the
applicable survival period, continue to be subject to the indemnification under
this Agreement until such claim is finally terminated, settled, resolved or
adjudicated; and all terms, conditions and stipulations of this Agreement shall
likewise continue to apply.
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X.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
X.3 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
X.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties.
X.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
X.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
X.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to VERO: Copy to:
Vero Orthopaedics II, P.A. Block & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D. Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to SCN: Copy to:
Specialty Care Network, Inc. Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
X.8 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Colorado or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Colorado.
Each of the parties submits to the jurisdiction of any state or federal court
sitting in Denver, Colorado, in any
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action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.
X.9 Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Closing Date with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to SCN board approval will be subject to
the restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each of the Parties. No waiver by any party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
X.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
X.11 Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
X.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
X.13 No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between
VERO and SCN that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant
patients.
X.14 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
X.15 Transactions with Affiliated Practices. In the event that SCN
shall within a period commencing on the Closing Date and ending December 31,
1999 close a transaction with an Affiliated Practice which is substantially
similar to the restructuring transaction contemplated by this Agreement (a
"Restructuring Transaction"), and, taken as a whole, the financial terms of
such other Restructuring Transaction are materially more favorable to such
Affiliated Practice (and its Physician Owners) than the financial terms, taken
as a whole, of the restructuring transaction contemplated by this Agreement,
then in such event the Parties shall modify the financial terms of this
Agreement in such manner as the Parties shall reasonably determine so that the
financial terms of the restructuring transaction contemplated by this Agreement
for VERO and the Physician Owners shall be no less favorable, when taken as a
whole, than the Restructuring Transaction undertaken with respect to any other
Affiliated Practice. For these purposes, the term "Affiliated Practice" shall
refer to any physician medical practice which, as of December 1, 1998, had in
effect with SCN an agreement substantially similar to the Service Agreement.
For purposes of this SECTION 10.15, "material" shall be limited solely to
consideration given by an
16
21
Affiliated Practice in consideration of a Restructuring Transaction on terms
other than as follows: (i) Seventy-Five Percent (75%) or more of the SCN Shares
received by such Affiliated Practice in its original acquisition transaction
with SCN, or the financial equivalent thereof, (ii) Twenty-Five Percent (25%)
of the cash received by such Affiliated Practice in its original acquisition
transaction with SCN as consideration for restructuring the Service Agreement,
and/or (iii) a management services fee in an amount less than Fifty Percent
(50%) of the percentage service fee under the Service Agreement, or the
financial equivalent thereof.
17
22
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:
------------------------------------------
Title:
---------------------------------------
VERO ORTHOPAEDICS II, P.A.
By:
------------------------------------------
Title:
---------------------------------------
PHYSICIAN OWNERS:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
18
23
SCHEDULE 1.1
EXCLUDED ASSETS
Bone Densitometer
24
SCHEDULE 1.2
PHYSICIAN OWNERS
▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
25
SCHEDULE 1.3
TERM DEBT
See attached.
26
SCHEDULE 2.4
ASSUMED LIABILITIES
Accounts Payable
Accrued Personnel Costs
Other Accrued Expense
Capital Lease Obligations
27
SCHEDULE 3.3
CONSENTS
See attached.
28
EXHIBIT 2.1(a)
VERO NOTE
See attached.
29
EXHIBIT 2.1(b)
PURCHASE PRICE ALLOCATION AGREEMENT
THIS AGREEMENT is made and entered into as of December 31, 1998, by
and between SPECIALTY CARE NETWORK, INC., a Delaware corporation (the
"Purchaser") and VERO ORTHOPAEDICS II, P.A., a Florida professional service
corporation (the "Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have entered into a Restructure
Agreement dated as of December 31, 1998, pursuant to which Seller has agreed to
sell and Purchaser has agreed to buy certain of the assets (the "Purchased
Assets") of Seller (the "Restructure Agreement");
WHEREAS, the Restructure Agreement provides that the parties shall
allocate the price to be paid for the Purchased Assets (the "Purchase Price")
in a manner which shall conform with and include the information required by
Section 1060 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the parties hereto desire to set forth herein with
particularity the allocation of the Purchase Price.
NOW, THEREFORE, in consideration of the foregoing recitals, the
covenants, conditions, representations, warranties, stipulations and agreements
contained herein, and other good and valuable consideration, the full receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1. Allocation of Asset Purchase Price. The Asset Purchase Price set
forth in the Restructure Agreement is hereby allocated among the Purchased
Assets as follows:
Description Fair Market Value Allocation
Class I
Class II
Class III
Class IV
Class V
2. Asset Acquisition Statement. The parties agree that they will
allocate the Purchase Price as set forth herein on the Asset Acquisition
Statement reported to the Internal Revenue Service on Internal Revenue Form
8594.
3. Purchaser and Seller Acknowledgment. The Purchaser and Seller
acknowledge that they have inspected the Purchased Assets and that the amounts
set forth herein as the fair market values of such Purchased Assets are true
and accurate as of the date hereof.
30
4. Entire Agreement; Modifications. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter and
supersedes all negotiations, prior discussions, agreements and understandings
relating to the subject matter of this Agreement. Any modifications to this
Agreement must be approved in writing by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Price Allocation Agreement as of the day and date first written above.
VERO ORTHOPAEDICS II, P.A.
By:
----------------------------------
Title:
-------------------------------
SPECIALTY CARE NETWORK, INC.
By:
----------------------------------
Title:
-------------------------------
31
EXHIBIT 7.1(b)
▇▇▇▇ OF SALE
THIS ▇▇▇▇ OF SALE is made and delivered by and from SPECIALTY CARE
NETWORK, INC., a Delaware Corporation ("Seller"), to VERO ORTHOPAEDICS II,
P.A., a Florida professional service corporation ("Purchaser"), pursuant to and
in accordance with the terms and provisions of that certain Restructure
Agreement dated as of December 31, 1998 (the "Restructure Agreement"), by and
between Seller and Purchaser. Capitalized terms, unless otherwise defined
herein, shall have the meanings ascribed to them in the Restructure Agreement.
In connection therewith, for good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, Seller does hereby
grant, bargain, sell, transfer, convey and deliver unto Purchaser, its
successors and assigns, all legal and beneficial right, title and interest in
and to the Purchased Assets; to have and to hold the same unto Purchaser and
its successors and assigns from and after the date hereof, subject to the
representations and warranties of Seller and other terms and conditions
contained in the Restructure Agreement, and subject to Seller'S security
interest in the Purchased Assets pursuant to that certain Security Agreement by
and between Seller and Purchaser of even date herewith. The foregoing expressly
does not include any of the Excluded Assets set forth in the Restructure
Agreement.
Subject to the terms and conditions of the Restructure Agreement, each
of the parties hereto will use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary to consummate
and make effective the purchase of the Purchased Assets and the other
transactions contemplated by the Restructure Agreement. From time to time after
the date hereof, Seller will, at Seller'S expense, execute and deliver such
instruments and documents to Purchaser, as Purchaser may reasonably request, in
order to more effectively vest in Purchaser good title to the Purchased Assets
and to more effectively consummate the transactions contemplated by the
Restructure Agreement.
All of the representations and warranties of Seller set forth in the
Restructure Agreement regarding the Purchased Assets are incorporated herein by
reference in their entirety, to the same extent and with the same limitations
as set forth in the Restructure Agreement. Seller represents and warrants that
the title conveyed is good and marketable, its transfer rightfully made; that
the Purchased Assets are delivered free and clear of all liens and
encumbrances; and that Seller will warrant and defend same against the lawful
claims and demands of all persons whomsoever.
This instrument shall be binding upon Seller, its successors and
assigns, and shall inure to the benefit of Purchaser, its successors and
assigns. This instrument shall be effective as to the transfer of all of the
Purchased Assets as of the Closing Date.
Nothing herein contained shall be deemed or construed as an assumption
by Purchaser of, or to impose upon Purchaser, any liabilities or obligations of
Seller, except as otherwise provided in that certain Assignment and Assumption
Agreement of even date herewith.
This ▇▇▇▇ of Sale shall be governed by and construed in accordance
with the laws of the State of Florida.
32
IN WITNESS WHEREOF, Seller has caused its duly authorized
representative to execute and deliver this ▇▇▇▇ of Sale as of the 31st day of
December, 1998.
SPECIALTY CARE NETWORK, INC.
By:
---------------------------------
Title:
------------------------------
33
EXHIBIT 7.1(c)
ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR THE SUM OF $10.00 CASH IN HAND, and other good and valuable
consideration, including the assumption by VERO ORTHOPAEDICS II, P.A., a
Florida professional service corporation ("VERO"), of liabilities as
hereinbelow set forth, SPECIALTY CARE NETWORK, INC., a Delaware corporation
("SCN") hereby assigns, transfers, conveys, and delivers to VERO, all of its
legal and beneficial right, title and interest in and to the Purchased Assets
not otherwise transferred by that certain ▇▇▇▇ of Sale of even date herewith.
All capitalized terms not otherwise defined herein having the meanings ascribed
to those terms in that certain Restructure Agreement ("Restructure Agreement")
by and among SCN, VERO, and the Physician Owners of VERO, dated as of December
31, 1998, and said terms are incorporated herein by this reference.
In partial consideration of the foregoing, VERO and the Physician
Owners, jointly and severally, hereby assume and agree to perform, pay and
discharge all Assumed Liabilities.
This Assignment and Assumption Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns, but no assignment shall relieve any party of its obligations
hereunder.
This Assignment and Assumption Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
34
IN WITNESS WHEREOF, VERO, the Physician Owners and SCN, by their
duly-authorized officers, have signed and delivered this Assignment and
Assumption Agreement as of December 31, 1998.
SPECIALTY CARE NETWORK, INC.
By:
-------------------------------------
Its:
------------------------------------
VERO ORTHOPAEDICS II, P.A.
By:
-------------------------------------
Its:
------------------------------------
PHYSICIAN OWNERS:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
35
EXHIBIT 7.1(d)
MANAGEMENT SERVICES AGREEMENT
See attached.
36
EXHIBIT 7.2(c)
RELEASE
THIS RELEASE is being executed and delivered in accordance with
SECTION 7.2(C) of the Restructure Agreement dated December 31, 1998 (the
"Agreement") by and among SPECIALTY CARE NETWORK, INC., a Delaware corporation
("SCN"), VERO ORTHOPAEDICS II, P.A., a Florida professional service corporation
("VERO") and the Physician Owners. Capitalized terms used in this Release
without definition have the respective meanings given to them in the Agreement.
VERO and the Physician Owners acknowledge that execution and delivery
of this Release is a condition to SCN's obligation to consummate the
transaction contemplated by the Agreement and to amend and restate the Service
Agreement as the Management Services Agreement, and that SCN is relying on this
Release in connection with the foregoing.
VERO and the Physician Owners, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and intending to be
legally bound, in order to induce SCN to consummate all transactions
contemplated by the Agreement, hereby agree as follows:
VERO and the Physician Owners on behalf of VERO and themselves
individually and each of their Related Persons, hereby releases and forever
discharges SCN and each of its respective individual, joint or mutual, past,
present and future representatives, affiliates, stockholders, controlling
persons, subsidiaries, employees, agents, successors and assigns (individually,
a "Releasee" and collectively, "Releasees") from any and all claims, demands,
Proceedings, causes of action, Orders, obligations, contracts, agreements,
debts and liabilities whatsoever, whether known or unknown, suspected or
unsuspected, both at law and in equity, which each of VERO and the Physician
Owners or any of their respective Related Persons now has, have ever had or may
hereafter have against the respective Releasees arising contemporaneously with
or prior to the Closing Date or on account of or arising out of any matter,
cause or event occurring contemporaneously with or prior to the Closing Date,
including, but not limited to, any rights to indemnification or reimbursement
from SCN, whether pursuant to the Merger Agreement, Service Agreement, and any
other agreement entered into prior to the date of the Agreement, contract or
otherwise and whether or not relating to claims pending on, or asserted after,
the Closing Date; provided, however, that nothing contained herein shall
operate to release any obligations of SCN accruing after the Closing Date under
the Agreement or the Management Services Agreement, which are to remain in
effect after Closing.
VERO and the Physician Owners hereby irrevocably covenants to refrain
from, directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Releasee, based upon any matter purported to be released hereby.
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each VERO and the Physician Owners, jointly and
severally, shall indemnify and hold harmless each Releasee from and against all
loss, liability, claim, damage (including incidental and consequential damages)
or expense (including costs of investigation and defense and reasonable
attorney's fees) whether or not involving third party claims, arising directly
or indirectly from or in connection with (i) the assertion by or on behalf of
VERO or the Physician Owners or any of their Related Persons of any claim or
other matter purported to be released pursuant to this Release, and (ii) the
assertion by any third party of any claim or demand against any Releasee which
claim or demand arises directly or indirectly from, or in connection with, any
assertion by or on behalf of VERO or the Physician Owners or any of their
Related Persons against such third party of any claims or other matters
purported to be released pursuant to this Release.
If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
37
This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Florida without
regard to principles of conflicts of law.
All words used in this Release will be construed to be of such gender
or number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned have executed and
delivered this Release as of this 31st day of December, 1998.
VERO:
VERO ORTHOPAEDICS II, P.A.
By:
-------------------------------------
Its:
------------------------------------
PHYSICIAN OWNERS:
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.