Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), is made and entered into
as of the 18th day of September, 1996, by and between ▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"),
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇") and PHYSICIAN'S CHOICE,
LLC ("PC"), a Connecticut limited liability company (Moskow, ▇. ▇▇▇▇▇▇., ▇.
▇▇▇▇▇▇ and PC shall be referred to collectively herein as the "Sellers"), and
PHYSICIAN'S CHOICE, INC., a Delaware corporation ("Purchaser").
WHEREAS, immediately prior to the execution hereof, Sellers were equity
holders in Physician's Choice Management, LLC, a Connecticut limited liability
company (the "Company");
WHEREAS, simultaneous with the execution hereof, the Company has been
dissolved and all of the assets of the Company have been transferred to its
equity holders, including SellerWHEREAS, pursuant to this Agreement, the
Purchaser desires to purchase from the Sellers and the Sellers desire to sell,
convey, transfer, assign and deliver to the Purchaser all of their interest in
and to the assets of the Company, on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth and for other good and valuable consideration,
the receipt and adequacy of
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which is hereby expressly acknowledged, the parties hereto agree as follows:
1. Transfer of Assets
(a) Purchase and Sale of Assets. On the terms and subject to the
conditions herein set forth, at the Closing (as hereinafter defined), the
Sellers shall sell, transfer, convey, assign and deliver to the Purchaser, and
the Purchaser shall purchase and accept delivery of all of Sellers' right, title
and interest to the tangible and intangible assets of the Company existing upon
the Company's dissolution, whether directly or indirectly owned, including, but
not limited to any such right, title and interest to: (i) the Company's
supplies, furniture, equipment, leasehold improvements, (ii) the Company's books
and records, (iii) the Company's rights, benefits, privileges and deposits under
those contracts, agreements, leases and purchase orders to be assumed by
Purchaser under this Agreement, including without limitation that certain
Management Services Agreement between PC and the Company, dated as November 22,
1995 (the "Management Services Agreement"), (iv) the Company's trade names, and
all trademarks, service marks and logos used by Company in its business; (v) all
notes, accounts, contracts and other receivables and work in progress due, owing
and/or outstanding as of the Company's dissolution; and (vi) cash on hand or on
deposit, or its equivalent. The aforesaid assets and properties to be
transferred to the Purchaser hereunder are hereinafter collectively referred to
as the "Assets". PC hereby consents and agrees to the assignment of the
Management Services Agreement, and all of its and the Company's rights, benefits
and privileges thereunder, to Sellers and Purchaser in connection with the
liquidation and dissolution of the Company, and the assignment of Sellers'
interest therein to Purchaser hereunder, in accordance with the terms and
subject to the conditions hereof.
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(b) Method of Conveyance. The sale, transfer, conveyance, assignment
and delivery by the Sellers of their right, interest and title to the Assets to
the Purchaser shall be effected as of the Effective Date by the Sellers'
execution and delivery of such warranty bills of sale, endorsements,
assignments, drafts and other instruments of conveyance and transfer
(collectively, the "Instruments of Conveyance") as are reasonably necessary to
effectively vest in the Purchaser all of the right, title and interest of the
Sellers in and to the Assets. At the Closing, good and valid title to all of the
Assets shall be transferred, conveyed, assigned and delivered by the Sellers to
the Purchaser pursuant to the Instruments of Conveyance, free and clear of any
and all liens, encumbrances, claims, and other restrictions of any kind or
nature whatsoever.
2. Purchase Price and Payment. In consideration of the sale, transfer,
conveyance, assignment and delivery of Sellers' right, title and interest to the
Assets to the Purchaser, and in reliance upon the representations, warranties
and covenants made herein by the Sellers, the Purchaser shall pay the Sellers
(the "Purchase Price") (i) the aggregate sum of Eight Hundred Twenty Five
Thousand Dollars ($825,000) in cash and (ii) a number of shares of restricted
unregistered common stock of PhyMatrix Corp. (the "Shares") with a fair market
value equal to Eight Million Five Hundred Thousand Dollars ($8,500,000), which
number shall be determined by dividing $8,500,000 by the average closing price
per share of PhyMatrix Corp. ("PhyMatrix") common stock for the ten (10) days
preceding the Closing Date as quoted on NASDAQ. The following legend shall be
stamped on the Shares:
THE SHARES REPRESENTED BY THIS
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CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT BEING FILED UNDER OR PURSUANT TO SAID
ACT OR AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM REGISTRATION
IS AVAILABLE. THIS CERTIFICATE IS SUBJECT TO THE PROVISIONS OF
AN ASSET PURCHASE AGREEMENT DATED AUGUST ___, 1996, THE
ORIGINAL OF WHICH IS ON FILE IN THE MINUTE BOOK OF THE
COMPANY. ANY SALE, TRANSFER, PLEDGE, ASSIGNMENT OR ENCUMBRANCE
OF THE SHARES REPRESENTED BY THIS CERTIFICATE NOT IN
CONFORMITY WITH SAID AGREEMENT SHALL BE INVALID AND VOID.
3. Closing.
(a) Closing Date. A closing of the transactions contemplated by this
Agreement (the "Closing") shall be held on August 21, 1996, or on a later date
as mutually agreed to by the parties hereto (the actual date upon which such
closing shall occur being herein referred to as the "Closing Date"); provided,
however, that the effective date of the Agreement (the "Effective Date") shall
be set pursuant to the agreement of the parties as set forth in that Closing
Agreement of the same date hereof.
(b) Consents of Third Parties. Anything herein to the contrary
notwithstanding, this Agreement and any instrument executed pursuant hereto
shall not constitute an assignment of any claim, contract, license, lease,
purchase order or other commitment included in the Assets (other than the
Management Services Agreement) (collectively, the
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"Commitments") if an attempted assignment or transfer of the same without the
consent of the other party thereto or the applicable governmental agency would
be ineffective or would constitute a breach or violation thereof so that
Purchaser would not in fact receive all of the rights and benefits of Sellers
thereunder. If by the Closing Date any such consent has not been obtained and
Purchaser desires to have Sellers' assistance in obtaining such consent, Sellers
shall use their best efforts to provide for Purchaser the benefits under any
such Commitment without such arrangement causing a breach or violation of such
Commitment. If Sellers are unable to obtain such consent to any transfer or
assignment hereunder, Sellers shall (i) list each such Commitment on Schedule
3(b) hereto, (ii) remain liable with respect to its obligations thereunder, and
(iii) indemnify Purchaser pursuant to Section 12 of this Agreement with respect
to all claims, demands or suits with respect thereto; provided however, that if
Sellers are not able to so provide Purchaser with such benefits, in the absence
of any such consent, as determined by Purchaser in its sole discretion,
Purchaser shall have the option (not exercisable later than the Closing Date) of
terminating this Agreement, in which event no party hereto shall have any
further rights or obligations hereunder.
4. Restrictions on Transfer of Shares. Notwithstanding anything to the
contrary in this Agreement, but subject to the provisions of Section 10(f)
below, the Sellers shall not transfer more than one-third of their respective
Shares to any other party in any one of the three years immediately following
the Closing Date, such that up to a third of the Shares may be transferred in
each of the first, second and third years following the Closing Date. The
certificates for the Shares may contain a restriction as to the transfer of the
Shares in accordance with the provisions of this Section 4. Notwithstanding the
foregoing, in the event of a change
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of control of PhyMatrix, the restriction on the transfer shares contained in
this Agreement shall be inapplicable. For purposes of this Agreement, the term
"change of control" shall mean with respect to Phymatrix: (a) the transfer of
all or substantially all of the assets of such PhyMatrix; (b) the transfer of
equity interest in PhyMatrix after which the acquiror holds more than fifty
percent (50%) of the voting power of all equity interests in PhyMatrix; (c) the
merger, consolidation, or other reorganization of PhyMatrix with or into another
entity; or (d) a change in the composition of the governing body of PhyMatrix,
other than in the ordinary course of business, which results in the replacement
of more than fifty percent (50%) of the membership of such governing body, as a
result of one transaction or a series of related transactions.
5. Conditions Precedent to Obligations of the Purchaser. The obligations
of the Purchaser hereunder are subject to the satisfaction, on or prior to
Closing, of all of the following conditions precedent:
(a) Consents and Approvals. As of the Closing Date, the Sellers shall
have obtained all required approvals, consents or acquiescence from third
parties with respect to the transactions contemplated by this Agreement,
including without limitation the following: (i) any lenders or lessors, and (ii)
to the extent required, any vendors or suppliers of the Seller.
(b) No Pending or Threatened Legal Claim. No litigation of any kind
relating to this Agreement or the transactions contemplated hereby shall be
pending or threatened and no preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or by any federal or state
governmental or regulatory body, or any statute, rule, regulation or executive
order promulgated or enacted by any federal or state governmental authority
after the date of this Agreement, which prohibits the consummation of the
transaction
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contemplated by this Agreement, or affects in any way the Company or
Sellers' right, title and interest to the Assets or the Sellers' ability to
transfer such right, title and interest to the Purchaser in accordance with the
terms of this Agreement, shall be in effect, pending or threatened.
(c) Representations and Warranties. The representations and warranties
of the Sellers contained in this Agreement, and all of the Schedules attached
hereto, shall be true and correct in all material respects at and as of the
Closing Date and the Effective Date, and Sellers shall have delivered to
Purchaser a certificate to that effect dated as of the Closing Date and the
Effective Date.
(d) Absence of Adverse Changes. No Material adverse change in the
operations or the business of the Company or the financial condition of the
Company shall have occurred since the Company's inception, no fact shall have
arisen which could have had or had a Material adverse effect on the Company, or
its properties, assets or operations, or the consummation of the transactions
contemplated hereby, in each case in the sole discretion of the Purchaser.
(e) Covenants Performed. All of the covenants, terms and conditions of
this Agreement to be complied with and performed by the Sellers on or before the
Closing Date shall have been duly complied with and performed.
(f) Corporate Action. PC shall have furnished the Purchaser with a
copy, certified by the secretary of Seller, of the resolutions duly adopted by
the equity holders and management of PC approving the terms, execution and
delivery of this Agreement and performance of this Agreement by PC.
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(g) Employment Agreements. Moskow shall have executed and delivered to
Purchaser an Employment Agreement between him and PhyMatrix in the form attached
hereto as Exhibit A (the "Moskow Employment Agreement"). ▇. ▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇
shall have executed and delivered to Purchaser Employment Agreements between
each of them, respectively, and Purchaser (the "Lipton Employment Agreements")
(collectively, the "Employment Agreements").
(h) Instruments of Conveyance and Other Documents. The Sellers shall
have executed the Instruments of Conveyance and delivered them to the Purchaser.
The Purchaser shall have received from the Sellers all such other documents and
instruments, duly executed where required or appropriate, as it may reasonably
request in connection with the transaction contemplated by this Agreement.
(i) Dissolution of the Company. The Company shall have been dissolved
and all of its assets shall have been transferred to Sellers and PhyMatrix.
6. Conditions Precedent to Obligations of the Sellers. The obligations
of the Sellers under this Agreement are subject to the satisfaction, on or prior
to Closing, of all of the following conditions precedent:
(a) Consents and Approvals. As of the Closing Date, the Seller shall
have obtained all required approvals, consents or acquiescence from third
parties with respect to the transactions contemplated by this Agreement,
including without limitation the following: (i) any lenders or lessors, and (ii)
to the extent required, any vendors or suppliers of the Seller.
(b) Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement or in any document or certificate
delivered to the Sellers
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in connection herewith shall be true and correct in all material respects at
and as of the Closing Date.
(c) Covenants Performed. All of the covenants, terms and conditions of
this Agreement to be complied with and performed by the Purchaser on or before
the Closing Date shall have been duly complied with and performed.
(d) Corporate Action. The Purchaser shall have furnished the Seller
with a copy, certified by the secretary of Purchaser, of the resolutions duly
adopted by the directors of the Purchaser approving the terms, execution and
delivery of this Agreement, and the performance of this Agreement by the
Purchaser.
(e) Purchase Price. The Purchaser shall have delivered the Purchase
Price.
(f) Employment Agreements. Purchaser shall have delivered or caused to
deliver the Employment Agreements.
(g) Other Documents. The Sellers shall have received from the Purchaser
copies of all such other documents and instruments as they may reasonably
request in connection with the transaction contemplated by this Agreement.
(i) Dissolution of the Company. The Company shall have been dissolved
and all of its assets shall have been transferred to Sellers and PhyMatrix.
7. Representations, Warranties and Covenants of the Sellers. The
Sellers, jointly and severally, hereby represent and warrant to the Purchaser as
follows:
(a) Organization in Good Standing. PC is a limited liability company
duly organized, validly existing in good standing under the laws of the state of
Connecticut. The Sellers have full power and authority to enter into this
Agreement and perform their obligations
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under this Agreement.
(b) Authority. The Sellers have full capacity, right, power and
authority to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. All acts or proceedings required to be taken
by the Sellers to authorize the execution, delivery and performance of this
Agreement and all transactions contemplated hereby have been duly and validly
taken. This Agreement constitutes the valid and binding agreement of the
Sellers, enforceable against the Sellers in accordance with the terms herein.
(c) Assets. Subject only to (i) the rights of third parties under
leases and contracts to be assumed by the Purchaser, (ii) any liens for current
taxes and assessments not delinquent and (iii) PhyMatrix's right, title and
interest to the Assets, Seller has good, marketable title to each of the Assets
(or has the right to use leased assets reflected in leases to be assigned to
Purchaser hereunder), free and clear of all mortgages, liens (other than liens
for current taxes and assessments not delinquent), security interests,
encumbrances, leases (except those leases to be assigned to Purchaser
hereunder), equities, claims, shares, easements, rights-of-way, covenants,
conditions and restrictions, and subject to no options or rights of first
refusal or any other agreements (with the exception of leases to be assigned
hereunder). Except as specifically disclosed and described in the Schedules
hereto, Seller may transfer and assign all of its interests in the Assets
without obtaining the consents or approval of any other person or party.
(d) No Violations. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not constitute nor
with notice or lapse of time or both would constitute: (i) a violation of PC's
Articles of Organization (as
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amended or restated), Operating Agreement (as amended or restated) or
resolutions or actions of PC's members, management or duly authorized committees
thereof; (ii) a breach of or default under any contract or judgment to which any
of the Sellers is a party or is subject, either individually or jointly, or;
(iii) an event which would permit any person to terminate any such contract or
to accelerate the maturity of any indebtedness or other obligation of any of the
Sellers.
(e) Material Contracts. To the best knowledge of the Sellers, each
Material Contract, as hereinafter defined, of the Company is in full force and
effect as against the parties thereto. To the best knowledge of the Sellers,
each party to a Material Contract has complied with all material commitments and
obligations on their and its part to be performed or observed thereunder. No
event has occurred which is or, after the giving of notice or passage of time or
both, would constitute a default under or breach of, any Material Contract by
the Company or, to the best knowledge of the Sellers, by any other person or
party to such Material Contract. None of the Sellers has received or given
notice of an intention to cancel or terminate a Material Contract. None of the
Sellers has received any notice of a default, offset or counterclaim under any
Material Contract or of any other communication asserting noncompliance with
such Material Contract. For purposes of this section, a Material Contract shall
mean a contract of the Company which meets the definition of "Material"
hereinafter set forth in this Section.
(f) Absence of Certain Changes. Within the last 120 days there has not
been any Material (as defined in subsection (j) of this Section): (i)
transaction by the Company not in the ordinary course of business; (ii) adverse
change in the financial condition, assets, liabilities, business or prospects of
the Company; (iii) any sale or transfer of any of the assets
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of, or any cancellation of any receivable or claims by, the Company, (except
sales or transfers in the ordinary course of the Company's business of inventory
or services or immaterial amounts of other tangible personal property for
services not required in the business of the Company); (iv) mortgage, pledge or
subjection to lien, charge or encumbrance of any kind of any Asset of the
Company; (v) amendment or termination of any contract or agreement to which the
Company was a party as of the beginning of the most recent fiscal quarter; (vi)
amendment or termination of any contract or agreement to which the Company was a
party as of the beginning of the most recent fiscal quarter; (vii) any incurring
or assumption of or taking of any property subject to, any liability by the
Company except in the ordinary course of business; (viii) alteration in the
manner in which the Company keeps its books, accounts or records, or underlying
any method of calculation of bad debts, contingencies or other reserves from
that reflected in the most recent financial statements of the Company; (ix)
incurring or assumption of indebtedness by the Company for borrowed money, or
any commitment of the Company to borrow money, or any guaranty by the Company,
directly or indirectly, of indebtedness of others, or any prepayment by the
Company of long-term debt except in the ordinary course of business; (x)
acquisition or lease by the Company of or commitment to acquire or lease, any
realty or any substantial item of furniture, machinery or equipment; or (xi), in
general, adverse change in the financial condition, operations, business,
property or assets or manner of conducting business of the Company, (other than
changes in the ordinary course of business consistent with prior practice, none
of which, individually or in the aggregate, has had or could be expected to have
a material adverse effect on the financial condition, operations, business or
assets of the Company).
(g) Disclosure. No representation which has been or shall be made to
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Purchaser in or pursuant to this Agreement by Sellers contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.
(h) Representations. The Sellers hereby acknowledge that the only
representations made to it by Purchaser are those contained in Section 9 of this
Agreement and the Sellers are not relying on any other representations.
(i) Recent Developments. Except as disclosed herein, including the
Schedules hereto, none of the officers or directors of PC has any knowledge of
any developments relating specifically to the business of the Company which
would be Materially adverse thereto, excluding any information within the public
domain respecting generally the managing of physician networks in Bridgeport,
Connecticut.
(j) Definition of "Material". As used in the foregoing representations
and warranties "Material" shall mean the same as materiality for purposes of
financial statement reporting or disclosure as determined by the Company's
auditors based on FASB Accounting. All determinations of the Company's auditors
hereunder shall be binding upon the parties.
8. Representations, Warranties and Covenants of the Sellers as to
Shares of PhyMatrix.
In connection with the transfer of the Shares to the Sellers, the Sellers
hereby warrant, covenant and represent as follows:
(a) ▇. ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ (the "Individual Sellers") are
accredited
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investors because each of them meet at least one of the following criteria: (i)
a natural person whose individual net worth, or joint net worth with spouse,
exceeds $1,000,000 at the time of purchase; or (ii) a natural person who had an
individual income in excess of $200,000 in each of the two most recent years or
joint income with that person's spouse in excess of $300,000 in each of those
years and who reasonably expects reaching the same income level in the current
year.
(b) PC is an accredited investor because PC was not formed for the
specific purpose of acquiring the Shares and, upon the dissolution of the
Company, PC will have in excess of $5,000,000 in assets.
(c) The Sellers are sophisticated investors by virtue of their
education, training and/or numerous prior investments made on their own behalf
or through entities which they, alone or with others, controls. The Sellers are
knowledgeable and experienced in financial and business matters, especially in
investments which involve new operations, and which have risks similar to those
which may be encountered by PhyMatrix. The Sellers are capable of evaluating the
merits and risks of an investment in PhyMatrix.
(d) The Sellers have been furnished or otherwise obtained all
information necessary to enable them to evaluate the merits and risks of their
prospective investment in PhyMatrix and have received and reviewed all such
relevant information, including without limitation the Final Prospectus dated
January 23, 1996, relating to the sale of 1,072,500 shares of Common Stock of
PhyMatrix.
(e) The Sellers have been furnished or have had access to any and all
material documents and information regarding PhyMatrix to the Sellers'
satisfaction. The Sellers have
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had an opportunity to question individuals involved in the management of
PhyMatrix. The Sellers hereby acknowledge that PhyMatrix has made available to
the Sellers prior to any investment in PhyMatrix all information requested by
the Sellers and reasonably necessary to enable the Sellers to evaluate the risks
and merits of an investment in PhyMatrix. The Sellers are aware of the
speculative nature of any investment in PhyMatrix.
(f) The Sellers can bear the economic risk of the investment in
PhyMatrix (including the possible loss of his entire cash payment) without
impairing the Sellers' ability to provide for themselves and/or their family in
the same manner that the Sellers would have been able to provide prior to making
an investment in PhyMatrix. The Sellers understand that they must continue to
bear the economic risk of the investment in PhyMatrix for an indefinite period
of time, since there are certain restrictions on the Sellers' ability to trade
the Shares within three years from the date hereof.
(g) THE SELLERS ACKNOWLEDGE THAT THE SHARES OFFERED HEREBY AND THIS
SUBSCRIPTION LETTER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
OR THE SECURITIES LAW OF ANY OTHER STATE, AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH LAWS. THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY, NOR HAS THIS
AGREEMENT BEEN FILED WITH, NOR REVIEWED BY, THE SECURITIES AND EXCHANGE
COMMISSION OR THE DIVISION OF SECURITIES OF THE STATE OF CONNECTICUT PRIOR TO
ITS ISSUANCE OR USE. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS INVOLVED FOR AN INDEFINITE PERIOD OF TIME.
THE SHARES HAVE NOT BEEN REGISTERED UNDER SECTION 36-485 OF THE
CONNECTICUT UNIFORM SECURITIES ACT, AND THEREFORE, CANNOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED
UNDER THE ACT OF 1933, AS AMENDED, OR THE SECURITIES ACT OF THIS STATE, IF SUCH
REGISTRATION IS REQUIRED, OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
(h) The Shares that the Sellers are acquiring are being acquired solely
for their account and are not being purchased with a view to, or for resale in
connection with, any distribution within the meaning of the Securities Act of
1933, as amended, or any other applicable Securities Laws. The Sellers
understands that, in addition, the Shares are subject to restrictions on
transfer under this Agreement. The Sellers will not resell or offer to resell
any Shares except in accordance with all applicable Securities Laws.
(i) Sellers are duly authorized to execute this Agreement and all other
documents and instruments contemplated hereby. The undersigned representative of
PC represents and warrants that his signature below is binding upon PC and that
the acquisition of the Shares has been authorized by PC.
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9. Representations, Warranties and Covenants of the Purchaser. The
Purchaser hereby represents and warrants to the Sellers as follows:
(a) Corporate Status. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Purchaser has all requisite power and authority to purchase the Assets as
contemplated pursuant to provisions of this Agreement.
(b) Violation of Other Instruments; Approvals. Neither the execution or
the consummation of the transaction contemplated by this Agreement does or will
constitute a breach or default (or an occurrence which by a lapse of time and/or
by the giving of notice will constitute a breach or default) under any lease,
license, contract or agreement to which the Purchaser is a party or by which the
Purchaser is bound.
(c) Participation in Board of Directors of PhyMatrix. Purchaser will
use its best efforts to cause Moskow and ▇. ▇▇▇▇▇▇ to be elected to the Board of
Directors of PhyMatrix at the next election of the Board of Directors of
PhyMatrix following the Closing Date.
(d) Participation of Sellers in Board of Directors of Purchaser.
Commencing on the Effective Date and continuing until a change of control of
Purchaser or PhyMatrix, PC shall be entitled to designate three members of the
Board of Directors of Purchaser, and during such period the following shall
apply:
(i) Purchaser's Board of Directors. The business and property of
the Purchaser shall be managed and controlled by the Board of Directors. The
Board of Directors shall have full and complete authority, power and discretion
to manage and control the business, affairs and properties of the Purchaser, to
make all decisions regarding those matters and to
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perform any and all other acts or activities customary or incident to the
management of the Purchaser's business.
(ii) Composition of Board of Directors. The Board of Directors of
Purchaser shall initially consist of a total of six directors. Directors of
Purchaser shall hold office until resignation, removal pursuant to Purchaser's
Articles of Incorporation and Bylaws, or until that director's successor shall
have been elected and qualified. All directors elected by PC shall be full
voting members.
(iii) Quorum Requirements. Except as set forth in subsection (iv),
at all meetings of the Board of Directors of Purchaser, a majority of the
directors designated by each PhyMatrix and PC (including vacant director
positions) shall be required to constitute a quorum for the transaction of any
business authorized by the Board of Directors. An act approved by at least four
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except a greater number is specifically required by
statute or the Articles of Incorporation or Bylaws of the Purchaser. If at any
meeting there is less than a quorum present, a majority of those present may
adjourn the meeting without further notice to any absent director. Each director
shall have one vote for purposes of all actions taken by the Board of Directors.
(iv) Approval by Entire Board of Directors. Notwithstanding the
foregoing quorum requirements, the following issues or decisions shall only be
decided by a majority vote of the all of the directors in the Board of
Directors, at which each of the directors shall be present for the purpose of
constituting a quorum on a vote as to such matters:
(1) setting the annual operating budget of Purchaser;
GTH\ECKW\456126.4\09/27/96
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(2) setting the annual capitalization budget of Purchaser;
(3) determining the long-term business strategy plan of
Purchaser;
(4) determining the long-term capitalization plan of
Purchaser; and
(5) delegation of management powers to the Officers of the
Purchaser in addition to the powers specifically granted
to the Officers of Purchaser in its Articles and Bylaws.
The inability of the Board of Directors to determine any of the foregoing
items as a result of the absence of any of the directors on at least two
occasions on which any of such items were to be discussed shall constitute a
deadlock as to any such item, triggering the provisions of subsection (v) of
this Section.
(v) Decision-Making in Event of Deadlock. In the event there is a
deadlock among the directors with respect to any action or other matter before
the Board of Directors, the matter as to which there is a deadlock shall be
referred to the Board of Directors of PhyMatrix, which Board of Directors shall
consider and determine the matter. Upon such determination by the PhyMatrix
Board of Directors, the matter shall be referred to the Board of Directors of
Purchaser for a final vote, in which such vote each of the directors of
Purchaser's shall be bound by the determination of the PhyMatrix Board of
Directors and shall cast his or her respective vote in accordance therewith.
Before any matter is referred to the PhyMatrix Board of Directors, at least two
of Purchaser's directors shall declare a deadlock as to a matter.
GTH\ECKW\456126.4\09/27/96
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(e) Financing by Purchaser. In the event Sellers, or in the case of PC
its members, incur a tax liability in an amount not exceeding $2,800,000
directly as a result of the sale of Sellers' right, title and interest to the
Assets as contemplated hereby and their receipt of the Purchase Price, including
the Shares, Purchaser shall loan Sellers the amount of such tax liability. The
loan shall be evidenced by a secured promissory note (the "Note") and a related
Security Agreement, a copy of which Note and Security Agreement shall be
attached hereto as Exhibits B and C, respectively. The Note shall be for a three
year term and shall bear interest at the applicable federal rate of interest for
short term notes as set forth in Section 1274(d) of the Internal Revenue Code,
with payments of principal and interest commencing thereon on the first day of
the first full month following the making of the loan, and as specified in
greater detail in the Note. The Note shall be secured by a number of Shares (the
"Collateral Shares") having a minimum fair market value of one hundred fifty
percent (150%) of the amount of the Note at all times that any indebtedness
under the Note is outstanding, such that the number of Collateral Shares may be
increased from time to time in the event the value of the Shares falls, thereby
rendering the value of the Collateral Shares less than 150% of the amount of the
Note. The Note shall provide for pro-rata reductions of the principal and
interest owed on the Note upon the transfer of any of the Shares. Provided
Sellers comply with the terms of the foregoing and the Note and Security
Agreement, if the value of the Shares drops below the amount of indebtedness
under the Note the Sellers shall not be liable for such deficiency. The fair
market value of the of the Collateral Shares shall be calculated in accordance
with the formula set forth in Section 2 above.
(f) Stock Options for Principals of PC. Each of Moskow, ▇. ▇▇▇▇▇▇ and
W.
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Lipton shall receive options to purchase thirty thousand (30,000) shares of
PhyMatrix common stock at the price of the stock of PhyMatrix on the Closing
Date, as such price is quoted on NASDAQ on such date. Said options shall be
fully vested as of the Closing Date.
(g) Stock Options for Employees of PC. Purchaser will give due
consideration to a request by Sellers to include non-equity holding employees of
PC in the stock option plan of PhyMatrix.
(h) Right of First Refusal in Event of Sale of Purchaser. In the event
PhyMatrix enters into an agreement to sell a controlling interest in Purchaser,
Sellers shall be given a right of first refusal to purchase the equity interest
of Purchaser being sold by PhyMatrix as follows:
(1) Bona Fide Offer. In the event that PhyMatrix receives a "Bona
Fide Offer", as defined below, to sell a controlling interest in Purchaser (the
"Offered Interest") and PhyMatrix desires to accept such Bona Fide Offer,
PhyMatrix shall promptly send notice to the Sellers offering to sell the Offered
Interest to the Sellers at the same price and upon the same terms and conditions
as are contained in the Bona Fide Offer. The notice shall contain a true and
complete copy of the Bona Fide Offer, setting forth the price and all terms and
condi tions with the names, addresses and businesses or other occupations of the
offeror or offerors. The Sellers shall then have such rights and privileges, for
the prescribed time periods, as are set forth below. For purposes of this
Agreement, the term "Bona Fide Offer" shall mean a bona fide offer in writing
from an unaffiliated party (who must be financially capable of carrying out the
terms of such Bona Fide Offer), in a form legally enforceable against the
offeror or offerors. For purposes of this provision a "controlling interest"
shall mean a transfer of equity interest in
GTH\ECKW\456126.4\09/27/96
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Purchaser after which the acquiror (i) holds more than 50% of the voting power
of all equity interests in Purchaser, or (ii) will have the ability to replace
more than fifty percent of the composition of the governing body of Purchaser.
(2) Procedures. In the event that a Bona Fide Offer to purchase an
Offered Interest has been received, and notice has been sent by PhyMatrix to the
Sellers, the Sellers shall have the right, for a period of thirty (30) days from
their receipt of such notice (the "Option Period"), at their sole option, to
purchase all but not less than all of the Offered Interest at the price and on
the terms and conditions contained in the Bona Fide Offer. In the event that the
Sellers shall have elected to purchase the Offered Interest, the Sellers shall
give PhyMatrix and Purchaser written notice of such election, which notice shall
specify the identity of the pur chaser(s) of the Offered Interest and a closing
date and time, which closing shall occur no later than thirty (30) days after
the expiration of the Option Period. The closing shall be held at the
Purchaser's offices. The obligation of PhyMatrix to sell the Offered Interest
shall be binding and absolute, and enforceable by the Sellers by specific
performance. In the event that none of the Sellers elect, within the prescribed
periods, to purchase all the Offered Interest, PhyMatrix shall have the right to
accept the Bona Fide Offer in whole or in part with respect to the Offered
Interest and to sell the Offered Interest, but (i) only in strict accordance
with all of the provisions of the Bona Fide Offer; and (ii) only if the sale is
fully consummated within ninety (90) days after the expiration of the Option
Period. If, at the end of the said ninety (90) day period PhyMatrix has not sold
the Offered Interest, all of the restrictions on the sale, transfer or
assignment set forth in this Agreement shall again be in effect with respect
thereto. In the event of a Bona Fide Offer for the sale by PhyMatrix of less
than all of its equity interest in
GTH\ECKW\456126.4\09/27/96
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Purchaser, as a condition to the acceptance of such Offer by Sellers, Sellers
shall execute and deliver a Shareholders Agreement in form reasonably
satisfactory to PhyMatrix.
(3) Allocation of Purchase Right. In the event more than one of the
Sellers desires to purchase the Offered Interest, the rights of the Sellers to
purchase the Offered Interest shall be allocated in accordance with the Sellers'
pro-rata ownership interest in the Company as of the date of its dissolution.
For example, if two of the Sellers desire to purchase the Offered Interest and
one of such Sellers owned twenty units and the other of such Sellers owned
thirty units as of the Company's dissolution, then the twenty unit Seller shall
be entitled to purchase forty percent of the Offered Interest and the thirty
unit Seller shall be entitled to purchase sixty percent of the Offered Interest.
10. Registration Rights for Shares.
(a) Demand Registration. Beginning on February __, 1997 and continuing
thereafter for a thirty day period, any of the Sellers may request PhyMatrix, in
writing, to effect the registration of the Shares owned by the Sellers on the
appropriate form of registration statement, but if PhyMatrix is eligible to use
Form S-3 (or any successor form relating to secondary offerings), such
registration shall be on Form S-3 (or such successor form). Upon receipt of any
such request, PhyMatrix shall promptly give written notice of such proposed
registration to the other Seller or Sellers not requesting registration. Such
Sellers shall have the right, by giving written notice to PhyMatrix within
thirty (30) days after PhyMatrix provides its notice, to elect to have included
in such registration any or all of their Shares as such Sellers may request in
such notice of election (the "Registrable Shares"). Thereupon, PhyMatrix shall
use its best efforts to effect the registration of all Registrable Shares which
PhyMatrix has been
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requested to register under this Section 10(a).
(1) If at the time of any request to register Registrable Shares
pursuant to this Section 10(a), PhyMatrix is engaged or has fixed plans to
engage within sixty (60) days of the time of the request in a registered public
offering as to which the Sellers may include Registrable Shares pursuant to
Section 10(b) or is engaged in any other activity which, in the good faith
determination of PhyMatrix's Board of Directors, would be adversely affected by
the requested registration to the material detriment of PhyMatrix, then
PhyMatrix may at its option direct that such request be delayed for a period not
in excess of three months from the effective date of such offering or the date
of commencement of such other material activity, as the case may be, such right
to delay a request to be exercised by PhyMatrix not more than once in any
18-month period.
(2) In the event the Registrable Shares are sold pursuant to a
Registration Statement in an underwritten offering pursuant to this Section
10(a), PhyMatrix agrees to enter into an underwriting agreement containing
customary representations and warranties with respect to the business and
operations of an issuer of the securities being registered and customary
covenants and agreements to be performed by such issuer, including without
limitation customary provisions with respect to indemnification by PhyMatrix of
the underwriters of such offering.
(3) In the case of any registration effected pursuant to this
Section 10(a), the Sellers shall have the right to designate the managing
underwriter in any underwritten offering, subject to the approval of PhyMatrix,
which approval may not be unreasonably withheld or delayed.
GTH\ECKW\456126.4\09/27/96
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(b) Piggyback Registration. If at any time (without limit as to
number) PhyMatrix proposes to file a Registration Statement, as defined below,
PhyMatrix will, prior to such filing, give written notice to all Sellers of its
intention to do so, and upon the written request of a Seller or Sellers given
within ten (10) days after PhyMatrix provides such notice (which request shall
state the intended method of disposition of such Registrable Shares), PhyMatrix
shall use its best efforts to cause all those Registrable Shares which PhyMatrix
has been requested by such Seller or Sellers to register to be registered under
the Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Securities and Exchange Commission promulgated
under such Act, as they each may, from time to time, be in effect (the
"Securities Act"); provided, however, that PhyMatrix shall have the right to
postpone or withdraw any registration effected pursuant to this Section 10(b)
without obligation to any of the Sellers; and further provided that PhyMatrix
shall not be required to include any Registrable Shares in such underwriting
unless the requesting Seller or Sellers accept the terms of the underwriting as
agreed upon between PhyMatrix and the underwriters selected by it.
(1) If, in the opinion of the managing underwriter in an
underwritten public offering, the registration of all or part of the Registrable
Shares which the holders have requested to be included pursuant to this Section
10(b) would materially and adversely affect such public offering, then PhyMatrix
shall be required to include in the underwriting only that number of Registrable
Shares, if any, which the managing underwriter believes in good faith may be
sold without causing such adverse effect. If the number of Registrable Shares to
be included in the underwriting in accordance with the foregoing is less than
the total number of shares which the Sellers have requested to be included,
then, at PhyMatrix's option, the Sellers
GTH\ECKW\456126.4\09/27/96
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and other holders of securities in PhyMatrix who have requested registration
shall participate in the underwriting pro rata based upon their total ownership
of the aggregate number of shares requested to be included in such registration
by the Sellers and by holders hereafter granted registration rights (or in any
other proportion as agreed upon by all holders having such rights).
(c) Allocation of Expenses. PhyMatrix will pay all Registration
Expenses of all registrations under this Section.
(d) Definitions. The term "Registration Expenses" shall mean all
expenses incurred by PhyMatrix in complying with the provisions of this Section
10, without limitation, all registration and filing fees, exchange listing fees,
printing expenses, accounting fees, fees and disbursements of counsel for
PhyMatrix and the Sellers, but excluding underwriting discounts and selling
commissions relating to the Registrable Shares. The term "Registration
Statement" shall mean a registration statement filed by PhyMatrix with the
Securities and Exchange Commission for a public offering and sale of securities
of PhyMatrix (other than a registration statement on Form S-1 registering debt
securities, convertible debt securities, any common stock issued upon the
conversion of such convertible debt securities or any class of capital stock
other than Common Stock, Form S-8 or Form S-4, or their successors, or any other
form for either an initial public offering or a particular limited purpose, or
any registration statement covering only securities proposed to be issued in
exchange for securities or assets of another corporation).
(e) Information from Sellers. Each Seller who is a holder of
Registrable Shares included in any registration shall furnish to PhyMatrix such
information regarding such Seller as PhyMatrix may reasonably request in writing
and as shall be required in connection with any registration, qualification or
compliance referred to herein.
GTH\ECKW\456126.4\09/27/96
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(f) "Lockup" Agreement. If required by PhyMatrix, an underwriter of
Common Stock or other securities of PhyMatrix or other nationally-recognized
investment advisor of PhyMatrix, as part of an underwritten registration or in
connection with certain material activity of PhyMatrix relating to the raising
of capital or investment financing of PhyMatrix or relating to a proposed sale
or material merger or acquisition of or by PhyMatrix which in the good faith
opinion of such advisor would be materially impacted by the sale of the Shares
by the Sellers, each Seller hereby agrees not to sell or otherwise transfer or
dispose of any Registrable Shares or other securities of PhyMatrix held by such
Seller in a public sale for a period of time specified by PhyMatrix and such
underwriter, not to exceed fifteen (15) days prior to and one hundred eighty
(180) days following the effective date of a registration statement except as
part of such underwritten registration. Such agreement shall be in writing in a
form satisfactory to PhyMatrix and such underwriter. PhyMatrix may impose
stop-transfer instructions with respect to the Registrable Shares or other
securities subject to the foregoing restrictions until the end of the stand-off
period.
11. Continuing Cooperation. All parties agree to cooperate with each
other, both prior to and after the Closing Date towards the ends of: (i)
ensuring a smooth transition concerning the purchase of the Assets and/or
Sellers' right, title and interest to the Assets; (ii) ensuring good relations
between the Purchaser and the Company's participating providers, suppliers,
employees, consultants and other agents; and (iii) preserving for the benefit of
the Purchaser the goodwill inherent in or associated with the Company's
business.
GTH\ECKW\456126.4\09/27/96
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12. Indemnification.
The Sellers agree to indemnify and hold harmless the Purchaser and any of
its affiliates from and against all liability, damage, losses, costs and
expenses (including reasonable attorneys' fees) which they may incur by reason
of the failure of the Sellers to fulfill any of the terms and conditions of this
Agreement, or by reason of any breach of the representations and warranties made
by the Sellers herein or in any document provided by the Sellers to the
Purchaser or any of its affiliates pursuant to this Agreement or in relation to
this Agreement, including in connection with the Sellers' exercise of their
rights under Section 10 hereof.
13. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut, applied without giving
effect to any conflicts of law principles.
(b) Notices. Any notices and other communications to be given hereunder
shall be in writing and shall be deemed to have been duly given when delivered
by hand or five days after such notice is mailed, by registered or certified
mail, postage prepaid, return receipt requested, addressed to such party as
follows:
If to PC: Physician's Choice, LLC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Zeldes, Needle & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
GTH\ECKW\456126.4\09/27/96
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Bridgeport, Connecticut 06601-1740
If to ▇. ▇▇▇▇▇▇: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to ▇. ▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
If to Moskow: ▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to PhyMatrix: PhyMatrix Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
GTH\ECKW\456126.4\09/27/96
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with a copy to: Greenberg, Traurig, Hoffman, Lipoff,
▇▇▇▇▇ & Quentel, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
If to Purchaser: Physician's Choice, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
with a copy to: Greenberg, Traurig, Hoffman, Lipoff,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq.
or to such other addresses as a party hereto may from time to time give written
notice of the other as provided herein.
(c) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings,
negotiations and discussions, both written and oral, between the parties hereto
with respect to the subject matter hereof. This Agreement may not be amended or
modified in any way except by a written instrument executed by the parties
hereto.
(d) Assignment. No assignment of this Agreement shall be valid without
the specific written consent of the parties hereto.
(e) No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
or entity, other than the parties hereto and their successors and permitted
assigns, any rights or remedies under
GTH\ECKW\456126.4\09/27/96
30
or by reason of this Agreement.
(f) Severability. The invalidity of any one or more of the words,
sentences or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, sentences or sections contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word(s), sentence(s) or section(s) had not been inserted.
(g) Expenses. All legal, accounting and other costs and expenses
incurred in connection with this Agreement and any of the transactions
contemplated hereby shall be borne and paid by the party incurring such costs
and expenses, and no party shall be obligated for any cost or expense incurred
by any other party.
(h) Litigation. Should any litigation arise out of the terms or
performance of this Agreement, the prevailing party shall be entitled to all
costs and expenses, including reasonable attorneys' fees, whether in trial court
or on appeal, or during negotiations.
(i) Construction. This Agreement shall be construed without regard to
any presumption or other rule requiring construction against the party causing
this Agreement to be drafted. The headings contained in this Agreement are for
reference purposes only and shall not affect in any manner or way the meaning or
interpretation of this Agreement.
GTH\ECKW\456126.4\09/27/96
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IN WITNESS WHEREOF, the parties hereof have hereunto set their hands and
caused this instrument to be executed as of the 18th day of September, 1996.
PHYSICIAN'S CHOICE PHYSICIAN'S CHOICE, LLC
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------- ------------------------------
Title: Chief Financial Officer Title: President
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------ ---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
0456126.10/286476_1.WP6
GTH\ECKW\456126.4\09/27/96
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