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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 1996
____________________
NATIONAL SURGERY CENTERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-27162 36-3549627
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
35 EAST WACKER DRIVE, SUITE 2800
CHICAGO, ILLINOIS 60601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 553-4200
____________________
Page 1 of 42 -- Exhibit Index appears on Page 4
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ITEM 2. ACQUISITION OF ASSETS
On February 21, 1996, the Registrant, National Surgery Centers, Inc.,
a Delaware corporation ("NSC"); Coram Healthcare Corporation, a Nevada
corporation ("Coram"); T2 Medical, Inc., a Delaware corporation ("T2"); Surgex,
Inc., a Nevada corporation ("Surgex"); and Ronald E. Moore ("Moore") entered
into a purchase agreement (the "Purchase Agreement") for the acquisition by the
Registrant (a) from the Seller, of all of the capital stock of each of (i)
Surgex-Miami, Inc., a Florida corporation; (ii) Surgex-Atlanta, Inc., a
Delaware corporation; and (iii) Surgex-Sarasota, Inc., a Delaware corporation
(collectively, the "Subsidiaries"); all debt owed by such Subsidiaries to each
other or to Surgex and all accrued interest thereon; and all management fees
owed by certain limited partnerships managed by the Subsidiaries to Surgex and
(b) from T2, of indebtedness receivable in the amount of $828,000 and all
accrued interest thereon in consideration of the payment by the Registrant to
Coram of $4,300,000 (the items purchased by Registrant as referred to in (a)
and (b), collectively, the "Purchased Assets"). On May 13, 1996, pursuant to
the Purchase Agreement, Coram received $4,171,066 for the Purchased Assets,
which amount adjusts for changes in working capital as set forth in the Purchase
Agreement.
The terms of the acquisition, including the amount of cash paid as
consideration, were determined through arm's-length negotiations, based on past
and projected levels of revenue and profitability of the entities acquired and
the value of the assets acquired. The acquisition was accounted for using the
purchase method of accounting. A form of the Purchase Agreement is attached
hereto and is incorporated herein by reference as Exhibit 2.1.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired
It is impracticable to provide any of the required financial
statements for the acquired business at the time this report
on Form 8-K is filed. The Registrant will file the required
financial statements for the acquired business as soon as
practicable, but not later than 60 days after this report on
Form 8-K is filed.
(b) Pro forma financial information
It is impracticable to provide any of the required pro forma
financial information at the time this report on Form 8-K is
filed. The Registrant will file the required pro forma
financial information as soon as practicable, but not later
than 60 days after this report on Form 8-K is filed.
(c) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index
set forth elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL SURGERY CENTERS, INC.
By:/s/ Bryan S. Fisher
-------------------------
Bryan S. Fisher
Chief Financial Officer
Date: May 28, 1996
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NATIONAL SURGERY CENTERS, INC.
EXHIBIT INDEX
Sequential*
Number and Description of Exhibit Page Number
2.1 Form of Purchase Agreement dated February 21, 1996 by 5
and among the following parties: Coram Healthcare
Corporation, a Nevada corporation; T2 Medical, Inc., a
Delaware corporation; Surgex, Inc., a Nevada
corporation; Ronald E. Moore; and National Surgery
Centers, Inc., a Delaware corporation.
- ------------------
* Included only in the manually signed copy.
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PURCHASE AGREEMENT
DATED FEBRUARY 21, 1996
AMONG
CORAM HEALTHCARE CORPORATION,
T2 MEDICAL, INC.,
SURGEX, INC.,
RONALD E. MOORE
AND
NATIONAL SURGERY CENTERS, INC.
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TABLE OF CONTENTS
<TABLE>
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ARTICLE 1.0 PURCHASE AND SALE OF THE SHARES, THE INTERCOMPANY DEBT, THE MANAGEMENT FEES, AND THE NOTE 2
1.1 PURCHASE AND SALE 2
1.2 AMOUNT OF THE PURCHASE PRICE 2
1.3 TIME AND PLACE OF THE CLOSING 2
1.4 PROCEDURE AT THE CLOSING 3
ARTICLE 2.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER, T2, AND MOORE CONCERNING THE TRANSACTION 3
2.1 ORGANIZATION; DUE AUTHORIZATION 4
2.2 BINDING OBLIGATION 4
2.3 OWNERSHIP OF PURCHASED ASSETS 5
2.4 INVESTMENT BANKERS' AND BROKERS' FEES 6
ARTICLE 3.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER CONCERNING THE TRANSACTION 6
3.1 ORGANIZATION, POWER AND AUTHORITY OF THE PURCHASER; DUE AUTHORIZATION 6
3.2 BINDING OBLIGATION; NONCONTRAVENTION 6
ARTICLE 4.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER CONCERNING THE SUBSIDIARIES 7
4.1 ORGANIZATION, POWER AND AUTHORITY OF THE SUBSIDIARIES 7
4.2 EQUITY SECURITIES OF THE SUBSIDIARIES 7
4.3 SUBSIDIARIES OF THE SUBSIDIARIES 8
4.4 FINANCIAL STATEMENTS THE SUBSIDIARIES 9
4.5 LIABILITIES OF THE SELLER AND THE SUBSIDIARIES 9
4.6 TAX MATTERS 9
4.7 REAL ESTATE OF EACH OF THE SUBSIDIARIES 10
4.8 GOOD TITLE TO AND CONDITION OF EACH OF THE SUBSIDIARIES' ASSETS 11
4.9 CASH AND RECEIVABLES OF EACH OF THE SUBSIDIARIES 11
4.10 LICENSES AND PERMITS OF EACH OF THE SUBSIDIARIES 11
4.11 PROPRIETARY RIGHTS OF EACH OF THE SUBSIDIARIES 12
4.12 ADEQUACY OF EACH OF THE SUBSIDIARIES' ASSETS; EACH OF THE SUBSIDIARIES' RELATIONSHIPS
WITH ITS MANAGED CARE CUSTOMERS 12
4.13 DOCUMENTS OF AND INFORMATION WITH RESPECT TO EACH OF THE SUBSIDIARIES 12
4.14 INSURANCE COVERING EACH OF THE SUBSIDIARIES AND ITS ASSETS 13
4.15 LITIGATION INVOLVING ANY OF THE SUBSIDIARIES 13
4.16 RECORDS OF THE SELLER AND EACH OF THE SUBSIDIARIES 13
4.17 NO MATERIAL ADVERSE CHANGE 14
</TABLE>
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<TABLE>
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4.18 ABSENCE OF CERTAIN ACTS OR EVENTS 14
4.19 COMPLIANCE WITH LAWS BY EACH OF THE SUBSIDIARIES 14
4.20 ENVIRONMENTAL MATTERS 15
4.21 LABOR RELATIONS OF EACH OF THE SUBSIDIARIES 15
4.22 EMPLOYEE BENEFITS 15
4.23 ACCURACY OF INFORMATION FURNISHED BY THE SELLER 16
ARTICLE 5.0 ADDITIONAL COVENANTS OF THE SELLER 16
5.1 BEST EFFORTS 16
5.2 CONDUCT OF BUSINESS PENDING THE CLOSING 16
5.3 ACCESS TO THE SELLER AND EACH OF THE SUBSIDIARIES' FACILITIES,
PROPERTIES AND RECORDS 17
5.4 NOTICE OF MATERIAL DEVELOPMENTS 17
5.5 NO DISCLOSURE 17
5.6 NO OTHER DISCUSSIONS 18
5.7 INTERIM MANAGEMENT 18
5.8 ESCROW AGREEMENT 18
5.9 NOTICE OF HEARING AND PROCEDURES FOR SALE, AND ORDER APPROVING SALE OF 18
ARTICLE 6.0 ADDITIONAL COVENANTS OF THE PURCHASER 20
6.1 BEST EFFORTS 20
6.2 NOTICE OF MATERIAL DEVELOPMENTS 20
ARTICLE 7.0 CONDITIONS TO THE OBLIGATION OF THE PURCHASER 20
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS 20
7.2 OPINION OF COUNSEL 20
7.3 RECEIPT OF NECESSARY CONSENTS 20
7.4 NO ADVERSE LITIGATION 20
7.5 RESIGNATIONS AND RELEASES 20
7.6 TAIL COVERAGE 21
7.7 PAYMENT OF DISTRIBUTIONS 21
7.8 RESOLUTION OF NAULT CASE 21
ARTICLE 8.0 CONDITIONS TO OBLIGATION OF THE SELLER 21
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS 21
8.2 OPINION OF COUNSEL 21
8.3 RESOLUTION OF NAULT CASE 21
ARTICLE 9.0 CERTAIN ACTIONS AFTER THE CLOSING 22
9.1 EXECUTION OF FURTHER DOCUMENTS 22
9.2 RESTRICTIVE COVENANTS 22
9.3 DELIVERY OF COMPANY RECORDS 23
</TABLE>
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<TABLE>
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9.4 PREPARATION OF TAX RETURNS 23
ARTICLE 10.0 INDEMNIFICATION 24
10.1 AGREEMENT BY SELLER TO INDEMNIFY 24
10.2 AGREEMENT BY PURCHASER TO INDEMNIFY 24
10.4 QUALIFICATIONS 25
ARTICLE 11.0 MISCELLANEOUS 27
11.1 AMENDMENT AND MODIFICATION 27
11.2 PAYMENT OF EXPENSES 27
11.3 TERMINATION 27
11.4 BINDING EFFECT 28
11.5 ENTIRE AGREEMENT 28
11.6 HEADINGS 28
11.7 EXECUTION IN COUNTERPART 28
11.8 NOTICES 29
11.9 GOVERNING LAW 30
11.10 PUBLICITY 30
11.11 EXCLUSIVE REMEDY 30
</TABLE>
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SCHEDULES
Schedule 1.1(iv) Intercompany Debt
Schedule 4.2 Ownership of Capital Stock
Schedule 4.3 Subsidiaries
Schedule 4.4 Financial Statements
Schedule 4.7 Leasehold Premises
Schedule 4.8 Liens and Encumbrances
Schedule 4.11 Proprietary Rights
Schedule 4.13 Documents of and
Information with Respect
to the Seller and each of
the Subsidiaries
Schedule 4.14 Insurance
Schedule 4.15 Litigation
Schedule 4.17 No Material Adverse Changes
Schedule 4.18 Absence of Certain Acts or
Events
Schedule 4.19 Compliance with Laws
Schedule 4.21 Labor Relations
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EXHIBITS
Exhibit A Assignment of Management
Agreement
Exhibit B Escrow Agreement
Exhibit C Opinion of Seller's Counsel
Exhibit D Opinion of Bell, Boyd &
Lloyd
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PURCHASE AGREEMENT
This purchase agreement (the "Agreement") is made and entered into this
21st day of February, 1996 by and among the following parties: Coram
Healthcare Corporation, a Nevada corporation ("Coram"); T2 Medical, Inc., a
Delaware corporation ("T2"); Surgex, Inc., a Nevada corporation (the "Seller");
Ronald E. Moore ("Moore"); and National Surgery Centers, Inc., a Delaware
corporation (the "Purchaser").
RECITALS
Moore owns all of the issued and outstanding shares of common stock, $.01
par value (the "common stock"), of the Seller and T2 holds an aggregate of
$10,000,000 Series I Convertible Debentures of the Seller which are convertible
into an aggregate of 74.375% of the issued and outstanding common stock after
conversion upon the election of the holder.
The Seller owns all of the issued and outstanding shares of capital stock
of each of (i) Surgex-Miami, Inc., a Florida corporation ("SMI") and the
general partner of Ambulatory Surgical Centre of Miami, L.P., a Florida limited
partnership ("ASCM"); (ii) Surgex-Atlanta, Inc., a Delaware corporation ("SAI")
and the general partner of North Atlanta Endoscopy Center L.P., a Georgia
limited partnership ("NAEC"); and (iii) Surgex-Sarasota, Inc., a Delaware
corporation ("SSI") and the general partner of Sarasota Endoscopy Center, L.P.,
a Georgia limited partnership ("SEC"). The corporations set forth in the
foregoing sentence are sometimes referred to collectively herein as the
"Corporate Subsidiaries," the limited partnerships are sometimes referred to
collectively herein as the "Partnerships," and the Corporate Subsidiaries and
the Partnerships are sometimes referred to collectively herein as the
"Subsidiaries." In addition, the Seller owns (x) all of the issued and
outstanding shares of capital stock of Surgex-San Bernardino, Inc. ("SSBI"), a
California corporation and general partner of Surgex-San Bernardino, L.P., a
California limited partnership ("SSBLP") and (y) all of the outstanding shares
of capital stock of Surgex-Southern Nevada, Inc., a Nevada corporation
("SSNI"). SSBI, SSNI, and SSBLP are sometimes referred to collectively herein
as the "Excluded Subsidiaries."
The Seller desires to sell to the Purchaser and the Purchaser desires to
purchase from the Seller all of the issued and outstanding shares of capital
stock of each of the Corporate Subsidiaries, all debt owed by the Subsidiaries
to each other or to the Seller and all accrued interest thereon, and all
management fees owed by the Partnerships to the Seller, all as herein provided
and on the terms and conditions hereinafter set forth. T2 desires to sell to
the Purchaser and the Purchaser desires to purchase from T2 that certain note
in the amount of $828,000 owed by SMI to T2 and all accrued interest thereon
(the "Note"), effective as of the Closing (as defined below), all as herein
provided and on the terms and conditions hereinafter set forth.
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COVENANTS
In consideration of the mutual representations, warranties and covenants
and subject to the conditions herein contained, the parties hereto agree as
follows:
ARTICLE 1.0 PURCHASE AND SALE OF THE SHARES, THE INTERCOMPANY DEBT, THE
MANAGEMENT FEES, AND THE NOTE
1.1 PURCHASE AND SALE. The Seller agrees to and will sell, transfer,
assign and deliver to the Purchaser at the Closing, and the Purchaser agrees to
and will purchase and accept from the Seller, on the terms and subject to the
conditions set forth in this Agreement, (i) 1,000 shares of the common stock,
no par value per share, of SMI, constituting all of the issued and outstanding
shares of capital stock of SMI; (ii) 500 shares of the common stock, $.01 par
value per share, of SAI, constituting all of the issued and outstanding shares
of capital stock of SAI; (iii) 500 shares of the common stock, $.01 par value
per share, of SSI, constituting all of the issued and outstanding shares of
capital stock of SSI, (iv) all outstanding debt owed by any of the Subsidiaries
to each other or to Seller, such debt being listed and described in Schedule
1.1(iv) attached hereto, and all accrued interest thereon (the "Intercompany
Debt"), and (v) all management fees owed, as of the Closing Date, by any of the
Partnerships to Seller (the "Management Fees"). The shares of common stock of
SMI, SAI, and SSI are sometimes collectively referred to herein as the
"Shares." T2 agrees to and will sell, transfer, assign and deliver to the
Purchaser at the Closing, and the Purchaser agrees to and will purchase and
accept from T2, on the terms and subject to the conditions set forth in this
Agreement the Note, constituting all of the debt of the Subsidiaries owed to
T2. The Shares, the Intercompany Debt and the Note are sometimes referred to
collectively herein as the "Securities" and the Securities, and the Management
Fees are sometimes referred to collectively herein as the "Purchased Assets.
1.2 AMOUNT OF THE PURCHASE PRICE. As consideration for execution of this
Agreement, Purchaser will deposit in escrow with LaSalle National Trust, N.A.
(the "Escrow Agent") pursuant to the Escrow Agreement, an aggregate amount in
cash equal to $4,300,000, with $3,472,000 being deposited into Account One and
$828,000 being deposited in Account Two. As consideration for the Shares, the
Intercompany Debt and the Management Fees (the "Seller Purchase Price"), and as
consideration for the Note (the "Note Purchase Price"), the Purchaser agrees,
subject to the terms, conditions and limitations set forth in this Agreement,
to cause the Escrow Agent to wire transfer to Seller and T2, respectively, the
initial deposit plus all accrued interest held by the Escrow Agent in Account
One and Account Two.
1.3 TIME AND PLACE OF THE CLOSING. The closing of the purchase and sale
of the Purchased Assets shall take place at the offices of Bell, Boyd & Lloyd,
70 West Madison Street, Suite 3300, Chicago, Illinois 60601 at 10:00 A.M.,
local time, within five days following the final settlement or completion of
the litigation set forth in Section 7.8 of this Agreement; provided, however,
that if any of the conditions which are set forth in Articles 7.0 and 8.0 has
not been satisfied or waived by said date following satisfaction or waiver of
all such conditions, then the closing shall take place on a subsequent date,
which shall be determined by the mutual
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agreement of the Purchaser and the Sellers. Throughout this Agreement, such
event is referred to as the "Closing" and such date and time are referred to as
the "Closing Date."
1.4 PROCEDURE AT THE CLOSING. At the Closing, the parties agree to take
the following steps in the order listed below (provided, however, that upon
their completion all such steps shall be deemed to have occurred
simultaneously):
1.4.1 Seller and T2 shall deliver to the Purchaser the
certificates, instruments and other documents required to be
delivered by Seller and T2 pursuant to Article 7.0.
1.4.2 The Purchaser shall deliver to the Seller and T2 the
certificates, instruments and other documents required to be
delivered by the Purchaser pursuant to Article 8.0.
1.4.3 Seller shall deliver to the Purchaser certificates
evidencing the Shares, duly endorsed in blank or accompanied by
duly executed stock powers and an assignment transferring all of
its interest in the Intercompany Debt, the Management Fees.
1.4.4 T2 shall deliver to the Purchaser an assignment
transferring all of its interest in the Note.
1.4.5 The Purchaser shall cause the Escrow Agent to deliver
by wire transfer to such account or accounts as shall have been
designated in writing by Seller and T2, respectively, the initial
deposit made by Purchaser, plus all accrued interest, held by
Escrow Agent in Account One and Account Two.
1.4.6 The Purchaser shall deliver by wire transfer to such
account or accounts as shall have been designated in writing by
Seller the cost of any capital improvements to the Partnerships
financed by Seller following the date hereof, pursuant to the
terms of Section 2.2 of the Assignment of Management Agreements
(as defined below).
1.4.7 The Purchaser and Seller and T2 shall execute and
deliver a cross receipt acknowledging receipt from the other,
respectively, of the Purchased Assets and the wired funds
specified in Section 1.4.5.
ARTICLE 2.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER, T2, AND MOORE
CONCERNING THE TRANSACTION
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, each of Seller (as to
Paragraphs 2.1.1, 2.2.1, 2.3.1 and 2.4), T2 (as to Paragraphs 2.1.2, 2.2.2,
2.3.2 and 2.4), and Moore (as to Paragraphs 2.2.3, 2.3.3 and 2.4) severally and
not jointly make the following representations and warranties with respect to
itself or himself, or in the case Seller, itself and the Subsidiaries:
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2.1 ORGANIZATION; DUE AUTHORIZATION.
2.1.1 Seller is a corporation duly organized and legally
existing in good standing under the laws of the jurisdiction of
its incorporation, with full corporate power and authority to
enter into this Agreement and to carry out the transactions and
agreements contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary actions of Seller.
2.1.2 T2 is a corporation duly organized and legally existing
in good standing under the laws of the jurisdiction of its
incorporation, with full corporate power and authority to enter
into this Agreement and to carry out the transactions and
agreements contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary actions of T2.
2.2 BINDING OBLIGATION.
2.2.1 Neither the execution and delivery of this Agreement by
the Seller nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the
articles or certificates of incorporation or bylaws of the Seller
or any of the Subsidiaries, or of any law, ordinance or regulation
or any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or
enforceable against the Seller or any of the Subsidiaries; or (ii)
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
mortgage, contract, agreement, indenture, will, trust or other
instrument which is either binding upon or enforceable against the
Seller any of the Subsidiaries or the assets and properties of the
Seller or any of the Subsidiaries. No permit, consent, approval
or authorization of, or declaration to or filing with, any
regulatory or other government authority is required in connection
with the execution and delivery of this Agreement by the Seller
and the consummation by it of the transactions contemplated
hereby.
2.2.2 Neither the execution and delivery of this Agreement by
T2 nor the consummation of the transactions contemplated hereby
will: (i) conflict with or violate any provision of the articles
or certificates of incorporation or bylaws of T2, or of any law,
ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either
applicable to, binding upon or enforceable against T2; or (ii)
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
mortgage, contract, agreement, indenture, will, trust or other
instrument which is either binding upon or enforceable against T2
or the assets and properties of T2. No permit, consent,
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approval or authorization of, or declaration to or filing with, any
regulatory or other government authority is required in connection
with the execution and delivery of this Agreement by T2 and the
consummation by them of the transactions contemplated hereby.
2.2.3 Neither the execution and delivery of this Agreement by
Moore nor the consummation of the transactions contemplated hereby
will: (i) conflict with or violate any provision of any law,
ordinance or regulation or any decree or order of any court or
administrative or other governmental body which is either
applicable to, binding upon or enforceable against Moore; or (ii)
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
mortgage, contract, agreement, indenture, will, trust or other
instrument which is either binding upon or enforceable against
Moore or the assets and properties of Moore. No permit, consent,
approval or authorization of, or declaration to or filing with,
any regulatory or other government authority is required in
connection with the execution and delivery of this Agreement by
Moore and the consummation by them of the transactions
contemplated hereby.
2.3 OWNERSHIP OF PURCHASED ASSETS.
2.3.1 The Seller is the lawful owner of all of the Shares,
Intercompany Debt, and Management Fees and has valid marketable
title thereto, free and clear of all liens, pledges, encumbrances,
security interests, restrictions on transfer (other than
restrictions under federal and state securities laws), claims and
equities of every kind. Except for this Agreement, there are no
outstanding warrants, options or rights of any kind to acquire
from the Seller any of the Shares or the Intercompany Debt.
Delivery of the Shares, the Intercompany Debt, and Management Fees
by the Seller to the Purchaser in accordance with this Agreement
will vest title to all of the Shares, the Intercompany Debt, and
Management Fees in the Purchaser, free and clear of all liens,
pledges, encumbrances, claims and equities of every kind.
2.3.2 T2 is the lawful owner of the Note and has valid
marketable title thereto, free and clear of all liens, pledges,
encumbrances, security interests, restrictions on transfer (other
than restrictions under federal and state securities laws), claims
and equities of every kind. Except for this Agreement, there are
no outstanding options or rights of any kind to acquire from T2
the Note. Delivery of the Note by T2 to the Purchaser in
accordance with this Agreement will vest title to the Note in the
Purchaser, free and clear of all liens, pledges, encumbrances,
claims and equities of every kind.
2.3.3 Moore is the lawful owner of all of the issued and
outstanding shares of common stock of Seller ("Seller's Shares")
and has valid marketable title thereto, free and clear of all
liens, pledges, encumbrances, security interests,
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restrictions on transfer (other than restrictions under federal and
state securities laws), claims and equities of every kind. There
are no outstanding options or rights of any kind to acquire from
Moore the Seller's Shares.
2.4 INVESTMENT BANKERS' AND BROKERS' FEES. None of Moore, T2 nor the
Seller or any of the Subsidiaries has any obligation to pay any fees or
commissions to any investment banker, broker, finder or agent with respect to
the transactions contemplated by this Agreement.
ARTICLE 3.0 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER CONCERNING THE
TRANSACTION
In order to induce the Seller, Moore, Coram, and T2 to enter into this
Agreement and to consummate the transactions contemplated hereunder, the
Purchaser makes the following representations and warranties:
3.1 ORGANIZATION, POWER AND AUTHORITY OF THE PURCHASER; DUE AUTHORIZATION.
The Purchaser is a corporation duly organized and validly existing under the
laws of the State of Delaware, with full corporate power and authority to enter
into this Agreement and to carry out the transactions and agreements
contemplated hereby. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action of the Purchaser.
3.2 BINDING OBLIGATION; NONCONTRAVENTION . This Agreement has been duly
executed and delivered by the Purchaser and is a valid and binding obligation
of the Purchaser, enforceable in accordance with its terms. Neither the
execution and delivery of this Agreement by the Purchaser nor the consummation
of the transactions contemplated hereby will: (i) conflict with or violate any
provision of the certificate of incorporation or bylaws of the Purchaser or of
any decree or order of any court or administrative or other governmental body
which is either applicable to, binding upon or enforceable against the
Purchaser; or (ii) 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 mortgage, contract,
agreement, indenture or other instrument which is either binding upon or
enforceable against the Purchaser. No permit, consent, approval or
authorization of, or declaration to or filing with, any regulatory or other
government authority is required in connection with the execution and delivery
of this Agreement by the Purchaser and the consummation of the transactions
contemplated hereby.
3.3 INVESTMENT REPRESENTATIONS. Purchaser is acquiring the Securities for
its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof and it has no present
agreement or commitment providing for the disposition thereof. Purchaser
further represents that it understands that (i) the Securities have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by reason of their issuance and transfer in transactions exempt from the
registration requirements of the Securities Act, (ii) the Securities must be
held indefinitely unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from such registration, and (iii) the
Securities bear a legend to such effect. Purchaser further understands that the
exemptions from registrations afforded by Rules 144 and 144A under the
Securities Act depend on the satisfaction of various conditions and that, if
applicable, such rules afford the basis of sales of the Securities in limited
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amounts under certain conditions. Purchaser (a) is able to bear the economic
risk of losing its entire investment in the Securities (including its
investment in the Corporate Subsidiaries), which is not disproportionate to
Purchaser' net worth, and has adequate means of providing for its current needs
and personal contingencies without regard to the investment in the Securities,
(b) has sufficient knowledge and experience in business and financial matters
to evaluate the Securities, to evaluate the risk of an investment in the
Securities, to make an informed investment decision with respect thereto, and
to protect its interest in connection with its purchase of the Securities,
without need for the additional information which would be included in a
complete registration statement effective under the Securities Act, (C)
Purchaser is not purchasing or receiving any Securities pursuant to a general
solicitation by the Seller, and (d) Purchaser is a corporation, not formed for
the specific purpose of acquiring the Securities, having total assets in excess
of $5,000,000. Purchaser is a resident of the State of Illinois.
ARTICLE 4.0 REPRESENTATIONS AND WARRANTIES OF THE SELLER CONCERNING THE
SUBSIDIARIES
In order to induce the Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, the Seller makes the
following representations and warranties:
4.1 ORGANIZATION, POWER AND AUTHORITY OF THE SUBSIDIARIES.
4.1.1 Each of the Corporate Subsidiaries is a corporation
duly organized and legally existing in good standing under the
laws of its incorporation, and has full corporate power and
authority and all licenses and permits necessary to own or lease
its properties and to carry on its business as it is now being
conducted. Each of the Corporate Subsidiaries is legally
qualified to transact business as a foreign corporation, and is in
good standing in each jurisdiction in which its business or
property is such as to require that it be thus qualified.
4.1.2 Each of the Partnerships is a limited partnership duly
organized and legally existing in good standing under the laws of
its formation, and has full power and authority and all licenses
and permits necessary to own or lease its properties and to carry
on its business as it is now being conducted. Each of the
Partnerships is legally qualified to transact business as a
foreign partnership, and is in good standing in each jurisdiction
in which its business or property is such as to require that it be
thus qualified.
4.2 EQUITY SECURITIES OF THE SUBSIDIARIES.
4.2.1 The authorized capital stock of SMI consists solely of
1,000 shares of common stock, 1,000 shares of which are issued and
outstanding and none of which are issued and held in its treasury;
the authorized capital stock of SAI consists solely of 500 shares
of common stock, 500 shares of which are issued and outstanding
and none of which are issued and held in its treasury; and the
authorized capital stock of SSI consists solely of 500 shares of
common stock, 500 shares of which are issued and outstanding and
none of which are issued and
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held in its treasury. All voting rights in each of the Corporate
Subsidiaries are vested exclusively in its shares of common stock,
and there are no voting trusts, proxies or other agreements or
understandings with respect to the voting of the capital stock of
the Corporate Subsidiaries. All of the issued and outstanding
shares of common stock of the Corporate Subsidiaries are validly
authorized and issued, fully paid and non-assessable. Schedule
4.2 sets forth the name and address of and the number of shares of
common stock of the Corporate Subsidiaries owned by, each
shareholder of record (and, if different, by each beneficial
owner) as of the date hereof. Except for the Note and as set forth
in Schedule 4.2, there are no outstanding warrants, options or
rights of any kind to acquire from any of the Seller or any of the
Corporate Subsidiaries any shares of its common stock or
securities of any kind, and there are no pre-emptive rights with
respect to the issuance or sale of shares of capital stock of any
of the Seller or any of the Corporate Subsidiaries. None of the
Corporate Subsidiaries has any obligation to acquire any of its
issued and outstanding shares of common stock or any other
security issued by it from any holder thereof.
4.2.2 The authorized units of ownership interest of ASCM
consists solely of 100 units, the number of which units are issued
and outstanding being set forth on Schedule 4.2 attached hereto
and none of which are issued and held in its treasury; the
authorized units of NAEC consists solely of 100 units, the number
of which units are issued and outstanding being set forth on
Schedule 4.2 attached hereto and none of which are issued and held
in its treasury; and the authorized units of ownership interest of
SEC consists solely of 100 units, the number of which units are
issued and outstanding being set forth on Schedule 4.2 attached
hereto and none of which are issued and held in its treasury. All
voting rights in each of the Partnerships are vested exclusively
in its units of ownership interest, and there are no voting
trusts, proxies or other agreements or understandings with respect
to the voting of the units of the Partnerships. All of the issued
and outstanding units of ownership interest of the Partnerships
are validly authorized and issued, fully paid and non-assessable.
Schedule 4.2 sets forth the name and address of and the number of
units of ownership interest of the Partnerships owned by, each
partner of record (and, if different, by each beneficial owner) as
of the date hereof. There are no outstanding warrants, options or
rights of any kind to acquire from any of the Partnerships any
units or securities of any kind, and there are no pre-emptive
rights with respect to the issuance or sale of units of any of the
Partnerships. None of the Partnerships has any obligation to
acquire any of its issued and outstanding units of ownership
interest or any other security issued by it from any holder
thereof.
4.3 SUBSIDIARIES OF THE SUBSIDIARIES. Except as set forth on Schedule 4.3
which identifies the type and amount of equity interest owned by the Seller or
any of the Subsidiaries), none of the Subsidiaries has any equity interest or
the right or obligation to acquire an equity interest, in any other person or
entity.
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4.4 FINANCIAL STATEMENTS OF THE SUBSIDIARIES. Set forth in Schedule 4.4
are the following financial statements of each of the Subsidiaries:
4.4.1 unaudited balance sheets at December 31 of each of the
years 1993 and 1994;
4.4.2 an unaudited balance sheet at November 30, 1995;
4.4.3 unaudited statements of income and retained earnings
for each year in the two-year period ended December 31, 1994; and
4.4.4 an unaudited statement of income and retained for the
eleven month period ended November 30, 1995.
Such financial statements were prepared in accordance with the books and
records of the Subsidiaries on a consistent basis, and accurately and fairly
reflect in all material respects the financial position of the Subsidiaries
taken as a whole at each of such balance sheet dates and results of operations
of the Subsidiaries for each of the periods covered by such statements of
income and retained earnings taken as a whole. The unaudited balance sheets of
each of the Subsidiaries at November 30, 1995 (including the notes pertaining
thereto, if any) is referred to herein as the "1995 Balance Sheets."
4.5 LIABILITIES OF THE SUBSIDIARIES. None of the Subsidiaries has any
liabilities or obligations, either accrued, absolute, contingent or otherwise,
except to the extent disclosed and specifically set forth in this Agreement or
incorporated by express reference in any of the schedules attached hereto.
4.6 TAX MATTERS.
4.6.1 The Seller and each of the Subsidiaries has timely
filed all tax returns and reports required to be filed by it,
including without limitation all federal, state, local and foreign
tax returns, and has paid in full all taxes and other charges
which have become due. The amounts provided in the 1995 Balance
Sheets for taxes are adequate to cover all unpaid liabilities for
all federal, state, local and foreign taxes and other charges
which were accrued through, or applicable to the period ended,
November 30, 1995 and for which the Seller or any of the
Subsidiaries may be liable in its own right or as a transferee of
the assets of, or successor to, any other person or entity. There
is no tax deficiency proposed or to the best of the knowledge of
the Seller threatened against the Seller or any of the
Subsidiaries. There are no tax liens upon any property or assets
of the Seller or any of the Subsidiaries. The Seller and each of
the Subsidiaries has made all payments of estimated taxes when due
in amounts sufficient to avoid the imposition of any penalty.
4.6.2 All taxes and other assessments and levies which the
Seller or any of the Subsidiaries was required by law to withhold
or to collect have been duly
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withheld and collected, and have been paid over to the proper
governmental entity or are being held by the Seller and each of
the Subsidiaries in separate bank accounts for such payment, and
all such withholdings and collection and all other payments due in
connection therewith as of the date of the 1995 Balance Sheets are
duly reflected on the 1995 Balance Sheets.
4.6.3 None of the tax returns of the Seller or any of the
Subsidiaries is under audit or examination by any tax authority,
and there are no outstanding agreements or waivers extending the
statute of limitations applicable to any federal or state income
tax returns of the Seller or any of the Subsidiaries for any
period. The Seller have previously delivered to the Purchaser
accurate and complete copies of all federal and state income tax
returns, examination reports and statements of deficiencies
assessed against or agreed to by the Seller or any of the
Subsidiaries since December 31, 1995.
4.7 REAL ESTATE OF EACH OF THE SUBSIDIARIES.
4.7.1 Schedule 4.7 accurately and completely sets forth,
with respect to every parcel of real estate leased by each of the
Subsidiaries (the "Leasehold Premises"): (i) the lessor and
lessee thereof and the date and term of the lease governing such
property; (ii) the location, including address, thereof; (iii) the
legal description and the approximate size thereof; (iv) a brief
description (including size, approximate year of completion, and
function) of the principal improvements and buildings thereon, all
of which are within the property, set-back and building lines of
the Leasehold Premises; and (v) the nature and amount of any
mortgages, tax liens or other liens thereon (including without
limitation any environmental liens). The Seller has previously
delivered to the Purchaser accurate and complete copies of each of
the leases covering the Leasehold Premises, and none of such
leases has been amended or modified except to the extent that such
amendments or modifications are disclosed in such copies or in
Schedule 4.7. All of the leases covering the Leasehold Premises
are in full force and effect, and none of the Subsidiaries is in
default or breach under any such lease. No event has occurred
which with the passage of time or the giving of notice or both
would cause a material breach of or default under any such lease.
None of the Seller or any of the Subsidiaries has any knowledge of
any breach or anticipated breach by the other parties to such
lease.
4.7.2 Each of the Subsidiaries has a valid leasehold
interest in each of the Leasehold Premises, free and clear of all
liens, mortgages, pledges, charges, encumbrances, assessments,
restrictions, covenants and easements or title defects of any
nature whatsoever, except for liens for real estate taxes not yet
due and payable, and such imperfections of title and encumbrances,
if any, as are not substantial in character, amount or extent and
do not materially detract from the value, or interfere with the
present use, of such properties or otherwise impair business
operations in any material respect.
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4.7.3 Each parcel of the Leasehold Premises: (i) has direct
access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy
the current and reasonably anticipated normal transportation
requirements of each of the Subsidiaries' business as presently
conducted at such parcel; and (ii) is served by all utilities,
including but not limited to water, electricity, natural gas,
sewer and telephone, in such quantity and quality as are
sufficient to satisfy the current business activities of each of
the Subsidiaries' business as conducted at such parcel.
4.7.4 None of the Seller or any of the Subsidiaries has
received notice of: (i) any condemnation proceeding with respect
to any portion of the Leasehold Premises, and to the best of the
knowledge of the Seller and each of the Subsidiaries no proceeding
is contemplated by any governmental authority; or (ii) any special
assessment which may affect the Leasehold Premises, and to the
best of the knowledge of the Seller and each of the Subsidiaries
no such special assessment is contemplated by any governmental
authority.
4.8 GOOD TITLE TO AND CONDITION OF EACH OF THE SUBSIDIARIES' ASSETS. Each
of the Subsidiaries has good and marketable title to all of its assets and
properties other than the Leasehold Premises, free and clear of all liens,
mortgages, pledges, encumbrances or charges of every kind, nature, and
description whatsoever, except those set forth in Schedule 4.8. The inventory
and supplies of each of the Subsidiaries consist of items of a quality and
quantity usable and salable in the normal course of each of the Subsidiaries'
business.
4.9 CASH AND RECEIVABLES OF EACH OF THE SUBSIDIARIES.
4.9.1 As of February 1, 1996, the aggregate amount of Cash
(as hereinafter defined) of the Subsidiaries shall equal $231,000.
For purposes of this Agreement, "Cash" shall be defined as the
Subsidiaries' cash as defined by generally accepted accounting
principles, consistently applied ("GAAP").
4.9.2 The Seller has previously delivered to the Purchaser a
complete list of all receivables of each of the Subsidiaries as of
November 30, 1995 including accounts receivable and notes
receivable. All of the receivables listed thereon or set forth or
reflected in the 1995 Balance Sheets, were, as of the dates as of
which the information is given therein, and as of the Closing Date
each of the Subsidiaries' receivables will be, valid accounts
receivable.
4.10 LICENSES AND PERMITS OF EACH OF THE SUBSIDIARIES. Each of the
Subsidiaries possesses all licenses and other required governmental or official
approvals, permits or authorizations, the failure to possess which would have a
material adverse effect on the business, financial condition or results of
operations of such Subsidiary, including without limitation (i) all licensure,
including any certificates of need, required to operate as a surgical center in
the states in which they operate and (ii) all the conditions required for
participation in the Medicare and Medicaid programs, including without
limitation compliance with "life safety" conditions of participation
(collectively, the "Necessary Licenses.") All such licenses, approvals,
permits and
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authorizations are in full force and effect, and each of the
Subsidiaries is in compliance with their requirements, and no proceeding is
pending or threatened to revoke or amend any of them. No governmental consent,
review or other process is required in order for each of the Subsidiaries to
continue operations in the manner in which they were operated prior to February
1, 1996.
4.11 PROPRIETARY RIGHTS OF EACH OF THE SUBSIDIARIES. Each of the
Subsidiaries possesses all proprietary rights, the failure to possess which
would have a material adverse effect on the business, financial condition or
results of operations of such Subsidiary, including without limitation patents,
trade secrets, technology, know-how, copyrights, trademarks, trade names, and
rights to any of the foregoing, to carry on its business as now being conducted
without conflict with valid proprietary rights of others. Schedule 4.11
contains an accurate and complete list of all such proprietary rights (the
"Proprietary Rights"). Except as set forth on Schedule 4.11, (i) the
Subsidiaries own all right, title and interest in and to all of the Proprietary
Rights, (ii) there have been no claims made against the Seller or any of the
Subsidiaries for the assertion of the invalidity, abuse, misuse, or
unenforceability of any of such rights, and there are no grounds for the same,
(iii) none of the Seller and each of the Subsidiaries has received a notice of
conflict with the asserted rights of others within the last five years, and
(iv) the conduct of the Seller and each of the Subsidiaries' business has not
materially infringed any such rights of others.
4.12 ADEQUACY OF EACH OF THE SUBSIDIARIES' ASSETS; EACH OF THE
SUBSIDIARIES' RELATIONSHIPS WITH ITS MANAGED CARE CUSTOMERS . The assets and
properties of each of the Subsidiaries constitute, in the aggregate, all of the
property necessary for the conduct of each of the Subsidiaries' business in the
manner in which and to the extent to which it is currently being conducted.
None of the Subsidiaries knows of any written or oral communication, fact,
event or action which exists or has occurred within 90 days prior to the date
of this Agreement, which would tend to indicate that: any current party with
whom the Seller or any of the Subsidiaries has a managed care contract which
accounted for over 5% of the total net sales of the Subsidiaries, taken as a
whole, for the year ended December 31, 1994, will terminate its business
relationship with any of the Subsidiaries. Neither the Seller nor any
Affiliate (as hereinafter defined) of the Seller, other than the Seller and
each of the Subsidiaries, nor any officer, director or employee of the Seller
and each of the Subsidiaries, has any direct or indirect interest in any
customer, supplier or competitor of the Seller and each of the Subsidiaries or
in any person from whom or to whom the Seller and each of the Subsidiaries
leases real or personal property, or in any other person with whom the Seller
and each of the Subsidiaries is doing business. Each of the Seller and each of
the Subsidiaries is not restricted by agreement from carrying on its business
anywhere in the geographic areas in which they are currently operating. As
used in this Agreement, the term "Affiliate" means, with respect to a specified
person, any other person which directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the persons specified.
4.13 DOCUMENTS OF AND INFORMATION WITH RESPECT TO EACH OF THE
SUBSIDIARIES. Schedule 4.13 accurately and completely lists the following:
(i) each loan, credit agreement, guarantee, security agreement or similar
document or instrument to which any of the Subsidiaries is a party or by which
it is bound; (ii) each lease of personal property to which any of the
Subsidiaries is a party or by which it is bound; (iii) any other agreement,
contract or
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commitment to which any of the Subsidiaries is a party or by which
it is bound which involves a future commitment by any of the Subsidiaries in
excess of $25,000 and which cannot be terminated without liability on 90 days
or less notice; (iv) each power of attorney executed by or on behalf of any of
the Subsidiaries; (v) the name and current annual salary of each salaried
employee of any of the Subsidiaries whose current annual salary is in excess of
$30,000 and the profit sharing, bonus or any other form of compensation (other
than salary) paid or payable by any of the Subsidiaries to or for the benefit
of each such person for the year ended December 31, 1994, and any employment or
other agreement of any of the Subsidiaries with any of its officers or
employees; (vi) the name of each of the Subsidiaries' officers and directors;
and (vii) the name of each bank in which any of the Subsidiaries has an account
or safe-deposit box, the name in which the account or box is held and the names
of all persons authorized to draw thereon or to have access thereto. The
Seller has previously furnished the Purchaser with an accurate and complete
copy of each such agreement, contract or commitment listed in Schedule 4.13.
There has not been any default in any obligation to be performed by any of the
Subsidiaries under any such instrument, which default, if left uncured, could
materially and adversely affect the assets, properties, business, financial
condition or results of operations of the Subsidiaries, taken as a whole (a
"Material Adverse Effect").
4.14 INSURANCE COVERING EACH OF THE SUBSIDIARIES AND ITS ASSETS. Schedule
4.14 accurately and completely lists each policy of insurance in force with
respect to each of the Subsidiaries, its assets and properties, and each of the
performance on other surety bonds maintained by each of the Subsidiaries in the
conduct of its business. All premiums and other payments which have become due
under the policies of insurance listed in Schedule 4.14 have been paid in full,
all of such policies are now in full force and effect. None of the Seller or
any of the Subsidiaries has received notification from any insurer, agent or
broker denying or disputing any claim made by the Seller or any of the
Subsidiaries or denying or disputing any coverage for any such claim or the
amount of any claim. None of the Subsidiaries has any claim against any of its
insurers under any of such policies pending or anticipated and there has been
no occurrence of any kind which would give rise to any such claim.
4.15 LITIGATION INVOLVING ANY OF THE SUBSIDIARIES. Except as set forth in
Schedule 4.15 there are no actions, suits, claims, governmental investigations
or arbitration proceedings pending or to the best of the knowledge of the
Seller or any of the Subsidiaries threatened against or affecting any of the
Subsidiaries or any of its assets or properties and, to the best of the
knowledge of the Seller or any of the Subsidiaries, there is no basis for any
of the foregoing. There are no outstanding orders, decrees or stipulations
issued by any federal, state, local or foreign judicial or administrative
authority in any proceeding to which any of the Subsidiaries is or was a party.
4.16 RECORDS OF EACH OF THE SUBSIDIARIES. The Seller have previously
furnished the Purchaser with copies of each of the Subsidiaries' articles or
certificates of incorporation and all amendments thereto to date (certified by
the Secretaries of State of the jurisdictions of their formation) and of each
of the Subsidiaries' bylaws (certified by each of the Subsidiaries' secretary,
as applicable), and such copies are correct and complete in all respects. To
the best knowledge of Seller, Moore, and the Subsidiaries, each of the
Subsidiaries' operating data and
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records, including without limitation customer lists and financial, accounting
and credit records (the "Subsidiaries Records"), are accurate and complete in
all material respects and there are no material matters as to which appropriate
entries have not been made in any of the Subsidiaries Records. A record of all
action taken by the shareholders and the board of directors of each of the
Subsidiaries and all minutes of their meetings are contained in the minute
books of each of the Subsidiaries and are accurate and complete. The record
books and stock ledgers of each of the Subsidiaries contain an accurate and
complete record of all issuances, transfers and cancellations of shares of
capital stock of each of the Subsidiaries.
4.17 NO MATERIAL ADVERSE CHANGE. Except as set forth in Schedule 4.17 or
as contemplated by this Agreement, since the date of the 1995 Balance Sheets,
there have not been any changes in the business or properties of any of the
Subsidiaries, or in its consolidated financial condition, other than changes
occurring in the ordinary course of business which in the aggregate have not
had a material adverse effect on the business, properties, financial condition,
business prospects or operating results of the Subsidiaries taken as a whole.
4.18 ABSENCE OF CERTAIN ACTS OR EVENTS. Except as disclosed in Schedule
4.18 or as contemplated by this Agreement, since the date of the 1995 Balance
Sheets, none of the Subsidiaries has: (i) authorized or issued any of its
shares of capital stock (including any held in its treasury) or any other
securities; (ii) declared or paid any dividend or made any other distribution
of or with respect to its shares of capital stock or other securities or
purchased or redeemed any shares of its capital stock or other securities;
(iii) paid any bonus or increased the rate of compensation of any of its
employees; (iv) sold, leased, transferred or assigned any of its assets other
than in the ordinary course of business; (v) made or obligated itself to make
capital expenditures aggregating more than $25,000; (vi) paid any of the
legal, accounting or other expenses of the Seller in connection with the
transactions contemplated hereby; (vii) incurred any material obligations or
liabilities (including any indebtedness) or entered into any material
transaction, except for this Agreement and the transactions contemplated
hereby; or (viii) suffered any theft, damage, destruction or casualty loss in
excess of $25,000.
4.19 COMPLIANCE WITH LAWS BY EACH OF THE SUBSIDIARIES.
4.19.1 Except as set forth in Section 4.19.2 below and
Schedule 4.19, to the best knowledge of Moore, Seller and any of
the Subsidiaries, each of the Subsidiaries is in compliance with
all laws, regulations and orders applicable to each of the
Subsidiaries, its assets, properties and business, the failure of
which to comply with could have a Material Adverse Effect. None
of the Seller nor any of the Subsidiaries has received
notification of any asserted past or present failure to comply
with any laws, and to the best of their knowledge, no proceeding
with respect to any such violation is contemplated.
4.19.2 Section 4.19. 1 shall not apply to, and Seller shall
not be deemed to have made any representation or warranty to
Purchaser regarding, the compliance of the capitalization of,
ownership of or distributions by the Partnerships under the
Omnibus Budget Reconciliation Act of 1993 (the "Stark"
anti-referral legislation)
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and related regulations, the Social Security Act (including
U.S.C. 1320a-7b and other "Fraud and Abuse" provisions) and
related regulations, and any other federal, state or local statute
prohibiting the referral of any patient (i) in exchange for any
type or offer of remuneration, or (ii) to any entity to which a
physician or immediate family member has a financial or other type
of relationship; or any such laws regarding the billing of goods
or services resulting from any such referral.
4.20 ENVIRONMENTAL MATTERS. None of the Subsidiaries (i) has conducted
or authorized the generation, transportation, storage, treatment or disposal on
or at the Real Estate or the Leasehold Premises of any solid, liquid, hazardous
toxic or dangerous wastes, except in accordance with the Applicable
Environmental Laws (as defined below), (ii) has received notice or has
knowledge that any governmental authority or any employee or agency thereof has
determined or threatens to determine that there is any violation of Applicable
Environmental Laws at or caused by the Leasehold Premises, and (iii) has had
any communication or agreements involving the Seller from or with any
governmental authority or agency having jurisdiction over the Leasehold
Premises or any private entity (including, without limitation, the prior owners
of the Leasehold Premises) relating any actual or alleged violation of the
Application Environmental Laws. For the purposes of this Section 4.20, the
"Applicable Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, as amend, 42 U.S.C. Sec. 9601 et
seq., the Emergency Planning and Community Right-to-Know Act, as amended, 42
U.S.C. Sec. 11001 et seq., and any applicable state Environmental Protection
Act, as amended, and any environmental laws, water quality standards,
ordinances or regulations that may now impose standards of conduct or liability
concerning solid, liquid, hazardous, toxic or dangerous wastes, substances or
materials.
4.21 LABOR RELATIONS OF EACH OF THE SUBSIDIARIES. Except as set forth in
Schedule 4.21, none of the Subsidiaries is a party to or bound by any
collective bargaining agreement or any other agreement with a labor union, and
there has been no effort by any labor union to organize any employees of any of
the Subsidiaries into one or more collective bargaining units. There is not
pending or, to the best of the knowledge of the Seller or any of the
Subsidiaries, threatened any labor dispute, strike or work stoppage which
affects or which may affect the business of any of the Subsidiaries or which
may interfere with its continued operation. None of the Subsidiaries nor any
agent, representative or employee of any of the Subsidiaries has committed any
unfair labor practice as defined in the National Labor Relations Act, as
amended, and there is not now pending or, to the best of the knowledge of the
Seller or any of the Subsidiaries, threatened any charge or complaint against
any of the Subsidiaries by or with the National Labor Relations Board or any
representative thereof. There has been no strike, walkout or work stoppage
involving any of the employees of any of the Subsidiaries during the five-year
period prior to the date hereof. Except as set forth on Schedule 4.21, none of
the Seller or any of the Subsidiaries is aware that any executive or key
employee or group of employees has any plans to terminate his, her or their
employment with any of the Subsidiaries.
4.22 EMPLOYEE BENEFITS. None of the Subsidiaries maintains or
contributes to, and at any time since December 31, 1990 has maintained or
contributed to: (i) any non-qualified
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deferred compensation or retirement plans or arrangements; (ii) any qualified
defined contribution retirement plans or arrangements; (iii) any qualified
defined benefit pension plan; (iv) any other plan, program, agreement or
arrangement under which former employees of any of the Subsidiaries or its
beneficiaries are entitled, or current employees of any of the Subsidiaries
will be entitled following termination of employment, to medical, health, life
insurance or other benefits other than pursuant to benefit continuation rights
granted by state or federal law; or (v) any other employee benefit, health,
welfare, medical, disability, life insurance, capital stock, capital stock
purchase or capital stock option plan, program, agreement, arrangement or
policy.
4.23 ACCURACY OF INFORMATION FURNISHED BY THE SELLER. No representation,
statement or information made by the Seller to the Purchaser in this Agreement
and the various schedules attached hereto, contains or shall contain any untrue
statement of a material fact or omits or shall omit any material fact necessary
to make the information contained therein not misleading.
ARTICLE 5.0 ADDITIONAL COVENANTS OF THE SELLER
5.1 BEST EFFORTS. The Seller shall use its reasonable commercial efforts
to cause to be satisfied as soon as practicable and prior to the Closing Date
all of the conditions set forth in Article 7.0 to the obligation of the
Purchaser to purchase the Purchased Assets, and Moore, Coram and T2,
respectively, shall each use its reasonable commercial efforts to cause to be
satisfied as soon as practicable and prior to the Closing Date all of the
conditions set forth in Article 7.0 to the obligation of the Purchaser to
purchase the Purchase Assets to the extent each such person has control over
the satisfaction of any such obligation.
5.2 CONDUCT OF BUSINESS PENDING THE CLOSING. From and after February 1,
1996 and until the Closing Date, except as otherwise provided herein or by the
prior written consent of the Purchaser:
5.2.1 the Seller shall cause each of the Subsidiaries to
conduct its business and operations in the manner in which the
same have heretofore been conducted and the Seller shall use its
reasonable commercial efforts to cause each of the Subsidiaries to
(i) preserve its business organization intact, (ii) keep available
the services of its officers, employees, agents and distributors,
and (iii) preserve its relationships with customers, suppliers and
others having dealings with each of the Subsidiaries;
5.2.2 the Seller shall cause each of the Subsidiaries to
maintain all of its properties in customary repair, order and
condition, reasonable wear and use and damage by unavoidable
casualty excepted, and to maintain insurance of such types and in
such amounts upon all of its properties and with respect to the
conduct of its business as are in effect on the date of this
Agreement;
5.2.3 the Seller shall not permit any of the Subsidiaries to
(i) authorize or issue any shares of its capital stock (including
any held in its treasury) or any other securities, (ii) declare or
pay any dividend or make any other distribution of or with respect
to its shares of capital stock or other securities or purchase or
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redeem any shares of its capital stock or other securities; (iii)
pay any bonus or increase the rate of compensation of any of its
employees or enter into any new employment agreement or amend any
existing employment agreement; (iv) sell, lease, transfer or
assign any of its assets other than in the ordinary course of
business; (v) make or obligate itself to make capital expenditures
aggregating more than $25,000; (vi) pay any of the legal,
accounting or other expenses of the Seller in connection with the
transactions contemplated hereby; (vii) incur any material
obligations or liabilities or enter into any material transaction;
or (viii) amend their articles or certificates of incorporation or
bylaws.
5.3 ACCESS TO THE SELLER AND EACH OF THE SUBSIDIARIES' FACILITIES,
PROPERTIES AND RECORDS. From and after the execution and delivery of this
Agreement, the Seller will cause the Seller and each of the Subsidiaries to
afford to the representatives of the Purchaser access, during normal business
hours and upon reasonable notice, to the Seller and each of the Subsidiaries'
premises sufficient to enable the Purchaser to inspect the assets and
properties of the Seller relating to the Subsidiaries and each of the
Subsidiaries, and the Seller will cause each of the Subsidiaries to furnish to
such representatives during such period all such information relating to the
foregoing investigation as the Purchaser may reasonably request; provided,
however, that any furnishing of such information to the Purchaser and any
investigation by the Purchaser shall not affect the right of the Purchaser to
rely on the representations and warranties made by the Seller in or pursuant to
this Agreement, and, provided further that the Purchaser will hold in
confidence all documents and information concerning the Seller and each of the
Subsidiaries so furnished, and, if the sale of the Purchased Assets pursuant
hereto shall not be consummated, such confidence shall be maintained and the
Purchaser will not use or disclose to any person any such document or
information in accordance with the confidentiality agreement between the
Purchaser and T2 dated November 21, 1995.
5.4 NOTICE OF MATERIAL DEVELOPMENTS. The Seller will give prompt written
notice to the Purchaser of any material development affecting the assets,
properties, business, business prospects, financial condition or results of
operation of the Seller or any of the Subsidiaries, including without
limitation any development which results in the inaccuracy of any of the
representations and warranties of the Seller made herein. Any disclosure by
Seller pursuant to this Section 5.4 shall be deemed to amend or supplement any
of such representations and warranties, or any of the schedules hereto;
however, Purchaser shall be entitled to terminate this Agreement prior to the
Closing, without liability for any costs, expenses, loss of anticipated profit
or any further obligation for breach of warranty or otherwise to any other
party to this Agreement, if it determines that the conditions giving rise to
any such amendments or supplements, in the judgment of the Purchaser will have
a Material Adverse Effect; provided, however, that Purchaser shall not be
entitled to terminate this Agreement pursuant to the foregoing clause if the
Material Adverse Effect results predominately from a material breach of the
Assignment of Management Agreements by Purchaser.
5.5 NO DISCLOSURE. Without the prior written consent of the Purchaser,
none of the Seller, Moore, T2 or Coram will, prior to the Closing Date,
disclose the existence of or any term or condition of this Agreement to any
person or entity except that such disclosure may be made
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(i) to any person in a business relationship with the Seller, Moore, T2, or
any of the Subsidiaries to whom such disclosure is necessary in order to
satisfy any of the conditions to the consummation of the purchase of the
Purchased Assets which are set forth in this Agreement, and (ii) to the extent
the Seller, Moore, or T2 believe in good faith that such disclosure is required
by law (in which case the Seller, Moore, or T2 (as applicable) will consult
with the Purchaser prior to making such disclosure).
5.6 NO OTHER DISCUSSIONS. None of the Seller or Coram will, prior to
February 29, 1996, or such earlier date that this Agreement is terminated,
enter into discussions or negotiate with or entertain or accept the unsolicited
offer of any other party concerning the potential sale of all or any part of
the shares of any of the Subsidiaries to, or the merger or consolidation of any
of the Subsidiaries with, any person other than the Purchaser.
5.7 INTERIM MANAGEMENT. In order to provide for an orderly transition of
management of the facilities during the period from February 1, 1996 until the
Closing (the "Interim Period"), each of the Seller, the Partnerships, and the
Purchaser shall on the date hereof execute and deliver to each other an
assignment of management agreements effective as of February 1, 1996, in the
form attached hereto as Exhibit A ("Assignment of Management Agreements"), to
allow the Purchaser to begin managing the Subsidiaries as of the date hereof
which includes a power of attorney granting Purchaser the authority necessary
to manage the Subsidiaries on behalf of the General Partner of each of the
Subsidiaries. Upon Purchaser's request, each of the Seller and Moore shall use
their reasonable commercial efforts to obtain consents or approvals of all
parties to the Management Agreements of the Subsidiaries which are necessary to
permit the assignment of such Management Agreements to the Purchaser pursuant
to the Assignment of Management Agreement and such consents or approvals shall
have been obtained and shown by written evidence satisfactory to the Purchaser.
5.8 ESCROW AGREEMENT. Each of the Seller, T2 and the Purchaser shall on
the date hereof execute and deliver to each other and LaSalle National Trust,
N.A. an escrow agreement, in the form attached hereto as Exhibit B (the "Escrow
Agreement"), to create an escrow where the Purchase Price and any distributions
to be paid to the Corporate Subsidiaries by the Subsidiaries for the Interim
Period will be deposited pending the Closing.
5.9 NOTICE OF HEARING AND PROCEDURES FOR SALE, AND ORDER APPROVING SALE OF
PURCHASED ASSETS IN THE EVENT OF BANKRUPTCY. If any of the conditions set
forth in Section 11.3.1.5 of this Agreement occur during the Interim period and
the Purchaser does not elect to terminate this Agreement thereunder, each of
the Seller, Moore, Coram, and T2 agree as follows:
5.9.1 The Seller shall obtain a Final Order of the Bankruptcy
Court, pursuant to Section 363 of the Bankruptcy Code, approving
the sale of the Purchased Assets and the terms and conditions set
forth in the Agreement (the "Sale Order"). For purposes of this
Agreement, "Final Order" shall mean an order docketed by the Clerk
of the Bankruptcy Court, the operation or effect of which has not
been stayed.
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5.9.2 In connection with obtaining the Sale Order, the Seller
may fulfill its fiduciary duty to seek higher and better offers
for the Purchased Assets. The Seller, however, shall obtain an
order of the Bankruptcy Court providing that, in connection with
the sale procedures for the Purchased Assets, an offer other than
that proposed by the Purchaser and set forth in this Agreement
will not be considered higher or better unless it exceeds the
Purchase Price by $430,000 (the "Sale Procedure Order"). The Sale
Procedure Order also provides that, if the Seller accepts a higher
or better offer by a bidder other than the Purchaser, the
Purchaser shall be entitled to a break-up fee from the Seller
equal to ten percent (10%) of the approved purchase price.
5.9.3 If the Seller accepts a higher or better offer by a
bidder other than the Purchaser, the Purchaser shall be released
from any liability or any other obligation it may have pursuant to
the terms of this Agreement.
5.9.4 The Seller shall deliver to Purchaser a Certified Copy
of the Sale Order which is satisfactory to the Purchaser and
provides in substance that (i) Seller has good and marketable
title to the Purchased Assets; (ii) Seller has the power and
authority to sell, transfer and deliver the Purchased Assets to
Purchaser; (iii) upon delivery by the Seller of the instruments of
transfer at closing, the Purchased Assets shall be conveyed to
Purchaser free and clear of all liens, mortgages, pledges,
encumbrances, charges, claims, and interests; (iv) all creditors
of the Seller, Coram and their Affiliates are enjoined and
prohibited from pursuing any claim arising from and of Seller,
Coram and their Affiliates' action or inaction, whether or not
such claim currently exists, against the Purchased Assets or
Purchaser; (v) the terms and conditions of the Asset Purchase
Agreement are integrated in the Sale Order; and (vi) that the
notice of the sale was adequate, the Purchase Price and the terms
of the sale of the Purchased Assets are fair, just and reasonable,
and that the sale procedure was proper in all aspects.
5.9.5 The Seller shall deliver an opinion letter of counsel
for the Seller dated as of the date of closing, in form and
substance satisfactory to Purchaser, stating (i) the Agreement has
been duly executed and delivered by Seller and, assuming due
execution and delivery by Purchaser, the Agreement constitutes a
valid and binding obligation of Seller; (ii) the Sale Order has
been entered, is final and is not subject to appeal or that,
assuming the absence of bad faith in the transaction, any appeal
of the Sale Order will be rendered moot unless a stay of the
transaction authorized by the Sale Order is obtained prior to
consummation of the transaction; and (iii) to counsel's knowledge,
except for the Sale Order, no authorization, approval or consent
of any governmental or regulatory official, body or authority or
any court is required in connection with the execution, delivery
and performance by Seller of the transaction contemplated by the
Agreement.
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ARTICLE 6.0 ADDITIONAL COVENANTS OF THE PURCHASER
6.1 BEST EFFORTS. The Purchaser will use its reasonable commercial
efforts to cause to be satisfied as soon as practicable and prior to the
Closing Date all of the conditions set forth in Article 8.0 to the obligation
of the Seller to sell the Purchased Assets pursuant to this Agreement.
6.2 NOTICE OF MATERIAL DEVELOPMENTS. The Seller will give prompt written
notice to the Purchaser of any material development affecting the assets,
properties, business, business prospects, financial condition or results of
operation of the Subsidiaries.
ARTICLE 7.0 CONDITIONS TO THE OBLIGATION OF THE PURCHASER
The obligation of the Purchaser to purchase the Purchased Assets shall be
subject to the fulfillment at or prior to the Closing Date of each of the
following conditions:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Seller, Moore, T2, and
Coram contained in this Agreement shall have been true and correct at and as of
the date hereof, and they shall be true and correct at and as of the Closing
Date with the same force and effect as though made at and as of that time. The
Seller, Moore, T2, and Coram shall each have performed and complied with all of
their obligations required by this Agreement to be performed or complied with
at or prior to the Closing Date. Each of the Seller, Moore, T2, and Coram
shall have delivered to the Purchaser a certificate, dated as of the Closing
Date and signed by each of the Seller, Moore, T2, and Coram, certifying that
such representations and warranties are thus true and correct and that all such
obligations have been thus performed and complied with.
7.2 OPINION OF COUNSEL. The Purchaser shall have received an opinion
dated the Closing Date from Alston & Bird, counsel for the Seller, or in-house
counsel for Coram serving under contract on behalf of the Seller, in form and
substance as set forth in Exhibit C attached hereto.
7.3 RECEIPT OF NECESSARY CONSENTS. All necessary consents or approvals of
third parties to any of the transactions contemplated hereby, the absence of
which would materially affect Purchaser's rights hereunder, shall have been
obtained and shown by written evidence satisfactory to the Purchaser.
7.4 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Purchased Assets
to the Purchaser or any other transaction contemplated hereby, or which might
affect the right of the Purchaser to own the Purchased Assets or to control
each of the Subsidiaries and which, in the judgment of the Purchaser, makes it
inadvisable to proceed with the purchase of the Purchased Assets.
7.5 RESIGNATIONS AND RELEASES. The Seller shall have delivered to the
Purchaser the written resignations of the directors of each of the
Subsidiaries and the written resignations of such officers of each of the
Subsidiaries as may be requested by the Purchaser. Each of the
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directors and officers of each of the Subsidiaries shall have delivered to
each of the Subsidiaries and the Purchaser a release and waiver of any claim
that he or she may have against each of the Subsidiaries.
7.6 TAIL COVERAGE Seller shall have obtained an extended reporting
endorsement on its current insurance coverage, or "tail" insurance coverage for
malpractice liabilities of each of the Subsidiaries, arising prior to Closing.
7.7 PAYMENT OF DISTRIBUTIONS Seller shall have satisfied any obligations
of any of the Subsidiaries to the shareholders or partners of the Subsidiaries,
respectively, for dividends or distributions of income of any of the
Subsidiaries arising prior to the December 31, 1995, and shall have provided
Purchaser with records indicating the amounts of payments of such obligations
and the periods for which such payments related.
7.8 RESOLUTION OF NAULT CASE All claims arising out of the subject matter
of, or which could have been alleged in, the suit captioned Jason Nault and
Louise Nault v. Southern Nevada Surgical Center, et al, (Civil Action File No.
A334360 D.C. Clark County, Nevada), shall have been fully and finally resolved,
as determined by the Purchaser in its sole discretion.
ARTICLE 8.0 CONDITIONS TO OBLIGATION OF THE SELLER
The obligation of the Seller, T2, Moore and Coram to sell the Purchased
Assets or to consummate the transactions contemplated herein shall be subject
to the fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct at and as of the date hereof,
and they shall be true and correct at and as of the Closing Date with the same
force and effect as though made at and as of that time. The Purchaser shall
have performed and complied with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Closing Date.
The Purchaser shall have delivered to Seller, Moore, T2 and Coram a
certificate, dated as of the Closing Date and signed by a duly authorized
officer of the Purchaser, certifying that such representations and warranties
are thus true and correct and that all such obligations have been thus
performed and complied with.
8.2 OPINION OF COUNSEL. The Seller shall have received an opinion, dated
the Closing Date, from Bell, Boyd & Lloyd counsel for the Purchaser, in form
and substance as set forth in Exhibit D attached hereto.
8.3 RESOLUTION OF NAULT CASE All claims arising out of the subject matter
of, or which could have been alleged in, the suit captioned Jason Nault and
Louise Nault v. Southern Nevada Surgical Center, et al, (Civil Action File No.
A334360 D.C. Clark County, Nevada), shall have been fully and finally resolved,
as determined by the Seller, Moore, Coram and T2 in their sole discretion.
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8.4 RELEASES. Each Subsidiary shall have delivered to Seller, Moore,
Coram and T2 a release and waiver of any claim that it may have against any of
such person or entity; provided, however, that such release shall not release
any claims that any of the Subsidiaries may have against any of such parties
for breach of such party's fiduciary duties to any of the Subsidiaries.
8.5 TERMINATION OF MANAGEMENT AGREEMENT. Each of the Partnerships shall
have terminated the Management Agreements with the Seller as of the Closing
Date.
ARTICLE 9.0 CERTAIN ACTIONS AFTER THE CLOSING
9.1 EXECUTION OF FURTHER DOCUMENTS. From and after the Closing, upon the
reasonable request of the Purchaser, the Seller shall execute, acknowledge and
deliver all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and assurances as may be reasonably required to convey and
transfer to and vest in the Purchaser and protect its right, title and interest
in the Purchased Assets and as may be appropriate otherwise to carry out the
transactions contemplated by this Agreement.
9.2 RESTRICTIVE COVENANTS.
9.2.1 In order to assure that the Purchaser will realize the
value and goodwill inherent in the Purchased Assets, T2 and Coram
each agree with the Purchaser that neither it nor any of its
Affiliates (as defined above, but excluding Seller and Moore)
shall:
9.2.1.1 directly or indirectly, for a period of
one year following the Closing Date, engage anywhere
within ten (10) miles of the current location of any
of the Subsidiaries (the "Restricted Area"), in the
development, management or ownership of ambulatory
surgery centers, or acquire or retain any financial
interest in any business which is so engaged;
provided, however, that this restriction shall not
apply to (i) fixed site lithotripsy or minor urology
procedures performed in conjunction with such
lithotripsy or (ii) the implantation of infusion
ports;
9.2.1.2 directly or indirectly, at any time
following the Closing Date, in any way utilize,
disclose, copy, reproduce or retain in its or his
possession any of the Proprietary Rights or any of the
Subsidiaries' records.
9.2.2 In order to assure that the Purchaser will realize the
value and goodwill inherent in the Purchased Assets, Moore and
Seller each agree with the Purchaser that neither he nor it nor
any of his or its Affiliates (as defined above, but excluding T2
and Coram) shall:
9.2.1.1 directly or indirectly, for a period of
five year following the Closing Date, engage anywhere
within ten (10) miles
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of the current location of any of the Subsidiaries
(the "Restricted Area"), in the development,
management or ownership of ambulatory surgery centers
which perform gastro-intestinal surgery or
gastro-intestinal medical procedures, or acquire or
retain any financial interest in any business which is
so engaged; and
9.2.1.2 directly or indirectly, at any time
following the Closing Date, in any way utilize,
disclose, copy, reproduce or retain in its or his
possession any of the Proprietary Rights any of the
Subsidiaries' records.
9.2.3 If any provision of paragraphs 9.2.1 or 9.2.2 of this
Section 9.2, as applied to any party or to any circumstances, is
adjudged by a court to be invalid or unenforceable, the same will
in no way affect any other provision of the said paragraphs 9.2.1
or 9.2.2 or any other part of this Agreement, the application of
such provision in any other circumstances or the validity or
enforceability of this Agreement. If any such provision, or any
part thereof, is held to be unenforceable because of the duration
of such provision or the area covered thereby, the parties agree
that the court making such determination will have the power to
reduce the duration and/or area of such provision, and/or to
delete specific words or phrases, and in its reduced form such
provision will then be enforceable and will be enforced. Upon
breach of any provision of paragraphs 9.2.1 or 9.2.2 of this
Section 9.2, the Purchaser will be entitled to injunctive relief,
since the remedy at law would be inadequate and insufficient. In
addition, the Purchaser will be entitled to such damages as it can
show it has sustained by reason of such breach.
9.3 DELIVERY OF COMPANY RECORDS. Within 5 days following the Closing,
Seller, Moore, T2 and Coram shall have delivered to Purchaser all financial,
accounting, business, and other records of the Subsidiaries which Seller,
Moore, T2 and Coram have within Their possession. Subsequent to the Closing,
Purchaser shall have the right to obtain reasonable access to the records of
Seller with respect to the Subsidiaries during normal business hours in order
to permit Purchaser to prepare financial statements, tax returns and
governmental filings with respect to the Seller and the Subsidiaries, and
Seller shall have the right to obtain reasonable access to the records of
Purchaser with respect to the Subsidiaries during normal business hours in
order to permit Seller to prepare financial statements, tax returns and
governmental filings with respect to the Subsidiaries.
9.4 PREPARATION OF TAX RETURNS. Seller shall prepare all tax returns
required to be filed for the Subsidiaries for all periods prior to December 31,
1995, by March 31, 1996 or in accordance with the terms of any applicable
partnership agreements.
9.5 CHANGE OF SUBSIDIARY NAMES. Within ten days following the Closing,
Purchaser shall cause the name of each Subsidiary to be changed to a name that
does not use the word "Surgex" or any derivative thereof.
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ARTICLE 10.0 INDEMNIFICATION
10.1 AGREEMENT BY SELLER TO INDEMNIFY. Each of the Seller, T2 and Coram
jointly and severally agrees that it will indemnify and hold the Purchaser
harmless in respect of the aggregate of all "Indemnifiable Damages" (as
hereinafter defined). For this purpose, "Indemnifiable Damages" shall mean the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including related counsel fees and expenses) incurred or suffered by the
Purchaser or any of the Subsidiaries (or any successor to all or any part of
the assets or business of any of the Subsidiaries) (i) resulting from any
inaccurate representation or warranty made by the Seller in or pursuant to this
Agreement, (ii) resulting from any default in the performance of any of the
covenants or agreements made by the Seller in this Agreement, or (iii)
resulting from any of the Excluded Liabilities (as defined below). All
Indemnifiable Damages shall be net of any economic benefit to the Purchaser
occurring in connection with such Indemnifiable Damages (including economic
benefits obtained under the tax laws of any taxing jurisdiction, amounts
recovered under insurance policies, and set off and counterclaim recoveries)
suffered by Purchaser. Without limiting the generality of the foregoing, with
respect to the measurement of Indemnifiable Damages, the Purchaser shall have
the right to be put in the same financial position as it would have been in had
each of the representations and warranties of the Seller been true and correct
and had each of the covenants of the Seller been performed in full. For
purposes of this Section, "Excluded Liabilities" shall mean, as of the Closing
Date, any liabilities or obligations of the Subsidiaries, either accrued,
absolute, contingent or otherwise owing to or resulting from (a) except for the
Note, the Management Fees, and the Intercompany Debt, any liabilities or
obligations, either accrued, absolute, contingent or otherwise owing to the
Seller, T2, or any of their Affiliates, including any intercompany debt, (b)
except as disclosed or accrued for in the 1995 Balance Sheet or arising
thereafter in the ordinary course of business, any liabilities of the
Subsidiaries to its employees arising prior to the Closing for wages, vested
vacation pay, bonuses, EEOC, worker's compensation, COBRA, OSHA, ERISA, ADA,
and other statutory liabilities arising under state or federal law, (C) any
obligations of any of the Subsidiaries to the shareholders or partners of the
Subsidiaries, for dividends or distributions of income of any of the
Subsidiaries arising prior to January 1, 1996, (d) any obligations of the
Subsidiaries to any local, state or federal authority or body for taxes arising
as a result of such Subsidiaries operations prior to the Closing, (e) any of
the liabilities arising under or related to the subject matter of the suits set
forth on Schedule 4.15, attached hereto, (f) any obligation for expenses
incurred by Seller in connection with the transactions contemplated by this
Agreement, including without limitation the fees and expenses of its counsel,
independent auditors, and investment bankers retained by Seller for any
purpose, including the preparation or accounting for any tax returns relating
to periods prior to the Closing; or (g) liabilities arising out of or resulting
from actions by the Excluded Subsidiaries, T2, Coram or Seller.
10.2 AGREEMENT BY PURCHASER TO INDEMNIFY. The Purchaser agrees that it
will indemnify and hold the Seller, T2, Moore, and Coram harmless in respect of
the aggregate of all Indemnifiable Damages incurred or suffered by the Seller,
T2, Moore, and Coram (or any successor to all or any part of the assets or
business of the Seller, Moore, T2 and Coram) (i) resulting from any inaccurate
representation or warranty made by the Purchaser in or pursuant to this
Agreement, or (ii) resulting from any default in the performance of any of the
covenants or
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agreements made by the Purchaser in this Agreement. All Indemnifiable Damages
shall be net of any economic benefit to the Seller, T2, Moore, and Coram
occurring in connection with such Indemnifiable Damages (including economic
benefits obtained under the tax laws of any taxing jurisdiction, amounts
recovered under insurance policies, and set off and counterclaim recoveries)
suffered by Seller, T2, Moore, and Coram. Without limiting the generality of
the foregoing, with respect to the measurement of Indemnifiable Damages, the
Seller, T2, Moore, and Coram shall have the right to be put in the same
financial position as it or he would have been in had each of the
representations and warranties of the Purchaser been true and correct and had
each of the covenants of the Purchaser been performed in full.
10.3 AGREEMENT BY MOORE TO INDEMNIFY. Moore agrees that he will indemnify
and hold the Purchaser harmless in respect of the aggregate of all
Indemnifiable Damages incurred or suffered by the Purchaser (i) resulting from
any inaccurate representation or warranty made by Moore in this Agreement, or
(ii) resulting from any default in the performance of any of the covenants or
agreements made by Moore in this Agreement. All Indemnifiable Damages shall be
net of any economic benefit to the Purchaser occurring in connection with such
Indemnifiable Damages (including economic benefits obtained under tax laws of
any taxing jurisdiction, amounts recovered under insurance policies, and set
off and counterclaim recoveries) suffered by Purchaser. Without limiting the
generality of the foregoing, with respect to the measurement of Indemnifiable
Damages, the Purchaser shall have the right to put in the same financial
position as it would have been in had each of the representations and
warranties of Moore been true and correct and had each of the covenants of
Moore been performed in full.
10.4 QUALIFICATIONS. . The foregoing obligations to indemnify the
Purchaser or the Seller, Moore, T2 and Coram shall be subject to each of the
following principles or qualifications:
10.4.1 Each of the representations and warranties made by
the Seller, T2 and Coram in this Agreement or pursuant hereto,
shall survive until April 1, 1997, notwithstanding any
investigation at any time made by or on behalf of the Purchaser,
and thereafter all such representations and warranties shall be
extinguished, provided, however, that the representations and
warranties made by the Seller, Moore, T2 and Coram in Sections
2.1, 2.2, 2.3, 2.4, 4.1 and 4.2 hereof shall in each case survive
forever and those made in Section 4.6 hereof shall in each case
survive until the first anniversary of the later of (i) the date
on which the applicable period of limitation on assessment or
refund of tax has expired, or (ii) the date on which the
applicable taxable year (or portion thereof) has been closed. No
claim for the recovery of Indemnifiable Damages based upon the
inaccuracy of such representations and warranties may be asserted
by the Purchaser after such representations and warranties shall
be thus extinguished; provided, however, that bona fide claims
first asserted in writing and in good faith within the applicable
period (whether or not the amount of any such claim has become
ascertainable within such period) shall not thereafter be barred.
Each of the representations and warranties made by the Purchaser
in this Agreement or pursuant hereto, shall survive for a period
of eighteen months after the Closing Date, notwithstanding
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any investigation at any time made by or on behalf of the Seller, T2
and Coram, and thereafter all such representations and warranties
shall be extinguished, provided, however, that the representations
and warranties made by the Purchasers in Section 3.1 and 3.2
hereof shall in each case survive forever.
10.4.2 Any party seeking indemnification ("Indemnified
Party") agrees to use its reasonable commercial efforts to give
prompt written notice to the relevant indemnifying party
("Indemnifying Party") of each claim for Indemnifiable Damages
which it believes it has suffered. If the Indemnified Party fails
to so notify a Indemnifying Party, and if the Indemnifying Party
is thereby materially prejudiced by such failure of notice in its
defense of the claim, the Indemnifying Party's obligation of
indemnity hereunder shall be extinguished with respect to such
claim to the extent that the Indemnifying Party has been
prejudiced by the failure to give such notice.
10.4.3 An Indemnifying Party shall not be obligated to make
any indemnification payments under this Article 10.0 until the
aggregate Indemnifiable Damages actually incurred by the
Indemnified Party and indemnified under Article 10.0 exceed One
Hundred Thousand Dollars ($100,000) at which time claims may be
asserted for all Indemnifiable Damages actually incurred in excess
of an aggregate of $50,000; provided, however, that an
Indemnifying Party shall not be obligated to make any
indemnification payments under Article 10.0 of this Agreement on
account of any Indemnifiable Damages arising out of any single
matter indemnified under Section 10.0, unless the aggregate
Indemnifiable Damages with respect to such single matter or group
of related matters exceed Five Thousand Dollars ($5,000).
Notwithstanding any other provision of this Article 10, none of
the limitations of this Section 10.4.3 shall apply to
Indemnifiable Damages incurred with respect to Sections 4.9.1, 7.7
and 9.4 of this Agreement.
10.4.4 Seller, T2 and Coram, collectively, shall be
obligated to indemnify the Purchaser pursuant to Section 10.1 only
to the extent of the Purchase Price, the Purchaser shall be
obligated to indemnify the Seller pursuant to Section 10.2 only to
the extent of the Purchase Price, and Moore shall be obligated to
indemnify the Purchaser pursuant to Section 10.3 only to the
extent of $80,000.
10.4.5 The indemnification provided in this Article 10.0
shall not be construed as a form of insurance. In the event that
an Indemnifying Party shall be obligated to indemnify the
Indemnified Party pursuant to this Article 10.0, the Indemnifying
Party, upon payment of such indemnify, shall be subrogated to all
rights of the Indemnified Party with respect to the claim or other
matter which such indemnification relates to the extent of the
amount paid by Indemnifying Party to the Indemnified Party
pursuant to this Article 10.0.
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ARTICLE 11.0 MISCELLANEOUS
11.1 AMENDMENT AND MODIFICATION. The parties hereto may amend, modify and
supplement this Agreement in such manner as may be agreed upon by them in
writing.
11.2 PAYMENT OF EXPENSES. Each party to this Agreement shall pay all of
the expenses incurred by it in connection with this Agreement, including
without limitation its legal and accounting fees and expenses, and the
commissions, fees and expenses of any person employed or retained by it to
bring about, or to represent it in, the transactions contemplated hereby.
11.3 TERMINATION.
11.3.1 Anything to the contrary herein notwithstanding, this
Agreement may be terminated and the transaction contemplated
hereby may be abandoned:
11.3.1.1 by the mutual written consent of all of
the parties hereto at any time prior to the Closing
Date;
11.3.1.2 by the Purchaser at any time prior to
the Closing Date if there shall be a pending or
threatened action or proceeding by or before any court
or other governmental body which shall seek to
restrain, prohibit or invalidate the sale of the
Purchased Assets to the Purchaser or any other
transaction contemplated hereby, or which might affect
the right of the Purchaser to own the Purchased Assets
or to control the Seller and each of the Subsidiaries
and which, in the judgment of the Purchaser, makes it
inadvisable to proceed with the transaction
contemplated by this Agreement;
11.3.1.3 by the Purchaser in the event of the
material breach by the Seller of any provision of this
Agreement, which breach is not remedied by the
breaching party within 30 days after receipt of notice
thereof from the Purchaser;
11.3.1.4 by the Seller in the event of the
material breach by the Purchaser of any provision of
this Agreement, which breach is not remedied by the
Purchaser within 30 days after receipt of notice
thereof from Seller;
11.3.1.5 by the Purchaser in the event (i) the
Seller shall institute proceedings for an order for
relief, or shall consent to the institution of such a
proceeding against it, or shall file a petition or
consent seeking reorganization or arrangement under,
the federal bankruptcy laws, or shall consent to the
appointment of a receiver or trustee or assignee in
bankruptcy of it or its property, or shall make an
assignment for the benefit of creditors, or shall
admit in
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writing its inability to pay its debts
generally as they become due or (ii) an involuntary
order for relief under the federal bankruptcy laws
shall have been entered or a decree or order of a
court having jurisdiction in the premises shall have
been entered approving as properly filed a petition
seeking reorganization of the Seller under the federal
bankruptcy laws or any other similar applicable
Federal or state laws, and such decree or order shall
have continued undischarged or unstayed for a period
of 15 days; or a decree or order of a court having
jurisdiction in the premises for the appointment of a
receiver or trustee or assignee in bankruptcy or
insolvency of the Seller or of substantially all of
the property of the Seller or for the sequestration of
substantially all of the property of the Seller, or
for the winding up or liquidation in insolvency or
bankruptcy of its affairs, shall have been entered,
and such decree or order shall have remained in force
undischarged and unstayed for a period of 15 days; or
11.3.1.6 by any party hereto if the Closing has
not taken place by June 30, 1996.
If this Agreement is terminated pursuant to Section 11.3.1.1, no party
shall have any liability for any costs, expenses, loss of anticipated profit or
any further obligation for breach of warranty or otherwise to any other party
to this Agreement. Any termination of this Agreement pursuant to Sections
11.3.1.2, 11.3.1.3, 11.3.1.4, 11.3.1.5, or 11.3.1.6 shall be without prejudice
to any other rights or remedies of the respective parties.
11.3.2 The risk of any loss to the assets and properties of
each of the Subsidiaries and all liability with respect to injury
and damage occurring in connection therewith shall be the sole
responsibility of the Seller until the time of the Closing.
11.4 BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs and legal representatives.
11.5 ENTIRE AGREEMENT. This instrument and the exhibits and schedules
attached hereto and the confidentiality agreement between the Purchaser and T2
dated November 21, 1995, contain the entire agreement of the parties hereto
with respect to the purchase of the Purchased Assets and the other transactions
contemplated herein, and supersede all prior understandings and agreements of
the parties with respect to the subject matter hereof. Any reference herein to
this Agreement shall be deemed to include the schedules and exhibits attached
hereto.
11.6 HEADINGS. The descriptive headings in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
11.7 EXECUTION IN COUNTERPART. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
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11.8 NOTICES. Any notice, request, information or other document to be
given hereunder shall be in writing. Any notice, request, information or other
document shall be deemed duly given four business days after it is sent by
registered or certified mail, postage prepaid, to the intended recipient,
addressed as follows:
If to the Seller, addressed to such parties as follows:
T2 Medical, Inc.
1125 17th Street, Suite 1500
Denver, Colorado 80202
Attention: Kelly McCrann
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Steve Pottle, Esq.
If to Moore, addressed to such party as follows:
Mr. Ronald E. Moore
Surgex, Inc.
2473 Forest Park Boulevard
Fort Worth, TX 76110
with a copy to:
Thompson & Knight
801 Cherry Street, Suite 1600
Fort Worth, TX 76102
Attention: Stephen B. Norris, Esq.
If to the Purchaser, addressed to:
National Surgery Centers, Inc.
35 East Wacker Drive, Suite 2800
Chicago, Illinois 60601
Attention: E. Timothy Geary
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with a copy to:
Bell, Boyd & Lloyd
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602
Attention: Steven E. Ducommun, Esq.
Any party may send any notice, request, information or other document to be
given hereunder using any other means (including personal delivery, courier,
messenger service, facsimile transmission, telex or ordinary mail), but no such
notice, request, information or other document shall be deemed duly given
unless and until it is actually received by the party for whom it is intended.
Any party may change the address to which notices hereunder are to be sent to
it by giving written notice of such change of address in the manner herein
provided for giving notice.
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to contracts made
and to be performed therein.
11.10 PUBLICITY. No press release or other public announcement related to
this Agreement or the transactions contemplated hereby will be issued by any
party hereto without the prior approval of the other parties, except that any
party may make such public disclosure which it believes in good faith to be
required by law or by the terms of any listing agreement with a securities
exchange (in which case such party will consult with the other parties prior to
making such disclosure).
11.11 EXCLUSIVE REMEDY Each of the parties hereto acknowledges and agrees
that from and after the Closing, its sole and exclusive remedy with respect to
any and all claims relating to the subject matter of this Agreement shall be
under and subject to the indemnification provisions set forth Article 10,
except that nothing in this Agreement shall be deemed to constitute a waiver of
causes of action arising from fraud by the party against whom a claim is made.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
_________________________________
Ronald E. Moore
CORAM HEALTHCARE CORPORATION
By ______________________________
Title ___________________________
T2 MEDICAL, INC.
By ______________________________
Title ___________________________
SURGEX, INC.
By ______________________________
Title ___________________________
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NATIONAL SURGERY CENTERS, INC.
By ______________________________
Title ___________________________
32
