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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 and Exchange Act of 1934
Date of Report (date of earliest event reported): October 8, 1997
ProMedCo Management Company
(Exact name of Registrant as specified in its charter)
Delaware 0-21373 75-2529809
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
801 Cherry Street, Suite 1450
Fort Worth, Texas 76102
(Address of principal executive offices, including zip code)
(817)335-5035
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On October 8, 1997, ProMedCo Management Company ("ProMedCo" or the
"Company"), a Delaware corporation, through its wholly owned subsidiary,
ProMedCo of Sarasota, Inc., ("ProMedCo-Sarasota") acquired all of the
outstanding stock of IMG, Inc., a Florida corporation ("IMG") formerly known as
Intercoastal Medical Group, Inc. Concurrent with the acquisition,
ProMedCo-Sarasota, entered into a long-term service agreement (the "Service
Agreement") with Intercoastal Medical Group, Inc. ("Intercoastal"), a newly
formed Florida corporation. Intercoastal, the largest physician group practice
in Sarasota, Florida, consists of 24 physicians and two physician extenders at
six sites. The total consideration for the transaction was approximately $14.4
million, which consisted of a combination of cash and deferred cash payments and
the assumption of certain liabilities. The consideration was determined through
arm's length negotiations between the representatives of ProMedCo and IMG. The
factors considered in determining the purchase price included information with
respect to the financial condition, assets, liabilities, businesses and
operations of each entity on both a historical and prospective basis. The cash
portion of the purchase price was funded with a combination of proceeds from the
March 1997 public offering of the Company's Common Stock and borrowings from the
Company's revolving credit facility.
Assets acquired will be used by ProMedCo-Sarasota to provide administrative
and medical support services to Intercoastal pursuant to the terms of the
Service Agreement.
Item 7. Financial Statements and Exhibits
Financial Statements
(a) It is impractical to provide the required financial statements at this
time. The required financial statements will be filed as an amendment to this
report as soon as practical in accordance with Item 7(a)(4) of Form 8-K.
(b) It is impractical to provide the required pro forma financial
information at this time. The required pro forma financial information will be
filed as an amendment to this report as soon as practical in accordance with
Item 7(a)(4) of Form 8-K.
Exhibits
(c) Stock Purchase Agreement as of October 8, 1997 by and between
ProMedCo Management Company, ProMedCo of Sarasota, Inc., IMG, Inc. (formerly
known as Intercoastal Medical Group, Inc.), and Intercoastal Medical Group, Inc.
Service Agreement by and between ProMedCo of Sarasota and Intercoastal Medical
Group, Inc., effective August 1, 1997.
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SIGNATURE
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 hereunto duly authorized.
ProMedCo Management Company
By: /s/ H. Wayne Posey
H. Wayne Posey
President and Chief Executive Officer
Date: October 23, 1997
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STOCK PURCHASE AGREEMENT
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PROMEDCO MANAGEMENT COMPANY
PROMEDCO OF SARASOTA, INC.
AND
IMG, INC.,
(formerly known as)
INTERCOASTAL MEDICAL GROUP, INC.
AND
INTERCOASTAL MEDICAL GROUP, INC.
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September 30, 1997
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Table of Contents
ARTICLE 1 DEFINITIONS................................1
Affiliate...........................................1
Assets..............................................1
Clinic Expenses.....................................3
Consideration.......................................3
COBRA...............................................3
Clinic Facility.....................................3
Closing.............................................3
Closing Date........................................3
Code................................................3
Contracts...........................................3
Definitive Closing Statements.......................3
Distribution Funds..................................3
Exhibit Volume......................................3
Final Closing Statement.............................3
GAAP................................................3
IMG ................................................3
Intercoastal........................................3
IMG Financial Statements............................3
Initial Portion of Purchase Consideration...........4
Inventory...........................................4
IRS ................................................4
Medical Professional................................4
Net Clinic Revenue..................................4
Pension Plan........................................4
Person..............................................4
Physician Employees.................................4
ProMedCo-Sarasota Distribution......................4
ProMedCo Management Company.........................4
ProMedCo-Sarasota...................................4
Second Portion of the Purchase Consider
ation...........................................4
Service Agreement...................................4
Shareholders........................................4
ARTICLE 2 SALE AND TRANSFER OF STOCK; CONSIDERATION; CLOSING............4
2.1 Sale and Transfer of Stock.....................4
2.2 Consideration for Sale and Transfer............5
2.3 Assets Only....................................6
2.4 Closing........................................6
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2.5 Further Acts and Assurances....................6
2.6 Other Transactions at the Closing..............6
2.7 Purchase Consideration Adjustments.............7
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF IMG...............................8
3.1 Organization, Corporate Power and
Qualification...................................8
3.2 Capitalization of IMG..........................9
3.3 Subsidiaries, Affiliates, Affiliated
Companies and Joint Venture.....................9
3.4 Financial Statements..........................10
3.5 Professional Income............................10
3.6 Absence of Undisclosed Liabilities............10
3.7 Absence of Certain Recent Changes.............10
3.8 Title to Assets...............................12
3.9 Contracts.....................................12
3.10 Burdensome Agreements........................14
3.11 Absence of Related Party Transac
tions........................................14
3.12 Defaults.....................................15
3.13 Inventory....................................15
3.14 Equipment....................................15
3.15 Receivables..................................15
3.16 Permits and Licenses.........................15
3.17 Litigation, etc..............................16
3.18 Court Orders, Decrees and Laws...............16
3.19 Taxes........................................16
3.20 Immigration Act..............................17
3.21 Program Compliance. ........................17
3.22 Environmental Matters........................18
3.23 ERISA........................................18
3.24 Pension, etc. ...............................19
3.25 Employee Matters.............................20
3.26 Insurance and Bonds..........................20
3.27 Labor Matters................................20
3.28 Third Party Payor Compliance.................21
3.29 Facility Compliance..........................21
3.30 Improper Payments............................21
3.31 Books of Account; Reports....................21
3.32 No Finders or Brokers........................21
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3.33 Consents and Approvals of Govern
mental Authorities.............................22
3.34 No Adverse Effect............................22
3.35 Disclosure...................................22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS..................22
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PROMEDCO AND PROMEDCO-
SARASOTA...........................................22
5.1 Organization and Standing of ProMedCo and ProMedCo-Sarasota.22
5.2 Authority; Binding Effect.....................23
5.3 No Finders or Brokers.........................23
5.4 Consents and Approvals of Governmental Authorities.23
ARTICLE 6 COVENANTS OF PROMEDCO AND PROMEDCO-SARASOTA.....................23
6.1 Best Efforts to Secure Consents...............23
6.2 Corporate Action..............................23
6.3 Handling of Documents.........................24
6.4 Non-Disclosure................................24
ARTICLE 7 COVENANTS OF IMG................................................24
7.1 Access and Information........................24
7.2 Conduct of Business...........................25
7.3 Compliance with Agreement.....................25
7.4 Unusual Events................................25
7.5 Confidential Information......................26
7.6 Interim Financial Statements..................26
7.7 Departmental Violations.......................26
7.8 Assessments...................................26
7.9 Insurance Ratings.............................26
7.10 Maintain Insurance Coverage..................27
7.11 Exclusive Dealings...........................27
ARTICLE 8 CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE SHAREHOLDERS...............................27
8.1 Representations and Warranties True...........27
8.2 Opinion of Counsel............................27
8.3 Authority.....................................28
8.4 No Obstructive Proceeding.....................28
8.5 Delivery of Certain Certified Documents.......28
8.6 Proceedings and Documents Satisfactory........28
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8.7 No Agency Proceedings.........................28
8.8 Full Sale.....................................28
8.9 Closing Transactions..........................29
ARTICLE 9 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PROMEDCO AND
PROMEDCO-SARASOTA..................................29
9.1 Representations and Warranties True...........29
9.2 No Obstructive Proceeding.....................29
9.3 Opinion of Shareholders' Counsel..............29
9.4 Resignation of Administrator...................30
9.5 Consents and Approvals........................30
9.6 Proceedings and Documents Satisfactory........30
9.7 No Adverse Change.............................30
9.8 Delivery of Certain Documents.................30
9.9 Exercise or Elimination of Warrants............30
9.10 Full Sale; Closing Transactions...............30
ARTICLE 10 TERMINATION.................................................31
10.1 Optional Termination.........................31
10.2 Notice of Abandonment. ......................31
10.3 Mandatory Termination........................31
10.4 Termination..................................31
ARTICLE 11 INDEMNIFICATION...............................................31
11.1 Grant of Indemnity...........................32
11.2 Representation, Cooperation and Settlement...32
11.3 Remedies Cumulative..........................33
ARTICLE 12 MISCELLANEOUS.................................................33
12.1 Expenses.....................................33
12.2 Notices. ....................................33
12.3 Entire Agreement.............................34
12.4 Alternative Dispute Resolution...............35
12.5 Governing Law................................35
12.6 Legal Fees and Costs..........................35
12.7 Time.........................................35
12.8 Section Headings.............................35
12.9 Waiver.......................................35
12.10 Nature and Survival of Representations......35
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12.11 Exhibits....................................36
12.12 Assignment..................................36
12.13 Binding on Successors and Assigns...........36
12.14 Parties in Interest.........................36
12.15 Amendments..................................36
12.16 Drafting Party..............................37
12.17 Counterparts................................37
12.18 Reproduction of Documents...................37
12.19 Disclosure of Certain Information...........37
12.20 Press Releases..............................38
12.21 IMG Shareholders Agreement; Warrants.........38
APPENDIX 2.6A SERVICE AGREEMENT
APPENDIX 2.6B FORM OF MEDICAL PROFESSIONAL EMPLOYMENT AGREEMENT
APPENDIX 2.6C SPLIT DOLLAR AGREEMENT
APPENDIX 2.6D COLLATERAL ASSIGNMENT
APPENDIX 2.6E RABBI TRUST ASSIGNMENT
APPENDIX 8.2 FORM OF OPINION OF PROMEDCO-SARASOTA'S COUNSEL
APPENDIX 9.3 FORM OF OPINION OF IMG'S COUNSEL
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STOCK PURCHASE AGREEMENT
Stock Purchase Agreement dated as of September 30, 1997, among IMG, Inc., a
Florida corporation ("IMG") formerly known as Intercoastal Medical Group, Inc.,
all of the shareholders (the "Shareholders") of IMG, ProMedCo Management
Company, a Delaware corporation ("ProMedCo") and ProMedCo of Sarasota, Inc., a
Florida corporation ("ProMedCo-Sarasota"), a wholly owned subsidiary of
ProMedCo.
RECITAL:
IMG operates a medical practice in Sarasota, Florida and owns the Assets
described herein. ProMedCo, through its subsidiaries, including
ProMedCo-Sarasota is engaged in the business of providing medical practice
facilities, nonmedical personnel and medical practice management and
administrative services. The Shareholders desire to sell their stock in IMG to
ProMedCo-Sarasota in exchange for cash as described herein.
The parties hereby agree as follows:
ARTICLE 1 DEFINITIONS
For the purposes of this Agreement, the following definitions shall apply:
"Affiliate" means with respect to any Party, any entity which controls, is
controlled by, or is under common control with such party all as more fully set
forth in the rules and regulations of the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
"Assets" means the following assets pertaining to IMG:
(a) All furnishings, fixtures and equipment owned by IMG wherever situated;
(b) All of IMG's rights, benefits and interests under all contracts and
agreements related to the operation of the business of IMG which are to be
assumed by ProMedCo-Sarasota (collectively, the "Contracts"), including
without limitation certain contracts and leases described in Exhibit 3.9
hereof and the Service Agreement, and including, to the extent allowable by
law, all payor contracts under which IMG or any of the Medical
Professionals are currently paid for services;
(c) All books, records, documents and other writings used in connection with
the operation of IMG's business, including without limitation, all patient
medical records;
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(d) All accounts receivable of IMG and, subject to applicable laws and
regulations, all patient accounts receivable records of IMG;
(e) All cash and prepaid expenses of IMG;
(f) All current and useable inventory of supplies, drugs, janitorial and office
supplies and other disposables and consumables on hand at or under order by
IMG on the Closing Date;
(g) All permits, licenses, certificates and governmental authorizations,
approvals, license applications or related certifications obtained in
connection with the operation of the Clinic Facility identified in Exhibit
3.16, but only to the extent that transfer is permitted by law;
(h) All data processing programs, software programs, computer printouts, data
bases and hardware and related items used in the conduct of the business of
IMG, including accounting, invoices, auditing, and data processing bases
and programs;
(i) All intangible assets, trade names, service marks and service names, and
applications therefor, and all intellectual property used in connection
with the operation of IMG's business, including without limitation the name
"Intercoastal Medical Group" and related marks and logos, telephone
numbers, and yellow page listings;
(j) All rights, claims and causes of action other than malpractice
counterclaims or crossclaims held by IMG which have accrued as a result of
the operation of the Clinic Facility;
(k) All goodwill, customer lists, clinical and administrative policy and
procedure manuals, trade secrets, marketing and promotional materials
(including audiotapes, videotapes and printed materials) and all other
property rights required for or incident to the marketing of the products
and services of IMG's business, and all books and record relating thereto;
and
(l) All other assets, personal or mixed, tangible or intangible, used in
connection with the operation of IMG's business other than fee interests in
real estate.
The items of personal property belonging to individual physicians listed in
Schedule A hereto, are specifically excluded from, and do not constitute
Assets; in addition, "Organizational Costs" included among "Other Assets"
on the balance sheet of IMG and any amounts receivable post-Closing by IMG
in respect of the sale of its interest in
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RISCORP Health Plans, Inc. and shall not constitute Assets and shall belong to
the Shareholders as their interests may appear.
Clinic Expenses" shall have the meaning ascribed thereto in the Service
Agreement.
"Consideration" means $4,690,000.
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985, 26 U.S.C. ss. 162 et seq.
"Clinic Facility" means the clinic facilities located at (i) 921 S. Beneva,
Sarasota, FL 34232; (ii) 1630 S. Tuttle, Sarasota, FL 34239; (iii) 5741 Bee
Ridge, Sarasota, FL; Heart Center Sq., (iv) 1540 S. Tamiami, Sarasota, FL; (v)
7129 Curtiss Ave., Sarasota, FL; (vi) 8522 Potter Park, Sarasota, FL; (vii) 1843
Floyd St., Sarasota, FL; (viii) 943 S. Beneva #106, Sarasota, FL; and (ix) 943
S. Beneva #306, Sarasota, FL.
"Closing" and "Closing Date" are defined in ss. 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" is defined in the definition of "Assets" above.
"CPA Firm" is defined in ss. 2.7(a).
"Definitive Closing Statements" is defined in ss. 2.7.
"Distribution Funds" is defined in the Service Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"Exhibit Volume" means the volume of Exhibits referred to in this Agreement
prepared and delivered by IMG.
"Final Closing Statement" is defined in ss. 2.7.
"GAAP" means generally accepted accounting principles.
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"IMG" means IMG, Inc., formerly known as Intercoastal Medical Group, Inc., a
Florida corporation.
"Intercoastal" means Intercoastal Medical Group, Inc., a newly formed Florida
corporation.
"IMG Financial Statements" is defined in ss. 3.4.
"Initial Portion of Purchase Consideration" is defined in ss. 2.2.
"Inventory" means the inventory of IMG.
"IRS" means the Internal Revenue Service.
"Medical Professional" shall have the meaning ascribed thereto in the Service
Agreement.
"Net Clinic Revenue" shall have the meaning ascribed thereto in the Service
Agreement.
"Pension Plan" and "Pension Plans" means any "employee pension benefit plan"
listed in Exhibit 3.23.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust or unincorporated organization.
"Physician Employees" shall have the meaning ascribed thereto in the Service
Agreement.
"ProMedCo-Sarasota Distribution" shall have the meaning ascribed thereto in the
Service Agreement.
"ProMedCo Management Company" means ProMedCo Management Company, a Delaware
corporation which is the sole shareholder of ProMedCo-Sarasota.
"ProMedCo-Sarasota" means ProMedCo of Sarasota, Inc., a Florida corporation.
"Second Portion of the Purchase Consideration" is defined in ss. 2.2(c).
"Service Agreement" means the Services Agreement effective August 1, 1997
between ProMedCo-Sarasota and Intercoastal.
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"Shareholders" is defined in the preamble to this Agreement.
ARTICLE 2 SALE AND TRANSFER OF STOCK; CONSIDERATION; CLOSING
2.1 Sale and Transfer of Stock. Upon the terms and subject to the conditions of
this Agreement, each of the Shareholders agrees to sell, convey and deliver to
ProMedCo-Sarasota and ProMedCo-Sarasota agrees to purchase at the Closing from
each Shareholder , the number of shares of capital stock of IMG set forth
opposite their respective names below:
Shareholder Shares
John O. Binns, MD 100
Daniel J. Blacklow, MD 100
Louis M. Cohen, MD 100
David C. Daiello, MD 100
Richard S. Duckworth, MD 100
James S. Feldbaum, MD 100
Lee S. Harris, MD 100
Charles R. Hollen, MD 100
Joseph J. Larkin, Jr., MD 100
Michael B. McBride, MD 100
David Olson, MD 100
Randy B. Powell, MD 100
Philip S. Rubin, MD 100
John M. Steele, MD 100
David R. Stutz, MD 100
Michael C. Swanson, MD 100
Frederick E. Turton, MD 100
Marc L. Weinberg, MD 100
Ricky R. Wiseman, MD 100
2.2 Consideration for Sale and Transfer. In connection with the Closing:
(a) At the Closing, ProMedCo-Sarasota will deliver to each Shareholder 80% of
that portion of the Consideration obtained by multiplying the
Consideration, without adjustment pursuant to ss. 2.7, by a fraction, the
numerator of which is the number of shares of IMG Stock held by such
Shareholder, and the denominator of which
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is the number of shares of IMG Stock held by all the Shareholders. The cash
delivered at the Closing is referred to as the "Initial Portion of Purchase
Consider ation."
(b) At the Closing, each Shareholder will deliver his or her shares of IMG
Stock together with a stock power executed in blank with signature
guaranteed in form and substance satisfactory to ProMedCo-Sarasota's
counsel, as shall be effective on the Closing Date to vest in
ProMedCo-Sarasota good and marketable title to the IMG Stock, free and
clear of all liens, pledges and encumbrances.
(c) As soon as the Definitive Closing Statement is prepared in accordance
with ss. 2.7(a), ProMedCo-Sarasota shall deliver to each shareholder
that portion of the Consideration obtained by multiplying (x) the
amount obtained by applying the aggregate of all adjustments to
Consideration described in Section 2.8 to 25% of the Initial Portion
of the Purchase Consideration, by (y) a fraction, the numerator of
which is the number of shares of IMG Stock held such Shareholder, and
the denominator of which is the number of shares of IMG Stock held by
all the Shareholders.
2.3 Assets Only. Prior to the Closing, the Shareholders of IMG shall have taken
such steps as are necessary to cause the assets of IMG at the Closing to consist
only of the Assets.
2.4 Closing. The sale, purchase, and other activities provided for herein (the
"Closing") shall take place on September 30, 1997 (the "Closing Date"), at a
site designated by ProMedCo-Sarasota. In case the Closing does not take place on
the Closing Date, the Closing Date shall be set by mutual agreement between
ProMedCo-Sarasota and IMG.
2.5 Further Acts and Assurances. The Shareholders shall, at any time and from
time to time at and after the Closing, upon request of ProMedCo-Sarasota, take
any and all steps reasonably necessary to place ProMedCo-Sarasota in possession
and operating control of the properties and business of IMG, including the
Assets, and will do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all such further acts, deeds, assignments,
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transfers, conveyances, powers of attorney and assurances as may be reasonably
required for the transferring and confirming to ProMedCo-Sarasota or to its
successors or assigns, or for reducing to possession, any or all of the Assets.
2.6 Other Transactions at the Closing. In addition to the transaction set forth
above, the following additional transactions shall occur at the Closing:
(a) Intercoastal and ProMedCo-Sarasota shall enter into a Service
Agreement in the form attached hereto as Appendix 2.6A.
(b) Intercoastal shall enter into employment agreements in the form
attached as Appendix 2.6B hereto (the "Medical Professional Employment
Agreements") with each of the Medical Professionals associated with
Intercoastal.
(c) ProMedCo-Sarasota shall enter into a Split-Dollar Agreement in the
form attached hereto as Appendix 2.6C (the "Split-Dollar Agreement")
with each of the Shareholders and each of the Physician Employees
associated with Intercoastal .
(d) ProMedCo-Sarasota and each Shareholder and Physician Employee
associated with Intercoastal who is a party to a Split-Dollar
Agreement shall execute a Collateral Assignment (the "Collateral
Assignment") in the form attached hereto as Appendix 2.6D pertaining
to the Life Insurance Policy contemplated by the Split-Dollar
Agreement.
(e) ProMedCo-Sarasota and each Shareholder and Physician Employee
associated with Intercoastal who is a party to a Split-Dollar
Agreement shall execute an Rabbi Trust Agreement with a mutually
agreeable Trustee (the "Rabbi Trust Agreement") in the form attached
hereto as Appendix 2.6E pertaining to premiums payable in connection
with the Life Insurance Policy contemplated by the Split-Dollar
Agreement.
2.7 Purchase Consideration Adjustments.
(a) Definitive Closing Statements. By such time as is reasonable under the
circumstances, but in no event more than 120 days after the Closing,
ProMedCo-Sarasota shall prepare and deliver to the Shareholders a
final closing statement ("Final Closing Statement") of IMG as of the
Closing Date. ProMedCo-Sarasota covenants that the Final Closing
Statement shall be true, complete and accurate and will present fairly
the assets and liabilities items set forth in ss.ss. 2.1 and 2.2
hereof as at the Closing, calculated in a manner consistent with
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GAAP, and the requirements of this Agreement; provided however, the Final
Closing Statement shall reflect the value of inventory notwithstanding that the
IMF Financial Statements do not reflect the value of inventory; provided further
that net assets shall not be deemed to have decreased as a result of any write
off of IMG's investment in Millennium or Organizational costs. IMG and its
representatives shall be provided access to the books and records of
ProMedCo-Sarasota as necessary to verify the accuracy of such calculations. If
within 30 business days of receipt of the Final Closing Statement, the
Shareholders fail to deliver to ProMedCo-Sarasota written notice specifying any
unac ceptable entries on the Final Closing Statements and the reasons therefor,
then such Final Closing Statement shall constitute the Definitive Closing
Statements. If the Shareholders timely and duly deliver such notice within 30
business days of receipt thereof, the parties shall attempt in good faith to
resolve the differences, and if they are unable to do so, within 20 days
thereafter either party may deliver the Final Closing Statement to a "big six"
accounting firm chosen by ProMedCo-Sarasota (the "CPA Firm"), who shall have 20
business days to review the Final Closing Statement and make such adjustments
thereto as it deems necessary to ensure that the Final Closing Statement has
been prepared in a manner consistent with GAAP as applied in the IMG Financial
Statements calculated on a consistent basis and the requirements of this
Agreement, including without limitation this ss. 2.7. The Final Closing
Statement as so adjusted shall constitute the Definitive Closing Statement and
shall be binding on the parties hereto. If the total amount payable by
ProMedCo-Sarasota pursuant to clause (b) below increases from that shown on the
Final Closing Statement, ProMedCo-Sarasota shall pay the fees and expenses of
the CPA Firm, otherwise such fees and expenses shall be borne by the
Shareholders.
(b) Balance Sheet Adjustment. To the extent that the Definitive Closing
Statement shows Assets at Closing net of Liabilities at the Closing to
be different from assets net of liabilities on the IMG Financial
Statements as of March 31, 1997, the Consideration shall be increased
or reduced, as the case may be, on a dollar for dollar basis.
(c) Working Capital Adjustment. If the total of cash and cash equivalents
sold of IMG at Closing is less than the aggregate current liabilities
(calculated in accordance with GAAP), the Consideration will be
reduced on a dollar-for-dollar basis without double counting for
changes resulting under clause (b) above.
(d) Long Term Debt Adjustment. Consideration shall be reduced on a
dollar-for-dollar basis for any long term debt on the balance sheet of
IMG at the Closing without double counting for changes resulting under
clause (b) above. For the purposes of this clause (d), Capital
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Lease Obligations shall be deemed to be long term debt, except that no
adjustment shall be made for Leasehold Improvements at Doctors Hospital which
are classified as a Capital Lease Obligation.
(e) Physician Adjustment. The amount of Consideration shall be reduced for
each physician presently practicing with IMG who does not execute a
Medical Professional Employment Agreement at the Closing in an amount
computed by multiplying (x) 1.72 by (x) the difference obtained by
subtracting (1) the amount of Clinic Expenses attributable to the
physician for the twelve months prior to Closing from (2) the amount
of Net Clinic Revenue attributable to the physician over the same
period.
Any reduction in the Consideration resulting from clauses (b), (c), (d) or (e)
of this ss. 2.7 shall be accomplished by first reducing the Balance of the
Consideration as provided in such clauses, and if such reductions exhaust the
Balance of the Consideration, then the Shareholders within 10 days after a
demand therefor by ProMedCo-Sarasota, shall return sufficient cash from the
Initial Portion of the Consideration, pro rata in proportion to the number of
shares of IMG Stock held by each Shareholder immediately prior to the Closing,
to fully satisfy the reduction in Consideration.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF IMG
IMG hereby represents and warrants to ProMedCo-Sarasota as follows:
3.1 Organization, Corporate Power and Qualification. IMG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has full corporate power and authority and all authorizations,
licenses and permits necessary to own, lease and operate its properties and
assets and to carry on its business as and where it is now being conducted. IMG
is duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or the nature of the
business transacted by it makes such qualification necessary. IMG is not to do
business in any state other than Florida. No jurisdiction where IMG is not
presently qualified as a foreign corporation has made any assertion that such
corporation's business or ownership of property makes qualification as a foreign
corporation in such jurisdiction necessary. A copy of the Articles of
Incorporation and all amendments thereto as of the date hereof of IMG and a copy
of its by-laws, as amended to the date hereof (both certified by the Secretary
of IMG), are included as Exhibit 3.1 of the Exhibit Volume and are true,
accurate and complete as of the date hereof. IMG is not in default under or in
violation of any provision of its Articles of Incorporation or bylaws.
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3.2 Capitalization of IMG. The authorized capital stock of IMG consists of
100,000 shares of $1.00 par value common stock, of which as of the date hereof,
1,900 shares are validly issued and outstanding. Except as set forth in Exhibit
3.2 of the Exhibit Volume, there are no other authorized or outstanding or
authorized equity securities of IMG of any class, kind or character, and there
are no outstanding rights, contracts, rights to subscribe, conversion rights,
exchange rights, warrants, options, calls puts or other agreements or
commitments of any character relating to the capital stock of IMG or any
securities convertible or exchangeable or exercisable for any shares of stock of
any class of capital stock of IMG. IMG has no treasury stock that has not been
cancelled as of the date hereof. Except for the transactions contemplated by
this Agreement or as disclosed in Exhibit 3.2, there are not any agreements or
understandings among IMG's stockholders with respect to the voting of shares of
the IMG Stock on any matter. The IMG Stock is subject to no pledge or other
lien. Immediately after the Closing, ProMedCo-Sarasota will own 100% of the
issued and outstanding capital stock of IMG, free and clear of any liens,
charges, encumbrances or other claims. No shares of the capital stock of IMG are
reserved for any purpose; there are no preemptive or similar rights with respect
to the issuance, sale or other transfer (whether present, past or future) of the
capital stock of IMG and there are no agreements or other obligations
(contingent or otherwise) which may require IMG to issue, repurchase or
otherwise acquire any shares of its capital stock or any other securities. There
are no outstanding or authorized stock appreciation/phantom stock or similar
rights with respect to IMG. There are no voting trusts, proxies, or any other
agreements or understandings with respect to the voting stock of IMG. The list
of Shareholders and the number of shares opposite their names in ss. 2.1 is a
complete and accurate of all the shareholders of IMG as of the date hereof and
the Closing Date.
3.3 Subsidiaries, Affiliates, Affiliated Companies and Joint Venture. Except as
set forth in Exhibit 3.3, IMG has no direct or indirect ownership interest in,
by way of stock ownership or otherwise, any corporation, association or business
enterprise.
3.4 Financial Statements. Exhibit 3.4 consists of the unaudited balance sheet of
IMG at March 31, 1997 and the related statement of operation for the three
months then ended (such financial statements and the related notes being herein
called "IMG Financial Statements").
The IMG Financial Statements are true, complete and accurate, have been based
upon the information contained in the books and records of IMG and present
fairly the assets, liabilities and financial condition of IMG as of the dates
thereof and the results of its operations for the periods then ended, prepared
in conformity with generally accepted accounting principles. The IMG Financial
Statements do not contain any material inaccuracy and do not suffer from any
material omissions.
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3.5 Professional Income. Exhibit 3.5 lists all medical directorships and other
sources of professional income and the amounts thereof derived by physicians
associated with IMG which are not reflected in the statements of operations
contained in the IMG Financial Statements.
3.6 Absence of Undisclosed Liabilities. Except as and to the extent reflected or
reserved against in the IMG Financial Statements and except for commitments and
obligations incurred in the ordinary course of business and consistent with past
practice accruing after March 31, 1997, IMG as of March 31, 1997, had, or will
have at Closing, no liabilities, claims or obligations (whether accrued,
absolute, contingent, unliquidated or otherwise, whether or not known to IMG or
any directors, officers or employees of IMG, whether due to become payable and
regardless of when or by whom asserted).
3.7 Absence of Certain Recent Changes. Except as expressly provided in this
Agreement or as set forth on Exhibit 3.7 in alphabetical order corresponding to
the following subsections, IMG has continued and shall continue the normal
operations of IMG's business until the Closing, and since March 31, 1997, and
through the Closing Date, IMG has not been and will not have:
(a) except in the usual and ordinary course of its business, consistent
with past practice, and in an amount which is usual and normal
incurred any indebtedness or other liabilities (whether accrued,
absolute, contingent or otherwise), guaranteed any indebtedness or
sold any of its assets;
(b) transferred, disposed of, or further encumbered or pledged any of the
Assets without the prior written consent of ProMedCo-Sarasota;
(c) suffered any damage, destruction or loss, whether or not covered by
insurance, in excess of $10,000;
(d) suffered the resignation or other termination of any management
personnel of IMG, or the loss of or other termination of a business
relationship with any material customers or suppliers of IMG's
business;
(e) increased the regular rate of compensation payable by it to any
employee other than normal merit and cost of living increases granted
in the ordinary course of business; or increased such compensation by
bonus, percentage, compensation service award
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or similar arrangement theretofore in effect for the benefit of any of its
employees, and no such increase is required;
(f) established or agreed to establish, amended or terminated any pension,
retirement or welfare plan or arrangement for the benefit of its
employees not theretofore in effect;
(g) suffered any change in its financial condition, assets, liabilities,
operations, prospects or business or suffered any other event or
condition of any character which individually or in the aggregate has
or might reasonably have a material ad verse effect on IMG;
(h) experienced any labor organizational efforts, strikes or complaints
other than griev ance procedures in the ordinary course of business or
entered into any collective bargaining agreements with any union;
(i) made any single capital expenditure which exceeded $5,000 or made
aggregate capital expenditures which exceeded $10,000;
(j) except with respect to liens or encumbrances arising by operation of
law, permitted or allowed any of the Assets to be subjected to any
pledge, lien, security interest, encumbrance, restriction or charge of
any kind;
(k) written down the value of any of the Assets, or written off as
uncollectible any notes or accounts receivable, except for write-downs
and write-offs in the ordinary course of business and consistent with
past practice;
(l) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than in the usual
and ordinary course of business;
(m) suffered any extraordinary losses, canceled any debts or waived any
claims or rights of substantial value, whether or not in the usual and
ordinary course of bus iness;
(n) paid, lent or advanced any amount to, or sold, transferred or leased
any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any
stockholder of IMG or any of the officers or
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directors of IMG or of any "Affiliate" of any of its officers or directors,
except for reimbursement of ordinary and reasonable business expenses related to
the business of IMG and compensation to officers at rates not exceeding the
rates of compensa tion at March 31, 1997;
(o) amended, terminated or otherwise altered (whether by action or
inaction) any contract, agreement or license of significant value to
which IMG is a party, except in the ordinary course of business;
(p) entered into a material transaction other than in the ordinary course
of business or made any change in any method of accounting or
accounting practice;
(q) canceled, or failed to continue, insurance coverages; or
(r) agreed, whether in writing or otherwise, to take any action described
in this ss. 3.7.
3.8 Title to Assets. The Assets to be transferred hereunder constitute all of
the non-real estate operating assets of IMG necessary or appropriate for the
continued operation of the Clinic Facility. The Assets consisting of owned
personal property are subject to no liens or encumbrances except the security
interests of record set forth on Exhibit 3.8 of the Exhibit Volume, which
Exhibit is a copy of a Uniform Commercial Code ("UCC") search as of a recent
date duly obtained by IMG and which search shows security interests of record
relating to such Assets in every place where such security interests are filed
and includes copies of all such financing statements. IMG agrees to remove all
security interests reflected on such UCC search, if any, prior to the Closing
(except those approved by ProMedCo-Sarasota in writing) and to remove any other
security interests filed with respect to such assets between the date of such
UCC search and the Closing Date. The bills of sale and the assignments and other
instruments to be executed and delivered by IMG at the Closing will be valid and
binding and enforceable in accordance with their respective terms, and will
effectively vest in ProMedCo-Sarasota good and marketable title to all the
Assets. If IMG shall fail to remove all such security interests,
ProMedCo-Sarasota shall have the right to do so and shall have the right to
off-set the cost of doing so against the Cash Consideration payable under ss.
2.2 hereof.
3.9 Contracts. Exhibit 3.9 of the Exhibit Volume contains a copy of each
contract, lease, agree ment and other instrument to which IMG is a party or is
bound which involves an unperformed commitment or obligation (contingent or
otherwise) of more than $10,000 in the aggregate, including, without limitation,
the following: service agreements, maintenance agreements, bank
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loans and equipment financings, real estate leases, payor contracts,
professional service agreements, software licensing agreements and other
agreements. Except as noted in such Exhibit 3.9: (i) all such contracts, leases
and agreements are in full force and effect; (ii) there has been no threatened
cancellation thereof; (iii) there are no outstanding disputes thereunder; (iv)
each is with unrelated third parties and was entered into on an arms-length
basis in the ordinary course of business and all will continue to be binding in
accordance with their terms after consummation of the transactions contemplated
hereby; (v) there are no contracts, leases, agreements or other instruments to
which IMG is a party or is bound (other than insurance policies) which could
either singularly or in the aggregate have an adverse effect on the value of the
Assets to ProMedCo-Sarasota; and (vi) there are no employment agreements or
other agreements to which IMG is a party or by which IMG is bound that contain
any severance or termination pay liabilities or obligations.
Except as described in Exhibit 3.9 or the other Schedules hereto (and except for
purchase contracts and orders for inventory in the ordinary course of business
consistent with past practice), IMG is not, as of the date of this Agreement, a
party to or bound by any:
(a) material agreement or contract not made in the ordinary course of
business;
(b) employee collective bargaining agreement or other contract with any
labor union;
(c) covenant not to compete;
(d) lease or similar agreement under which IMG is a lessor or sublessor of
any material real property owned or leased by IMG or any portion of
premises otherwise occupied by IMG;
(e) (i) lease or similar agreement under which (A) IMG is lessee of, or
holds or uses, any machinery, equipment, vehicle or other tangible
personal property owned by a third party or (B)IMG is a lessor or
sublessor of any tangible personal property owned by any of its
shareholders, (ii) continuing contract for the future purchase of
materials, supplies or equipment, or (iii) management, service,
consulting or other similar type of contract, in any such case which
has a future liability in excess of $10,000, and which is not
terminable by IMG for a cost of less than $10,000;
(f) license or other agreement relating in whole or in part to, trademarks
(including, but not limited to, any license or other agreement under
which IMG has the right to use any of the same owned or held by a
third party);
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(g) agreement or contract under which IMG has borrowed or lent any money
or issued any note, bond, indenture or other evidence of indebtedness
or directly or indirectly guaranteed indebtedness, liabilities or
obligations of others for an amount in excess of $10,000 (other than
(i) endorsements for the purpose of collection in the ordinary course
of business and (ii) advances to employees of IMG in the ordinary
course of business);
(h) mortgage, pledge, security agreement, deed of trust or other document
granting a lien against the Assets (including liens upon properties
acquired under conditional sales, capital leases or other title
retention or security devices but excluding operating leases);
(i) other agreement, contract, lease, license, commitment or instrument to
which IMG is a party or by or to which IMG or any of it assets or
businesses are bound or subject, which has an aggregate future
liability in excess of $10,000 and is not terminable by IMG for a cost
of less than $10,000; or
(j) any agreement, contract, understanding or business venture with any
physician, other provider or any other Person which violates the
Medicare/Medicaid Fraud and Abuse amendments or any regulations
thereunder adopted by the U.S. Department of Health and Human
Services.
3.10 Burdensome Agreements. Except as is set forth in Exhibit 3.10 of the
Exhibit Volume, IMG is not a party to, nor are the Assets subject to or bound or
affected by, any provision of any order of any court or other agency of
government or any indenture, agreement or other instrument or commitment which
materially adversely affects the operations, earnings, assets, properties,
liabilities, business or prospects of IMG or its condition, financial or
otherwise.
3.11 Absence of Related Party Transactions. Except as disclosed on Exhibit 3.11,
neither IMG, nor any officer, director or affiliate of IMG, has any material
direct or indirect financial or economic interest in any competitor or supplier
of IMG. IMG is not a party to any transaction or proposed transaction, including
without limitation the leasing of property, the purchase or sale of materials or
goods (except with respect to IMG's service business) or the furnishing of its
services (except as employees of the IMG), with IMG, or any Affiliate of IMG,
including (without limitation) any family member of a shareholder of IMG; and
IMG has not directly or indirectly entered into any agreement or commitment
which could result in IMG becoming obligated to provide funds in respect of or
to assume any obligation of any such affiliated person or entity. Except as set
forth on Exhibit 3.11, there are no debts owing to IMG by, or any contractual
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agreements or understandings between IMG and, any shareholder, director or
officer of IMG, any member of their respective families, or any affiliate or
associate of any of the foregoing individuals, as the term "affiliate" is
defined for purposes of the Securities Act of 1933 and the rules and regulations
thereunder, and none of the foregoing individuals or any affiliate or associate
of them owns any property or rights, tangible or intangible (other than an
equitable interest), used in or related to IMG's business. IMG is not indebted
to any shareholder, officer, director or employee of IMG, or to any member of
their respective families, or to any affiliate or associate of any of the
foregoing individuals, in any amount whatsoever, other than for payment of
salaries and compensation for services actually rendered to IMG in the ordinary
course of their businesses.
3.12 Defaults. Except as disclosed in Exhibit 3.12, IMG is not in default in any
material respect under, nor has any event occurred which, with the lapse of time
or action by a third party, could result in a material default under any
outstanding indenture, mortgage, contract, instrument or agreement to which IMG
is a party or by which IMG may be bound or under any provision of the Articles
of Incorporation or by-laws of IMG. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement will not violate any provision of, or result in the breach of, or
constitute a default under, any law the violation of which would result in a
significant liability to IMG, or any order, writ, injunction or decree of any
court, governmental agency or arbitration tribunal; constitute a violation of or
a material default under, or a conflict with, any term or provision of the
Articles of Incorporation or by-laws of IMG or any contract, commitment,
indenture, lease, instrument or other agreement, or any other restriction of any
kind to which IMG is a party or is bound; or cause, or give any party grounds to
cause (with or without notice, the passage of time or both) the maturity of any
liability or obligation of IMG, to be accelerated, or increase any such
liability or obligation.
3.13 Inventory. The Inventory consists of a quality and quantity usable and
saleable in the ordinary course of business but has not been reflected on the
balance sheet included in the IMG Financial Statements. The present quantity of
the Inventory of IMG is reasonable and warranted in the present circumstances of
the business conducted by IMG. The only transactions related thereto since March
31, 1997 have been additions or sales in the ordinary course of business. The
Definitive Closing Statement will reflect major inventory items at the lower of
cost or market.
3.14 Equipment. All Assets consisting of equipment are well maintained and in
good operating condition and are sufficient for their current purpose, except
for reasonable wear and tear. The present quantity of all such equipment of IMG
is reasonable and warranted in the present course of the business conducted by
IMG and its subsidiaries. The only transactions related thereto since March 31,
1997, have been additions thereto in the ordinary course of business.
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3.15 Receivables. All notes and accounts receivable of IMG shown on the IMG
balance sheet and all those arising since the balance sheet dates have arisen in
the ordinary course of business. Attached as Exhibit 3.15 is a true and correct
aging of the accounts receivable currently on the books and records of IMG.
3.16 Permits and Licenses. Included as Exhibit 3.16 in the Exhibit Volume is a
schedule of permits and licenses, listing and briefly describing each permit,
license or similar authorization from each governmental authority issued with
respect to the operation or ownership of properties by IMG together with the
designation of the respective expiration dates of each, and also listing and
briefly describing each association in which IMG is a member and each
association or governmental authority by which IMG is accredited or otherwise
recognized. IMG is not required to obtain any additional permits, licenses or
similar authorizations (including, without limitation, any additional
certificates of need) from any governmental authority for the proper conduct of
its business or to become a member of or accredited by any association or
governmental authority other than those listed on Exhibit 3.16 in the Exhibit
Volume, and there are no proceedings pending, or to the best of IMG's knowledge,
threatened, which may result in the revocation, cancellation, suspension, or
other adverse modification of, any license or permit listed in Exhibit 3.16. All
of such permits, licenses and authorizations will continue to be valid and in
full force and effect in accordance with their respective terms after the
consummation of the transactions contemplated hereby.
3.17 Litigation, etc. Except as set forth in Exhibit 3.17 of the Exhibit Volume,
there is no litigation, arbitration, governmental claim, investigation or
proceeding pending or to the best knowledge of IMG, threatened against IMG at
law or in equity, before any court, arbitration tribunal or governmental agency.
No such proceeding set forth in Exhibit 3.17 concerns the ownership or other
rights with respect to the Assets. To the best knowledge of IMG, there are no
facts based on which material claims may be hereafter made against IMG. Any and
all claims arising from incidents on or before the Closing Date shall be the
sole responsibility of IMG and are specifically excluded from the liabilities to
be assumed by ProMedCo-Sarasota hereunder. All claims and litigations against
IMG are fully covered by insurance. IMG shall unconditionally indemnify and hold
ProMedCo-Sarasota harmless against any loss or liability including, without
limitation, attorney's fees, resulting from any claims or litigation arising out
of incidents relating to IMG which occurred prior to the Closing Date, to the
extent such loss or liability is not covered by insurance.
3.18 Court Orders, Decrees and Laws. There is not outstanding or threatened any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal against or affecting
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IMG or the Assets. IMG is in compliance with all applicable federal, state and
local laws, regulations and administrative orders which are material to the
business of IMG and IMG has received no notices of alleged violations thereof.
No governmental authorities are presently conducting proceedings against IMG and
to the best knowledge of IMG, no such investigation or proceeding is pending or
being threatened.
3.19 Taxes. Except as set forth in Exhibit 3.19: (i) all federal, state and
other tax returns of IMG required by law to be filed have been timely filed, and
IMG has paid or provided for all taxes (including taxes on properties, income,
franchises, licenses, sales and payrolls) which have become due pursuant to such
returns or pursuant to any assessment, except for any taxes and assessments of
which the amount, applicability or validity is currently being contested in good
faith by appropriate proceedings and with respect to which IMG has set aside on
its books adequate re serves; (ii) all such tax returns have been prepared in
compliance with all applicable laws and regulations and are true and accurate in
all respects;(iii) the amounts set up as provisions for taxes (including
provision for deferred income taxes) on the IMG Financial Statements are
sufficient for the payment of all unpaid federal, state, county and local taxes
accrued for or applicable to all periods (or portions thereof) ending on or
before the Closing Date;(iv) there are no tax liens on any of the Assets except
those with respect to taxes not yet due and payable and except for any taxes and
assessments of which the amount, applicability or validity is currently being
contested in good faith by appropriate proceedings and with respect to which IMG
has set aside on its books adequate reserves; (v) there are no pending tax
examinations nor has IMG received a revenue agent's report asserting a tax
deficiency;(vi) IMG does not expect any taxing authority to claim or assess any
amount of additional taxes against it; (vii) no claim has ever been made by a
taxing authority in a jurisdiction where IMG does not file tax returns that IMG
is or may be subject to taxes assessed by such jurisdiction; (viii) IMG has
withheld from each payment made to its employees the amount of all taxes
(including, but not limited to, federal, state and local income taxes and
Federal Insurance Contribution Act taxes) required to be withheld therefrom and
all amounts customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
has paid or will pay the same to, or has deposited or will deposit such payment
with, the proper tax receiving officers or other appropriate authorities, except
to the extent of any liabilities to be assumed by ProMedCo-Sarasota hereunder.
3.20 Immigration Act. IMG is in compliance with the terms and provisions of the
Immigration Act in all material respects. For each employee (as defined in 8
C.F.R. ss.274a.1(f)) of IMG for whom compliance with the Immigration Act by IMG
is required, IMG has obtained and retained a complete and true copy of each such
employee's Form I-9 (Employment Eligibility Verification Form) and all other
records or documents prepared, procured or retained by IMG pursuant to the
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Immigration Act. There are no violations or potential violations of the
Immigration Act by IMG. IMG has not been cited, fined, served with a Notice of
Intent to Fine or with a Cease and Desist Order, nor, to IMG's knowledge, has
any action or administrative proceeding been initiated or threatened against
IMG, by reason of any actual or alleged failure to comply with the Immigration
Act.
3.21 Program Compliance. Neither IMG nor any of its shareholders, employees or
agents have engaged in or is being investigated for any activities which are
prohibited under either (a) Section 1320a-7a or 1320a-7b of Title 42 of the
United States Code, (b) Section 1395nn of Title 42 of the United States Code, or
(c) Section 3729 of Title 31 of the United States Code, or the regulations
promulgated thereunder, or any similar or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (i) knowingly presenting or
causing to be presented a false claim for payment, (ii) knowingly making or
using a false record in order to receive payment for a claim, (iii) knowingly
and willfully making or causing to be made a false statement or representation
of a material fact in any application for any benefit or payment; (iv) knowingly
and willfully making or causing to be made any false statement or representation
of a material fact for use in determining rights to any benefit or payment; (v)
any failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; (vi) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (A) in return for referring an individual to a person for the
furnishing or arranging for the furnishing of any item or service for which
payment may be made in whole or in part by Medicare or Medicaid, or (B) in
return for purchasing, leasing or ordering or arranging for, or recommend ing,
purchasing, lease or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid; or (vii)
referring a patient for "designated health services" to a person or entity with
which the referring physician has a financial relationship.
3.22 Environmental Matters. Except as disclosed on Exhibit 3.22:
(a) There are no outstanding violations or any consent decrees entered
against IMG regarding environmental matters, including, but not
limited to, matters affecting the emission of air pollutants, the
discharge of water pollutants, the management of hazardous or toxic
substances or wastes, or noise.
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(b) There are no claimed, threatened or alleged material violations with
respect to any federal, state or local environmental law, rule,
regulation, ordinance, permit, license or authorization, and there are
no present discussions with any federal, state or local governmental
agency concerning any alleged violation of environmental laws, rules,
regulations, ordinances, permits, licenses or authorizations.
(c) All operations conducted by IMG have been and are in compliance in all
material respects with all federal, state and local statutes, rules,
regulations, ordinances, permits, licenses and authorizations relating
to environmental compliance and control.
3.23 ERISA.
(a) Except as listed in Exhibit 3.23 of the Exhibit has no "employee
benefit plans", as such term is defined under Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or any other plan or similar arrangement, written or otherwise, which
provides any type of pension or welfare benefit to any of its
directors, employees, or former employees.
(b) With respect to all of the plans listed in Exhibit 3.23,IMG has
delivered to ProMedCo-Sarasota true and exact copies of (i) all plan
documents embodying the provisions of such plans, together with all
amendments thereto, (ii) all summary plan descriptions and summaries
of material modifications pertaining thereto, (iii) copies of the most
recent Internal Revenue Service determination letters, if any,
relating to such plans, (iv) copies of the last three (3) years'
Annual Report (Form 5500 series), as filed with respect to such plans
with the Internal Revenue Service, together with all Schedules and
attachments thereto, including, without limitation, copies of the plan
audits and/or actuarial valuations, (v) copies of all contract
administration agreements between IMG and third party administrators,
(vi) copies of all participant-related forms currently in use in
connection with such plans including, without limitation, salary
reduction agreements and beneficiary designations and (vii)
participant-specific claims history for any "welfare benefit plan"
(within the meaning of Section 3(1) of ERISA) that has been in
existence during any part of the last three years.
(c) No "prohibited transaction", as such term is defined under Section
4975(c) of the Code or under Section 406 of ERISA, and the respective
regulations thereunder,
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has occurred or is occurring with respect to any "employee benefit plan"
maintained by IMG or with respect to any trustee or administrator thereof.
3.24 Pension, etc.
(a) No "unfunded accrued liability", as such term is defined under Section
3(30) of ERISA, exists with respect to any "employee pension benefit
plan" listed in Exhibit 3.23 (each a "Pension Plan" and collectively
the "Pension Plans").
(b) None of the Pension Plans or any related trusts have been partially or
fully terminated (through the complete cessation of contributions
thereto or otherwise). In addition there has not occurred any
"reportable events", as such term is defined under Section 4043 of
ERISA, which could have a material adverse effect on the condition,
financial or otherwise, of IMG.
(c) Neither any of the Pension Plans nor any related trusts have incurred
any "accumulated funding deficiency", as such term is defined under
Section 302(a)(2) of ERISA or Section 412(a) of the Code (whether or
not waived), since the effective date of ERISA.
(d) With respect to each Pension Plan, there are not in existence any
liabilities other than those liabilities shown on the Annual Reports
(Form 5500 series) delivered to ProMedCo-Sarasota in connection
herewith. No material change with respect to the matters covered by
the most recent Annual Report for each Pension Plan has occurred since
the filing date thereof. The terms and operation of each Pension Plan
have complied, and are in compliance, with the applicable provisions
of ERISA and the Code. All Pension Plans have at all times been and
are qualified under Section 401(a) of the Code, except for those
Pension Plans set forth in Exhibit 3.24 of the Exhibit Volume. None of
the Pension Plans listed in Exhibit 3.23 is unfunded.
3.25 Employee Matters. Included as Exhibit 3.25A of the Exhibit Volume is a list
of all employ ees of IMG together with their annual rates of compensation and a
list of all people who were paid bonuses in the last twelve months plus the
amount thereof. No written employment agreement to which IMG is a party requires
longer than a four-week notice before termination, and there is no agreement to
lend, or guarantee any loan, to an employee, or an agreement relating to a
bonus, severance pay or similar plan, agreement, arrangement or understanding,
except as set forth in
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Exhibit 3.25B. Exhibit 3.25C of the Exhibit Volume is a written description of
employee benefits of IMG.
3.26 Insurance and Bonds. Exhibit 3.26A contains a description of all fire,
liability and other insurance coverage maintained by IMG currently in force,
including the amounts and losses and risks covered; all such policies are fully
paid as to all premiums heretofore due. Exhibit 3.26B contains a description of
all malpractice liability insurance policies of IMG since January 1, 1994.
Except as set forth on Exhibit 3.26B, IMG has not had in the last seven years
filed a written application for any insurance coverage which has been denied by
an insurance agency or carrier. Exhibit 3.26C sets forth a list of all claims
for any insured loss in excess of $5,000 per occurrence, filed by IMG during the
three year period immediately preceding the date hereof, including, but not
limited to, workers compensation, general liability and environmental liability.
IMG is not in material default with respect to any provision contained in any
such policy and has not failed to give any notice or present any claim under any
such policy in due and timely fashion.
3.27 Labor Matters. There are no collective bargaining agreements with any labor
union to which IMG is a party or by which IMG is bound, and it is not currently
negotiating with a labor union. No employees of IMG have ever petitioned for a
representation election. IMG is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice.
There is no unfair labor practice complaint against IMG pending before the
National Labor Relations Board. There is no labor strike, dispute, slowdown or
stoppage actually pending or, to its knowledge, threatened against or affecting
IMG. No grievance which might have a material adverse effect on IMG or the
conduct of its business nor any such arbitration proceeding arising out of or
under collective bargaining agreements is pending and no claim therefor exists.
IMG has not experienced any employee strikes during the last three years. IMG
will advise ProMedCo-Sarasota of any such labor dispute, petition for
representative election or negotiations with any labor union which shall arise
before the Closing Date. Except as may be required by ss.4980B of the Code or
applicable state health care continuation coverage statutes, IMG has no
liability under any plan or arrangement which provides welfare benefits,
including medical and life insurance, to any current or future retiree or
terminated employee.
3.28 Third Party Payor Compliance. IMG is participating in or otherwise
authorized to receive reimbursement from or is a party to Medicare, Medicaid,
and other third-party payor programs (collectively "Third Party Payor
Programs"). All necessary certifications and contracts required for
participation in such programs are in full force and effect and have not been
amended or otherwise modified, rescinded, revoked or assigned as of the date
hereof, and to the best of IMG's
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knowledge, no condition exists or event has occurred which in itself or with the
giving of notice or the lapse of time or both would result in the suspension,
revocation, impairment, forfeiture or non-renewal of any such Third Party Payor
Program. To the best of IMG's knowledge, IMG is in full compliance with the
requirements of all such Third Party Payor Programs applicable thereto.
3.29 Facility Compliance. The Clinic Facility is duly licensed and is lawfully
operated in accordance with the requirements of all applicable law and has all
necessary authorizations for the use and operation, all of which are in full
force and effect. There are no outstanding notices of deficiencies relating to
IMG issued by any governmental authority or Third Party payor Program requiring
conformity or compliance with any applicable law or condition for participation
of such governmental authority or Third Party Payor program, and after
reasonable and independent inquiry and due diligence and investigation, IMG has
neither received notice nor has any knowledge or reason to believe that such
necessary authorizations may be revoked or not renewed in the ordinary course.
3.30 Improper Payments. Neither IMG nor any officer or employee of IMG have made
any bribes, kickbacks or other improper payments on behalf of IMG or received
any such payments from vendors, suppliers or other persons contracting with IMG.
3.31 Books of Account; Reports. The books of account of IMG in reasonable
detail, accurately and fairly reflect its transactions and the disposition of
its assets. IMG has filed all reports and returns required by any law or
regulation to be filed by it.
3.32 No Finders or Brokers. Except for Practice Solutions, neither IMG nor any
officer or director of IMG has engaged any finder or broker in connection with
the transactions contemplated hereunder. The amount due Practice Solutions at
the Closing will not exceed the amount set forth in ss. 2.2(d).
3.33 Consents and Approvals of Governmental Authorities. No characteristic of
IMG or of the nature of its business or operations requires any consent,
approval or authorization of, or declaration, filing or registration with any
governmental or regulatory authority in connection with the execution and
delivery of this Agreement and the consummation of the transactions contem
plated hereby.
3.34 No Adverse Effect. There is no event or condition of any kind or character
pertaining to the business, assets or prospects of IMG that may adversely affect
such business, assets or prospects
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other than general economic conditions affecting the practice of medicine by
physicians in the United States.
3.35 Disclosure. No representations and warranties by IMG in this Agreement and
no statement in this Agreement or any document or certificate furnished or to be
furnished to ProMedCo and ProMedCo-Sarasota pursuant hereto contains or will
contain any untrue statement or omits or will omit to state a material fact
necessary in order to make the statements contained therein not misleading. IMG
has disclosed to ProMedCo and ProMedCo-Sarasota all facts known to IMG material
to the assets, liabilities, business, operation and property of IMG. There are
no facts known to IMG not yet disclosed which would adversely affect the future
operations of IMG.
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder represents severally and not jointly that: (i) such Shareholder
has full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby; (ii) the execution, delivery, and performance
of this Agreement constitutes the valid and binding agreement of such
Shareholder enforceable in accordance with its terms, and the execution,
delivery and performance of this Agreement is not in conflict with any other
agreement, and will not result in the acceleration or imposition of any other
obligation relating to such Shareholder; and (iii) such Stockholder owns his or
her stock free and clear of all liens and encumbrances and will deliver good
title thereto to ProMedCo-Sarasota at the Closing.
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PROMEDCO AND
PROMEDCO-SARASOTA
ProMedCo and ProMedCo-Sarasota hereby represent and warrant as follows:
5.1 Organization and Standing of ProMedCo and ProMedCo-Sarasota. ProMedCo and
ProMedCo-Sarasota are each corporations duly organized, validly existing and in
good standing under the laws of the state of Delaware and Florida, respectively;
each has full corporate power and authority to conduct its business as now being
conducted; and each is duly qualified to do business in each jurisdiction in
which the nature of the property owned or leased or the nature of the business
conducted by it requires such qualification.
5.2 Authority; Binding Effect. Each of ProMedCo and ProMedCo-Sarasota has
corporate power to execute and deliver this Agreement and consummate the
transactions contemplated hereby and has taken (or by the Closing Date will have
taken) all action required by law, its Articles of
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Incorporation, by-laws or otherwise to authorize such execution and delivery and
the consumma tion of the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement constitutes the valid and binding
agreement of each of ProMedCo and ProMedCo-Sarasota enforceable in accordance
with its terms (except as the same may be restricted, limited or delayed by
applicable bankruptcy or other laws affecting creditors' rights generally and
except as to the remedy of specific performance which may not be available under
the laws of various jurisdictions) assuming that this Agreement has been duly
authorized, delivered and executed by IMG and constitutes the valid and binding
obligation, enforceable against IMG in accordance with its terms (except as
enforceability against IMG may be restricted, limited or delayed to the same
extent as referred to in parenthetical phrase immediately above).
5.3 No Finders or Brokers. Neither ProMedCo, ProMedCo-Sarasota nor any officer
or director of either has engaged any finder or broker in connection with the
transactions contemplated hereunder.
5.4 Consents and Approvals of Governmental Authorities. No characteristic of
ProMedCo or ProMedCo-Sarasota or of the nature of their business or operations
requires any consent, approval or authorization of, or declaration, filing or
registration with any governmental or regulatory authority in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
ARTICLE 6 COVENANTS OF PROMEDCO AND PROMEDCO-SARASOTA
ProMedCo and ProMedCo-Sarasota hereby covenant and agree as follows:
6.1 Best Efforts to Secure Consents. ProMedCo and ProMedCo-Sarasota shall use
their best efforts to secure before the Closing all necessary consents and
approvals needed to satisfy all the conditions precedent to the obligations of
IMG hereunder.
6.2 Corporate Action. ProMedCo and ProMedCo-Sarasota will take all necessary
corporate and other action and use its best efforts to obtain all consents,
approvals and amendments of agreements required of it to carry out the
transactions contemplated by this Agreement and to satisfy the conditions
specified herein.
6.3 Handling of Documents. With respect to information provided by IMG pursuant
to this Agreement prior to the Closing, ProMedCo and ProMedCo-Sarasota shall
keep all such information confidential which is not in the public domain, except
to the extent that such
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information (i) becomes generally available to the public other than as a result
of a disclosure directly or indirectly by ProMedCo or ProMedCo-Sarasota, (ii)
was known by ProMedCo or ProMedCo-Sarasota on a non-confidential basis prior to
disclosure to ProMedCo or ProMedCo-Sarasota by IMG pursuant to this Agreement or
(iii) becomes available to ProMedCo or ProMedCo-Sarasota on a non-confidential
basis from a source (other than IMG) which is entitled to disclose the same, and
to exercise the same care in handling such information as it would exercise with
similar information of its own.
6.4 Non-Disclosure. ProMedCo and ProMedCo-Sarasota will keep confidential and
not disclose to any third party any information relating to the business of IMG,
whether acquired by ProMedCo or ProMedCo-Sarasota before or after the Closing
Date, which IMG has not made generally available to the public.
ARTICLE 7 COVENANTS OF IMG
IMG hereby covenants and agrees as follows:
7.1 Access and Information. Between the date of this Agreement and the Effective
Date; IMG will: (i) provide to ProMedCo-Sarasota and its officers, attorneys,
accountants and other representatives, during normal business hours, or
otherwise if ProMedCo-Sarasota deems reasonably necessary, free and full access
to all of the properties, assets, agreements, commit ments, books, records,
accounts, tax returns, and documents of IMG and permit them to make copies
thereof; (ii) furnish ProMedCo-Sarasota and its representatives with all
information concerning the business, properties and affairs of IMG as
ProMedCo-Sarasota reasonably requests and certified by the officers, if
requested; (iii) cause the independent public accountants of IMG to make
available to ProMedCo-Sarasota and its representatives all financial information
relating to IMG requested, including all working papers pertaining to audits and
reviews made heretofore by such auditors; (iv) furnish ProMedCo-Sarasota true
and complete copies of all financial and operating statements of IMG; (v) permit
access to customers and suppliers for consultation or verification of any
information obtained by ProMedCo-Sarasota and use their best efforts to cause
such customers and suppliers to cooperate with ProMedCo-Sarasota in such
consultation and in verifying such information; and (vi) cause their employees,
accountants and attorneys to make disclosure of all material facts known to them
affecting the financial condition and business operations of IMG and to
cooperate fully with any audit, review, investigation or examination made by
ProMedCo-Sarasota and its representatives, including, without limitation, with
respect to:
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(a) The books and records of IMG;
(b) The reports of state and federal regulatory examinations;
(c) Leases, contracts and commitments between the IMG and any other
person;
(d) Physical examination of the Clinic Facility; and
(e) Physical examination of the equipment and furnishings within the
Clinic Facility.
7.2 Conduct of Business. Between the date hereof and the Effective Date, except
as otherwise expressly approved in writing by ProMedCo-Sarasota, IMG shall
conduct its business only in the ordinary course thereof consistent with past
practice and in such a manner that the representations and warranties contained
in Article 3 of this Agreement shall be true and correct at and as of the
Closing Date (except for changes contemplated, permitted or required by this
Agreement) and so that the conditions to be satisfied by IMG at the Closing
shall have been satisfied. IMG will, consistent with conducting its business in
accordance with reasonable business judgment, preserve the business of IMG
intact; use its reasonable best efforts to preserve and maintain the business
organization and the physician relationships of the Clinic, keep available to
ProMedCo-Sarasota the services of the present employees of IMG (except those
dismissed for cause, those who voluntarily discontinue their employment and
those whose termination is consented to by ProMedCo-Sarasota) and preserve for
ProMedCo-Sarasota the goodwill of the physicians, suppli ers, patients and
others having business relations with the IMG.
7.3 Compliance with Agreement. IMG shall not undertake any course of action
inconsistent with satisfaction of the conditions applicable to it set forth in
this Agreement, and shall do all such acts and take all such measures as may be
reasonably necessary to comply with the representations, agreements, conditions
and other provisions of this Agreement. IMG shall give ProMedCo-Sarasota prompt
written notice of any change in any information contained in the representations
and warranties made in Article 3 hereof and on the Exhibits referred to therein
(provided, however, that such notice shall not limit ProMedCo-Sarasota's rights
under ss. 9.1 hereof) and of any condition or event which constitutes a default
of any covenant or agreement made in Article 7 or in any other section hereof.
7.4 Unusual Events. Until the Closing Date, IMG shall supplement or amend all
relevant Exhibits in the Exhibit Volume with respect to any matter thereafter
arising or discovered which, if existing or known at the date of this Agreement,
would have been required to be set forth or de scribed in such Exhibits;
provided, however, that for the purposes of the rights and obligations of the
parties hereunder, any such supplemental disclosure shall not be deemed to have
been disclosed as of the date IMG delivers to ProMedCo-Sarasota the Exhibit
Volume pursuant to ss. 10.1 of this Agreement or any other date, and shall not
be deemed to amend or supplement any Exhibits or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant, unless agreed to in
writing by ProMedCo-Sarasota.
7.5 Confidential Information. IMG shall keep confidential all information
provided by ProMedCo and ProMedCo-Sarasota regarding the business plan,
financial condition and operations of ProMedCo and ProMedCo-Sarasota, which is
not in the public domain, and shall exercise the same care in handling such
information as it would exercise with similar information of its own. IMG may
disclose information it deems advisable to its physician employees provided such
physician employees are advised of the confidential nature of such information
and agree to keep such information confidential as provided herein. ProMedCo and
ProMedCo-Sarasota shall be a third party beneficiaries of such agreements.
7.6 Interim Financial Statements. Within 30 days after the end of each calendar
month subse quent to the date of this Agreement and prior to the Closing Date,
IMG shall deliver to ProMedCo-Sarasota an unaudited balance sheet of IMG as of
the end of such calendar month together with the related statement of
operations. All such financial statements shall fairly present the financial
position, results of operations and cash flows for the financial periods
indicated, in accordance with generally accepted accounting principles
consistently applied except that footnote information may be omitted in such
statements, and that such statements shall be subject to normal year-end audit
adjustments, but only if such adjustments are of a normal, recurring type and
are not material in the aggregate..
7.7 Departmental Violations. All notes or notices of violations of law or
municipal ordinances, orders or requirements noted in or issued by the
departments of buildings, fire, labor, health, or any other state or municipal
department having jurisdiction against or affecting the business, property or
assets of IMG shall be complied with prior to the Closing Date. All such notes
or notices, after the date hereof and prior to the Closing Date, shall be
complied with by IMG prior to the Closing Date. Upon written request, IMG shall
furnish ProMedCo-Sarasota with an authorization to make the necessary searches
for such notes or notices.
7.8 Assessments. If, on the Closing Date, the business, property or assets of
IMG are or will be subject to an assessment or assessments which are or may
become payable in annual installments, of which the first installment is then a
charge or lien, or has been paid, then for the purposes of this
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Agreement all the unpaid installments of any such assessment, including those
which are to become due and payable, shall be paid and discharged by IMG prior
to the Closing Date.
7.9 Insurance Ratings. IMG shall take all action reasonably requested by
ProMedCo-Sarasota to enable it to succeed to the Workers' Compensation and
Unemployment Insurance ratings, insurance policies, deposits and other interests
of IMG and other ratings for insurance or other purposes established by IMG.
ProMedCo-Sarasota shall not be obligated to succeed to any such rating,
insurance policy, deposit or other interest, except as it may elect to do so.
7.10 Maintain Insurance Coverage. From the date hereof until the Closing, IMG
shall maintain and cause to be maintained in full force and effect the existing
insurance on the Assets and the operations of IMG and shall provide, upon
request by ProMedCo-Sarasota, evidence satisfactory to ProMedCo-Sarasota that
such insurance continues to be in effect and that all premiums due have been
paid.
7.11 Exclusive Dealings. During the period from the date of this Agreement to
the Closing Date, or until the earlier termination of this Agreement pursuant to
Article 10, the Shareholders and IMG shall refrain from taking any actions,
directly or indirectly, to encourage, initiate, or engage in discussions or
negotiations with, or provide any information to, any corporation, partnership,
person, or other entity or group, other than ProMedCo-Sarasota, concerning the
purchase of IMG or its assets, or any merger, joint venture or similar
transaction involving IMG and will not enter into any such transaction.
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHARE
HOLDERS
All obligations of the Shareholders which are to be discharged under this
Agreement at the Closing are subject to the performance, at or prior to the
Closing, of all covenants and agreements contained herein which are to be
performed by ProMedCo and ProMedCo-Sarasota at or prior to the Closing and to
the fulfillment at, or prior to, the Closing, of each of the following
conditions (unless expressly waived in writing by the Shareholders at any time
at or prior to the Closing):
8.1 Representations and Warranties True. All of the representations and
warranties made by ProMedCo and ProMedCo-Sarasota contained in Article 5 of this
Agreement shall be true as of the date of this Agreement, shall be deemed to
have been made again at and as of the date of Closing, and shall be true at and
as of the date of Closing in all material respects; ProMedCo and
ProMedCo-Sarasota shall have performed and complied in all material respects
with all covenants
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and conditions required by this Agreement to be performed or complied with by
then prior to or at the Closing; and IMG shall have been furnished with a
certificate of the President or any Vice President of ProMedCo and of
ProMedCo-Sarasota, dated the Closing Date, in such officer's capacity,
certifying to the truth of such representations and warranties as of the Closing
and to the fulfillment of such covenants and conditions.
8.2 Opinion of Counsel. IMG shall have been furnished with an opinion dated the
Closing Date of Boult, Cummings, Conners & Berry, PLC, counsel to ProMedCo and
ProMedCo-Sarasota, in form and substance satisfactory to IMG, to the effect set
forth as Appendix 8.2 attached hereto.
8.3 Authority. All action required to be taken by or on the part of ProMedCo and
ProMedCo-Sarasota to authorize the execution, delivery and performance of this
Agreement by ProMedCo and ProMedCo-Sarasota and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by the
Boards of Directors of ProMedCo and ProMedCo-Sarasota.
8.4 No Obstructive Proceeding. No action or proceedings shall have been
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against IMG, or the
officers or directors of IMG, which seeks to, or would, render it unlawful as of
the Closing to effect the transactions contemplated hereby in accordance with
the terms hereof, and no such action shall seek damages in a material amount by
reason of the transactions contemplated hereby. Also, no substantive legal
objection to the transactions contemplated by this Agreement shall have been
received from or threatened by any governmental department or agency.
8.5 Delivery of Certain Certified Documents. At the Closing, ProMedCo-Sarasota
shall deliver to IMG copies of the Articles of Incorporation of
ProMedCo-Sarasota and ProMedCo certified (not more than 30 days prior to the
Closing Date) by the appropriate governmental authorities, copies of resolutions
of the Board of Directors of and ProMedCo-Sarasota, certified by the secretary
or assistant secretary of ProMedCo-Sarasota approving and authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and copies of resolutions of the Board of
Directors of ProMedCo, certified by the secretary or assistant secretary of
ProMedCo approving the issuance of the ProMedCo Stock.
8.6 Proceedings and Documents Satisfactory. All proceedings in connection with
the transac tions contemplated hereby and all certificates and documents
delivered to IMG pursuant to this Agreement shall be satisfactory in form and
substance to IMG and its counsel acting reasonably and in good faith.
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8.7 No Agency Proceedings. There shall not be pending or, to the knowledge of
ProMedCo or ProMedCo-Sarasota, threatened, any claim, suit, action or other
proceeding brought by a governmental agency before any court or governmental
agency, seeking to prohibit or restrain the transactions contemplated by this
Agreement or material damages in connection therewith.
8.8 Full Sale. All of the Shareholders shall at Closing on the Closing Date
hereunder deliver to ProMedCo-Sarasota all of the shares of IMG Stock to be sold
by them hereunder and all of the Shareholders shall in addition fully comply
with the terms and provisions hereof, it being understood and agreed that the
obligations of ProMedCo-Sarasota to purchase any of the shares of stock of IMG
is conditioned upon performance hereunder by all of the Shareholders.
8.9 Closing Transactions. All the transactions described in ss. 2.6 shall have
been consummated simultaneously with the Closing.
ARTICLE 9 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PROMEDCO
AND PROMEDCO-SARASOTA
All obligations of ProMedCo and ProMedCo-Sarasota which are to be discharged
under this Agreement at the Closing are subject to the performance, at or prior
to the Closing, of all covenants and agreements contained herein which are to be
performed by the Shareholders at or prior to the Closing and to the fulfillment
at or prior to the Closing of each of the following conditions (unless expressly
waived in writing by ProMedCo and ProMedCo-Sarasota at any time at or prior to
the Closing):
9.1 Representations and Warranties True. All of the representations and
warranties of the Shareholders contained in Article 3 of this Agreement shall be
true as of the date of this Agreement, shall be deemed to have been made again
at and as of the Closing, and shall be true at and as of the date of Closing in
all material respects (without taking into account any disclosures made by IMG
to ProMedCo and ProMedCo-Sarasota pursuant to ss. 7.4 hereof); the Shareholders
shall have performed or complied in all material respects with all covenants and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing; and ProMedCo and ProMedCo-Sarasota shall be
furnished with a certificate of the President or any Vice President of IMG dated
the Closing Date, in such person's representative corporate capacity, certifying
to the truth of such representations and warranties as of the time of the
Closing and to the fulfillment of such covenants and conditions.
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9.2 No Obstructive Proceeding. No action or proceedings shall have been
instituted against, and no order, decree or judgment of any court, agency,
commission or governmental authority shall be subsisting against ProMedCo or
ProMedCo-Sarasota or the officers or directors of ProMedCo or ProMedCo-Sarasota
which seeks to, or would, render it unlawful as of the Closing to effect the
transactions contemplated hereby in accordance with the terms hereof, and no
such action shall seek damages in a material amount by reason of the transaction
contemplated hereby. Also, no substantive legal objection to the transactions
contemplated by this Agreement shall have been received from or threatened by
any governmental department or agency.
9.3 Opinion of Shareholders' Counsel. IMG shall have delivered to ProMedCo and
ProMedCo-Sarasota at the Closing an opinion of Moore & Menkhaus, P.A., special
counsel to the Shareholders, dated the Closing Date, in form and substance
satisfactory to ProMedCo and ProMedCo-Sarasota, to the effect set forth as
Appendix 9.3 attached hereto.
9.4 Resignation of Administrator. Frederick Schadt shall have tendered his
resignation as Administrator of IMG to be effective within 30 days after
ProMedCo-Sarasota notifies Mr. Schadt of its acceptance of such resignation. The
obligation to make severance or similar payments to Mr. Schadt in connection
with his resignation shall be deemed to be a liability of IMG existing as of the
Closing for the purposes of the Balance Sheet Adjustment described in ss. 2.7.
9.5 Consents and Approvals. Each of the parties to any agreement or instrument
under which the transactions contemplated hereby would constitute or result in a
default or acceleration of obligations shall have given such consent as may be
necessary to permit the consummation of the transactions contemplated hereby
without constituting or resulting in a default or acceleration under such
agreement or instrument, and any consents required from any public or regulatory
agency or organization having jurisdiction shall have been given. Also,
ProMedCo-Sarasota shall have received releases, waivers of default and consents
to assignment in form satisfactory to it from all parties to contracts and
agreements to be assumed by ProMedCo-Sarasota hereunder.
9.6 Proceedings and Documents Satisfactory. All proceedings in connection with
the transac tions contemplated hereby and all certificates and documents
delivered to ProMedCo-Sarasota pursuant to this Agreement shall be satisfactory
in form and substance to ProMedCo and ProMedCo-Sarasota and its counsel acting
reasonably and in good faith.
9.7 No Adverse Change. From the date of this Agreement until the Closing, the
operations of IMG shall have been conducted in the ordinary course of business
consistent with past practice and from the date of the IMG Financial Statements
until the Closing no event shall have occurred or
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have been threatened which has or would have a material and adverse effect upon
the financial condition, assets, liabilities, operations, prospects or business
of IMG; and IMG shall have not sustained any loss or damage to their assets,
whether or not insured, or union activity that affects materially and adversely
its ability to conduct its business.
9.8 Delivery of Certain Documents. At the Closing, the Shareholders shall have
delivered to ProMedCo-Sarasota copies of the Articles of Incorporation of IMG
certified (not more than 30 days prior to the Closing Date) by the appropriate
governmental authorities.
9.9 Exercise or Elimination of Warrants. All of the outstanding warrants of IMG
shall have been exercised or otherwise eliminated.
9.10 Full Sale; Closing Transactions. All of the Shareholders shall at Closing
on the Closing Date hereunder deliver to ProMedCo-Sarasota all of the shares of
IMG Stock to be sold by them hereunder and all of Shareholders shall in addition
fully comply with the terms and provisions hereof, it being understood and
agreed that the obligations of ProMedCo-Sarasota to purchase any of the shares
of stock of IMG is conditioned upon performance hereunder by all of
Shareholders. In addition, all the other transactions described in ss. 2.6 shall
have been consummated.
ARTICLE 10 TERMINATION
10.1 Optional Termination. This Agreement may be terminated and the transactions
contemplat ed hereby abandoned at any time prior to the Effective Date,
notwithstanding stockholder approval as follows:
(a) By the mutual consent of ProMedCo, ProMedCo-Sarasota and the
Shareholders; or
(b) By the Shareholders, if any of the conditions set forth in Article 8
shall not have met by September 30, 1997; provided that the
Shareholders shall not be entitled to terminate this Agreement
pursuant to this ss. 10.1(b) if the Shareholders' willful breach of
this Agreement has prevented the consummation of the transactions con
templated hereby; or
(c) By ProMedCo-Sarasota, if any of the conditions provided in Article 9
hereof have not been met by September 30, 1997; provided that
ProMedCo-Sarasota shall not be entitled to terminate this Agreement
pursuant to this ss. 10.1(c) if ProMedCo-Sarasota's willful breach of
this Agreement has prevented the consummation of the transactions
contemplated hereby.
10.2 Notice of Abandonment. In the event of such termination by either ProMedCo
and ProMedCo-Sarasota or the Shareholders pursuant to ss. 10.1 above, written
notice shall forthwith be given to the other party hereto.
10.3 Mandatory Termination. If the Closing has not occurred by October 31, 1997,
this Agreement shall automatically terminate and no longer be of any force or
effect.
10.4 Termination. In the event this Agreement is terminated as provided above,
ProMedCo and ProMedCo-Sarasota shall deliver to IMG all documents (and copies
thereof in their possession) concerning IMG and its Affiliates previously
delivered by IMG or the Shareholders to ProMedCo and ProMedCo-Sarasota; and none
of the parties nor any of their respective partners, shareholders, directors, or
officers shall have any liability to the other party for costs, expenses, loss
of anticipated profits, consequential damages, or otherwise, except for any
deliberate breach of any of the provisions of this Agreement.
ARTICLE 11 INDEMNIFICATION
11.1 Grant of Indemnity. Each Shareholder severally, and not jointly, agrees to
indemnify, defend and hold ProMedCo and ProMedCo-Sarasota and their Affiliates,
and subsidiaries, and its and their respective employees, representatives,
officers and agents, harmless from and against any claims, losses, settlement
payments, liability, obligations, lawsuits, deficiencies, encumbrances, damages
or expense of whatever nature, whether known or unknown, accrued, absolute,
contingent or otherwise including (without limitation) interest, penalties,
attorneys' fees, costs of investigation and all amounts paid in defense or
settlement of the foregoing, suffered or incurred by ProMedCo or
ProMedCo-Sarasota as a result of the occurrence of any of the following:(i) a
breach of any obligation, representation, warranty, covenant or agreement made
by such Shareholder in this Agreement or any agreement referred to herein or
because any representation or warranty by such Shareholder contained herein, in
any document furnished or required to be furnished pursuant to this Agreement by
such Shareholder to ProMedCo or ProMedCo-Sarasota or any of their
representatives shall be false when made or given; and (ii) costs and expenses
(including reasonable attorneys' fees) incurred by ProMedCo and
ProMedCo-Sarasota in connection with any demand, action, suit, proceeding,
assessment or judgment incident to any of the foregoing. The liability of any
Shareholder under this ss. 11.1 shall be limited to the amount of Consideration
paid or payable to such Shareholder hereunder.
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11.2 Representation, Cooperation and Settlement.
(a) ProMedCo and ProMedCo-Sarasota shall give prompt notice to any
Shareholder of any claim against ProMedCo or ProMedCo-Sarasota which
might give rise to a claim based on the indemnity contained in this
Article 11, stating the nature and basis of the claim and the amount
thereof.
(b) In the event any claim, action, suit or proceeding is brought against
ProMedCo or ProMedCo-Sarasota with respect to which the Shareholders
may have liability under the indemnity contained in this Article 11,
ProMedCo and ProMedCo-Sarasota shall permit the Shareholder to assume
the defense of any such claim or any litigation resulting from such
claim, provided that ProMedCo and ProMedCo-Sarasota shall not be
required to permit the Shareholder to assume the defense of any third
party claim which if not first paid, discharged, or otherwise complied
with would result in an interruption or cessation of the conduct of
ProMedCo-Sarasota's business or any material part thereof. Failure by
the Shareholder to notify ProMedCo and ProMedCo-Sarasota of the
Shareholder's election to defend any such claim or action by a third
party within thirty (30) days after notice thereof shall have been
given by ProMedCo and ProMedCo-Sarasota, shall be deemed a waiver of
any such election. If the Shareholder assumes the defense of such
claim or litigation resulting therefrom, the obligation of the
Shareholder hereunder as to such claim shall include taking all steps
reasonably necessary in the defense or settlement of such claim or
litigation resulting in the defense or settlement of such claim or
litigation resulting therefrom, including the retention of counsel
satisfactory to ProMedCo and ProMedCo- Sarasota, and holding ProMedCo
and ProMedCo-Sarasota harmless from and against any and all damage
resulting from, arising out of, or incurred with respect to any
settlement approved by the Shareholder or any judgment in connection
with such claim or litigation resulting therefrom. The Shareholder
shall not, in the defense of such claim or litigation, consent to the
entry of any judgment (other than a judgment of dismissal on the
merits with costs) except with the written consent of ProMedCo and
ProMedCo-Sarasota nor enter into any settlement except with the
written consent of ProMedCo and ProMedCo-Sarasota. Any settlement must
include as an unconditional term thereof the giving by the claimant or
the plaintiff to ProMedCo and ProMedCo-Sarasota a release from all
liability in respect to such claim or litigation.
(c) If the Shareholder shall not assume the defense of any such claim by a
third party or litigation resulting therefrom, ProMedCo and
ProMedCo-Sarasota may defend against such claim or litigation in such
manner as it deems appropriate. The Shareholder shall, in
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accordance with the provisions hereof, promptly reimburse ProMedCo and
ProMedCo-Sarasota for the amount of any settlement reasonably entered into by
ProMedCo and ProMedCo-Sarasota and for all damage incurred by ProMedCo and
ProMedCo-Sarasota in connection with the defense against or settlement of such
claim or litigation.
11.3 Remedies Cumulative. The remedies provided herein shall be cumulative and
shall not preclude ProMedCo and ProMedCo-Sarasota from asserting any other
rights or seeking any other remedies against the Shareholders to which ProMedCo
and ProMedCo-Sarasota are entitled by law.
ARTICLE 12 MISCELLANEOUS
12.1 Expenses. All expenses of the preparation of this Agreement and of the
transactions contem plated hereby, including, without limitation, counsel fees,
accounting fees, investment adviser's fees and disbursements, shall be borne by
the respective parties incurring such expense, whether or not such transactions
are consummated.
12.2 Notices. All notices, demands and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered in person or
mailed by certified mail or registered mail (postage prepaid) or sent by
reputable overnight courier service (charges prepaid):
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To the Shareholders c/o Intercoastal Medical Group, Inc.
921 South Beneva Rd.
Sarasota, FL 34232
Attention: John M. Steele, M.D., President
with a copies to: Moore & Menkhaus, P.A.
4800 North Federal Highway
Suite 210-A
Boca Raton, FL 33431
Attention: David Menkhaus
Hankin, Persson & Darnell
2033 Main Street
Suite 400
Sarasota, FL 34237
Attention: Lawrence M. Hankin
To ProMedCo and
ProMedCo-Sarasota: c/o ProMedCo Management Company
801 Cherry Street
Suite 1450
Fort Worth, TX 76102
Attention: Chief Executive Officer
with a copy to John E. Gillmor
Boult, Cummings, Conners & Berry, PLC
414 Union Street, Suite 1600
Nashville, TN 38219
or to such other address as either the Shareholders or ProMedCo may designate by
notice to the other.
12.3 Entire Agreement. This Agreement and the Appendices, Exhibits, schedules
and documents delivered pursuant hereto constitute the entire contract between
the parties hereto pertaining to the subject matter hereof and supersede all
prior and contemporaneous agreements, understandings, negotiations and
discussions, whether written or oral, of the parties, and there are no
representa tions, warranties or other agreements between the parties in
connection with the subject matter
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hereof, except as specifically set forth herein. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
parties to be bound thereby.
12.4 Alternative Dispute Resolution. Any dispute, disagreement, claim or
controversy arising out of or related to this Agreement (a "Disputed Matter")
may, at the option of either party hereto upon written notice to the other
party, be submitted to non-binding mediation before a mutually acceptable
neutral advisor. To the extent the neutral advisor is compensated, the parties
shall each bear half the cost. Any Disputed Matter that is not resolved through
mediation will be settled by binding arbitration in accordance with the rules of
commercial arbitration of the American Arbitration Association, and judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Such arbitration shall occur within Sarasota County,
Florida, unless the parties mutually agree to have such proceedings in some
other locale. The arbitrator(s) may in any such proceeding award attorneys' fees
and costs to the prevailing party.
12.5 Governing Law. THE VALIDITY AND CONSTRUCTION OF THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF FLORIDA OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF FLORIDA. IN FURTHERANCE OF THE FOREGOING,
THE INTER NAL LAW OF THE STATE OF FLORIDA SHALL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN THOUGH UNDER THAT JURISDIC TION'S CHOICE OF
LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY.
12.6 Legal Fees and Costs. In the event either party elects to incur legal
expenses to enforce or interpret any provision of this Agreement, the prevailing
party will be entitled to recover such legal expenses, including, without
limitation, reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which such party shall be entitled.
12.7 Time. Time is of the essence for purposes of each and every provision of
this Agreement.
12.8 Section Headings. The Section headings are for reference only and shall not
limit or control the meaning of any provision of this Agreement.
12.9 Waiver. No delay or omission on the part of any party hereto in exercising
any right hereun der shall operate as a waiver of such right or any other right
under this Agreement.
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12.10 Nature and Survival of Representations. All statements contained in any
certificate delivered by or on behalf of any of the parties to this Agreement
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties made by the respective parties
hereunder. The covenants (including the indemnification covenants set forth in
Article 11), representations and warranties made by the parties each to the
other in this Agreement or pursuant hereto shall survive the transactions
contemplated hereby and any investigation made by the parties hereto until April
30, 1999 except that the representations and warranties set forth in ss.ss. 3.8,
3.17, 3.18, 3.19, 3.21, 3.22, 3.23 and 3.24 and Article 4 and the indemnity
provisions in Article 11 shall survive until the expiration of the relevant
statutes of limitations.
12.11 Exhibits. All Exhibits, Appendices, schedules and documents referred to in
or attached to this Agreement are integral parts of this Agreement as if fully
set forth herein and all statements appearing therein shall be deemed to be
representations. All items disclosed hereunder shall be deemed disclosed only in
connection with the specific representation to which they are explicitly
referenced.
12.12 Assignment. No party hereto shall assign this Agreement without first
obtaining the written consent of the other party, except ProMedCo and
ProMedCo-Sarasota shall have the right to assign this Agreement to an Affiliate
or any institutional lender providing financing to ProMedCo and its subsidiaries
so long as ProMedCo remains liable under this Agreement. Further, the
Shareholders shall have the right to terminate this Agreement prior to the
Closing upon any actual or announced event which would cause a change in control
of ProMedCo.
12.13 Binding on Successors and Assigns. Subject to ss. 12.12, this Agreement
shall inure to the benefit of and bind the respective heirs, administrators,
successors and assigns of the parties hereto. Nothing expressed or referred to
in this Agreement is intended or shall be construed to give any person other
than the parties to this Agreement or their respective successors or permitted
assigns any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein, it being the intention of the
parties to this Agreement that this Agreement shall be for the sole and
exclusive benefit of such parties or such successors and assigns and not for the
benefit of any other person.
12.14 Parties in Interest. Nothing in this Agreement is intended to confer any
right on any person other than the parties to it and their respective successors
and assigns, nor is anything in this Agreement intended to modify or discharge
the obligation or liability of any third person to
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any party to this Agreement, nor shall any provision give any third person any
right of subrogation or action over against any party to this Agreement.
12.15 Amendments. This Agreement may be amended, but only in writing, signed by
the parties hereto, at any time prior to the Closing, before or after approval
hereof by the stockholders of IMG, with respect to any of the terms contained
herein, but after such stockholder approval, no amendment shall be made which
reduces the consideration per share paid each such stockholder without the
further approval of such stockholders.
12.16 Drafting Party. The provisions of this Agreement, and the documents and
instruments referred to herein, have been examined, negotiated, drafted and
revised by counsel for each party hereto and no implication shall be drawn nor
made against any party hereto by virtue of the drafting of this Agreement.
12.17 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.
12.18 Reproduction of Documents. This Agreement and all documents relating
thereto, including without limitation, consents, waivers and modifications which
may hereafter be executed, the Exhibits and documents delivered at the Closing,
and financial statements, certificates and other information previously or
hereafter furnished to ProMedCo-Sarasota may be reproduced by ProMedCo-Sarasota
by any photographic, photostatic, microfilm, microcard, miniature photographic
or other similar process and ProMedCo-Sarasota may destroy any original
documents so reproduced. The Shareholders agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by ProMedCo-Sarasota in
the regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
12.19 Disclosure of Certain Information. IMG hereby grants ProMedCo
authorization to disclose aggregate financial history and financial and other
information about IMG and about the Clinic Facility in order for ProMedCo to
comply with disclosure requirements in connection with the sale and registration
of its securities, and also to lenders, investment bankers and other officials
as reasonably deemed necessary by ProMedCo.
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12.20 Press Releases. Except as required by law, neither the Shareholders nor
IMG shall make any press releases or other public announcements relating to this
Agreement or the transactions contemplated hereby without the prior written
consent of ProMedCo-Sarasota.
12.21 IMG Shareholders Agreement; Warrants. The Shareholders Agreement dated
December 1, 1993 (the "Shareholders Agreement") among IMG and its shareholders
is hereby terminated, and it shall have no force or effect on the ability of any
of the parties to this Agreement to consummate the transactions contemplated
hereby, including, without limitation, the sale and transfer of stock by the
Shareholders to ProMedCo-Sarasota. Each party to the Shareholders Agreement
hereby releases each other party thereto from any claims such Shareholder may
have against any of the other parties thereto under the Shareholders Agreement.
In addition, by his or her execution of this Agreement, each Shareholder hereby
relinquishes and surrenders, and consents to IMG's cancellation of, any and all
warrants to purchase stock of IMG heretofore granted or promised to such
Shareholder or any other Shareholder at any time.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
PROMEDCO MANAGEMENT COMPANY
By
Its
Name
PROMEDCO OF SARASOTA, INC.
By
Its
Name
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IMG, INC.
(formerly known as)
INTERCOASTAL MEDICAL GROUP, INC.
By
Its
Name
"Shareholders"
John O. Binns, MD
Daniel J. Blacklow, MD
Louis M. Cohen, MD
David C. Daiello, MD
Richard S. Duckworth, MD
James S. Feldbaum, MD
Lee S. Harris, MD
Charles R. Hollen, MD
Joseph J. Larkin, Jr., MD
Michael B. McBride, MD
David Olson, MD
Randy B. Powell, MD
Philip S. Rubin, MD
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John M. Steele, MD
David R. Stutz, MD
Michael C. Swanson, MD
Frederick E. Turton, MD
Marc L. Weinberg, MD
Ricky R. Wiseman, MD
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LIST OF APPENDICES
Number Description
2.6A Service Agreement
2.6B Form of Medical Professional Employment Agreement
2.6C Split Dollar Agreement
2.6D Collateral Assignment
2.6E Rabbi Trust Agreement
8.2 Form of opinion of ProMedCo-Sarasota's counsel to be
delivered at the Closing
9.3 Form of opinion of IMG's counsel to be delivered at the
Closing
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LIST OF EXHIBITS
Number Description
3.1 Copies of IMG's Articles of Incorporation and Bylaws
3.3 Subsidiaries of IMG
3.4 IMG Financial Statements
3.5 Professional Income not Reflected in IMG Financial Statements
3.7 Exceptions to Absence of Recent Changes Representation
3.8 Recent UCC report on IMG's Assets
3.9 Contracts
3.10 List of Burdensome Agreements
3.11 Related party transactions
3.12 Exceptions to No Default Representation
3.15 Aging of Accounts Receivable
3.16 Permits and licenses
3.17 Litigation
3.22 Environmental Matters
3.23 List of Employee Benefit Plans
3.24 List of Employee Benefit Plans not qualified under section 401(a)
of the Internal Revenue Code
3.25A List of employees
3.25B Special Arrangements with Employees
3.25C Description of Employee Benefits
3.26A List of Insurance coverages and bonds other than those relating to
Malpractice
3.26B List of Malpractice Coverages
3.26C Claims History
