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EXHIBIT 10.26
ASSET ACQUISITION AGREEMENT
by and among
Physicians' Specialty Corp.
PSC Management Corp.
and
Atlanta Head and Neck Surgery, P.C.
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ASSET ACQUISITION AGREEMENT
ASSET ACQUISITION AGREEMENT (this "Agreement"), dated as of February
13, 1997, by and among PSC MANAGEMENT CORP., a Delaware corporation ("PSC");
PHYSICIANS' SPECIALTY CORP., a Delaware corporation ("PARENT"); ATLANTA HEAD
AND NECK SURGERY, P.C., a Georgia professional corporation ("Seller") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D., an individual resident of the State of Georgia
("Shareholder").
W I T N E S S E T H:
WHEREAS, Seller operates a medical practice which provides
otolaryngology and other medical and surgical services from offices located in
the metropolitan Atlanta, Georgia area ("Business");
WHEREAS, Shareholder is the only shareholder of Seller;
WHEREAS, Parent through its wholly-owned subsidiaries is engaged in the
business of acquiring the assets of and managing medical practices;
WHEREAS, PSC is a wholly-owned subsidiary of Parent;
WHEREAS, Seller wishes to convey to PSC, and PSC wishes to acquire from
Seller, substantially all of the properties and assets of Seller, subject to
certain liabilities set forth herein, all upon the terms and subject to the
conditions set forth herein.
NOW THEREFORE, in consideration of the premises, the mutual promises
and covenants hereinafter set forth, and the contemplated delivery by PSC to
Seller of shares of the Common Stock of Parent, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the parties
hereto do hereby agree as follows:
Section 1. Terms of the Sale and Acquisition of Assets.
The sale of the assets of Seller hereunder and the acquisition thereof
by PSC shall be made at the Closing (as defined in Section 1.12) based on the
respective representations, warranties and agreements of the parties hereto and
subject to the terms and conditions herein stated.
1.1 Conveyance of Assets. Subject to the provisions of Section 1.2
hereof, at the Closing Seller shall convey, transfer and assign to PSC and PSC
shall acquire from Seller all of Seller's right, title and interest in and to
the properties and assets of Seller as a going concern, including, without
limitation, all items of personal property and other assets used in connection
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with the Business (except as otherwise provided herein), whether or not any of
such assets have any value for accounting purposes (individually "Asset," and
collectively "Assets"), free and clear of all obligations, security interests,
liens, claims and encumbrances whatsoever, except as specifically assumed by PSC
pursuant to Section 1.3(b). Without limiting the generality of the foregoing,
the Assets specifically include:
(a) All real estate, personal property, plant,
furniture, fixtures and equipment owned by Seller which are utilized in or
related to the Business, including, but not limited to, all items owned by
Seller identified on Exhibit 1.1(a) attached hereto.
(b) All contracts, agreements and commitments of
Seller and/or Shareholder related to the Business identified on Exhibit 2.6 and
Exhibit 2.14 attached hereto and set forth on Exhibit 1.3(b) and all contracts,
agreements and commitments of Seller and/or Shareholder related to the Business
and entered into after the date hereof and prior to the Closing in the ordinary
course of business and not in violation of Section 7.1 hereof (but excluding
this Agreement and the agreements, instruments and documents executed and
delivered by PSC pursuant to this Agreement and also excluding physician
employment agreements of Seller and any contracts with nurse practitioners and
physician assistants of Seller) and all contract rights of Seller incident
thereto, and all general intangibles of Seller.
(c) Subject to applicable laws and regulations, all
inventories maintained by Seller as of the Closing Date as described in Exhibit
1.1(c).
(d) Subject to applicable laws and regulations, all
accounts receivable of Seller, notes receivable and other rights to receive
payments owing to Seller in existence on the Closing Date, and all proceeds and
cash arising from the collection of same from and after the Closing Date.
(e) Subject to applicable laws and regulations, all
patient accounts receivable records of Seller.
(f) The books and records of Seller relating to the
Assets, all of which shall be delivered to PSC, or such person as PSC may
designate, on the Closing Date.
(g) Subject to applicable laws and regulations, all
transferable licenses and other regulatory approvals necessary for or incident
to the operation of the Assets.
(h) Seller's right to use the name "Atlanta Head and
Neck Surgery, P.C." and all other trade and service marks and names and goodwill
associated therewith, and all customer lists, clinical and administrative policy
and procedure manuals, trade secrets, copyrights, patents, marketing and
promotional materials (including audiotapes, videotapes and printed materials)
and all other property rights required for or incident to the marketing of the
products and services of the Business, and all books and records relating
thereto.
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(i) All of Seller's prepaid expenses, prepaid
insurance, deposits and similar items.
1.2 Excluded Assets. There shall be excluded from the Assets
transferred and conveyed hereunder, and Seller shall retain all of its right,
title and interest in and to, the assets set forth on Exhibit 1.2 attached
hereto and the following assets:
(a) The minute books of Seller and similar corporate
records of Seller.
(b) All considerations to be delivered by PSC on the
Closing Date.
(c) All assets listed in Exhibit 1.2 hereto.
(d) Patient charts, records and files.
1.3 Acquisition PSC Price; Assumption of Liabilities. As consideration
for the sale of the Assets by Seller, at Closing PSC shall provide Seller with
the following considerations:
(a) Parent Shares. At the Closing Parent shall issue
to Seller shares of the Common Stock, par value $.001 per share, of Parent (the
"Parent Common Stock") with a total value equal to $170,000 subject to
adjustments described in Exhibit 1.3(a) and Section 1.3(b) (the "Acquisition
Price"). The number of shares of Parent Common Stock which shall constitute the
Acquisition Price shall be determined by dividing the Acquisition Price by the
Initial Public Offering Price of the Parent Common Stock. For purposes of this
Section 1.3(a), the "Initial Public Offering Price" shall mean the price for the
shares of Parent Common Stock as priced and sold on a gross basis before taking
into account the managing underwriters' commissions and costs associated with
Parent's initial public offering (the "IPO"). Assuming an IPO Price of $9.50 per
share and no adjustments pursuant to Exhibit 1.3(a), a total of 17,895 shares of
Parent Common Stock would be issued as the Acquisition Price. The Acquisition
Price shall be allocated to the acquisition of the Assets as set forth on
Exhibit 1.3(a)(1) attached hereto. The parties shall use such allocation in
completing Form 8594 and satisfying any and all other reporting requirements of
the Internal Revenue Service or any other state or local taxing authority.
(b) Assumption of Liabilities. Except as otherwise
provided herein, at the Closing PSC shall assume and discharge up to Eighty
Thousand Dollars ($80,000) (the "Assumed Debt") of the then outstanding
principal and interest accrued thereon of Seller's notes listed on Exhibit
1.3(b) (the "Notes") and shall perform or discharge on or after the Closing Date
(as defined in Section 1.12), only those contracts, leases, commitments,
obligations and liabilities of Seller which are also listed on Exhibit 1.3(b)
attached hereto (collectively, the "Obligations"), except to the extent that
such contracts, leases, commitments, obligations and liabilities are excluded by
virtue of the operation of other provisions of this Agreement. PSC agrees to
promptly pay and discharge such Obligations as the same become due and payable.
An amount, if any, equal to Eighty Thousand Dollars less the amount of Seller's
debt assumed by PSC shall be added to the Acquisition Price (as defined in
Section 1.3(a)). Notwithstanding anything to the contrary
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contained herein, Seller and Shareholder shall pay off (before Closing) the
excess of the sum of all of the outstanding principal and interest accrued
thereon of the Notes less Eighty Thousand Dollars ($80,000).
(c) Liabilities Not Assumed. Notwithstanding any
contrary provision contained herein, PSC shall not be deemed to have assumed,
nor shall PSC assume (i) any liability which may be incurred by reason of any
uncured material breach of or any monetary default under such contracts, leases,
commitments or obligations which occurred prior to the Closing Date; (ii) any
liability for any employee benefits payable to employees of Seller, including,
but not limited to, liabilities arising under any Seller Plan (as defined in
Section 2.21 hereto) and liabilities for accrued sick leave or vacation days;
(iii) any liability based upon or arising out of a violation of any antitrust or
similar restraint-of-trade laws by Seller, including, without limiting the
generality of the foregoing, any such antitrust liability which may arise in
connection with agreements, contracts, commitments or orders for the sale of
goods or provision of services by Seller reflected on the books of Seller at or
prior to the Closing Date; (iv) any liability based upon or arising out of
overpayments due to the Medicare and/or Medicaid programs, any other third party
payor, or any liability based upon or arising out of a violation of any false
claim, anti-kickback, prohibition or self-referral laws or similar fraud and
abuse laws by Seller; (v) any medical malpractice liability associated with the
Business or Seller or any person associated with the Business or Seller; (vi)
any liability based upon or arising out of any tortious conduct or wrongful
actions of Seller or any Shareholder; or (vii) any liability for the payment of
any taxes imposed by law on Seller arising from or by reason of the transactions
contemplated by this Agreement or otherwise.
1.4 Employment Arrangements.
(a) Following the Closing PSC will initially offer
employment as employees-at-will to all persons (other than physicians and such
personnel as are specified in the Management Services Agreement, defined in
Section 1.5 below) who are employees of Seller on the Closing Date; Seller's
employees who become employed by PSC are hereinafter referred to as "Transferred
Employees" and the physicians and such other personnel as are specified in the
Management Services Agreement, but who will not become employed by PSC are
hereafter referred to as the "Practice Employees."
(b) As of the Closing Date, Seller will: (i)
terminate any employment contracts applicable to those persons who are employed
by PSC as Transferred Employees pursuant to Section 1.4(a) hereof; and (ii)
terminate the participation of all such employees in all Seller Plans, such
termination to be effected in accordance with and to the extent permitted by
applicable provisions of the Internal Revenue Code of 1986, as amended, (the
"Code") and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and all other applicable laws, rules and regulations; and (iii) cause
the Seller Plans to make timely appropriate distributions, to the extent
required, to such employees in accordance with, and to the extent permitted by,
the terms and conditions of such Seller Plans. Seller will provide to PSC such
copies of documents and other information related to the termination of such
employees' participation in the Seller Plans as PSC may request.
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(c) At the Closing, Shareholder agrees to become an
employee and shareholder of New Atlanta Ear, Nose & Throat Associates, P.C., a
Georgia professional corporation ("Practice"), and shall execute the form of
employment contract and shareholders agreement which other shareholder employees
of Practice have executed with Practice.
1.5 Management Services Agreement. Shareholder acknowledges and agrees
that Practice and PSC shall execute a Management Services Agreement at the time
of the acquisition of assets of Atlanta Ear, Nose & Throat Associates, P.C.
("AENT") by PSC which shall govern the business relationship between Practice
and PSC.
1.6 Seller's Financial Information. The agreement between the parties
evidenced by this Agreement has been reached based on financial information
about Seller, the Assets and the Business as of September 30, 1996, all provided
to PSC by Seller. The unaudited Balance Sheet of Seller as of December 31, 1996
("Balance Sheet Date"), is attached hereto as Exhibit 1.6 and is hereinafter
referred to as the "Balance Sheet".
1.7 Each Party to Bear Costs. PSC shall pay up to Five Thousand Dollars
($5,000) of Seller's and Shareholder's reasonable legal expenses owed to ▇.
▇▇▇▇▇▇▇▇ & Associates, P.C. in connection with this Agreement. Each of the
parties to this Agreement shall pay all of the costs and expenses incurred by
such party in connection with the transactions contemplated by this Agreement,
except as otherwise provided herein. Without limiting the generality of the
foregoing, and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, neither party shall be liable for
or required to pay, either directly or indirectly, any of the following
liabilities or expenses incurred by the other party: (a) fees and expenses of
any person for services as a finder, or for fees and expenses of any persons for
financial services rendered to such other party in connection with negotiating
and closing the sale contemplated by this Agreement; (b) fees and expenses of
legal counsel retained by such other party for services rendered to such party
in connection with negotiating and closing the sale contemplated by this
Agreement; (c) fees and expenses of any auditors and accountants retained by
such other party for services rendered to such party in connection with
negotiating and closing the sale contemplated by this Agreement; (d) state and
federal income taxes or other similar charges on income incurred by such other
party on any gain from the purchase and sale of Assets hereunder; and (e)
expenses and fees relating to feasibility studies, appraisals and similar
valuation services performed on behalf of such other party in connection with
the transactions contemplated hereby.
1.8 Assignment of Contracts and Assets; Consents. Nothing in this
Agreement or delivered pursuant to this Agreement shall be construed as an
attempt to agree to assign any contract, certificate, license or other Asset
which is in law or by agreement nonassignable without the consent of the other
party or parties thereto, or of any governmental authority, as the case may be,
unless such consent shall be given. Seller will use its reasonable good faith
efforts to obtain all such necessary consents of the parties to any such
contracts prior to the Closing. In order, however, that the full value of every
such contract, certificate, license or other Asset included within the Assets
and all claims and demands in such contracts may be realized, Seller and
Shareholder hereby
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covenant with PSC and Parent that Seller, by itself or by its agents, will, at
the request and expense and under the direction of PSC, in the name of Seller or
otherwise, as PSC shall specify and as shall be permitted by law, take all such
reasonable actions and do or cause to be done all such reasonable things as
shall, in the opinion of PSC, be necessary or proper (a) in order that the
rights and obligations of Seller under such contracts, certificates, licenses
and other Assets shall be preserved, and (b) for, and to facilitate, from and
after the Closing, the collection of the moneys due and payable, and to become
due and payable, to Seller in and under every such contract and in respect of
every such claim and demand, from and after the Closing, and Seller shall hold
the same for the benefit of, and shall pay the same over to, PSC.
1.9 Cooperation with Regulatory Approvals. Seller and Shareholder shall
cooperate with and assist PSC, as PSC shall reasonably request, in obtaining the
approval of all regulatory agencies and officials whose approval is required for
the transfer of all licenses and other regulatory approvals required to enable
PSC to acquire the Assets and operate the Business.
1.10 Irrevocable Guaranty by Parent. To induce Seller to execute and
deliver this Agreement, Parent hereby unconditionally and irrevocably guarantees
the Seller and Shareholder the full, prompt and faithful performance by PSC of
all covenants and obligations to be performed by PSC under this Agreement,
including, but not limited to, the payment of all sums and delivery of all
property stipulated to be transferred by PSC pursuant to this Agreement and
PSC's obligation to indemnify the Seller and Shareholder pursuant to Section
8.2. This guaranty shall be a guaranty of payment, not merely collection, and
shall be unaffected by any subsequent modification or amendment of this
Agreement whether or not Parent has knowledge of or consented to such
modification or amendment. In the event that PSC fails to fully perform all such
covenants and obligations in accordance with their terms or pay all or any part
of such sums or deliver all or any part of such property when due, Parent will
perform all such covenants and obligations in accordance with their terms or
immediately pay or deliver to Seller (or such other payee or transferee as may
be provided in any such agreement) the amount due and unpaid or the property not
delivered, as the case may be, by PSC. In the event of bankruptcy, termination,
liquidation or dissolution of PSC, this unconditional guaranty shall continue in
full force and effect. In the event of any extension of time for payment or
performance or other modification of any guaranteed obligation or covenant, or
any waiver thereof or other compromise or indulgence with respect thereto or any
release or impairment of any security for any such obligation or covenant, or
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or guarantor, no notice to, or consent of, Parent shall be
required.
1.11 Tax and Accounting Treatment. It is intended by the parties that
the purchase and sale contemplated by this Agreement and related documents
qualify as a reorganization under the provisions of Section 368(a)(1)(C) of the
Internal Revenue Code of 1986, as amended, and that for accounting purposes, it
is intended that such transaction be accounted for by Parent as a "pooling of
interests".
1.12 Closing.
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(a) Closing. Subject to the fulfillment of the
conditions precedent specified in Sections 5 and 6, the transaction contemplated
by this Agreement shall be consummated at a closing (the "Closing") to be held
at 10:00 a.m. local time simultaneously with the closing of the IPO at the
offices of Bachner, Tally, ▇▇▇▇▇▇▇, & ▇▇▇▇▇▇ L.L.P., New York, New York, or at
such other location, as is mutually agreed upon by the Parties. The date on
which the Closing occurs shall be referred to as the "Closing Date."
(b) Documents to be Delivered by Seller. At the
Closing, Seller shall deliver, or cause to be delivered, to PSC the following:
(i) Such bills of sale, endorsements and
assignments as are necessary to vest in PSC good and
valid title to the Purchased Assets;
(ii) The certificate required to be
delivered pursuant to Section 5.5;
(iii) The legal opinion required to be
delivered pursuant to Section 5.7 of this Agreement;
(iv) The other agreements, documents and
instruments required by Sections 5.8 through 5.14;
(v) Any other documentation required to be
delivered under this Agreement or otherwise requested
to be delivered by PSC that is necessary or
appropriate to consummate the Transaction; and
(vi) Pursuant to 5.18 of this Agreement, a
copy of the ▇▇▇▇ of sale evidencing that any medical
assets of Seller not acquired by PSC have been
transferred by Seller to Practice.
(c) Documents and Other Items to be Delivered by
Purchaser. At the Closing, PSC shall deliver to Seller the following:
(i) The Acquisition Price, payable by shares
of Parent Common Stock pursuant to Section 1.3;
(ii) The certificate required to be
delivered pursuant to Sections 6.4 of this Agreement;
(iii) The legal opinion required to be
delivered pursuant to Section 6.6 of this Agreement;
(iv) The other agreements, documents and
instruments required by Section 6.7, 6.9 and 6.10;
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(v) Any other documentation required to be
delivered under this Agreement or otherwise
reasonably requested to be delivered by Seller or
Shareholder that is necessary or appropriate to
consummate the transaction.
Simultaneously with such delivery, Seller and Shareholder jointly and
severally agree to use their best efforts and to take all action as may be
reasonably necessary to put PSC in possession and operating control of the
Assets free and clear of all liens or other restrictions or encumbrances,
including the obtaining of such consents of third parties as may be reasonably
necessary to effect the foregoing.
Section 2. Representations and Warranties of Seller and Shareholder.
The Seller and Shareholder jointly and severally
represent and warrant to PSC and Parent as follows:
2.1 Corporate Existence; Good Standing. Seller is a professional
corporation duly organized, validly existing and in good standing under the laws
of the State of Georgia. Seller has all necessary corporate powers to own all of
its assets and to carry on its business as such business is now being conducted.
Seller is not required to qualify to do business as a foreign corporation in any
other state or jurisdiction by reason of its business, properties or activities
in or relating to such other state or jurisdiction.
2.2 Power and Authority for Transactions.
(a) Seller has corporate power to execute, deliver
and perform its obligations under this Agreement and all agreements and other
documents executed and delivered by it pursuant to this Agreement, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution and delivery of and the performance of
this Agreement and such related documents. The execution and delivery of this
Agreement, and the agreements related hereto executed and delivered pursuant to
this Agreement, do not, and, subject to the receipt of consents to assignments
of leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Articles of Incorporation or
Bylaws of Seller or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which Seller is a party or by which
Seller is bound, or violate any material restrictions of any kind to which
Seller is subject which could have a Material Adverse Effect.
(b) The execution and delivery of this Agreement,
and the agreements related hereto executed and delivered pursuant to this
Agreement, do not, and the consummation of the transactions contemplated hereby
will not, violate any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment or decree to which any Shareholder is a party or by
which any Shareholder is bound, or
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violate any material restrictions of any kind to which any Shareholder is
subject and which could have a Material Adverse Effect.
2.3 Subsidiaries and Affiliates. Seller does not own stock in or
control, directly or indirectly, any other corporation, association or business
organization, nor is Seller a party to any joint venture or partnership.
Shareholder is the sole shareholder of Seller and owns all the capital stock of
Seller. There are no outstanding (a) securities of Seller convertible into
equity interests in Seller, or (b) commitments, options, rights or warrants to
issue any such equity interests in Seller, or to issue securities of Seller
convertible into such equity interests.
2.4 Permits, Licenses and Governmental Authorizations. (a) All material
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other material governmental
authorizations and approvals necessary for the conduct of the Business, or
waivers thereof, have been duly obtained and are in full force and effect, and
there are no proceedings pending or, to the knowledge of Seller and Shareholder,
threatened which may result in the revocation, cancellation or suspension, or
any adverse modification, of any thereof. Any and all past litigation concerning
such building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental authorizations
and approvals, and all claims and causes of action raised therein, have been
finally adjudicated.
(b) Approvals. Shareholder holds in full force and effect all
approvals, authorizations, licenses, and certifications required by law (the
"Approvals") to practice medicine. Evidence of such Approvals has been delivered
to PSC. There has been no lapse, revocation, or suspension of any Approval, or
any formal allegation (including any complaint, indictment or initiation of
proceedings) made before a court of law, licensing or regulatory authority,
professional organization, or the medical staff or committee of a hospital,
regarding any Shareholder's practice or fitness to practice medicine, including
any allegation of the following: alcohol abuse, a violation of any law or
regulation relating to controlled substances, professional malpractice or
misconduct, improper billing practices, or a crime involving moral turpitude.
The foregoing does not include any action taken as a result of failure to timely
complete medical records.
(c) Provider Numbers. Shareholder holds a valid Medicare provider
number and valid uniform physician identification numbers. Evidence of such
numbers has been delivered to PSC.
(d) Board Certification. Shareholder is certified by the American Board
of Otolaryngology and evidence of such board certification(s) has been delivered
to PSC.
(e) No Conviction. No Shareholder has ever been convicted of a criminal
offense relating to the Medicare or any federally-funded state health care
program. For purposes of this Agreement, the term conviction includes the entry
of a plea of guilty or no contendere and participation in a first offender,
deferred adjudication, or other arrangement or program whereby a judgment of
conviction has been withheld.
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2.5 Seller's Financial Information. Seller has heretofore furnished PSC
and Parent with copies of financial information about Seller as set forth on
Exhibit 2.5 attached hereto, including, but not limited to, the Balance Sheet.
All such financial statements have been prepared on a tax (cash) basis and not
in accordance with generally accepted accounting principles ("GAAP") but
otherwise have been prepared on a consistent basis throughout the periods
indicated, reflect all liabilities of Seller as of their respective dates, and
present fairly the financial position of Seller as of such dates and the results
of operations and cash flows for the period or periods reflected therein.
2.6 Leases. Exhibit 2.6 attached hereto sets forth a list of all leases
pursuant to which Seller leases, as lessor or lessee, real or personal property
used in operating the Business or otherwise; however the parties understand and
agree that only those leases [if any] listed on Exhibit 1.3(b) will be assumed
by PSC. Except as indicated on Exhibit 2.16, all such leases listed on Exhibit
2.6 are valid and effective in accordance with their respective terms, and there
is not under any such lease any existing default by Seller, as lessor or lessee,
or any condition or event of which Seller or any Shareholder has knowledge which
with notice or lapse of time, or both, would constitute a default, in respect of
which Seller has not taken adequate steps to cure such default or to prevent a
default from occurring. With respect to any lease not assumed by PSC, Seller and
Shareholder represent and covenant that they will honor and discharge all
obligations of Seller under such leases.
2.7 Personal Property. Seller owns all of the personal property
reflected on the Balance Sheet and included in the Assets, including, but not
limited to, all items of personal property identified on Exhibit 1.1(a) and
Exhibit 1.1(c) attached hereto, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those set forth in Exhibit 2.7 attached
hereto and except for liens corresponding to the Assumed Debt. All such personal
property that comprises the Assets shall be transferred to PSC subject to only
claims, charges, exceptions or encumbrances set forth on Exhibit 2.7. Such
personal property is in usable condition, normal wear and tear excepted, and
suitable for its purpose and intended use.
2.8 Inventories. The items of Seller's inventory have been acquired in
the ordinary course of the Business and maintained at levels consistent with
past practices and are in all material respects adequate for the reasonable
requirements of the Business.
2.9 Principal Place of Business. The principal places of business of
Seller are, and have been for the previous five (5) years, in those counties
listed in Exhibit 2.9.
2.10 Location of Assets. Except as indicated in Exhibit 2.10, all of
the Assets are located in those counties listed in Exhibit 2.9.
2.11 Intellectual Property Rights. Except as set forth in Exhibit 2.11
attached hereto, Seller has no right, title or interest in or to patents, patent
rights, manufacturing processes, trade names, trademarks, service marks,
inventions, specialized treatment protocols, copyrights, formulas and trade
secrets. Except for off-the-shelf software licenses, Seller is not a licensee in
respect of
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any patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets. Seller owns and
possesses adequate licenses or other rights to use all such patents, trademarks,
service marks, trade names, copyrights, manufacturing processes, inventions,
specialized treatment protocols, formulas and trade secrets necessary to conduct
its business as now operated. No claim is pending or has been made to the effect
that the present or past operations of Seller infringe upon or conflict with the
asserted rights of others to such patents, patent rights, manufacturing
processes, trade names, trademarks, service marks, inventions, specialized
treatment protocols, copyrights, formulas and trade secrets.
2.12 Directors and Officers; Payroll Information. Set forth on Exhibit
2.12 attached hereto is a true and complete list, as of the date of this
Agreement, of: (a) the name of each Director and officer of Seller and the
offices held by each; and (b) the most recent payroll report of Seller, showing
all current employees of Seller and their current levels of compensation other
than bonuses and other extraordinary compensation.
2.13 Legal Proceedings. Except as set forth in Exhibit 2.13 attached
hereto, neither Seller nor any Shareholder has knowledge of any pending or
threatened litigation, governmental investigation, condemnation or other
proceeding against or relating to or affecting Seller, any Shareholder, the
Business, the Assets or the transactions contemplated by this Agreement,
including, but not limited to, claims for medical malpractice or negligence,
and, to the knowledge of Seller and Shareholder, no basis for any such action
exists, nor is there any legal impediment of which Seller or any Shareholder has
knowledge to the continued operation of the Business in the ordinary course.
2.14 Contracts. Seller has delivered to PSC true copies of all written,
and disclosed to PSC all Material oral, outstanding contracts, obligations and
commitments of Seller and Shareholder entered into in connection with the
Business, all of which are listed or incorporated by reference on Exhibit 2.6
(in the case of leases) and Exhibit 2.14 (in the case of managed care contracts,
third party payor contracts and contracts other than leases) attached hereto.
Except as otherwise indicated on such Exhibits, all of such contracts,
obligations and commitments are valid, binding and enforceable against Seller in
accordance with their terms and are in full force and effect, subject to
limitations on enforceability imposed by, bankruptcy, moratorium, creditors'
rights or similar laws. Except as set forth or incorporated by reference on such
Exhibits, to Seller's knowledge no default or alleged default by Seller exists
thereunder. Except as listed or incorporated by reference on Exhibit 2.6 and
Exhibit 2.14, neither Seller nor any Shareholder is a party to any Material
written or oral agreement, contract, lease or plan of a type described as
follows:
(a) Contract related to the Assets, not made in the
ordinary course of business, other than this Agreement.
(b) Employment contract which is not terminable
without cost or other liability to Seller, or any successors or assigns thereof,
upon notice of 30 days or less.
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(c) Contract with any labor union.
(d) Bonus, pension, profit-sharing, retirement,
stock acquisition, hospitalization, insurance or similar plan providing for
employee benefits.
(e) Lease with respect to any property, real or
personal, whether as lessor or lessee.
(f) Contract for the future acquisition of
materials, supplies or equipment (i) which is in excess of the requirements of
the Business now booked or for normal operating inventories, or (ii) which is
not terminable without material cost or liability to Seller, or any successors
or assigns thereof, upon notice of 30 days or less.
(g) Insurance contract.
(h) Contract continuing for a period of more than
six months from the Closing Date.
(i) Loan agreement or other contract for money
borrowed.
2.15 Subsequent Events. Except as set forth on Exhibit 2.15 attached
hereto, Seller has not, since the date of the Balance Sheet:
(a) Incurred any material uninsured obligation or
liability (absolute, accrued, contingent or otherwise), or any material adverse
change except in connection with the performance of this Agreement, other than
in the ordinary course of business.
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown or
reflected on the Balance Sheet or (ii) liabilities incurred since the date of
the Balance Sheet in the ordinary course of business.
(c) Increased or established any reserve for taxes
or any other liability on its books or otherwise provided therefor, except as
may have been required due to income or operations of Seller.
(d) Mortgaged, pledged or subjected to any lien,
charge or other encumbrance any of the Assets, tangible or intangible.
(e) Sold or transferred any of the Assets, canceled
any debts or claims or waived any rights, except in the ordinary course of
business.
(f) Granted any general or uniform increase in the
rates of pay of employees or any substantial increase in salary payable or to
become payable by Seller to any
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officer or employee, consultant or agent (other than normal merit increases), or
by means of any bonus or pension plan, contract or other commitment, increased
the compensation of any officer, employee, consultant or agent.
(g) Authorized any capital expenditures in excess of
$1,000.00.
(h) Except for this Agreement and any other
agreement executed and delivered pursuant to this Agreement, entered into any
material transaction other than in the ordinary course of business or permitted
under other Sections hereof.
(i) Issued any stock, bonds or other securities.
(j) Experienced damage, destruction or loss (whether
or not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse change
in its financial condition, assets, liabilities or business.
(k) Paid bonuses, distributions, or advanced loans
to Shareholder or employees outside of the ordinary course of business
consistent with past practices of Seller.
2.16 Accounts Receivable. Exhibit 2.16 reflects the amount of Seller's
accounts receivable as of the date of the Balance Sheet, net of allowances for
uncollectible and doubtful accounts, all in conformity with generally accepted
accounting principles. All such financial information has been prepared on a tax
(cash) basis and not in accordance with GAAP but has been prepared otherwise on
a consistent basis throughout the period indicated. Seller maintains its
accounting records in sufficient detail to substantiate the accounts receivable
reflected on Exhibit 2.16 and has given and will give to PSC full and complete
access to those records, including the right to make copies therefrom. Since the
date of the Balance Sheet, Seller has not changed any principle or practice with
respect to the recordation of accounts receivable or the calculation of reserves
therefor, or any material collection, discount or write-off policy or procedure.
To the best of the knowledge of the Seller and Shareholder, the Seller is in
substantial compliance with the terms and conditions of such third-party payor
arrangements, and to Seller's knowledge the reserves established by Seller are
adequate to cover any liability resulting from lack of compliance.
2.17 Tax Returns. Seller has filed all tax returns required to be filed
by it, and made all payments required to be made by it, with respect to income
taxes, real property taxes, sales taxes, use taxes, employment taxes and similar
taxes due and payable on or before the date of this Agreement. Seller has no tax
liability, except for ad valorem taxes for the fiscal year ending in 1996, taxes
being contested in good faith, as set forth on Exhibit 2.17 attached hereto, and
sales, use, employment and similar taxes for periods as to which such taxes have
not yet become due and payable.
2.18 Commissions and Fees. There are no valid claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which
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may be now or hereafter asserted against PSC or Parent resulting from any
action taken by Seller or Shareholder or their respective agents or employees,
or any of them.
2.19 Material Liabilities. Except as set forth on Exhibit 2.15, or to
the extent reflected or reserved against on the Balance Sheet, Seller did not
have, as of the Balance Sheet Date, and has not incurred since that date, any
material uninsured liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due which would
have a Material Adverse Effect, other than those incurred in the ordinary course
of business. Except as set forth on Exhibit 2.15, Seller and Shareholder do not
know, or have reasonable grounds to know, of any basis for the assertion against
Seller as of the Balance Sheet Date, of any material claim or liability of any
nature in any amount not fully reflected or reserved against on the Balance
Sheet, or of any material uninsured claim or liability of any nature arising
since that date which would have a Material Adverse Effect other than those
incurred in the ordinary course of business or contemplated by this Agreement.
2.20 Insurance Policies. Seller or Shareholder maintains policies of
comprehensive general liability and professional liability insurance in amounts
of not less than $3 million per occurrence and $5 million aggregate on a claims
made basis and property damage insurance on the Assets to be sold hereunder.
Valid policies in such amounts are outstanding and duly in force and will remain
duly in force through the Closing Date. All such policies are described in
Exhibit 2.20 attached hereto.
2.21 Employee Benefit Plans. Except as set forth on Exhibit 2.21
attached hereto, Seller has neither established, nor maintains, nor is obligated
to make contributions to or under or otherwise participate in, (a) any bonus or
other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document); (b) any pension, profit sharing, retirement or other plan, program or
arrangement; or (c) any other employee benefit plan, fund or program, including,
but not limited to, those described in Section 3(3) of ERISA. All such plans
listed on Exhibit 2.21 (individually "Seller Plan," and collectively "Seller
Plans") have been operated and administered in all material respects in
accordance with, as applicable, ERISA, the Internal Revenue Code of 1986, as
amended, title VII of the Civil Rights Act of 1964, as amended, the Equal Pay
Act of 1967, as amended, the Age Discrimination in Employment Act of 1967, as
amended, and the related rules and regulations adopted by those federal agencies
responsible for the administration of such laws. No act or failure to act by
Seller has resulted in a "prohibited transaction" (as defined in ERISA) with
respect to the Seller Plans. No "reportable event" (as defined in ERISA) has
occurred with respect to any of the Seller Plans. Seller has not previously
made, is not currently making, and is not obligated in any way to make, any
contributions to any multi-employer plan within the meaning of the
Multi-Employer Pension Plan Amendments Act of 1980.
2.22 Compliance with Laws in General. Neither Seller nor any
Shareholder has knowledge of material violations of any federal, state and local
laws, regulations and ordinances relating to the operations of the Business and
the Assets, including, without limitation, the Federal Environmental Protection
Act, the Occupational Safety and Health Act, the Americans with
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Disabilities Act and any Environmental Laws, and no notice of any pending
inspection or violation of any such law, regulation or ordinance has been
received by Seller or any Shareholder.
2.23 Fraud and Abuse. Seller and Shareholder and all persons and
entities providing professional services for the Business have not, to the
knowledge of Seller and Shareholder, engaged in any activities which are
prohibited under Section 1320a-7b of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully making
or causing to be made a false statement or representation of a material fact for
use in determining rights to any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representations of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (ii) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, lease or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid; (e) engaging in
any activity which is a basis for exclusion from the Medicare, Medicaid and
other federally-funded programs under Section 1320a-7a of Title 42 of the United
States Code; (f) any violation of the Medicare or Medicaid requirements,
including and fraud and abuse provisions, except where such circumstances would
not have a Material Adverse Effect.
2.24 Medicare, Medicaid, and Other Third-Party Payor Payment
Liabilities. Except as described in Exhibit 2.24 neither Seller nor any
Shareholder has, and as of the Closing Date, will have, any liabilities to any
third party fiscal intermediary or carrier administering any state Medicaid
program or the federal Medicare program, or to any other third party payor for
the recoupment of any amounts previously paid to Seller (or any predecessor
corporation) or any Shareholder by any such third-party fiscal intermediary,
carrier, Medicaid program, Medicare program, or third party payor. There are no
pending or threatened actions by any third party fiscal intermediary or carrier
administering any state Medicaid or the federal Medicare program, by the
Department of Health and Human Services, any state Medicaid agency, or any third
party payor to suspend payments to Seller or any Shareholder.
2.25 Billing Practices and Referral Sources. (a) Billing Practices
Generally. All billing practices by Seller and Shareholder to all third party
payors, including, but not limited to, the federal Medicare program, state
Medicaid programs and private insurance companies, have been true, fair and
correct and in compliance with all applicable laws, regulations and policies of
all such third party payors, and neither Seller nor any Shareholder has billed
for or received any payment or reimbursement in excess amounts allowed by law.
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(b) Gratuitous Payments. Neither Seller nor any Shareholder,
director, or officer of Seller, nor to Seller's knowledge any employee or agent
acting on behalf of or for the benefit of Seller or any Shareholder, has
directly or indirectly (i) offered or paid any remuneration, in cash or in kind,
to, or made any financial arrangements with, any past or present customers, past
or present patients, past or present suppliers, contractors or third party
payors of Seller in order to obtain business or payments from such persons,
other than entertainment activities in the ordinary and lawful course of
business; (ii) given or agreed to give, or is aware that there has been made or
that there is any agreement to make, any gift or gratuitous payment of any kind,
nature or description (whether in money, property or services) to any customer
or potential customer, patient or potential patient, supplier or potential
supplier, contractors, third party payor or any other person other than in
connection with promotional or entertainment activities in the ordinary and
lawful course of business; (iii) made or agreed to make, or is aware that there
has been made or that there is any agreement to make, any contribution, payment
or gift of funds or property to, or for the private use of, any governmental
official, employee or agent where either the contribution, payment or gift or
the purpose of such contribution, payment or gift is or was illegal under the
laws of the United States or under the laws of any state thereof or any other
jurisdiction (foreign or domestic) under which such payment, contribution or
gift was made; (iv) established or maintained any unrecorded fund or asset for
any purpose or made any false or artificial entries on any of its books or
records for any reason or (v) made, or agreed to make, or is aware that there
has been made or that there is any agreement to make, any payment to any person
with the intention or understanding that any part of such payment would be used
for any purpose other than that described in the documents supporting such
payment.
(c) Transactions with Referral Sources. Neither Seller nor any
Shareholder, director, or officer thereof, nor to Seller's knowledge any
employee of Seller, is a party to any contract, lease, agreement or arrangement,
including, but not limited to, any joint venture or consulting agreement with
any physician, hospital, nursing facility, home health agency or other person
who is in a position to make or influence referrals to or otherwise generate
business for Seller or any Shareholder to provide services, lease space, lease
equipment or engage in any other venture activity.
2.26 Physician Self-Referrals. Neither Seller nor any Shareholder has
submitted any claims in connection with any referrals which violated any
applicable self-referral law, including the ▇▇▇▇▇ Law (42 U.S.C. Section
1395nn) or any applicable state self-referral law as those laws are currently
interpreted.
2.27 Investment Intent. (a) Acquisition Purpose. Seller and Shareholder
(through his ownership interest in Seller) are acquiring the Parent Common Stock
to be received by them under this Agreement for investment purposes only and not
with a view to the sale or distribution thereof.
(b) Experience in Financial Matters. Seller and Shareholder have had
the opportunity to discuss Parent's business, management and financial affairs
with Parent's management. Seller and Shareholder have such knowledge and
experience in financial matters that they are capable
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of evaluating the merits and risks of an investment in the Parent Common Stock.
Seller's and Shareholder's financial condition is such that it or he is able to
bear all economic risks of investment in the Parent Common Stock, including the
risks of holding the Parent Common Stock for an indefinite period of time.
(c) Non-transferability of Parent Common Stock. Seller and Shareholder
understand that since the shares of Parent Common Stock have not been registered
under the 1933 Act, the shares of Parent Common Stock must be held indefinitely
unless they are subsequently registered under the 1933 Act or an exemption from
such registration is available. Other than as set forth in the Registration
Rights Agreement, Seller and Shareholder acknowledge that neither Parent nor PSC
is under any obligation to register under the 1933 Act any sale of the Parent
Common Stock or to comply with any provisions which would entitle any such sale
to any exemption from registration. Seller and Shareholder are fully familiar
with Rule 144 promulgated under the 1933 Act.
(d) Legend on Parent Common Stock. Each stock certificate representing
the Parent Common Stock shall bear a legend in, or substantially in, the
following form and any other legend required by any applicable state securities
or Blue Sky laws:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
any state securities laws and may not be sold, pledged or
otherwise transferred without an effective registration under
said Act and any applicable state securities laws or unless
the company shall have received an opinion of counsel
satisfactory to the company that an exemption from
registration under such Act and any applicable state
securities laws is then available."
Seller and Shareholder agree to abide by the terms of this legend. Parent may
maintain a "stop transfer order" against the Parent Common Stock.
2.28 No Untrue Representations. To the knowledge of Seller and
Shareholder, no representation or warranty by Seller or any Shareholder in this
Agreement, and no Exhibit or certificate issued by officers or Directors of
Seller or any Shareholder and furnished or to be furnished to PSC or Parent
pursuant hereto, or in connection with the transactions contemplated hereby,
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 or facts
contained therein not misleading. All information and information provided by
Seller or Shareholder for valuation of the Business by PSC and Parent is true,
accurate and complete in all material respects.
Section 3. Representations and Warranties of Parent and PSC.
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PSC and Parent hereby jointly and severally represent and warrant to
Seller and Shareholder as follows:
3.1 Corporate Existence; Good Standing; Qualification. Each of PSC and
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of PSC and Parent has all
necessary corporate power to own its properties and assets and to carry on its
business as presently conducted and is duly qualified to do business and is in
good standing in all jurisdictions in which the character of the property owned,
leased or operated or the nature of the business transacted by it makes
qualification necessary.
3.2 Power and Authority. Each of PSC and Parent has corporate power to
execute and deliver this Agreement and perform its obligations under this
Agreement and all agreements and other documents executed and delivered by it
pursuant to this Agreement, and has taken all actions required by law, its
Certificate of Incorporation, its By-laws or otherwise, to authorize the
execution, delivery and performance of this Agreement and such related
documents. The execution and delivery of this Agreement, and the agreements
related hereto executed and delivered pursuant to this Agreement do not and,
subject to the receipt of consents to assignments of leases and other contracts
where required and the receipt of regulatory approvals where required, the
consummation of the transactions contemplated hereby will not, violate any
provision of the Certificate of Incorporation or Bylaws of either PSC or Parent
or any provisions of, or result in the acceleration of, any obligation under any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which PSC or Parent is a party or by which either of them is bound,
or violate any restrictions of any kind to which PSC or Parent is subject. The
execution and delivery of this Agreement have been approved by the respective
Boards of Directors of PSC and Parent.
3.3 Commissions and Fees. There are no valid claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
Seller or Shareholder resulting from any action taken by PSC or Parent or their
respective officers, Directors or agents, or any of them.
3.4 Capitalization. Parent has an authorized capitalization of 10,000
shares of Preferred Stock, par value $1.00 per share, of which no shares are
issued and outstanding, and no shares are held in treasury, and 50,000,000
shares of common stock, par value $.001 per share, of which 599,893 shares are
issued and outstanding, and no shares are held in treasury. All of the Parent
Common Stock to be issued pursuant to this Agreement will, when so delivered, be
duly and validly issued and fully paid and nonassessable. Except as disclosed in
the draft Registration Statement (as hereinafter defined), and except as
described on Exhibit 3.4, there are no options, warrants or similar rights
granted by Parent or any other agreements to which Parent is a party providing
for the issuance or sale by it of any additional securities. There is no
liability for dividends declared or accumulated but unpaid with respect to any
shares of Parent Common Stock. Parent has not paid any dividends to any holder
of Parent Common Stock or participated in or effected any issuance, exchange or
retirement of Parent Common Stock, or otherwise changed the equity interests of
holders of Parent Common Stock, in contemplation of effecting the transaction
contemplated by this Agreement within the two years immediately preceding the
Closing Date.
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3.5 PSC Common Stock. Parent owns, beneficially and of record, all of
the issued and outstanding shares of Common Stock of PSC, free and clear of all
liens and encumbrances. Parent has taken all such actions as may be required in
its capacity as the sole shareholder of PSC to approve this transaction.
3.6 Parent Documents. Parent has heretofore furnished Seller with draft
Amendment No. 1 to its Registration Statement S-1 dated February 8, 1997, to be
filed with the SEC, relating to the offer and sale of 2,200,000 shares of Parent
Common Stock in the IPO (the "Registration Statement").
3.7 Legal Proceedings. Except as disclosed in the Registration
Statement, there is no material litigation, governmental investigation or other
proceeding pending or, so far as is known to Parent threatened against or
relating to Parent, its properties or business, or the transaction contemplated
by this Agreement and, so far as is known to Parent, no basis for any such
action exists.
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Section 4. Access to Information and Documents Prior to Closing.
4.1 Access to Seller's Information. Seller and Shareholder shall give
to PSC and its counsel, accountants, engineers and other representatives full
access to all the requested properties, documents, contracts, personnel files
and other records of Seller and the Business hereunder and shall furnish PSC
with copies of such requested documents and with such information with respect
to the affairs of Seller as PSC shall from time to time reasonably request.
Seller and Shareholder shall disclose and make available to Parent and its
representatives all requested books, contracts, accounts, personnel records,
letters of intent papers, records, communications with regulatory authorities
and other documents relating to the Assets and to the Business.
4.2 Access to Information of PSC and Parent. PSC and Parent shall give
to Seller and Shareholder and their respective counsel, accountants and other
representatives such access to the documents, contracts and other records of
PSC, Parent and PSC and shall furnish Seller and Shareholder with copies of such
documents and with such information with respect to the affairs of PSC, Parent
and PSC as Seller and Shareholder shall from time to time reasonably request.
4.3 Retention of Records. Without cost to Seller, PSC shall retain all
books and records of Seller ("Records") transferred to it pursuant to this
Agreement for the greater of four years from the Closing Date or such longer
periods of time as required by applicable statutes, rules and regulations. For a
period of four years after the Closing Date, and for such longer period as the
Records are maintained, each party will, during normal business hours and so as
not to unreasonably disrupt normal business, afford any other party, its
counsel, its accountants or other parties who have a reasonable need for such
access full access (and copying at the expense of the requesting party, if
desired) to the books and records relating to the Assets in the possession of
such party as such other party may reasonably request.
Section 5. Conditions to Obligation of Parent and PSC to Close.
The obligation of PSC and Parent to consummate the transactions to be
performed by them in connection with this Agreement is subject to satisfaction
of the following conditions precedent (any of which may be waived in writing by
PSC or Parent):
5.1 Representations and Warranties True. The representations and
warranties set forth in Article 2 shall be true and correct in all material
respects as of the date made and at and as of the Closing, except as a result of
changes expressly permitted by this Agreement.
5.2 Covenants. Shareholder and Seller shall have performed and complied
with all of their covenants and agreements in all material respects through the
Closing.
5.3 No Suit or Proceeding. No action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction in which an unfavorable
injunction, judgment, order, decree, ruling, or charge would (i) prevent
consummation of any of the transactions contemplated by this Agreement, (ii)
cause any of the
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transactions contemplated by this Agreement to be rescinded following
consummation, (iii) affect adversely the right of PSC to operate the Business
(and no such injunction, judgment, order, decree, ruling, or charge shall be in
effect).
5.4 Absence of Material Adverse Change.
(i) There shall have been no change in the condition
(financial or otherwise), business, assets of Seller or the
Business from the Balance Sheet Date which has had or could
reasonably be expected to have a Material Adverse Effect on
the Seller, the Business, or the Assets.
(ii) Neither Seller nor the Assets shall have been,
and shall not be seriously threatened to be materially
adversely affected in any way as a result of fire, explosion,
disaster, accident, labor dispute, any action by the United
States or any other government or government authority,
domestic or foreign, riot, act of war, civil disturbance or
Act of God.
5.5 Certificate. Shareholder shall have delivered to PSC a certificate
to the effect that each of the conditions specified in Sections 5.1-5.4 is
satisfied in all respects.
5.6 Consents and Approvals. PSC and Parent shall have received all
authorizations, consents, and approvals of third parties and of governments and
governmental agencies, if any, that may be required for the acquisition of the
Assets by PSC, including, without limitation, the consent of the lessors to
transfer to PSC the leases listed on Exhibits 2.6 and/or 2.14.
5.7 Counsel Opinion. Parent and PSC shall have received from counsel to
the Seller and Shareholder an opinion dated as of the Closing Date, in form and
substance reasonably satisfactory to Parent and PSC.
5.8 Other Agreements Executed. Shareholder shall have executed and
delivered an Employment Agreement with Practice in the form required by the
Management Services Agreement, which will provide for liquidated damages in an
amount equal to the Acquisition Price in the event of breach by the physician of
certain provisions therein, (ii) Practice shall have executed and delivered the
Management Services Agreement, and (iii) Shareholder shall have executed and
delivered the Registration Rights Agreement in substantially the form of Exhibit
5.8 (the "Registration Rights Agreement").
5.9 Release of Liens. All liens encumbering the Assets other than those
listed on Exhibit 5.9, shall be duly released by the secured parties and other
lien holders, and UCC-3 release or termination statements and other lien release
documents, if any, shall have been recorded or the recording thereof provided
for.
5.10 Closing Date Financial Certificate. Seller shall have delivered to
PSC a closing date financial certificate which shall certify as of the last day
of the month prior to the effective date
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of the Registration Statement an unaudited cash basis balance sheet of Seller
and for the period ended as of such date a statement of operations of Seller,
along with a detailed accounts receivable aging analysis of Seller as of such
date. Seller's 1996 collections shall not have been less than five hundred
thousand dollars ($500,000) and the net worth of Practice as of the Closing Date
(defined as the accrual basis net worth of assets acquired by PSC including the
net realizable value of its accounts receivable, less assumed liabilities) shall
not be less than one hundred twenty-five thousand dollars ($125,000).
5.11 Corporate Documents. Seller shall have furnished PSC with copies
of the following documents: the Articles of Incorporation and all amendments
thereto of Seller and of Practice, duly certified by the Secretary of State of
the State of Georgia; certificates, executed by the proper officials of the
State of Georgia, as to the valid existence and good standing of Seller and of
Practice in the State of Georgia; resolutions authorizing this Agreement and the
transactions provided for herein, duly adopted by the Board of Directors or
other governing body of Seller and duly adopted by Shareholder, all as duly
certified by the Secretary of Seller; and resolutions of the Practice
authorizing the execution, delivery and performance of the Management Services
Agreement by the Practice, as duly certified by the Secretary of the Practice.
5.12 Instruments of Conveyance. Simultaneously with the execution of
this Agreement and in order to effect the conveyance, transfer and assignment of
the Assets and the Business and the assumption of certain liabilities, Seller
shall have executed and delivered to PSC all such bills of sale, assignment and
assumption agreements and other documents or instruments of conveyance, transfer
or assignment as shall be necessary or appropriate to vest in or confirm to PSC
Seller's right, title and interest in and to the Assets, free and clear of all
obligations, security interests, liens and encumbrances whatsoever, except as
specifically assumed by PSC pursuant to Section 1.3(b).
5.13 Practice Acquisition. The Practice shall have acquired from the
Seller the excluded assets referred to in Section 1.2(c) (other than those
personally owned items (if any) identified as such on Exhibit 1.2(c)) and (d)
(the "Medical Excluded Assets") for the purpose of acquiring and owning such
assets, subject to and in accordance with the provisions of a ▇▇▇▇ of Sale and
Assignment by and from the Seller in form and substance reasonably satisfactory
to PSC.
5.14 Investor Letter and Financial Data Sheet. Seller and Shareholder
shall have provided to Parent prior to the Closing Date a fully-completed and
executed Investor Letter and Financial Data Sheet substantially in the form of
Exhibit 5.14.
5.15 Assignment of Leases. At the option of PSC, Seller shall assign to
PSC any real property lease utilized by Seller in the Practice and lease to
Parent and PSC any real property owned by Seller or Shareholder and utilized in
Seller's practice. All such leases shall be on reasonable terms mutually
agreeable to the Parties.
5.16 Listing of Shares in NASDAQ. Shares of common stock of Parent
shall have been listed for trading on NASDAQ.
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5.17 Contemporaneous Acquisition. Contemporaneously with the Closing,
PSC will acquire the assets of AENT and the capital stock of Atlanta ENT Center,
Inc., Atlanta-AHP, Inc. and ENT Center of Atlanta, Inc. pursuant to separate
agreements with ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. and the shareholders of AENT.
5.18 Execution of Promissory Note. Contemporaneously with the Closing:
(a) New Atlanta Ear, Nose and Throat Associates, P.C. ("NAENT) shall
execute a promissory note in the amount of Thirty Thousand Dollars (pursuant to
a loan from PSC to NAENT as set forth in Section 6.13(a) of this Agreement)
payable to PSC and bearing simple interest at eight percent (8%) per annum. Such
promissory note shall be payable by NAENT in ten (10) equal installments of
interest and principal beginning sixty (60) days after the Closing Date with
each such installment due every thirty days thereafter.
(b) Shareholder shall execute a promissory note in the amount of Thirty
Thousand Dollars (pursuant to a loan from NAENT to Shareholder as set forth in
Section 6.13(b) of this Agreement) payable to NAENT and bearing simple interest
at eight percent (8%) per annum. Such promissory note shall be payable by
Shareholder in ten (10) equal installments of interest and principal beginning
sixty (60) days after the Closing Date with each such installment due every
thirty days thereafter.
Section 6. Conditions to Obligation of Seller and Shareholder.
The obligation of Seller and Shareholder to consummate the transactions
to be performed by them in connection with this Agreement is subject to
satisfaction of the following conditions (any one of which may be waived in
writing by Seller or Shareholder);
6.1 Representations and Warranties True. The representations and
warranties set forth in Article 3 above shall be true and correct in all
material respects at and as of the Closing;
6.2 Covenants. Parent and PSC shall have performed and complied with
all of their covenants and agreements in all material respects through the
Closing;
6.3 No Suit or Proceeding. No action, suit or proceeding shall be
pending before any court or quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction 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);
6.4 Certificate. PSC shall have delivered to Seller a certificate to
the effect that each of the conditions specified in Sections 6.1-6.3 is
satisfied in all respects;
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6.5 Government Approvals. Seller, Parent and PSC shall have received
all authorizations, consents, and approvals of governments and governmental
agencies, if any, that may be required;
6.6 Counsel Opinion. The Seller shall have received from counsel to
Parent and PSC an opinion dated as of the Closing Date in form and substance
reasonably satisfactory to Seller;
6.7 Other Agreements Executed. (i) The Practice shall have executed and
delivered an Employment Agreement with Shareholder and other Physician Practice
Employees in the form required by the Management Services Agreement, (ii) PSC
shall have executed and delivered the Management Services Agreement, and (iii)
meeting the requirements of Section 5.8 above, Parent shall have executed and
delivered the Registration Rights Agreement.
6.8 Parent Stock. Parent or PSC shall have delivered at the closing the
Parent Common Stock required as the Acquisition Price under Section 1.3(a).
6.9 Corporate Documents. (a) PSC shall have furnished Seller with
copies of the following documents: the Certificate of Incorporation and all
amendments thereto of PSC, duly certified by the Delaware Secretary of State;
certificates, executed by the proper Delaware officials, as to the good standing
of PSC in Delaware; and resolutions authorizing this Agreement and the
transactions provided for herein, duly adopted by the Board of Directors of PSC
and duly certified by the Secretary of PSC.
(b) Parent shall have furnished Seller with copies of the following
documents; the Certificate of Incorporation and all amendments thereto of
Parent, duly certified by the Delaware Secretary of State; certificates,
executed by the proper Delaware officials, as to the good standing of Parent in
Delaware; and resolutions authorizing this Agreement and the transactions
provided for herein, duly adopted by the Board of Directors of Parent and duly
certified by the Secretary of Parent.
6.10 Assumption of Liabilities. PSC shall have assumed the Obligations
in accordance with Section 1.3(b) pursuant to an assumption agreement in form
and substance reasonably satisfactory to Seller.
6.11 Absence of Material Adverse Change. There shall have been no
change in the condition (financial or otherwise), business, assets, or prospects
of PSC or Parent from the date of this Agreement which has had or could
reasonably be expected to have a material adverse effect on PSC or Parent.
6.12 Listing of Shares. Shares of the common stock of Parent shall have
been listed for trading on NASDAQ.
6.13 Loan to Seller and Shareholder. Contemporaneously with the
Closing:
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(a) PSC shall loan to NAENT Thirty Thousand Dollars ($30,000) and NAENT
shall execute a promissory note for such loan as set forth in Section 5.18(a) of
this Agreement.
(b) NAENT shall loan to Shareholder Thirty Thousand Dollars ($30,000)
and Shareholder shall execute a promissory note for such loan as set forth in
Section 5.18(b) of this Agreement.
Section 7. Certain Additional Covenants.
7.1 Conduct of Business Prior to Closing. During the period from and
after the date of this Agreement and until the Closing Date:
(a) Seller and Shareholder will carry on the
Business in substantially the same manner as heretofore carried on and will not
make any purchase or sale, incur any indebtedness or liens, or introduce any
method of management or operation in respect to such Business or otherwise
engage in any transaction except in the ordinary course of business and in the
manner not inconsistent with prior practice and the terms of this Agreement,
other than with the prior written consent of PSC;
(b) Neither Seller nor Shareholder will permit any
change to be made in the articles of incorporation or by-laws or, if applicable,
shareholder agreement of Seller, other than with the prior written consent of
PSC.
(c) Neither Seller nor Shareholder will acquire or
dispose of any capital assets having an initial cost or current value in excess
of $1,000 other than with the prior written consent of PSC;
(d) Neither Seller nor Shareholder will increase the
compensation payable or to become payable to any of its employees or agents
other than (a) with the prior written consent of PSC or (b) cash bonuses by
Seller to Shareholder consistent with the past practice of Seller;
(e) Neither Seller nor Shareholder will take, or
permit or suffer to be taken, any action which is represented and warranted in
Section 2.15 not to have occurred since the Balance Sheet Date other than with
the prior written consent of PSC.
7.2 Funding of Accrued Employee Benefits. Except as set forth on
Exhibit 7.2, Seller hereby covenants and agrees that it will take whatever steps
are necessary to pay or fund completely or reserve completely for any accrued
benefits, where applicable, or vested accrued benefits for which Seller or any
entity might have any liability whatsoever arising from any salary, wage,
benefit, bonus, vacation pay, sick leave, insurance, employment tax or similar
liability of Seller to any employee or other person or entity (including,
without limitation, any Seller Plan and any liability under employment contracts
with Seller) allocable to services performed prior to the Closing Date. Seller
acknowledges that the purpose and intent of this covenant is to assure that PSC
shall have no liability whatsoever at any time in the future with respect to any
of Seller's
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employees or similar persons or entities, including, without limitation, any
Seller Plan, except as indicated on Exhibit 7.2.
7.3 Creditor's Claims. Seller and Shareholder represent, covenant and
agree that all of the creditors with respect to the Business will be paid in
full by Seller prior to the Closing Date, or within such other period as is
normally permitted by such creditors in the ordinary course of business, except
to the extent that any liability to such creditors is assumed by PSC pursuant to
this Agreement. If required by PSC, Seller and Shareholder shall furnish PSC
with proof of payment of all creditors with respect to the Assets.
Notwithstanding the foregoing, Seller may dispute the amount or validity of any
such creditor's claim without being deemed to be in violation of this Section
7.3, provided that such dispute is in good faith.
7.4 Affiliate Agreements. Seller will use its reasonable, good faith
efforts to cause its directors and its executive officers and "affiliates"
(within the meaning of Rule 145 under the Securities Act of 1933, as amended) to
execute and deliver to Parent as soon as practicable instructions in the form
attached hereto as Exhibit 7.4 relating to the disposition of the shares of
Parent issued to the Seller.
7.5 Waiver of Bulk Transfer Compliance. Seller, Shareholder and PSC
hereby waive any compliance with the Georgia Bulk Transfers Act. Seller and
Shareholder jointly and severally represent, covenant and agree that all of the
creditors with respect to the Business will be paid in full by the Seller prior
to the Closing Date, or within such other period as is normally permitted by
such creditors in the ordinary course of business, except to the extent that any
liability to such creditors is assumed by PSC pursuant to this Agreement. If
required by PSC, the Seller and Shareholder shall furnish PSC with proof of
payment of all creditors with respect to the Business. Notwithstanding the
foregoing, the Seller may dispute the amount of validity of any such creditor's
claim without being deemed to be in violation of this Section 7.5, provided that
such dispute is in good faith and does not unreasonably delay the resolution of
the claim.
7.6 Liquidation of Seller. As soon as practical, but in no event later
than 12 months following the Closing Date, Seller will dissolve and liquidate in
accordance with applicable law.
7.7 Covenant Not to Compete. For a period of five (5) years from and
after the Closing Date, each of Seller and Shareholder agrees that it or he will
not (i) directly or indirectly, engage in, manage, operate, control, conduct,
consult for or be employed in a management capacity by, provide services to or
invest in any business or venture in competition with the Business or PSC or
Parent in the Geographic Territory (as defined below); provided however, that
ownership of less than 1% of the outstanding stock of any publicly traded
corporation shall not be deemed to violate this clause, (ii) within the
Geographic Territory, directly or indirectly, solicit or attempt to solicit any
customer or client of PSC or Parent or patient of Practice other than in the
course of a Shareholder's normal performance of services and duties for Practice
as a physician-shareholder thereof; or (iii) solicit or employ or attempt to
solicit or hire away or employ any employee of PSC or Parent or Practice. If the
final judgment of a court of competent jurisdiction declares that any term or
provision of this Section is invalid or unenforceable, Shareholder and PSC agree
that the
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court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. The parties agree that the
Business currently serves territories each with greater than an eight (8) mile
radius of Seller's various office locations. Accordingly, as used herein, the
term "Geographic Territory" shall mean each area within an eight (8) mile radius
of each of the office locations of Seller. The parties agree that the restraints
set forth above in this Section 7.7 are reasonable in respect to subject matter,
length of time and geographic area. Each of Seller and Shareholder agrees that
the restrictions on their activities contained in this Section are reasonable
and necessary to protect the goodwill and relationships, economic advantage and
other legitimate interests of PSC and Parent, and that, were it or he to breach
any of the covenants contained in this Section 7.7, PSC would be harmed and the
damage to PSC would be irreparable. Accordingly, Seller and Shareholder
acknowledge and agree that, as PSC's legal remedies may be inadequate in the
event of a breach of the covenants in this Section 7.7, in addition to damages
and other remedies available to PSC, such covenants may be enforced by
injunction or other equitable remedies.
7.8 Confidentiality.
(a) Seller and Shareholder shall, and shall use
their reasonable efforts to cause their respective employees, agents and
representatives to, for a period of five (5) years after the Closing, hold in
confidence all financial information about Seller, the Business and the Assets,
except such disclosure as may be required by law or governmental order or
regulation, or by subpoena or other legal process (provided PSC will be provided
advance notice of such disclosure in order to afford it the opportunity to seek
an appropriate protective order).
(b) Seller and Shareholder further agree to, and
shall use their reasonable efforts to cause their respective employees, agents
and representatives who are not hired by PSC at Closing, to keep confidential
for a period of five (5) years after the Closing, any and all information
relating to services, products, marketing information, sources of supply,
pricing and patients of Seller on the date hereof or developed by or for Seller,
except such disclosure as may be required by law or governmental order or
regulation, or by subpoena or other legal process (provided PSC will be provided
advance notice of such disclosure in order to seek an appropriate protective
order).
(c) The restrictions in this Section 7.8 shall not
apply to any information that comes into the public domain through no fault of
Seller or Shareholder.
7.9 Pooling and Tax-free Combination Treatment. Neither Parent, Seller
or Shareholder shall intentionally take or cause to be taken any action, which
would disqualify the combination as a "pooling of interests" under generally
accepted accounting principles and applicable SEC requirements or as a
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code.
Shareholder represents and warrants to Parent that he has no present intention
or plan
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or design to dispose of the shares of Parent Common Stock that he will receive
pursuant to the liquidation of Seller. Further, Shareholder hereby covenants and
agrees with Parent that he will not sell, convey or otherwise transfer any
shares of Parent Common Stock distributed to Shareholder pursuant to the
liquidation of Seller until the expiration of not less than one (1) month
following the release by Parent of consolidated financial statements of Parent
to the public that reflect at least one (1) month of joint operations of Parent
and Seller's business. Each Party hereto agrees to take such further action or
action and to execute such other documents, agreements, certificates or
instruments as may be necessary or desirable to maintain pooling of interests
accounting treatment of the transactions contemplated by this Agreement in
accordance with all applicable financial accounting standards.
Section 8. Nature and Survival of Representations and Warranties;
Indemnification.
8.1 Nature and Survival. All statements contained in this Agreement or
in any Exhibit attached hereto, any agreement executed pursuant hereto, and any
certificate executed and delivered by any party pursuant to the terms of this
Agreement, shall constitute representations and warranties of Seller and
Shareholder, jointly and severally, or of PSC and Parent, jointly and severally,
as the case may be. All such representations and warranties, all representations
and warranties expressly labeled as such in this Agreement and the obligations
of the parties to indemnify any other party pursuant to Section 8.2 or 8.3(a),
shall survive the date of this Agreement and the Closing Date (i) with respect
to the representations and warranties in Sections 2.1 through 2.4 and Sections
2.23 through 2.26, for the period of the applicable statute of limitations, and
(ii) with respect to all other representations and warranties until the earlier
of (A) a period of one (1) year following the Closing Date or (B) the date of
issuance of the first audited consolidated financial statements for Parent and
its subsidiaries which contain combined operations of Parent and the Business.
Each party covenants with the other parties not to make any claim with respect
to such representations or warranties against any party after the date on which
such survival period shall terminate. No party shall be entitled to bring suit
against any other party pursuant to Section 8.2 or 8.3(a) hereof, unless such
party has timely given the notice required in Section 8.4 hereof. Each party
hereby releases, acquits and discharges the other party from any and all claims
and demands, actions and causes of action, damages, costs, expenses and rights
of setoff with respect to which the notice required by Section 8.4 is not timely
provided.
8.2 Indemnification by PSC and Parent. PSC and Parent jointly and
severally (for purposes of this Section 8.2 and, to the extent applicable,
Section 8.4, "Indemnitor"), shall indemnify and hold Seller and Shareholder, and
their respective agents, employees, legal representatives, successors and
assigns (each of the foregoing, including Seller and Shareholder, for purposes
of this Section 8.2 and, to the extent applicable, Section 8.4, an "Indemnified
Person"), harmless from and against any and all liabilities, losses, claims,
damages, actions, suits, costs, deficiencies and expenses (including, but not
limited to, reasonable fees and disbursements of counsel through appeal) arising
from or by reason of or resulting from any breach by Indemnitor of any
representation, warranty, agreement or covenant made by Indemnitor contained in
this Agreement (including the Exhibits hereto) and each document, certificate or
other instrument
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furnished or to be furnished by Indemnitor hereunder, excluding, however, any
and all liabilities of Seller or Shareholder which are not expressly assumed by
PSC under this Agreement.
8.3 Indemnification by Seller and Shareholder. (a) Seller and
Shareholder (for purposes of this Section 8.3(a) and, to the extent applicable,
Section 8.3(b) and Section 8.4, "Indemnitor"), shall jointly and severally
indemnify and hold PSC and Parent and their respective officers, directors,
shareholders, affiliates, agents, employees, legal representatives, successors
and assigns (each of the foregoing, including PSC and Parent, for purposes of
this Section 8.3(a) and, to the extent applicable, Sections 8.3(b) and Section
8.4, an "Indemnified Person") harmless from and against any and all liabilities,
losses, claims, damages, actions, suits, costs, deficiencies and expenses
(including, but not limited to, reasonable fees and disbursements of counsel
through appeal), in an aggregate amount not to exceed the Acquisition Price
arising from or by reason of or resulting from any breach by Indemnitor (or any
of them) of any representation or warranty contained in this Agreement
(including the Exhibits hereto) and each document, certificate or other
instrument furnished or to be furnished by Indemnitor hereunder, and with
respect to all times prior to the Closing Date, arising from or by reason of or
resulting from the Indemnitor's management and conduct of the ownership or
operation of the Business or the Assets and from any alleged act of negligence
or malpractice of Indemnitor or its employees, agents and independent
contractors in or about the Business or the Assets.
(b) The Seller and Shareholder jointly and severally agree to
indemnify and hold harmless each Indemnified Person from and against any and all
liabilities, losses, claims, damages, actions, suits, costs, deficiencies and
expenses, including, but not limited to, reasonable fees and disbursements of
counsel through appeal, resulting from, arising out of, relating to or caused by
any breach of any covenant or agreement of the Seller or a Shareholder contained
in this Agreement.
8.4 Indemnification Procedure. Within 60 days after Indemnified Person
receives written notice of the commencement of any action or other proceeding,
or otherwise becomes aware of any claim or other circumstance, in respect of
which indemnification or reimbursement may be sought under Section 8.2 or
Section 8.3(a), such Indemnified Person shall notify Indemnitor thereof. If any
such action or other proceeding shall be brought against any Indemnified Person,
Indemnitor shall, upon written notice given within a reasonable time following
receipt by Indemnitor of such notice from Indemnified Person, be entitled to
assume the defense of such action or proceeding with counsel chosen by
Indemnitor and reasonably satisfactory to Indemnified Person; provided, however,
that any Indemnified Person may at its own expense retain separate counsel to
participate in such defense. Notwithstanding the foregoing, Indemnified Person
shall have the right to employ separate counsel at Indemnitor's expense and to
control its own defense of such action or proceeding if, in the reasonable
opinion of counsel to such Indemnified Person, (a) there are or may be legal
defenses available to such Indemnified Person or to other Indemnified Persons
that are different from or additional to those available to Indemnitor and which
could not be adequately advanced by counsel chosen by Indemnitor, or (b) a
conflict or potential conflict exists between Indemnitor and such Indemnified
Person that would make such separate representation advisable; provided,
however, that in no event shall Indemnitor be required to pay
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fees and expenses hereunder for more than one firm of attorneys in any
jurisdiction in any one action or proceeding or group of related actions or
proceedings. Indemnitor shall not, without the prior written consent of any
Indemnified Person, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding to which such
Indemnified Person is a party unless such settlement compromise or consent
includes an unconditional release of such Indemnified Person from all liability
arising or potentially arising from or by reason of such claim, action or
proceeding.
8.5 Limitations Upon Obligations. Anything in this Section 8 to the
contrary notwithstanding, it is expressly acknowledged and agreed that no
payment shall be made hereunder by PSC or Parent (individually and collectively
a "Parent Party") to Seller or Shareholder (individually and collectively a
"Selling Party") or, by a Selling Party to a Parent Party, on claims for
indemnification under Sections 8.2 or 8.3(a):
(a) until the aggregate of all such claims of a Parent Party
against a Selling Party under Section 8.3(a), or by a Selling Party against a
Parent Party under Section 8.2, shall exceed $10,000.00, in which event the
Party holding such claim shall be entitled to indemnification with respect to
all such claims in the aggregate subject to section (b) below. In the event that
such claims do not aggregate in excess of $10,000.00, then neither the Parent
Parties nor the Selling Parties shall have any claim for indemnification against
the other under Section 8.2 or Section 8.3(a);
(b) in excess of the sum of the Acquisition Price (as defined
in Section 1.3(a)) and Assumed Debt (as defined in Section 1.3(b)).
Section 9. Termination.
9.1 Right to Terminate. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by the mutual written consent of Parent, PSC and
Seller;
(b) by either PSC, Parent or Seller upon prior written
notice to the other party
(i) if any court or governmental or regulatory
agency, authority or body shall have enacted, promulgated or
issued any statute, rule, regulation, ruling, writ or
injunction, or taken any other action, restraining, enjoining
or otherwise prohibiting the transactions contemplated hereby
and all appeals and means of appeal therefrom have been
exhausted; or
(ii) if the Closing shall not have occurred on or
before March 31, 1997 or such later date as the parties may
agree to; provided, however, that the right to terminate this
Agreement pursuant to this Section 9.1(b)(ii) shall not be
available to any party whose breach of any representation or
warranty or failure to perform or
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comply with any obligation or condition under this
Agreement has been the cause of, or resulted in, the failure
of the Closing to occur on or before such date;
(c) by PSC or Parent, upon prior written notice to Seller and
Shareholder, if any of the conditions specified in Section 5 have not
been met or waived prior to the Closing Date (or any extension thereof
pursuant to Section 9.1(b)(ii) above); or
(d) by Seller and Shareholder, upon prior written notice to
PSC, if any of the conditions specified in Section 6 shall not have
been met or waived prior to the Closing Date (or any extension thereof
pursuant to Section 9.1(b)(ii) above).
9.2 Effect of Termination. In the event of termination of this
Agreement pursuant to this Section 9, this Agreement shall forthwith become null
and void and there shall be no liability on the part of any of the parties
hereto or their respective officers or directors with respect to this Agreement,
except for Section 1.7 which shall remain in full force and effect after any
such termination of this Agreement, and except that nothing herein shall relieve
any party from liability for a breach of this Agreement prior to the termination
thereof.
Section 10. Miscellaneous.
10.1 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile and overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PSC:
PSC MANAGEMENT CORP.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent:
PHYSICIANS SPECIALTY CORP.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy of each notice directed to PSC or Parent to:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Seller or Shareholder:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: _________________
All such communications shall be deemed to have been delivered on the date of
delivery or on the next business day following the deposit of such
communications with the overnight courier.
10.2 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement. Seller and Shareholder
will execute and deliver from time to time thereafter, at the request of PSC,
all such further instruments of conveyance, assignment and further assurance as
may reasonably be required in order to vest in and confirm to PSC all of
Seller's right, title and interest in and to the Assets.
10.3 Public Disclosures. Except as otherwise required by law, no party
to this Agreement shall make any public or other disclosure of this Agreement or
the transactions contemplated hereby (other than Parent's disclosures in the
Registration Statement) without the prior consent of the other parties. The
parties to this Agreement shall cooperate with respect to the form and content
of any such disclosures.
10.4 Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of Georgia, applied without
giving effect to any conflict-of-laws principles.
10.5 "Including". The word "including," when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific terms or matters as provided immediately following the
word "including" or to similar items or matters, whether or not non-limiting
language (such as "without limitation," "but not limited to" or words of similar
import) is used with reference to the word "including" or the similar items or
matters, but rather shall be deemed to refer to all other items or matters that
could reasonably fall with the broadest possible scope of the general statement,
term or matter.
10.6 "Knowledge". "To the knowledge," "to the best knowledge,
information and belief' or any similar phrase, shall be deemed to include the
assurance that such knowledge is based upon a reasonable investigation, unless
otherwise expressly provided. Unless otherwise expressly provided herein, Seller
shall be deemed to have knowledge of any facts known to any Shareholder.
10.7 "Material". An individual claim, obligation or liability shall be
deemed to be "material" if the amount thereof exceeds [$3,000.00] or involves
the violation of any federal, state or local statute, rule or regulation. A
contract or lease shall be deemed to be material if it requires a
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single payment in excess of [$3,000.00] or payment for any future 12-month
period in excess of [$3,000.00], except that no contract for the acquisition of
inventory items or consumable supplies shall be deemed material unless such
contract cannot be terminated without cause by Seller on not more than 30 days
notice, or has, as of the Closing Date, an amount payable with respect thereto
of more than [$3,000.00].
10.8 "Material Adverse Change" or "Material Adverse Effect". "Material
Adverse Change" or "Material Adverse Effect" means, when used in connection with
the parties to this Agreement, any change, effect, event or occurrence that has,
or is reasonably likely to have individually or in the aggregate, a material
adverse impact on the business or financial position of such party and its
subsidiaries taken as a whole; provided, however, that "Material Adverse Change"
and "Material Adverse Effect" shall be deemed to exclude the impact of (i)
changes in generally accepted accounting principles, (ii) changes in applicable
law, and (iii) any changes resulting from any restructuring or other similar
charges or write-offs taken by Seller with the consent of PSC.
10.9 "Hazardous Materials". The term "Hazardous Materials" means any
material which is or may potentially be hazardous to the health or safety of
human or animal life or vegetation, regardless of whether such material is found
on or below the surface of the ground, in any surface or underground water,
airborne in ambient air or in the air inside any structure built or located upon
or below the surface of the ground or in building materials or in improvements
of any structures, or in any personal property located or used in any such
structure, including, but not limited to, all hazardous substances, imminently
hazardous substances, hazardous wastes, toxic substances, infectious wastes,
pollutants and contaminants from time to time defined, listed, identified,
designated or classified as such under any Environmental Laws (as defined in
Section 10.10) regardless of the quantity of any such material.
10.10 "Environmental Laws". The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any judicial
or administrative interpretation thereof, regulating the use, generation,
handling, storage, transportation, discharge, emission, spillage or other
release of Hazardous Materials or medical waste or relating to the protection of
the environment or the disposal of medical waste.
10.11 Appointment of Attorney-in-Fact. Effective at the Closing, Seller
hereby constitutes and appoints PSC, and its successors and assigns, the true
and lawful attorneys for Seller, with full power of substitution, in the name of
Seller, but on behalf of and for the benefit of and at the expense of PSC, to
institute and prosecute, in the name of Seller or otherwise, all proceedings
which PSC may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Assets, to defend and compromise any and
all actions, suits or proceedings in respect of any such Assets, and to do all
such acts and things in relation thereto as PSC shall deem advisable, subject to
applicable laws and regulations. Seller agrees that the foregoing powers shall
be coupled with an interest and shall be irrevocable by Seller or by its
dissolution or in any manner or for any reason. PSC shall retain for its own
account any amounts collected pursuant to the foregoing powers, including any
sums payable in respect thereof, and
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Seller shall pay to PSC, when received, any amounts which shall be received
by Seller in respect of any Assets.
10.12 Captions. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to describe,
define or limit the scope or intent of the provisions of this Agreement.
10.13 Integration of Exhibits. All Exhibits attached to this Agreement
are integral parts of this Agreement as if fully set forth herein, and all
statements appearing therein shall be deemed disclosed for all purposes and not
only in connection with the specific representation in which they are explicitly
referenced; provided, however, that any liabilities or obligations to be assumed
by PSC shall be set forth on Exhibit 1.3(b), and the inclusion of any
liabilities or obligations in any other Exhibits shall not be deemed or
construed to incorporate such liabilities or obligations into Exhibit 1.3(b).
10.14 Entire Agreement. This instrument, including all Exhibits
attached hereto, contains the entire agreement of the parties and supersedes any
and all prior or contemporaneous agreements between the parties, written or
oral, with respect to the transactions contemplated hereby. It may not be
changed or terminated orally, but may only be changed by an agreement in writing
signed by the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought.
10.15 Counterparts. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument.
10.16 Binding Effect. This Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. No party may assign any right or obligation hereunder without
the prior written consent of the other parties.
10.17 No Rule of Construction. The parties acknowledge that this
Agreement was initially prepared by PSC and that all parties have read and
negotiated the language used in this Agreement. The parties agree that, because
all parties participated in negotiating and drafting this Agreement, no rule of
construction shall apply to this Agreement which construes ambiguous language in
favor of or against any party by reason of that party's role in drafting this
Agreement.
10.18 Costs of Enforcement. In the event that PSC or Parent on the one
hand, or Seller or Shareholder, on the other hand, file suit in any court
against any other party to enforce the terms of this Agreement against the other
party or to obtain performance by it hereunder, the prevailing party will be
entitled to recover all reasonable out of pocket costs, including reasonable
attorneys' fees, from the other party as part of any judgment in such suit. The
term "prevailing party" shall mean the party in whose favor final judgment after
appeal (if any) is rendered with respect to the
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claims asserted in the Complaint. "Reasonable attorneys' fees" are those
attorneys' fees actually incurred in obtaining a judgment in favor of the
prevailing party.
10.19 Transfer of Assets; Assignment. The parties also hereby agree
that this Agreement shall not be assigned or transferred by either party without
the prior written consent of the other; provided, however, that this Agreement
may be assigned, in whole or in part, by PSC or Parent, in its sole discretion,
to any parent, subsidiary or affiliate of PSC or Parent or to any party
acquiring all or substantially all PSC's or Parent's assets. Any such assignment
shall not affect Parent's obligations hereunder or under any documents executed
by Parent pursuant to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
"PSC"
PSC MANAGEMENT CORP.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Secretary and Vice Chairman
----------------------------------
"PARENT"
PHYSICIANS' SPECIALTY CORP.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Title: Secretary and Vice Chairman
----------------------------------
"SELLER"
ATLANTA HEAD AND NECK
SURGERY, P.C.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
--------------------------------------
Title: President
----------------------------------
"SHAREHOLDER"
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, M.D.
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