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EXHIBIT 2.1
RESTRUCTURE AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
MEDICAL REHABILITATION SPECIALISTS II, P.A.,
AND
▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
DATED AS OF DECEMBER 31, 1998
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TABLE OF CONTENTS
ARTICLE IDEFINITIONS..............................................................................................1
ARTICLE IIBASIC TRANSACTION.......................................................................................5
2.1 Purchase and Sale of Assets.........................................................................5
2.2 Amendment and Restatement of Service Agreement......................................................5
2.3 Accounting; True-Up; Dispute Resolution.............................................................5
2.4 Assumption of Term Debt and Assumed Liabilities.....................................................6
2.5 The Closing.........................................................................................6
2.6 Deliveries at Closing...............................................................................6
2.7 Taxes and Expenses..................................................................................6
2.8 Employees...........................................................................................6
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF SCN..................................................................6
3.1 Organization, Qualification, and Power..............................................................7
3.2 Authorization of Transaction........................................................................7
3.3 Noncontravention....................................................................................7
3.4 Title; Condition....................................................................................7
3.5 Tax Matters.........................................................................................7
3.6 Brokers' Fees.......................................................................................7
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF MRS II AND THE PHYSICIAN OWNER........................................7
4.1 Organization........................................................................................8
4.2 Ownership Interest of MRS II........................................................................8
4.3 Authorization of Transaction........................................................................8
4.4 Noncontravention....................................................................................8
4.5 Brokers' Fees.......................................................................................8
4.6 Title to SCN Shares.................................................................................8
ARTICLE VCOVENANTS................................................................................................8
5.1 General.............................................................................................8
5.2 Notices and Consents................................................................................9
5.3 Regulatory Matters and Approvals....................................................................9
5.4 Operation of Business...............................................................................9
5.5 Further Acts and Assurances.........................................................................9
5.6 Full Access.........................................................................................9
5.7 Notice of Developments..............................................................................9
5.8 Collection of Accounts Receivable...................................................................9
5.9 Corporate Authorization.............................................................................9
5.10 Employee Benefit Plans.............................................................................10
ARTICLE VICONDITIONS TO OBLIGATIONS TO CLOSE.....................................................................10
6.1 Conditions to Obligation of MRS II and the Physician Owner.........................................10
6.2 Conditions to Obligation of SCN....................................................................11
ARTICLE VIIPRE-CLOSING AND CLOSING DELIVERIES....................................................................11
7.1 By SCN.............................................................................................11
7.2 By MRS II and the Physician Owner..................................................................12
ARTICLE VIIITERMINATION..........................................................................................12
8.1 Termination of Agreement...........................................................................12
8.2 Effect of Termination..............................................................................13
ARTICLE IXINDEMNIFICATION........................................................................................13
9.1 Indemnification by MRS II and the Physician Owner..................................................13
9.2 Notice to MRS II and the Physician Owner; Opportunity to Defend....................................13
9.3 General Indemnification by SCN.....................................................................13
9.4 Notice to SCN; Opportunity to Defend...............................................................13
ARTICLE XMISCELLANEOUS...........................................................................................13
10.1 Survival...........................................................................................13
10.2 No Third-Party Beneficiaries......................................................................14
10.3 Entire Agreement..................................................................................14
10.4 Succession and Assignment.........................................................................14
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10.5 Counterparts.....................................................................................14
10.6 Headings.........................................................................................14
10.7 Notices..........................................................................................14
10.8 Governing Law; Venue.............................................................................15
10.9 Amendments and Waivers...........................................................................15
10.10 Severability.....................................................................................15
10.11 Expenses.........................................................................................15
10.12 Construction.....................................................................................15
10.13 No Referrals Required............................................................................15
10.14 Incorporation of Exhibits and Schedules..........................................................15
SCHEDULE 1.1.........................................................................................Schedule 1.1-1
EXCLUDED ASSETS......................................................................................Schedule 1.1-1
SCHEDULE 1.2Physician Owner..........................................................................Schedule 1.2-1
SCHEDULE 1.3TERM DEBT................................................................................Schedule 1.3-1
SCHEDULE 2.4ASSUMED LIABILITIES......................................................................Schedule 2.4-1
EXHIBIT 2.1(a)
MRS II NOTE.................................................................................Exhibit 2.1-1
EXHIBIT 2.1(b)PURCHASE PRICE ALLOCATION AGREEMENT.....................................................Exhibit 2.1-2
EXHIBIT 7.1(b)▇▇▇▇ OF SALE.........................................................................Exhibit 7.1(b)-1
EXHIBIT 7.1(c)ASSIGNMENT AND ASSUMPTION AGREEMENT..................................................Exhibit 7.1(c)-1
EXHIBIT 7.1(d)MANAGEMENT SERVICES AGREEMENT........................................................Exhibit 7.1(d)-1
EXHIBIT 7.2(c)RELEASE..............................................................................Exhibit 7.2(c)-1
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RESTRUCTURE AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of
December 31, 1998, by and among MEDICAL REHABILITATION SPECIALISTS II, P.A., a
Florida professional service corporation ("MRS II") and the undersigned
Physician Owner (as defined herein) of MRS II, on the one hand, and SPECIALTY
CARE NETWORK, INC., a Delaware corporation ("SCN"), on the other hand. MRS II,
the Physician Owner, and SCN are referred to individually herein as a "Party"
or collectively herein as the "Parties."
R E C I T A L S:
WHEREAS, MRS II is engaged in the practice of medicine at its offices
in Tallahassee, Florida;
WHEREAS, certain of the Parties entered into a Merger Agreement dated
March 3, 1997, pursuant to which SCN acquired certain assets of MRS II, or MRS
II's predecessor entity that was engaged in the practice of medicine (the
"Merger"), and, in connection therewith, the Parties entered into that certain
Service Agreement effective as of March 1, 1997 (the"Service Agreement");
WHEREAS, MRS II has been managed by SCN pursuant to the Service
Agreement;
WHEREAS, the Parties intend to amend and restate the Service Agreement
as a Management Services Agreement;
WHEREAS, the Parties intend that MRS II, through the Physician Owner,
purchase, or repurchase, as the case may be, certain assets heretofore utilized
by SCN in its management of MRS II's medical practice; and
WHEREAS, the Parties intend that MRS II assume certain liabilities of
SCN which were generated or incurred by SCN in connection with its management
of MRS II's medical practice, and to make certain other agreements among
themselves, all on the terms and conditions as set forth herein.
NOW, THEREFORE, for and in consideration of the premises above, the
mutual covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply:
"Accounts Receivable" shall mean the Purchased A/R (as defined in the
Service Agreement) of MRS II, including collections on Purchased A/R which have
not been transferred to SCN as of the Closing Date that have been purchased by
SCN prior to the Closing Date.
"Affected Participants" has the meaning set forth in SECTION 5.10(B).
"Affiliated Practice" has the meaning set forth in SECTION 10.15.
"Agreement" has the meaning set forth in the preface above.
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"Applicable Law" means all federal, state, county, municipal or other
local laws, constitutions, ordinances, statutes, rules, regulations, and orders
applicable thereto.
"Arbitration Notice" shall have the meaning as defined in SECTION
2.3(B).
"Asset Purchase Price" shall have the meaning as defined in SECTION
2.1.
"Assumed Liabilities" shall have the meaning as defined in SECTION
2.4.
"Book Value" shall mean the book value of the Purchased Assets as
carried on SCN's books in accordance with GAAP, as determined by SCN or SCN's
independent accountants.
"Closing" has the meaning set forth in SECTION 2.5.
"Closing Date" has the meaning set forth in SECTION 2.5.
"Closing Date Balance Sheet" has the meaning set forth in SECTION
2.3(A).
"Closing Price" has the meaning set forth in SECTION 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Delaware General Corporation Law" means the General Corporation Law
of the State of Delaware, as amended.
"Excluded Assets" means certain assets specifically set forth on
SCHEDULE 1.1 used in the provision of ancillary services at MRS II and all
assets of SCN not used specifically and exclusively in connection with the
management of MRS II's medical practice.
"GAAP" means generally accepted accounting principles as set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity or other practices or procedures as may be
approved by a significant segment of the accounting profession. For purposes of
this Agreement, GAAP shall be applied in a manner consistent with the historic
practices used by SCN with respect to MRS II, as applicable.
"Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, board, body, agency, bureau or entity or any
arbitrator with authority to bind a party at law.
"Independent Accounting Firm" shall have the meaning as defined in
SECTION 2.3(B).
"Knowledge" means actual knowledge after reasonable investigation.
"Lender" means any lender to SCN that has a Security Interest in any
of the Purchased Assets.
"Loss" has the meaning set forth in SECTION 9.1.
"Management Services Agreement" shall mean that certain Management
Service Agreement by and among SCN, MRS II and the Physician Owner dated as of
January 1, 1999.
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"Merger" means the acquisition of the assets of MRS II, or its
predecessor Person in the practice of medicine, pursuant to the Merger
Agreement.
"Merger Agreement" means that certain Merger Agreement, dated March 3,
1997, by and among the Parties.
"Most Recent Balance Sheet" has the meaning set forth in SECTION
2.3(A).
"MRS II" has the meaning set forth in the preface above.
"MRS II Health Plan" has the meaning set forth in SECTION 5.10(B).
"MRS II Note" has the meaning set forth in SECTION 2.1.
"MRS II Ownership Interests" has the meaning set forth in SECTION 4.2.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other governmental body or by any arbitrator.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party or Parties" has the meaning set forth in the preface above.
"Person" means an individual, corporation, partnership, association,
limited liability company, limited liability partnership, joint stock company,
joint venture, trust, unincorporated organization, or governmental entity (or
any department, agency or political subdivision thereof, including without
limitation Third-Party Payors).
"Physician Owner" means the Persons set forth on SCHEDULE 1.2.
"Practice Offices" has the meaning set forth in the Management
Services Agreement.
"Prepaid Expenses" means those expenses incurred and paid by SCN in
connection with SCN's management of MRS II's medical practice which confer a
benefit on SCN, MRS II or the Physician Owner, including but not limited to
professional liability insurance, and which MRS II has not paid SCN pursuant to
the Service Agreement or otherwise as of the Closing Date.
"Proceedings" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any governmental body or arbitrator
"Purchased Assets" means all of SCN's right, title, and interest in
and to the following assets of SCN owned as of the Closing Date:
(a) Accounts Receivable;
(b) assets purchased or acquired in the Merger other than those assets
disposed of in the Ordinary Course of Business;
(c) Prepaid Expenses;
(d) inventory used directly and exclusively in connection with SCN's
management of MRS II's medical practice which has not been previously purchased
by MRS II pursuant to the Service Agreement or otherwise; and
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(e) all other assets, tangible and intangible, acquired by SCN and
used directly and exclusively in connection with the SCN's management of MRS
II's medical practice, other than the Excluded Assets.
"Requisite SCN Approval" means (i) the requisite vote of the Board of
Directors (or duly authorized committee thereof) of SCN and (ii) the approval
of any Lender, in order to approve this Agreement and carry out the terms and
conditions hereof.
"Requisite MRS II Approval" means the affirmative vote of the
requisite percentage of the directors and/or shareholder interests of MRS II
which is required by the Florida Business Corporation Act to approve the
transactions contemplated by this Agreement.
"Restructuring Transaction" has the meaning set forth in SECTION
10.15.
"SCN" means Specialty Care Network, Inc., a Delaware corporation,
together with its affiliates, successors and assigns.
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"Savings Plan" has the meaning set forth in SECTION 5.10(B).
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, or any conditional sales agreement, option,
or right of first refusal other than (a) mechanic's, materialmen's or similar
lien, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Service Agreement" shall have the meaning set forth in the Recitals
of this Agreement.
"Service Fee" means any reimbursable expense or Service Fee owed, or
payable to, SCN by MRS II or the Physician Owner pursuant to the Service
Agreement.
"Successor Plan" has the meaning set forth in SECTION 5.10(B).
"Term Debt" means the debt and obligations set forth on SCHEDULE 1.3.
"Third-Party Payor" has the meaning set forth in the Management
Services Agreement.
"Transferred Employee" means the terminated employees of SCN described
in SECTION 2.8 and all other individuals employed at the Practice Offices on
the Closing Date.
ARTICLE II.
BASIC TRANSACTION
II.1 Purchase and Sale of Assets. At the Closing, on and subject to
the terms and conditions of this Agreement, SCN shall transfer, sell, assign,
convey and deliver to MRS II, and MRS II shall purchase and otherwise assume,
all of the
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Purchased Assets. The purchase price for the Purchased Assets (the "Asset
Purchase Price") shall equal (a) the Book Value of the Accounts Receivable as
of the Closing Date, plus (b) the Book Value of all furniture, fixtures, office
furnishings, tools and similar property, equipment and other capital assets of
SCN, not including the Excluded Assets, used directly and exclusively in
connection with SCN's management of MRS II's medical practice as of the Closing
Date, plus (c) the Book Value of all Prepaid Expenses as of the Closing Date,
plus (d) the Book Value of all notes and other receivables owed to SCN by MRS
II and/or the Physician Owner, including but not limited to any accrued but
unpaid Service Fees owed by MRS II to SCN as of the Closing Date, plus (e) the
cash balance in the MRS II deposit account, less (f) the Book Value of the
Assumed Liabilities. MRS II and the Physician Owner shall satisfy the Asset
Purchase Price at Closing by delivering to SCN a non-negotiable promissory note
(the "MRS II Note") substantially in the form attached hereto as Exhibit
2.1(a), a portion of the principal amount of which represents the Asset
Purchase Price. The Asset Purchase Price, and the MRS II Note shall be subject
to adjustment with respect to the cash amounts paid at Closing in accordance
with SECTION 2.3. The Parties agree to allocate the Purchase Price (and all
other capitalizable costs) for all purposes (including financial accounting and
tax purposes) among the Purchased Assets in accordance with the Purchase Price
Allocation Agreement attached hereto as EXHIBIT 2.1(B).
II.2 Amendment and Restatement of Service Agreement. At the Closing,
on and subject to the terms and conditions of this Agreement, the Parties shall
amend and restate the Service Agreement in substantially the form of the
Management Services Agreement attached hereto as EXHIBIT 7.1(D), and such
Management Services Agreement shall control the rights, obligations and duties
of the Parties with respect to SCN's management of MRS II's medical practice
from and after the Closing Date; provided, however, that the Service Agreement
shall be effective and shall control the relationship of the Parties prior to
the Closing Date. As consideration for SCN's agreeing to amend and restate the
Service Agreement, MRS II and the Physician Owner shall deliver to SCN at
Closing the MRS II Note, a portion of the principal amount of which represents
such consideration.
II.3 Accounting; True-Up; Dispute Resolution.
(a) No less than five (5) business days prior to Closing, SCN
shall deliver to MRS II the most recently prepared month-end balance
sheet (the "Most Recent Balance Sheet") stating the Book Value of the
Purchased Assets and Assumed Liabilities. Within sixty (60) days from
the Closing Date, SCN shall prepare a balance sheet (the "Closing Date
Balance Sheet") stating the Book Value of the Purchased Assets and
Assumed Liabilities as of the Closing Date. In the event SCN
determines that the Asset Purchase Price (as determined in accordance
with the Closing Date Balance Sheet) is greater than the amount paid
by MRS II and the Physician Owner at Closing in accordance with the
provisions of SECTION 2.1 of this Agreement, then MRS II and the
Physician Owner shall pay to SCN such excess in cash within two (2)
days of the date SCN furnishes to MRS II and the Physician Owner the
Asset Purchase Price computation. In the event that SCN determines
that the Asset Purchase Price (as determined in accordance with the
Closing Date Balance Sheet) is less than the amount paid by MRS II and
the Physician Owner to SCN at Closing in accordance with the
provisions of SECTION 2.1 of this Agreement, then SCN shall pay to MRS
II and the Physician Owner such excess in cash within two (2) days of
the date SCN furnishes to MRS II and the Physician Owner the Asset
Purchase Price computation.
(b) If SCN and MRS II are unable to resolve any disagreement
within twenty (20) days after SCN's receipt of such notice of
disagreement, either SCN or MRS II may give notice (an "Arbitration
Notice") to the other Party of an intent to submit such disagreement
to a certified independent public accounting firm that is nationally
recognized (the "Independent Accounting Firm") and mutually agreeable
to SCN and MRS II. If SCN and MRS II cannot agree upon such election
within twenty (20) days after delivery of the Arbitration Notice, the
Independent Accounting Firm shall be selected by lot from among the
five largest independent public accounting firms in the United States,
excluding SCN's principal auditors. The dispute shall be immediately
submitted by MRS II and SCN to the Independent Accounting Firm for
resolution of such dispute within twenty (20) days after submission to
the Independent Accounting Firm. At the time of the submission of such
dispute to the Independent Accounting Firm for resolution, SCN shall
file with the Independent Accounting Firm a written statement of its
position with regard to any matters in dispute, at which time MRS II
shall have ten (10) days to respond in writing
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to SCN's position. Upon receipt of written position statements by each
of SCN and MRS II, the Independent Accounting Firm shall resolve the
dispute in accordance with GAAP. The decision of the Independent
Accounting Firm shall be final and binding upon all Parties hereto.
Each Party shall bear its own expenses, including expenses of its
accountants and attorneys in connection with the resolution of any
such dispute; provided, however, the fees and expenses of the
Independent Accounting Firm shall be paid by MRS II.
II.4 Assumption of Term Debt and Assumed Liabilities. Except as
otherwise provided herein, MRS II shall assume at the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) the Term Debt set forth
on SCHEDULE 1.3, and (ii) the commitments, obligations and liabilities of SCN
which are listed on SCHEDULE 2.4 attached hereto (collectively the "Assumed
Liabilities") with respect to MRS II and the Physician Owner, including without
limitation, any and all accounts payable, payroll, accrued employee vacation
time and sick leave and any employee benefits.
II.5 The Closing. The closing of the transaction (the "Closing") shall
take place at the offices of SCN, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, commencing at 9:00 a.m. local time on the second business day
following the satisfaction or waiver of all conditions to the obligations of
the Parties to consummate the transactions contemplated hereby or such other
date as the Parties may mutually determine (the "Closing Date"); provided,
however, that the Closing Date shall be no later than December 31, 1998. Time
is of the essence for this Agreement. The Parties may agree to close the
transactions contemplated by the Agreement via facsimile, with executed
original agreements, instruments, or other documents to be sent to the
appropriate party via FedEx (or other nationally recognized delivery company
that guarantees delivery of such documents on the following day) the next day;
provided, however, the Parties shall execute a written agreement governing the
terms and conditions of a Closing via facsimile.
II.6 Deliveries at Closing. At the Closing, (i) SCN will deliver to
MRS II the various certificates, instruments, and documents referred to in
SECTION 7.1 below; (ii) MRS II and the Physician Owner, as applicable, will
deliver to SCN the various certificates, instruments, and documents referred to
in SECTION 7.2 below.
II.7 Taxes and Expenses. SCN and MRS II shall be responsible for any
business, occupation, withholding or similar tax or taxes of any kind related
to SCN's or MRS II's business, respectively, for any period prior to the
Closing Date. All applicable sales, use and tangible taxes, documentary stamp
taxes, filing and recording costs and other transfer taxes, costs and fees
relating to the transfer of title to the Purchased Assets, and the consummation
of the transactions described herein, shall be paid by MRS II.
II.8 Employees. As of the Closing Date and subject to Applicable Law,
SCN shall terminate all the employees of SCN utilized at the Practice Offices.
MRS II shall hire such terminated employees and pay to such terminated
employees substantially the same compensation and benefits as SCN had paid such
terminated employees prior to the Closing Date. MRS II shall assume
responsibility under any and all employment agreements with respect to such
terminated employees.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SCN
SCN represents and warrants to MRS II and the Physician Owner that the
statements contained in this ARTICLE III are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this ARTICLE III).
III.1 Organization, Qualification, and Power. SCN is duly authorized
to conduct business and is in good standing under the laws of each jurisdiction
in which the character or location of the properties owned or the business
conducted by SCN makes such qualifications necessary. SCN has the full power
and authority to carry on the business in which it is engaged and to own and
use the properties owned, leased and used by it. SCN is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware.
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III.2 Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder; subject, however, to SCN
obtaining the Requisite SCN Approval. Upon receiving the Requisite SCN
Approval, this Agreement will constitute the valid and legally binding
obligation of SCN, enforceable in accordance with its terms and conditions.
III.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which SCN
is subject or any provision of the Delaware General Corporation Law or bylaws
of SCN or (ii) upon receipt of all consents set forth on SCHEDULE 3.3, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice (other than such notice as may be
required by a Lender) under any agreement, contract, lease, license, instrument
or other arrangement to which SCN is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). SCN is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
III.4 Title; Condition. SCN has, or will have at the Closing Date, and
will convey to MRS II good and marketable title to all of the Purchased Assets
subject to no Security Interest. SCN agrees to remove all Security Interests on
the Purchased Assets reflected on any search of public records, if any, prior
to the Closing Date and to remove any other Security Interest on the Purchased
Assets created with respect to the Purchased Assets between the date of such
search of public records and the Closing Date.
III.5 Tax Matters. All federal and state tax returns required by law
to be filed with respect to payroll taxes have been filed and SCN has paid or
adequately provided for all such taxes. SCN has withheld from each payment made
to employees of SCN the amount of all taxes (including, but not limited to,
federal, state and local income taxes and Federal Insurance Contribution Act
taxes) required to be withheld therefrom and all amounts customarily withheld
therefrom, and has set aside all other employee contributions or payments
customarily set aside with respect to such wages and has paid or will pay the
same to, or has deposited or will deposit such payment with, the proper tax
receiving officers or other appropriate authorities. There are no tax liens on
any of Purchased Assets except those with respect to taxes not yet due and
payable.
III.6 Brokers' Fees. SCN does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which MRS II or the Physician
Owner may be obligated.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF MRS II AND THE PHYSICIAN OWNER
MRS II and the Physician Owner, jointly and severally, represent and
warrant to SCN that the statements contained in this ARTICLE IV are correct and
complete as of the date of this Agreement and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this ARTICLE IV).
IV.1 Organization. MRS II is a professional service corporation duly
organized, validly existing, and in good standing under the laws of the State
of Florida. MRS II is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction in which the character or location
of the properties owned or the business conducted by MRS II makes such
qualification necessary. MRS II has the full power and authority to carry on
the business in which it is engaged and to own and use the properties owned,
leased and used by it.
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IV.2 Ownership Interest of MRS II. MRS II is owned solely by the
Physician Owner. Except for the shares of all classes of stock (the "MRS II
Ownership Interests") owned by the Physician Owner, there are no other MRS II
Ownership Interests or any other interest convertible into a MRS II Ownership
Interest authorized or outstanding.
IV.3 Authorization of Transaction. MRS II has the full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of MRS II and the Physician Owner, enforceable in accordance with its terms and
conditions.
IV.4 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which MRS
II is subject or any provision of the Florida Business Corporation Act or
bylaws of MRS II or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
MRS II is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). MRS II is not required to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
IV.5 Brokers' Fees. Neither MRS II nor the Physician Owner have any
liability or obligation to pay any fees or commissions to any broker, finder,
or agent with respect to the transactions contemplated by this Agreement for
which SCN could become liable or obligated.
IV.6 Title to SCN Shares. MRS II or the Physician Owner have, or will
have at the Closing Date, good and marketable title to all of the SCN Shares
delivered pursuant to SECTION 2.2 subject to no mortgage, pledge, lien, lease,
conditional sales agreement, option, right of first refusal or any other
encumbrance or charge, including taxes. MRS II and the Physician Owner agree to
remove all Security Interests reflected on any search of public records, if
any, prior to the Closing Date and to remove any other Security Interest filed
with respect to the SCN Shares between the date of such search of public
records and the Closing Date.
ARTICLE V.
COVENANTS
The Parties agree as follows with respect to the period from and after
the execution of this Agreement:
V.1 General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in ARTICLE VI below) to be
satisfied by him or it, subject to the exercise of the SCN directors' fiduciary
duties under Delaware law. This SECTION 5.1 shall not be construed to obligate
any of the Parties to waive any condition precedent to his or its obligations
to perform hereunder.
V.2 Notices and Consents. MRS II and SCN will give any notices to
third parties, and will use their best efforts to obtain any third party
consents, necessary or required to consummate the transaction contemplated
hereby.
V.3 Regulatory Matters and Approvals. Each of the Parties will give
any notices to, make any filings with, and use its reasonable best efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the transactions contemplated by this
Agreement.
V.4 Operation of Business. From the date of this Agreement through the
Closing Date, SCN and MRS II will not (and will not commit to) engage in any
practice, take any action, or enter into any transaction outside the Ordinary
Course of Business. Without limiting the generality of the foregoing:
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(a) Neither SCN nor MRS II will authorize or effect any
change in its charter, or equivalent thereof, or bylaws; and
(b) SCN will not impose any Security Interest upon any of the
Purchased Assets outside the Ordinary Course of Business.
V.5 Further Acts and Assurances. SCN, and MRS II and the Physician
Owner shall, at any time and from time to time at and after the Closing, upon
request of the other, (a) take any and all steps necessary to (i) place MRS II
in possession and operating control of the Purchased Assets, (ii) enter into
the Management Services Agreement, and (iii) enter into any agreement or
arrangement contemplated hereby; and (b) will do, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances as may be required for the better transferring and
confirming to MRS II or SCN, as applicable, or their respective successors or
assigns, or for reducing to possession, any or all of the Purchased Assets.
V.6 Full Access. Upon five (5) business days prior notice, SCN will
permit representatives of MRS II to have full access to all premises,
properties, personnel, books, records (including tax records), contracts, and
documents of or pertaining to SCN during normal business hours; provided,
however, such access shall be limited to the operations of MRS II and the
Physician Owner as such are relevant to the transactions contemplated by this
Agreement.
V.7 Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of
any of its own representations and warranties in ARTICLE III or ARTICLE IV
above. No disclosure by any Party pursuant to this SECTION 5.7, however, shall
be deemed to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant.
V.8 Collection of Accounts Receivable. SCN agrees to cooperate with
Physician Owner in the collection of Accounts Receivable owned by SCN as of the
Closing Date and acquired by MRS II pursuant to this Agreement. In connection
therewith, SCN agrees to execute the necessary documents to accommodate the
collection of the Accounts Receivable in such manner.
V.9 Corporate Authorization. By execution of this Agreement, MRS II
and the Physician Owner have taken any and all steps necessary and have done,
executed, acknowledged and delivered, or have caused to be done, executed,
acknowledged and delivered, all such acts, deeds and assurances required in
order to consummate the transactions contemplated by this Agreement, including
the Physician Owner voting as directors of MRS II in favor of the transactions
contemplated by this Agreement and voting as an owners of MRS II in favor of
the transactions contemplated by this Agreement at any meeting (or in any
action by written consent) required by the Florida Business Corporation Act.
V.10 Employee Benefit Plans.
(a) Welfare Plans. As of the Closing Date, the Transferred
Employees shall cease participating in all SCN welfare benefit plans,
including, but not limited to, the Speciality Care Network
Medical/Dental Plan, the Speciality Care Network Like Insurance Plan,
the Speciality Care Network Disability Plan, and the Speciality Care
Network Flexible Spending Plan. As of the Closing Date, MRS II shall,
with respect to Transferred Employees, designate one or more plans
("MRS II Health Plan") to provide health benefits substantially
similar to the Specialty Care Network Medical/Dental Plan to
Transferred Employees and their eligible dependents, and MRS II shall
allow all Transferred Employees and their eligible dependents to
enroll, without any waiting period, in the MRS II Health Plan. With
respect to Transferred Employees, the MRS II Health Plan shall waive
any restrictions and limitations for pre-existing conditions. Any
service of Transferred Employees recognized by SCN under the Specialty
Care Network welfare plan shall be recognized by the MRS II welfare
plans. SCN and the Specialty Care Network Medical/Dental Plan shall
only be responsible for health expenses of Transferred Employees and
their
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dependents to the extent such expenses are covered under the terms are
covered under the terms of the Specialty Care Network Medical/Dental
Plan and are incurred prior to the Closing Date. The MRS II Health
Plan shall take into account expenses incurred under the Specialty
Care Network Medical/Dental Plan on or after January 1, 1999, and up
to the Closing Date, for purposes of determining deductibles and
out-of-pocket limits under the MRS II Health Plan.
(b) Specialty Care Network Retirement Savings Plan. As of the
Closing Date, the Transferred Employees shall cease participating in
the Specialty Care Network Retirement Savings Plan ("Savings Plan").
As of the Closing Date, MRS II shall establish, at its sole expense, a
defined contribution retirement plan that is qualified under sections
401(a) and 501(a) of the Code ("Successor Plan"). Within 90 days after
the Closing Date, SCN shall cause the assets and liabilities of the
Savings Plan attributable to the accounts of the Transferred Employees
and individuals formerly employed at the Practice Offices (the
"Affected Participants") to be transferred to the Successor Plan.
Effective upon the completion of the transfer of assets in accordance
with this Section, MRS II shall cause Successor Plan to assume the
liabilities of the Savings Plan applicable to such Affected
Participants. With respect to Transferred Employees, the Successor
Plan shall waive all requirements for eligibility to participate.
Service of a Transferred Employee which is recognized by the Savings
Plan shall be recognized as service under the Successor Plan.
(c) Amendments and Termination. The SCN employees benefit
plans described in this SECTION 5.10 are hereby amended, effective as
of the Closing Date, by making any changes necessary or appropriate to
effectuate the provisions of this SECTION 5.10. SCN reserves the right
to terminate any of the employee benefit plans described in this
SECTION 5.10 at any time before or after the Closing Date.
ARTICLE VI.
CONDITIONS TO OBLIGATIONS TO CLOSE
VI.1 Conditions to Obligation of MRS II and the Physician Owner. The
obligation of MRS II and the Physician Owner to consummate the transactions
contemplated by this Agreement is subject to satisfaction of the following
conditions:
(a) the Requisite MRS II Approval shall have been obtained;
(b) the representations and warranties set forth in ARTICLE
III above shall be true and correct in all material respects at and as
of the Closing Date;
(c) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the rights of MRS II or the
Physician Owner to own the Purchased Assets;
(d) all actions to be taken by SCN in connection with the
consummation of the transactions contemplated hereby and all
certificates, instruments, agreements, and other documents required to
effect the transactions contemplated hereby, have been taken or
delivered to MRS II and the Physician Owner and are satisfactory in
form and substance;
(e) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
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(f) neither the surrender of the SCN Shares by MRS II and/or
the Physician Owner, nor the issuance of the MRS II Note will violate
federal securities laws or the securities laws of any state of the
United States.
MRS II and the Physician Owner may waive any condition specified in
this SECTION 6.1 by executing a writing so stating at or prior to the Closing.
VI.2 Conditions to Obligation of SCN. The obligation of SCN to
consummate the transactions contemplated by this Agreement is subject to
satisfaction of the following conditions:
(a) SCN shall have procured all of the third party consents
necessary to transfer the Assumed Liabilities or shall have made for
adequate provision thereof;
(b) the Requisite SCN Approval;
(c) the representations and warranties set forth in ARTICLE
IV above shall be true and correct in all material respects at and as
of the Closing Date;
(d) MRS II and the Physician Owner shall have performed and
complied with all of their covenants hereunder in all material
respects through the Closing;
(e) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of SCN to own the
Purchased Assets; and
(f) all actions to be taken by MRS II and/or the Physician
Owner in connection with the consummation of the transactions
contemplated hereby and all certificates, instruments, agreements and
other documents required to effect the transactions contemplated
hereby, have been taken or delivered to SCN and are satisfactory in
form and substance.
SCN may waive any condition specified in this SECTION 6.2 by executing a
writing so stating at or prior to the Closing.
ARTICLE VII.
PRE-CLOSING AND CLOSING DELIVERIES
VII.1 By SCN. SCN shall execute and deliver to MRS II and the
Physician Owner prior to or at the Closing:
(a) Certified resolutions of SCN authorizing the execution of
all documents and the consummation of all transactions contemplated
hereby;
(b) A ▇▇▇▇ of Sale in substantially the form attached hereto
as EXHIBIT 7.1(B);
(c) An Assignment and Assumption Agreement in substantially
the form attached hereto as EXHIBIT 7.1(C);
(d) A Management Services Agreement in substantially the form
attached hereto as EXHIBIT 7.1(D);
(e) A certificate duly executed by the President, or other
duly authorized executive officer, of SCN that as of the Closing Date,
all representations and warranties of SCN are true and correct in all
material respects,
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all covenants and agreements contained in the Agreement to be
performed by SCN have been performed or complied with, and all
conditions to Closing have been satisfied;
(f) The Most Recent Balance Sheet pursuant to SECTION 2.3(A);
and
(g) Such other instruments as may be reasonably requested by
MRS II in order to effect to or carry out the intent of this
Agreement.
VII.2 By MRS II and the Physician Owner. MRS II and the Physician
Owner shall deliver to SCN at or prior to the Closing:
(a) The Asset Purchase Price and the MRS II Note being
surrendered by MRS II or the Physician Owner;
(b) An Assignment and Assumption Agreement in substantially
the form of EXHIBIT 7.1(C);
(c) A Release in substantially the form attached hereto as
EXHIBIT 7.2(C);
(d) Certified resolutions of MRS II authorizing the execution
of all documents and the consummation of all transactions contemplated
hereby;
(e) A Management Services Agreement in substantially the form
attached hereto as EXHIBIT 7.1(D);
(f) A certificate, duly executed by the President, or other
duly authorized executive officer of MRS II, stating as of the Closing
Date, all representations and warranties of MRS II are true all,
covenants and agreements contained in the Agreement to be performed by
MRS II have been performed or complied with and all conditions to
Closing have been satisfied; and
(g) Such other instruments as may be reasonably requested by
SCN in order to effect to or carry out the intent of this Agreement.
ARTICLE VIII.
TERMINATION
VIII.1 Termination of Agreement. Either of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after SCN board of directors approval) as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing Date;
(b) MRS II and the Physician Owner may terminate this
Agreement by giving written notice to SCN at any time prior to the
Closing Date (A) in the event SCN has breached any representation,
warranty, or covenant contained in this Agreement in any material
respect, MRS II and the Physician Owner have notified SCN of the
breach, and the breach has continued without cure on or before
December 31, 1998, after the notice of breach or (B) if the Closing
shall not have occurred on or before December 31, 1998, by reason of
the failure of any condition precedent under SECTION 6.2 hereof
(unless the failure results primarily from MRS II's or the Physician
Owner' breaching any representation, warranty, or covenant contained
in this Agreement); or
(c) SCN may terminate this Agreement by giving written notice
to MRS II or the Physician Owner at any time prior to the Closing Date
(A) in the event MRS II or the Physician Owner has breached any
representation, warranty, or covenant contained in this Agreement in
any material respect, SCN has notified MRS
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II or the Physician Owner of the breach, and the breach has continued
without cure on or before December 31, 1998, after the notice of
breach or (B) if the Closing shall not have occurred on or before
December 31, 1998, by reason of the failure of any condition precedent
under SECTION 6.1 hereof (unless the failure results primarily from
SCN's breaching any representation, warranty, or covenant contained in
this Agreement).
VIII.2 Effect of Termination. If any Party terminates this Agreement
pursuant to SECTION 8.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach). Notwithstanding the
foregoing, in the event the transaction contemplated by this Agreement is not
consummated due to the fault, or failure to perform hereunder by MRS II or the
Physician Owner then MRS II and the Physician Owner agree to reimburse SCN for
SCN's out-of-pocket expenses, including but not limited to professional fees or
(ii) SCN, then SCN agrees to reimburse MRS II and the Physician Owner for their
out-of-pocket expenses, including but not limited to professional fees.
ARTICLE IX0
INDEMNIFICATION
IX.1 Indemnification by MRS II and the Physician Owner. MRS II and the
Physician Owner agree to and shall, jointly and severally, defend, indemnify
and hold harmless SCN, its successors and assigns, officers and directors from
or against any and all losses, liabilities, claims, damages, actions, suits,
costs, deficiencies, penalties, and expenses (including without limitation
reasonable attorney's fees) (collectively referred to herein as "Loss") (i)
resulting from or arising out of the breach, untruth or inaccuracy of any
representation, warranty or covenant of MRS II or the Physician Owner set forth
in this Agreement, or (ii) resulting from or arising out of any of the Assumed
Liabilities. In addition to any indemnification rights granted to SCN under
this Agreement, SCN shall continue to be entitled to any indemnification under
any prior agreements between or among SCN, MRS II, or the Physician Owner,
including without limitation any SCN rights to indemnification under the
Service Agreement or the Merger Agreement.
IX.2 Notice to MRS II and the Physician Owner; Opportunity to Defend.
SCN agrees to give prompt notice to MRS II and the Physician Owner of the
assertion of any claim, or the commencement of any suit, action or proceeding,
in respect of which indemnity may be sought under SECTION 9.1. MRS II and the
Physician Owner may participate in and at their election, or at the request of
SCN, assume the defense of any such suit, action or proceeding at MRS II or the
Physician Owner' expense. Neither MRS II nor the Physician Owner shall be
liable under SECTION 9.1 for any settlement effected without their consent of
any claim, litigation or proceeding in respect of which indemnity may be sought
under SECTION 9.1, which consent shall not be unreasonably withheld.
IX.3 General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless MRS II, its successors and assigns, officers and
managers, from or against any Loss resulting from or arising out of the breach,
untruth or inaccuracy of any representation, warranty or covenant of SCN set
forth in this Agreement.
IX.4 Notice to SCN; Opportunity to Defend. The Physician Owner agrees
to give prompt notice to SCN of the assertion of any claim, or the commencement
of any suit, action or proceeding in respect of which indemnity may be sought
under SECTION 9.3. SCN may participate in and at its election, or at the
request of the Physician Owner, assume the defense of any such suit, action or
proceeding at SCN's expense. SCN shall not be liable under SECTION 9.3 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
be unreasonably withheld.
ARTICLE X.
MISCELLANEOUS
X.1 Survival. The representations, warranties, and covenants of the
Physician Owner, MRS II and SCN contained in this Agreement and the
indemnifications contained herein shall survive the Closing. Except as provided
in this SECTION 10.1 below, no claim for indemnification with respect to any
alleged misrepresentation or breach of warranty may
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be made after three (3) years following the Closing Date. SCN shall be entitled
to indemnification for (i) claims for breaches of representations, warranties
or covenants relating to matters involving the payment of taxes (including
interest and/or penalties thereon), (ii) claims arising from reimbursement of
any amounts to Third Party Payors (including interest and penalties thereon),
and (iii) claims relating to a matter involving compliance with Applicable Laws
as described in ARTICLE IV and ARTICLE V above and such right of
indemnification shall survive for the applicable statute of limitations for the
underlying claim asserted. Any matter to which indemnification pertains and
with respect to which a claim has been asserted or threatened following the
Closing Date and prior to termination of the applicable survival period shall,
notwithstanding the expiration of the applicable survival period, continue to
be subject to the indemnification under this Agreement until such claim is
finally terminated, settled, resolved or adjudicated; and all terms, conditions
and stipulations of this Agreement shall likewise continue to apply.
X.2 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
X.3 Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
X.4 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Parties.
X.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
X.6 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
X.7 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
five (5) business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to MRS II: Copy to:
Medical Rehabilitation Specialists II, P.A. ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇'▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, M.D. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to SCN: Copy to:
Specialty Care Network, Inc. Baker, Donelson, Bearman & ▇▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been
duly given unless and until it actually is received by the intended recipient.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
party notice in the manner herein set forth.
X.8 Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of
the State of Colorado or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Colorado.
Each of the parties submits to the jurisdiction of any state or federal court
sitting in Denver, Colorado, in any action or proceeding arising out of or
relating to this Agreement and agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court. Each party also
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety, or other security that might be required of any
other party with respect thereto.
X.9 Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Closing Date with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to SCN board approval will be subject to
the restrictions contained in the Delaware General Corporation Law. No
amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by each of the Parties. No waiver by any party
of any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
X.10 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
X.11 Expenses. Each of the Parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
X.12 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
X.13 No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between MRS
II and SCN that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant
patients.
X.14 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
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X.15 Transactions with Affiliated Practices. In the event that SCN
shall within a period commencing on the Closing Date and ending December 31,
1999 close a transaction with an Affiliated Practice which is substantially
similar to the restructuring transaction contemplated by this Agreement (a
"Restructuring Transaction"), and, taken as a whole, the financial terms of
such other Restructuring Transaction are materially more favorable to such
Affiliated Practice (and its Physician Owners) than the financial terms, taken
as a whole, of the restructuring transaction contemplated by this Agreement,
then in such event SCN shall modify the financial terms of this Agreement in
such manner as SCN shall reasonably determine so that the financial terms of
the restructuring transaction contemplated by this Agreement for MRS II and the
Physician Owner shall be no less favorable, when taken as a whole, than the
Restructuring Transaction undertaken with respect to any other Affiliated
Practice. For these purposes, the term "Affiliated Practice" shall refer to any
physician medical practice which, as of December 1, 1998, had in effect with
SCN an agreement substantially similar to the Service Agreement.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:
------------------------------------------
Title:
---------------------------------------
MEDICAL REHABILITATION SPECIALISTS II, P.A.
By:
------------------------------------------
Title:
---------------------------------------
PHYSICIAN OWNER:
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
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SCHEDULE 1.1
EXCLUDED ASSETS
None.
22
SCHEDULE 1.2
Physician Owner
▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
23
SCHEDULE 1.3
TERM DEBT
See attached.
24
SCHEDULE 2.4
ASSUMED LIABILITIES
See attached.
25
EXHIBIT 2.1(a)
MRS II Note
See attached.
26
EXHIBIT 2.1(b)
PURCHASE PRICE ALLOCATION AGREEMENT
THIS AGREEMENT is made and entered into as of December 31, 1998, by
and between SPECIALTY CARE NETWORK, INC., a Delaware corporation (the
"Purchaser") and MEDICAL REHABILITATION SPECIALISTS II, P.A., a Florida
professional service corporation (the "Seller").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser have entered into a Restructure
Agreement dated as of December 31, 1998, pursuant to which Seller has agreed to
sell and Purchaser has agreed to buy certain of the assets (the "Purchased
Assets") of Seller (the "Restructure Agreement");
WHEREAS, the Restructure Agreement provides that the parties shall
allocate the price to be paid for the Purchased Assets (the "Purchase Price")
in a manner which shall conform with and include the information required by
Section 1060 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the parties hereto desire to set forth herein with
particularity the allocation of the Purchase Price.
NOW, THEREFORE, in consideration of the foregoing recitals, the
covenants, conditions, representations, warranties, stipulations and agreements
contained herein, and other good and valuable consideration, the full receipt
and sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
1 Allocation of Asset Purchase Price. The Asset Purchase Price set
forth in the Restructure Agreement is hereby allocated among the Purchased
Assets as follows:
Description Fair Market Value Allocation
----------- ----------------- ----------
Class I
Class II
Class III
Class IV
Class V
2 Asset Acquisition Statement. The parties agree that they will
allocate the Purchase Price as set forth herein on the Asset Acquisition
Statement reported to the Internal Revenue Service on Internal Revenue Form
8594.
3 Purchaser and Seller Acknowledgment. The Purchaser and Seller
acknowledge that they have inspected the Purchased Assets and that the amounts
set forth herein as the fair market values of such Purchased Assets are true
and accurate as of the date hereof.
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4 Entire Agreement; Modifications. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter and
supersedes all negotiations, prior discussions, agreements and understandings
relating to the subject matter of this Agreement. Any modifications to this
Agreement must be approved in writing by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Price Allocation Agreement as of the day and date first written above.
MEDICAL REHABILITATION SPECIALISTS II, P.A.
By:
-----------------------------------------------
Title:
--------------------------------------------
SPECIALTY CARE NETWORK, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
28
EXHIBIT 7.1(b)
▇▇▇▇ OF SALE
THIS ▇▇▇▇ OF SALE is made and delivered by and from SPECIALTY CARE
NETWORK, INC., a Delaware Corporation ("Seller"), to MEDICAL REHABILITATION
SPECIALISTS II, P.A., a Florida professional service corporation ("Purchaser"),
pursuant to and in accordance with the terms and provisions of that certain
Restructure Agreement dated as of December 31, 1998 (the "Restructure
Agreement"), by and between Seller and Purchaser. Capitalized terms, unless
otherwise defined herein, shall have the meanings ascribed to them in the
Restructure Agreement.
In connection therewith, for good and valuable consideration, the
adequacy and sufficiency of which are hereby acknowledged, Seller does hereby
grant, bargain, sell, transfer, convey and deliver unto Purchaser, its
successors and assigns, all legal and beneficial right, title and interest in
and to the Purchased Assets; to have and to hold the same unto Purchaser and
its successors and assigns from and after the date hereof, subject to the
representations and warranties of Seller and other terms and conditions
contained in the Restructure Agreement, and subject to Seller's security
interest in the Purchased Assets pursuant to that certain Security Agreement by
and between Seller and Purchaser of even date herewith. The foregoing expressly
does not include any of the Excluded Assets set forth in the Restructure
Agreement.
Subject to the terms and conditions of the Restructure Agreement, each
of the parties hereto will use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary to consummate
and make effective the purchase of the Purchased Assets and the other
transactions contemplated by the Restructure Agreement. From time to time after
the date hereof, Seller will, at Seller's expense, execute and deliver such
instruments and documents to Purchaser, as Purchaser may reasonably request, in
order to more effectively vest in Purchaser good title to the Purchased Assets
and to more effectively consummate the transactions contemplated by the
Restructure Agreement.
All of the representations and warranties of Seller set forth in the
Restructure Agreement regarding the Purchased Assets are incorporated herein by
reference in their entirety, to the same extent and with the same limitations
as set forth in the Restructure Agreement. Seller represents and warrants that
the title conveyed is good and marketable, its transfer rightfully made; that
the Purchased Assets are delivered free and clear of all liens and
encumbrances; and that Seller will warrant and defend same against the lawful
claims and demands of all persons whomsoever.
This instrument shall be binding upon Seller, its successors and
assigns, and shall inure to the benefit of Purchaser, its successors and
assigns. This instrument shall be effective as to the transfer of all of the
Purchased Assets as of the Closing Date.
Nothing herein contained shall be deemed or construed as an assumption
by Purchaser of, or to impose upon Purchaser, any liabilities or obligations of
Seller, except as otherwise provided in that certain Assignment and Assumption
Agreement of even date herewith.
This ▇▇▇▇ of Sale shall be governed by and construed in accordance
with the laws of the State of Florida.
29
IN WITNESS WHEREOF, Seller has caused its duly authorized
representative to execute and deliver this ▇▇▇▇ of Sale as of the 31 day of
December, 1998.
SPECIALTY CARE NETWORK, INC.
By:
-------------------------------------
Title:
----------------------------------
30
EXHIBIT 7.1(c)
ASSIGNMENT AND ASSUMPTION AGREEMENT
FOR THE SUM OF $10.00 CASH IN HAND, and other good and valuable
consideration, including the assumption by MEDICAL REHABILITATION SPECIALISTS
II, P.A., a Florida professional service corporation ("MRS II"), of liabilities
as hereinbelow set forth, SPECIALTY CARE NETWORK, INC., a Delaware corporation
("SCN") hereby assigns, transfers, conveys, and delivers to MRS II, all of its
legal and beneficial right, title and interest in and to the Purchased Assets
not otherwise transferred by that certain ▇▇▇▇ of Sale of even date herewith.
All capitalized terms not otherwise defined herein having the meanings ascribed
to those terms in that certain Restructure Agreement ("Restructure Agreement")
by and among SCN, MRS II, and the Physician Owner of MRS II, dated as of
December 31, 1998, and said terms are incorporated herein by this reference.
In partial consideration of the foregoing, MRS II and the Physician
Owner, jointly and severally, hereby assume and agree to perform, pay and
discharge all Assumed Liabilities.
This Assignment and Assumption Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns, but no assignment shall relieve any party of its obligations
hereunder.
This Assignment and Assumption Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
IN WITNESS WHEREOF, MRS II, the Physician Owner and SCN, by their
duly-authorized officers, have signed and delivered this Assignment and
Assumption Agreement as of December 31, 1998.
SPECIALTY CARE NETWORK, INC.
By:
------------------------------------------
Its:
-----------------------------------------
MEDICAL REHABILITATION SPECIALISTS II, P.A.
By:
------------------------------------------
Its:
-----------------------------------------
PHYSICIAN OWNER:
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
31
EXHIBIT 7.1(d)
MANAGEMENT SERVICES AGREEMENT
See attached.
32
EXHIBIT 7.2(c)
RELEASE
THIS RELEASE is being executed and delivered in accordance with
SECTION 7.2(C) of the Restructure Agreement dated December 31, 1998 (the
"Agreement") by and among SPECIALTY CARE NETWORK, INC., a Delaware corporation
("SCN"), MEDICAL REHABILITATION SPECIALISTS II, P.A., a Florida professional
service corporation ("MRS II") and the Physician Owner. Capitalized terms used
in this Release without definition have the respective meanings given to them
in the Agreement.
MRS II and the Physician Owner acknowledge that execution and delivery
of this Release is a condition to SCN's obligation to consummate the
transaction contemplated by the Agreement and to amend and restate the Service
Agreement as the Management Services Agreement, and that SCN is relying on this
Release in connection with the foregoing.
MRS II and the Physician Owner, for good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and intending to be
legally bound, in order to induce SCN to consummate all transactions
contemplated by the Agreement, hereby agree as follows:
MRS II and the Physician Owner on behalf of MRS II and themselves
individually and each of their Related Persons, hereby releases and forever
discharges SCN and each of its respective individual, joint or mutual, past,
present and future representatives, affiliates, stockholders, controlling
persons, subsidiaries, employees, agents, successors, and assigns
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, Proceedings, causes of action, Orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which each of MRS II and
the Physician Owner or any of their respective Related Persons now has, have
ever had or may hereafter have against the respective Releasees arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date, including, but not limited to, any rights to indemnification
or reimbursement from SCN, whether pursuant to the Merger Agreement, Service
Agreement, and any other agreement entered into prior to the date of the
Agreement, contract or otherwise and whether or not relating to claims pending
on, or asserted after, the Closing Date; provided, however, that nothing
contained herein shall operate to release any obligations of SCN accruing after
the Closing Date under the Agreement or the Management Services Agreement,
which are to remain in effect after Closing.
MRS II and the Physician Owner hereby irrevocably covenants to refrain
from, directly or indirectly, asserting any claim or demand, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
Releasee, based upon any matter purported to be released hereby.
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each MRS II and the Physician Owner, jointly and
severally, shall indemnify and hold harmless each Releasee from and against all
loss, liability, claim, damage (including incidental and consequential damages)
or expense (including costs of investigation and defense and reasonable
attorney's fees) whether or not involving third party claims, arising directly
or indirectly from or in connection with (i) the assertion by or on behalf of
MRS II or the Physician Owner or any of their Related Persons of any claim or
other matter purported to be released pursuant to this Release, and (ii) the
assertion by any third party of any claim or demand against any Releasee which
claim or demand arises directly or indirectly from, or in connection with, any
assertion by or on behalf of MRS II or the Physician Owner or any of their
Related Persons against such third party of any claims or other matters
purported to be released pursuant to this Release.
If any provision of this Release is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release held invalid or
unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
33
This Release may not be changed except in a writing signed by the
person(s) against whose interest such change shall operate. This Release shall
be governed by and construed under the laws of the State of Florida without
regard to principles of conflicts of law.
All words used in this Release will be construed to be of such gender
or number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned have executed and
delivered this Release as of this 31st day of December, 1998.
MRS II:
MEDICAL REHABILITATION SPECIALISTS II, P.A.
By:
------------------------------------------
Its:
-----------------------------------------
PHYSICIAN OWNER:
---------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, M.D.