MEMBERSHIP INTEREST PURCHASE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.,
▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.,
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, M.D.,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.,
▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D.
AND
SPECIALTY CARE NETWORK, INC.
September 10, 1997
TABLE OF CONTENTS
(This Table of Contents is not a part of the Agreement and is only for
convenience of reference.)
Page
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1. Definitions.........................................................- 1 -
2. Purchase and Sale of Membership Interests...........................- 3 -
(a) Basic Transaction.........................................- 3 -
(b) Payment of Purchase Price.................................- 3 -
(c) The Closing...............................................- 3 -
(d) Deliveries at the Closing.................................- 3 -
3. Representations and Warranties Concerning the Transaction...........- 3 -
(a) Representations and Warranties of the Sellers.............- 3 -
(b) Representations and Warranties of the Buyer...............- 4 -
4. Representations and Warranties Concerning the Company...............- 5 -
(a) Organization, Qualification, and Corporate Power..........- 5 -
(b) Capitalization............................................- 5 -
(c) Noncontravention..........................................- 5 -
(d) Brokers' Fees.............................................- 5 -
(e) Title to Assets...........................................- 6 -
(f) Financial Statements......................................- 6 -
(g) Events Subsequent to Most Recent Fiscal Year End..........- 6 -
(h) Undisclosed Liabilities...................................- 7 -
(i) Legal Compliance..........................................- 7 -
(j) Tax Matters...............................................- 8 -
(k) Real Property.............................................- 8 -
(l) Tangible Assets..........................................- 10 -
(m) Contracts................................................- 10 -
(n) Powers of Attorney.......................................- 11 -
(o) Insurance................................................- 11 -
(p) Litigation...............................................- 12 -
(q) Guaranties...............................................- 12 -
(r) Environment, Health, and Safety..........................- 12 -
(s) Disclosure...............................................- 12 -
5. Pre-Closing Covenants..............................................- 12 -
(a) General..................................................- 12 -
(b) Notices and Consents.....................................- 13 -
(c) Operation of Business....................................- 13 -
(d) Preservation of Business.................................- 13 -
(e) Full Access..............................................- 13 -
(f) Notice of Developments...................................- 13 -
(g) Exclusivity..............................................- 13 -
6. Post-Closing Covenants.............................................- 13 -
(a) General..................................................- 13 -
(b) Litigation Support.......................................- 13 -
(c) Transition...............................................- 14 -
7. Conditions Precedent to Obligation to Close........................- 14 -
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Page
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(a) Conditions to Obligation of the Buyer....................- 14 -
(b) Conditions to Obligation of the Sellers..................- 14 -
8. Deliveries at Closing..............................................- 15 -
9. Remedies for Breaches of This Agreement............................- 15 -
(a) Survival of Representations and Warranties...............- 15 -
(b) Indemnification Provisions for Benefit of the Buyer......- 16 -
(c) Matters Involving Third Parties..........................- 16 -
(d) Determination of Adverse Consequences....................- 16 -
(e) Recoupment Under Contingent Consideration................- 16 -
(f) Other Indemnification Provisions.........................- 17 -
10. Termination.......................................................- 17 -
(a) Termination of Agreement.................................- 17 -
(b) Effect of Termination....................................- 17 -
11. Miscellaneous.....................................................- 17 -
(a) Press Releases and Public Announcements..................- 17 -
(b) No Third-Party Beneficiaries.............................- 17 -
(c) Entire Agreement.........................................- 18 -
(d) Succession and Assignment................................- 18 -
(e) Counterparts.............................................- 18 -
(f) Headings.................................................- 18 -
(g) Notices..................................................- 18 -
(h) Governing Law............................................- 18 -
(i) Amendments and Waivers...................................- 19 -
(j) Severability.............................................- 19 -
(k) Expenses.................................................- 19 -
(l) Construction.............................................- 19 -
(m) Incorporation of Exhibits and Schedules..................- 19 -
(n) Specific Performance.....................................- 19 -
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated as of September 10,
1997, by and between SPECIALTY CARE NETWORK, INC., a Delaware corporation
("Buyer") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D., ▇▇▇▇ ▇. ▇▇▇▇▇▇,
M.D., ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D., ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D., and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, M.D., residents of the State of
Ohio (the "Sellers").
W I T N E S S E T H:
WHEREAS, the Sellers own all of the membership interests in West Central
Ohio Group, Ltd., an Ohio limited liability company (the "Company"); and
WHEREAS, the Sellers desires to sell and Buyer desires to purchase one-half
(1/2) of the Sellers membership interests (the "Membership Interests") on the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. The following terms, as used herein, have the following
meanings:
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"Applicable Rate" means the corporate base rate of interest announced from
time to time by NationsBank, N.A., Nashville, Tennessee plus two percent (2%).
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Consideration" has the meaning set forth in Section 2(b) below.
"Company" means West Central Ohio Group, Ltd., an Ohio limited liability
company.
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"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Financial Statement" has the meaning set forth in Section 4(f) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Knowledge" means actual knowledge after reasonable investigation.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Membership Interests" means one-half (1/2) of the issued and outstanding
membership interests of the Company.
"Most Recent Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section 4(f)
below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(f)
below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9(c) below.
2. Purchase and Sale of Membership Interests.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Sellers, and the Sellers agree
to sell to the Buyer, the Membership Interests for a price (the "Purchase
Price") equal to the sum of (i) Three Hundred Thirty Thousand Four Hundred
Eighty-Six and no/100 Dollars ($330,486.00) and (ii) the Contingent
Consideration, payable as set forth in Section 2(b).
(b) Payment of Purchase Price. The Buyer shall pay or satisfy Four Hundred
Thousand and no/100 Dollars ($400,000.00) of the Purchase Price in cash by the
Buyer's wire transfer of readily available United States funds to the Sellers at
the Closing. The remaining balance of the purchase price (the "Contingent
Consideration") shall be paid as follows: the Buyer shall pay to the Sellers an
amount equal to twenty-five percent (25%) of the Company's first Six Million and
no/100 Dollars ($6,000,000.00) of net income after the Closing Date as
determined in accordance with GAAP. SCN shall pay such amount within sixty (60)
days of the close of each fiscal year. Notwithstanding the foregoing, any and
all obligations to pay the Contingent Consideration will terminate upon the
earlier of (i) payment of One Million Five Hundred Thousand and no/100 Dollars
($1,500,000.00) of Contingent Consideration or (ii) the fifth (5th) anniversary
of the Closing Date.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇, Meredith,
Witter, ▇▇▇▇▇ & ▇▇▇▇▇▇ in Lima, Ohio, 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 Buyer and the Sellers may mutually determine
(the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) the Buyer will deliver
to the Sellers the various instruments and documents referred to in Section 8(a)
below, (ii) the Sellers will deliver to the Buyer the various instruments and
documents referred to in Section 8(b) below.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. The Sellers represent
and warrant to the Buyer that the statements contained in this Section 3(a) 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
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of this Agreement throughout this Section 3(a)) with respect to himself,
except as set forth in the disclosure schedule accompanying this Agreement (the
"Disclosure Schedule""). The Disclosure Schedule shall be satisfactory to the
Buyer and its counsel and will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this Section 3(a).
(i) Authorization of Transaction. The Sellers have full power and
authority to execute and deliver this Agreement and to perform their
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of the Sellers, enforceable in accordance with its terms
and conditions. The Sellers need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated
by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Sellers are subject
or (B) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Sellers are a party or by which they are bound or to which any of their
assets are subject.
(iii) Brokers' Fees. The Sellers have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(iv) Membership Interests. The Sellers own beneficially all of the
Membership Interests free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Sellers are not a party to
any option, warrant, purchase right, or other contract or commitment that
could require the Sellers to sell, transfer, or otherwise dispose of any
membership interests of the Company (other than this Agreement). The
Sellers are not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any Membership Interests.
(b) Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)), except as set forth in the Disclosure Schedule.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions subject to
applicable bankruptcy, moratorium, insolvency and other laws affecting the
rights of creditors and general equity principals. The Buyer need not give
any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate
the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental
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agency, or court to which the Buyer is subject or any provision of its
charter or bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to which any of
its assets is subject.
(iv) Brokers' Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Sellers could
become liable or obligated.
(v) Investment. The Buyer is not acquiring the Membership Interests
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
4. Representations and Warranties Concerning the Company. The Sellers
represent and warrant to the Buyer that the statements contained in this Section
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule. Nothing in the
Disclosure Schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless the Disclosure Schedule
identifies the exception with reasonable particularity and describes the
relevant facts in reasonable detail. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization, Qualification, and Corporate Power. The Company is a
limited liability company duly organized, validly existing, and in good standing
under the laws of the State of Ohio. The Company is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required. The Company has full power and authority and all
licenses, permits, and authorizations necessary to carry on the businesses in
which it is engaged and to own and use the properties owned and used by it.
Section 4(a) of the Disclosure Schedule lists the members and officers of the
Company. The Sellers have delivered to the Buyer correct and complete copies of
the articles and operating agreement of the Company (as amended to date). The
minute books (containing the records of meetings of the members and any
committees of the members), and the record books of the Company are correct and
complete. The Company is not default under or in violation of any provision of
its articles or operating agreement.
(b) Capitalization. All of the issued and outstanding membership interests
of the Company have been duly authorized, fully paid, and are held of record by
the Sellers. Except as specifically provided in the Operating Agreement there
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company to issue, sell, or otherwise cause to
become outstanding any additional membership interests. There are no outstanding
or authorized profit participation or similar rights with respect to the
Company. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the membership interests of the
Company.
(c) 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, or court to which the Company is subject or any provision
of the articles or operating agreement of the Company or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Company is a party or by which it is bound or
to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). The Company does not need to give any
notice to,
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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.
(d) Brokers' Fees. The Company does not have any Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. Except as set forth in Section 3(e) of the Disclosure
Schedule, the Company has good and marketable title to, or a valid leasehold
interest in, the properties and assets it uses, located on its premises, or
shown on the Most Recent Balance Sheet or acquired after the date thereof, free
and clear of all Security Interests, except for properties and assets disposed
of in the Ordinary Course of Business since the date of the Most Recent Balance
Sheet.
(f) Financial Statements. Schedule 4(f) of the Disclosure Schedule includes
the following financial statements for the Company (collectively the "Financial
Statements"): (i) unaudited balance sheet and statement of income, changes in
members' equity, and cash flow as of and for the fiscal years ended December 31,
1996 (the "Most Recent Fiscal Year End"); and (ii) unaudited balance sheet and
statement of income, changes in stockholders' equity, and cash flow (the "Most
Recent Financial Statements") as of and for the six (6) months ended June 30,
1997 (the "Most Recent Fiscal Month End"). The Financial Statements (including
the notes thereto) have been prepared on a consistent basis throughout the
periods covered thereby, present fairly the financial condition of the Company
as of such dates and the results of operations of the Company for such periods,
are correct and complete, and are consistent with the books and records of the
Company.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, there has not been any adverse change in the business,
financial condition, operations, results of operations, or future prospects of
the Company. Without limiting the generality of the foregoing, since that date:
(i) the Company has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, other than for a fair consideration in
the Ordinary Course of Business;
(ii) the Company has not entered into any agreement, contract, lease,
or license (or series of related agreements, contracts, leases, and
licenses) either involving more than $25,000.00 or outside the Ordinary
Course of Business;
(iii) the Company has not accelerated, terminated, modified, or
canceled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than $25,000.00
to which it is a party or by which it is bound;
(iv) except as set forth in Section 4(g) of the Disclosure Schedule,
the Company has not imposed any Security Interest upon any of its assets,
tangible or intangible;
(v) the Company has not made any capital expenditure (or series of
related capital expenditures) either involving more than $25,000.00 or
outside the Ordinary Course of Business;
(vi) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions) either
involving more than $25,000.00 or outside the Ordinary Course of Business;
(vii) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness for
borrowed money or a capitalized lease obligation;
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(viii) the Company has not delayed or postponed the payment of
accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) the Company has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims) either
involving more than $25,000.00 or outside the Ordinary Course of Business;
(x) there has been no change made or authorized in the articles or
operating agreement of the Company;
(xi) the Company has not issued, sold, or otherwise disposed of any of
its membership interests, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or exercise)
any of its membership interests;
(xii) the Company has not declared, set aside, or paid any
distribution with respect to its membership interests (whether in cash or
in kind) or redeemed, purchased, or otherwise acquired any of its
membership interests;
(xiii) the Company has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property;
(xiv) the Company has not made any loan to, or entered into any other
transaction with, any of its members, officers, and employees outside the
Ordinary Course of Business;
(xv) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
(xvi) the Company has not granted any increase in the base
compensation of any of its members, officers, and employees outside the
Ordinary Course of Business;
(xvii) the Company has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan, contract,
or commitment for the benefit of any of its members, officers, and
employees (or taken any such action with respect to any other employee
benefit plan);
(xviii) the Company has not made any other change in employment terms
for any of its members, officers, and employees outside the Ordinary Course
of Business;
(xix) the Company has not made or pledged to make any charitable or
other capital contribution outside the Ordinary Course of Business;
(xx) there has not been any other occurrence, event, incident, action,
failure to act, or transaction outside the Ordinary Course of Business
involving the Company; and
(xxi) the Company has not committed to any of the foregoing.
(h) Undisclosed Liabilities. The Company does not have any Liability (and
there is no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against either of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, malpractice, infringement, or violation of law).
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(i) Legal Compliance. The Company and its predecessors and Affiliates has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
(j) Tax Matters.
(i) The Company has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Company (whether or not shown on any Tax Return) have
been paid. The Company is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are no
Security Interests on any of the assets of the Company that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
(iii) Neither the Sellers nor any officer (or employee responsible for
Tax matters) of the Company expects any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any Tax Liability of the Company either (A)
claimed or raised by any authority in writing or (B) as to which the
Sellers or the officers (and employees responsible for Tax matters) of the
Company has Knowledge based upon personal contact with any agent of such
authority. Section 4(j) of the Disclosure Schedule lists all federal,
state, local, and foreign income Tax Returns filed with respect to the
Company for taxable periods ended on or after December 31, 1992, indicates
those Tax Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. The Sellers have delivered to the
Buyer correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against or
agreed to by the Company since December 31, 1992.
(iv) the Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) The Company has not made any payments, is not obligated to make
any payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. The Company has disclosed on its
federal income Tax Returns all positions taken therein that could give rise
to a substantial understatement of federal income Tax within the meaning of
Code Section 6662.
(k) Real Property.
(i) Section 4(k)(i) of the Disclosure Schedule lists and describes
briefly all real property that the Company owns. With respect to each such
parcel of owned real property:
(A) the identified owner has good and marketable title to the
parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for installments of
special assessments not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the current use,
occupancy, or value, or the marketability of title, of the property
subject thereto;
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(B) there are no pending or threatened condemnation proceedings,
lawsuits, or administrative actions relating to the property or other
matters affecting adversely the current use, occupancy, or value
thereof;
(C) the legal description for the parcel contained in the deed
thereof describes such parcel fully and adequately, the buildings and
improvements are located within the boundary lines of the described
parcels of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the properties
or buildings or improvements thereon are subject to "permitted
non-conforming use" or permitted non-conforming structure"
classifications), and do not encroach on any easement which may burden
the land, and the land does not serve any adjoining property for any
purpose inconsistent with the use of the land, and the property is not
located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use
thereof have not been obtained;
(D) all facilities have received all approvals of governmental
authorities (including licenses and permits) required in connection
with the ownership or operation thereof and have been operated and
maintained in accordance with applicable laws, rules, and regulations;
(E) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or parties
the right of use or occupancy of any portion of the parcel of real
property;
(F) there are no outstanding options or rights of first refusal
to purchase the parcel of real property, or any portion thereof or
interest therein;
(G) there are no parties (other than the Company) in possession
of the parcel of real property, other than tenants under any leases
disclosed in Section 4(k)(i) of the Disclosure Schedule who are in
possession of space to which they are entitled;
(H) all facilities located on the parcel of real property are
supplied with utilities and other services necessary for the operation
of such facilities, including gas, electricity, water, telephone, and
storm sewer, all of which services are adequate in accordance with all
applicable laws, ordinances, rules, and regulations and are provided
via public roads or via permanent, irrevocable, appurtenant easements
benefitting the parcel of real property; and
(I) each parcel of real property abuts on and has direct
vehicular access to a public road, or has access to a public road via
a permanent, irrevocable, appurtenant easement benefitting the parcel
of real property, and access to the property is provided by paved
public right-of-way with adequate curb cuts available.
(ii) Section 4(k)(ii) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to the Company.
The Sellers have delivered to the Buyer correct and complete copies of
the leases and subleases listed in Section 4(k)(ii) of the Disclosure
Schedule (as amended to date). With respect to each lease and sublease
listed in Section 4(k)(ii) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated
hereby;
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(C) no party to the lease or sublease is in breach or
default, and no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(D) no party to the lease or sublease has repudiated any
provision thereof;
(E) there are no disputes, oral agreements, or forbearance
programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations and
warranties set forth in subsections (A) through (E) above are
true and correct with respect to the underlying lease;
(G) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(H) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations;
(I) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities; and
(J) the owner of the facility leased or subleased has good
and marketable title to the parcel of real property, free and
clear of any Security Interest, easement, covenant, or other
restriction, except for installments of special easements not yet
delinquent and recorded easements, covenants, and other
restrictions which do not impair the current use, occupancy, or
value, or the marketability of title, of the property subject
thereto.
(l) Tangible Assets. The Company owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its businesses
as presently conducted. Each such tangible asset is free from defects (patent
and latent), has been maintained in accordance with normal industry practice, is
in good operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
(m) Contracts. Section 4(m) of the Disclosure Schedule lists the following
contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in
excess of $25,000.00 per annum;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than one year,
result in a loss to the Company, or involve consideration in excess of
$25,000.00;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $25,000.00 or
under which it has imposed a Security Interest on any of its assets,
tangible or intangible;
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(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with either the Sellers or their Affiliates (other
than the Company);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former members, officers, and
employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000.00 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any amount to
any of its members, officers, and employees outside the Ordinary Course of
Business;
(xi) any agreement under which the consequences of a default or
termination could have an adverse effect on the business, financial
condition, operations, results of operations, or future prospects of the
Company; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $25,000.00.
The Sellers have delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 4(m) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 4(m) of the Disclosure Schedule. With
respect to each such agreement: (1) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (2) the agreement will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (3) no
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (4) no party has
repudiated any provision of the agreement.
(n) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
(o) Insurance. Section 4(o) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Company has been a party, a named
insured, or otherwise the beneficiary of coverage at any time within the past
five (5) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
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With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) neither the Company nor any other party to the policy is in breach
or default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. The Company has been covered during the past five (5)
years by insurance in scope and amount customary and reasonable for the
businesses in which it has engaged during the aforementioned period. Section
4(o) of the Disclosure Schedule describes any self-insurance arrangements
affecting the Company.
(p) Litigation. Section 4(p) of the Disclosure Schedule sets forth each
instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party or is threatened
to be made a party to any action, suit, proceeding, hearing, or investigation
of, in, or before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction or before any arbitrator. None of
the actions, suits, proceedings, hearings, and investigations set forth in
Section 4(p) of the Disclosure Schedule could result in any material adverse
change in the business, financial condition, operations, results of operations,
or future prospects of the Company. Neither the Sellers nor the officers (and
employees with responsibility for litigation matters) of the Company has any
reason to believe that any such action, suit, proceeding, hearing, or
investigation may be brought or threatened against the Company.
(q) Guaranties. The Company is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
(r) Environment, Health, and Safety.
(i) The Company and its predecessors and Affiliates has complied with
all Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any failure
so to comply. Without limiting the generality of the preceding sentence,
the Company and its predecessors and Affiliates has obtained and been in
compliance with all of the terms and conditions of all permits, licenses,
and other authorizations which are required under, and has complied with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are contained
in, all Environmental, Health, and Safety Laws.
(ii) The Company does not have any Liability (and none of the Company
and its predecessors and Affiliates has handled or disposed of any
substance, arranged for the disposal of any substance, exposed any employee
or other individual to any substance or condition, or owned or operated any
property or facility in any manner that could form the Basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company giving rise to any
Liability) for damage to any site, location, or body of water (surface or
subsurface), for any illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health, and Safety
Law.
(iii) All properties and equipment used in the business of the Company
and its predecessors and Affiliates have been free of asbestos, PCB's,
methylene chloride, trichloroethylene, 1,2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous Substances.
(s) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a fact or omit to state any
fact necessary in order to make the statements and information contained in this
Section 4 not misleading.
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5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to take
all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 7
below).
(b) Notices and Consents. The Sellers will cause the Company to give any
notices to third parties, and will cause the Company to use its best efforts to
obtain any third-party consents, that may be required by law or the terms of any
contract to which the Sellers or the Company may be subject or that the Buyer
may request in connection with the transaction contemplated by this Agreement.
Each of the Parties will (and the Sellers will cause the Company to) give any
notices to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental agencies
required to consummate the transaction contemplated by this Agreement.
(c) Operation of Business. The Sellers will not cause or permit the Company
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, the Sellers will not cause or permit the Company to (i) declare, set
aside, or make any distribution with respect to its membership interests or
redeem, purchase, or otherwise acquire any of its membership interests or (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 4(g) above.
(d) Preservation of Business. The Sellers will cause the Company and to
keep its business and properties substantially intact, including their present
operations, physical facilities, working conditions, and relationships with
lessors, licensors, suppliers, patients, and employees.
(e) Full Access. The Sellers will permit, and the Sellers will cause the
Company to permit, representatives of the Buyer to have full access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to the Company.
(f) Notice of Developments. The Sellers will give prompt written notice to
the Buyer of any material adverse development causing a breach of any of the
representations and warranties in Section 4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of his or its own representations and warranties in Section 3
above. No disclosure by any Party pursuant to this Section 5(f), however, shall
be deemed to amend or supplement the Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(g) Exclusivity. The Sellers will not (and the Sellers will not cause or
permit the Company to) (i) solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of any membership
interests or any substantial portion of the assets of, the Company (including
any acquisition structured as a merger or consolidation) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. The Sellers will not
vote their membership interests in favor of any such acquisition structured as a
merger or consolidation. The Sellers will notify the Buyer immediately if any
Person makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
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instruments and documents) as any other Party may request, all at the sole cost
and expense of the requesting Party (unless the requesting Party is entitled to
indemnification therefor under Section 9 below). The Sellers acknowledge and
agree that from and after the Closing the Buyer will be entitled to access to
all documents, books, records (including Tax records), agreements, and financial
data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with him or it
and his or its counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records as
shall be necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 9 below).
(c) Transition. The Sellers will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with the Company after the Closing as it maintained with
the Company prior to the Closing.
7. Conditions Precedent to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(a) and
Section 4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Sellers shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) the Company shall have procured all of the third party consents
specified in Section 5(b) above.
(iv) 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, (C) affect adversely the right of
the Buyer to own the Membership Interests, or (D) affect adversely the
right of the Company to own its assets and to operate its businesses (and
no such injunction, judgment, order, decree, ruling, or charge shall be in
effect);
(v) the Sellers shall have delivered to the Buyer a certificate to the
effect that each of the conditions specified above in Section 7(a)(i)-(iv)
is satisfied in all respects;
(vi) the Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to consummate the
transactions contemplated hereby; and
(vii) all actions to be taken by the Sellers in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance
to the Buyer.
- 14 -
The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the Sellers
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3(b) above
shall be true and correct in all material respects at and as of the Closing
Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) 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 or (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers a certificate to
the effect that each of the conditions specified above in Section
7(b)(i)-(iii) is satisfied in all respects;
(v) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance
to the Sellers.
The Sellers may waive any condition specified in this Section 7(b) if they
execute a writing so stating at or prior to the Closing.
8. Deliveries at Closing.
(a) Documents to be Delivered by the Buyer. At the Closing, the Buyer shall
deliver the following instruments and documents to the Sellers or other
appropriate party:
(i) cash in the amount of Four Hundred Thousand and no/100 Dollars
($400,000.00) by wire transfer in readily available United States Funds;
(ii) the certificate described in Section 7(b)(iv) above; and
(iii) such other documents as the Sellers may reasonably request to
affect the transactions contemplated by this Agreement.
(b) Documents to be Delivered by the Sellers. At the Closing, the Sellers
shall deliver the following instruments and documents to the Sellers:
(i) a certificate of existence from the Ohio Secretary of State
evidencing the existence and good standing of the Company;
(ii) all consents necessary regarding the transaction contemplated by
this Agreement;
- 15 -
(iii) an opinion of counsel to the Sellers in a form reasonably
satisfactory to the Buyer's counsel;
(iv) the Certificate described in Section 7(a)(v) above; and
(v) such other documents as the Buyer may reasonably request to affect
the transactions contemplated by this Agreement.
9. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Parties contained in this Agreement shall survive the
Closing hereunder (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect forever thereafter (subject to any applicable statutes of
limitations).
(b) Indemnification Provisions for Benefit of the Buyer. In the event the
Sellers breach (or in the event any third party alleges facts that, if true,
would mean the Sellers have breached) any of the representations, warranties,
and covenants contained herein and, provided that the Buyer makes a written
claim for indemnification against the Sellers pursuant to Section 9(c) below,
then the Sellers agree to indemnify the Buyer from and against the entirety of
any Adverse Consequences the Buyer may suffer through and after the date of the
claim for indemnification (including any Adverse Consequences the Buyer may
suffer after the end of any applicable survival period) resulting from, arising
out of, relating to, in the nature of, or caused by the breach (or the alleged
breach), or otherwise.
(c) Matters Involving Third Parties.
(i) If any third party shall notify the Buyer with respect to any
matter (a "Third Party Claim") which may give rise to a claim for
indemnification against the Sellers under this Section 9, then the Buyer
shall promptly notify the Sellers thereof in writing; provided, however,
that no delay on the part of the Buyer in notifying the Sellers shall
relieve the Sellers from any obligation hereunder unless (and then solely
to the extent) the Sellers are thereby prejudiced.
(ii) The Sellers will have the right to defend the Buyer against the
Third Party Claim with counsel of their choice satisfactory to the Buyer so
long as (A) the Sellers notify the Buyer in writing within 15 days after
the Buyer has given notice of the Third Party Claim that the Sellers will
indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim, (B) the Sellers
provide the Buyer with evidence acceptable to the Buyer that the Sellers
will have the financial resources to defend against the Third Party Claim
and fulfill their indemnification obligations hereunder, (C) the Third
Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (D) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment of the
Buyer, likely to establish a precedential custom or practice adverse to the
continuing business interests of the Buyer, and (E) the Sellers conduct the
defense of the Third Party Claim actively and diligently.
(iii) So long as the Sellers are conducting the defense of the Third
Party Claim in accordance with Section 9(c)(ii) above, (A) the Buyer may
retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (B) the Buyer will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Sellers (not to
be withheld unreasonably), and (C) the Sellers will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Buyer.
- 16 -
(iv) In the event any of the conditions in Section 9(c)(ii) above is
or becomes unsatisfied, however, (A) the Buyer may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it may deem appropriate
(and the Buyer need not consult with, or obtain any consent from, the
Sellers in connection therewith), (B) the Sellers will reimburse the Buyer
promptly and periodically for the costs of defending against the Third
Party Claim (including attorneys' fees and expenses), and (C) the Sellers
will remain responsible for any Adverse Consequences the Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim to the fullest extent provided in this Section 9.
(d) Determination of Adverse Consequences. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount rate)
in determining Adverse Consequences for purposes of this Section 9. All
indemnification payments under this Section 9 shall be deemed adjustments to the
Purchase Price.
(e) Recoupment Under Contingent Consideration. The Buyer shall have the
option of recouping all or any part of any Adverse Consequences it may suffer
(in lieu of seeking any indemnification to which it is entitled under this
Section 9) by notifying the Sellers that the Buyer is reducing the amount of
Contingent Consideration due and payable to the Sellers by the Buyer.
(f) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant. The Sellers hereby agree that they will not make any
claim for indemnification against the Company by reason of the fact that they
were a member, officer, employee, or agent of such entity or were serving at the
request of any such entity as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against the Sellers (whether
such action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving written notice
to the Sellers at any time prior to the Closing (A) in the event any of the
Sellers has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, the Buyer has notified
the Sellers of the breach, and the breach has continued without cure for a
period of 10 days after the notice of breach or (B) if the Closing shall
not have occurred on or before October 31, 1997, by reason of the failure
of any condition precedent under Section 7(a) hereof (unless the failure
results primarily from the Buyer itself breaching any representation,
warranty, or covenant contained in this Agreement); and
(iii) the Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event the
Buyer has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, any of the Sellers has
notified the Buyer of the breach, and the breach has continued without cure
for a period of 10 days after the notice of breach or (B) if the Closing
shall not have occurred on or before October 31, 1997, by reason of the
failure of any condition precedent under Section 7(b) hereof (unless the
failure results primarily from any of the Sellers himself breaching any
representation, warranty, or covenant contained in this Agreement).
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(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 10(a) 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).
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of the Buyer and the Sellers;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Parties prior to making the
disclosure).
(b) 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.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Sellers; provided, however, that the Buyer may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) 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.
(f) 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.
(g) 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 the Sellers: Copy to:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, Meredith, Witter, ▇▇▇▇▇ & ▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
If to the Buyer: Copy to:
Specialty Care Network, Inc. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇
Suite 600 165 Madison Avenue, Suite 2000
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
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 Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(i) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Buyer and
the Sellers. 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.
(j) 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.
(k) Expenses. Each of the Parties will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Sellers agree that the
Company has not borne nor will bear any of the Sellers' costs and expenses
(including any of their legal fees and expenses) in connection with this
Agreement or any of the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
BUYER:
SPECIALTY CARE NETWORK, INC.
By:
----------------------------------
Title:
-------------------------------
SELLER:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.,
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D.
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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