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EXHIBIT 10.6
MASTER TRANSACTION AGREEMENT
BY AND AMONG
PHYSICIANS TRUST, INC.
OLD CLINIC
A.D. ▇▇▇▇▇▇, JR., (A.P.M.C.)
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INDEX
PAGE
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Assumed Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.5 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.6 Contribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.7 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.8 Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.11 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.12 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.13 Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.14 Hazardous Wastes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.15 Indemnity Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.16 Initial Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.17 Investment Representations Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.18 Management Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.19 Market Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.20 Medical Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.21 NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.22 NASDAQ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.23 New Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.24 New Clinic Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.25 New Clinic Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.26 New Clinic Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.27 New Clinic Organizational Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.28 Nonmedical Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.29 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.30 Old Clinic Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.31 Old Clinic Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.32 Old Clinic Balance Sheet Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.33 Physician Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.34 Physician Indemnified Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.35 Physician Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.36 Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.37 PTI Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.38 PTI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.39 PTI Indemnified Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
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Section 1.40 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.41 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.42 SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.43 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.44 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.45 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.46 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.47 Trading Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.48 Transaction Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 RESTRUCTURING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Pre-Closing Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Employment and Other Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.4 Execution of Management Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5 Noncompetition and Confidentiality Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 REPRESENTATIONS OF THE PHYSICIAN PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.1 Representations of the Physician Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.2 Representations of the Physician . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 4 REPRESENTATIONS OF PTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Representations of PTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 5 PRE-CLOSING COVENANTS OF OLD CLINICAND THE PHYSICIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.2 Access to Information and Records Before Closing . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1 Filing of Registration Statement; Other Action . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.2 Compliance with Conditions Precedent; Further Assurances . . . . . . . . . . . . . . . . . . . 23
Section 6.3 Certain Notifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.4 Amendment to Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.5 Physician Parties to Obtain Own Tax Advice . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.6 Investment Representations and Covenants of Physician . . . . . . . . . . . . . . . . . . . . . 25
Section 6.7 No Corporate Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.8 Current Public Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.9 Rule 144 Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.10 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.1 Conditions Precedent to the Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . 28
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Section 7.2 Conditions Precedent to the Obligations of PTI . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.3 Conditions Precedent to the Obligations of the Physician Parties . . . . . . . . . . . . . . . 29
ARTICLE 8 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.2 Deliveries to PTI at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.3 Deliveries to the Physician Parties at the Closing . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 9 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.1 Termination by Mutual Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.2 Termination by PTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.3 Termination by the Physician Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 9.4 Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 10 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 10.1 Indemnification by the Physician Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 10.2 Indemnification by PTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.3 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.4 Defense of Third Party Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 10.5 Payment of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 10.6 Liquidated Damages; Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 11 PIGGYBACK REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 11.1 Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 11.2 Covenants of PTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 11.3 Covenants of the Physician . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 11.4 Indemnification of Physician . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.5 Indemnification of PTI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 11.6 Defense of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 11.7 Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 12 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 12.1 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 12.2 Arbitrators. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 12.3 Applicable Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13.2 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13.4 Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 13.6 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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Section 13.7 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 13.8 Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 13.9 Reformation Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 13.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 13.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 13.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 13.13 Announcements and Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 13.14 Antidilution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 13.15 No Tax Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 13.16 No Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.17 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.18 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 13.19 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
EXHIBITS
A Asset Purchase Agreement
B Contribution Agreement
C Management Services Agreement
D New Clinic Charter
E New Clinic Bylaws
F New Clinic Operating Agreement
G New Clinic Organizational Minutes
H Subordinated, Non-negotiable Promissory Note
I Physician Employment Agreement
J Security Agreement
K General ▇▇▇▇ of Sale, Conveyance, Transfer and Assignment and Agreement
Regarding Assumption of Liabilities
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MASTER TRANSACTION AGREEMENT
This Master Transaction Agreement ("Master Transaction Agreement"),
dated and effective as of July 7, 1997, is by and among PHYSICIANS TRUST, INC.,
a Delaware corporation ("PTI"); A.D. ▇▇▇▇▇▇, JR. (A.P.M.C.), a Louisiana
professional medical corporation ("Old Clinic"); and A.D. ▇▇▇▇▇▇, JR., M.D.
("Physician").
RECITALS
A. Physician is a physician licensed to practice medicine in the
State of Louisiana. Physician currently conducts his orthopedic medical
practice through Old Clinic.
B. Physician desires to restructure his medical practice
currently conducted through Old Clinic by consummation of the transactions
described in this Master Transaction Agreement.
C. The parties to this Master Transaction Agreement desire to set
forth the terms and conditions upon which the restructuring described above
shall be accomplished and to agree upon other matters set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound hereby, the
parties agree as follows:
ARTICLE 1 DEFINITIONS
For purposes of this Master Transaction Agreement, the following
terms, in addition to other capitalized terms used in this Master Transaction
Agreement that are defined elsewhere herein, shall have the meanings set forth
herein.
Section 1.1 Asset Purchase Agreement. The Asset Purchase Agreement
to be executed by and between PTI and Old Clinic, substantially in the form set
forth in Exhibit A.
Section 1.2 Assumed Obligations. As defined in Section 2.3 of the
Asset Purchase Agreement.
Section 1.3 Closing. The closing of the transactions contemplated by
this Master Transaction Agreement.
Section 1.4 Closing Date. As defined in Section 2.2 hereof.
Section 1.5 Code. The Internal Revenue Code of 1986, as amended.
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Section 1.6 Contribution Agreement. The Contribution Agreement to be
executed between the Physician and New Clinic substantially in the form set
forth in Exhibit B.
Section 1.7 Disclosure Schedule. The disclosure schedule attached
hereto setting forth, with reference to the applicable section and subsection
of this Master Transaction Agreement, certain information and exceptions to the
representations, warranties and covenants of the Physician Parties.
Section 1.8 Environmental Claim. As defined in Section 10.1(a)(iv)
hereof.
Section 1.9 Environmental Laws. As defined in Section 3.1(m) hereof.
Section 1.10 ERISA. As defined in Section 3.1(l) hereof.
Section 1.11 Exchange Act. The Securities Exchange Act of 1934, as
amended.
Section 1.12 GAAP. Generally accepted accounting principles,
consistently applied.
Section 1.13 Governmental Authority. Any national, state,
provincial, local or tribal governmental, judicial or administrative authority
or agency.
Section 1.14 Hazardous Wastes. As defined in Section 3.1(m) hereof.
Section 1.15 Indemnity Loss. As defined in Section 10.1(a) hereof.
Section 1.16 Initial Public Offering. The initial public offering of
PTI Common Stock contemplated by the Registration Statement.
Section 1.17 Investment Representations Schedules. The schedule
attached hereto setting forth exceptions to the Physician's representations,
warranties and covenants set forth in Section 6.6 hereof.
Section 1.18 Management Services Agreement. The Management Services
Agreement to be executed between PTI and New Clinic substantially in the form
set forth in Exhibit C.
Section 1.19 Market Price. The market price per share of PTI Common
Stock determined in the following manner: (i) the closing price (which shall be
the last reported sales price, or, in case no such sales take place on such
date, the average of the closing bid and the asked prices) per share of the PTI
Common Stock on the principal national securities exchange on which the PTI
Common Stock is then listed or admitted to trading, if the PTI Common Stock is
then listed or admitted to trading on any national securities exchange; (ii) if
the PTI Common Stock is not then so listed on a national securities exchange,
the average of the closing bid and asked prices of the PTI Common Stock in the
over-the-counter market as reported by NASDAQ; (iii) if the PTI
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Common Stock is not then quoted by NASDAQ, as furnished by any member of NASD
selected by PTI for that purpose; or (iv) if no member of NASD furnishes quotes
with respect to the PTI Common Stock, an amount determined in good faith by the
board of directors of PTI.
Section 1.20 Medical Assets. As defined in Section 2.2 of the Asset
Purchase Agreement.
Section 1.21 NASD. The National Association of Securities Dealers,
Inc.
Section 1.22 NASDAQ. The National Association of Securities Dealers
Automated Quotation System.
Section 1.23 New Clinic. Bayou Orthopedic Center, A Professional
Medical Corporation, a Louisiana professional medical corporation formed in
accordance with the terms of this Master Transaction Agreement.
Section 1.24 New Clinic Charter. The Articles of Incorporation of
New Clinic substantially in the form set forth in Exhibit D.
Section 1.25 New Clinic Bylaws. The bylaws of New Clinic
substantially in the form set forth in Exhibit E.
Section 1.26 New Clinic Operating Agreement. The operating agreement
of New Clinic substantially in the form set forth in Exhibit F.
Section 1.27 New Clinic Organizational Minutes. The organizational
minutes of New Clinic substantially in the form set forth in Exhibit G.
Section 1.28 Nonmedical Assets. As defined in Section 2.1 of the
Asset Purchase Agreement.
Section 1.29 Note. The subordinated, non-negotiable promissory note
to be delivered to Physician at the Closing pursuant to this Master Transaction
Agreement substantially in the form set forth in Exhibit H.
Section 1.30 Old Clinic Audited Financial Statements. As defined in
Section 3.1(d) hereof.
Section 1.31 Old Clinic Balance Sheet. As defined in Section 3.1(d)
hereof.
Section 1.32 Old Clinic Balance Sheet Date. As defined in Section
3.1(d) hereof.
Section 1.33 Physician Employment Agreement. The Physician
Employment Agreement to be executed between Physician and New Clinic
substantially in the form set forth in Exhibit I.
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Section 1.34 Physician Indemnified Persons. As defined in Section
10.2 hereof.
Section 1.35 Physician Parties. The Physician and Old Clinic.
Section 1.36 Practice. The orthopedic, medical and all other related
health-care practices conducted from time to time by Old Clinic prior to
Closing and New Clinic on and after the Closing.
Section 1.37 PTI Audited Financial Statements. As defined in Section
4.1(e) hereof.
Section 1.38 PTI Common Stock. The Common Stock, par value $.001 per
share, of PTI.
Section 1.39 PTI Indemnified Persons. As defined in Section 10.1(a)
hereof.
Section 1.40 Real Property Leases. As defined in Section 2.1(h) of
the Asset Purchase Agreement.
Section 1.41 Registration Statement. As defined in Section 6.1(a)
hereof.
Section 1.42 SEC. The Securities and Exchange Commission.
Section 1.43 Securities. The Note and the shares of PTI Common Stock
to be issued to the Physician pursuant to this Master Transaction Agreement.
Section 1.44 Securities Act. The Securities Act of 1933, as amended.
Section 1.45 Taxes. As defined in Section 3.1(j) hereof.
Section 1.46 Termination Date. As defined in Section 9.4 hereof.
Section 1.47 Trading Day. Any day on which the New York Stock
Exchange Inc. or any successor entity is open for trading, or if the New York
Stock Exchange, Inc. and its successors cease to conduct a securities trading
business, any day on which any national securities exchange is open for
trading.
Section 1.48 Transaction Documents. This Master Transaction
Agreement, the Contribution Agreement, the Physician Employment Agreement, the
Management Services Agreement, the New Clinic Charter, the New Clinic Bylaws,
the New Clinic Operating Agreement, the New Clinic Organizational Minutes, the
Note, the Asset Purchase Agreement, the joinder of New Clinic contemplated by
Section 2.1(c) hereof and each other document and instrument executed and
delivered at this Closing.
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ARTICLE 2 RESTRUCTURING
Section 2.1 Pre-Closing Actions. Prior to the Closing, the following
actions shall occur in the order set forth in this Section 2.1:
(a) the Physician and Old Clinic shall terminate any
existing employment and other agreements, oral, written or otherwise,
between the Physician and Old Clinic;
(b) the Physician shall cause New Clinic to be duly
organized and, to that end, shall cause (i) the New Clinic Charter to
be filed with the Secretary of State of the State of Louisiana, (ii)
the New Clinic Bylaws to be executed and delivered, (iii) the New
Clinic Operating Agreement to be executed and delivered, (iv) the New
Clinic Organizational Minutes to be approved and (v) interests of New
Clinic to be issued to the Physician in the amount set forth in the
New Clinic Organizational Minutes for the consideration described
therein; and
(c) New Clinic shall execute and deliver a joinder to
this Master Transaction Agreement pursuant to which it agrees to be
bound by the terms and provisions of this Article 2, Section 6.7 and
Article 12 hereof.
Section 2.2 Closing. The Closing shall take place at 10:00 a.m.,
local time, at the offices of Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, on the first day following the
satisfaction of each condition set forth in Article 7 hereof, including
consummation of the transactions contemplated by the Initial Public Offering.
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date." At the Closing, the steps set out below will occur as provided herein.
(a) Asset Purchase Agreement. Old Clinic and PTI
shall execute and deliver the Asset Purchase Agreement, and subject to
its terms and conditions, on the Closing Date the Old Clinic shall
transfer, assign, convey and deliver the Assets to PTI, free and clear
of all security interests, liens, claims and encumbrances (other than
statutory liens arising in the ordinary course of business or other
liens that do not materially detract from the value or interfere with
the use of such properties or assets), PTI shall accept and acquire
the Assets from Old Clinic, and assume the Assumed Liabilities, and
PTI shall pay to Old Clinic the purchase price provided in the Asset
Purchase Agreement.
(b) Distribution of Medical Assets; Dissolution of
Old Clinic. After the occurrence of the events described in
Subsection (a) of this Section 2.2, Old Clinic shall dissolve and
convey, assign and distribute its remaining assets (consisting solely
of cash and Medical Assets) to the Physician.
(c) Contribution of Medical Assets. After the
occurrence of the events described in Subsection (b) of this Section
2.2, Physician and New Clinic shall execute and
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deliver a Contribution Agreement pursuant to which the Physician
shall contribute his undivided interest in the Medical Assets to New
Clinic.
Section 2.3 Employment and Other Arrangements. At the Closing, after
the occurrence of the events described in Section 2.2, New Clinic and the
Physician shall execute and deliver the Physician Employment Agreement,
complete with the noncompetition covenant attached thereto and forming a part
thereof, and the New Clinic Operating Agreement.
Section 2.4 Execution of Management Services Agreement. At the
Closing, after the occurrence of the events described in Section 2.3, PTI and
New Clinic shall execute and deliver the Management Services Agreement, and in
consideration of causing New Clinic to execute and deliver the Management
Services Agreement, PTI shall deliver the following consideration to the
Physician in the amounts and on the dates set forth below:
(a) At the Closing, PTI shall deliver to Physician
cash in the amount of $555,000. Payment of the cash amount may be
made, at the election of PTI, by delivery of a PTI check or by wire
transfer to bank accounts designated by the Physician.
(b) At the Closing, PTI shall deliver to the
Physician a Note in the original principal amount of $525,000. Such
Note shall bear interest at 7% per annum with interest paid annually.
The principal shall be paid in three separate payments of $175,000,
$175,000, and $175,000, on the third, fourth, and fifth anniversaries
of the Closing, respectively. Provided, however, that, to secure for
PTI the benefits contemplated by this Master Transaction Agreement,
and as an additional inducement for the performance by Physician of
his obligations hereunder and under the Physician Employment
Agreement, and in recognition that PTI's obligation to deliver cash
and securities to the Physician hereunder was incurred in reliance on
the assurances of the Physician contained in the respective
Transaction Documents, and that a material violation of the covenants
and obligations of Physician contained in any of the Transaction
Documents would result in a failure of consideration to PTI:
(i) in the event that PTI is entitled to indemnification from
Physician pursuant to Sections 10.1, 10.4 or 11.5 hereof, then PTI, at
its sole discretion, shall be entitled to set off any amount up to the
full amount of all Indemnity Losses and other payments entitled to be
received by PTI from the Physician pursuant to such provisions as
provided in Section 10.5 below; and
(ii) in the event that the Physician Employment Agreement
between New Clinic and Physician is terminated prior to the fifth
anniversary of the Closing Date, by New Clinic "for cause" (as defined
in the Physician Employment Agreement) or as a result of a Physician
Termination (as defined in the Physician Employment Agreement), then
PTI, at PTI's sole discretion, shall be entitled to cancel and set off
all amounts payable under the Note (or any renewal or replacement
thereof) delivered to the Physician pursuant to this
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Section 2.4(b), and upon such election by PTI, such Note shall be
deemed canceled, discharged and paid in full, and the Physician shall
redeliver such Note to PTI; provided, however, that in no event shall
PTI have any right to set-off against, cancel or recover any amount
payable to Physician under such Note after such amount has been paid
to such Physician.
(c) At any time after two years following the Closing
Date, at the election of the Physician, PTI will issue and deliver to
the Physician, such number of validly issued, fully paid and
nonassessable shares of PTI Common Stock having an aggregate value of
$600,000, based upon the Initial Public Offering Price; provided, that
notwithstanding the foregoing, no fractional share of PTI Common Stock
will be issued and in lieu thereof, the Physician will be entitled to
receive a cash payment reflecting the Physician's proportionate
interest in a share of PTI Common Stock multiplied by the Initial
Public Offering Price; provided, however, that, to secure for PTI the
benefits contemplated by this Master Transaction Agreement, and as an
additional inducement for the performance by the Physician of his
obligations hereunder and under the Physician Employment Agreement,
and in recognition that PTI's obligation to deliver cash and
securities to the Physician hereunder was incurred in reliance on the
assurances of the Physician contained in the respective Transaction
Documents, and that a material violation of the covenants and
obligations of the Physician contained in any of the Transaction
Documents would result in a failure of consideration to PTI:
(i) in the event that PTI is entitled to indemnification from
the Physician pursuant to Sections 10.1, 10.4 or 11.5 hereof, then
PTI, at its sole discretion, shall be entitled to set off any amount
up to the full amount of all Indemnity Losses and other payments
entitled to be received by PTI from Physician, as provided in Section
10.5 below, by canceling a number of shares of PTI Common Stock
entitled to be received by the Physician hereunder, and by terminating
PTI's obligation to deliver such shares to the Physician, which
represent an amount, valued at the average Market Price per share
during the ten Trading Days immediately preceding the date payment was
due under Section 10.5, which is equal to the amount of such Indemnity
Losses and other payments due to PTI which PTI has elected to set off;
and
(ii) in the event that the Physician Employment Agreement
between New Clinic and the Physician is terminated prior to the fifth
anniversary of the Closing Date by New Clinic for "cause" (as defined
in the Physician Employment Agreement) or as a result of a Physician
Termination (as defined in the Physician Employment Agreement), then
PTI, at PTI's sole discretion, shall be entitled to cancel any and all
shares of PTI Common Stock entitled to be received by Physician
hereunder and PTI shall be entitled to terminate its obligation to
deliver any and all such shares to be delivered to the Physician
pursuant to this Section 2.4(c), and upon such election by PTI, all
such shares, and all Physician rights with respect thereto, shall be
deemed canceled, discharged and terminated in all respects; provided,
however, that in no event shall PTI have any right to set-off
against,
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cancel or recover any shares of PTI Common Stock after such shares
have been delivered to such Physician.
(d) PTI's remedies provided in Sections 2.4(b) and
2.4(c) above are not, and shall not be deemed to be, exclusive
remedies for breach of any provision of this Agreement or any other
Transaction Document, and PTI may elect to exercise any or all
applicable remedies available under such Sections, together with any
or all other remedies available to PTI under the Transaction
Documents, and any or all remedies available at law or in equity.
(e) With regard to Physician hereunder, provided that
Physician is not in default or other breach under the terms of any
Transaction Documents, in the event that (i) PTI defaults in payments
of principal or interest due under terms of its Note delivered to
Physician, and PTI fails to cure such default within any applicable
grace period provided in such instrument, or (ii) PTI fails to issue
and deliver duly authorized, validly issued, fully paid and
nonassessable shares of PTI Common stock within sixty days following
written notice from Physician of his election to take delivery of such
shares pursuant to Section 2.4(c) above, or (iii) PTI or its
affiliates, successors or assigns, breaches any obligation owed to New
Clinic or Physician under this Master Transaction Agreement or any
agreement executed pursuant to the provisions hereof and fails to cure
such breach as provided in the applicable agreement, then, in either
such event, upon ninety days' prior written notice from such Physician
to PTI: (") Physician at his option shall be entitled to repurchase
the assets acquired by PTI pursuant to the Asset Purchase Agreement
pursuant to the terms and conditions provided therein, except that the
Physician shall assume the role of buyer, and PTI shall assume the
role of seller; (B) the purchase price for all such assets shall be an
amount equivalent to the book value thereof; (C) concurrently with
closing of the Physician's repurchase of assets, Physician, New Clinic
and PTI will each consent to termination of all obligations arising
under Physician Employment Agreement, and each will agree to immediate
termination of all compensation payable thereunder for periods after
the repurchase closing date; (D) PTI's remaining payment obligations
under this Master Transaction Agreement, including all payment
obligations under the Note and all obligations to deliver PTI Common
Stock, shall be deemed canceled, discharged and terminated in all
respects; (E) the Management Services Agreement will be terminated,
canceled and discharged; and (F) Physicians shall be entitled to
retain all cash and PTI Common Stock previously paid or delivered to
him. In any such event, PTI, New Clinic and Physician shall execute
all documents and instruments reasonably required to consummate the
transactions described above; and PTI shall use its reasonable best
efforts to insure that Physician acquires such assets free and clear
of any liens.
Section 2.5 Noncompetition and Confidentiality Covenants. In
connection with the consummation of the transactions contemplated by this
Master Transaction Agreement, and by executing and delivering certain of the
other Transaction Documents, the Physician Parties and New Clinic will be
entering into certain noncompetition and confidentiality covenants. The
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Physician Parties and New Clinic recognize that such covenants are an essential
part of the transactions contemplated by this Master Transaction Agreement and
certain other Transaction Documents and that, but for the contemplated
agreement of the Physician Parties to comply with such covenants, PTI would not
have entered into this Master Transaction Agreement.
ARTICLE 3 REPRESENTATIONS OF THE PHYSICIAN PARTIES
Section 3.1 Representations of the Physician Parties. The Physician
Parties jointly and severally represent and warrant to PTI that:
(a) Organization, Valid Authorization and Good
Standing. Old Clinic is a Louisiana professional medical corporation
duly organized, validly existing and in good standing under the laws
of the State of Louisiana. New Clinic will be a professional medical
corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana on and after the Closing
Date. Old Clinic has the power and authority to own all of its
properties and assets and to conduct the Practice prior to the Closing
Date. New Clinic will have the power and authority to own all of its
properties and assets and to conduct the Practice on and after the
Closing Date. Old Clinic has, and New Clinic will have, the power and
authority to enter into the Transaction Documents to which it is a
party and to carry out its obligations thereunder. The execution and
delivery of the Transaction Documents to which Old Clinic will be a
party and the consummation of the transactions contemplated thereby
have been duly and validly authorized by Old Clinic, and no other
corporate or other proceedings on the part of Old Clinic are necessary
to authorize such Transaction Documents and the transactions
contemplated thereby. The execution and deliver of the Transaction
Documents to which New Clinic will be a party and the consummation of
the transactions contemplated thereby will be duly and validly
authorized by New Clinic, and no other corporate or other proceedings
on the part of New Clinic will be necessary to authorize such
Transaction Documents and the transactions contemplated thereby. This
Master Transaction Agreement has been duly and validly executed and
delivered by Old Clinic and constitutes the valid and binding
agreement of Old Clinic enforceable against it in accordance with its
terms. Each Transaction document executed and delivered by Old Clinic
or New Clinic will upon such execution and deliver constitute the
valid and binding agreement of such party enforceable against it in
accordance with its terms, except as enforcement in general may be
limited by any applicable bankruptcy, insolvency, reorganization or
other laws affecting creditor's rights generally or by the application
of equitable remedies.
(b) Compliance. Except as disclosed on the
Disclosure Schedule, the execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated
thereby by Old Clinic and New Clinic will not (i) violate any
provision of their respective organizational documents, (ii) violate
any material provisions of or result in the breach of or entitle any
part to accelerate (whether after the giving of notice or lapse of
time or both) any material obligation under, any mortgage, lien,
lease,
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contract, license, instrument or any other agreement to which Old
Clinic is a party or New Clinic, on the Closing Date, will be a party,
(iii) result in the creation or imposition of any material lien,
charge, pledge, security interest or other material encumbrance upon
any property of Old Clinic or New Clinic or (iv) to the best of the
Physician Parties' knowledge, violate or conflict with any order,
award, judgment or decree or other material restriction or any law,
ordinance or regulation to which Old Clinic or New Clinic or its
property is or will be subject.
(c) Approvals. To the best of Physician Parties'
knowledge, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority
or other person is required in connection with the execution and
delivery of the Transaction Documents by Old Clinic or New Clinic or
the consummation by it of the transactions contemplated thereby,
except for those consents or approvals set forth in the Disclosure
Schedule.
(d) Financial Statements. Old Clinic has furnished
to the PTI Old Clinic's audited financial statements for the year
ended December 31, 1995, and for the nine months ended September 30,
1996, consisting of a balance sheet, the related statements of income
and changes in stockholders' equity, (collectively, the "Audited
Financial Statements"). Except as disclosed on the Disclosure
Schedule, Old Clinic's Audited Financial Statements (i) have been
prepared in accordance with GAAP, (ii) are true, complete and correct
in all material respects as of the respective dates and for the
respective periods above stated and (iii) fairly present the financial
position of Old Clinic at such dates and the results of its operations
for the periods ended on such dates. Except as set forth in the
Disclosure Schedule, each of Old Clinic's Audited Financial Statements
reflects all of the liabilities and obligations of Old Clinic that are
required to be reflected or disclosed therein in accordance with GAAP.
For purposes of this Master Transaction Agreement, the balance sheet of
Old Clinic included in Old Clinic's Audited Financial Statements is
referred to as the "Old Clinic Balance Sheet" and the date thereof is
referred to as the "Old Clinic Balance Sheet Date."
(e) Undisclosed Liabilities. To the best of the
Physician Parties' knowledge, Old Clinic does not have any liability
(whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
whether due or to become due, and whether ▇▇▇▇▇▇ or inchoate)
individually or in the aggregate in excess of $5,000, and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against Old Clinic
giving rise to any liability, except as set forth on Old Clinic
Balance Sheet, or on the Disclosure Schedule.
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(f) Absence of Changes or Events. Except as set
forth on the Disclosure Schedule, since the Old Clinic Balance Sheet
Date, Old Clinic has conducted the Practice only in the ordinary
course of business, and Old Clinic has not:
(i) Incurred any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to
become due, whether individually or in the aggregate, that has
had or might have a material adverse effect on Old Clinic or
the Practice;
(ii) Pledged or subjected to any material lien,
charge, security interest or any other encumbrance or
restriction on any of its assets;
(iii) Sold, transferred, leased to others or
otherwise disposed of any of its assets material to the
operation of the Practice, except in the ordinary course of
the business of Old Clinic;
(iv) Canceled or compromised any material debt
or claim, or waived or released any right of substantial
value;
(v) Received any notice of termination of any
contract, lease or other agreement, or suffered any damage,
destruction or loss that, individually or in the aggregate,
has had or might have a material adverse effect on Old Clinic
or the Practice;
(vi) Instituted, settled or agreed to settle any
litigation, action, proceeding or arbitration;
(vii) Failed to replenish its inventory or
supplies in a normal and customary manner or made any material
purchase commitment other than in the ordinary course of
business of Old Clinic;
(viii) Failed to pay any accounts or note
payable or any other obligations on a timely basis consistent
with the practices of Old Clinic during the three-month period
ending with the date of execution of the letter of intent
among PTI and the Physician Parties;
(ix) Entered into any material transaction,
contract or commitment other than in the ordinary course of
the business of Old Clinic;
(x) Suffered any event or events, whether
individually or in the aggregate, that has had or could be
reasonably expected to have a material adverse effect on the
financial condition, results of operations, properties,
assets, liabilities, business, operations or prospects of Old
Clinic or the Practice;
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(xi) Made any material change in the rate of
compensation, commission, bonus or other remuneration payable,
or paid or agreed to pay any material bonus, extra
compensation, pension, severance or vacation pay, to any
partner or employee;
(xii) Issued any equity interests, declared or
paid any distribution or entered into any agreement or
understanding to do or engage in any of the foregoing actions;
(xiii) Engaged in any activities or practices
other than the Practice; or
(xiv) Entered into any agreement or made any
commitment to take any of the actions described in Subsections
(i) through (xiii) inclusive of this Section 3.1(f).
(g) Litigation. Except as disclosed on the
Disclosure Schedule, there are no material claims, actions, suits,
proceedings (arbitration or otherwise) or investigations pending or,
to the best of the Physician Parties' knowledge, threatened against
Old Clinic or the Practice at law or in equity in any court or before
or by any Governmental Authority, and, to the best of the Physician
Parties' knowledge, there are no, and have not been any, facts,
conditions or incidents that may result in any such actions, suits,
proceedings (arbitration or otherwise) or investigations. To the best
of the Physician Parties' knowledge, neither Old Clinic nor the
Practice is in default in respect of any judgment, order, writ,
injunction or decree of any court or other Governmental Authority.
(h) Permits; Compliance with Laws. Old Clinic has
all permits, licenses, orders, and approvals of all Governmental
Authorities material to the conduct of the Practice, a true and
correct list of which is set forth on the Disclosure Schedule. To the
best of the Physician Parties' knowledge, all such permits, licenses,
orders and approvals are in full force and effect, and no suspension
or cancellation of any of them is pending or threatened. To the best
of the Physician Parties' knowledge, none of such permits, licenses,
orders or approvals, and no application for any of such permits,
licenses, orders or approvals, will be adversely affected by the
consummation of the transactions contemplated by this Master
Transaction Agreement or any other Transaction Document. Except as
set forth on the Disclosure Schedule, no consent or approval is
required for, and no other impediment or restriction exists that will
prohibit or limit, the transfer of any of such permits, licenses,
orders and approvals (and any applications therefor) in accordance
with the terms of the Transaction Documents. The Physician Parties
have not received any written notice of violation that Old Clinic in
its conduct of the Practice has not complied in any material respects
with any rule or regulation of any Governmental Authority having
authority over Old Clinic, including without limitation, agencies
concerned with occupational safety, environmental protection,
employment practices, and Medicare and
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Medicaid requirements applicable to Old Clinic's billing procedures
(except denials of claims in the ordinary course of business).
(i) Insurance. The Disclosure Schedule sets forth a
complete and correct list of all insurance policies obtained and
maintained by Old Clinic or the Physician in connection with the
operation of the Practice. Such insurance policies are in full force
and effect, and all premiums due on such policies have been paid. The
insureds under each such policy have complied in all material respects
with the provisions of all such policies. Except as set forth on the
Disclosure Schedule, no consent or approval is required for, and no
other impediment or restriction exists that will prohibit or limit,
the transfer of any such insurance policies included within the
Nonmedical Assets in accordance with the terms of the Asset Purchase
Agreement. Old Clinic and the Physician have made available to PTI
complete and correct copies of all such policies, together with all
riders and amendments thereto. Old Clinic and the Physician have also
set forth on the Disclosure Schedule a list of malpractice insurance
policies previously maintained within the last ten (10) years by them.
They have also set forth on such Disclosure Schedule a list of all
malpractice claims and similar types of claims, actions or proceedings
asserted against any of the Physician or Old Clinic at any time within
the last ten (10) years.
(j) Tax Matters. To the best of the Physician
Parties' knowledge, all federal, state, local and foreign tax returns
required to be filed by Old Clinic prior to the date hereof have been
filed on a timely basis with the appropriate Governmental Authorities
in all jurisdictions in which such returns are required to be filed
and all such returns are true and correct. To the best of the
Physician Parties' knowledge, all federal, state, local and foreign
income, franchise, sales, use, property, and all other taxes, fees,
assessments or other governmental charges (including withholding
taxes), and all interest and penalties thereon (all of the foregoing,
collectively "Taxes") due from, or properly accruable by, Old Clinic
with respect to taxable periods ending on or prior to, and the portion
of any interim period through, the date hereof have been fully and
timely paid or, in the case of Taxes for which payment is not yet
required, properly and fully accrued for on Old Clinic Audited
Financial Statements (or, in the case of Taxes that have accrued since
Old Clinic Balance Sheet Date, on Old Clinic Audited Financial
Statements). PTI will not after the Closing owe, or be liable
directly or indirectly, to any other person or entity for any taxes
imposed upon Old Clinic. Old Clinic is not currently the subject of
any audit, examination or any similar investigation by any
Governmental Authority. The Disclosure Schedule sets forth all
audits, examinations or similar investigations of Old Clinic by any
Governmental Authority since January 1, 1991. The consummation of the
transactions contemplated by the Asset Purchase Agreement will not be
subject to any sales or other transfer tax of any state or local
taxing authority.
(k) Contracts. Set forth on the Disclosure Schedule
is a complete and correct list of all material agreements, contracts
and commitments, written or oral, to which Old Clinic is a party or by
which it or any of its properties or the Practice is bound,
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including without limitation: (i) mortgages indentures, note, letters
of credit, security agreements and other agreements and instruments
relating to the borrowing of money by or extension of credit to or by
Old Clinic; (ii) employment and consulting agreements, employee
benefit, profit-sharing and retirement plans and all collective
bargaining agreements; (iii) all joint venture or partnership
agreements to which Old Clinic is a party; (iv) licenses of software
and any patent, trademark and other intellectual property rights; (v)
agreements or commitments for capital expenditures; (vi) brokerage or
finder's agreements; (vii) agreements regarding clinical research; and
(viii) agreements with payors, leases for real or personal property
and contracts to provide medical or healthcare services. Old Clinic
has made available to PTI complete and correct copies of all written
agreements, contracts and commitments, together with all amendments
thereto, and accurate descriptions of all oral agreements, set forth
on the list on the Disclosure Schedule. All such agreements,
contracts and commitments are in full force and effect and, to the
best of the Physician Parties' knowledge, all parties thereto have
performed all material obligations required to be performed by them to
date, are not in default in any material respect thereunder, and have
not violated any representation or warranty, explicit or implied,
contained therein. No claim or default by any party has been made or
is now pending under any such agreement, contract or commitment, and,
to the best of the Physician Parties' knowledge, no event has occurred
and is continuing that with notice or the passing of time or both
would constitute a default thereunder or would excuse performance by
any party thereto. Except as set forth in the Disclosure Schedule, no
consents or approvals are required under the terms of any agreement
listed on the Disclosure Schedule in connection with any of the
transactions contemplated by the Transaction Documents including,
without limitation, the transfer of any such agreement pursuant to the
Asset Purchase Agreement.
(l) Employee Benefit Plans. Except as set forth on
the Disclosure Schedule, neither Old Clinic nor any other entity,
whether or not incorporated, which is deemed to be under common
control (as defined in Section 414 of the Code or 4001(b) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
with Old Clinic ("Commonly Controlled Entity") maintains or
contributes to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) that is a defined contribution plan described
in Section 3(34) of ERISA or Section 414(i) of the Code, or that is a
defined benefit plan described in Section 3(35) of ERISA or Section
414(j) of the Code, and that gives, or will give, rise to any
liability of Old Clinic for (i) any premium payments due under Section
4007 of ERISA with respect to any such defined benefit plan, or (ii)
any unpaid minimum funding contributions that would result in the
imposition of a lien on any assets of Old Clinic pursuant to Section
412(c)(11) of the Code or Section 302(c)(11) of ERISA. Neither Old
Clinic nor any Commonly Controlled Entity sponsors or sponsored, or
maintains or maintained, any defined benefit plan (described in the
immediately preceding sentence) that has been, or will be, terminated
in a manner that would result in any liability of Old Clinic to the
Pension Benefit Guaranty Corporation or that would result in the
imposition of a lien on any assets of Old Clinic pursuant to Section
4068 of ERISA.
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At no time during the five (5) consecutive year period immediately
preceding the first day of the year in which the Closing Date occurs
has Old Clinic or any Commonly Controlled Entity participated in or
contributed to any multiemployer plan defined in Section 4001(a)(3) of
ERISA, or Section 414(f) of the Code, nor during such period has Old
Clinic or any Commonly Controlled Entity had an obligation to
participate in or contribute to any such multiemployer plan. Except
as set forth on the Disclosure Schedule, Old Clinic is not obligated
under any agreement or other arrangement pursuant to which
compensation or benefits will become payable as a result of the
consummation of the transactions contemplated in this Master
Transaction Agreement. Neither Old Clinic nor any of its respective
directors, officers, employees or agents, has, with respect to any
employee benefit plan (as defined in Section 3(3) of ERISA), that is
or has been established by or contributed to, or with respect to which
costs or liabilities are accrued by Old Clinic engaged in any conduct
that would result in any material taxes or penalties on prohibited
transactions under Section 4975 of the Code or under Section 502(i) or
(1) of ERISA or in breach of fiduciary duty liability under Section
409 of ERISA which, in the aggregate, could be material to the
business, financial condition or results of operation of Old Clinic,
taken as a whole, and no actions, investigations, suits or claims with
respect to the fiduciaries, administrators or assets of any such
employee benefit plan (other than routine claims for benefits) is
pending or threatened, which, in the aggregate, could reasonably be
expected to give rise to material liability of Old Clinic, or which
could be material to the business, financial condition or results of
operations of Old Clinic, taken as a whole. None of the Old Clinic
welfare benefit plans (as defined in Section 3(1) of ERISA) provides
for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of Old Clinic
other than Acontinuation coverage" required under the Controlled
Omnibus Budget Reconciliation Act of 1985. Any and all plans,
policies, programs or arrangements of Old Clinic or any Commonly
Controlled Entity which are subject to Section 4980B of the Code have
been and are in compliance with the requirements of Section 4980B of
the Code and Part 6 of Title I of ERISA. Old Clinic will remain fully
liable with respect to all plans, programs, policies or other
arrangements, including but not limited to any pension,
profit-sharing, thrift or other retirement plan; deferred
compensation; or any other pension benefit plan of any kind; stock
ownership, stock purchase, performance share, bonus or other incentive
plan; severance plan; disability, medical, dental, vision or other
health plan; life insurance or death benefit plan; vacation, sick
leave, holiday or other paid leave plan; cafeteria plan, medical
flexible spending account reimbursement plan; dependent care plan; or
any other welfare benefit plan of any kind; or any other benefit plan,
policy, program or arrangement whether or not any such plan, policy,
program or other arrangement is, or is intended to be, qualified under
Section 401(a) of the Code, and whether or not any such plan, policy,
program or arrangement is subject to the provisions of ERISA, and PTI
will not be required to assume by law or under any form of any such
plans, policies, programs or arrangements any of the liabilities for
or under such plans, policies, programs or arrangements.
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(m) Environmental Protection. Old Clinic has
obtained all permits, licenses and other authorizations that are
required for the conduct of its Practice under any federal, state and
local laws and the regulations promulgated thereunder relating to
pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of hazardous
substances, materials or wastes (collectively, "Hazardous Wastes"),
into the environment (including, without limitation, ambient air,
surface water, ground water, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of Hazardous Wastes (collectively,
"Environmental Laws"). Old Clinic and the Practice is in material
compliance with all terms and conditions of such required permits,
licenses and authorizations, and is also in compliance with all
applicable Environmental Laws. Except as set forth on the Disclosure
Schedule, no consent or approval is required for, and no other
impediment or restriction exists that will prohibit or limit, the
transfer of such permits, licenses and authorizations in accordance
with the terms of the Asset Purchase Agreement. There are no pending
or, to the best of Physician Parties' knowledge, threatened,
investigations, actions or proceedings of whatsoever nature involving
Old Clinic or the Practice arising under any Environmental Law.
(n) Labor Matters. Except as described on the
Disclosure Schedule, none of the employees of Old Clinic is
represented by any union or other collective bargaining
representative, and there are no contracts for the employment of any
officer or employee of Old Clinic in effect. Old Clinic is not aware
of any organizational efforts by any union directed towards any of the
employees of Old Clinic. Except as listed on the Disclosure Schedule,
there has not been, nor to the knowledge of Old Clinic is there
threatened or contemplated, any strike, slowdown, picketing or work
stoppage by any employees of Old Clinic, any lockout of any of such
employees or any labor trouble or other occurrence, event or condition
of a similar character materially affecting, individually or in the
aggregate, the operations, assets, properties or prospects of Old
Clinic or the Practice.
(o) Employees. The Disclosure Schedule sets forth a
complete list of the names and positions held of all employees of Old
Clinic, and the current annual rate of compensation (including
bonuses) paid to each such employee.
(p) Brokers. All negotiations relating to the
Transaction Documents and the transactions contemplated hereby have
been carried on without the intervention of any person acting on
behalf of the Physician Parties as a group in such manner as to give
rise to any valid claim for any broker's or finder's fee or similar
compensation.
(q) Disclosure. To the best of the Physician
Parties' knowledge, no representation, warranty or statement made by
any of the Physician Parties in this Master Transaction Agreement or
any of the exhibits or schedules hereto, or any agreements,
certificates, documents or instruments delivered or to be delivered to
PTI in accordance with this Master Transaction Agreement or the other
Transaction Documents, contains or
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will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances under which
they were made, not misleading. The Physician Parties do not know of
any fact or condition (other than general economic conditions or
legislative or administrative changes in health-care delivery) which
materially adversely affects, or in the future may materially adverse
affect, the condition, properties, assets, liabilities, business,
operations or prospects of the Practice which has not been set forth
herein or in the Disclosure Schedule.
Section 3.2 Representations of the Physician. Physician represents
and warrants to PTI as to himself that:
(a) Valid Authorization. Physician is competent and
has full power, capacity and authority to enter into the Transaction
Documents to which he is a party and to carry out his obligations
thereunder. This Master Transaction Agreement has been duly and
validly executed and delivered by Physician and constitutes the valid
and binding agreement of Physician enforceable against him in
accordance with its terms. Each Transaction Document executed and
delivered at the Closing by the Physician will upon such execution and
delivery constitute the valid and binding agreement of the Physician
enforceable against the Physician in accordance with its terms, except
as enforcement in general may be limited by any applicable bankruptcy,
insolvency, reorganization or other laws affecting creditor's rights
generally or by the application of equitable remedies.
(b) Compliance. Except as set forth on the Disclosure
Schedule, the execution and delivery of the Transaction Documents and
the consummation of the transactions contemplated thereby by Physician
will not (i) violate any material provision of or result in the breach
of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any material obligation under any
mortgage, lien, lease, contract, license, instrument or any other
agreement to which the Physician is a party, (ii) result in the
creation or imposition of any material lien, charge, pledge, security
interest or other encumbrance upon any property of the Physician or
(iii) to the best of the Physician's knowledge, violate or conflict
with any order, award, judgment or decree or other material
restriction or any law, ordinance or regulation to which the Physician
or the property of the Physician is subject.
(c) Approvals. To the best of Physician's knowledge,
no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority or other person
is required in connection with the execution and delivery of the
Transaction Documents by the Physician or the consummation by the
Physician of the transactions contemplated thereby.
(d) Litigation. Except as disclosed on the
Disclosure Schedule, there are no claims, actions, suits or
proceedings (arbitration or otherwise) pending or, to the
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Physician's knowledge, threatened against the Physician at law or at
equity in any court or before or by any Governmental Authority arising
out of or otherwise relating to the Physician's practice of medicine,
and to Physician's knowledge, there are no, and within the last five
(5) years have not been any, facts, conditions or incidents that may
result in any such actions, suits, proceedings (arbitration or
otherwise) or investigations. The Physician is not in default in
respect of any judgment, order, writ, injunction or decree of any
court or other Governmental known to the Physician. Except as set
forth on the Disclosure Schedule, there have been no disciplinary,
revocation or suspension proceedings or similar types of claims,
actions or proceedings, hearings or investigations against any of the
Physician or Old Clinic within the last five (5) years.
(e) Permits. To the best of the Physician's
knowledge, the Physician has all permits, licenses, orders and
approvals of all Governmental Authorities necessary to perform the
services performed by the Physician in connection with the conduct of
the Practice. All such permits, licenses, orders and approvals are in
full force and effect and no suspension or cancellation of any of them
is pending or threatened. To the best of the Physician's knowledge,
none of such permits, licenses, orders or approvals, and no
application for any of such permits, licenses, orders or approvals
will be adversely affected by the consummation of the transactions
contemplated by the Transaction Documents. The Physician is a
participating physician, as such terms is defined by the Medicare
program, and the Physician has not been disciplined, sanctioned or
excluded from the Medicare program and has not been subject to any
plan of correction imposed by any professional review body within the
last five (5) years.
(f) Staff Privileges. The Disclosure Schedule lists
all hospitals at which the Physician has full staff privileges. Such
staff privileges have not been revoked, surrendered, suspended or
terminated, and to the Physician's knowledge, there are no, and have
not been any, facts, conditions or incidents that may result in any
such revocation, surrender, suspension or termination.
(g) Brokers. All negotiations relating to the
Transaction Documents and the transactions contemplated hereby have
been carried on without the intervention of any person acting on
behalf of the Physician in such manner as to give rise to any valid
claim for any broker's or finder's fee or similar compensation.
(h) Intentions. Except as set forth on the
Disclosure Schedule, from and after the Closing Date, the Physician
intends to continue practicing medicine on a full-time basis for the
next five (5) years with New Clinic and does not know of any fact or
condition that materially adversely affects, or in the future may
materially adversely affect, his ability or intention to practice
medicine on a full-time basis for the next five years with New Clinic.
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(i) Disclosure. The Physician does not know of any
fact or condition (other than general economic conditions or
legislative or administrative changes in healthcare delivery) that
materially adversely affects, or in the future may materially
adversely affect, the condition, properties, assets, liabilities,
business, operations or prospects of the Practice that has not been
set forth herein or in the Disclosure Schedule.
ARTICLE 4 REPRESENTATIONS OF PTI
Section 4.1 Representations of PTI. PTI jointly and severally
represents and warrants to Physician that:
(a) Organization, Valid Authorization and Good
Standing. PTI is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. PTI has the
power and authority to own all of its properties and assets and to
conduct its business. PTI has the power and authority to enter into
the Transaction Documents to which it is a party and to carry out its
obligations thereunder. The execution and delivery of the Transaction
Documents to which it is a party and the consummation of the
transactions contemplated thereby have been duly and validly
authorized by the Board of Directors of PTI, and no other corporate or
other proceedings on the part of PTI are necessary to authorize the
Transaction Documents and the transactions contemplated thereby. This
Master Transaction Agreement has been duly and validly executed and
delivered by PTI and constitutes the valid and binding agreement of
PTI enforceable against PTI, in accordance with its terms. Each
Transaction Document executed and delivered at the Closing by PTI will
upon such execution and delivery constitute the valid and binding
agreement of PTI, enforceable against PTI in accordance with its
terms.
(b) Compliance. The execution and delivery of the
Transaction Documents and the consummation of the transactions
contemplated thereby by PTI will not (i) violate any provision of
their respective charters or bylaws, (ii) violate any material
provision of or result in the breach of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or
both) any material obligation under, any mortgage, lien, lease,
contract, license, instrument or any other agreements to which PTI is
a party, (iii) result in the creation or imposition of any material
lien, charge, pledge, security interest or other encumbrance upon any
property of PTI or (iv) violate or conflict with any order, award,
judgment or decree or other material restriction or any law, ordinance
or regulation to which PTI or the property of PTI is subject.
(c) Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority or other person is required in connection with
the execution and delivery of the Transaction Documents by PTI or the
consummation by PTI of the transactions contemplated thereby, except
for (i) any filings and approvals required under the rules and
regulations of the Securities and
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Exchange Commission, and (ii) (filings and approvals required by the
Blue Sky laws of the various states.
(d) Capitalization. The authorized capital stock of
PTI consists of (i) 8,000,000 shares of PTI Common Stock of which, as
of the date of this Master Transaction Agreement, of which 3,270,000
shares are issued and outstanding, and (ii) 2,000,000 shares of Serial
Preferred Stock, $.001 par value per share, none of which is
outstanding. All of the issued and outstanding shares of PTI Common
Stock are, and all shares of PTI Common Stock to be issued pursuant to
the transactions described in Article 2 of this Master Transaction
Agreement will be, validly issued, fully paid and non-assessable.
(e) Financial Statements. PTI has furnished to the
Physician Parties PTI's audited financial statements for the year
ended December 31, 1995, and for the nine-month period ending
September 30, 1996, consisting of a balance sheet, the related
statement of income and changes in stockholders' equity (the "PTI
Audited Financial Statements"). Except as disclosed on the Disclosure
Schedule, the PTI Audited Financial Statements (i) have been prepared
in accordance with GAAP, (ii) are true, complete and correct in all
material respects as of their date and for the period above stated and
(iii) fairly present the financial position of PTI at such date and the
results of its operations for the period ended on such date. Except as
set forth on the Disclosure Schedule, the PTI Audited Financial
Statements reflect all of the liabilities and obligations of PTI that
are required to be reflected or disclosed therein in accordance with
GAAP.
(f) Litigation. Except as disclosed on the
Disclosure Schedule, there are no claims, actions, suits, proceedings
(arbitration or otherwise) or investigations pending or, to either of
PTI's knowledge, threatened against PTI at law or in equity in any
court or before or by any Governmental Authority, and, to PTI's
knowledge, there are no, and have not been any, facts, conditions or
incidents that may result in any such actions, suits, proceedings
(arbitration or otherwise) or investigations. PTI is not in default
in respect of any judgment, order, writ, injunction or decree of any
court or other Governmental Authority.
(g) Brokers. All negotiations relating to the
Transaction Documents and the transactions contemplated hereby have
been carried on without the intervention of any person acting on
behalf of PTI in such manner as to give rise to any valid claim for
any broker's or finder's fee or similar compensation.
(h) Disclosure. No representation, warranty or
statement made by PTI in this Master Transaction Agreement or any of
the exhibits or schedules hereto, or any agreements, certificates,
documents or instruments delivered or to be delivered to the Physician
Parties in accordance with this Master Transaction Agreement or the
other Transaction Documents or in the Private Placement Memorandum
dated December 31,
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1996, together with, or as amended by, any supplement to such Private
Placement Memorandum, contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein, in light
of the circumstances under which they were made, not misleading.
ARTICLE 5 PRE-CLOSING COVENANTS OF OLD CLINIC
AND THE PHYSICIAN
Section 5.1 Conduct of Business. From the date hereto to the
Closing, except with the prior written consent of PTI, or except as otherwise
provided for in this Master Transaction Agreement, Old Clinic will, and the
Physician will use their best efforts to cause Old Clinic to:
(a) carry on its business in, and only in, the usual,
regular and ordinary course in substantially the same manner as
heretofore and use its best efforts to preserve intact its present
business organization, keep available the services of its present
officers and employees, and preserve its relationships with customers,
contractors, institutional healthcare providers, healthcare
professionals and others having business dealings with it to the end
that its goodwill and going business shall be unimpaired on the
Closing Date;
(b) keep in full force and effect insurance
comparable in amount and scope of coverage to insurance now carried by
it;
(c) perform all of its obligations under agreements,
contracts and instruments relating to or affecting its properties,
assets and business;
(d) maintain its books of account and records in the
usual, regular and ordinary manner;
(e) comply with all statutes, laws, ordinances, rules
and regulations applicable to it and to the conduct of its business;
(f) not enter into, assume or amend in any material
respect, any agreement, contract or commitment of the character
referred to in Section 3.1(k);
(g) not merge or consolidate with or purchase
substantially all of the assets of, or otherwise acquire, any
corporation, partnership, association or other business;
(h) not sell, transfer or convey all or substantially
all of the assets of Old Clinic;
(i) not take, or permit to be taken, any action which
is represented and warranted in Section 3.1(f) not to have been taken
since Old Clinic Balance Sheet Date;
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(j) promptly advise PTI in writing of any material
adverse change in its financial condition, results of operations,
properties, assets, liabilities, business operations or prospects or
in the Practice;
(k) not increase salaries or other compensation of
employees of Old Clinic;
(l) not issue any shares or other equity interests or
effect any stock split or other reclassification or declare or pay any
dividends or similar types of distributions;
(m) not create, incur, assume, guarantee or otherwise
become directly or indirectly liable with respect to any indebtedness
for borrowed money other than in the ordinary course of business under
agreements existing on the date hereof and identified on the
Disclosure Schedule;
(n) not solicit, facilitate or encourage any
inquiries or proposals for the acquisition of its stock, assets or
business, or authorize or permit any officer, director, employee,
investment banker, attorney or other representative, directly or
indirectly, on its behalf, to cooperate or negotiate with, or
otherwise to provide any information to, any person or entity with
respect to such inquiries or proposals, or accept any offer from any
such person or entity to purchase Old Clinic or its business or assets
or stock in whole or in part;
(o) pay all account payables and collect all account
receivables of the Practice only in the ordinary course of business
consistent with prudent past practice, not accelerate collection of
accounts receivable or defer payment of accounts payable in
anticipation of the Closing and not purchase drugs or supplies on
terms and conditions not in the ordinary course, consistent with past
practice; and
(p) not enter into any agreement or understanding to
do or engage in any of the foregoing actions described in Subsections
(f) through (i) and (k) through (o).
Section 5.2 Access to Information and Records Before Closing. PTI
may, at its expense, prior to the Closing date, make, or cause to be made, such
investigation of the Practice, and of the assets, liabilities, operations and
properties of Old Clinic and of its financial and legal condition as PTI deems
necessary or advisable to familiarize itself with such matters. Old Clinic
shall permit PTI and its representatives (including legal counsel and
independent accountants) upon reasonable notice to have full access to the
properties and relevant books and records of Old Clinic and of the Practice, at
reasonable business hours, and will cause its employees to furnish PTI with
such financial and operating data and other information and copies of documents
with respect to the services, operations and properties of Old Clinic and the
Practice as PTI may from time to time request.
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ARTICLE 6 ADDITIONAL AGREEMENTS
Section 6.1 Filing of Registration Statement; Other Action.
(a) PTI, Physician, Old Clinic and New Clinic shall
cooperate in the preparation of the registration statement on Form S-1
(or other appropriate Form) to be filed by PTI with the SEC under the
Securities Act in connection with its Initial Public Offering
(including the prospectus constituting a part thereof, the
"Registration Statement"). PTI shall obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry
out the transactions contemplated by this Agreement, and Physician,
Old Clinic, and New Clinic shall furnish all information concerning
the Physician, Old Clinic, and New Clinic as may be reasonably
requested in connection with any such action.
(b) Physician, Old Clinic, New Clinic and PTI
represent and warrant that none of the information or documents
supplied or to be supplied by it specifically for inclusion in the
Registration Statement, by exhibit or otherwise, will, at the time the
Registration Statement and each amendment and supplement thereto, if
any, become effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. Physician, Old Clinic, and New Clinic, respectively,
shall agree with PTI as to the information and documents supplied by
the Physician, Old Clinic and New Clinic for inclusion in the
Registration Statement and each shall indicate such information and
documents in a letter to be delivered at Closing (the "Information
Letter"). Physician, Old Clinic and New Clinic shall be entitled to
review the Registration Statement and each amendment thereto, if any,
prior to the time each becomes effective under the Securities Act.
(c) Physician, Old Clinic and New Clinic shall, upon
request, furnish PTI with all information concerning itself and such
other matters as may be reasonably requested by PTI in connection with
the preparation of the Registration Statement and each amendment or
supplement thereto, or any other statement, filing, notice or
application made by or on behalf of each such party to any
governmental entity in connection with the transactions contemplated
by this Agreement.
Section 6.2 Compliance with Conditions Precedent; Further Assurances.
(a) Each party hereto shall use such party's good
faith efforts to cause the conditions precedent to the Closing set
forth in Article 7 hereof to be fulfilled and, subject to the terms
and conditions herein provided, to take, or cause to be taken, all
action, and to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this
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Master Transaction Agreement and the other Transaction Documents.
Each party hereto covenants and agrees that it will cooperate with
each of the other parties hereto and use its reasonable efforts to (i)
procure upon reasonable terms and conditions all consents and
approvals necessary to the transactions contemplated by this Agreement
(ii) complete or obtain all necessary filings, registrations,
certificates, and authorizations necessary or advisable for the
transactions contemplated by this Agreement and for the use of the
Nonmedical Assets, (iii) satisfy all requirements prescribed by law
for, and all conditions, to, the consummation of the transactions
contemplated by this Agreement, and to (iv) effect the transactions
contemplated by this Agreement. In case at any time after the Closing
any further actions are necessary or desirable to carry out the
purposes of this Master Transaction Agreement or the other Transaction
Documents, each party shall take all such necessary actions.
(b) Without limiting the generality of the foregoing,
the Physician Party shall use its best efforts to cause the
satisfaction of the conditions precedent set forth in Section 7.1
hereof and the conditions precedent set forth in Section 7.2 hereof.
Section 6.3 Certain Notifications. At all times from the date hereof
until the Closing, each party shall promptly notify the others in writing of
the occurrence of any event which will or may result in the failure to satisfy
any of the conditions specified in Article 7.
Section 6.4 Amendment to Schedules. Each party hereto agrees that,
with respect to the representations and warranties of such party contained in
this Agreement, such party shall have the continuing obligation until Closing
to supplement or amend promptly the Schedules with respect to any matter that
would have been or would be required to be set forth or described in the
Schedules in order to not materially breach any representation, warranty or
covenant of such party contained herein; provided that no amendment or
supplement to a Schedule that constitutes or reflects, individually or in the
aggregate, a material adverse change to the Practice or the Nonmedical Assets
may be made unless PTI consents to such amendment or supplement, and no
amendment or supplement to a Schedule that constitutes or reflects a material
adverse change to PTI may be made unless the Physician and Old Clinic consent
to such amendment or supplement. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Sections 7.1, 7.2 and 7.3 have been fulfilled, the Schedules hereto shall be
deemed to be the Schedules as amended or supplemented pursuant to this Section
6.4. In the event that the Physician or Old Clinic seeks to amend or
supplement a Schedule pursuant to this Section 6.4 and PTI does not consent to
such amendment or supplement, or PTI seeks to amend or supplement a Schedule
pursuant to this Section 6.4 and Physician and Old Clinic do not consent, this
Agreement shall be deemed terminated by mutual consent.
Section 6.5 Physician Parties to Obtain Own Tax Advice. Each of the
Physician Parties represents and warrants that it has relied, and covenants and
agrees that in connection with the transactions contemplated by this Master
Transaction Agreement, it will rely, solely on its own
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advisors to determine the tax consequences of the transactions contemplated
hereunder, and that no representation or warranty has been made by any party as
to the tax consequences of such transactions.
Section 6.6 Investment Representations and Covenants of Physician.
(a) The Physician understands that the Securities
will not be registered under the Securities Act or any state
securities laws on the grounds that the issuance of the Securities is
exempt from registration pursuant to Section 4(2) of the Securities
Act or Regulation D promulgated under the Securities Act and
applicable state securities laws, and that the reliance of PTI on such
exemptions is predicated in part on the Physician's representations,
warranties, covenants and acknowledgments set forth in this Section
6.6.
(b) Except as disclosed on the Investment
Representations Schedule attached hereto, Physician represents and
warrants that he is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act.
(c) The Physician represents and warrants that the
Securities to be acquired by such Physician upon consummation of the
transactions described in Article 2 of this Master Transaction
Agreement will be acquired by the Physician for his own account, not
as a nominee or agent, and without a view to resale or other
distribution within the meaning of the Securities Act and the rules
and regulations thereunder, except as contemplated in Article 11
hereof, and that the Physician will not distribute any of the
Securities in violation of the Securities Act.
(d) The Physician represents and warrants that the
address set forth below his name in the Investment Representations
Scheduleis the Physician's principal residence.
(e) The Physician (i) acknowledges that the
Securities issued to the Physician at the Closing must be held
indefinitely by Physician unless subsequently registered under the
Securities Act or an exemption from registration is available, (ii) is
aware that any routine sales of Securities made pursuant to Rule 144
under the Securities Act may be made only in limited amounts and in
accordance with the terms and conditions of that Rule and that in such
cases where the Rule is not applicable, compliance with some other
registration exemption will be required, and (iii) is aware that Rule
144 is not currently available for use by such Physician for resale of
any of the Securities to be acquired by Physician upon consummation of
the transactions described in Article 2 of this Master Transaction
Agreement.
(f) The Physician represents and warrants to PTI that
he has such knowledge and experience in financial and business matters
such that he is capable of evaluating the merits and risks of an
investment in any of the Securities to be acquired by
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the Physician upon consummation of the transactions described in
Article 2 of this Master Transaction Agreement.
(g) The Physician confirms that he has received and
read the Confidential Private Placement Memorandum of PTI dated
December 31, 1996, together with any supplement thereto. The
Physician also confirms that PTI has made available to the Physician
the opportunity to ask questions of and receive answers from it
concerning the terms and conditions of his investment in the
Securities, and has received, to his satisfaction, such additional
information, in addition to that set forth herein, about PTI's
operations and the terms and conditions of the offering as Physician
has requested.
(h) In order to ensure compliance with the provisions
of Subsection (c) hereof, the Physician agrees that after the Closing
the Physician will not sell or otherwise transfer or dispose of
Securities or any interest therein (unless such shares have been
registered under the Securities Act) without first complying with
either of the following conditions, the expenses and costs of
satisfaction of which shall be fully borne and paid for by such
Physician:
(i) PTI shall have received a written
legal opinion from legal counsel, which opinion and counsel
shall be satisfactory to PTI in the exercise of its reasonable
judgment, indicating that the proposed transfer will not be in
violation of any of the registration provisions of the
Securities Act and the rules and regulations promulgated
thereunder; or
(ii) PTI shall have received an opinion from its
own counsel to the effect that the proposed transfer will not
be in violation of any of the registration provisions of the
Securities Act and the rules and regulations promulgated
thereunder.
The Physician also agrees that the certificates or instruments
representing the Securities to be issued to the Physician pursuant to
this Master Transaction Agreement may contain a restrictive legend
noting the restrictions on transfer described in this Article and
required by federal and applicable state securities laws, provided
that this Subsection 6.6(h) shall no longer be applicable to any
Securities following their transfer pursuant to a registration
statement effective under the Securities Act or in compliance with
Rule 144.
Section 6.7 No Corporate Practice. No Physician Party has knowledge
that the actions, transactions or relationships arising from, and contemplated
by the Transaction Documents violate any law, rule or regulation relating to
the corporate practice of medicine. Each Physician Party accordingly agrees
that such Physician Party will not, in an attempt to void or nullify any
Transaction Document or any relationship involving PTI or any Physician Party,
▇▇▇, claim, aver, allege or assert that any such Transaction Document or any
such relationship violates any law, rule or regulation relating to the
corporate practice of medicine; provided, however, such Physician
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Party is entitled to make any such claim, assessment, allegation or assertion
if such Physician Party reasonably believes, on advice from counsel, that
failure to terminate such Transaction Document or such relationship will
subject such Physician Party to material liability or will materially adversely
affect such Physician Party's right to practice medicine.
Section 6.8 Current Public Information. At all times following the
registration of any of PTI's securities under the Securities Act or Exchange
Act pursuant to which PTI becomes subject to the reporting requirements of the
Exchange Act, PTI shall use commercially reasonable efforts to comply with the
requirements of Rule 144 under the Securities Act, as such Rule may be amended
from time to time (or any similar rule or regulation hereafter adopted by the
SEC) regarding the availability of current public information to the extent
required to enable any holder of shares of PTI Common Stock to sell such shares
without registration under the Securities Act pursuant to Rule 144 (or any
similar rule or regulation). Upon the request of any holder of the shares of
PTI Common Stock issued pursuant to the Asset Purchase Agreement, PTI will
deliver to such holder a written statement as to whether PTI has complied with
such requirements.
Section 6.9 Rule 144 Covenant. PTI represents and warrants that the
holding period, as determined by Rule 144(d)(3)(iii) enacted under the
Securities Act of 1933, as in effect on the date hereof (the "Holding Period"),
for any shares of PTI Common Stock acquired by Physician pursuant to Section
2.4(c) of the Master Transaction Agreement commences on the Closing Date. In
the event that a Physician elects to sell any of such shares pursuant to Rule
144 within sixty days of receipt thereof and is unable to do so by reason of
the Holding Period being deemed to have commenced on a date later than the
Closing Date (other than by reason of a change in the law), then (i) the
Physician shall promptly notify PTI of such inability and provide PTI with the
opportunity for five business days after receipt of such notice (the
"Assistance Period") to assist the Physician in effecting the proposal sale and
(ii) in the event that such proposed sale is not effected within the Assistance
Period, PTI shall redeem a number of such shares of PTI Common Stock from the
Physician up to a number equal to the quotient determined by dividing the
Physician's Tax Liability by the value per share used to calculate such Tax
Liability. For purposes of this Section 6.9, a Physician's "Tax Liability"
shall be determined by multiplying the number of shares that are delivered to
the Physician at a given time by the Market Price on such date (or such lesser
price as the Physician represents he intends to use for purposes of preparing
his applicable income tax return), and then multiplying such product by the
highest stated federal and state income rate applicable to individuals.
Section 6.10 Corporate Existence. During the term of the Management
Services Agreement, New Clinic shall, and the Physician shall cause New Clinic
to, maintain and preserve in full force and effect its corporate existence.
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ARTICLE 7 CONDITIONS
Section 7.1 Conditions Precedent to the Obligations of All Parties.
The obligations of the parties to complete the Closing shall be subject to the
fulfillment, at or prior to the time of the Closing, of each of the following
conditions:
(a) all permits, approvals, waivers and consents of
any Governmental Authority or of any third party necessary or
appropriate for consummation of the Closing shall have been obtained;
(b) no preliminary or permanent injunction or other
order of a court or other Governmental Authority in the United States
shall have been issued and be in effect, and no United States federal
or state statute, rule or regulation shall have been enacted or
promulgated after the date hereof and be in effect, that (i) prohibits
the consummation of the Closing or (ii) imposes material limitations
after the Closing on the ability of New Clinic to own and operate the
Practice or to manage the Practice pursuant to the Management Services
Agreement;
(c) there shall not be any action or proceeding
commenced by or before any court or other Governmental Authority in
the United States that challenges the consummation of the Closing or
seeks to impose material limitations on the ability of New Clinic to
own and operate the Practice or PTI to manage the Practice pursuant to
the Management Services Agreement; and
(d) the parties to the Asset Purchase Agreement shall
have agreed to its schedules.
Section 7.2 Conditions Precedent to the Obligations of PTI. The
obligations of PTI to complete the Closing shall be subject to the fulfillment,
at or prior to the time of the Closing of each of the following conditions:
(a) except for such changes as permitted or
contemplated by this Master Transaction Agreement, the representations
and warranties of the Physician Parties contained in this Master
Transaction Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect
as if made at and as of the Closing Date;
(b) the Physician Parties shall have performed,
complied with and fulfilled all the covenants, agreements, obligations
and conditions required by any of the Transaction Documents to be
performed, complied with or fulfilled by them prior to or at the
Closing;
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(c) since the date of this Master Transaction
Agreement, there shall not have occurred any event or events, whether
individually or in the aggregate, that have had or that reasonably
could be expected to have a material adverse effect on the financial
condition, results of operations, properties, assets, liabilities,
business, operations or prospects of Old Clinic or the Practice;
(d) the Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or
threatened by the SEC. At or prior to Closing, PTI shall have
received all state securities and "Blue Sky" permits necessary, in its
sole discretion, to consummate the transactions contemplated hereby.
(e) PTI shall have received all of the instruments,
documents and other items described in Section 8.2 hereof.
Section 7.3 Conditions Precedent to the Obligations of the Physician
Parties. The obligations of the Physician Parties to complete the Closing
shall be subject to the fulfillment at or prior to the time of the Closing, of
each of the following conditions:
(a) except for such changes as permitted or
contemplated by this Master Transaction Agreement and except for
increases in the number of issued and outstanding shares of PTI Common
Stock, the representations and warranties of PTI contained in this
Master Transaction Agreement shall be true and correct in all material
respects at and as of the Closing Date with the same force and effect
as if made at and as of the Closing Date;
(b) PTI shall have performed, complied with and
fulfilled all of the covenants, agreements, obligations and conditions
required by any of the Transaction Documents to be performed, complied
with or fulfilled by them prior to or at the Closing;
(c) since the date of this Master Transaction
Agreement, there shall not have occurred any event or events, whether
individually or in the aggregate, that have had or that reasonably
could be expected to have a material adverse effect on the financial
condition, results of operations, properties, assets, liabilities,
business, operations or prospects of PTI;
(d) the Physician Parties shall have received from
the PTI Parties all of the instruments, documents and other items
described in Section 8.3 hereof.
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ARTICLE 8 CLOSING
Section 8.1 Closing.
(a) The Closing shall take place at the offices of
Chamberlain, Hrdlicka, White, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, at 10:00 A.M. on the Closing Date.
(b) At the Closing, the parties shall complete the
transactions provided for in Sections 2.2, 2.3, and 2.4 in the
sequence specified in Article 2 hereof.
Section 8.2 Deliveries to PTI at the Closing. At the Closing, and
simultaneously with the deliveries to the Physician Parties specified in
Section 8.3 hereof, and in addition to any other deliveries required to be made
to PTI pursuant to any other Transaction Document at the Closing, the Physician
Parties shall deliver or cause to be delivered to PTI the following:
(a) the New Clinic Charter, the New Clinic Bylaws and
the New Clinic Organizational Minutes;
(b) the joinder of New Clinic contemplated by Section
2.1(c) hereof;
(c) the Management Services Agreement duly executed
by New Clinic;
(d) the Asset Purchase Agreement duly executed by Old
Clinic;
(e) the Contribution Agreement duly executed by the
Physician and New Clinic;
(f) the Physician Employment Agreement duly executed
by the Physician and New Clinic, together with the noncompetition
covenant;
(g) the New Clinic Operating Agreement duly executed
by the Physician and New Clinic; and
(h) such other closing documents, certificates and
instruments as are contemplated by the other Transaction Documents or
as shall have been reasonably requested by PTI and as are customarily
delivered in connection with transactions of the type contemplated
herein.
Section 8.3 Deliveries to the Physician Parties at the Closing. At
the Closing, and simultaneously with the deliveries to PTI specified in Section
8.2, and in addition to any other deliveries required to be made to a Physician
Party pursuant to any other Transaction Document at the Closing, PTI shall
deliver or cause to be delivered to the Physician Parties the following:
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(a) the Asset Purchase Agreement duly executed by
PTI;
(b) the Management Services Agreement duly executed
by PTI;
(c) such other closing documents, certificates and
instruments as are contemplated by the other Transaction Documents or
as shall have been reasonably requested by the Physician Parties and
as are customarily delivered in connection with transactions of the
type contemplated herein; and
(d) the consideration required to be delivered by PTI
at the Closing pursuant to the Transaction Documents.
ARTICLE 9 TERMINATION
Section 9.1 Termination by Mutual Agreement. This Master Transaction
Agreement may be terminated by the mutual agreement in writing of the parties
hereto at any time prior to the Closing.
Section 9.2 Termination by PTI. If at any time prior to or at the
Closing (a) any of the Physician Parties shall have failed to perform in any
respect any of their respective covenants or obligations, at the time required
to be performed, set forth in this Master Transaction Agreement or the other
Transaction Documents and such failure has not been or cannot be cured to the
reasonable satisfaction of PTI within a reasonable time; (b) any representation
or warranty of any of the Physician Parties contained herein or in any of the
other Transaction Documents is false or misleading in any material respect; (c)
any of the Physician Parties shall fail to make any deliveries specified in
Section 8.2; or (d) any of the conditions set forth in Sections 7.1 or 7.2
shall not have been satisfied in any respect (and such failure cannot be cured
to the reasonable satisfaction of PTI prior to Closing) or waived in writing by
PTI, all obligations of PTI under this Master Transaction Agreement (other than
its obligations under Sections 13.3 and 13.13) may be terminated by PTI.
Section 9.3 Termination by the Physician Parties. If at any time
prior to or at the Closing (a) PTI shall have failed to perform in any respect
any of their respective covenants or obligations, at the time required to be
performed, set forth in this Master Transaction Agreement or the other
Transaction Documents and such failure has not been or cannot be cured to the
reasonable satisfaction of the Physician Parties within a reasonable time; (b)
any representation or warranty of PTI contained herein or in any of the other
Transaction Documents is false or misleading in any material respect; (c) PTI
shall fail to make any deliveries specified in Section 8.3; or (d) any of the
conditions set forth in Sections 7.1 or 7.3 shall not have been satisfied in
any respect (and such failure cannot be cured to the reasonable satisfaction of
the Physician Parties prior to Closing) or waived in writing by the Physician
Parties, all obligations of the Physician Parties under this Master Transaction
Agreement (other than their obligations under Sections 13.3 and 13.13) may be
terminated by the Physician Parties.
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Section 9.4 Termination Date. Unless terminated by mutual agreement
of the parties prior to Closing, this Master Transaction Agreement shall
continue in full force and effect until October 31, 1997, and it shall continue
in full force and effect thereafter unless terminated prior to Closing by
delivery of written notice of termination at the election of either the
Physician Parties, on the one hand, or PTI on the other (the date of such
notice to be the "Termination Date"). If Closing fails to occur as a result of
the breach of this Master Transaction Agreement by PTI on the one hand, or any
of the Physician Parties, on the other, this Master Transaction Agreement may
be extended for a reasonable time to facilitate Closing at the election of the
non-breaching party. In the event of termination of this Master Transaction
Agreement pursuant to the provisions of this Section, a party that is not in
material breach of this Master Transaction Agreement shall stand fully released
and discharged with respect to any and all obligations under this agreement.
In the event that the Conditions Precedent to Closing are not satisfied because
of the breach of any representation, warranty or covenant of any party hereto,
each party shall be entitled to pursue, exercise and enforce any and all
remedies, rights, powers and privileges available hereunder or at law or in
equity.
ARTICLE 10 INDEMNIFICATION
Section 10.1 Indemnification by the Physician Parties.
(a) Except as provided in Section 10.1(b) and subject
to the limitations set forth in Section 10.6, each of the Physician
Parties, jointly and severally, hereby agrees to indemnify, defend and
hold PTI, and its respective officers, directors, employees and
shareholders (collectively, "PTI Indemnified Persons") harmless from
and against all demands, suits, claims, actions or causes of action,
assessments, losses, damages, liabilities, liens, settlements,
penalties, and forfeitures, and reasonable costs and expenses incident
thereto (including reasonable attorneys' fees) (collectively, the
"Indemnity Losses" and individually, an "Indemnity Loss"), asserted
against or suffered or incurred, directly or indirectly, by any of the
PTI Indemnified Persons and resulting from:
(i) any misrepresentation in or breach of the
representations or warranties of any of the Physician Parties
or the failure of any of the Physician Parties to perform any
of their respective covenants or obligations contained in this
Master Transaction Agreement or the Asset Purchase Agreement;
(ii) except with respect to the Assumed
Obligations and except with respect to any liabilities
relating to or arising from the provision of professional
medical services (or failure to provide professional medical
services), the operation of the Practice or the use of the
Nonmedical Assets or the Medical Assets by Old Clinic prior to
the Closing including, but not limited to, any and all
obligations or liabilities of any of the Physician Parties of
any kind, description or character, direct or indirect,
absolute or contingent, known or unknown;
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(iii) any liability for Taxes arising out of, or
by virtue of, or based on any Physician Party; or
(iv) any Environmental Claim (as hereinafter
defined) arising out of or based upon (i) operation of the
properties covered by the Real Property Leases on or prior to
the Closing Date or (ii) operation of the Practice, on or
prior to the Closing Date. For purposes of this Agreement,
the term "Environmental Claim" means any liabilities,
responsibilities, third party (including private parties,
governmental agencies and employees) actions, lawsuits, claims
or proceedings (whether they arise under common law or statute
or are recognized now or at a later time and regardless of
form including strict liability and negligence) which relate
to or arise from or in connection with any Environmental Law
or Hazardous Wastes, including, but not limited to, any
liability which relates to or arises from or in connection
with any investigation, remediation, or removal of any
Hazardous Wastes.
(b) Notwithstanding the foregoing provisions of
Section 10.1(a), the Physician Parties shall not be obligated to
jointly and severally indemnify, defend or hold the PTI Indemnified
Parties harmless from and against any Indemnity Losses asserted
against or suffered or incurred by any of the PTI Indemnified Parties
and resulting from any misrepresentation in or breach of any
representation of Physician contained in Section 3.2 hereof or Section
6.6 hereof or from the failure of Physician to perform any of the
Physician's covenants or obligations contained in the Non-Competition
Covenant attached to the Asset Purchase Agreement. In each of these
cases, the Physician shall severally and not jointly indemnify, defend
and hold PTI harmless from and against all Indemnity Losses asserted
against or suffered or incurred by any of the PTI Indemnified Parties
and resulting from any misrepresentation in or breach of such
representations of the Physician or from the failure of the Physician
to perform any of such covenants or obligations.
Section 10.2 Indemnification by PTI. Subject to the limitations set
forth in Section 10.6, PTI, jointly and severally, hereby agrees to indemnify,
defend and hold the Physician Parties and their respective officers, directors,
employees, partners and shareholders (collectively "Physician Indemnified
Persons") harmless from and against any Indemnity Loss asserted against or
suffered or incurred by any of the Physician Indemnified Persons and resulting
from:
(a) any misrepresentation in or breach of the
representations and warranties of PTI or the failure of PTI to perform
any of their respective covenants or obligations contained in this
Master Transaction Agreement or in the Asset Purchase Agreement;
(b) the use of the Nonmedical Assets after the
Closing;
(c) the Assumed Obligations;
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(d) any liability for Taxes arising out of, or by
virtue of, or based on PTI; or
(e) any Environmental Claim arising out of or based
upon the operation of the business of PTI on or prior to the Closing
Date.
Section 10.3 Notice. If any person or entity has reason to believe
that he, she or it has suffered or incurred (or has a reasonable belief that
he, she or it will suffer or incur) any Indemnity Loss subject to indemnity
hereunder, such person or entity shall so notify the indemnifying party
promptly in writing describing such loss or expense, the amount thereof, if
known, and the method of computation of such Indemnity Loss, all with
reasonable particularity. If the nature of the Indemnity Loss set forth in the
notice does not involve any third party claim, and if the indemnifying party
does not respond to the indemnified party in writing contesting the existence
of amount of any Indemnity Loss within thirty (30) days after delivery of such
notice, then such indemnifying party shall be obligated to pay, and shall pay
in accordance with Section 10.5, the amount of the Indemnity Loss set forth in
such notice to the indemnified party. If any action at law, suit in equity,
administrative action or arbitration or mediation proceeding is instituted by
or against a third party with respect to which any person intends to claim any
liability or expense as an Indemnity Loss under this Article 10, such person
shall promptly notify the indemnifying party of such action. The failure to
give or to timely give any notice required by this Section 10.3 shall not
relieve the party from whom indemnity is sought of any of its obligations under
this Article 10, except to the extent that such failure results in actual
prejudice to the indemnifying party.
Section 10.4 Defense of Third Party Claim.
(a) With respect to any action at law, suit in
equity, administrative action or arbitration or mediation proceeding
that is instituted by or against a third party with respect to which
any person intends to claim any liability or expense under this
Article 10, the indemnifying party shall have ten (10) business days
after receipt of the notice with respect thereto referred to in the
first sentence of Section 10.3 to notify the indemnified party that it
elects to conduct and control any action, suit or proceeding with
respect to such claim; provided, however, that no such election may be
made with respect to any action, suit or proceeding by a taxing
authority with respect to any consolidated, combined or unitary return
filed by PTI or any of its affiliates. If the indemnifying party does
not give such notice, the indemnified person shall have the right to
defend, contest, settle or compromise such action, suit or proceeding
in the exercise of its exclusive discretion, and the indemnifying
party shall, upon request from the indemnified person, promptly pay
the indemnified person in accordance with the other terms and
conditions of this Article 10 the amount of any Indemnity Loss subject
to indemnity hereunder resulting from its liability to the third party
claimant. If the indemnifying party gives such notice, it shall have
the right to participate in, and, to the extent that it shall desire,
to undertake, conduct and control, through counsel of its own choosing
(which counsel shall be satisfactory to the
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indemnified party in the reasonable judgment of the indemnified party
and shall not, except with the consent of the indemnified party, be
counsel to the indemnified party) and at its sole expense, the conduct
and settlement of such action, suit or proceeding, and the indemnified
person shall cooperate with the indemnifying party in connection
therewith; provided, however, that (i) the indemnifying party shall
not thereby permit to exist any lien, encumbrance or other adverse
charge securing the claims indemnified hereunder upon any asset of the
indemnified person, (ii) the indemnifying party shall not thereby
consent to the imposition of any injunction against the indemnified
person without the written consent of the indemnified person, (iii)
the indemnifying party shall permit the indemnified person to
participate in such conduct or settlement through counsel chosen by
the indemnified person, but the fees and expenses of such counsel
shall be borne by the indemnified person except as provided below, and
(iv) upon a final determination of such action, suit or proceeding,
the indemnifying party shall promptly reimburse to the extent required
under this Article 10 the indemnified person for the full amount of
any Indemnity Loss resulting from such action, suit or proceeding and
all reasonable and related expenses incurred by the indemnified
person, other than fees and expenses of counsel for the indemnified
person incurred after the assumption of the conduct and control of
such action, suit or proceeding by the indemnifying party (except as
provided below); provided further, however, that such fees and
expenses of counsel for the indemnified party shall be borne by the
indemnifying party if (i) the employment of counsel by the indemnified
party has been authorized in writing by the indemnifying party, (ii)
the indemnified party has reasonably concluded (based on the advice of
counsel) that there may be legal defenses available to it that are
different from or in addition to those available to the indemnifying
party, (iii) a conflict or potential conflict exists (based on advice
of counsel to the indemnified party) between such party and the
indemnifying party in which case the indemnifying party will not have
the right to direct the defense of such action on behalf of the
indemnified party, or (iv) the indemnifying party has not in fact
employed counsel to assume the defense of such action within a
reasonable time after giving notice of its intent to assume such
defense. So long as the indemnifying party is contesting any such
action in good faith, the indemnified person shall not pay or settle
any such action, suit or proceeding. Notwithstanding the foregoing,
the indemnified person shall have the right to pay or settle any such
action, suit or proceeding, provided that in such event the
indemnified person shall waive any right to indemnity therefor from
the indemnifying party and no amount in respect thereof shall be
claimed as an Indemnity Loss under this Article 10.
(b) If requested by the indemnifying party, the
indemnified person agrees to cooperate with the indemnifying party and
its counsel in contesting any claim which the indemnifying party
elects to contest or, if appropriate, in making any counterclaim
against the person asserting the claim, or any cross-complaint against
any person asserting the claim, or any cross-complaint against any
person and further agrees to take such other action as reasonably may
be requested by an indemnifying party to reduce any loss or expense
for which the indemnifying party would have responsibility, but the
indemnifying
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party will reimburse the indemnified person for any expenses incurred
by it in so cooperating or acting at the request of the indemnifying
party.
(c) The indemnified person agrees to afford the
indemnifying party and its counsel the opportunity to be present at,
and to participate in, conferences with all persons, including
governmental authorities, asserting any claim against the indemnified
person or conferences with representatives of or counsel for such
persons.
Section 10.5 Payment of Losses. Except as specifically set forth in
any other section of this Master Transaction Agreement or the Asset Purchase
Agreement with respect to payment of losses, which section shall govern payment
of losses with respect to matters set forth therein, the indemnifying party
shall pay to the indemnified person in cash the amount of any Indemnity Loss to
which the indemnified person may become entitled by reason of the provisions of
this Agreement, such payment to be made within sixty (60) business days after
any such amount of losses is finally determined either pursuant to mutual
agreement of the parties, pursuant to the second sentence of Section 10.3,
pursuant to the provisions of Section 10.4(a), pursuant to the provisions of
Section 11.4 or Section 11.5, or pursuant to the dispute resolution provisions
set forth in Article 12 or pursuant to a final, unappealable binding judgment
of a court with jurisdiction. If Physician is the indemnifying party and fails
to make payment as contemplated by this Section 10.5, PTI, at its election,
shall be entitled to (i) cancel the number of shares of the PTI Common Stock
entitled to be received by such indemnifying party and terminate its obligation
to deliver such number of shares of PTI Common Stock, which number of shares,
valued at the average Market Price per share during the ten Trading Days
immediately preceding the date payment was due under this Section 10.5,
represent an amount equal to or less than the amount of Indemnity Loss, or (ii)
set off all or any amounts payable under the Note held by the Physician,
representing the amount equal to or less than the amount of the Indemnity Loss,
or both of the foregoing, but in no event shall PTI be entitled to offset
amounts in excess of the Indemnity Loss pursuant to this Section 10.5. Such
indemnifying party agrees to redeliver to PTI any Note that, as a result of the
exercise of set-off rights, is paid in full.
Section 10.6 Liquidated Damages; Limitations. Notwithstanding
anything contained to the contrary in this Master Transaction Agreement, a
Party's right to recover any amounts under the indemnification provisions of
this Article 10 shall be determined or limited as provided in this Section
10.6.
(a) In the event that the Physician Parties fail or
refuse to close the transactions contemplated herein for any reason
other than the failure to satisfy the conditions to closing set forth
in Article 7 on or before the Termination Date, then the Physician
Parties shall pay liquidated damages to PTI in the amount of $50,000
in cash. The parties agree that the amount of such liquidated damages
represents a reasonable estimate of the costs and expense incurred by
PTI in anticipation of the transaction contemplated herein, and is
not, and shall not be deemed to be a penalty and shall be recoverable
in lieu of all other damages.
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(b) All representations, warranties and indemnities
made by the parties shall survive the Closing and shall thereafter
terminate and expire twenty-four (24) months after the Closing Date,
except that representations, warranties (Section 3.1(j)) and
associated indemnities with respect to tax matters, and
representations, warranties and associated indemnities with respect to
environmental matters (Section 3.1(m)), shall survive for a period
equal to the statute of limitations applicable to any claim arising
from or attributable to such matters; provided, however, that
notwithstanding the foregoing, the rights and obligations with respect
to indemnification as provided in this Article 10 shall continue with
respect to any matter for which indemnification has been properly
sought pursuant to the terms and conditions of this Master Transaction
Agreement prior to the expiration of any such survival period.
(c) The Physician Parties' liabilities to PTI
Indemnified Persons pursuant to this Article 10 shall be limited as
follows: with respect to any claim for indemnification under Section
10.1, no PTI Indemnified Parties shall be entitled to indemnification
pursuant to Article 10 until the PTI Indemnified Parties in the
aggregate have suffered or incurred Indemnity Losses of $5,000, and
each Physician Party's obligations under this Article 10 shall be
limited to $2,045,000; provided, however, that nothing contained in
this Section 10.6(c) shall be deemed to limit or impair PTI's right to
seek injunction or other equitable relief for a Physician's breach of
any provision set forth in the Non-Competition Covenant attached to
the Asset Purchase Agreement.
(d) PTI's liabilities to Physician Indemnified
Persons pursuant to this Article 10 shall be limited as follows: with
respect to any claim for indemnification under Section 10.2, no
Physician Indemnified Person shall be entitled to indemnification
pursuant to Article 10 shall be limited as follows: with respect to
any claim for indemnification under Section 10.2, no Physician
Indemnified Person shall be entitled to indemnification pursuant to
Article 10 until the Physician Indemnified Persons in the aggregate
have suffered or incurred Indemnity Losses of $5,000, and PTI's
obligations under this Article 10 shall be limited to $2,045,000.
ARTICLE 11 PIGGYBACK REGISTRATION RIGHTS
Section 11.1 Registration Rights. In the event that PTI proposes to
file a registration statement with the SEC on Form ▇-▇, ▇-▇, ▇-▇, S-18 or such
other comparable successor form as may be prescribed from time to time by the
SEC (a "Registration Statement") with the SEC with respect to an underwritten
public offering by PTI or PTI Common Stock for cash, whether or not for PTI's
own account, during the period commencing on the date of the second anniversary
of the Closing Date and ending on the fifth anniversary of the Closing Date,
PTI shall give written notice of such proposed filing to the Physician at least
fifteen (15) days before the anticipated filing date (in which notice PTI shall
use its best efforts to name the proposed managing underwriters of such
offering and the anticipated price range per share of PTI Common Stock), and
such notice shall offer the Physician the opportunity to register such number
of the Physician's shares of PTI
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Common Stock as the Physician may request in writing within ten (10) days after
receipt of such notice; provided, however, that the maximum number of shares of
PTI Common Stock that the Physician may request to include shall be equal to
the lesser of (i) that fraction of his shares of PTI Common Stock which equals
the maximum fraction of shares of PTI Common Stock held by any person having
piggyback registration rights (other than PTI or the Physician) that such other
person is permitted to request to include in such filing and (ii) 50% of the
Physician's shares of PTI Common Stock. Notwithstanding the foregoing, if the
managing underwriter of such offering advises PTI that the total number of
shares of PTI Common Stock which PTI, the Physician and any other persons
intend to include in such offering would adversely affect the success of such
offering, then the amount of shares of PTI Common Stock to be offered for the
account of the Physician shall be reduced to the extent necessary to reduce the
total number of shares of PTI Common Stock to be included in such offering to
the amount recommended by such managing underwriter; provided that if shares of
PTI Common Stock are being offered for the account of other persons as well as
PTI, such reduction shall not represent a greater fraction of the number of
shares of PTI Common Stock requested to be registered by the Physician than the
fraction of similar reductions imposed on such other persons over the amount of
securities requested to be registered by such other persons. Nothing contained
herein shall require PTI to (a) reduce the amount of shares of PTI Common Stock
to be offered by PTI in such offering for any reason or (b) include any shares
of PTI Common Stock of any Physician in any public offering for which a
Registration Statement is or is proposed to be filed if such shares of PTI
Common Stock are, at the time of effectiveness of such Registration Statement,
eligible to be sold under paragraph (k) of Rule 144 under the Securities Act
(or any successor provision with substantially the same effect). Nothing in
this Article 11 shall create any liability on the part of PTI to the Physician
if PTI for any reason should decide not to file a Registration Statement or
decide not to request that the Registration Statement be declared effective or
otherwise elect not to consummate the public offering contemplated thereby.
The rights hereunder are subject to the condition that if Physician desires to
include shares of PTI Common Stock in the public offering agrees to timely
execute and deliver the underwriting agreement to be executed and delivered by
PTI and the other sellers, if any, in connection with such public offering.
Section 11.2 Covenants of PTI.
(a) PTI hereby covenants and agrees:
(i) To take such steps as may be necessary to
comply with the Blue Sky laws of such states as the managing
underwriter may reasonably request; provided that in no event
shall PTI be obligated to qualify to do business in any state
where it is not so qualified or to take any action which would
subject it to unlimited service of process in any state where
it is not at such time so subject;
(ii) To use reasonable efforts to cause the
Registration Statement to become effective and to keep the
Registration Statement effective for such period as may be
required under the terms of the underwriting agreement
relating thereto,
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to file such post-effective amendments as may be necessary to
keep any prospectus contained in such Registration Statement
true and complete during such period as the Registration
Statement shall be effective, and to furnish and file such
other amendments, supplements, and other documents the
managing underwriter may reasonably request;
(iii) To supply such numbers of prospectuses as
may be reasonably required by the managing underwriter;
(iv) To pay the costs and expenses of
Registration Statement incurred by PTI, including without
limitation all registration and Blue Sky filing fees, all fees
and expenses of PTI's counsel (but not the fees and expenses
of counsel for the Physician), all accounting costs (including
costs associated with the preparation of interim period
financial statements) incurred by PTI, NASD fees, printing
costs, experts' fees and expenses incurred by PTI, costs of
post-effective amendments, and all other usual and customary
expenses in connection with the Registration Statement, except
for the Physician's pro rata share of underwriting discounts
and selling commissions (calculated in the manner set forth in
this Article 11); and
(v) With respect to any Registration Statement
filed pursuant to this Article 11, to cooperate with the
underwriters to the best of its abilities and to enter into an
underwriting agreement with such underwriters containing such
representations, warranties, covenants and indemnities on the
part of PTI as are usual and customary in an underwritten
public sale of common stock.
(b) In the event that, subsequent to the Closing
Date, PTI grants registration rights to physicians in connection with
PTI's or a wholly owned subsidiary's management of such physicians'
medical practice pursuant to a management agreement or similar
arrangement, and if the terms of such registration rights relating to
limitations with respect to (i) the period during which registration
rights may be exercised and (ii) the percentage of shares of PTI
Common Stock that are registrable are superior to the terms of the
registration rights relating to such limitations granted pursuant to
this Article 11, then, without the taking of any additional action,
such terms of registration rights granted pursuant to this Article 11
shall be amended to equal such terms of the subsequently granted
registration rights.
Section 11.3 Covenants of the Physician. The Physician hereby
covenants and agrees:
(a) To cooperate with PTI in its compliance with all
federal and state securities laws, including without limitation
providing such information and signing such documents as are
reasonably necessary to effect a registration;
(b) To pay his pro rata portion (calculated on the
basis of the ratio of the
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aggregate offering price attributable to the shares of the Physician
being registered and sold in relation to the aggregate offering price
attributable to the total number of securities being registered and
sold, including securities being registered and sold by other selling
stockholders) of the underwriting discounts and selling commissions
and to pay all the fees and disbursements of his counsel; and
(c) In addition to the transfer restrictions
otherwise provided for herein, if so requested by PTI, Physician will
agree, whether or not the Physician elects to cause the registration
of his shares pursuant to this Article 11, not to sell or otherwise
dispose of any shares of PTI Common Stock (other than the shares
covered by such registration, which may be sold in accordance with the
plan or plans of distribution described in the Registration Statement)
owned by the Physician for a period of the shorter of (i) the lock-up
period applicable to PTI or (ii) one hundred twenty (120) days
following the effective date of such registration statement or a
registration statement in connection with the Initial Public Offering.
Section 11.4 Indemnification of Physician. In connection with the
Initial Public Offering and whenever registration with respect to any shares of
a Physician's PTI Common Stock is affected under the Securities Act pursuant
hereto, PTI will indemnify and hold harmless the Physician, each underwriter,
the directors, officers, employees and agents of each underwriter, and each
person, if any, who controls each underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act from and against any
and all losses, claims, liabilities, expenses and damages (including any and
all investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out or are based on any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement or any prospectus included in such registration statement or any
amendment or supplement to the registration statement or any such prospectus or
the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading, provided that PTI will not be liable to the Physician to the extent
that such loss, claim, liability, expense or damage is based on an untrue
statement or omission made in reliance on and in conformity with information
furnished in writing to PTI by any of the Physician Parties, or by any of the
Physician Parties through any attorney-in-fact, expressly for inclusion in the
registration statement or any prospectus included in such registration
statement.
Section 11.5 Indemnification of PTI. In connection with the Initial
Public Offering and whenever registration with respect to any shares of a
Physician's PTI Common Stock is effected under the Securities Act pursuant
hereto, the Physician will indemnify and hold harmless PTI, each of PTI's
directors, each of PTI's officers, each person who controls PTI within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
each underwriter, the
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directors, officers, employees and agents of each underwriter, and each person,
if any, who controls each underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement or any prospectus included in such registration
statement or any amendment or supplement to the registration statement or any
such prospectus or the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements
in it not misleading, provided that the Physician will not be liable except to
the extent that such loss, claim, liability, expense or damage arises from or
is based upon an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information furnished in
writing to PTI by the Physician, or by the Physician through any attorney-in-
fact, expressly for inclusion in the registration statement or any prospectus
included in such registration statement.
Section 11.6 Defense of Claim. Promptly after receipt by an
indemnified party of notice of the commencement of any action, the indemnified
party shall notify the indemnifying party in writing of the commencement
thereof if a claim in respect thereof is to be made against an indemnifying
party under this Article 11, but the omission of such notice shall not relieve
the indemnifying party from liability which it may have to the indemnified
party under this Article 11, except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice, and shall not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than under this Article 11. In case any action is brought
against the indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and to the extent that it chooses, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party that it so chooses, the
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof; provided however, that (i) if the indemnifying party fails to take
reasonable steps necessary to defend diligently the claim within twenty (20)
days after receiving notice from the indemnified party that the indemnified
party believes the indemnifying party has failed to diligently defend such
claim, or (ii) if the indemnified party who is a defendant in any action or
proceeding which is also brought against the indemnifying party reasonably
shall have concluded that there are legal defenses available to the indemnified
party which are not available to the indemnifying party, or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, then the indemnified party
shall have the right to assume or continue its own defense as set forth above
and the indemnifying party shall reimburse each indemnified party for the costs
of such defense as
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provided in Sections 11.4 and 11.5. In no event shall the indemnifying party
be responsible for the fees of more than one firm of counsel for all
indemnified parties.
Section 11.7 Non-Transferability. The registration rights and
benefits set forth herein, including indemnification by PTI, are granted for
the sole and personal benefit of the Physician and may not be transferred or
assigned.
ARTICLE 12 ARBITRATION
Section 12.1 Scope. Unless otherwise specifically provided in any
other Transaction Document, the parties hereto agree that any claim,
controversy, dispute or disagreement between or among any of the parties to any
of the Transaction Documents arising out of or relating to any Transaction
Document (other than claims involving any noncompetition or confidentiality
covenant) shall be governed exclusively by the terms and provisions of this
Article 12; provided, however, that the terms and provisions of this Article 12
shall not preclude any party hereto from seeking, or a court of competent
jurisdiction from granting, a temporary restraining order, temporary injunction
or other equitable relief for any breach of (i) any noncompetition or
confidentiality covenant in any Transaction Document or (ii) any duty,
obligation, covenant, representation or warranty, the breach of which may cause
irreparable harm or damage.
Section 12.2 Arbitrators. In the event any claim or claims for an
Indemnity Loss is brought by any of PTI or any of the Physician Parties
(including New Clinic), or there is any other claim, controversy, dispute or
disagreement among any of PTI or the Physician Parties (including New Clinic)
arising out of or relating to any Transaction Document, and the parties are
unable to resolve such claim, controversy, dispute or disagreement within
thirty (30) days after notice is first delivered pursuant to Section 10.3, the
disagreement within thirty (30) days after notice is first delivered pursuant
to Section 10.3, the parties agree to select arbitrators to hear and decide all
such claims under this Article 12. If such claim, controversy, dispute or
disagreement is between any of the Physician Parties (including New Clinic), on
the one hand, and PTI, on the other hand, then the Physician Parties (including
New Clinic) shall select one arbitrator and PTI shall select one arbitrator.
If such claim, controversy, dispute or disagreement is between any of the
Physician Parties (including New Clinic), on the one hand, and New Clinic, on
the other hand, then such Physician Parties shall select one arbitrator and New
Clinic shall select one arbitrator. The two arbitrators so chosen shall then
select a third arbitrator who is experienced in the matter or action that is
subject to such arbitration. If such matter or action involves healthcare
issues, then the third arbitrator shall have such qualifications as would
satisfy the requirements of the National Health Lawyers Association Alternative
Dispute Resolution Service. Each of the arbitrators chosen shall be impartial
and independent of all parties to the Transaction Documents. If either of the
parties fails to select an arbitrator within twenty days after the end of such
thirty-day period, or if the arbitrators chosen fail to select a third
arbitrator within twenty days, then any party may in writing request the judge
of the United States District Court for the District of Louisiana senior in
term of service to appoint the arbitrator or arbitrators and, subject to this
Article 12, such arbitrators shall hear all arbitration matters arising under
this Article 12.
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Section 12.3 Applicable Rules.
(a) Each arbitration hearing shall be held at a place
in Houma, Louisiana acceptable to a majority of the arbitrators. The
arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association to the
extent such rules do not conflict with the terms hereof. The decision
of a majority of the arbitrators shall be reduced to writing and shall
be binding on the parties. Judgment upon the award(s) rendered by a
majority of the arbitrators may be entered and execution had in any
court of competent jurisdiction or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement. The charges and expenses of the arbitrators shall be
shared equally by the parties to the hearing.
(b) The arbitration shall commence within ten (10)
days after the arbitrators are selected in accordance with the
provisions of this Article 12. In fulfilling their duties with
respect to determining the amount of an Indemnity Loss, the
arbitrators may consider such matters as, in the opinion of the
arbitrators, are necessary or helpful to make a proper valuation. The
arbitrators may consult with and engage disinterested third parties to
advise the arbitrators. The arbitrators shall not add any interest
factor reflecting the time value of money to the amount of any
Indemnity Loss and shall not award any punitive damages.
(c) If any of the arbitrators selected hereunder
should die, resign or be unable to perform his or her duties
hereunder, the remaining arbitrators or such senior judge (or such
judge's successor) shall select a replacement arbitrator. The
procedure set forth in this Article 12 for selecting the arbitrators
shall be followed from time to time as necessary.
(d) As to any determination of the amount of an
Indemnity Loss, or as to the resolution of any other claim,
controversy, dispute or disagreement, that under the terms hereof is
made subject to arbitration, no lawsuit based on such claimed
Indemnity Loss or such resolution shall be instituted by any of PTI or
the Physician Parties (including New Clinic), other than to compel
arbitration proceedings or enforce the award of a majority of the
arbitrators.
(e) All privileges under Louisiana and federal law,
including attorney-client and work-product privileges, shall be
preserved and protected to the same extent that such privileges would
be protected in a federal court proceeding applying Louisiana law.
ARTICLE 13 MISCELLANEOUS
Section 13.1 Taxes. The Physician Parties will pay all transfer
taxes, sales and other taxes and charges, if any, which may become payable in
connection with the transactions contemplated by the Transaction Documents.
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Section 13.2 Remedies Not Exclusive. No remedy conferred by any of
the specific provisions of this Master Transaction Agreement or any other
Transaction Document is intended to be exclusive of any other remedy, and each
and every remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity or by
statute or otherwise. Provided, however the right to recover any amount under
the indemnification provision of Article X shall be determined and limited
exclusively as provided in Section 10.6. The election of any one or more
remedies by any party hereto shall not constitute a waiver of the right to
pursue other available remedies.
Section 13.3 Expenses. Whether or not the transactions contemplated
by this Master Transaction Agreement are consummated, each of the parties
hereto shall pay the fees and expenses of its counsel, accountants and other
experts incident to the negotiation and preparation of the Transaction
Documents and consummation of the transactions contemplated thereby. The
Physician Parties will pay the amount of one-half of the bookkeeping and
accounting fees related to the audit of the Practice by PTI, but such payment
shall not exceed, in any event, $10,000.
Section 13.4 Parties Bound. Except to the extent otherwise expressly
provided herein, this Master Transaction Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
representatives, administrators, guardians, successors and assigns; and no
other person shall have any right, benefits or obligation hereunder.
Section 13.5 Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Master Transaction Agreement shall be sufficient in all respects if given
in writing and delivered in person, by telecopy, by overnight courier or by
registered or certified mail, postage prepaid, return receipt requested, to the
receiving party at the following address:
If to PTI, addressed to:
Physicians Trust, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With copies to:
Chamberlain, Hrdlicka, White,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Physician Parties, addressed to:
________________________
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: A.D.▇▇▇▇▇▇, Jr., M.D.
Telecopy:
With copies to: ▇▇▇▇▇▇ ▇. Sundbery
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as such party may have given to the other parties by
notice pursuant to this Section 13.5. Notice shall be deemed given on the date
of delivery, in the case of personal delivery or telecopy, or on the delivery
or refusal date, as specified on the return receipt, in the case of overnight
courier or registered or certified mail.
Section 13.6 Choice of Law. This Master Transaction Agreement shall
be construed, interpreted, and the rights of the parties determined in
accordance with, the laws of the State of Louisiana except with respect to
matters of law concerning the internal affairs of any corporate or partnership
entity which is a party to or the subject of this Master Transaction Agreement,
and as to those matters the law of the state of incorporation or organization
of the respective entity shall govern. The parties agree that if a controversy
or claim between or among them arises out of or in relation to this Master
Transaction and results in litigation, the courts of Terrebonne Parish,
Louisiana shall have jurisdiction to hear and decide such matter, and the
parties hereto submit to jurisdiction to such courts.
Section 13.7 Entire Agreement; Amendments and Waivers. This Master
Transaction Agreement, together with other Transaction Documents and all
exhibits and schedules hereto and thereto, constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representatives
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or other agreements between the parties in connection with the subject matter
hereof. No supplement, modification or waiver of this Master Transaction
Agreement shall be binding unless it shall be specifically designated to be a
supplement, modification or waiver of this Master Transaction Agreement and
shall be executed in writing by the party to be bound thereby. No waiver of
any of the provisions of this Master Transaction Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any
of the provisions of this Master Transaction Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
Section 13.8 Letter of Intent. Without limiting the generality of
the foregoing section, the provisions of the Letter of Intent between PTI and
the Physician, shall terminate and cease to be of any force or effect at and
upon the Closing.
Section 13.9 Reformation Clause. The parties acknowledge that
federal and state law and regulations applicable to business transactions in
which physicians and other healthcare provides own equity interests in
healthcare companies are in a state of flux, and that as such laws and
regulations, and interpretations of such laws and regulations by the courts and
regulatory authorities, evolve, the transactions contemplated by this Master
Transaction Agreement may be prohibited by, or become economically impractical
due to, such laws and regulations. If such event occurs, the parties each
agree to negotiate in good faith such changes to the structure and terms of the
transactions provided for in this Master Transaction Agreement as may be
necessary to make these transactions, as restructured, lawful under applicable
laws and regulations, without materially disadvantaging either party.
Section 13.10 Assignment. The Master Transaction Agreement may not
be assigned by operation of law or otherwise except that PTI shall have the
right to assign this Master Transaction Agreement, at any time, to any direct
or indirect wholly owned subsidiary of PTI. No such assignment shall relieve
PTI of its obligations hereunder.
Section 13.11 Attorneys' Fees. Except as otherwise specifically
provided herein, if any action or proceeding is brought by any party with
respect to this Master Transaction Agreement or the other Transaction
Documents, or with respect to the interpretation, enforcement or breach hereof,
the prevailing party in such action shall be entitled to an award of all
reasonable costs of litigation or arbitration, including, without limitation,
attorneys' fees, to be paid by the losing party, in such amounts as may be
determined by the court having jurisdiction of such action or proceeding or by
the arbitrators deciding such action or proceeding.
Section 13.12 Further Assurances. From time to time hereafter and
without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such actions as any of the other parties hereto may
reasonably request in order to more effectively consummate the transactions
contemplated by the Transaction Documents or as shall be reasonably necessary
or appropriate in
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connection with the carrying out of the parties' respective obligations
hereunder or the purposes of this Master Transaction Agreement.
Section 13.13 Announcements and Press Releases. Any press releases
or any other public announcements concerning this Master Transaction Agreement
or the other Transaction Documents shall be approved by both PTI and Old
Clinic; provided, however, that if any party reasonably believes that it has a
legal obligation to make a press release and the consent of the other party
cannot be obtained, then the release may be made without such approval.
Section 13.14 Antidilution.
(a) The existence of PTI's obligation to issue shares
of PTI Common Stock pursuant to Section 2.4(c) of this Master
Transaction Agreement shall not affect in any way the right or power
of PTI or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in
PTI's capital structure or its business, or any merger or
consolidation of PTI, or any issue of bonds, debentures, preferred or
prior preference stock ahead of, or affecting the PTI Common Stock, or
the rights thereof, as the dissolution or liquidation of PTI, or any
sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of similar character or
otherwise.
(b) If PTI effects a subdivision or consolidation of
shares of PTI Common Stock or other capital readjustment, the payment
of a stock dividend, or other increase or reduction of the number of
shares of PTI Common Stock outstanding, without receiving compensation
therefor in money, services or property, then the number of shares of
PTI Common Stock subject to issuance pursuant to Section 2.4(c) of
this Master Transaction Agreement shall be appropriately adjusted in
such a manner to entitle the Physician to receive the name total
number and class of shares as it would have received had it received
shares of PTI Common Stock immediately prior to the event requiring
the readjustment. In the event of any capital reorganization or
reclassification of the capital stock of PTI, any consolidation or
merger of PTI with or into another corporation, or any sale, lease or
disposition of all or substantially all of the assets of PTI that is
effected in such a manner that holders of shares of PTI are entitled
to receive additional shares, other securities and/or property
(including cash) with respect to or in exchange for shares of PTI
Common Stock, PTI shall, as a condition precedent to such transaction,
cause effective provisions to be made so that the Physician shall
thereafter have the right to receive the kind and amount of additional
shares, other securities and/or other property receivable upon such
event as it would have received had it received the shares of PTI
Common Stock immediately prior to the event.
Section 13.15 No Tax Representations. Each party acknowledges that
it is relying solely on its advisors to determine the tax consequences of the
transactions contemplated hereunder and
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that no representation or warranty has been made by any party as to the tax
consequences of such transactions.
Section 13.16 No Rights as Stockholder. No Physician shall have any
rights as a stockholder with respect to any shares of PTI Common Stock until
the issuance of a stock certificate for such shares. Except as otherwise
provided in Section 13.14, no adjustments shall be made for dividends or
distributions or other rights for which the record date is prior to such date
any such stock certificate issued.
Section 13.17 Multiple Counterparts. This Master Transaction
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 13.18 Headings. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Master Transaction Agreement.
Section 13.19 Severability. Each article, section, subsection and
lesser section of this Master Transaction Agreement constitutes a separate and
distinct undertaking, covenant or provision hereof. In the event that any
provision of this Master Transaction Agreement shall finally be determined to
be unlawful, such provision shall be deemed severed from this Master
Transaction Agreement, but every other provision of this Master Transaction
Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this Master Transaction
Agreement to be duly executed as of July 7, 1997.
PHYSICIANS TRUST, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-------------------------------------------
Title: Chief Executive Officer
------------------------------------------
A.D. ▇▇▇▇▇▇, JR, (A.P.M.C.)
a Louisiana professional medical corporation
By: /s/ A.D. ▇▇▇▇▇▇, JR., M.D.
---------------------------------------------
Name: A.D. ▇▇▇▇▇▇, Jr., M.D.
-------------------------------------------
Title: President
-----------------------------------------
PHYSICIAN
/s/ A.D. ▇▇▇▇▇▇, JR., M.D.
-------------------------------------------------
A.D. ▇▇▇▇▇▇, Jr., M.D.
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
PHYSICIANS TRUST, INC.
AND
A.D. ▇▇▇▇▇▇, JR., (A.P. M. C.)
56
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 TERMS OF ASSET PURCHASE . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Medical Assets . . . . . . . . . . . . . . . . . . . . 3
Section 2.3 Assumption of Obligations and Liabilities . . . . . . . 4
Section 2.4 Purchase Price . . . . . . . . . . . . . . . . . . . . 5
Section 2.5 Tax Allocation . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3 REPRESENTATIONS OF THE PHYSICIAN PARTIES . . . . . . . . . . . . . 5
Section 3.1 Representations of the Physician Parties . . . . . . . 5
ARTICLE 4 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.1 Documents to be Delivered by Old Clinic . . . . . . . . 7
Section 4.2 Documents to be Delivered by PTI . . . . . . . . . . . 8
ARTICLE 5 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.1 Indemnification . . . . . . . . . . . . . . . . . . . . 8
Section 5.2 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.3 Remedies Not Exclusive . . . . . . . . . . . . . . . . 8
Section 5.4 Parties Bound . . . . . . . . . . . . . . . . . . . . . 8
Section 5.5 Choice of Law . . . . . . . . . . . . . . . . . . . . . 8
Section 5.6 Entire Agreement; Amendments and Waivers . . . . . . . 8
Section 5.7 Reformation Clause . . . . . . . . . . . . . . . . . . 9
Section 5.8 Assignment . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.9 Further Assurances . . . . . . . . . . . . . . . . . . 9
Section 5.10 Multiple Counterparts . . . . . . . . . . . . . . . . . 9
Section 5.11 Headings . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.12 Severability . . . . . . . . . . . . . . . . . . . . . 10
Section 5.13 Survival of Representations and Warranties . . . . . . 10
Section 5.14 Notices . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.15 Prorations . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.16 Commercial Reasonableness . . . . . . . . . . . . . . . 10
EXHIBITS
A General ▇▇▇▇ of Sale, Conveyance, Transfer and Assignment, and
Agreement Regarding Assumption of Liabilities
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SCHEDULES
2.1(b) Accounts Receivable
2.1(c) Personal Property Lease
2.1(d) Assumed Contracts
2.1(e) Tangible Personal Property
2.1(g) Licenses
2.1(h) Real Property Leases
2.2(e) Medical Licenses
2.3(a) Accounts Payable
2.5 Tax Allocation
3.1(a) Title Exceptions
3.1(c) Inventory Exceptions
3.1(d) Accounts Receivable Exceptions
3.1(e) Tangible Personal Property Exceptions
3.1(f) Lease Exceptions
3.1(g) Assumed Contract Exceptions
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Asset Purchase Agreement"), dated and
effective for all purposes as of the close of business on ____________, 1997,
is by and between PHYSICIANS TRUST, INC., a Delaware corporation ("PTI"), and
A.D. ▇▇▇▇▇▇, JR., (A PROFESSIONAL MEDICAL CORPORATION), a Louisiana
professional medical corporation ("Old Clinic").
RECITALS
A. In connection with the transactions contemplated by the Master
Transaction Agreement, dated and effective as of ________________, 1997, among
PTI, Old Clinic and A.D. ▇▇▇▇▇▇, Jr., M.D. (the "Master Transaction
Agreement"), Old Clinic desires to sell and transfer all of its nonmedical
assets, and PTI desires to purchase and acquire such nonmedical assets.
B. In addition, in connection with the transactions contemplated by
the Master Transaction Agreement, Old Clinic desires to transfer to PTI certain
liabilities of Old Clinic, and PTI desires to assume such liabilities of Old
Clinic.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreement set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agrees as
follows:
ARTICLE 1
DEFINITIONS
Any capitalized term not defined herein shall have the meaning ascribed
to such term in the Master Transaction Agreement.
ARTICLE 2
TERMS OF ASSET PURCHASE
Section 2.1 Purchase and Sale. Subject to the terms and conditions
herein set forth and in the Master Transaction Agreement, and in reliance upon
the representations and warranties set forth herein and in the Master
Transaction Agreement, Old Clinic agrees to sell, convey, assign, transfer and
deliver to PTI, and PTI agrees to purchase and acquire, the assets consisting
of all the assets (other than cash and the Medical Assets specified in Section
2.2 hereof) owned by Old Clinic as a going concern as of the Closing Date, of
every kind, character and description, whether tangible, real, personal or
mixed, and wheresoever located, whether carried on the books of Old Clinic or
not carried on the books of Old Clinic due to having been expensed, fully
depreciated, or otherwise (the
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"Nonmedical Assets"), including without limitation the following (except to the
extent that any of the following are specifically enumerated as Medical Assets
in Section 2.2 hereof):
(a) All of the inventory owned by Old Clinic ("Inventory");
(b) All accounts receivable or other rights to receive payment
owing to Old Clinic as set forth and described on Schedule 2.1(b)
("Accounts Receivable");
(c) All of Old Clinic's rights in, to and under all leases of
supplies, instruments, equipment, furniture, machinery and other items
of tangible personal property ("Personal Property Leases"), including
without limitation the Personal Property Leases described on Schedule
2.1(c);
(d) All of Old Clinic's rights in, to and under all contracts,
agreements, insurance policies, purchase orders and commitments (the
"Assumed Contracts"), including without limitation the Assumed Contracts
described on Schedule 2.1(d);
(e) All tangible personal property (including supplies,
instruments, equipment, furniture and machinery) owned by Old Clinic
("Tangible Personal Property"), including without limitation the
Tangible Personal Property described on Schedule 2.1(e); but not
including the excluded Tangible Personal Property identified as such on
Schedule 2.1(e);
(f) All books and records of Old Clinic, including without
limitation, all credit records, payroll records, computer records,
computer programs, contracts, agreements, operating manuals, schedules
of assets, correspondence, books of account, files, papers, books and
all other public and confidential business records (together the
"Business Records"), whether such Business Records are in hard copy form
or are electronically or magnetically stored;
(g) All franchises, licenses, permits, certificates, approvals
and other governmental authorizations necessary to own and operate any
of the other Nonmedical Assets, a complete and correct list of which is
set forth on the Schedule 2.1(g) (the "Licenses");
(h) The leasehold estates created by, and all rights conferred
on Old Clinic under or by virtue of, all real property lease agreements
(such real property lease agreements are hereinafter referred to as
"Real Property Leases" and the parcels of real property in which Old
Clinic has a leasehold interest and that are subject to the Real
Property Leases are hereinafter referred to as "Leased Property"),
including without limitation estates created by, and rights conferred
under, the Real Property Leases described on Schedule 2.1(h), and any
and all estates, rights, titles and interests in, to and under all
warehouses, storage facilities,
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buildings, works, structures, fixtures, landings, constructions in
progress, improvements, betterments, installations and additions
constructed or located on or attached or affixed to the Leased Property;
(i) All (i) United States and foreign patents, patent
applications, trademarks, trademark applications and registrations,
service marks, service ▇▇▇▇ applications and registrations, copyrights,
copyright applications and registrations and trade names, fictitious
names and assumed names of Old Clinic; (ii) proprietary data and
technical, manufacturing know-how and information (and all materials
embodying such information) of Old Clinic; (iii) developments,
discoveries, inventions, ideas and trade secrets of Old Clinic; and (iv)
rights to ▇▇▇ for past infringement (all of the foregoing, collectively,
"Intellectual Property");
(j) All of Old Clinic's right, title and interest in, to and
under all telephone numbers used in connection with the Practice,
including all extensions thereto;
(k) All rights in, to and under all representations,
warranties, covenants and guaranties made or provided by third parties
to or for the benefit of Old Clinic with respect to any of the other
Nonmedical Assets or with respect to the Medical Assets; and
(l) All of Old Clinic's prepaid expenses, prepaid insurance,
deposits and other similar items ("Prepaid Items").
If and to the extent the assignment of any personal property lease, real
property lease, contract, agreement, purchase order, work order, commitment,
license, permit, certificate or approval constituting a Nonmedical Asset shall
require the consent of another party thereto, then (i) such personal property
lease, real property lease, contract, agreement, purchase order, work order,
commitment, license, permit, certificate or approval shall constitute a
Personal Property Lease, Real Property Lease, Assumed Contract or License, as
the case may be, only upon and subject to receipt of such consent; (ii) such
personal property lease, real property lease, contract, agreement, purchase
order, work order, commitment, license, permit, certificate or approval shall
not be a Personal Property Lease, Real Property Lease, Assumed Contract or
License, as the case may be, if and for so long as the attempted assignment
would constitute a breach thereof; and (iii) Old Clinic shall cooperate fully
with PTI in seeking such consent or reasonable arrangement designed to provide
to PTI the benefits, claims or rights arising hereunder.
Section 2.2 Medical Assets. Old Clinic shall not sell, convey,
assign, transfer or deliver to PTI, and PTI shall not be obligated to acquire
(or make any payments or otherwise discharge any liability or obligation of Old
Clinic with respect to), the following assets of Old Clinic (the "Medical
Assets"):
(a) Any of Old Clinic's right, title and interest in, to or
under, or possession of, all drugs, pharmaceuticals, products,
substances, items or devices whose purchase,
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Asset Purchase Agreement - Physicians Trust, Inc. and
A.D. ▇▇▇▇▇▇, ▇▇. (▇.▇.▇.▇.) ▇
▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, administration, prescription or security
requires the authorization or order of a licensed health care provider
or requires a permit, registration, certification or any other
governmental authorization held by a licensed health care provider as
specified under any federal or state law, or both;
(b) Any of Old Clinic's right, title and interest in and to
records of identity, diagnosis, evaluation or treatment of patients;
(c) Any of Old Clinic's right, title and interest in, to and
under insurance policies covering or relating to medical malpractice;
(d) Any goodwill relating to or attributable to or arising
from the other Old Clinic Medical Assets;
(e) Any franchises, licenses, permits, certificates, approvals
and other governmental authorizations necessary to desirable to own and
operate any of the other Medical Assets, a complete and correct list of
which is set forth on Schedule 2.2(e); and
(f) Any of Old Clinic's right, title or interest in, to or
under any contract or agreement that requires performance by a licensed
health care provider under federal or applicable state law ("Medical
Contracts").
Section 2.3 Assumption of Obligations and Liabilities. At the
Closing, PTI shall assume and agree to pay or perform, promptly as they become
due, only those obligations and liabilities of Old Clinic expressly set forth
below in this Section 2.3 (the "Assumed Obligations"). Except for the Assumed
Obligations, PTI shall not assume or be deemed to have assumed and shall not be
responsible for any other obligation or liability of Old Clinic, direct or
indirect, known or unknown, ▇▇▇▇▇▇ or inchoate, absolute or consignment,
including without limitation (i) any and all obligations regarding any foreign,
Federal, state or local income, sales, use, franchise or other tax liabilities
(ii) any and all obligations or liabilities relating to any of fees or expenses
of the Physician Parties' counsel, accountants or other experts incident to the
negotiation and preparation of the Transaction Documents and consummation of
the transactions contemplated thereby, and (iii) any and all liabilities
relating to or arising from the provision of professional medical services (or
failure to provide professional medical services) prior to the Closing Date.
The Assumed Obligations are:
(a) The accounts and notes payable and other obligations of
Old Clinic specifically set forth on Schedule 2.3(a) and incurred in
connection with the operation of the Practice arising in the ordinary
course of business consistent with past practices and not incurred in
violation of any law or in breach of any duty existing as of the date
hereof; and
(b) The obligations or liabilities of Old Clinic that relate
to periods, events or circumstances occurring on or after the effective
date in, to and under the Personal Property Leases listed on Schedule
2.1(c), the Real Property Leases listed on Schedule 2.1(h) and the
Assumed Contracts listed on Schedule 2.1(d); provided, however, that (i)
each of such Personal Property Leases listed on Schedule 2.1(c), Real
Property Leases listed on Schedule
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2.1(h) and the Assumed Contracts listed on Schedule 2.1(d) shall be on
the same terms and conditions as are in effect prior to and on the
effective date, (ii) PTI shall assume no obligation or liability in, to
or under any such lease, agreement or order that is not included on the
Schedule 2.1(c), Schedule 2.1(h) or Schedule 2.1(d), and (iii) PTI shall
assume no obligation or liability in, to or under any illegal agreement,
lease or purchase order, or any other obligations, the performance of
which would be illegal.
Section 2.4 Purchase Price. PTI agrees that, subject to the terms and
conditions of this Asset Purchase Agreement, and in full consideration for the
aforesaid sale, transfer, conveyance, assignment and delivery of the Nonmedical
Assets to PTI, and the assumption of the Assumed Obligations by PTI, PTI shall
deliver to Old Clinic on the Closing Date an amount equal to the sum of
$130,000 plus the lesser of $250,000 or 90% of the scheduled value of the
Accounts Receivable as of the Closing Date ("Purchase Price"). Payment of such
cash amount may be made, at the election of PTI, by delivery of a PTI check or
by wire transfer to a bank account designated by Old Clinic.
Section 2.5 Tax Allocation. The Purchase Price plus the Assumed
Obligations constitute, for federal income tax purposes, the total
consideration paid by PTI for the Nonmedical Assets (the "Tax Consideration").
The Tax Consideration shall be allocated among the Nonmedical Assets in the
manner set forth on Schedule 2.5. The allocation set forth on Schedule 2.5 is
based on the fair market value of the assets acquired, and the allocation is
intended to be in compliance with Section 1060 of the Code. PTI and Old Clinic
agree to use the allocations in Schedule 2.5 in all tax returns or statements
filed with any taxing authority. PTI and Old Clinic agree to file timely the
applicable Forms 8594 attached to the Schedule 2.5 with their respective
federal income tax returns for the taxable year in which the Closing Date
occurs.
ARTICLE 3
REPRESENTATIONS OF THE PHYSICIAN PARTIES
Section 3.1 Representations of the Physician Parties. The Physician
Parties jointly and severally represent and warrant to PTI that:
(a) Title to Nonmedical Assets. Except as set forth on
Schedule 3.1(a), Old Clinic is the owner and has as of the date hereof,
good and marketable title to the Nonmedical Assets, free and clear of
any and all liens, charges, pledges, claims, security interests,
exceptions or other encumbrances of any kind.
(b) Inventory. Except as set forth on Schedule 3.1(c), to the
best of the Physician Parties' knowledge: (i) the Inventory is in its
originally manufactured condition, fit for the use which intended, free
from any known defect and in a quality and quantity usable in the
ordinary course of business; (ii) the Inventory does not contain
material amounts of items that are slow-moving, obsolete or of below-
standard quality; (iii) the qualities and quantities of Inventory are
reasonable and warranted in the present and anticipated circumstances of
the Practice; and (iv) there has been no decrease in the physical
Inventory since the Old Clinic Balance Sheet Date, other than in the
ordinary course of business.
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(c) Accounts Receivable. Except as set forth on Schedule
3.1(d), the Accounts Receivable are in the aggregate valid, binding and
legally enforceable obligations (except as enforcement may be limited by
any applicable bankruptcy, insolvency, reorganization or other laws
affecting creditor's rights generally or by general equitable remedies)
and are owned by Old Clinic free and clear of all liens and
encumbrances, and except for contractual allowances and reserves for bad
debts, in the aggregate will not be subject to any offset, counterclaim
or other adverse claim or defense, and may be sold and transferred to
PTI. The Accounts Receivable arose in the ordinary and usual course of
the business and the amounts stated on the books and records of Old
Clinic. No warranty is given that the Accounts Receivable are
collectable and any such warranty is expressly disclaimed and released.
(d) Tangible Personal Property. Except as set forth on
Schedule 3.1(e), the Tangible Personal Property is in good operating
condition, working order and repair (normal wear and tear excepted) and
is fully suitable for the uses for which it is employed in the conduct
of the Practice.
(e) Leases. With respect to each of the Real Property Leases
and Personal Property Leases, except as set forth on Schedule 3.1(f) and
Schedule 3.1(g):
(i) such lease is legal, valid, binding, enforceable
and in full force and effect;
(ii) such lease will continue to be legal, valid,
binding, enforceable and in full force and effect on identical
terms following the Closing;
(iii) no party to such lease is in material breach or
default, and no event has occurred that, with notice or lapse of
time, would constitute a material breach or default or permit
termination, modification or acceleration thereunder;
(iv) no party to such lease has repudiated in writing
any provision thereof;
(v) there are no disputes, oral agreements or
forbearance programs in effect as to such lease;
(vi) to the best of the Physician Parties' knowledge,
the owner of the property leased pursuant to such lease has good
and marketable title to such property free and clear of any
security interest, mortgage, easement, covenant or other
restriction, except for recorded easements, covenants or other
restrictions that do not impair current use, occupancy or value,
or the marketability of title of the property subject thereto;
and
(vii) Old Clinic has performed and satisfied in full each
material obligation to be performed by Old Clinic under such
lease.
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(f) Contract Rights. Except as set forth on Schedule 3.1(g),
each of the Assumed Contracts is valid and enforceable and is in full
force and effect, and there is no material default or existing condition
that, with the giving of notice or the passage of time, would constitute
such a default by Old Clinic or by any parties thereto. Old Clinic has
performed and satisfied in full each material obligation required to be
performed by Old Clinic under each assumed contract. If services are to
be provided to Old Clinic under any such Assumed Contract, such services
have been and are being performed satisfactorily and timely,
substantially in accordance with terms of such Assumed Contract.
(g) Prepaid Items. Each of the Prepaid Items may be
transferred to PTI without the necessity of obtaining any consent or
approval.
(h) Accounts Payable. Each of the Accounts Payable was
incurred in the ordinary course of business of Old Clinic, may be
transferred to PTI and is due and payable in the ordinary course of
business of Old Clinic consistent with past practices.
(i) Completeness and Conditions of Assets. The Nonmedical
Assets, together with the Medical Assets, include all the properties
necessary to conduct the Practice as presently conducted and as proposed
to be conducted, and the Nonmedical Assets include all the properties
necessary to perform the Assumed Obligations.
ARTICLE 4
CLOSING
Section 4.1 Documents to be Delivered by Old Clinic. At the Closing,
pursuant to this Asset Purchase Agreement, Old Clinic shall deliver, or cause
to be delivered, to PTI the following:
(a) Bills of sale, endorsements, assignments, drafts, checks
or other instruments, as to all Nonmedical Assets, and any other
appropriate instruments in such reasonable or customary form as shall be
requested by PTI and its counsel and reasonably satisfactory to Old
Clinic and its counsel, including without limitation the General ▇▇▇▇ of
Sale, Conveyance, Transfer and Assignment and Agreement Regarding
Assumption of Liabilities covering all the Nonmedical Assets and the
Assumed Obligations substantially in the form attached hereto as Exhibit
A;
(b) Evidence satisfactory to PTI that all liens, claims,
pledges, security interests and other encumbrances on the Nonmedical
Assets have been released;
(c) All consents to assignment or other documents contemplated
by the second paragraph of Section 2.1 hereof; and
(d) Such further certificates, schedules, exhibits or other
instruments as may be necessary to consummate the transactions herein
contemplated.
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Section 4.2 Documents to be Delivered by PTI. At the Closing,
pursuant to this Asset Purchase Agreement, PTI shall deliver the following
appropriate instruments of assumption, as to all Assumed Obligations, and any
other appropriate instruments in such reasonable or customary form as shall be
requested by Old Clinic and its counsel and reasonably satisfactory to PTI and
its counsel, including without limitation the General ▇▇▇▇ of Sale, Conveyance,
Transfer and Assignment, and Agreement Regarding Assumption of Liabilities
covering all the Nonmedical Assets and Assumed Obligations, substantially in the
form attached hereto as Exhibit A.
ARTICLE 5
MISCELLANEOUS
Section 5.1 Indemnification. The liability of the partners hereto in
respect of a breach of a representation, warranty, covenant, indemnity or
agreement contained in or arising in connection with this Purchase Agreement
shall be governed by the terms of Article 10 of the Master Transaction
Agreement.
Section 5.2 Taxes. Old Clinic will pay all transfer taxes, sales and
other taxes and charges, if any, which may become payable in connection with
the transactions contemplated by the Transaction Documents.
Section 5.3 Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Asset Purchase Agreement is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative
and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver of the right to pursue other available remedies.
Section 5.4 Parties Bound. Except to the extent otherwise expressly
provided herein, this Asset Purchase Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs,
representatives, administrators, guardians, successors and assigns; and no
other person shall have any right, benefit or obligation hereunder.
Section 5.5 Choice of Law. This Asset Purchase Agreement shall be
construed, interpreted, and the rights of the parties determined in accordance
with, the laws of the State of Louisiana except with respect to matters of law
concerning the internal affairs of any corporate or partnership entity which is
a party to or the subject of this Asset Purchase Agreement, and as to those
matters the law of the state of incorporation or organization of the respective
entity shall govern. The Parties agrees that if a controversy or claim between
them arises out of or in relation to this Asset Purchase Agreement and results
in litigation, the courts of Terrebonne Parish, Louisiana and the courts of the
United States of America located in Terrebonne Parish, Louisiana shall have
jurisdiction to hear and decide such matter, and Old Clinic and PTI submit to
jurisdiction to such courts.
Section 5.6 Entire Agreement; Amendments and Waivers. This Asset
Purchase Agreement, together with the other Transaction Documents and all
Exhibits and Schedules hereto
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and thereto, constitutes the entire agreement between the parties pertaining to
the subject matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements between the parties in connection with the subject matter hereof.
No supplement, modification or waiver of this Asset Purchase Agreement shall be
binding unless it shall be specifically designated to be a supplement,
modification or waiver of this Asset Purchase Agreement and shall be executed
in writing by the Party to be bound thereby. No waiver of any of the
provisions of this Asset Purchase Agreement shall be deemed or shall constitute
a waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
Section 5.7 Reformation Clause. It is the intention of the parties
hereto to conform strictly to applicable laws regarding the practice and
regulation of medicine, whether such laws are now or hereafter in effect,
including the laws of the United States of America, the State of Louisiana or
any other applicable jurisdiction, and including any subsequent revisions to,
or judicial interpretations of, those laws, in each case to the extent they are
applicable to this Asset Purchase Agreement (the "Applicable Laws").
Accordingly, if the transfer of any Nonmedical Assets by Old Clinic or PTI
violates any Applicable Law, then the parties hereto agree as follows: (a) the
provisions of this Section 5.7 shall govern and control; (b) if neither of the
parties hereto is materially economically disadvantaged, then any Nonmedical
Asset, the transfer of which violates any Applicable Law, shall be deemed to
have never been transferred to PTI; (c) if one or more of the parties hereto is
materially economically disadvantaged, then the parties hereto agree to
negotiate in good faith such changes to the structure and terms of the
transactions provided for in this Asset Purchase Agreement as may be necessary
to make these transactions, as restructured, lawful under applicable laws and
regulations, without materially disadvantaging either party; (d) this Asset
Purchase Agreement shall be deemed reformed; and (e) the parties to this Asset
Purchase Agreement shall execute and deliver all documents or instruments
necessary to effect or evidence the provisions of this Section 5.7.
Section 5.8 Assignment. This Asset Purchase Agreement may not be
assigned by operation of law or otherwise except that PTI shall have the right
to assign this Asset Purchase Agreement, at any time, to any direct or indirect
wholly-owned subsidiary of PTI. No such assignment shall relieve PTI of its
obligations hereunder.
Section 5.9 Further Assurances. From time to time hereafter and
without further consideration, each of the parties hereto shall execute and
deliver such additional or further instruments of conveyance, assignment and
transfer and take such actions as any of the other parties hereto may
reasonably request in order to more effectively consummate the transactions
contemplated by the Transaction Documents or as shall be reasonably necessary
or appropriate in connection with the carrying out of the parties' respective
obligations hereunder or the purposes of this Asset Purchase Agreement.
Section 5.10 Multiple Counterparts. This Asset Purchase Agreement may
be executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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Section 5.11 Headings. The headings to the sections and schedules of
this Asset Purchase Agreement are inserted for convenience only and shall not
affect the meaning or interpretation of this Asset Purchase Agreement.
Section 5.12 Severability. Each article, subsection and lesser section
of this Asset Purchase Agreement constitutes a separate and direct undertaking,
covenant or provision hereof. In the event that any provision of this Asset
Purchase Agreement shall finally be determined to be unlawful, such provision
shall be deemed severed from this Asset Purchase Agreement, but every other
provision of this Asset Purchase Agreement shall remain in full force and
effect.
Section 5.13 Survival of Representations and Warranties. All
representations, warranties and indemnities made by the parties in this Asset
Purchase Agreement shall survive the Closing and shall thereafter terminate and
expire twenty-four (24) months after the closing Date, except that
representations, warranties and associated indemnities with respect to
environmental matters and tax matters shall survive for a period equal to the
respective statute of limitations applicable to any claim arising from or
attributable to such matters; provided, however, that notwithstanding the
foregoing, the rights and obligations with respect to indemnification as
provided in Article 10 of the Master Transaction Agreement shall continue with
respect to any matter for which indemnification has been properly sought
pursuant to the terms and conditions of this Asset Purchase Agreement and the
Master Transaction Agreement prior to the expiration of any such survival
period.
Section 5.14 Notices. All notices, reports, records or other
communications that are required or permitted to be given to the parties under
this Asset Purchase Agreement shall be sufficient in all respects if given in
writing and delivered in person, by telecopy, by overnight courier, or by
registered or certified mail, postage prepaid, return receipt requested, to the
receiving party at the address of the parties set forth in the Master
Transaction Agreement or to such other address as such party may have given to
the other party pursuant to this Section 5.14. Notice shall be deemed given on
the date of delivery, in the case of personal delivery or telecopy, or on the
delivery or refusal date, as specified on the return receipt, in the case of
overnight courier or registered or certified mail.
Section 5.15 Prorations. Old Clinic and PTI agree that all utility,
insurance, maintenance, operating and other similar expenses and ad valorem,
property and other taxes shall be divided or prorated between Old Clinic and
PTI based on their respective periods of ownership and occupancy through and
after the Closing Date.
Section 5.16 Commercial Reasonableness. The parties to this Asset
Purchase Agreement hereby agree that they shall perform their obligations
hereunder in a commercially reasonable manner.
(SIGNATURES ON FOLLOWING PAGE)
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A.D. ▇▇▇▇▇▇, JR., (A.P.M.C.)
a Louisiana professional medical corporation
By:
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
PHYSICIANS TRUST, INC.,
a Delaware corporation
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., President
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EXHIBIT A
GENERAL ▇▇▇▇ OF SALE, CONVEYANCE, TRANSFER AND ASSIGNMENT, AND AGREEMENT
REGARDING ASSUMPTION OF LIABILITIES
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SCHEDULE 2.1(b)
ACCOUNTS RECEIVABLE
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SCHEDULE 2.1(c)
PERSONAL PROPERTY LEASES
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SCHEDULE 2.1(d)
ASSUMED CONTRACTS
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SCHEDULE 2.1(e)
TANGIBLE PERSONAL PROPERTY
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SCHEDULE 2.1(g)
LICENSES
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SCHEDULE 2.1(h)
REAL PROPERTY LEASES
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SCHEDULE 2.2(e)
MEDICAL LICENSES
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SCHEDULE 2.3(a)
ACCOUNTS PAYABLE
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SCHEDULE 2.5
TAX ALLOCATION
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SCHEDULE 3.1(a)
TITLE EXCEPTIONS
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SCHEDULE 3.1(c)
INVENTORY EXCEPTIONS
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SCHEDULE 3.1(d)
ACCOUNTS RECEIVABLE EXCEPTIONS
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SCHEDULE 3.1(e)
TANGIBLE PERSONAL PROPERTY EXCEPTIONS
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SCHEDULE 3.1(f)
LEASE EXCEPTIONS
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SCHEDULE 3.1(g)
ASSUMED CONTRACT EXCEPTIONS
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MANAGEMENT SERVICES AGREEMENT
Dated as of the _________ day of ________, 1997
by and between
PHYSICIANS TRUST, INC.
and
BAYOU ORTHOPEDIC CENTER,
A PROFESSIONAL MEDICAL CORPORATION
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TABLE OF CONTENTS
Page
----
ARTICLE 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3. Services to be Provided by Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.1 Overall Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.2 General Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.3 Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 Acquisition and Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.5 Financial Planning and Budgeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.6 Inventory and Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.7 Advertising and Public Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.8 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.9 Provider and Payor Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.10 Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.11 Other Consulting and Advisory Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.12 Events Excusing Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 4. Obligations of the Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Employment of Physician Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Professional Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.3 Medical Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.4 Clinic's Internal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.5 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.6 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.7 Ancillary Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.8 Premises and Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.9 Clinic Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 5. Joint Planning Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.1 Formation and Operation of the Joint Planning Board . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 6. Restrictive Covenants and Liquidated Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.1 Restrictive Covenants of the Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.2 Restrictive Covenants and Liquidated Damages Provisions . . . . . . . . . . . . . . . . . . . . . 22
Section 6.3 Enforcement of Physician Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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ARTICLE 7. Financial and Security Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.1 Service Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.2 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.3 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.4 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 8. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 9. Insurance and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.1 Insurance to be Maintained by the Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.2 Insurance to be Maintained by Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.3 Continuing Liability Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.4 Additional Insured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.6 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 10. Term and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.1 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 10.2 Extended Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.3 Termination by the Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.4 Termination by Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.5 Effective Date of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10.6 Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10.7 Terms of Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.8 Exceptions to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.9 Effect Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 11. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.3 Waiver of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.4 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.6 Contract Modifications for Prospective Legal Events . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.7 Parties In Interest; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.8 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.11 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.12 Arbitration and Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.13 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.14 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.15 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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Section 11.16 Reference to Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.17 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11.18 Inflation Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.19 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 11.20 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
EXHIBITS
7.4 Security Agreement
SCHEDULES
---------
3.3 Facilities
4.1 Physician Employment Agreement
4.3 Medical Practice
4.9(c) Clinic Plans
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MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement (this "Agreement"), dated as of
______________, 1997, is by and among Physicians Trust, Inc., a Delaware
corporation, ("PTI"), and its affiliates (collectively, "Administrator") and
Bayou Center Orthopedic Center, A Professional Medical Corporation, a
Louisiana professional medical corporation (the "Clinic").
WITNESSETH:
WHEREAS, the Clinic will conduct a medical orthopedic practice in the
Houma, Louisiana area and will provide professional orthopedic care and
products to the general public; and
WHEREAS, Administrator is in the business of owning certain assets of
medical clinics and providing consulting, administrative, and other support
services to and furnishing medical practices with the necessary facilities,
equipment, non-physician personnel, supplies and nonphysician support staff
services; and
WHEREAS, the Clinic desires to obtain the services of Administrator in
performing functions so as to permit the Clinic to devote its efforts on a
concentrated and continuous basis to the rendering of medical services to its
patients; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and on the terms and subject to the
conditions herein set forth, the parties hereto agree as follows:
ARTICLE 1.
Definitions
SECTION 1.1 DEFINITIONS. For the purposes of this Agreement, the
following definitions shall apply:
(a) "Acquisition" shall mean the acquisition of assets
described in the Acquisition Agreements.
(b) "Acquisition Agreements" shall mean the Asset
Purchase Agreement of even date herewith by and between Administrator and
Clinic of even date herewith and the Master Transaction Agreement dated
_______, 1997, by and between Administrator, Clinic and certain physicians.
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(c) "Acquisition Consideration" shall mean the PTI
Common Stock and other consideration furnished pursuant to the Acquisition
Agreements by PTI in connection with the Acquisition.
(d) "Acquisition Effective Date" shall mean the date
the Acquisition is effective pursuant to the terms of the Acquisition
Agreements.
(e) "Adjustments" shall mean any adjustments
for uncollectible accounts, discounts, Medicare and Medicaid disallowances,
workers' compensation, employee/dependent health care benefit programs,
professional courtesies and other activities to the extent they do not generate
a collectible fee or offset a fee previously recorded.
(f) "Administrator Expense" shall mean,
pursuant to GAAP applied on a consistent basis:
(i) Any corporate overhead charges of
Administrator or PTI and other items incurred by
Administrator or PTI that are not incurred
specifically for the purpose of providing services
to the Clinic or are not directly attributable to
the Clinic as reasonably determined by
Administrator, including, without limitation,
salaries and benefits of executive officers of
Administrator or PTI, except as otherwise provided
for in the definition of Clinic Expenses.
(ii) Any amortization of any intangible
asset resulting from the Acquisition.
(iii) Any depreciation attributable to
increases in the book value of tangible depreciable
assets resulting from the Acquisition.
(iv) Any legal and accounting expenses
incurred by Administrator or PTI in connection with
the Acquisition.
(v) All taxes of Administrator,
including but not limited to state and federal
income taxes and franchise taxes, but excluding
state and federal employee taxes related to
employees who provide services for the Clinic,
property taxes on assets used by the Clinic and
other taxes specifically included in Clinic
Expenses.
(vi) Any other expenses specifically
included in "Administrator Expenses" in this
Agreement.
(g) "Affiliate" with respect to any person
shall mean a person that directly or indirectly through one or more
intermediaries controls, or is controlled by or is under common control with,
such person. Neither Administrator nor the Clinic is deemed to be an Affiliate
of the other.
(h) "Ancillary Expenses" shall mean, pursuant
to GAAP applied on a consistent basis, all operating and non-operating expenses
of Administrator or PTI, without ▇▇▇▇-up, incurred in the
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operation of Ancillary Services on behalf of the Clinic pursuant to this
Agreement, and all operating and non-operating expenses of the Clinic incurred
by the Clinic in the operation of Ancillary Services on behalf of the Clinic,
including, without limitation, all expenses normally included within the
definition of Clinic Expenses and specifically including all costs associated
with Technical Employees.
(i) "Ancillary Revenue" for any month shall
mean, all fees and income of the Clinic Administrator or PTI that, pursuant to
GAAP applied on a consistent basis, should be recorded each month (net of
Adjustments) by or on behalf of the Clinic from the provision of Ancillary
Services to the patients of the Clinic.
(j) "Ancillary Services" shall mean any and all
services, products or other fee generating activities provided to the patients
of the Clinic and not resulting from direct professional medical services or
incident to such professional medical services by Physician Employees of the
Clinic.
(k) "Clinic" shall include the Clinic as
defined in the first paragraph of this Agreement and all satellite locations
and related businesses of such Clinic.
(l) "Clinic Expenses" shall mean, pursuant to
GAAP applied-on a consistent basis, all operating and non-operating expenses of
Administrator or PTI, without ▇▇▇▇-up, incurred in the operation of the Clinic
pursuant to this Agreement, and all operating and non-operating expenses of the
Clinic incurred by the Clinic in the operation of the Clinic, including,
without limitation:
(i) Salaries, benefits and other direct
costs of all employees of Administrator or PTI who
perform services for the Clinic, and all salaries
and benefits of Physician Employees (other than
Clinic Physician Stockholders) if approved by the
Joint Planning Board, including, without
limitation, federal and state employee taxes and
costs of workers' compensation.
(ii) Direct costs of all employees or
consultants of Administrator and its Affiliates
engaged to provide services at or in connection
with the Clinic or who actually provide services at
or in connection with the Clinic for improved
performance, such as quality assurance, materials
management, purchasing program, charge and coding
analysis, physician recruitment and business office
consultant provided, however, only the portion of
expenses related to such employee or consultant,
without ▇▇▇▇-up, that is reasonably allocable to
work performed at or for the benefit of the Clinic
shall be included in Clinic Expenses.
(iii) The obligations of Administrator or
PTI under leases or subleases for assets which are
leased or utilized for the benefit of the Clinic,
including, without limitation, any subleases
between any Affiliates included in Administrator,
provided that the rent payable under such subleases
shall not exceed the rent payable by such
Affiliate.
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(iv) Personal and intangible property
taxes assessed against Administrator's or its
Affiliate's assets which are leases or utilized for
the benefit of the Clinic, commencing on the date
of this Agreement.
(v) Interest expense on indebtedness (1)
assumed by Administrator or PTI as a result of the
Acquisition or (2) incurred by Administrator or PTI
(a) to finance or refinance obligations incurred by
Administrator or PTI as a result of the Acquisition
(except in connection with any interest expense
accrued under promissory notes or other obligations
payable by PTI or Administrator to Clinic Physician
Stockholders under the Acquisition Agreements)
and/or (b) in connection with making advances and
capital available to the Clinic and in providing
other services pursuant to this Agreement, to the
extent such indebtedness exceeds the net
intercompany account balance of the Clinic, which
interest expense shall be the actual cost incurred
by Administrator or PTI in obtaining such funds.
(vi) Any provider tax assessed against
the Clinic by the State and any sales and use taxes
assessed against the Clinic related to Clinic
operations or assessed against Administrator
related to services provided hereunder.
(vii) Expenses related to professional
meetings, seminars, dues and professional licensing
fees related to the business of the Clinic.
(viii) All expenses specifically included
in "Clinic Expenses" in this Agreement.
(ix) All professional liability insurance
premiums and deductibles related thereto, and all
expenses, whether for premiums or otherwise,
related to life insurance for any Clinic Physician
Stockholder where the beneficiary thereof is the
Clinic or the Administrator.
(x) Other expenses reasonably incurred
by Administrator in providing reasonable services
for the direct benefit of the Clinic and in
carrying out its obligations under this Agreement.
Provided, however, that, notwithstanding anything contained herein,
Administrator Expenses, Ancillary Expenses and Excluded Clinic Expenses shall
not be included in Clinic Expenses.
(m) "Clinic Funds " shall indicate for the
relevant period an amount equal to Revenues less than the sum of Clinic
Expenses and the Service Fee.
(n) "Clinic Physicians " shall mean physicians
employed by the Clinic, including physicians who are stockholders of, partners
of, or members in the Clinic.
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(o)"Clinic Physician Stockholders" shall mean those Physician
Employees who own an interest, directly or indirectly, in the equity capital of
the Clinic.
(p) "Clinic Plan" shall have the meaning set forth in Section
4.9(a).
(q) "Clinic Related Liabilities" shall have the meaning set
forth in Section 10.6(b).
(r) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(s) "Confidential and Proprietary Information" shall have the
meaning set forth in Section 6.1(b).
(t) "Current Physician Restrictive Covenants" shall have the
meaning set forth in Section 6.2.
(u) "Designated Health Services" shall have the meaning
assigned to such term in ▇▇▇▇▇.
(v) "Dispute" shall have the meaning set forth in Section
11.12.
(w) "ERISA" shall have the meaning set forth in Section
4.9(c).
(x) "Excluded Clinic Expenses" shall mean, pursuant to GAAP
applied on a consistent basis, (i) any salaries or other distributions made to
Clinic Physicians, whether for professional fee income or otherwise, and any
expenses related thereto, including payroll and other taxes associated
therewith, (ii) any federal, state or other income taxes applicable to the
Clinic, (iii) any expenses, whether for premiums or otherwise, related to life
insurance for any Clinic Physician where the beneficiary thereof is not the
Clinic or the Administrator, (iv) all costs, expenses and liabilities incurred
by the Clinic or Administrator in excess of the limits of professional
liability insurance, (v) any expenses described in any Physician Employment
Agreement for any Clinic Physician, (vi) any contributions to any Clinic Plan
for the benefit of any Clinic Physician, and (vii) any other expenses
specifically included in "Excluded Clinic Expenses" in this Agreement.
(y) "Fair Market Value" shall mean, as to any assets, the fair
market value of such assets as agreed upon by the parties hereto, or in the
event that the parties hereto cannot agree to such value by ninety (90) days
prior to the Purchase Closing, the fair market value of such assets as
determined by an Independent Financial Expert selected by Administrator;
provided, however, that if the Clinic shall object to such determination within
ten (10) days after being notified thereof by Administrator, the Clinic shall
within such ten-day period select an Independent Financial Expert to determine
the fair market value of such assets; provided further, that in the event that
the Independent Financial Experts selected by Administrator and the Clinic
cannot agree on the fair market value of such assets, then the two Independent
Financial Experts shall mutually select a third Independent Financial Expert to
determine the fair market value of such assets and the value determined by such
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their Independent Financial Exert shall be binding on the parties hereto. Each
such Independent Financial Expert may use any customary and generally accepted
method of determining fair market values, and shall take into account the
effect of any liens, claims or encumbrances (other than those arising out
Clinic Related Liabilities) that may reasonably by expected to have an effect
on the value of such assets. The cost of any Independent Financial Experts
retained by any person hereunder shall be paid one-half by Administrator and
one-half by the Clinic.
(z) "Federal Health Care Program" shall mean (i) any plan or
program that provides health benefits, whether directly, through insurance, or
otherwise, which is funded directly, in whole or in part, by the United States
Government (except for the Federal Employee Health Benefit Program); and (ii)
certain state health care programs (e.g., Medicare, Champus, Medicaid, the
Maternal and Child Health Services Block Grant Program, and the Social Services
Block Grant Program).
(aa) "Future Physician Restrictive Covenants" shall have the
meaning set forth in Section 6.2.
(bb) "GAAP" shall mean generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board and the Securities
and Exchange Commission or in such other statements by such other entity or
other practices and procedures as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination. For purposes of this Agreement, GAAP shall be applied on
an accrual basis in a manner consistent with the historic practices of the
person to which the term applies.
(cc) "Independent Financial Expert" shall mean any entity
regularly engaged in the business of evaluating assets of medical clinics and
associated businesses which does not (and whose directors, officers, employees,
Affiliates or stockholders do not) have a material direct or indirect financial
interest in Administrator or any of its Affiliates or in the Clinic or any of
its Affiliates, which has not been, and at the time it is called upon to give
independent financial advice to the parties hereto is not (and none of whose
directors, officers, employees, Affiliates or stockholders is) a promoter,
director or officer of Administrator or any of its Affiliates or of the Clinic
or of its Affiliates, and which does not provide any advice or opinions to
Administrator or the Clinic except as an Independent Financial Expert.
(dd) "IRS" shall mean the Internal Revenue Service.
(ee) "Joint Planning Board" shall mean a two (2) member joint
board established pursuant to Section 5.1.
(ff) "LD Causes of Action" shall have the meaning set forth in
Section 6.3(a).
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(gg) "Liquidated Damages" shall have the meaning set forth in
Section 6.3(a).
(hh) "Liquidated Damages Provisions" shall have the meaning set
forth in Section 6.2.
(ii) "Managed Care Contracts" shall have the meaning set forth
in Section 3.9.
(jj) "Managed Care Payors" shall have the meaning set forth in
Section 3.9.
(kk) "Medical Waste" includes, but is not limited to, (i)
pathological waste, (ii) blood, (iii) sharps, (iv) wastes from surgery or
autopsy, (v) dialysis waste, including contaminated disposable equipment and
supplies, (vi) cultures and stocks of infectious agents and associated
biological agents, (vii) contaminated animals, (viii) isolation wastes, (ix)
contaminated equipment, (x) laboratory waste, (xi) any substance, pollutant,
material, or contaminant listed or regulated under any Medial Waste Law, and
(xii) other biological waste and discarded materials contaminated with or
exposed to blood, excretion, or secretions from human beings or animals.
(ll) "Medical Waste Laws" shall mean the following, including
regulations promulgated and orders issued thereunder, all as may be amended
from time to time: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA Sections 2501 et seq., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA Sections 1401 et
seq., (iv) The Occupational Safety and Health Act, 29 USCA Sections 651 et
seq., (v) the United States Department of Health and Human Services, National
Institute for Occupational Safety and Health, Infectious Waste Disposal
Guidelines, Publication No. 88-119, and (vi) any other federal, state,
regional, county, municipal or other local laws, regulations and ordinances
insofar as they purport to control Medical Waste, or impose requirements
relating to Medical Waste.
(mm) "Payment Date" shall have the meaning set forth in Section
7.2.
(nn) "Personal Property" shall have the meaning set forth in
Section 3.3(b).
(oo) "Physician Employment Agreement" shall mean the employment
agreement entered into of even date herewith between the Clinic and any Clinic
Physician whether on the date hereof or on any date hereafter during the term
of this Agreement and any extension thereof.
(pp) "Physician Employees" shall mean (i) those individuals who
are physicians employed by, or shareholders, members or partners of, the
Clinic, or who are otherwise under contract or associated with the Clinic to
provide professional medical services to patients of the Clinic, (ii) Physician
Extender Employees and (iii) Technical Employees.
(qq) "Physician Extender Employees" shall mean those
individuals who are employed by or otherwise under contract or associated with
the Clinic as nurse anesthetists, physicians assistants, nurse practitioners or
similar positions, or any position that generates a professional charge, but
shall not include Technical Employees.
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(rr) "Plans" shall have the meaning set forth in Section
4.9(a).
(ss) "Premises" shall mean the premises provided to the Clinic
pursuant to Section 3.3.
(tt) "PTI Common Stock" shall mean the common stock, par value
$0.001 per share, of PTI.
(uu) "PTI Group" shall mean Administrator, PTI, the Clinic and
their Affiliates and all professional associations or corporations or other
entities for which Administrator, PTI, or their Affiliates provide management
services.
(vv) "Purchase Assets" shall have the meaning set forth in
Section 10.6(a).
(ww) "Purchase Closing" shall have the meaning set forth in
Section 10.7.
(xx) "Purchase Notice" shall have the meaning set forth in
Section 10.6(b).
(yy) "Purchase Price" shall have the meaning set forth in
Section 10.7.
(zz) "Restrictive Covenants" shall mean the Current Physician
Restrictive Covenants and the Future Physician Restrictive Covenants.
(aaa) "Revenues" for any month shall mean all fees and income of
the Clinic that, pursuant to GAAP applied on a consistent basis, should be
recorded each month (net of Adjustments) by or on behalf of the Clinic,
including, without limitation, the fees generated as a result of professional
medical services furnished to patients by Physician Employees and other fees or
income generated in their capacity as professionals, whether rendered in an
inpatient or outpatient setting, including, but not limited to, medical
director fees or technical fees from medical ancillary services and consulting
fees, but shall not include (i) any income or revenue received by any Physician
Stockholder individually from the activities listed in Schedule A to the
applicable Physician Employment Agreement, (ii) liquidated damages received by
the Clinic or the Administrator pursuant to Section 6.2 or 6.3, or (iii)
Ancillary Revenues as defined herein.
(bbb) "Service Fee" shall have the meaning set forth in Section
7.1(b).
(ccc) "▇▇▇▇▇" shall mean 42 U.S.C. Section 1395nn and all rules
and regulations promulgated thereunder, as such may be amended or revised from
time to time.
(ddd) "State" shall mean the State of Louisiana.
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(eee) "Tax Returns" shall include all federal, state, local,
franchise, property and other tax returns.
(fff) "Technical Employees" shall mean those individuals who are
employed by or otherwise under contract or associated with the Clinic as
technicians to provide services in the diagnostic areas of the Clinic's
practice, such as laboratory employees and radiology technicians.
(ggg) "Termination Date" shall have the meaning set forth in
Section 10.5.
(hhh) "Termination Notice" shall have the meaning set forth in
Section 10.5(a).
ARTICLE 2.
Relationship of the Parties
The Clinic and Administrator intend to act and perform as independent
contractors, and the provisions hereof are not intended to create any
partnership, joint venture, agency or employment relationship between the
parties. Administrator and the Clinic agree that the Clinic shall retain the
exclusive authority to direct the medical, professional, and ethical aspects of
its medical practice. Administrator shall neither exercise control over nor
interfere with the physician-patient relationships of the Clinic, which shall
be maintained strictly between the physicians of the Clinic and their patients.
The parties hereby agree that the benefits to the Clinic hereunder do not
require, are not payment for and are not in any way contingent upon the
admission, referral or any other arrangement for the provision of any item or
service offered by Administrator or any of its Affiliates to any of the
Clinic's patients in any facility or laboratory controlled, managed or operated
by Administrator.
ARTICLE 3.
Services to be Provided by Administrator
SECTION 3.1 OVERALL FUNCTION. Administrator shall provide or
arrange for the services set forth in this Article 3 and the costs, fees,
expenses and other disbursements incurred by Administrator or PTI in connection
therewith shall be included in Clinic Expenses, except to the extent such
costs, fees or expenses are Excluded Clinic Expenses or Administrator Expenses.
Administrator is authorized to perform its services hereunder as is necessary
or appropriate for the efficient operation of the Clinic, including, without
limitation performance of some of the business office functions at locations
other than the Clinic. The Clinic will not act in a manner which would prevent
Administrator from performing its duties hereunder and will provide such
information and assistance to Administrator as is reasonably required by
Administrator to perform its services hereunder. Administrator shall use its
best efforts to cause its employees to comply with all applicable federal,
state and local laws, rules and regulations in its provision of services
hereunder.
SECTION 3.2 GENERAL ADMINISTRATIVE SERVICES.
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(a) The Clinic hereby engages Administrator to
serve as its exclusive manager and administrator of non-physician services
relating to the operation of the Clinic, subject to matters reserved for the
Clinic or referred to the Joint Planning Board as herein contemplated, and
Administrator shall have all necessary authority to perform such services. The
Clinic agrees that the purpose and intent of this Agreement is to relieve the
Physician Employees to the maximum extent possible of the administrative,
accounting, purchasing, non-physician personnel and other business aspects of
its practice. Administrator agrees that the Clinic and Physician Employees, and
only the Clinic and Physician Employees, will perform the medical functions of
its practice. Administrator shall have no authority, directly or indirectly, to
perform or supervise, and shall not perform or supervise, any medical function.
Administrator may, however, advise the Clinic as to the relationship between
its performance of medical functions and overall administrative and business
functions of its practice to the extent permitted by applicable law.
(b) Administrator shall, in the name of and on
behalf of the-Clinic, ▇▇▇▇ patients, insurance companies and other third-party
payors and collect the professional fees for medical services rendered by the
Clinic in the Clinic, for services performed outside the Clinic for its
hospitalized patients, and for other professional and Clinic services and
products. The Clinic hereby appoints Administrator for the term of this
Agreement to be its true and lawful attorney-in-fact for the following
purposes: (i) to ▇▇▇▇ patients, insurance companies and other third-party
payors in the Clinic's name and on its behalf, (ii) to collect accounts
receivable resulting from such billing in the Clinic's name and on its behalf,
(iii) to receive payments on behalf of the Clinic from insurance companies,
prepayments received from health care plans, Medicare, Medicaid and all other
third party payors; (iv) to take possession of and endorse in the name of the
Clinic (and/or in the name of an individual physician), such payments intended
for the purpose of payment of a physician's ▇▇▇▇ related to the Clinic, and
notes, checks, money orders, insurance payments and other instruments received
in payment of accounts receivable; and (v) to initiate the institution of legal
proceedings in the name of the Clinic or a Physician Employee to collect any
accounts and monies owed to the Clinic or the Physician Employee, to enforce
the rights of the Clinic or the Physician Employee as creditor under any
contract or in connection with the rendering of any service, and to contest
adjustments and denials by governmental agencies (or their fiscal
intermediaries) as third-party payors. All monies shall be accounted for by
Administrator as being distinctly attributable to the Clinic. The Clinic may
perform the functions or exercise the rights set forth in this Section 3.2(b)
only with the consent of Administrator. The Clinic shall execute a Power of
Attorney in form and substance acceptable to the parties hereto in connection
with the rights and powers granted to Administrator pursuant to this Section
3.2(b). The Clinic shall cooperate with and at the request of Administrator
shall provide reasonable assistance to Administrator regarding the functions
set forth herein. In the performance of the services described in this Section
3.2(b), Administrator shall use commercially reasonable efforts to collect such
professional fees and still comply with all applicable managed care contracts
and all applicable laws, rules and regulations.
(c) Administrator shall supply to the Clinic
the ordinary, necessary or appropriate services for the efficient operation of
the Clinic, including without limitation, necessary clerical,
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accounting, purchasing, payroll, legal bookkeeping and computer services,
information management, preparation of Tax Returns, printing, postage and
duplication services and medical transcribing services; provided, however, that
the Clinic may elect to prepare its own Tax Returns, in which case, the cost of
preparing such Tax Returns in excess of $1,500 per annum shall be included in
Excluded Clinic Expenses. Administrator shall prepare monthly unaudited
financial statements for the Clinic containing a balance sheet and income
statement, which shall be delivered to the Clinic as soon as practicable, but
not later than forty-five (45) days after the end of each calendar month. The
Clinic may elect to have an audit conducted with respect to such financial
statements, in which case the cost of such audit shall be included in Excluded
Clinic Expenses.
(d) Administrator shall maintain all files and
records relating to the operation of the Clinic, including, but not limited to,
accounting, billing, collection and customary financial records and patient
files. The management of all files and records shall comply with all applicable
federal, state and local statutes and regulations, and all files and records
shall be located so that they are readily accessible for patient care,
consistent with ordinary records management practices. The Clinic shall
supervise the preparation of, and direct the contents of, patient medical
records, all of which shall remain confidential. All original patient records
contributed to the Clinic by the Clinic Physicians shall be and remain the
property of the Clinic and Administrator. All original patient records created
after the Acquisition Effective Date by the Clinic shall be and remain the
property of the Clinic. At such time as this Agreement expires or terminates,
(i) Administrator will provide the Clinic with the original patient records
that it owns, if any, (or true and complete copies thereof, if Administrator
shall be prevented by any applicable laws, regulations or accreditation
policies from providing the Clinic with the original records), of all
continuing patients of the Clinic, but subject to applicable laws, regulations
and accreditation policies, Administrator shall be permitted to retain true and
complete copies of such records (and shall retain the original records if, for
any of the foregoing reasons, it is prevented from providing them to the
Clinic), and (ii) subject to applicable laws, regulations and accreditation
policies, the Clinic will, if requested by Administrator, provide Administrator
with true and complete copies of the original patient records that it owns.
Administrator hereby agrees to preserve the confidentiality of such patient
medical records and to use the information in such records only for the limited
purposes necessary to perform management services, and, within the limits of
its responsibilities hereunder, to ensure that provision is made for
appropriate care for patients of the Clinic.
(e) Administrator shall take such action in the
name of and on behalf of the Clinic to collect fees and pay in a timely manner
all Clinic Expenses, except as otherwise agreed among Administrator and the
Clinic.
(f) Administrator shall, upon the terms and at
the times as mutually agreed by Administrator and the Clinic (but in no event
less frequently than monthly), distribute the Clinic Funds to the Clinic, with
appropriate adjustments made to reflect any Clinic Expenses paid by the Clinic
and not reimbursed by Administrator or Revenues collected or received by the
Clinic and not remitted to Administrator.
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SECTION 3.3 FACILITIES.
(a) Administrator shall make available to the
Clinic the premises that are described in Schedule 3.3 attached hereto (the
"Premises") and such other real property acquired (with the consent of the
Clinic) and improvements made by Administrator or PTI for the use of the Clinic
hereunder; provided, that in the event Administrator's rights to use any such
Premises shall terminate, Administrator shall use its best efforts to provide
other suitable premises to be used by the Clinic, which premises shall be
approved by the Clinic, such approval not to be unreasonably withheld.
Administrator shall obtain for the Clinic all utilities reasonably required in
connection with the use of the Premises and shall provide for the proper
cleanliness of the Premises, including normal janitorial services and refuse
disposal. Administrator shall maintain the Premises and make all necessary
repairs thereto.
(b) Administrator shall provide the Clinic with
the use of the equipment, furniture, fixtures, furnishings and other personal
property acquired by PTI in the Acquisition, together with such other
equipment, furniture, fixtures, furnishings and other personal property
acquired by Administrator or PTI for the use of Clinic pursuant to the terms
hereof (collectively, the "Personal Property"). Administrator shall maintain
the Personal Property and make necessary repairs thereto.
(c) All costs, fees, expenses and other
disbursements incurred by Administrator, PTI or the Clinic in connection with
the Premises and the Personal Property, including, without limitation, all
costs of repairs, maintenance and improvements, utility expenses (i.e.,
telephone, electric, gas and water), janitorial services, refuse disposal, real
or personal property lease cost payments and expenses, interest, principal and
other debt service or refinancing payments and expenses, depreciation, taxes
and casualty, liability and other insurance, shall be included in Clinic
Expenses, provided that depreciation and principal payments for the same assets
shall not both be included in Clinic Expenses.
(d) Nothing herein shall be construed as
precluding Administrator or PTI from selling, leasing or otherwise disposing of
all or any part of its real property, improvements, Personal Property,
tradenames, trademarks and other intangible property; provided that any such
disposition shall not eliminate or diminish Administrator's obligations
hereunder.
SECTION 3.4 ACQUISITION AND ASSISTANCE. In the event a decision
is made by the Clinic to employ additional physicians or acquire physician
groups or practices and if requested by the Clinic, Administrator may, in its
sole discretion, assist the Clinic in the identification and selection of
physicians or physician groups or practices that may be beneficial in providing
the services and products of the Clinic. In the event that a decision is made
by the Clinic to pursue the employment of selected physicians or the
acquisition of a particular physician group or practice, Administrator may, in
its sole discretion, if requested by the Clinic, provide recruiting,
consulting, negotiating and other services and may provide for legal,
accounting and other professional advisor services in connection with such
transaction. Nothing contained herein shall be construed to require
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Administrator to provide any capital, funds or other assistance to the Clinic
in connection with the employment of physicians or acquisition of physician
groups or practices by the Clinic.
SECTION 3.5 FINANCIAL PLANNING AND BUDGETING.
(a) Subject to the terms contained herein,
Administrator will make funds available for capital expenditures and
improvements by Administrator on behalf of the Clinic. Requests for
expenditures and improvement projects shall be prepared by the Joint Planning
Board in consultation with the Clinic and Administrator. All requests for
capital expenditures and improvements at the Clinic in excess of $5,000
individually and $15,000 in the aggregate for any calendar year must be
approved by the Board of Directors of PTI.
(b) Administrator shall consult with the Clinic
and the Joint Planning Board in the preparation of all annual capital and
operating budgets. Annual budgets shall be subject to the review, amendment and
approval or disapproval of the Board of Directors of Administrator (or a
committee designated by such Board of Directors) and the Clinic. In the event
Administrator and the Clinic can not reach agreement on such budgets, the next
previously agreed to budgets shall remain in effect with an adjustment to all
items not to exceed ten percent (10%).
SECTION 3.6 INVENTORY AND SUPPLIES. Administrator shall order
and purchase inventory and supplies, and such other ordinary, necessary or
appropriate materials which are requested by the Clinic and which the Clinic
shall reasonably determine to be necessary in the operation of the Clinic.
Supplies and inventory to be used directly in patient care and providing
medical services shall be of the type and quality specified by the Clinic. Such
inventory, supplies and other materials shall be included in Clinic Expenses at
their cost to PTI or Administrator, as the case may be.
SECTION 3.7 ADVERTISING AND PUBLIC RELATIONS. In consultation
with the Joint Planning Board and the Clinic, Administrator shall implement
(and design where requested) any appropriate local public relations or
advertising program on behalf of the Clinic, with appropriate emphasis on
public awareness of the availability of services at the Clinic. Prior to
publication or distribution of marketing or public relations material or
information, Administrator shall submit such material to the Clinic for its
review and approval. Administrator shall also design and implement all national
or other non-local public relations or advertising programs on behalf of the
Clinic, the cost of which shall be included in Administrator Expenses, except
to the extent such national programs are reasonably designed to replace or
supplement the marketing benefits derived from local public relations or
advertising programs, in which case, such costs will be included in Clinic
Expenses. The parties hereto agree that all public relations and advertising
programs shall be conducted in compliance with applicable standards of medical
ethics, laws and regulations.
SECTION 3.8 PERSONNEL. Except as specifically provided in
Section 5.1(b) of this Agreement, Administrator shall employ or otherwise
retain and shall be responsible for selecting, hiring, training, suspending,
and terminating, all management, administrative, clerical, secretarial,
bookkeeping, accounting, payroll, billing and collection and other
nonprofessional personnel as Administrator
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deems reasonably necessary and appropriate for Administrator's performance of
its duties and obligations under this Agreement. Consistent with reasonably
prudent personnel management policies, Administrator shall seek and consider
the advice, input, and requests of the Clinic in regard to personnel matters.
Administrator shall have sole responsibility for determining the salaries and
providing such fringe benefits, and for withholding, as required by law, any
sums for income tax, unemployment insurance, social security, or any other
withholding required by applicable law or governmental requirement.
SECTION 3.9 PROVIDER AND PAYOR RELATIONSHIPS. Administrator
shall provide financial and business assistance to the Clinic in the
negotiation, establishment, supervision and maintenance of contracts and
relationships (collectively, the "Managed Care Contracts") with all managed
care, institutional health care providers and payors, health maintenance
organizations, preferred provider organizations, exclusive provider
organizations, Medicare, Medicaid and other similar persons (collectively,
"Managed Care Payors"). Approval, disapproval, termination or amendment of any
contract or relationship with such Managed Care Payors and the Clinic shall be
the responsibility of the Clinic and the Joint Planning Board; provided,
however, that should a contract or relationship between any Managed Care Payor
and the Clinic involve or affect a contract or relationship between a Managed
Care Payor and an Affiliate of Administrator or PTI or a person or entity
serviced or managed by Administrator, PTI or an Affiliate of PTI and a
consensus among such affected Affiliates and serviced entities cannot be
reached regarding the contract or relationship, then the ultimate decision as
to the approval, disapproval, termination or amendment of the contract or the
relationship between such Affiliates and other affected or involved serviced
clinics and such Managed Care Payor, and such decision involving the Clinic and
such Managed Care Payor, shall be made by the Board of Directors of PTI.
SECTION 3.10 QUALITY ASSURANCE. Subject to Article 2,
Administrator shall assist the Clinic in fulfilling its obligations to its
patients to maintain a high quality of medical and professional services. Any
expenses that are related to the overall maintenance of Administrator's quality
assurance program shall be included in Administrator Expenses; provided,
however, that any expenses related to such program that are incurred for
services provided for the direct benefit of the Clinic shall be included in
Clinic Expenses.
SECTION 3.11 OTHER CONSULTING AND ADVISORY SERVICE.
Administrator will provide such consulting and other advisory services as
requested by the Clinic in all areas of the Clinic's business functions,
including, without limitation, financial planning, acquisition and expansion
strategies, development of long-term business objectives and other related
matters.
SECTION 3.12 EVENTS EXCUSING PERFORMANCE. In the event of
strikes, lock-outs, calamities, acts of God, unavailability of supplies or
other events over which Administrator has no control, Administrator shall not
be liable to the Clinic for failure to perform any of the services required
hereunder and the Clinic shall not have the right to terminate this Agreement
pursuant to Section 10.3(b), for so long as such events continue and for a
reasonable period of time thereafter; provided, however, that if such events
continue and Administrator is not able to perform any of the
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services required hereunder for a period of 120 consecutive days or more,
either Administrator or Clinic may terminate this Agreement by written notice
to the other.
ARTICLE 4.
Obligations of the Clinic
SECTION 4.1 EMPLOYMENT OF PHYSICIAN EMPLOYEES. The Clinic shall
have complete control of and responsibility for the hiring, compensation,
supervision, training, evaluation and termination of its Physician Employees,
although, at the request of the Clinic, Administrator and/or the Joint Planning
Board shall consult with the Clinic with respect to such matters. The Clinic
shall conduct an appropriate and reasonable due diligence review in connection
with the hiring of any physician or the acquisition of any physician group or
practice, and shall compensate such physician employees in amounts not to
exceed amounts which are reasonable and customary for physicians of comparable
skill and experience in the community where the Clinic is located. Each of the
Clinic Physician Stockholders shall enter into a Physician Employment Agreement
substantially in the form attached as Schedule 4.1, unless otherwise agreed to
by PTI. Although Administrator may provide payroll and other related services
to the Clinic, the Clinic shall be solely responsible for the payment of such
Physician Employees' salaries and wages, payroll taxes and all other taxes now
or hereafter applicable to their employment. The Clinic and its Physician
Employees shall not have any claim under this Agreement or otherwise against
Administrator or PTI for workers' compensation, unemployment compensation or
Social Security benefits, all of which shall be the sole responsibility of the
Clinic. The Clinic shall only employ or contract with licensed physicians or
other persons meeting applicable credentialing guidelines established by the
Clinic and approved by the Joint Planning Board. The Clinic shall cooperate in
the obtaining and retaining of professional liability insurance by ensuring
that its Physician Employees, and other employees who may have malpractice
exposure or liability, are insurable and by participating in an ongoing risk
management program.
SECTION 4.2 PROFESSIONAL SERVICES. The Clinic shall provide
professional services to patients in compliance at all times with ethical
standards, laws, rules and regulations applicable to the operations of the
Clinic and the Physician Employees. The Clinic shall ensure that each Physician
Employee has all required licenses, credentials, approvals or other
certifications to perform his or her duties and services for the Clinic. In the
event that any disciplinary actions or medical malpractice actions are
initiated against any Physician Employee, the Clinic shall promptly inform
Administrator of such action and the underlying facts and circumstances. The
Clinic shall carry out a program to monitor the quality of medical care
practiced at the Clinic. The Clinic shall employ such Physician Employees as is
necessary to provide efficient medical care to patients of the Clinic.
SECTION 4.3 MEDICAL PRACTICES. The Clinic shall use and occupy
the Premises exclusively for the practice of medicine and for providing other
related services and products. Unless otherwise approved in writing by
Administrator, which approval shall not be unreasonably withheld, it is
expressly acknowledged by the parties hereto that the medical practice or
practices conducted at the Clinic shall be conducted solely by physicians
associated with the Clinic, and, except as set forth on
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Schedule 4.3, no other physician or medical practitioners shall be permitted to
use or occupy the Clinic. The Clinic shall be solely and exclusively in control
of all aspects of the practice of medicine and the delivery of medical services
at the Clinic's facilities and at such outpatient surgery center, acute care
hospitals and other facilities as the Clinic may deem appropriate from time to
time. The rendition of all medical professional services, including, but not
limited to, diagnosis, treatment, surgery, therapy, the prescription of
medicine and drugs, and the supervision and preparation of medical reports
shall be the sole responsibility of the Clinic. Administrator shall have no
authority whatsoever with respect to the establishment of fees or charges for
the rendition of such services. From time to time, the Clinic in its discretion
will adopt and implement fee schedules for non-prepaid patients which shall be
reasonable in relation to fees generally being obtained in the same or similar
market areas and for all rebillings and recovery items on prepaid Managed Care
Contracts which are authorized and permitted by such contracts, a copy of which
and each amendment thereto shall be provided to Administrator for review no
later than thirty (30) days prior to the proposed effective date thereof.
SECTION 4.4 CLINIC'S INTERNAL MATTERS. The Clinic shall be
responsible for matters involving its corporate governance, employees and
similar internal matters, including, but not limited to, preparation and the
contents of such reports to regulatory authorities governing the Clinic as the
Clinic is required by law to provide, distribution of professional fee income
among the Clinic Physician Stockholders, which will be included in Excluded
Clinic Expenses; provided, however, that such compensation shall be consistent
with the Physician Employment Agreements for each Clinic Physician Stockholder.
The costs incurred in connection with the foregoing matters shall be Clinic
Expenses.
SECTION 4.5 NAME. Administrator agrees that the Clinic shall be
entitled to use on a nonexclusive and nontransferable basis for the term of
this Agreement the names "Physicians Trust, Inc." and "PTI" as may be necessary
or appropriate in the performance of the Clinic's services and obligations
hereunder.
SECTION 4.6 COMPLIANCE WITH LAWS. The Clinic shall, and shall
use its best efforts to cause the Physician Employees, to comply with all
applicable federal, state and local laws, rules, regulations and restrictions
in the conduct of the Clinic's business. Without limiting the generality of the
foregoing, the Clinic shall comply, and shall use its best efforts to cause
each Physician Employee to comply with all Medical Waste Laws applicable to the
operation of the Clinic in the generation, transportation, treatment, storage,
disposal or other handling of Medical Waste (to the extent that the Clinic or
the Physician Employees engage in such activities), and the Clinic shall not,
and shall use its best efforts to forbid any Physician Employee to:
(a) enter into any contract, lease, agreement
or arrangement, including, but not limited to, any joint venture or consulting
agreement, to provide services, lease space, lease equipment or engage in any
other venture or activity with any physician, hospital, pharmacy, home health
agency or other person or entity which is in a position to make or influence
referrals to, or
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otherwise generate business for the Clinic, if such transaction is in violation
of any applicable law, rule or regulation;
(b) knowingly and wilfully make or cause to be
made a false statement or representation of a material fact in any application
for any benefit or payment;
(c) fail to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its behalf or on behalf of another, with intent to
fraudulently secure such benefit or payment;
(d) knowingly and willfully pay, solicit or
receive any remuneration (including any kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offer 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 a Federal health care program, or
(ii) in return for purchasing, leasing, or ordering, or arranging for or
recommending purchasing, leasing, or ordering any good, facility, service, or
item for which payment may be made in whole or in part by a Federal health care
program; and
(e) refer a patient for Designated Health
Services to, or provide Designated Health Services to a patient upon a referral
from, an entity or person with which the physician or an immediate family
member has a financial relationship, other than as permitted by exceptions set
forth in ▇▇▇▇▇.
SECTION 4.7 ANCILLARY OPERATIONS. The Clinic shall not acquire,
establish or commence the operation of any satellite location, medical office,
ambulatory surgery center, health maintenance organization, preferred provider
organization, exclusive provider organization or similar entity or organization
established or operated by the Clinic after the date hereof without the prior
written consent of Administrator, which consent shall not be unreasonably
withheld.
SECTION 4.8 PREMISES AND PERSONAL PROPERTY. The Clinic shall
use its best efforts to prevent damage, excessive wear and tear, and
malfunction or other breakdown of the Premises and Personal Property or any
part thereof by the Physician Employees. The Clinic shall promptly inform
Administrator in writing of any and all necessary replacements, repairs or
maintenance to any of the Premises or Personal Properly and any failures of
equipment of which it becomes aware. The Clinic shall comply with all of the
covenants and provisions set forth in any leases or subleases for the Premises
entered into or assumed by Administrator, and Administrator agrees to provide
copies of all such leases to the Clinic.
SECTION 4.9 CLINIC EMPLOYEE BENEFIT PLANS.
(a) Effective on the Acquisition Effective
Date, the Clinic shall amend the tax-qualified retirement plan(s) described on
Schedule 4.9(c) (the "Clinic Plan") to provide that employees of the
Administrator who are classified as "leased employees" (as defined in Code
Section
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414(n)) of the Clinic shall be treated as Clinic employees for purposes of
eligibility and participation in the Clinic Plan. Not less often than annually,
the Clinic and the Administrator shall agree upon and identify in writing those
individuals to be classified as leased employees of the Clinic (the "designated
leased employees"). The Clinic and the Administrator shall establish mutually
agreeable procedures with respect to the participation of designated leased
employees in the Clinic Plan. Such procedures shall be designed to avoid the
tax disqualifications of the Clinic Plan, similar plans of clinics similarly
situated, and any similar plan sponsored or maintained by the Administrator
from time to time (collectively, the "Plans").
(b) If the Joint Planning Board determines that
the relationship between the Administrator and the Clinic (and other clinics
similarly situated) constitutes an "affiliated service group" (as defined in
Code Section 414(m)), the Administrator and the Clinic shall take such actions
as may be necessary to avoid the tax disqualification of the Plans. Such
actions may include the amendment, freeze, termination or merger of the Clinic
Plan.
(c) The Plans described on Schedule 4.9(c)
attached hereto are approved by Administrator. The Clinic shall not enter into
any new "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Security Act ("ERISA") without the express written consent of
Administrator. The Clinic shall not offer any retirement benefits or make any
material retirement payments other than under the Clinic Plan to any Clinic
Physician Stockholder without the express written consent of Administrator.
Except as otherwise required by law, the Clinic shall not materially amend,
freeze, terminate or merge the Clinic Plan without the express written consent
of Administrator. In the event of either of the foregoing, the Administrator's
consent shall not be withheld if such action would not jeopardize the
qualification of any of the Plans. The Clinic agrees to make such changes to
the Clinic Plan, including the freezing, termination, or merger of the Clinic
Plan, as may be approved by the Joint Planning Board and the Administrator, but
only if such changes are necessary to prevent the disqualification of any of
the Plans.
(d) Expenses incurred in connection with the
Clinic Plan or other Clinic employee benefit plans, including without
limitation the compensation of counsel, accountants, corporate trustees, and
other agents shall be included in Clinic Expenses.
(e) The employee benefit plan contribution and
administration expenses for the Physician Employees shall be included in the
Clinic's operating budget. The Clinic and the Administrator shall not make
employee benefit plan contributions or payments to the Clinic for their
respective employees in excess of such budgeted amounts unless required by law
or the terms of the Clinic Plan. The Administrator shall make contributions or
payments with respect to the Clinic Plan or other Clinic employee benefit
plans, as a Clinic Expense, on behalf of eligible Physician Employees (other
than Clinic Physicians), designated leased employees, and other eligible Clinic
employees. Clinic Physicians shall make contributions to the Clinic Plan as an
Excluded Clinic Expense. In the event the Clinic Plan or other Clinic employee
benefit is terminated, the Administrator shall be responsible, as a Clinic
Expense, for any funding liabilities related to eligible
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Physician Employees (other than Clinic Physicians), designated leased
employees, or other eligible Clinic employees.
(f) The Administrator shall have the sole and
exclusive authority to adopt, amend, or terminate any employee benefit plan for
the benefit of its employees, regardless of whether such employees are
designated leased employees, unless such actions would require the amendment,
freeze or termination of the Clinic Plan to avoid disqualification of the
Clinic Plan, in which case any such action would be subject to the express
prior written consent of the Joint Planning Board. The Administrator shall have
the sole and exclusive authority to appoint the trustee, custodian and
administrator of any such plan.
(g) From and after the Acquisition Effective
Date, the Clinic's employees and designated leased employees shall receive
credit for prior service with the Clinic's predecessor for vesting and
eligibility purposes under the Clinic Plan, but only to the extent such service
was actually recognized under the Clinic Plan immediately prior to the
Acquisition Effective Date.
(h) In the event that any "employee welfare
benefit plan" (as defined in ERISA Section 3(1)) maintained or sponsored by the
Clinic must be amended, terminated, modified, or changed as a result of the
Clinic and Administrator being deemed to be a part of an affiliated service
group, the Joint Planning Board will replace such plan or plans with a plan or
plans that provides those benefits approved by the Joint Planning Board. It
shall be the goal of the Joint Planning Board in such event to provide
substantially similar or comparable benefits if the same can be provided at a
substantially similar cost to the replaced plan.
ARTICLE 5.
Joint Planning Board
SECTION 5.1 FORMATION AND OPERATION OF THE JOINT PLANNING BOARD.
(a) The parties hereto shall establish a Joint
Planning Board which shall be responsible for developing long term strategic
planning objectives and management policies for the overall operation of the
Clinic and shall facilitate communication and interaction between Administrator
and the Clinic. The Joint Planning Board shall consist of two (2) members.
ClinicAdministrator shall designate, in its sole discretion, one (1) member of
the Joint Planning Board which member shall be an employee of PTI or the
Administrator. The Clinic shall designate, in its sole discretion, one (1)
member of the Joint Planning Board which member shall be a Clinic Physician of
the Clinic. Either party may change its designated Joint Planning Board member
at any time, with thirty (30) days advanced written notice to the other party.
The act of a majority of the members of the Joint Planning Board shall be the
act of the Joint Planning Board.
(b) The Joint Planning Board shall, in addition
to the responsibilities set forth elsewhere in this Agreement, have the
authority to (i) develop and assist the Clinic in implementing
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long-term strategic objectives, (ii) prepare proposals and make recommendations
to the Board of Directors of PTI regarding significant capital expenditures,
capital improvement and expansion projects on behalf of the Clinic, (iii) with
assistance of Administrator, prepare the annual capital and operating budgets
of the Clinic, (iv) consider and make recommendations regarding grievances
pertaining to matters not specifically addressed in this Agreement if such
matters are referred to it by the Clinic or Administrator, (v) make
recommendations to the Clinic regarding the number and type of physicians
required for the efficient operation of the Clinic, and (vi) make decisions and
recommendations regarding the Clinic Plan. Subject to Sections 3.4 and 4.1,
decisions regarding the hiring or firing of physicians shall be made solely by
the Clinic.
ARTICLE 6.
Restrictive Covenants and Liquidated Damages
The parties recognize that the services provided by Administrator
hereunder shall be feasible only if the Clinic operates an active medical
practice to which the physicians associated with the Clinic devote their full
business time and attention. Accordingly, the parties hereto agree as follows:
SECTION 6.1 RESTRICTIVE COVENANTS OF THE CLINIC.
(a) During the term of this Agreement and for a
period of one year thereafter, the Clinic shall not, without the prior written
consent of Administrator, (i) establish, operate or provide physician services
at any medical office, clinic or other health care facility providing services
similar to those provided by the Clinic, or (ii) engage or participate in any
business which engages in competition with the business conducted by PTI Group,
in either case, anywhere within 25 miles of any location of the PTI Group other
than locations of the Clinic existing on the date hereof.
(b) The Clinic recognizes the proprietary
interest of PTI Group in any Confidential and Proprietary Information (as
hereinafter defined) of PTI Group. The Clinic acknowledges and agrees that any
and all Confidential and Proprietary Information communications learned of,
developed or otherwise acquired by the Clinic during the term of this Agreement
shall be the property of PTI Group. The Clinic further acknowledges and
understands that its disclosure of any Confidential and Proprietary Information
will result in irreparable injury and damage to PTI Group. As used herein,
"Confidential and Proprietary Information" means all trade secrets and other
confidential and/or proprietary information of PTI Group, including information
derived from reports, investigations, research, work in progress, codes,
marketing and sales programs, financial projections, cost summaries, pricing
formula, contracts analyses, financial information, projections, confidential
filings with any state or federal agency, and all other confidential concepts,
methods of doing business, ideas, materials or information (other than the
Clinic's original patient records) prepared or performed for, by or on behalf
of PTI Group by its employees, officers, directors, agents, representatives, or
consultants.
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(c) The Clinic acknowledges and agrees that PTI
Group is entitled to prevent the disclosure of Confidential and Proprietary
Information. The Clinic agrees that at all times during the term of this
Agreement and forever thereafter to hold in strictest confidence and not to
disclose to any person, firm or corporation, other than to Physician Employees
and persons engaged by Administrator to further the business of the Clinic, and
not to use except in the pursuit of the business of PTI Group, Confidential and
Proprietary Information, without the prior written consent of Administrator,
unless (i) such information becomes known or available to the public generally
through no wrongful act of the Clinic or its employees, (ii) disclosure is
required by law or the rule, regulation or order of any governmental authority
under color of law, provided, that prior to disclosing any Confidential and
Proprietary Information pursuant to this clause (ii), the Clinic shall, if
possible, give prior written notice thereof to the Administrator and provide
Administrator with the opportunity to contest such disclosure, or (iii) the
Clinic reasonably believes that such disclosure is required in connection with
a lawsuit to which the Clinic is a party.
(d) In the event of any termination of this
Agreement for any reason whatsoever, or at any time upon the request of
Administrator, the Clinic will promptly deliver to Administrator all documents,
data and other information in the Clinic's possession that contains any
Confidential and Proprietary Information. The Clinic shall not take or retain
any documents or other information, or any reproduction or excerpt thereof,
containing any Confidential and Proprietary Information, unless otherwise
authorized in writing by Administrator.
(e) In the event of any termination of this
Agreement for any reason whatsoever, or at any time upon the request of the
Clinic, the Administrator will promptly deliver to the Clinic all documents,
data and other information pertaining to trade secrets or other confidential
and/or proprietary information of the Clinic, unless such documents, data or
information is necessary for Administrator to perform its services hereunder,
in which case Administrator shall be able to retain such data or information
and shall furnish copies of such documents.
SECTION 6.2 RESTRICTIVE COVENANTS AND LIQUIDATED DAMAGES
PROVISIONS. Each Physician Employment Agreement contains certain restrictive
covenants pertaining to covenants not to compete with and not to divulge the
confidential and proprietary information of Administrator and the Clinic ( the
"Current Physician Restrictive Covenants"). Each Physician Employment
Agreement contains certain provisions pertaining to the payment of liquidated
damages to the Clinic in certain cases of early termination of such Physician
Employment Agreement (the "Liquidated Damages Provisions"). During the term of
this Agreement, the Clinic shall not amend, alter or otherwise change any term
or provision of any Physician Employment Agreement without the prior written
consent of PTI. Following termination of this Agreement, the Clinic shall not
amend, alter or otherwise change any term or provision of the Restrictive
Covenants or Liquidated Damages Provisions ("Future Physician Restrictive
Covenants"), unless such provisions are no longer in force and effect pursuant
to the terms of the applicable Physician Employment Agreement at the time of
termination of this Agreement.
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SECTION 6.3 ENFORCEMENT OF PHYSICIAN EMPLOYMENT AGREEMENT.
(a) The Clinic hereby acknowledges that the
Acquisition Consideration and the terms and conditions of this Agreement were
determined based upon numerous factors, including the agreement of Clinic
Physician Stockholders to remain employed by the Clinic pursuant to the terms
of certain Physician Employment Agreements and to utilize the assets and
business overhead required to be provided by Administrator for a period of five
(5) years. Accordingly, in the event that the Clinic shall be entitled to any
liquidated damages (the "Liquidated Damages") pursuant to the terms of the
Liquidated Damages Provisions, (i) the Clinic shall pay to Administrator an
amount equal to such Liquidated Damages on the date such Liquidated Damages are
received by the Clinic or as otherwise provided in this Section 6.3(a), (ii) at
the request of Administrator, the Clinic shall assign to Administrator such
causes of action and/or other rights it has in connection with events and
actions giving rise to the Liquidated Damages (the "LD Causes of Action") and
shall cooperate with and provide reasonable assistance to Administrator with
respect to the pursuit of the LD Causes of Action by Administrator, and (iii)
at the request of Administrator, the Clinic shall seek any and all remedies at
law or in equity that it may have available to it in connection with the LD
Causes of Action. Administrator shall be entitled to receive all Liquidated
Damages and/or other damages or amounts recovered in connection with the LD
Causes of Action, which shall not be included in Revenues. The costs and
expenses incurred by the Clinic or Administrator in connection with pursuing
the LD Causes of Action shall be borne by Administrator and included in
Administrator Expenses. In the event that the Clinic has not initiated
proceedings to recover any Liquidated Damages due and owing to the Clinic
within sixty (60) days after a request by Administrator, the Clinic shall,
within five (5) days of a request by Administrator, pay to Administrator an
amount equal to such Liquidated Damages. In no event shall the payment by the
Clinic to Administrator of Liquidated Damages relieve the Clinic of its
obligation to assign the LD Causes of Action to Administrator, provided,
however, in the event that the Clinic pays Liquidated Damages to Administrator
pursuant to the immediately preceding sentence and the Clinic has assigned the
related LD Causes of Action to Administrator, Administrator shall prosecute
such LD Causes of Action and if Administrator recovers such Liquidated Damages,
Administrator shall reimburse the Clinic up to the amount paid to Administrator
by the Clinic out of any Liquidated Damages so recovered.
(b) The Clinic shall enforce the Physician
Employment Agreement, including, without limitation, the Restrictive Covenants.
Subject to Section 6.3(a) and the following sentence, the costs and expenses of
such enforcement shall be included in Clinic Expenses and all damages and other
amounts recovered thereby shall be included in Revenues. In the event that,
after a request by Administrator, the Clinic does not pursue any remedy that
may be available to it by reason of a breach or default of the Restrictive
Covenants or any other provision of the Physician Employment Agreements, upon
the request of Administrator, the Clinic shall assign to Administrator, such
causes of action and/or other rights it has with respect thereto; in which
case, all costs and expenses incurred in connection therewith shall be borne by
Administrator and shall be included in Administrator Expenses, and
Administrator shall be entitled to all damages and other amounts recovered
thereby.
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SECTION 6.4 REMEDIES. Administrator and the Clinic acknowledge
and agree that a remedy at law for any breach of the provisions of this Article
6 shall be inadequate, and therefore, either party shall be entitled to
specific performance and injunctive or other equitable relief in the event of
any such breach or attempted breach, in addition to any other rights or
remedies available to either party at law or in equity. Each party hereto
waives any requirement for the securing or posting of any bond in connection
with the obtaining of any such injunctive or other equitable relief. If any
provision of the Restrictive Covenants or this Article 6 relating to the
restrictive period, scope of activity restricted and/or the territory described
therein shall be declared by a court of competent jurisdiction to exceed the
maximum time period, scope of activity restricted or geographical area such
court deems reasonable and enforceable under applicable law, the time period,
scope of activity restricted and/or area of restriction held reasonable and
enforceable by the court shall thereafter be the restrictive period, scope of
activity restricted and/or the territory applicable to such provision of the
Restrictive Covenants or this Article 6. The invalidity or non-enforceability
of any provision of the Restrictive Covenants or this Article 6 in any respect
shall not affect the validity or enforceability of the remainder of the
Restrictive Covenants or this Article 6 or of any other provisions of this
Agreement.
ARTICLE 7.
Financial and Security Arrangements
SECTION 7.1 SERVICE FEES. The Clinic and Administrator agree
that the compensation set forth in this Article 7 is being paid to
Administrator in consideration of the services provided and the substantial
commitment and effort made by Administrator hereunder and any such fees have
been negotiated at arms' length and are fair, reasonable and consistent with
fair market value. Administrator shall be paid the following service fees:
(a) Management of Professional Services:
Administrator shall be reimbursed for the amount of all Clinic Expenses,
Excluded Clinic Expenses and Ancillary Expenses recorded by Administrator
pursuant to the terms of this Agreement;
(b) With respect to any period, Administrator
shall receive compensation equal to Revenues minus the sum of Clinic Expenses
and Excluded Clinic Expenses during such period; and
(c) Management of Ancillary Services: With
respect to any period, Administrator shall receive compensation equal to sixty
percent (60%) of the excess (if a positive number) of Ancillary Revenues over
Ancillary Expenses during such period.
SECTION 7.2 PAYMENTS. The amounts to be paid to Administrator
under this Article 7 shall be calculated by Administrator on the accrual basis
of accounting and shall be payable monthly. Payments due for each calendar
month shall be paid on the 15th day following the end of such month (or the
first preceding day that is a business day if the 15th day is not a business
day) (a "Payment Date"). Such amounts paid shall be estimates based upon
available information for such month,
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adjustments to the estimated payments shall be made to reconcile final amounts
due under Section 7.1 of the next Payment Date.
SECTION 7.3 REPAYMENT. Unless otherwise agreed to by
Administrator and the Clinic, the Clinic shall repay Administrator for any
amounts advanced to the Clinic to fund obligations of the Clinic as requested
by the Clinic on the first Payment Date following such advance. The Clinic
shall repay all indebtedness to Administrator in connection with funding for
capital expenditures or otherwise as agreed between the Clinic and
Administrator.
SECTION 7.4 SECURITY AGREEMENT. In order to enforce its rights
granted hereunder, the Clinic shall execute a Security Agreement in
substantially the form attached hereto as Exhibit 7.4 (the "Security
Agreement"), which Security Agreement grants a security interest in all of the
Clinic's accounts receivable (as more fully described in the Security
Agreement) to Administrator. In addition, the Clinic shall cooperate with
Administrator and execute all necessary documents in connection with the pledge
of such account receivable to Administrator or at Administrator's option, its
lenders. All collections in respect of such accounts receivable shall be
deposited in a bank account at a bank designated by Administrator. To the
extent that the Clinic comes into possession of any payments in respect of such
accounts receivable, the Clinic shall promptly remit such payments to
Administrator for deposit in bank accounts designated by Administrator.
ARTICLE 8.
Records
All records relating in any way to the operation of the Clinic (other
than original patient medical records contributed to the Clinic by the Clinic
Physician Stockholders and all original patients records created by the Clinic
after the Acquisition Effective Date) shall, subject to the obligations of the
Clinic to maintain patient medical records pursuant to Section 3.2(d), at all
times be the property of Administrator as set forth in Section 3.2(d). During
the term of this Agreement, and for a reasonable time thereafter, the Clinic or
its agents shall have reasonable access during normal business hours to the
Clinic's and Administrator's personnel and other financial records relating to
the Clinic, including, but not limited to, records of collections, expenses
with disbursements as kept by Administrator in performing Administrator's
obligations under this Agreements and the Clinic may copy any or all such
records.
ARTICLE 9.
Insurance and Indemnity
SECTION 9.1 INSURANCE TO BE MAINTAINED BY THE CLINIC. During
the term of this Agreement, the Clinic shall maintain comprehensive
professional liability insurance with such carrier as determined jointly by
Administrator and the Clinic, with limits per claim and per physician to be
agreed upon by Administrator and the Clinic and a separate limit of the Clinic
with such deductible
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as is mutually agreeable by Administrator and the Clinic. All malpractice
premiums and deductibles related thereto shall be included in Clinic Expenses.
All costs, expenses and liabilities incurred by the Clinic or Administrator in
excess of the limits of such policies shall be included in Excluded Clinic
Expenses.
SECTION 9.2 INSURANCE TO BE MAINTAINED BY ADMINISTRATOR. During
the term of this Agreement, Administrator will use commercially reasonable
efforts to provide and maintain, as a Clinic Expense, comprehensive
professional liability insurance for all professional employees of
Administrator, and comprehensive general liability and property insurance
covering the Clinic premises and operations with such limits or coverages as
may reasonably be determined to be appropriate by Administrator; provided that
Administrator must obtain the Clinic's approval in the event any such limits or
coverages are below the limits and coverages maintained as of the date of this
Agreement.
SECTION 9.3 CONTINUING LIABILITY INSURANCE COVERAGE. The Clinic
shall obtain or require each of its Physician Employees to obtain comprehensive
liability insurance coverage under either a "tail policy" or a "prior acts
policy" with the same limits and deductibles as the insurance coverage provided
pursuant to Section 9.1, upon the termination of such physician's relationship
with the Clinic for any reason. In the event that neither the Clinic nor the
Physician Employee obtains such comprehensive liability insurance coverage,
Administrator may do so. The cost of such comprehensive liability insurance
coverage shall be included in Clinic Expenses unless such cost is borne by the
Physician Employee.
SECTION 9.4 ADDITIONAL INSURED. The Clinic and Administrator
agree to use their reasonable efforts to have each other named as an additional
insured on the other's respective professional liability insurance programs.
The additional cost, if any, associated therewith shall be a Clinic Expense.
SECTION 9.5 INDEMNIFICATION. The Clinic shall indemnify, defend
and hold Administrator, PTI and their respective officers, directors,
shareholders, employees, agents and consultants (other than such persons who
are also officers, directors, shareholders, employees, agents or consultants of
the Clinic) harmless, from and against any and all liabilities, losses,
damages, claims, causes of action and expenses (including reasonable attorneys'
fees), not covered by insurance (including self-insured insurance and
reserves), whenever arising or incurred, that are caused or asserted to have
been caused, directly or indirectly, by or as a result of the performance of
medical services or the performance of any intentional acts, negligent acts or
omissions by the Clinic and/or its shareholders, employees and/or
subcontractors (other than Administrator, PTI or their employees) during the
term of this Agreement. Administrator and PTI shall indemnify, defend and hold
the Clinic and its officers, shareholders, directors, employees, agents and
consultants harmless from and against any and all liabilities, losses, damages,
claims, causes of action and expenses (including reasonable attorneys' fees),
not covered by insurance (including self-insured insurance and reserves),
whenever arising or incurred, that are caused or asserted to have been caused,
directly or indirectly, by or as a result of the performance of any intentional
acts, negligent acts or omissions by Administrator and/or its
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shareholders, employees and/or subcontractors (other than the Clinic or its
employees) during the term of this Agreement.
SECTION 9.6 GUARANTY. PTI hereby guarantees, absolutely and
unconditionally, the prompt performance by Administrator of all of its
obligations due to the Clinic under this Agreement.
ARTICLE 10.
Term and Termination
SECTION 10.1 TERM OF AGREEMENT. This Agreement shall commence
on the date hereof and shall expire on the 40th anniversary hereof unless
earlier terminated pursuant to the terms of either Section 10.3 or Section 10.4
or automatically extended pursuant to the terms of Section 10.2
SECTION 10.2 EXTENDED TERM. Unless earlier terminated as
provided for in either Section 10.3 or Section 10.4, the term of this Agreement
shall be automatically extended for additional terms of five (5) years each,
unless either party delivers to the other party, not less than twelve (12)
months nor earlier than fifteen (15) months prior to the expiration of the
preceding term, written notice of such party's intention not to extend the term
of this Agreement.
SECTION 10.3 TERMINATION BY THE CLINIC. The Clinic may
terminate this Agreement by giving written notice thereof to Administrator
(after the giving of any required notices and the expiration of any applicable
waiting periods set forth below) upon the occurrence of any of the following
events:
(a) Administrator or PTI shall admit in writing
its inability to generally pay its debts when due, apply for or consent to the
appointment of a receiver, trustee or liquidator of all or substantially all of
its assets, file a petition in bankruptcy or make an assignment for the benefit
of creditors, or upon other action taken or suffered by Administrator or PTI,
voluntarily or involuntarily, under any federal or state law for the benefit of
creditors, except for the filing of a petition in involuntary bankruptcy
against Administrator or PTI which is dismissed within sixty (60) days
thereafter.
(b) Administrator or PTI shall default in the
performance of any material duty or material obligation imposed upon it by this
Agreement and such default shall continue for a period of sixty (60) days after
written notice thereof has been given to Administrator by the Clinic, provided
that the Clinic may terminate this Agreement, if and only if, such termination
shall have been approved by the affirmative vote of the holders of two-thirds
of the interest of the equity holders of the Clinic.
(c) A law firm with nationally recognized
expertise in health care law and acceptable to the parties hereto renders an
opinion to the parties hereto that (i) a material provision of this Agreement
is in violation of applicable law or any court or regulatory agency enters an
order finding
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a material provision of this Agreement is in violation of applicable law and
(ii) this Agreement can not be amended pursuant to Section 11.6 hereof to cure
such violation.
(d) A default by PTI or its affiliates in the
performance of any material duty or material obligation imposed upon it by the
Master Transaction Agreement or any greement executed pursuant thereto, which
default shall continue for a period of sixty (60) days after written notice has
been given to PTI by the Clinic.
SECTION 10.4 TERMINATION BY ADMINISTRATOR. Administrator may
terminate this Agreement by giving written notice thereof to the Clinic (after
the giving of and required notices and the expiration of any applicable waiting
periods set forth below) upon the occurrence of any of the following events:
(a) The Clinic shall admit in writing its
inability to generally pay its debts when due, apply for or consent to the
appointment of a receiver, trustee or liquidator of all or substantially all of
its assets, file a petition in bankruptcy or make an assignment for the benefit
of creditors, or upon other action taken or suffered by the Clinic, voluntarily
or involuntarily, under any federal or state law for the benefit of debtors,
except for the filing of a petition in involuntary bankruptcy against the
Clinic which is dismissed within sixty (60) days thereafter.
(b) The Clinic shall default in the performance
of any material duty or material obligation imposed upon it by this Agreement,
and such default shall continue for a period of sixty (60) days after written
notice thereof has been given to the Clinic by Administrator.
(c) A law firm with nationally recognized
expertise in health care law and acceptable to the parties hereto renders an
opinion to the parties hereto that (i) a material provision of this Agreement
is in violation of applicable law or any court or regulatory agency enters an
order finding a material provision of this Agreement is in violation of
applicable law and (ii) this Agreement can not be amended pursuant to Section
11.6 hereof to cure such violation.
(d) The Clinic or any Physician Employee (i)
engages in any conduct or is formally accused of conduct for which the
Physician Employees' license to practice medicine reasonably would be expected
to be subject to revocation or suspension, whether or not actually revoked or
suspended, or (ii) is otherwise disciplined by any licensing, regulatory or
professional entity or institution, the result of any of which event described
in clause (i) or (ii) does or reasonably would be expected to materially
adversely affect the Clinic.
SECTION 10.5 EFFECTIVE DATE OF TERMINATION. Any termination of
this Agreement shall be effective (the "Termination Date") as follows:
(a) Immediately upon receipt of a termination
notice pursuant to Section 10.3, Section 10.4 or Section 3.12 (a "Termination
Notice"); or
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(b) Upon the expiration of this Agreement
pursuant to Section 10.1 and 10.2.
SECTION 10.6 PURCHASE OF ASSETS. Upon the termination of this
Agreement, subject to the provisions set forth below, the Clinic shall have the
option to, and Administrator shall have the option to require the Clinic to:
(a) Purchase from Administrator or its
Affiliates, as the case may be, at Fair Market Value, all tangible assets of
Administrator or its Affiliates that relate primarily to the Clinic, other than
Administrator's or its Affiliates' accounting and financial records (the
"Purchase Assets"), including, but not limited to, without duplication, (i) all
equipment, furniture, fixtures, furnishings, inventory, supplies, improvements,
additions and leasehold improvements utilized by the Clinic, (ii) any real
estate owned by Administrator or its Affiliates that is occupied by or used for
the benefit of the Clinic, and (iii) all other tangible assets that would be
set forth on a balance sheet of Administrator or its Affiliates prepared as of
the date of the Purchase Closing relating primarily to the Clinic; and
(b) Assume all of the Administrator's and
Affiliates' liabilities, debt, payables and other obligations (including lease
and other contractual obligations), or portions thereof, which relate directly
or are directly attributable to the Clinic ( the "Clinic Related Liabilities").
The Clinic shall be able to exercise its option under this Section
(unless this Agreement is terminated pursuant to either Section 10.4(a),
10.4(b) or 10.4(d)) and Administrator shall be able to exercise its option
under this Section (unless this Agreement is terminated pursuant to either
Section 10.3(a) or 10.3(b) or 10.3(d)) (i) until the one-year anniversary of
the date of termination if this Agreement is not terminated pursuant to either
Section 10.3(b), 10.3(d) or 10.4(b) and (ii) immediately if this Agreement is
terminated pursuant to Section 10.3(b), 10.3(d) or 10.4(b), by giving written
notice to the other party as required (the "Purchase Notice") on or prior to
ninety (90) days before the Termination Date if this Agreement is terminated
pursuant to Sections 10.1 and 10.2. In connection with the purchase and sale of
the Purchase Assets pursuant to this Section 10.6, Administrator shall use its
commercially reasonable efforts to cause the Purchase Assets to be conveyed
free of any lien, claim or encumbrance, other than those arising out of the
Clinic Related Liabilities.
SECTION 10.7 TERMS OF PURCHASE. The closing of the transaction
contemplated by Section 10.6 (the "Purchase Closing") shall occur (a) on the
Termination Date if this Agreement expires pursuant to the terms of Sections
10.1 and 10.2, or (b) on a date mutually acceptable to the parties hereto that
shall be within 180 days after receipt of a Termination Notice (or such later
date as is necessary for Administrator to obtain lessor consents to the
assignment to the Clinic of leases of real and personal property to be assumed
by the Clinic). Subject to the conditions set forth below, at the Purchase
Closing, Administrator and/or its Affiliates, as the case may be, shall
transfer and assign the Purchase Assets to the Clinic, and in consideration
therefor, the Clinic shall (a) pay to Administrator an amount in cash or, at
the option of the Clinic (subject to the conditions set forth below), PTI
Common Stock (valued at the last reported sale price of PTI Common Stock on the
New York Stock Exchange or other exchange including the NASDAQ Stock Market, on
which the PTI
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Common Stock is then listed or the last quoted ask price on any
over-the-counter market through which the PTI Common Stock is then quoted on
the last mailing day immediately preceding the Purchase Closing), or some
combination of cash and PTI Common Stock equal to the Fair Market Value of the
Purchase Assets as of the Purchase Closing less an amount equal to the Clinic
Related Liabilities (the "Purchase Price") and (b) assume the Clinic Related
Liabilities. The Clinic may offset the Purchase Price by any amounts owed the
Clinic by Administrator under this Agreement. Each party shall execute such
documents or instruments as is reasonably necessary, in the opinion of each
party and its counsel, to effect the foregoing transactions. The Clinic shall
use its best efforts to cause each shareholder of the Clinic to execute such
documents or instruments as may be necessary to cause the Clinic to assume the
Clinic Related Liabilities and to release Administrator and/or its Affiliates,
as the case may be, from any liability or obligation with respect thereto. In
the event the Clinic desires to pay all or a portion of the Purchase Price in
shares of PTI Common Stock, such transaction shall be subject to the
satisfaction of each of the following conditions:
(a) The holders of such shares of PTI Common
Stock shall transfer to Administrator good, valid and marketable title to the
shares of PTI Common Stock, free and clear of all adverse claims, security
interests, liens, claims, proxies, options, stockholders' agreements and
encumbrances;
(b) The holders of such shares of PTI Common
Stock shall make such representations and warranties as to title to the stock,
absences of security interests, liens, claims, proxies, options, stockholders'
agreements and other encumbrances and other matters as reasonably requested by
Administrator; and
(c) All other terms and conditions of any such
proposed transaction and the effects thereof, including any legal or tax
consequences, shall be reasonably satisfactorily to Administrator.
SECTION 10.8 EXCEPTIONS TO PURCHASE. Notwithstanding anything
contained herein to the contrary, Administrator shall not be obligated to sell
the Purchase Assets to the Clinic if the Clinic is not able to pay the Purchase
Price pursuant to the terms set forth above and assume the Clinic Related
Liabilities at the Purchase Closing. In such event, the Clinic shall surrender
the Purchase Assets to Administrator as of the Purchase Closing. If the Clinic
fails to so surrender the Purchase Assets, Administrator may, without prejudice
to any other remedy which it may have hereunder or otherwise, enter the
Premises and take possession of the Purchase Assets and expel or remove the
Clinic and any other person who may be occupying the Premises or any part
thereof, by force if necessity, without being liable for prosecution or any
claim for damages therefor.
SECTION 10.9 EFFECT UPON TERMINATION. Upon the Termination
Date, this Agreement shall terminate and shall be of no further force and
effect; provided, however:
(a) Administrator and PTI shall use their best
efforts to cooperate with the Clinic for the appropriate transfer of management
services. Administrator shall not object to the employment
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by the Clinic of Administrator's or PTI's employees performing services solely
for the Clinic and located at the offices of the Clinic.
(b) Each party hereto shall provide the other
party with reasonable access to books and records owned by it to permit such
requesting party to satisfy reporting and contractual obligations which may be
required of it.
(c) On the Termination Date, the Clinic shall
(i) assign to Administrator, to the extent permitted by law, all accounts
receivable included in Revenues that have not been collected and have been
utilized and considered in the computation and payment of compensation to the
Clinic Physicians, and (ii) pay to Administrator an amount equal to such
accounts receivable (net of any related allowance for doubtful accounts
recorded in accordance with GAAP) that are not assigned to Administrator by the
Clinic. Any other amounts due and owing but unpaid to either Administrator or
the Clinic as of the Termination Date shall be paid promptly by the appropriate
party.
(d) Any and all covenants and obligations of
either party hereto which their terms or by reasonable implications are to be
performed, in whole or in part, after the termination of this Agreement, shall
survive such termination, including, without limitation, the obligations of the
parties pursuant to the following Sections: 6.1(b), 6.1(c), 6.1(d), 6.2, 6.3,
9.5, Article 7 and the applicable provisions of Article 11.
ARTICLE 11.
General Provisions
SECTION 11.1 ASSIGNMENT. Administrator shall have the right to
assign its rights hereunder without the consent of the Clinic to PTI or any
direct or indirect wholly-owned subsidiary of Administrator or PTI (that
remains a wholly-owned subsidiary of Administrator or PTI) so long as such
assignment does not create any material economic obligations hereunder. The
Clinic hereby agrees that Administrator has the right to grant a security
interest in its right to receive payments hereunder to any lending institution
from which Administrator or PTI obtains financing.
SECTION 11.2 AMENDMENTS. This Agreement shall not be modified
or amended except by a written document executed by both parties to this
Agreement, and such written modification(s) or amendment(s) shall be attached
hereto.
SECTION 11.3 WAIVER OF PROVISIONS. Any waiver of any terms and
conditions hereof must be in writing and signed by the parties hereto. The
waiver of any of the terms and conditions of this Agreement shall not be
construed as a waiver of any other terms and conditions hereof.
SECTION 11.4 ADDITIONAL DOCUMENTS. Each of the parties hereto
agrees to execute any document or documents that may be requested from time to
time by the other party to implement or complete such party's obligations
pursuant to this Agreement.
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SECTION 11.5 ATTORNEYS' FEES. If legal action is commenced by
either party to enforce or defend its rights under this Agreement, the
prevailing party in such action shall be entitled to recover its costs and
reasonable attorneys' fees in addition to any other relief granted.
SECTION 11.6 CONTRACT MODIFICATIONS FOR PROSPECTIVE LEGAL
EVENTS. In the event any state or federal laws or regulations, now existing or
enacted or promulgated after the date hereof, are interpreted by judicial
decisions, a regulatory agency or legal counsel in such a manner as to indicate
that this Agreement or any provision hereof may be in violation of such laws or
regulations, the Clinic and Administrator shall amend this Agreement as
necessary to preserve the underlying economic and financial arrangements
between the Clinic and Administrator and without substantial economic detriment
to either party. To the extent any act or service required of Administrator in
this Agreement should be construed or deemed, by any governmental authority,
agency or court, to constitute the practice of medicine, the performance of
said act or service by Administrator shall be deemed waived and forever
unenforceable and the provisions of this Section 11.6 shall be applicable.
Neither party shall claim or assert illegality as a defense to the enforcement
of this Agreement or any provision hereof, instead, any such purported
illegality shall be resolved pursuant to the terms of this Section 11.6 and
Section 11.9.
SECTION 11.7 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and permitted assigns of the parties hereto.
Neither this Agreement nor any other agreement contemplated hereby shall be
deemed to confer upon any person not a party hereto or thereto any rights or
remedies hereunder or thereunder.
SECTION 11.8 ENTIRE AGREEMENT. This Agreement and the
agreements contemplated hereby constitute the entire agreement of the parties
regarding the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
SECTION 11.9 SEVERABILITY. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 11.10 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED
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AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES
GOVERNING CONFLICTS OF LAWS) OF THE STATE OF LOUISIANA.
SECTION 11.11 NO WAIVER; REMEDIES CUMULATIVE. No party hereto
shall by any act (except by written instrument pursuant to Section 11.3
hereof), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any default in or breach of
any of the terms and conditions hereof. No failure to exercise, nor any delay
in exercising, on the part of any party hereto, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
remedy set forth in this Agreement or otherwise conferred upon or reserved to
any part shall be considered exclusive of any other remedy available to any
party, but the same shall be distinct, separate and cumulative and may be
exercised from time to time as often as occasion may arise or as may be deemed
expedient.
SECTION 11.12 ARBITRATION AND MEDIATION. The parties agree to
utilize the following procedure with regard to any contention or claim arising
out of or relating to this Agreement, or any breach thereof (a "Dispute");
provided, however, that the provisions in this Section 11.12. shall not be
applicable to any LD Cause of Action or other cause of action assigned to
Administrator pursuant to Section 6.3 or any Dispute or cause of action related
thereto. If any Dispute cannot be settled through direct discussions, the
parties hereto agree to endeavor first to resolve the Dispute through mediation
in accordance with Section 11.12(a). If the Dispute cannot be resolved through
such mediation, the parties hereto agree to resolve such Dispute by binding
arbitration in accordance with Section 11.12(b).
(a) Mediation.
(i) Initiation of Procedure. The initiating party
shall give written notice to the other party, describing
the nature of the Dispute and its claim for relief and
identifying one or more individuals with authority to
resolve the Dispute on such party's behalf. The other
party shall have five (5) business days from receipt of
such notice within which to designate in writing one or
more individuals with authority to resolve the Dispute on
such party's behalf.
(ii) Selection of Mediator. Within ten (10)
business days from the date of designation by the
noninitiating party, the parties shall make a good faith
effort to select a person to mediate the Dispute. If no
mediator has been selected under this procedure, the
parties shall jointly request the National Health Lawyers
Association Alternative Dispute Resolution service to
provide a list of qualified attorney-mediators. Within
five (5) business days of receipt of the list, the parties
shall rank the proposed mediators in numerical order of
preference, simultaneously exchange such list, and select
as the mediator the one who has the highest combined
ranking. If such mediator is not available
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to serve, they shall proceed to contact the mediator who
was next highest in ranking until they select a mediator.
(iii) Time and Place for Meditation; Parties
Represented. In consultation with the mediator selected,
the parties shall promptly designate a mutually convenient
time in Houma, Louisiana for the mediation, such time to
be no later than sixty (60) days after selection of the
mediator. In the mediation, each party shall be
represented by persons with authority and discretion to
negotiate a resolution of the Dispute, and may be
represented by counsel.
(iv) Conduct of Mediation. The mediator shall
determine the format for the meetings and the mediation
sessions shall be private. The mediator will keep
confidential all information learned in private causes
with any party unless specifically authorized by such
party to make disclosure of the information to the other
party. The parties agree that the mediation shall be
governed by the applicable statutes, rules and/or
regulations governing mediation in Houma, Louisiana.
(v) Fees of Mediator; Disqualification. The fees
and expenses of the mediator shall be shared equally by
the parties. The mediator shall be disqualified as a
witness, consultant, expert or counsel for any party with
respect to the Dispute and any related matters.
(vi) Confidentiality. Mediation is a compromise
negotiation for purposes of federal and state Rules of
Evidence that constitutes privileged communication under
Louisiana law. The entire mediation process is
confidential, and such conduct, statements, promises,
offers, views and opinions shall not be discoverable or
admissible in any proceeding for any purpose.
(b) Binding Arbitration.
(i) Following the close of any unsuccessful
mediation proceeding with respect to a Dispute, such
Dispute shall, at the written request of either party, be
finally determined and settled pursuant to arbitration in
Houma, Louisiana by three arbitrators, one to be appointed
by Administrator, and one by the Clinic, and a neutral
arbitrator to be appointed by such two party-appointed
arbitrators, The neutral arbitrator shall be an attorney
and act as chairman. Should (x) either party fail to
appoint an arbitrator as hereinabove contemplated within
ten (10) days after the party not requesting arbitration
has received such written request, or (y) the two
arbitrators appointed by or on behalf of the parties as
contemplated in this Section 11.12(b) fail to appoint a
neutral arbitrator as hereinabove contemplated within ten
(10) days after the date of the appointment of the last
arbitrator appointed by or on behalf of the parties, then
the National Health Lawyers Alternative Dispute Resolution
Service, upon application of Administrator or of the
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Clinic, shall appoint an arbitrator to fill such position
with the same force and effect as though such arbitrator
had been appointed as hereinabove contemplated.
(ii) The arbitration proceeding shall be conducted
in accordance with The Alternative Dispute Resolution
Rules of the National Health Lawyers Association. A
determination, award or other action shall be considered
the valid action of the arbitrators if supported by the
affirmative vote of two or three of the three arbitrators.
The costs of arbitration (exclusive of attending the
arbitration, and of the fees and expenses of legal counsel
to such party, all of which shall be borne by such party)
shall be shared equally by Administrator and the Clinic.
The arbitration award shall be final and conclusive and
shall receive full faith and credit and judgment upon such
award may be entered and enforced in any court of
competent jurisdiction.
SECTION 11.13 COMMUNICATIONS. The Clinic and the Administrator
agree that good communication between the parties is essential to the
successful performance of this Agreement, and each pledges to communicate fully
and clearly with the other on matters relating to the successful operation of
the Clinic.
SECTION 11.14 CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
SECTION 11.15 GENDER AND NUMBER. When the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter and the number of all words shall include the singular and plural.
SECTION 11.16 REFERENCE TO AGREEMENT. Use of the words
"herein", "hereof", "hereto" and the like in this Agreement shall be construed
as references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
SECTION 11.17 NOTICE. Whenever this Agreement requires or
permits any notice, request, or demand from one party to another, the notice,
request, or demand must be in writing to be effective and shall be deemed to be
delivered and received (i) if personally delivered or if delivered by telex,
telegram, facsimile or courier service, when actually received by the party to
whom notice is sent or (ii) if delivered by mail (whether actually received or
not), at the close of business on the third business day next following the day
when placed in the mail, postage prepaid, certified or registered, addressed to
the appropriate party of parties, at the address of such party set forth below
(or at such other address as such party may designate by written notice to all
other parties in accordance herewith):
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If to Administrator: Physicians Trust, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Chamberlain, Hrdlicka, White,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Clinic: Bayou Orthopedic Center, A Professional Medical
Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: A.D. ▇▇▇▇▇▇, Jr., M.D.
Telecopy:
With a copy to: Duval, Funderburk, Sundbery, ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Sundbery
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 11.18 INFLATION ADJUSTMENT. The dollar amounts
indicated in Sections 3.2(c) and 3.5(a) shall be adjusted annually for
inflation during the term of this Agreement based on the National Consumer
Price Index.
SECTION 11.19 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
SECTION 11.20 DEFINED TERMS. Terms used in the Exhibits
attached hereto with their initial letter capitalized and not otherwise defined
therein shall have the meanings assigned to such terms in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
Clinic:
Bayou Orthopedic Center,
A Professional Medical Corporation
By:__________________________________________
Name: _______________________________________
Title:_______________________________________
PTI/Administrator:
PHYSICIANS TRUST, INC.
By: _________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
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EXHIBIT 7.4
SECURITY AGREEMENT
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SCHEDULE 3.3
FACILITIES
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SCHEDULE 4.1
PHYSICIAN EMPLOYMENT AGREEMENT
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SCHEDULE 4.3
MEDICAL PRACTICE
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SCHEDULE 4.9(C)
CLINIC PLANS
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THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE SECURITIES OR BLUE SKY
LAWS (COLLECTIVELY, THE "ACTS"), AND NO SUCH REGISTRATION IS CONTEMPLATED. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL. IN THE ABSENCE OF ANY EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACTS, THIS PROMISSORY NOTE MAY NOT BE OFFERED,
SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF SUCH ACTS.
PHYSICIANS TRUST, INC.
$525,000
SUBORDINATED NON-NEGOTIABLE PROMISSORY NOTE, SERIES A.
This Promissory Note, issued to A.D. ▇▇▇▇▇▇, Jr., M.D. ("Holder"), is
a duly authorized Promissory Note of PHYSICIANS TRUST, INC., a Delaware
corporation (the "Company"), designated as its Subordinated Non-Negotiable
Promissory Note, Series A, (such note is herein referred to as the "Series A
Note" and all Subordinated Non-Negotiable Promissory Notes, Series A, shall be
referred to herein as "Series A Notes"), issued in connection with the
transactions contemplated by that certain Master Transaction Agreement, by and
among the Company, A.D. ▇▇▇▇▇▇, Jr., A.P.M.C. and A.D. ▇▇▇▇▇▇, Jr., M.D.,
dated as of ______________, 1997 (the "Master Transaction Agreement"). The
Company, for value received, hereby promises to pay to Holder, the principal
sum of FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($525,000), together with
interest on the outstanding principal balance from day to day remaining at an
annual rate equal to seven percent (7%). Interest shall be calculated on the
basis of a 365-day year, or 366-day year, as appropriate, for the actual number
of days elapsed. Except as specifically noted hereafter, the term "Holder"
shall include any subsequent holders of this Series A Note whose names shall
appear in the register to be kept by the Company of the holders of its notes
(the "Note Register").
The unpaid principal amount of this Series A Note shall be due and
payable in three annual installments. The first two installments shall each be
in the amount of ONE HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 DOLLARS
($175,000), payable on ___________, 2000 and on __________, 2001. The third
installment shall be in the amount of ONE HUNDRED SEVENTY-FIVE THOUSAND AND
00/100 DOLLARS ($175,000), payable on _____________, 2002. Interest on the
principal of this Series A Note shall be due and payable annually, commencing on
___________, and, continuing regularly and annually on the 1st day of each
_________ until maturity. Except as otherwise provided herein, all sums of
past-due principal shall bear interest
___________
Initialed for
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at the lesser of twelve percent (12%) per annum or the maximum rate of interest
permitted by applicable law. Payment of the principal of and interest on this
Series A Note will be made at the principal office of the Company in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Article 1. Equal Rank. All of the Series A Notes rank equally and
ratably without priority over one another. All payments of interest on or
principal of the Series A Notes shall be made to the holders thereof, pro rata
according to the unpaid principal amount of the notes held by them.
Article 2. Subordination.
(a) This Series A Note, to the extent and in the manner
hereinafter set forth, shall be subordinated and subject in right of
payment to the prior payment in full of all principal of, premium, if
any, and interest on Senior Debt (as defined herein at Article 2,
subsection (f)).
(b) No payment on account of principal or interest on
this Series A Note shall be made if, at the time of such payment or
immediately after giving effect thereto, (i) there shall exist a
default in the payment of principal, premium, if any, or interest with
respect to any Senior Debt or (ii) there shall have occurred an event
of default (other than a default in the payment of principal, premium,
if any, or interest) with respect to any Senior Debt or in the
instruments or documents pursuant to which the same is outstanding,
permitting the holders thereof to accelerate the maturity thereof, and
such event of default shall not been cured or waived in writing by all
holders of Senior Debt; provided, that such payments may be made if
the holder or holders of Senior Debt have not accelerated the maturity
thereof within a period of 90 days following the date of such default
or event of default, as the case may be.
(c) Upon (i) any acceleration of the principal amount due
on this Series A Note pursuant to the terms hereof or (ii) any payment
or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to the creditors of the
Company upon any dissolution, winding up, total or partial liquidation
or reorganization of the Company (whether voluntary or involuntary) or
in bankruptcy, insolvency, receivership or other proceedings, all
principal, premium, if any, and interest due or to become due upon all
Senior Debt shall first be paid in full, or payment thereof provided
for in money or money's worth, before Holder shall be entitled to
retain any assets so paid or distributed in respect thereof (for
principal or interest); and upon any such dissolution, winding up,
liquidation or reorganization, any payment of distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to which Holder would be entitled, except for these
provisions, shall be paid by the Company to any
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receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, or to the holders of
Senior Debt or their representatives, to the extent necessary to pay
all Senior Debt in full, in money or money's worth, after giving
effect to any concurrent payment or distribution to or for the holder
of such Senior Debt, before any payment or distribution is made to
Holder.
(d) In the event that, notwithstanding the provisions of
the preceding paragraph, any such payment, or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, shall be received by Holder before all Senior Debt is paid
in full, or provision made for such payment, in accordance with its
terms, any such payment or distribution shall be held in trust for,
and shall be paid over or delivered, to the holders of such Senior
Debt or their representative(s), or to the trustee(s) under any
indenture pursuant to which any instruments evidencing any of such
Senior Debt may have been issued, for application to the payment of
all Senior Debt remaining unpaid to the extent necessary to pay all
Senior Debt in full in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of
such Senior Debt. Holder shall have no liability whatsoever for
determining the order of priority among holders of Senior Debt, and
shall fully discharge its obligations pursuant to this Note if it pays
or delivers all amounts required to be paid or delivered pursuant
hereto to any holders of Senior Debt.
(e) Nothing contained in these provisions is intended to
or shall impair as between the Company, it creditors (other than the
holders of Senior Debt) and Holder, the obligation of the Company,
which shall, except as provided in Article 7, be absolute and
unconditional, to pay to Holder the principal, and interest on this
Series A Note, as and when the same shall become due and payable in
accordance with its terms, or to affect the relative rights of Holder
and creditors of the Company (other than the holders of Senior Debt)
nor shall anything herein prevent Holder from exercising all remedies
otherwise permitted by applicable law, upon default, subject to the
rights, if any, under these provisions of the holders of Senior Debt
in respect of cash, property or securities of the Company received
upon the exercise of any such remedy.
(f) Senior Debt, as defined in this Series A Note, shall
include: (i) all indebtedness of the Company for borrowed money or for
the deferred purchase price of property or services, excluding any
trade payables arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or
otherwise, of the Company in connection with any letters of credit or
acceptances issued under letter of credit facilities, acceptance
facilities or other similar facilities and in connection with any
agreement to purchase, redeem exchange, convert or otherwise acquire
for value any capital stock of the Company, or any warrants, rights or
options to acquire such capital stock, now or hereafter outstanding,
(ii) all obligations of the Company evidenced by
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bonds, notes, debentures, loan agreements, credit agreements, lines of
credit or other similar instruments, (iii) every obligation of the
Company issued or contracted for as payment in consideration of the
purchase by the Company or an affiliate of the Company of the capital
stock or substantially all of the assets of another person or in
consideration for the merger or consolidation with respect to which
the Company or an affiliate of the Company was a party, (iv) all
indebtedness created or arising under any conditional sale or other
title retention agreement with respect to property acquired by the
Company (even if the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or
sale of such property), but excluding trade payables arising in the
ordinary course of business, and (v) all obligations of the Company
under any capital lease of real or personal property that, in
accordance with generally accepted accounting principles, has been
recorded on the balance sheet of the Company as a capitalized lease
obligation; provided, however, that Senior Debt shall not include any
such indebtedness that by its terms is subordinated to the Series A
Notes or that is subordinated to all indebtedness to which the Series
A Notes are subordinated in substantially like terms as the Series A
Notes.
Article 3. Prepayment. The Company may, at its sole option and
discretion, after giving Holder 30 days' prior written notice of its intent to
make such prepayment, prepay any amount of principal on this Series A Note
(together with any interest accrued on such prepaid principal as of the date of
such prepayment) at any time or from time to time. Holder agrees that upon any
such prepayment, Holder shall make a notation of this Series A Note of all
principal and interest so prepaid and the date of such prepayment.
Article 4. Transfer of the Notes.
(a) This Series A Note shall not be transferrable except
in compliance with the provisions of the Acts in respect of the
transfer of this Series A Note.
(b) This Series A Note and each note issued in exchange
for or upon transfer of this Series A Note be stamped or otherwise
imprinted with a legend in substantially the following form:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS (COLLECTIVELY, THE "ACTS"), AND NO
SUCH REGISTRATION IS CONTEMPLATED. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL. IN THE ABSENCE OF ANY EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACTS, THIS NOTE MAY NOT BE
OFFERED, SOLD, TRANSFERRED,
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OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACTS.
Article 5. Default.
(a) "Event of Default," wherever used herein, means any
one of the following events:
(1) default in the payment of principal or
interest when due on this Series A Note, even if caused by
subordination, that is not cured by the Company within ten
days; or
(2) the entry of a decree or order for relief by
a court having jurisdiction in respect of the Company in an
involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or
for any substantial part of its property, or ordering the
winding up or liquidation of its affairs and the continuance
of any such decree or order unstayed and in effect for a
period of 60 consecutive days; or
(3) the commencement by the Company of a
voluntary case under the federal bankruptcy laws, as now
constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar law,
or the consent by it to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) of the
Company or for any substantial part of its property, or the
making by it of any assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its
debts generally as they become due.
(b) If an Event of Default occurs, then and in every such
case Holder may declare the principal of this Series A Note to be due
and payable immediately, by a notice in writing to the Company, and
upon any such declaration such principal shall become immediately due
and payable.
(c) The Company expressly waives all notices of
nonpayment, demands for payment, presentations for payment, notices of
intention to accelerate maturity, protest and notice of protest, and
notices acceleration of the indebtedness due hereunder.
Article 6. Collection Fees. If an Event of Default occurs, and this
Series A Note is placed in the hands of an attorney for collection (whether or
not suit is filed), or if this Series A Note is
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collected by suit or legal proceedings or through bankruptcy proceedings, the
Company agrees to pay in addition to all sums then due hereon, including
principal and interest, all reasonable expenses of collection including
reasonable attorneys' fees.
Article 7. Setoff. In the event the Company shall be entitled,
pursuant to the Master Transaction Agreement or otherwise, to any damages or
other amounts to be paid by Holder to the Company, or to exercise any other
setoff rights, the Company may, in its sole discretion and without prior notice
to Holder, set off all or any such amounts against the principal or interest
then outstanding under this Series A Note. The Company shall give notice to
Holder that such amounts have been set off against the principal or interest of
the Series A Note, and interest shall cease to accrue on any amount so set off
against principal effective as of the date such notice is sent.
Article 8. Amendments and Waivers. This Series A Note may be amended
by written agreement of the Company and Holder. No waiver of the provisions
hereof shall be effective unless agreed to in writing by the party against whom
such waiver is asserted.
Article 9. Usury Savings Clause. Notwithstanding any other provision
of this Series A Note, it is the intention of the Company and Holder to conform
strictly to applicable usury laws regarding the use, forbearance or detention
of any indebtedness arising under this Series A Note whether such laws are now
or hereafter in effect, including the laws of the United States of America or
any other jurisdiction whose laws are applicable, and including any subsequent
revisions to or judicial interpretations of those laws, in each case to the
extent they are applicable to this Series A Note (the "Applicable Usury Laws").
Accordingly, if any payments made pursuant to this Series A Note result in any
person having paid any interest in excess of the Maximum Amount, as hereinafter
defined, or if any transaction contemplated hereby would otherwise be usurious
under any Applicable Usury Laws, then, in that event, it is agreed as follows:
(i) the provisions of this Article shall govern and control; (ii) the aggregate
of all interest under Applicable Usury Laws that is contracted for, charged or
received under this Series A Note shall under no circumstances exceed the
Maximum Amount, and any excess shall be promptly refunded to the payor by the
recipient hereof; (iii) no person shall be obligated to pay the amount of such
interest to the extent that it is in excess of the Maximum Amount; and (iv) the
effective rate of any interest payable under this Series A Note shall be ipso
facto reduced to the Highest Lawful Rate, as hereinafter defined, and the
provisions of this Series A Note immediately shall be deemed reformed, without
the necessity of the execution of any new document or instrument, so as to
comply with all Applicable Usury Laws. All sums paid, or agreed to be paid, to
any person pursuant to this Series A Note for the use, forbearance or detention
of any indebtedness arising hereunder shall, to the fullest extent permitted by
the Applicable Usury Laws, be amortized, pro rated, allocated and spread
throughout the full term of any such indebtedness so that the actual rate of
interest does not exceed the Highest Lawful Rate in effect at any particular
time during the full term thereof. As used herein, the term "Maximum Amount"
means the maximum nonusurious amount of interest that may be lawfully
contracted for, charged or received
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by any person in connection with any indebtedness arising under this Series A
Note under all Applicable Usury Laws, and the term "Highest Lawful Rate" means
the maximum rate of interest, if any, that may be charged to any person under
all Applicable Usury Laws on any principal balance from time to time
outstanding pursuant to this Series A Note.
Article 10. Severability Clause. In case any provision in this
Series A Note shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
Article 11. Notice. All notices to the Company required or permitted
by this Series A Note shall be sufficient if given in writing and executed by
Holder and if notice is required or permitted from more than one Holder, such
notice may be executed in multiple counterparts. All such notices to the
Company shall be delivered by registered or certified mail, return receipt
requested, or personally delivered, to the Company at Physicians Trust, Inc.
Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chairman of the Board, or such other address as the Company may designate by
written notice to Holder. Any notices by the Company to Holder shall be
delivered by registered or certified mail, return receipt requested, to Holder
at the address appearing in the Note Register. The address for Holder which
shall appear in the Note Register shall initially be ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and may subsequently be changed by Holder by written notice to
the Company given in accordance with this Article 11.
Article 12. No Recourse against Others. This Series A note shall be
the obligation of the Company only, and no recourse shall be had for the
payment hereof or the interest hereon against any incorporator, stockholder,
director or officer as such (whether past, present or future) of the Company or
any successor entity whether by virtue of any constitution, statute or rule of
law or equity, or by the enforcement of any assessment or penalty, or
otherwise, all such liability of the incorporators, stockholders, directors and
officers as such being expressly waived and released by Holder by the
acceptance of this Series A Note.
ARTICLE 13. GOVERNING LAW. THIS SERIES A NOTE SHALL BE DEEMED TO BE
A CONTRACT MADE UNDER THE LAWS OF THE STATE OF TEXAS, AND FOR ALL PURPOSES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, EXCLUSIVE OF ANY SUCH LAW UNDER WHICH THE LAW OR ANY OTHER JURISDICTION
WOULD APPLY.
Article 14. Construction. The headings and captions used in this
Series A Note are inserted solely for convenience in locating the provisions of
this Series A Note and not as an aid in construction. The plural usage of a
word shall be deemed to include the singular thereof and vice versa. Each
gender shall be deemed to include the other genders.
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IN WITNESS WHEREOF, the Company has caused this Series A Note to be
signed by its duly authorized officer and its corporate seal to be affixed
hereto and attested by its Secretary, on the _____ day of ________________,
1997.
PHYSICIANS TRUST, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Chairman of the Board and
Chief Executive Officer
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PHYSICIAN EMPLOYMENT AGREEMENT
THIS PHYSICIAN EMPLOYMENT AGREEMENT (the "AGREEMENT") is made and
entered into this _____ day of ________________, 1997, by and between A.D.
▇▇▇▇▇▇, Jr., M.D., whose mailing address is ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter "PHYSICIAN"), and Bayou Orthopedic Center, A Professional
Medical Corporation, a Louisiana professional medical corporation, having its
principal office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
"CLINIC").
W I T N E S S E T H:
This Agreement is made and entered into under the following
circumstances:
(1) Whereas the Clinic is engaged in the business of owning and
operating a medical practice; and
(2) Whereas the Clinic desires, on the terms and conditions stated
herein, to employ the Physician as a clinic physician specializing in the
practice of orthopedics; and
(3) Whereas the Physician desires, on the terms and conditions
stated herein, to be employed by the Clinic; and
(4) Whereas, the Physician was formerly employed by A.D. ▇▇▇▇▇▇,
Jr. (A.P.M.C.), a Louisiana professional medical corporation ("Old Clinic").
NOW, THEREFORE, in consideration of the foregoing recitals, and of the
promises, covenants, terms and conditions contained herein, the parties hereto
agree as follows:
1. Employment and Term. Subject to earlier termination as
provided for in Section 13 hereof, the Clinic employs Physician, and Physician
hereby accepts employment with the Clinic commencing [__________] (hereinafter
the "EFFECTIVE DATE") and continuing for a period of five (5) years
(hereinafter the "TERM OF EMPLOYMENT"). Upon the expiration of the initial
term, the Term of Employment shall automatically be renewed for successive one
(1) year periods, not to exceed fifteen (15), commencing upon the fifth
anniversary of the Effective Date, unless Physician gives written notice of
intent not to renew not less than nine (9) months, nor more than one (1) year,
prior to the then current Term of Employment.
2. Duties and Qualifications. Physician shall provide orthopedic
medical services to patients, on behalf of Clinic, at the Clinic's office
located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or such other locations in
the Houma, Louisiana area as requested by Clinic (hereinafter collectively
referred to as the "FACILITY"), in accordance with the laws of the State of
Louisiana (the "STATE") and the principles of medical ethics of the American
Medical Association.
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During the Term of Employment, Physician will practice medicine as an
employee of Clinic on a full-time basis and will perform such other duties as
are reasonably assigned to Physician from time to time by the Board of
Directors of Clinic ("BOARD OF DIRECTORS"). Such duties shall include, without
limitation:
a. Physician shall devote Physician's full professional
time, attention, and energies to rendering professional services at the
Facility and at such other places in Houma, Louisiana and its surrounding areas
as may be designated from time to time by Clinic and to administrative duties
related to such practice;
b. Physician shall provide "on duty" and "on call"
services on an equal rotating basis with other physician employees of Clinic,
and shall provide "on call" services at those hospitals and other facilities
that are designated from time to time in Clinic's business plan or as otherwise
agreed to by Physician;
c. Physician agrees to keep and maintain (or cause to be
kept and maintained) on a timely basis appropriate records relating to all
professional services rendered by Physician hereunder and to attend to all
billing reports, claims, and correspondence required in connection with
Physician's services rendered under this Agreement;
d. Physician agrees to promote, by entertainment or
otherwise, to the extent permitted by law and the applicable canons of
professional ethics and applicable parts of this Agreement, the professional
practice of Clinic;
e. Physician will, to a reasonable extent, attend
professional conventions and post-graduate seminars and participate in
professional societies in conjunction with the covenants and agreements
contained herein, and will do all things reasonably desirable to maintain and
improve Physician's professional skills;
f. Physician shall be and remain duly licensed by the
State to practice medicine without restriction and shall comply with and be
controlled and governed by, and otherwise perform services hereunder in
accordance with, applicable law and the ethics and standards of care of the
medical community or communities in which Physician shall from time to time
provide services;
g. For the purpose of permitting the Clinic and/or its
management services provider to purchase key man life insurance covering
Physician and naming Clinic and/or its management services provider as
exclusive beneficiaries, Physician agrees to any action reasonably required to
obtain such insurance, including submitting to a physical examination if
required by any carrier proposing to provide such insurance;
h. Physician shall at all times comply with the policies
and procedures adopted by Clinic's Board of Directors from time to time, and
shall perform such other duties as Clinic and Physician may from time to time
mutually agree; and
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i. Nothing herein shall authorize Clinic to impose
employment duties or constraints of any kind which would require Physician to
infringe the ethics of the medical profession or violate any local ordinance or
other law. Further, Physician shall be permitted to invest Physician's personal
assets and manage Physician's personal investment portfolio in such a form and
manner as will not require any professional or business services on Physician's
part to any third party, or conflict with the provisions of Section 16 or 17 of
this Agreement.
3. Professional Judgment. Physician will be free to exercise
Physician's own judgment regarding the treatment of any particular patient.
Physician, however, agrees to observe and comply with the rules, regulations,
policies and procedures of Clinic as adopted from time to time by the Board of
Directors.
4. Status of Physician. The parties expressly acknowledge that
Physician, in the performance of services hereunder, is an employee of Clinic.
Accordingly, Clinic shall deduct from all compensation paid to Physician
pursuant to this Agreement any sums required to be deducted by law or any other
requirement of any governmental body.
5. Professional Fees. Physician acknowledges that Clinic shall be
entitled to all fees generated by Physician pursuant to professional services
rendered on behalf of Clinic hereunder, and all such fees shall be and remain
the property of Clinic. Physician expressly and irrevocably transfers, assigns,
and otherwise conveys to Clinic all right, title, and interest of Physician in
and to any fees, whether in cash, goods, or other items of value, resulting
from or incident to Physician's practice of medicine pursuant to this Agreement
during the term hereof and hereby appoints Clinic as attorney-in-fact for
collection of same or otherwise enforcing Physician's interests therein.
6. Outside Professional Activities. Any fees or other honoraria
received by Physician for speaking engagements or other outside activities
shall be the property of Clinic, unless specifically excluded on Schedule A
attached hereto.
7. Salary. During the Term of Employment, the amount of salary
to which Physician shall be entitled ("Physician's Salary") will equal
sixty-five percent (65%) of the difference between Revenues attributable to
Physician for the prior month and Physician's allocated portion of the prior
month's Clinic Expenses, such product to then be reduced by the allocated
portion of Excluded Clinic Expenses attributable to Physician (other than
compensation payable to such Physician). This amount shall be payable in
accordance with Clinic's regular payroll policy. In the month following each
anniversary of Physician's employment, the Clinic shall calculate the extent to
which payments made to Physician with respect to the preceding twelve-month
period have been greater than or less than the Physician's Salary calculated as
provided above with respect to such period. To the extent such payments have
been less than the amount of Physician's Salary, the Clinic will pay the
Physician the amount of such shortfall within thirty days following such
anniversary. To the extent such payments have been greater than the amount of
Physician's Salary, the Clinic shall be entitled to set off the amount of such
excess payments against subsequent payroll checks to be issued to Physician;
provided, however, that the amount of such payroll reduction will not be
considered in determining whether payments to Physician have been greater than
or less than Physician's Salary
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141
with respect to the year in which such payroll reductions are made. Upon
termination of Physician's Term of Employment pursuant to this Agreement,
Physician or Clinic, as applicable, will make a cash payment to the other party
to this Agreement within 60 days after such termination in the amount required,
if any, so that Physician shall have received a salary hereunder equivalent to
the applicable Physician's Salary over the Term of Employment; provided
further, however, that cash amounts due and payable to any party hereunder may
be set off against payments due from the payee thereof under any other
provision of this agreement. For purposes of this Employment Agreement,
"REVENUES," "PHYSICIAN EMPLOYEES," "CLINIC PHYSICIAN STOCKHOLDER," "CLINIC
EXPENSES" and "EXCLUDED CLINIC EXPENSES" shall have the meaning assigned in the
Management Services Agreement, a copy of which is attached as Schedule B.
"REVENUES ATTRIBUTABLE TO PHYSICIAN" shall include all Revenue derived from
services provided by all Physician Employees in association with Physician,
including each physician employed by the Clinic who is not also a stockholder
of the Clinic; provided, however, that all Revenue derived from each Physician
Employee shall be allocated to Physician or to another Clinic Physician
Stockholder, and no Revenue shall be allocated to more than one Clinic
Physician Stockholder. All Clinic Expenses and all Excluded Clinic Expenses
incurred in connection with Revenue attributable to Physician shall be
allocated to Physician, including all such expense related to Physician
Employees associated with Physician.
8. Ancillary Profits. During each year of the Term of
Employment, Physician may receive a distribution of the profit from Ancillary
Services offered by the Clinic, the frequency and amount of which shall be
determined in the sole discretion of the Clinic.
9. Vacation/Personal Time. Physician shall be entitled to leave
for vacation, illness, disability and educational purposes as provided on the
attached Schedule C. Unused holidays and days of vacation may not be carried
over from one fiscal year to another. Clinic and Physician shall mutually
agree on the scheduling of Physician's vacation, holiday and leave time, and
all vacation, holiday and leave time shall be subject to Physician's obligation
to make arrangements with Clinic's other professional employees for on-call
coverage.
10. Fringe Benefits. In addition to any other rights Physician may
have hereunder, Clinic shall provide to Physician, as a Clinic Expense, the
cost of maintaining Physician's professional license and the fringe benefits as
set forth on the attached Schedule D except that the retirement benefits shall
be an Excluded Clinic Expense. Clinic may provide such additional fringe
benefits for the benefit of Physician as Clinic may determine in its reasonable
discretion; provided, however, that all such additional fringe benefits shall
be deemed Excluded Clinic Expenses, as such term is defined in the Management
Services Agreement, attributable to such Physician for the purposes of this
Agreement and the Management Services Agreement.
11. Professional Meetings and Continuing Medical Education.
Physician shall be entitled to attend professional meetings and continuing
medical education conferences as provided on Schedule C.
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12. Professional Liability Insurance.
a. Minimum Policy. During the Term of Employment, the
Clinic shall maintain in force and effect for the remainder of their
outstanding terms, all professional liability insurance policies, if any, which
are transferred from Old Clinic to the Clinic. All documents evidencing the
transfer of such policies shall be in a form acceptable to Administrator (as
hereinafter defined). At all times during the Term of Employment other than
when such transferred policies are in effect, the Clinic shall maintain and
keep in force professional liability insurance "claims made" policies of
acceptable form in the State providing coverage for Physician and Clinic with
limits of not less than One Million and No/100 Dollars ($1,000,000.00) per
occurrence, and not less than Three Million and No/100 Dollars ($3,000,000.00)
in the aggregate for each policy year. For purposes of this Agreement,
"acceptable form" shall mean any form reasonably acceptable to Physician,
Clinic and the Administrator (as hereinafter defined). The policy shall be
placed with insurance companies reasonably acceptable to Clinic which are
authorized by the State Insurance Department to issue such policies in the
State and which have an A.M. Best rating of A:IX or better (except for any such
policies transferred from Old Clinic, if any, and except as otherwise agreed)
and such policies shall name both the Clinic and Physician as named insureds.
Physician shall cooperate fully with Clinic and such insurance companies in
order to obtain such professional liability insurance policy.
b. Tail Coverage. Upon termination of Physician's
employment with Clinic for any reason whatsoever, whether voluntary or
involuntary, Clinic shall obtain or maintain a professional liability insurance
"tail" coverage policy in an amount not less than the limits of the
professional liability insurance policy in effect with respect to Physician
immediately prior to Physician's termination. Such tail coverage policy shall
provide coverage of Physician and Clinic for all occurrences and events during
Physician's employment with Clinic. The cost of such policy shall be a Clinic
Expense and as such shall be accrued and charged ratably over the final twelve
months of Physician's Term of Employment or such shorter period of Physician's
Term of Employment which remains at the time such termination is made known to
Clinic. Upon termination of Physician's Term of Employment, any portion of the
cost of such policy which has not been accrued as a Clinic Expense shall be
included as a Clinic Expense in determining the amount of the final cash
payment, if any, which may be required to be made by Physician or Clinic, as
applicable, to the other party pursuant to Section 7 of this Agreement to cause
net cash distributions to Physician to be equivalent to Physician's Salary over
the Term of Employment.
c. Indemnification. Physician hereby agrees to defend,
indemnify and hold Clinic harmless from and against any uninsured loss, claim,
suit, expense or obligation arising out of or resulting from Physician's actual
or alleged malpractice in the performance of medical services pursuant to this
Agreement, to the extent such loss, claim, suit, expense or obligation is not
reimbursed by insurance coverage.
d. Loss of Professional Liability Insurance. Clinic may
immediately suspend Physician from practice under this Agreement if, due to any
act or omission of Physician, medical professional liability insurance as
specified in (a) above cannot reasonably be obtained for Physician or if
Physician's medical professional liability insurance is canceled, suspended,
revoked or
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terminated, and Physician shall not be reinstated or permitted to practice at
Clinic's business until such time as the medical professional liability
insurance for Physician is reinstated to the satisfaction of Clinic. Physician
will notify Clinic within twenty-four (24) hours of receipt by Physician of any
notice or information that Physician's professional liability insurance has
been canceled, terminated, revoked or suspended.
13. Termination. Notwithstanding any other provisions of this
Agreement, the Term of Employment shall terminate upon:
a. the death of Physician; or,
b. upon Physician's "disability" (For purposes of this
Agreement, the term "DISABILITY" shall mean the inability of Physician, arising
out of any medically determinable physical or mental impairment, to perform the
services required of him hereunder for a period of sixty (60) consecutive days
during which sixty (60) day period Physician's compensation hereunder shall
continue); or,
c. at Clinic's option, immediately upon the existence of
"cause." For purposes of this Agreement, the term "CAUSE" shall be defined as:
(1) failure of Physician to perform the duties required
of him in this Agreement in a manner satisfactory to Clinic, in
Clinic's sole discretion; provided, however, that the Term of
Employment shall not be terminated pursuant to this subparagraph (1)
unless Clinic first gives Physician a written notice ("NOTICE OF
DEFICIENCY"). The Notice of Deficiency shall specify the deficiencies
in Physician's performance of his duties. Physician shall have a
period of thirty (30) days, commencing on receipt of the Notice of
Deficiency, in which to cure the deficiencies contained in the Notice
of Deficiency. In the event Physician does not cure the deficiencies
to the satisfaction of Clinic, in its sole discretion, within such
thirty (30) day period, the Clinic shall have the right to immediately
terminate the Term of Employment and this Agreement. The provisions of
this subparagraph (1) may be invoked by Clinic any number of times and
cure of deficiencies contained in any Notice of Deficiency shall not
be construed as a waiver of this subparagraph (1) nor prevent the
Clinic from issuing any subsequent Notices of Deficiency;
(2) any dishonesty by Physician in his dealings with the
Clinic, the commission of fraud by Physician, or negligence in the
performance of the duties of Physician;
(3) the arrest or conviction (or plea of guilty or nolo
contendere) of Physician of any felony or other crime involving
dishonesty or moral turpitude;
(4) any violation of any covenant or restriction
contained in Section 16 or Section 17 hereof;
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(5) unlawful use of narcotics or other controlled
substances, or use of alcohol or other drugs in a manner the Clinic
reasonably determines to be adverse to the best interests of the
Clinic;
(6) failure of Physician to maintain Physician's license
and authorization to practice as a physician in the State;
(7) failure of Physician to maintain his status as Board
certified in Physician's specialty area of practice;
(8) if, due to any act or omission of Physician, the
medical professional liability insurance required by Section 12(a) of
this Agreement cannot be reasonably obtained or maintained, or if, due
to any act or omission of Physician, such medical professional
liability insurance is canceled, terminated or revoked.
(9) for all purposes of this Agreement, termination for
"cause" shall be deemed to have occurred in the event of Physician's
resignation when, because of existing facts and circumstances,
subsequent termination for "cause" can reasonably be foreseen.
d. the termination of Physician's Term of Employment by
Physician (other than by death, disability or nonrenewal), or if Physician,
acting alone or in collusion with other members of the Clinic, the Clinic's
board of directors or other governing body of the Clinic, effects a termination
of Physician's Term of Employment without "cause" as defined above
(collectively, a "Physician Termination").
Except as otherwise provided in Section 13(b), in the event of
termination of Physician's Term of Employment pursuant to this Section 13,
Physician or Physician's estate, as appropriate, shall be entitled to receive
(in addition to any fringe benefits payable upon death in the case of
Physician's death) the salary provided for in Section 7 hereof (prorated on a
daily basis) and any Ancillary Profits provided for in Section 8 hereof
(determined as provided in Section 8), up to and including the effective date
of termination.
14. Effects of Termination. In the event of termination of the
Term of Employment pursuant to this Agreement for any reason, including
non-renewal, neither party shall have any further obligations hereunder except
for (i) obligations accruing prior to the date of termination and (ii)
obligations, promises, or covenants contained herein which are expressly made
to extend beyond the term of this Agreement, including, without limitation,
confidentiality of information, indemnities and Physician's covenants not to
compete and to pay damages (which covenants and agreements shall survive the
termination or expiration of the Term of Employment). If the Physician's
employment terminates prior to the end of the initial term or any renewal of
the Term of Employment, any compensation owed to Physician shall continue to be
calculated based on the formula for compensation under this Agreement, and such
sum shall be payable in full satisfaction of any and all rights to compensation
arising under this Agreement and shall be in lieu of any claims for accounts
receivable. The termination of the Term of Employment, for whatever reason,
shall not
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extinguish those obligations of Physician specified in the Restrictive
Covenants (hereinafter defined), nor shall the same extinguish the right of
either party to bring an action, either in law or in equity, for breach of this
Agreement by the other party.
Except in the event of a Physician Termination, notwithstanding any
other provision of this Agreement, if Physician's Term of Employment is
terminated without cause, all obligations hereunder shall terminate except for
(i) obligations accruing prior to termination; (ii) provisions of Sections 12,
14, 15, and 17 of this Agreement, and (iii) other provisions of this Agreement
to the extent that they relate to the interpretation of rights and obligations
of the parties arising under the provisions described in clauses (i) and (ii)
or the enforcement of such rights and obligations.
15. Transition Following Notice of Termination. Following any
notice of termination or nonrenewal of employment hereunder, whether given by
Clinic or Physician, Physician will fully cooperate with Clinic in all matters
relating to the winding up of Physician's pending work on behalf of Clinic and
the orderly transfer of such work to the other professional employees of
Clinic. On or after the giving of notice of termination hereunder and during
any notice period, Clinic will be entitled to such full-time or part-time
services of Physician as Clinic may reasonably require, and Clinic will
specifically have the right to terminate the active services of Physician at
the time such notice is given and to pay to Physician the compensation due to
him under this Agreement for the duration of the notice period.
16. Non-Competition. During the Term of Employment and for a
continuous period of two (2) years thereafter commencing upon expiration or
termination of the Term of Employment, regardless of any termination pursuant
to Section 13 or any voluntary termination or resignation by Physician,
Physician shall not, without the written consent of Clinic, individually or
jointly with others, directly or indirectly, whether for his own account or for
that of any other person or entity, own or hold any ownership or voting
interest in any person or entity engaged in a business the same as or similar
to any business of the Clinic, or in a business which competes in any manner
whatsoever with the business of Clinic or Clinic's Facility (other than any
ownership interest in the Administrator under the Management Services Agreement
attached as Schedule B hereto) and which is located or intended to be located
anywhere within a radius of twenty-five (25) miles of any office of Clinic and
Physician shall not act as an officer, director, employee, partner, independent
contractor, principal, agent, proprietor, or in any other capacity for, nor
lend any assistance (financial, managerial, professional or otherwise) or
cooperation to, nor perform any services for, any such person or entity (other
than any ownership interest in the Administrator under the Management Services
Agreement attached as Schedule B hereto). Notwithstanding the above, in the
event Physician completes seven years of service with the Clinic and PTI (or
any of its affiliates) is not then the Administrator, then there shall be no
non-competition restrictions on Physician upon expiration or termination of
Term of Employment.
17. Non-Disclosure; Non-Solicitation. Except in the performance of
his duties hereunder, at no time during the Term of Employment or at any time
thereafter shall Physician, individually or jointly with others, for the
benefit of Physician or any third party, publish, disclose, use or authorize
anyone else to publish, disclose or use, any secret or confidential material or
information relating to
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any aspect of the business or operations of the Clinic or any information
regarding the business methods, business policies, procedures, techniques, or
trade secrets, or other knowledge or processes of or developed by Clinic
(and/or any other Physician or agent of Clinic), any affiliate of the Clinic,
any entity in which the Clinic has an interest, including, without limitation,
any secret or confidential information relating to the business, customers,
financial position, trade or industrial practices, trade secrets, technology or
know-how of the Clinic. Moreover, during the Term of Employment, Physician
shall not act as an officer, director, employee, partner, independent
contractor, consultant, principal, agent, proprietor, owner or part owner of,
or in any other capacity for, nor lend any assistance (financial, managerial or
otherwise) or cooperation, to, any person or entity (other than Clinic or the
Administrator) which employs any person or hires or contracts with, as a
consultant or other independent agent or independent contractor, any person or
entity (other than Physician) who was employed by or acted as an agent for,
consultant to, or independent contractor of the Clinic, any affiliate of the
Clinic, or any entity in which the Clinic has an interest, at any time during
the Term of Employment, nor shall Physician employ any such person or induce or
attempt to influence any such person to terminate employment with Clinic.
18. Reasonableness of Restrictions; Reformation; Enforcement. The
parties hereto recognize and acknowledge that the geographical and time
limitations contained in Sections 16 and 17 hereof (hereinafter the
"RESTRICTIVE COVENANTS") are reasonable and properly required for the adequate
protection of the Clinic's interest. Physician acknowledges that the Clinic
will provide to Physician confidential information concerning the Clinic's
business methods and operating practices in reliance on the covenants contained
in the Restrictive Covenants. It is agreed by the parties hereto that if any
portion of the restrictions contained in the Restrictive Covenants are held to
be unreasonable, arbitrary or against public policy, then the restrictions
shall be considered divisible, both as to the time and to the geographical
area, with each month of the specified period being deemed a separate period of
time and each radius mile of the restricted territory being deemed a separate
geographical area, so that the lesser period of time or geographical area shall
remain effective so long as the same is not unreasonable, arbitrary or against
public policy. The parties hereto agree that in the event any court of
competent jurisdiction determines the specified period or the specified
geographical area of the restricted territory to be unreasonable, arbitrary or
against public policy, a lesser time period or geographical area which is
determined to be reasonable, nonarbitrary and not against public policy may be
enforced against Physician. If Physician shall violate any of the covenants
contained herein and if any court action is instituted by the Clinic to prevent
or enjoin such violation, then the period of time during which the Physician's
business activities shall be restricted, as provided in this Agreement, shall
be lengthened by a period of time equal to the period between the date of the
Physician's breach of the terms or covenants contained in this Agreement and
the date on which the decree of the court disposing of the issues upon the
merits shall become final and not subject to further appeal.
19. No Remedy at Law. With respect to the covenants and agreements
of Physician set forth in the Restrictive Covenants, the parties agree that a
violation of such covenants and agreements will cause irreparable injury to
Clinic for which Clinic will not have an adequate remedy at law, and that
Clinic shall be entitled, in addition to any other rights and remedies it may
have, at law or in equity, to obtain an injunction to restrain Physician from
violating, or continuing to violate,
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such covenants and agreements. In the event Clinic does apply for such an
injunction, Physician shall not raise as a defense thereto that the Clinic has
an adequate remedy at law.
20. Liquidated Damages. The parties agree that in the event of a
Physician Termination or as a result of the termination of the Term of
Employment by New Clinic for cause (as defined in Section 13), the costs and
damages to Clinic, though substantial, would be difficult to precisely
determine. Therefore, the parties agree that in the event of such termination,
Physician shall pay to Clinic, not as a penalty, but as the parties' reasonable
estimate of the costs and other damages resulting to Clinic in connection with
such termination, liquidated damages in an amount equal to the nine (9) months
of Clinic Expenses attributable to Physician next preceding the termination of
this Agreement, which amount is the best estimate of the expenses to continue
to be incurred while Physician is fully replaced. Such damages shall be payable
on demand by Clinic.
21. Billing Services. Clinic shall have sole responsibility and
authority for preparation of ▇▇▇▇▇▇▇▇ for, and collection of income generated
from, Physician's practice of medicine and the operation of the Facility and,
pursuant to this Agreement, the delegated authority to request, demand,
collect, receive and provide receipts for all income on behalf of Physician
including any payment or reimbursement from governmental agencies and insurance
carriers on account of medical services provided to patients of the Facility.
Physician will utilize the Clinic's provider numbers to ▇▇▇▇ on behalf of
Physician for payment and reimbursement from governmental agencies and
insurance carriers. All funds collected from operation of the Facility and
from Physician's practice of medicine hereunder shall be the sole property of
Clinic and shall be deposited into Clinic's account and Clinic shall have sole
authority to make disbursements therefrom, including refunds and repayment of
payments received in error.
22. Representations of Physician. Physician hereby makes the
following representations to Clinic, each of which is material and is being
relied on by Clinic and shall be true as of the date hereof and throughout the
Term of Employment.
a. Qualifications. Physician is, and will continue to
be, duly licensed to practice medicine in the State of Louisiana, is Board
certified by the __________________________________________________, agrees to
participate and does participate in a continuing medical education program, and
agrees to obtain and maintain an American Medical Association C.M.E.
certificate or its equivalent.
b. Factual Information. Any and all factual information
furnished by Physician to Clinic is true and accurate in every material respect
as of the date on which such information was furnished.
c. Professional Conduct. Physician has and will continue
to conduct his professional activities in accordance and compliance with any
and all laws, regulations and ethical and professional standards applicable
thereto.
d. Authority. Physician has full power and authority to
enter into this Agreement and perform all obligations hereunder. The execution
and performance of this Agreement by
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Physician will not constitute a breach or violation of any covenant, agreement
or contract to which Physician is a party or by which Physician is bound.
23. Prior Acts and Omissions of Physician. Physician represents
and warrants to Clinic that, as of the Effective Date, there is no pending or
threatened litigation or proceeding against Physician relating to Physician's
practice of medicine except as listed on the attached Schedule E. Clinic shall
not, and this Agreement is not intended to and shall not be construed in any
way as to cause Clinic to, assume any liabilities of Physician for the acts or
omissions of Physician relating to periods prior to the Effective Date, and
Physician shall indemnify and hold Clinic harmless from and against any
liability in respect thereof.
24. Patient Records, Books, Office Equipment, Etc.
a. Patient Records. All patient records shall at all
times be and remain Clinic's property; provided, however, that upon termination
of Physician's Term of Employment, Clinic shall provide Physician, at
Physician's expense, access to and copies of such records relating to medical
services performed at Clinic's business by Physician during the term hereof, if
so requested by the patient or if required by Physician in defense of any
professional liability claim.
b. Equipment and Supplies. Clinic shall provide for
Physician's use of all professional instruments, books, office equipment and
other property reasonably necessary, in Clinic's discretion, for Physician's
practice of medicine under this Agreement. All instruments, equipment,
furniture, furnishings, supplies, samples, forms, charts, logs, brochures,
patient records, policies and procedures, contracts and any other property,
materials or information furnished by Clinic are and shall remain the sole
property of Clinic. Upon termination of Physician's Term of Employment,
Physician shall return all such property to Clinic.
25. Assignability. This Agreement and the rights and duties
created hereunder shall not be assignable or delegable by Physician. Clinic
may, at Clinic's option and without consent of Physician, assign its rights and
duties hereunder to any successor entity or transferee of Clinic's assets.
26. Notices. All notices or other communications provided for
herein to be given or sent to a party by the other party shall be deemed
validly given or sent if in writing and mailed, postage prepaid, by registered
or certified United States mail or hand delivered or sent by facsimile,
addressed to the parties at their addresses hereinabove set forth. Any party
may give notice to the other parties at any time, by the method specified
above, of a change in the address at which, or the person to whom, notice is to
be addressed.
27. Severability. Each section, subsection and lesser section of
this Agreement constitutes a separate and distinct undertaking, covenant or
provision hereof. In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable, such provision shall be deemed
limited by construction in scope and effect to the minimum extent necessary to
render the same valid and enforceable, and, in the event such a limiting
construction is impossible, such
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invalid or unenforceable provision shall be deemed severed from this Agreement,
but every other provision of this Agreement shall remain in full force and
effect.
28. Waiver. The failure of a party to enforce any term, provision
or condition of this Agreement at any time or times shall not be deemed a
waiver of that term, provision or condition for the future, nor shall any
specific waiver of a term, provision or condition at one time be deemed a
waiver of such term, provision or condition for any future time or times.
29. Parties. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their heirs, personal
representatives, legal representatives, and proper successors and assigns, as
the case may be.
30. Governing Law. The validity, interpretation and performance
of this Agreement shall be governed by the laws of the State of Louisiana,
without giving effect to the principles of comity or conflicts of laws thereof.
Each party hereto agrees to submit to the personal jurisdiction and venue of
the state and federal courts having jurisdiction over Terrebonne Parish,
Louisiana, for a resolution of all disputes arising in connection with the
interpretation, construction, and enforcement of this Agreement, and hereby
waives the claim or defense therein that such courts constitute an inconvenient
forum.
31. Captions. The captions of this Agreement have been assigned
thereto for convenience only, and shall not be construed to limit, define or
modify the substantive terms hereof.
32. Entire Agreement; Counterparts. This Agreement constitutes the
entire agreement between the parties hereto concerning the subject matter
hereof, and supersedes all prior agreements, memoranda, correspondence,
conversations and negotiations. This Agreement may be executed in several
counterparts that together shall constitute but one and the same Agreement.
33. Costs of Enforcement. In the event it is necessary for any
party to retain the services of an attorney or to initiate legal proceedings to
enforce the terms of this Agreement, the prevailing party shall be entitled to
recover from the non-prevailing party, in addition to all other remedies, all
costs of such enforcement, including reasonable attorneys' fees and costs and
including trial and appellate proceedings.
34. Gender. Etc. Words used herein, regardless of the number and
gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender masculine, feminine or neuter,
as the context indicates is appropriate.
35. Third-Party Beneficiary. The parties acknowledge and agree
that PHYSICIANS TRUST, INC, a Delaware corporation ("ADMINISTRATOR"), has
entered into a Management Services Agreement with the Clinic in the form
attached as Schedule B, and that Physician and Administrator, together with
certain other parties, have entered into a Master Transaction Agreement with
Clinic in reliance on the covenants of Physician contained in Sections 16 and
17 hereof. Physician acknowledges and agrees that Administrator has entered
into the Master Transaction Agreement,
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purchased assets and incurred expenses in order to fulfill its obligations
pursuant to the Management Services Agreement, and otherwise detrimentally
relied upon Physician's agreement to perform his obligations pursuant to terms
of this Agreement, and that the Administrator's agreement to pay Physician the
consideration described in the Master Transaction Agreement was made in
reliance on Physician's commitment to provide services as an employee of the
Clinic pursuant to the terms of this Agreement for the Term of Employment.
Accordingly, Clinic and Physician agree that Administrator is a specific
intended third-party beneficiary of such covenants, who shall be independently
entitled to the benefit thereof and shall have an independent right to enforce
same. In addition, Clinic and Physician covenant and agree for the benefit of
Administrator that this Agreement shall not be terminated, modified or amended
without the prior written consent of Administrator.
Physician acknowledges and agrees that in the event of termination of
this Agreement, and in connection with any violation of this Agreement on the
part of Physician, Clinic may, upon request of Administrator, assign any cause
of action and/or rights that it may have hereunder to the Administrator,
including Clinic's rights, if any, to recover liquidated damages from
Physician. Physician acknowledges and agrees, that in the event of any such
assignment, Administrator shall be entitled to set off liquidated damages and
other amounts payable by Physicians hereunder which have been assigned to
Administrator against amounts payable by Administrator to Physician under the
terms of the Master Transaction Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on
the date first written above.
PHYSICIAN:
---------------------------------------
A.D. ▇▇▇▇▇▇, Jr., M.D.
CLINIC:
BAYOU ORTHOPEDIC CENTER, A
PROFESSIONAL MEDICAL CORPORATION,
a Louisiana professional medical
corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
ACKNOWLEDGED:
PHYSICIANS TRUST, INC.,
a Delaware corporation
By:
----------------------------------
Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President
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SCHEDULE A
OUTSIDE PROFESSIONAL ACTIVITIES
Any fees or honoraria received by Physician for or related to
professional activities performed by Physician at Physician Surgery
Center, an outpatient surgery center.
153
SCHEDULE B
MANAGEMENT SERVICES AGREEMENT
154
SCHEDULE C
LEAVE POLICIES
1. Physician's vacation on a per annum basis shall consist of thirty (30)
days per year, not including holidays during the year observed by the
Clinic, or other days during the particular year on which the Clinic
is closed. Physician shall be entitled to ten (10) days per year for
sick leave/personal time and ten (10) days per year to attend
professional meetings and continuing medical education conferences.
155
SCHEDULE D
BENEFITS
Insurance - Health $8,500
Journals/Magazines $3,500
Dues/Memberships/Licenses $3,000
CME Allowance (including travel) $3,500
Automobile Mileage Reimbursement At the applicable IRS
rate
Participation in the Clinic's retirement plan
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SCHEDULE E
PENDING LITIGATION
[NONE]