_____________________________________________________________________________
AMENDMENT NUMBER 1 TO REGISTRATION STATEMENT
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
Amendment No. 1
to
Form 10SB
REGISTRATION STATEMENT
UNDER SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
_____________________________________________________________________________
Acadia National Health Systems, Inc.
(Name of Small Business Issuer specified in its charter)
Colorado 010509781
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
460 Main Street
Lewiston, Maine 04240
(207) 784-9185
(800) 274-9185
(Address, including zip code, and telephone number including
area code, of registrant's principal executive offices
______________
Mark T. Thatcher, Esq.
Filing Agent
360 Thames Street, First Floor
Newport, RI 02840
(401) 841-9444
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_______________
Copies of communications to:
Thomas N. Hackett, CEO
Acadia National Health Systems, Inc.
460 Main Street
Lewiston, ME 04240
(207) 784-9185
Approximate date of commencement of proposed sale to the public:
None
If the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box:
N/A
If the registrant elects to deliver its latest annual report to
security holders, or a complete and legible facsimile thereof,
pursuant to Item 11(a)(1) of this form, check the following box:
N/A
<PAGE> 1
Item 1. Business.
The information required by this item is contained under
sections, "Summary Information" on pages 6-12, "Introduction" on
Page 12, "The Reorganization and Distribution" on pages 15-31, and
"Business and Properties of Acadia National Health Systems, Inc."
on pages 36-62 of the Information Statement (the "Information
Statement") attached hereto as Annex 1, and such sections are
deemed incorporated herein by reference.
Item 2. Financial Information.
The information required by this item is contained under
sections "Capitalization and Book Value Per Share of Acadia
National Health Systems, Inc." on Page 32 and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" on Page 33 of the Information Statement, and such
sections are deemed incorporated herein by reference.
Item 3. Properties.
The information required by this item is contained under
sections, "Introduction" on Page 12 and "Business and Properties of
Acadia National Health Systems, Inc." on pages 36-62 of the
Information Statement, and such sections are deemed incorporated
herein by reference.
Item 4. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this item is contained under the
section, "Principal Stockholders" on pages 64 of the Information
Statement, and such section is deemed incorporated herein by
reference.
Item 5. Directors and Executive Officers.
The information required by this item is contained under the
section, "Management of Acadia National Health Systems, Inc.--
Directors and Executive Officers" on Page 61 of the Information
Statement, and such section is deemed incorporated herein by
reference.
Item 6. Executive Compensation.
The information required by this item is contained under the
section, "Management of Acadia National Health Systems, Inc.--
Executive Compensation" on pages 61 and 63 of the Information
Statement, and such section is deemed incorporated herein by
reference.
<PAGE> 2
Item 7. Certain Relationships and Related Transactions.
The information required by this item is contained under the
sections, "Summary Information--The Reorganization and
Distribution--Relationship between Acadia National Health Systems,
Inc. and Physician Resources, Inc. after the Reorganization and
Distribution" on page 7 and "The Reorganization and Distribution--
Relationship between Acadia National Health Systems, Inc. and
Physician Resources, Inc." on page 15 of the Information Statement,
and such sections are deemed incorporated herein by reference.
Item 8. Legal Proceedings.
None.
Item 9. Market Price of and Dividends on the Registrant's Common
Equity and Related Stockholder Matters.
The information required by this item is contained under the
sections, "Summary Information--The Reorganization and
Distribution--Stock Trading" on page 9, "The Reorganization and
Distribution--Stock Trading" on page 18 and "Certain Factors" on
page 18 and 31 and "Description of Acadia National Health Systems, Inc.
Common Stock" on page 65 of the Information Statement, and such
sections are deemed incorporated herein by reference.
Item 10. Recent Sales of Unregistered Securities.
None.
Item 11. Description of Registrant's Securities to be Registered.
The information required by this item is contained under the
section, "Description of Acadia National Health Systems, Inc.
Common Stock" on page 65 of the Information Statement, and such
section is deemed incorporated herein by reference.
Item 12. Indemnification of Directors and Officers.
Articles 7-109-101 through 7-109-109 of the Colorado Business
Corporation Act provides that any director or officer of a Colorado
corporation may be indemnified against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by him in
connection with or in defending any action, suit or proceeding in
which he is a party by reason of his position, so long as it shall
be determined that he conducted himself in good faith and that he
reasonably believed that his conduct was in the corporation's best
interest. If a director or officer is wholly successful, on the
merits or otherwise, in connection with such proceeding, such
indemnification is mandatory.
<PAGE> 3
The Company's articles of incorporation and bylaws contain
provisions which provide, among other things, that the Company
shall indemnify certain persons, including officers and directors,
against judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with any
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interest of the Company, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. As to any action brought by or in the right of the
Company, such indemnification is limited to expenses (including
attorney's fees) actually and reasonably incurred in connection
with the defense or settlement of the case, and shall not be made,
absent court approval, if it was determined that such person was
liable for negligence or misconduct in the performance of his duty
to the Company.
Item 13. Financial Statements and Supplementary Date.
The financial statements required by this item are contained
under either the section, "Acadia National Health Systems,
Inc. Financial Statements" on pages F-2 to F-4 of the Information
Statement (such section is deemed incorporated herein by
reference), or in Item 15 below.
Item 14. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
Item 15. Financial Statements and Exhibits.
(a) Financial Statements--see Index to Financial Statements
on page F-1 of the Information Statement.
(b) Exhibits:
(see also Index to Exhibits)
2-Assets Purchase Agreement between Acadia National
Health Systems, Inc. and Physician Resources, Inc., dated
September 27, 1996;
3.(i)-Articles of Incorporation of the Company, as
amended;
3.(ii)-Bylaws of the Company;
4.(i)-Instruments Defining Rights of Security
Holders/Minutes of Annual/Special Meetings of the
Company;
4.(ii)-Loan Agreements Secured by Demand Notes/Promissory
Notes, Defining Rights of Holders of Long Term Debt;
<PAGE> 4
10.(i)-Software License Master Agreement;
10.(ii)-Lease of Premises, Acadia Corporate Headquarters,
460 Main Street, Lewiston, Maine 04240;
10.(iii)-Employment Agreements, dated September 27, 1996
between Acadia and THOMAS N. HACKETT, C.E.O.,
JACQUELYN J. MAGNO, Vice-President;
10.(iv)-Internal Revenue Code Section 125 Cafeteria Plan
dated June 1, 1996;
10.(v)-Line of Credit Memorandum dated September 8, 1995
with PEOPLE'S HERITAGE BANK in the amount of
$250,000.00;
10.(vi)-Line of Credit Memorandum dated July 29, 1996
with PEOPLE'S HERITAGE BANK in the amount of$100,000.00;
27-Financial data schedule;
99-Financial Statements Schedules--see Index to Financial
Statement Schedules on page S-1 hereof.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form 10SB and has duly caused this Amendment to Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lewiston, State of
Maine on the 28th day of January, 1997.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
By: Thomas N. Hackett
THOMAS N. HACKETT, President
To the Holders of Common Stock of
Acadia National Health Systems, Inc.:
This Information Statement ("Information Statement") describes
the reorganization and subsequent liquidation of Physician
Resources, Inc. ("PRI") and distribution of common shares of Acadia
National Health Systems, Inc. ("Acadia") to its stockholders, and
subsequent registration of the Acadia Common Stock (the
"Distribution").
<PAGE> 5
This Information Statement also sets forth information about
Acadia National Health Systems, Inc., its organization, business
and properties and contains audited balance sheets, financial
statements, pro forma financial projections and other financial
information.
Each holder of record of Physician Resources, Inc. ("PRI")
Common Stock on September 24, 1996, the record date for the
Reorganization and Distribution, will receive a proportionate
number of shares of Acadia Common Stock for each share of Physician
Resources, Inc. Common Stock held as of such date at the time of
liquidation of PRI. PRI stockholders of record on the record date
for the Reorganization and Distribution were entitled automatically
to participate in the Distribution and are not required to do
anything to become entitled to so participate. No fractional
shares of Acadia Common Stock will be issued. In lieu of receiving
fractional shares, holders of PRI Common Stock who would otherwise
be entitled to receive fractional shares of Acadia Common Stock
will receive cash for their fractional interests. Acadia stock
certificates will be mailed to stockholders on or about December 1,
1996.
Sincerely,
Thomas N. Hackett
THOMAS N. HACKETT
Chairman, President
Dated: November 8, 1996
To Prospective Stockholders of
Acadia National Health Systems, Inc.:
This Information Statement, distributed to the Acadia National
Health Systems, Inc. stockholders of record as of September 27,
1996, makes available information that should be of great
importance to you as a stockholder of Acadia National Health
Systems, Inc. The information appears in the same form as
contained in the Registration Statement on Form 10SB that Acadia
National Health Systems, Inc., has filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934.
We hope that the prospect of participating in the future of
Acadia National Health Systems, Inc., will be as exciting to you as
it is to us and to the other employees of Acadia National Health
Systems, Inc. who are dedicated to the continued growth of the
corporation.
<PAGE> 6
Sincerely,
Thomas N. Hackett
THOMAS N. HACKETT,
Chairman, President
Dated: November 8, 1996
ANNEX I
SUMMARY INFORMATION
The following is a summary of certain information contained
in this Information Statement. This summary is included for
convenience only and is qualified in its entirety by the more
detailed information and financial statements contained elsewhere
herein.
Business
Acadia National Health Systems, Inc. ("Acadia") was formed
to become a major national Physician Practice Management Company
(PPMC) over the next five years. PPMCs offer billing,
consulting, software, business systems, related services and
sometimes financing to physicians and other health providers. In
a growing managed care environment, these firms offer the
business resources to an industry that is traditionally
clinically oriented.
PPMCs offer doctors and other medical providers an
alternative that puts them at the forefront of health care reform
while positioning them to have choices regarding their autonomy
and profits. PPMCs have enjoyed average annual sales increases
of more than 50% over the last seven years and have been well
received in the stock market, with very high price earnings
ratios. The basis for the Company's assertion is set forth and
fully described at pages 36-62, "BUSINESS AND PROPERTIES OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Acadia has purchased the assets of Physician Resources, Inc.
("PRI"), a billing service founded 25 years ago by an Acadia
principal, Thomas N. Hackett. PRI focuses on small practices in
tertiary markets ignored by the major PPMC players and Acadia
will retain this focus. It will combine the experiences of
Hackett and his core team at PRI with expanded executive talent.
Acadia will also draw upon the experience of Advantage Payroll
Services, another Hackett business, to bring franchise and
banking expertise to the PPMC industry. Advantage Payroll
Services was started by Hackett in 1967 and incorporated in 1970
as a single location payroll service. In 1983 Hackett and his
team of David Friedrich, Nancy French, Rene Morin and others took
the company national through franchising. Today, Advantage is the
<PAGE> 7
eighth largest payroll service in the United States, with more
than 8,000 business clients and 35 franchisees. The Advantage
system is built on win, win, win partnerships between
franchisor, franchisee (often called "Associate") and the
business client. A great deal of the model for Acadia's growth
will be drawn from Advantage including: franchise structure,
distributed data processing and cash management techniques.
As a payroll company, Advantage engages in the following
activities and has done so for many years:
1. marketing its services through independent franchised sales
offices;
2. receiving, processing and redistributing information to third
parties, government agencies and customers;
3. providing Electronic Data Interchange (EDI) and Electronic
Funds Transfer (EFT) between clients and other entities;
4. providing quality assurance to ensure that all applicable
government regulations are observed and following up with dispute
resolution services.
Within the context of the medical billing industry, Acadia will
perform these same functions and more. Acadia will draw on the
principals' Advantage Payroll experience providing these services
and on their years of medical billing experience in Physician
Resources, Inc.
The Reorganization and Distribution
The management of Acadia and PRI, after careful study, have
concluded that it is in the best interests of PRI and its
stockholders to divest PRI by selling the assets of PRI to
Acadia. Management studied the sale of small private companies,
both from their own experience buying and selling small
businesses and from that of fellow members of the International
Billing Association, a trade association of medical billing
companies. It concluded privately held billing companies such as
Physician Resources, Inc. typically sell for 2-7 times earnings
with 3 times being average. It studied the records of public
Physician Practice Management Companies (PPMCs) such as Phycor,
Coastal Healthcare, Pacific Physician Services and Medical Asset
Management and concluded that these companies sell for 10-80
times earnings, with an average of 30 (Public information was
obtained through SEC's EDGAR database, annual reports and the
Investors Alliance Power Investor CD database.) The reasons for
these differences cannot be fully explained by company
operations. Management concluded that much of the price of a
public PPMC derives from shareholders' ability to sell their
shares without prolonged negotiation, the stock's liquidity.
<PAGE> 8
Any accounts between Acadia and PRI will be settled prior to
the Reorganization and Distribution. At the time of the
Reorganization and Distribution, Acadia became the owner of PRI's
physician practice management operations and assets.
Thomas N. Hackett, CEO of Acadia, made the decision to
develop the Acadia concept dramatically by adapting innovative
services, products and software systems to the existing PRI
doctor billing system while contemporaneously expanding the
concepts into a national franchising system of practice
management and billing services.
Acadia, based upon its unique nature and growth potential,
has elected to avail itself to the reporting requirements of the
Exchange Act and begin the dissemination of accurate and
regimented company information to the public through commission
filings. Although the company is not immediately interested in
raising capital, they are launching the new company with a
comprehensively revised business strategy and, hence a new
nationwide identity.
The Board of Directors and management concluded that the
business identity, client perception, reputation and existence of
PRI as a twenty-five (25) year old doctor billing company was an
inappropriate vehicle to infuse substantial growth through
dramatic adaptations of new, innovative services. Therefore, it
decided that the acquisition of the assets of PRI by Acadia (not
solely the assignment of interests in a reorganization) would
bridge the identity barriers discussed, and allow existing
customers to continue utilizing the billing services they are
accustomed to receiving from PRI.
Reasons for Distribution
In the opinion of the Board of Directors of Acadia and PRI,
the Reorganization and Distribution is in the best interests of PRI
and its stockholders. The principal considerations that led Acadia
and PRI to conclude that PRI divest its physician practice
management business are:
(i) An Assets Purchase Agreement has been duly executed and
ratified, whereby Acadia has successfully acquired all
right, title and interests to all tangible and intangible
assets of PRI for the purposes of implementing the Acadia
Business Plan and Franchising Plan as summarized herein;
(ii) Acadia plans to implement their Business Plan as
summarized herein and facilitate trading on the
Over-the-Counter ("OTC") Bulletin Board, in the near
future, and improve the market for
<PAGE> 9
its securities by providing information to the market
through Commission filings.
Manner of Reorganization and Distribution
On September 24, 1996 (the "Reorganization and
Distribution Date"), Acadia issued stock, in connection with the
Acadia and PRI Boards of Directors and Shareholder approved
Reorganization and Distribution. Following the Reorganization
and Distribution, the liquidation of PRI will commence. See "The
Reorganization and Distribution--Manner of Distribution".
Certificates representing shares of Acadia Common Stock will
be mailed to holders of Acadia Common Stock after the
Reorganization and Distribution is complete. Provided any holder
of PRI Common Stock holds a part or portion of a share of PRI
Common Stock indicated by a right as subject to purchase by the
exercise of such right, as promptly as practicable after the
Reorganization and Distribution, Acadia shall mail checks to the
holders of any fractional shares, representing the proceeds from
the sale of the fractional share interests. At this time, both
Acadia and PRI agree that no fractional shares will be issued in
connection with the Reorganization and Distribution. All
expenses associated with the Reorganization and Distribution will
be paid by Acadia and are estimated at $70,000.00.
Stock Trading
Prior to the date hereof, there has been no public market or
trading in Acadia Common Stock, and there can be no assurance
that an active trading market will develop or be sustained after
the Distribution. Provided a trading market does develop in the
future, based upon the Company's compliance with Rule 15(c)211 of
the Exchange Act and N.A.S.D. rules and regulations, the market
price of the shares of Common Stock is likely to be highly
volatile and may be significantly affected by factors such as
fluctuations in the Company's operating results, announcements of
technological innovations or new products by the Company or its
competitors, governmental regulatory action, developments with
respect to patents or proprietary rights and general market
conditions. See "The Reorganization and Distribution--Stock
Trading".
Results of the Reorganization and Distribution
Subsequent to the Reorganization and Distribution Date, Acadia
will operate as an independent company and will continue to engage
in physician practice management services.
<PAGE> 10
Relationship between Acadia and PRI after the Distribution.
Acadia will issue to PRI three hundred thousand (300,000)
shares of Acadia Common Stock, payable as consideration for the
purchase of the assets of PRI by Acadia in accordance with the
Assets Purchase Agreement, set forth herein and attached hereto
as Exhibit (2).
Following the execution of the Assets Purchase Agreement on
September 25, 1996, PRI will commence the processes to ensure
liquidation of its company.
Acadia and PRI will each make available to the other, for a
period of ninety (90) days following the Distribution, certain
personnel, office services and records to ensure the successful
liquidation of PRI.
Federal Income Tax Aspects of the Distribution
Acadia believes that no gain or loss will be recognized, and
no amount will be included in the income of, the holders of Acadia
Common Stock upon the Distribution, except with respect to any cash
received upon the sale of fractional shares. Acadia intends to
effect the Distribution regardless of whether a ruling is sought
from the Internal Revenue Service ("IRS"). See "The Reorganization
and Distribution--Federal Income Tax Aspects of the Distribution".
Tax and ERISA Risks Peculiar to Tax-Exempt Investors/Shareholders
Common Stock may be sold to qualified pension, profit sharing
and Keogh plans and to Individual Retirement Accounts ("IRAs")
which are generally exempt from taxation, with certain exceptions
(the "Tax-Exempt Investors"). There are risks under the Internal
Revenue Code and ERISA which must be considered by any potential
Investor/Shareholder, and an investment in Common Stock should be
considered only after obtaining advice from independent,
professional advisors. No rulings from the Internal Revenue
Service or the Department of Labor have been sought or obtained,
nor is there any intention to seek such rulings in the future with
respect to any of the matters described in this Information
Statement. The analysis and conclusions contained herein with
respect to these matters are not binding upon the Internal Revenue
Service, the Department of Labor or any court.
The views expressed in this Information Statement concerning
the federal tax and ERISA aspects which may affect a Tax-Exempt
Investor/Shareholder are expressly those of the Company. Some of
the matters discussed may be material to a decision to invest in
Common Stock.
<PAGE> 11
In considering an investment in Common Stock, potential Tax-
Exempt Investors/Shareholders should consider (i) whether dividend
income might be treated as "unrelated business taxable income" and,
if so, to what extent; (ii) whether an investment in Common Stock
is prudent within the contemplation of ERISA; and (iii) whether an
investment in Common Stock satisfies the diversification
requirements of ERISA. See "ERISA Considerations for Tax-Exempt
Investors/Shareholders."
EACH POTENTIAL INVESTOR/SHAREHOLDER SHOULD ASK THE ADVICE OF
HIS OWN TAX AND ERISA ADVISOR WITH RESPECT TO THE TAX OR ERISA
CONSEQUENCES OF AN INVESTMENT IN COMMON STOCK.
Selected Financial Information
The following table summarizes certain selected financial
information with respect to Acadia and is based upon the financial
statements of PRI. The information set forth below should be read
in conjunction with Management's Discussion and Analysis and the
financial statements, included elsewhere herein. The unaudited PRI
financial information as of 1993, 1994 and 1995 reflects, in the
opinion of management, all adjustments (as explained in the
footnote set forth on page 12 or which comprise only
normal recurring items) which are necessary for a fair presentation
of PRI's financial position and results of operations as of and for
the dates and periods indicated.
<TABLE>
SELECTED FINANCIAL INFORMATION*
Years ended December 31, 1993, 1994 and 1995
(Unaudited)
<CAPTION>
1993 1994 1995
<S> <C> <C> <C>
Net Sales 462,871 462,689 524,962
Expenses 404,072 351,672 402,928
Net Income
(loss) 58,799 111,017 122,034
<PAGE> 12
Net Earnings
(loss) per
common share $587.99 $1,110.17 $1,220.34
Total Assets
at end of
Period 195,618 202,929 359,136
Total Long
Term debt,
excluding
current
installments 68,590 115,796 162,046
<FN>
*Footnote:
In order to present a fair comparison with Acadia, a public
company, the following items were removed from Physician Resources'
cost structure as filed on its tax returns: 1) interest, consulting
fees and bonuses paid to owners, 2) one half of employee bonuses on
a plan that was canceled in July of 1996. These amounts do not
reflect unbooked commissions owed by clients which total fifty-two
thousand dollars ($52,000.00) as of September 27, 1996.
</TABLE>
INTRODUCTION
Acadia National Health Systems, Inc. ("Acadia"), a Colorado
corporation, has been formed to become a major national Physician
Practice Management Company (PPMC) over the next five years.
PPMCs offer billing, consulting, software, business systems,
related services and sometimes financing to physicians and other
health providers. In a growing managed care environment, these
firms offer the business resources to an industry that is
traditionally clinically oriented.
PPMCs offer doctors and other medical providers an alternative
that puts them at the forefront of health care reform while
positioning them to have choices regarding their autonomy and
profits. PPMCs have enjoyed average annual sales increases of
more than 50% over the last seven years and have been well
received in the stock market, with very high price earnings
ratios. The basis for the Company's assertion is set forth and
fully described at pages 36-62, "BUSINESS AND PROPERTIES OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
<PAGE> 13
Acadia has purchased the assets of Physician Resources, Inc.
("PRI") a billing service founded 25 years ago by an Acadia
principal, Thomas N. Hackett. PRI focuses on small practices in
tertiary markets ignored by the major PPMC players and Acadia
will retain this focus. It will combine the experiences of
Hackett and his core team at PRI with expanded executive talent.
Acadia will also draw upon the experience of Advantage Payroll
Services, another Hackett business, to bring franchise and
banking expertise to the PPMC industry.
Advantage Payroll Services was started by Hackett in 1967 and
incorporated in 1970 as a single location payroll service. In
1983 Hackett and his team of David Friedrich, Nancy French, Rene
Morin and others took the company national through franchising.
Today, Advantage is the eighth largest payroll service in the
United States, with more than 8,000 business clients and 35
franchisees. The Advantage system is built on win, win, win
partnerships between franchisor, franchisee (often called
"Associate") and the business client. A great deal of the model
for Acadia's growth will be drawn from Advantage including:
franchise structure, distributed data processing and cash
management techniques.
Franchisees will market billing, practice management, systems and
other physician oriented business services to small medical
practices in tertiary markets. Most practices will be less than
five physicians and found in cities and towns of less than 75,000
people. Catering to this market will play to small practice
strengths inherited from Physician Resources and simultaneously
minimize direct competition with companies such as Phycor, which
has a 5-10 year growth lead. The small practice strengths that
Acadia inherited from PRI are set forth at pages 41-42 of BILLING
SERVICE, "BUSINESS AND PROPERTIES OF ACADIA NATIONAL HEALTH
SYSTEMS, INC.
- - Franchisees will become the company's eyes and ears as they
constantly facilitate affiliations with other franchisees,
with third party payers, merger/takeover candidates and with
new strategic partners or joint ventures. These
affiliations will earn the franchisee participation in each
new affiliation formed. Thus, the system will grow at a
network pace, rather than a sales based pace. The Company
has not presently identified specific parties that it
anticipates entering into definitive agreements with,
however the Company does plan to pursue discussions
regarding the above mentioned potential transactions if they
become available in the near future.
Franchisees will earn commissions for assisting Acadia to
establish new franchises, strategic partnerships and joint
ventures within the franchisee's designated markets.
Commissions will vary with the nature of the new
<PAGE> 14
relationship and the extent to which a franchisee
facilitated the relationship. Acadia may offer an equity
position to the franchisee in lieu of commission on a
specific relationship, but commissions will be payable
unless all parties agree on the terms of the equity
relationship. Pursuant to the rules and regulations of the
Federal Trade Commission ("FTC"), Acadia will prepare and
make available to the public, no later than March 31,
1997, a Uniform Franchise Offering Circular ("UFOC") as
described in Rule 436 (16 CFR Part 436i).
The company will take advantage of several existing market
conditions and national trends to achieve accelerated
growth:
- - Managed care, Medicare reform and other third party payer
changes are creating complexity, rules and new liabilities
for medical providers that are driving doctors' offices and
small billing firms out of the medical billing business.
- - Physician Hospital Organizations (PHO) and Managed Care
Organizations (MCO) treat doctors as employees and limit
both their incomes and their traditional management role.
PPMCs give doctors an opportunity to be a profitable, active
partner in reform rather than its victim.
- - All large PPMCs concentrate on practices of 10 or more
providers and seek to sell their services in larger
metropolitan areas that can support those much bigger
practices. Metropolitan areas are shrinking, with rural
areas growing in population, as small business finds it can
be anywhere there is telephone service. Physician Resources
has always focused on smaller practices in rural markets, as
has Advantage Payroll Services, and Acadia will capitalize
on that experience, understanding and tradition. Acadia
will operate in a large niche ignored by their major
competitors. The company expects minimal head-to-head
competition during the first several years and most of that
will come from much smaller, weaker firms.
- - Technology changes including: computer networking, the
Internet, electronic billing, direct funds
transfer, automated scheduling, computerized patient
charting systems, state of the art dictation technology plus
distributed data processing leave doctors' offices and small
billing firms at best inefficient and at worst without
access to payment facilities. Physician Resources already
has extensive experience with these new technologies and is
currently expanding their state-of-the-art systems.
<PAGE> 15
- - Intense capital needs must be met including: working capital
for accounts receivable; new technology for office
automation, medical testing and case management; and higher
quality and quantity of space for office personnel.
- - Being a franchisee (associate) in a growth industry can be
very attractive to bright, hard working people. It gives
them independence as downsizing in corporate America
continues. These radical changes in the health care industry
are creating many unemployed professionals eager and
financially able to start their own small franchise
business. Thomas Hackett has more than thirteen years
franchisor experience and this will be his second national
franchise development project.
- - Acadia addresses the national trend toward health
organization consolidation. It's strengths in medical
industry expertise, business leadership, capitalization,
computer systems and franchising will lead to strategic
partnerships, joint ventures and other rapid growth
mechanisms as small and medium sized billing companies find
that joining Acadia is a good business strategy. The
Company has not initiated plans, proposals, arrangements or
understandings with specific parties with respect to
future acquisitions and mergers, however the Company does
plan to pursue discussions regarding these scenarios if they
become available in the future.
Acadia maintains its principal executive offices at 460 Main
Street, Lewiston, Maine 04240, its mailing address is 460 Main
Street, Lewiston, Maine 04240, and its telephone number is (207)
784-9185.
THE REORGANIZATION AND DISTRIBUTION
The management of Acadia and PRI, after careful study, have
concluded that it is in the best interests of PRI and its
stockholders to divest PRI by selling the assets of PRI to
Acadia. Management studied the sale of small private companies,
both from their own experience buying and selling small
businesses and from that of fellow members of the International
Billing Association, a trade association of medical billing
companies. It concluded privately held billing companies such as
Physician Resources, Inc. typically sell for 2-7 times earnings
with 3 times being average. It studied the records of public
Physician Practice Management Companies (PPMCs) such as Phycor,
Coastal Healthcare, Pacific Physician Services and Medical Asset
Management and concluded that these companies sell for 10-80
times earnings, with an average of 30 (Public information was
obtained through SEC's EDGAR database, annual reports and the
Investors Alliance Power Investor CD database.) The reasons for
these differences cannot be fully explained by company
<PAGE> 16
operations. Management concluded that much of the price of a
public PPMC derives from shareholders' ability to sell their
shares without prolonged negotiation, the stock's liquidity.
Any accounts between Acadia and PRI will be settled prior to
the Reorganization and Distribution. At the time of the
Reorganization and Distribution, Acadia became the owner of PRI's
physician practice management operations and assets.
Thomas N. Hackett, CEO of Acadia, made the decision to
develop the Acadia concept dramatically by adapting innovative
services, products and software systems to the existing PRI
doctor billing system while contemporaneously expanding the
concepts into a national franchising system of practice
management and billing services.
Acadia, based upon its unique nature and growth potential,
has elected to avail itself to the reporting requirements of the
Exchange Act and begin the dissemination of accurate and
regimented company information to the public through commission
filings. Although the company is not immediately interested in
raising capital, they are launching the new company with a
comprehensively revised business strategy and, hence a new
nationwide identity.
The Board of Directors and management concluded that the
business identity, client perception, reputation and existence of
PRI as a twenty-five (25) year old doctor billing company was an
inappropriate vehicle to infuse substantial growth through
dramatic adaptations of new, innovative services. Therefore, it
decided that the acquisition of the assets of PRI by Acadia (not
solely the assignment of interests in a reorganization) would
bridge the identity barriers discussed, and allow existing
customers to continue utilizing the billing services they are
accustomed to receiving from PRI.
Reasons for Distribution
In the opinion of the Board of Directors of Acadia and PRI,
the Reorganization and Distribution is in the best interests of
Acadia and PRI's stockholders. The principal considerations that
led Acadia and PRI to conclude that PRI should divest its physician
practice management services business are:
(i) An Assets Purchase Agreement has been duly executed and
ratified, whereby Acadia has successfully acquired all
right, title and interests to all tangible and intangible
assets of PRI for the purposes of implementing the Acadia
Business Plan as summarized herein;
<PAGE> 17
(ii) Acadia plans to implement their Business Plan as
summarized herein and facilitate trading on the
Over-the-Counter ("OTC") Bulletin Board, in the near
future, and improve the market for its securities by
providing information to the market through
Commission filings.
Manner of Distribution
On or about September 24, 1996 (the "Reorganization and
Distribution Date"), Acadia issued stock, in connection with the
Acadia and PRI Board of Directors and Shareholder approved
Reorganization and Distribution. Following the Reorganization and
Distribution, the liquidation of PRI will commence.
The following sequence and protocol of events transpired to
ensure a successful reorganization and distribution subsequent to
approved corporate action, resolution and directive by both the
Board of Directors and Shareholders of Acadia and PRI:
1. Three million two hundred sixty-seven thousand nine hundred
and eighty-seven (3,267,987) shares of Acadia Common Stock were
issued on September 24, 1996 to directors, officers, employees and
additional stockholders in accordance with approval by the Board of
Directors' Adoption of Special Minutes, ratification and approval
of an accompanying Corporate Resolution to issue shares in said
amounts, and notation on the Shareholder Ledger of Acadia with
respect to the issuance of said shares.
This transfer of shares in accordance with Internal Revenue
Code ("I.R.C.") Section 351 recognizes no gain or loss if property
is transferred to a corporation by one or more persons solely in
exchange for stock or securities in such corporation and
immediately after the exchange such person or persons are in
control of the corporation. Section 351 is defined by I.R.C.
Section 368 whereby "control" means the ownership of stock
possessing at least eighty percent (80%) of the total combined
voting power of all classes of stock entitled to vote and at least
eighty percent (80%) of the total number of shares of all other
classes of stock of the corporation;
2. Three hundred thousand (300,000) shares of Acadia Common
Stock were issued on September 27, 1996 to Physician Resources,
Inc. ("PRI") as consideration for the sale of PRI assets to Acadia
set forth and detailed in the Assets Purchase Agreement dated and
executed September 25, 1996. This issuance of stock has been
approved by the Board of Directors' Adoption of Special Minutes,
ratification and approval of an accompanying Corporate Resolution
to issue shares in said amount, and notation on the Shareholder
Ledger of Acadia with respect to the issuance of said shares.
<PAGE> 18
This transaction was made pursuant to I.R.C. Section
368(a)(1)(c) whereby the acquisition by one corporation, in
exchange solely for all or a part of its voting stock, or in
exchange solely for all or a part of the voting stock of a
corporation which is in control of the acquiring corporation,
results in a successful tax-free reorganization;
3. One hundred sixty-six thousand (166,000) shares of Acadia
Common Stock were issued on September 27, 1996 to Thomas N.
Hackett, CEO, in order to capitalize debt owed to him by PRI that
was subsequently acquired by Acadia upon its execution of the
Assets Purchase Agreement dated and executed September 25, 1996.
This issuance of stock has been approved by the Board of Directors'
Adoption of Special Minutes, ratification and approval of an
accompanying Corporate Resolution to issue shares in said amount,
and notation on the Shareholder Ledger of Acadia with respect to
the issuance of said shares.
Following the Distribution, PRI will commence the liquidation
of its company. PRI stockholders will receive cash in lieu of any
fractional shares of Acadia Common Stock owned by PRI at the time
of Distribution. Certificates representing shares of Acadia Common
Stock will be mailed to holders of PRI Common Stock after the
Distribution Date. As promptly as practicable after the
Distribution Date, PRI shall mail checks to the holders of
fractional shares, representing the proceeds from the sale of the
fractional share interests. All expenses associated with the
Distribution will be paid by Acadia.
No certificates or scrip representing fractional shares of
Acadia Common Stock will be issued as part of the liquidation. In
lieu of receiving fractional shares, each holder of PRI Common
Stock will receive cash for such fractional interest. Such cash
will be derived from the sale of fractional interests by the Agent
on behalf of stockholders otherwise entitled to fractional shares.
All expenses associated with the Distribution will be paid by
Acadia.
Stock Trading
Prior to the date hereof, there has been no public market or
trading in Acadia Common Stock, and there can be no assurance
that an active trading market will develop or be sustained after
the Distribution. Provided a trading market does develop in the
future, based upon the Company's compliance with Rule 15(c)211 of
the Exchange Act and N.A.S.D. rules and regulations, the market
price of the shares of Common Stock is likely to be highly
volatile and may be significantly affected by factors such as
fluctuations in the Company's operating results, announcements of
technological innovations or new products by the Company or its
competitors, governmental regulatory action, developments with
respect to patents or proprietary rights and general market
<PAGE> 19
conditions. See "The Reorganization and Distribution--Stock
Trading".
Results of the Distribution
Subsequent to the Reorganization and Distribution Date, Acadia
will operate as an independent company and will continue to engage
in a physician practice management services business.
Relationship between Acadia and PRI after the Distribution.
Acadia has issued three hundred thousand (300,000) shares of
its Common Stock to PRI, payable as consideration in accordance
with the Assets Purchase Agreement, fully described and set forth
herein as Exhibit (2).
The Board of Directors of Acadia includes two (2) directors
who are also directors and executive officers of PRI. See
Management of Acadia--Directors and Executive Officers.
Certain Agreements
For the purpose of an orderly transition following the
Reorganization and Distribution, and the subsequent liquidation of
PRI, Acadia and PRI have agreed to make available to the other for
a limited period certain personnel, office services and records
with each party being reimbursed for any costs and expenses
incurred in connection therewith. Each of Acadia and PRI also have
agreed to be responsible for all claims and liabilities relating to
their respective businesses, whether or not such claims and
liabilities are asserted prior to the Reorganization and
Distribution, and each has agreed to indemnify the other against
such claims and liabilities. In addition, Acadia and PRI have
agreed to preserve each party's rights and obligations with respect
to deficiencies and refunds of federal, state or other taxes
relating to Acadia which are attributable to periods ending prior
to or on the Reorganization and Distribution Date.
Federal Income Tax Aspects of the Reorganization and Distribution
Acadia will not seek a ruling from the Internal Revenue
Service (IRS") to the effect that no gain or loss will be
recognized, and no amount will be included in the income of, the
holders of Acadia Common Stock upon the Reorganization and
Distribution, except with respect to cash received upon the sale of
fractional shares.
Acadia believes the Reorganization and Distribution qualifies
as tax-free under Section 351, 368(c) and 368(a)(1)(C) of the
Internal Revenue Code of 1954, as amended (the "I.R.C" and/or the
"Code"). As such, the transfer of shares in accordance with I.R.C.
<PAGE> 20
Section 351 recognizes no gain or loss if property is transferred
to a corporation by one or more persons solely in exchange for
stock or securities in such corporation and immediately after the
exchange such person or persons are in control of the corporation.
I.R.C. Section 351 is defined by I.R.C. Section 368(c) whereby
"control" means the ownership of stock possessing at least eighty
percent (80%) of the total combined voting power of all classes of
stock entitled to vote and at least eighty percent (80%) of the
total number of shares of all other classes of stock of the
corporation;
The Reorganization and Distribution was also made pursuant to
I.R.C. Section 368(a)(1)(C) whereby the acquisition by one
corporation, in exchange solely for all or a part of its voting
stock, or in exchange solely for all or a part of the voting stock
of a corporation which is in control of the acquiring corporation,
results in a successful tax-free reorganization;
If the Distribution does not qualify as tax-free under I.R.C.
Section 351, 368(c) and 368(a)(1)(C), the Distribution will be
treated as a distribution with respect to Acadia Common Stock.
Each holder of Acadia Common Stock which is not a corporation will
be treated as receiving a distribution equal in amount to the
aggregate fair market value (as of the Distribution Date) of the
Acadia Common Stock received by him, plus the amount of cash
received in lieu of any fractional share interest. If the Acadia
stockholder is a domestic corporation, the amount of the
Distribution would be the adjusted basis of the Common Stock in the
hands of Acadia, increased by the amount of gain recognized by
Acadia on the Distribution, plus the amount of cash received in
lieu of any fractional interest. In either case, the portion of
the Distribution which is equal to the current and accumulated
earnings and profits of Acadia would be taxable as a dividend, that
portion of the Distribution in excess of the current and
accumulated earnings and profits of Acadia would be applied against
and reduce the stockholder's adjusted basis in the shares of Acadia
Common Stock, and that portion of the Distribution which exceeds
the stockholder's adjusted basis in Acadia Common Stock would be
taxable as a gain from the sale or exchange of the PRI Common
Stock. If the fair market value of the Acadia Common Stock exceeds
its adjusted basis in the hands of Acadia, a gain in an amount
equal to such excess will be recognized as if the PRI Common Stock
had been sold at the time of the Distribution. The recognition of
such gain to Acadia could not only result in additional federal
income tax liability to Acadia and/or PRI but could also increase
the current earnings and profits of Acadia and thus increase that
portion of the amount of the Distribution treated as a dividend to
the stockholders of Acadia.
<PAGE> 21
Acadia and PRI believe that the Reorganization and
Distribution is in the best interest of Acadia, PRI and its
stockholders without regard to its federal income tax consequences.
Accordingly, the Distribution will be effected whether or not
Acadia receives a favorable ruling from the Internal Revenue
Service. Acadia will notify all stockholders as to the result of
its request for ruling from the Internal Revenue Service.
The discussion contained herein has been prepared by the
Company and is based on existing law as contained in the Code,
amended United States Treasury Regulations ("Treasury
Regulations"), administrative rulings and court decisions as of the
date of this Registration Statement. No assurance can be given
that future legislative enactments, administrative rulings or court
decisions will not modify the legal basis for statements contained
in this discussion. Any such development may be applied
retroactively to transactions completed prior to the date thereof,
and could contain provisions having an adverse affect upon the
Company and the holders of the Common Stock. In addition, several
of the issues dealt with in this summary are the subject of
proposed and temporary Treasury Regulations. No assurance can be
given that these regulations will be finally adopted in their
present form.
All Investors/Shareholders must consider the potential
consequences under the Code as administered by the Service. In
addition, the fiduciaries of potential Tax-Exempt
Investors/Shareholders must also consider the potential
consequences under ERISA, as administered by the U.S. Department
of Labor (the "DOL"). References herein to "Sections" shall refer
to the Code, unless specifically indicated as referring to ERISA.
This discussion does not purport to be a complete analysis of
all potential federal income tax considerations to prospective
Investors or Shareholders. Furthermore, this discussion is limited
solely to U.S. federal income tax matters. Investors/Shareholders
should be aware that certain relevant provisions of the Code have
not been subject to definitive interpretation by the IRS or the
courts. Except as otherwise indicated, references to "Common
Stock" are to the Common Stock issued to date.
This discussion is limited to those Investors/Shareholders who
would hold the Common Stock as a "capital asset" for federal income
tax purposes. This discussion does not purport to address federal
income tax consequences that may be applicable to particular
categories of shareholders, including life insurance companies,
tax-exempt organizations, regulated investment companies, S
corporations, financial institutions, broker-dealers, persons with
significant holdings of Company stock, foreign corporations and
nonresident alien individuals. This discussion does not address
any tax considerations under the laws of any state, locality or
jurisdiction, or the laws of any foreign country.
<PAGE> 22
The Company has not sought, nor does it intend to seek, a
ruling from the IRS or an opinion of counsel as to any of the
matters covered by this discussion, and there can be no assurance
that the IRS will not successfully challenge the conclusions
reached in this discussion.
BECAUSE THE U.S. FEDERAL INCOME TAX CONSEQUENCES DISCUSSED
BELOW DEPEND UPON EACH HOLDER'S PARTICULAR TAX STATUS, AND
DEPEND FURTHER UPON U.S. FEDERAL INCOME TAX LAWS, REGULATIONS,
RULINGS AND DECISIONS WHICH ARE SUBJECT TO CHANGE (WHICH
CHANGES MAY BE RETROACTIVE IN EFFECT), INVESTORS/SHAREHOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE PARTICULAR
TAX CONSEQUENCES OF AN INVESTMENT IN THE COMMON STOCK.
This discussion is not intended as a substitute for careful
tax and ERISA planning, particularly since the income tax and ERISA
consequences of an investment in the Common Stock will not be the
same for all taxpayers. While it is believed that the following
conclusions accurately reflect the results that will generally be
reached in each situation, it does not and cannot include every
possible circumstance which might result in exceptions to the
conclusions, any one which might adversely affect some prospective
purchasers significantly.
In considering an investment in the Common Stock, fiduciaries
of Tax-Exempt Investors/Shareholders should consider: (i) whether
the investment is in accordance with the documents and instruments
governing the Tax-Exempt Investor/Shareholder; (ii) whether the
investment satisfies the diversification requirements of ERISA; and
(iii) whether the investment is prudent considering, among other
matters, that there probably will not be a market created in which
a Tax-Exempt Investor/Shareholder can sell or otherwise dispose of
its Common Stock. Whether an investment in the Common Stock is
prudent as to any particular Investor/Shareholder depends upon the
individual circumstances and assets of the Investor/Shareholder.
CERTAIN PARTS OF THIS DISCUSSION CONCERNING ERISA, UNRELATED
BUSINESS TAXABLE INCOME AND PLAN ASSETS AND INVESTMENTS RELATED TO
TAX-EXEMPT INVESTORS/SHAREHOLDERS MAY NOT BE APPLICABLE TO
INVESTORS/SHAREHOLDERS WHO ARE GENERALLY TAXABLE UNDER THE CODE.
Basis in Common Stock
The tax basis that a Shareholder will have in his Common Stock
will equal his cost in acquiring his Common Stock. If a
Shareholder acquires Common Stock at different times or at
different prices, he must maintain records of those transactions so
that he can accurately report gain or loss realized upon
disposition of the Common Stock.
<PAGE> 23
Dividends on Common Stock
Distributions made by the Company with respect to the Common
Stock will be characterized as dividends that are taxable as
ordinary income to the extent of the Company's current or
accumulated earnings and profits ("earnings and profits"), if any,
as determined for U.S. federal income tax purposes. To the extent
that a distribution on the Common Stock exceeds the holder's
allocable share of the Company's earnings and profits, such
distribution will be treated first as a return of capital that will
reduce the holder's adjusted tax basis in such Common Stock, and
then as taxable gain to the extent the distribution exceeds the
holder's adjusted tax basis in such Common Stock. The gain will
generally be taxed as a long-term capital gain if the holder's
holding period for the Common Stock is more than one year.
The availability of earnings and profits in future years will
depend on future profits and losses which cannot be accurately
predicted. Thus, there can be no assurance that all or any portion
of a distribution on the Common Stock will be characterized as a
dividend for general income tax purposes. Corporate shareholders
will not be entitled to claim the dividends received deduction with
respect to distributions that do not qualify as dividends. See the
discussion regarding the dividends received deduction below.
Corporate Holder - Dividends Received Deduction
Subject to important restrictions, dividends received by a
corporate holder of Common Stock generally will qualify for the 70%
dividends received deduction provided by Section 243(a)(1) of the
Code. Under Section 246(b) of the Code, the aggregate dividends
received deduction permitted to a corporate holder may not exceed
70% of such holder's "taxable income," as specially computed under
that section. Under Section 246(c) of the Code, the dividends
received deduction is not available if the corporate holder does
not hold the stock for at least 46 days or at least 91 days in the
case of a dividend attributable to a period or periods aggregating
in excess of 366 days. A corporate holder's holding period for
these purposes will be reduced by periods during which: (i) the
corporate holder has an option to sell, or has made (but not
closed) a short sale of substantially identical stock or
securities; (ii) the corporate holder is the grantor of an option
to purchase substantially identical stock or securities; or (iii)
the corporate holder's risk of loss with respect to the shares is
considered diminished by reason of the holding of one or more
positions in substantially similar or related property.
In addition to the foregoing, no dividends received deduction
will be allowed to a corporate holder of the Common Stock to the
extent the taxpayer is under any obligation (whether pursuant to a
short sale or otherwise) to make related payments with respect to
a position in substantially similar or related property. Under
<PAGE> 24
Section 246A of the Code, the percentage of the dividends received
deduction available to a corporate holder with respect to
"debt-financed portfolio stock" as defined in Section 246A(c) of
the Code may be proportionately reduced. In addition, for purposes
of computing alternative minimum tax liability, corporate holders
may be denied the benefit of the dividends received deduction.
Under Section 1059 of the Code, a corporate holder must reduce
(but not below zero) its basis in the Common Stock by the "nontaxed
portion" of any "extraordinary dividend" if the holder has not held
the Common Stock, subject to a risk of loss, for more than two
years before the date the Company declares, announces, or agrees
to, the amount or payment of such dividend, whichever is earliest.
In addition, upon a sale or disposition of such Common Stock, a
holder will recognize gain, in addition to any gain otherwise
required to be recognized, in an amount equal to so much of the
nontaxed portion of all extraordinary dividends which did not cause
a reduction in stock basis due to the limitation on reducing basis
below zero. Generally, the nontaxed portion of an extraordinary
dividend is the amount effectively excluded from income by
application of the dividends received deduction. An "extraordinary
dividend" on the Common Stock is a dividend that (i) equals or
exceeds 5% of the holder's adjusted tax basis in the stock,
treating all dividends having ex-dividend dates within an 85-day
period as one dividend|; or (ii) Exceeds 20% of the holder's
adjusted tax basis in the stock, treating all dividends having ex-
dividend dates within the same 365-day period as one dividend. A
holder may elect to determine whether a dividend on the Common
Stock is extraordinary by reference to the fair market value of the
stock on the day before the ex-dividend date (rather than by
reference to the stock holder's adjusted tax basis) for purpose of
the 5% or 20% tests described above if the holder is able to
establish the fair market value of the Common Stock as of such date
to the satisfaction of the IRS. An extraordinary dividend would
also include any amount treated as a dividend in the case of a
redemption that is either non-pro rata as to all stock holders or
in partial liquidation of the Company, regardless of the relative
size of the dividend and regardless of the corporate holders'
holding period for the Common Stock.
Any dividend on "disqualified common stock" is treated as an
extraordinary dividend, without regard to the holder's holding
period. Common Stock is so treated, if inter alia, such stock at
issue has a dividend rate that declines (or reasonably can be
expected to decline) or the issue price exceeds the liquidation
rights or stated redemption price. If constructive stock dividends
were considered paid on the Common Stock under Section 305(c)
(described below), the stock possibly could be considered by the
IRS to satisfy the declining dividend rate test.
<PAGE> 25
Redemption of Common Stock
The Company does not have the right to redeem any Common
Stock. However, any redemption of Common Stock, with the consent
of the holder, will be a taxable event to the redeemed holder.
The amount received in the redemption will be treated as a
distribution taxable as a dividend (to the extent of the Company's
earnings and profits) to the redeemed holder under Section 302 of
the Code (and may constitute an extraordinary dividend under
Section 1059 of the Code) unless the redemption: (a) is treated as
a distribution "not essentially equivalent to a dividend" with
respect to the holder under Section 302(b)(1); (b) is
"substantially disproportionate" with respect to the holder under
Section 302(b)(2); (c) "completely terminates" the holder's equity
interest in the Company pursuant to Section 302(b)(3); or (d) is of
stock held by a noncorporate holder and is in partial liquidation
of the Company pursuant to Section 302(b)(4). In determining
whether any of these tests has been satisfied, there generally must
be taken into account shares actually owned by the holder and
shares considered to be owned by the holder by reason of certain
constructive ownership rules set forth in Section 318 of the Code.
A distribution will be "not essentially equivalent to a dividend"
as to a particular holder only if it results in a "meaningful
reduction" in the holder's interest in the Company. A redemption
by a holder is "substantially disproportionate" if the holder's
percentage ownership of both all voting stock and all common stock
considered separately immediately after the redemption is less than
80% of such ownership percentage immediately before the redemption.
Prospective holders of Common Stock should consult their own tax
advisors as to the application of this rule.
If any of these tests is satisfied as to a holder, the
redemption of the Common Stock generally would be treated as to
that holder as an exchange under Section 302(a) of the Code giving
rise to capital gain or loss measured by the difference between the
amount of cash or the fair market value of property received and
the holder's tax basis in the redeemed Common Stock. Any such gain
or loss will be a long-term capital gain or loss if the holder's
holding period exceeds one year. However, payments received upon
redemption that represent accrued but unpaid dividends may be taxed
as ordinary income dividends, and the extraordinary dividend rules
discussed above could apply.
If none of these tests is satisfied as to a stockholder, the
redemption will be treated as a distribution taxable as a dividend
to the extent of the Company's current and accumulated earnings and
profits. As described above, the amount of cash received that is
treated as a dividend will constitute an "extraordinary dividend,"
and the basis reduction and gain recognition rules applicable to
such dividend will apply irrespective of the period of time that
<PAGE> 26
the holder has held the Common Stock, if such redemption is not pro
rata as to all holders.
The Company does not believe that the Common Stock will be
treated as debt for federal income tax purposes. However, in the
event that the Common Stock is treated as debt for federal tax
purposes, a holder generally will recognize gain or loss upon the
redemption of the Common Stock measured by the difference between
the amount of cash or the fair market value of property received
and the holder's tax basis in the redeemed Common Stock. To the
extent the cash or property received are attributable to accrued
interest, the holder may recognize ordinary income rather than
capital gain. Characterization of the Common Stock as debt would
also cause a variety of other tax implications, some of which may
be detrimental to either the holders, the Company, or both
(including, for example, original issue discount treatment to the
Investors). Potential Investors should consult their tax advisors
as to the various ramifications of debt characterization for
federal income tax purposes.
Other Disposition of the Common Stock
Upon the sale or exchange of shares of Common Stock, to or
with a person other than the Company, a holder will recognize
capital gain or loss equal to the difference between the amount
realized on such sale or exchange and the holder's adjusted basis
in such stock. Any capital gain or loss recognized will generally
be treated as a long-term capital gain or loss if the holder held
such stock for more than one year. For this purpose, the period
for which the Common Stock was held would be included in the
holding period of the Common Stock received upon a conversion.
Backup Withholding
Federal income tax backup withholding at a rate of 31% on
dividends, interest payments (including accrued OID), and proceeds
from a sale, exchange, or redemption of Common Stock, will apply
unless the holder (i) is a corporation or comes within certain
other exempt categories (and, when required, demonstrates this
fact); or (ii) provides a taxpayer identification number, certifies
as to no loss of exemption from backup withholding, and otherwise
complies with applicable requirements of the backup withholding
rules. The amount of any backup withholding from a payment to a
holder will be allowed as a credit against the holder's federal
income tax liability and may entitle such holder to a refund,
provided that the required information is furnished to the IRS.
<PAGE> 27
Unrelated Business Taxable Income
Tax-Exempt Investors/Shareholders are generally exempt from
taxation except to the extent that they have unrelated business
taxable income ("UBTI") (determined in accordance with Section
511-514 of the Code). Tax-Exempt Investors who purchase Common
Stock and do not directly or indirectly finance the purchase of
such Common Stock by borrowing will generally not be subject to
UBTI with respect to dividends attributable to the Common Stock.
If a Tax-Exempt Investor/Shareholder purchases Common Stock with
debt, then such Common Stock will be debt-financed property and the
dividend income therefrom may be UBTI.
State, Local and Foreign Taxes
In addition to the federal income tax consequences described
above, prospective investors should consider potential state, local
and foreign tax consequences of an investment in the Common Stock.
Importance of Obtaining Professional Advice
THE FOREGOING ANALYSIS IS NOT INTENDED AS A SUBSTITUTE FOR
CAREFUL TAX PLANNING, PARTICULARLY SINCE THE INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN THE COMMON STOCK VARY
SIGNIFICANTLY WITH THE PARTICULAR SITUATION OF EACH PROSPECTIVE
SHAREHOLDER. ACCORDINGLY, PROSPECTIVE INVESTORS/SHAREHOLDERS ARE
STRONGLY URGED TO CONSULT THEIR TAX ADVISORS WITH SPECIFIC
REFERENCE TO THEIR OWN SITUATIONS REGARDING THE POSSIBLE TAX
CONSEQUENCES OF AN INVESTMENT IN THE COMMON STOCK.
Summary
THE FOREGOING IS ONLY A SUMMARY OF SOME OF THE IMPORTANT
FEDERAL INCOME TAX CONSIDERATIONS GENERALLY AFFECTING
SHAREHOLDERS WHO ARE UNITED STATES CITIZENS OR RESIDENTS.
MOREOVER, THE FEDERAL INCOME TAX MATTERS DISCUSSED ABOVE ARE, AS
STATED, SUBJECT TO CHANGE BY LEGISLATION, ADMINISTRATIVE ACTION OR
JUDICIAL DECISIONS. THE FOREGOING ANALYSIS OF THE FEDERAL INCOME
TAX CONSIDERATIONS IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING, SINCE IT IS NOT FEASIBLE TO PRESENT AN EXPLANATION HEREIN
OF ALL POTENTIAL TAX CONSEQUENCES WHICH MIGHT AFFECT SHAREHOLDERS.
In view of the foregoing, and the varying foreign, state and
local tax consequences of the Distribution and liquidation of PRI,
Acadia stockholders are urged to consult their personal tax
advisors regarding the appropriate income tax treatment of their
receipt of Acadia Common Stock.
<PAGE> 28
ERISA Considerations for Tax-Exempt Investors/Shareholders
The following is a summary of certain factors that should be
considered by fiduciaries of employee benefit plans (as defined in
Section 3(2)(A) of the Employment Retirement Income Security Act of
1974, as amended through the date of this Prospectus ("ERISA"))
("Qualified Plans") before investing in Common Stock. This summary
is based upon the provisions of ERISA, applicable provisions of the
Code and the relevant Regulations, rulings and opinions issued by
the Department of Labor ("DOL") and the Service. No assurance can
be given that legislative or administrative changes or court
decisions may not be forthcoming that would significantly modify
the statements made herein. Any such changes may or may not apply
to transactions entered into before the date of their enactment.
General Fiduciary Requirements
Title I of ERISA includes provisions governing the
responsibility of fiduciaries to their Qualified Plans. Qualified
Plans must be administered according to these rules. Keogh plans
that cover only partners of a partnership or self-employed owners
of a business are not subject to the fiduciary duty rules of ERISA,
but are subject to the prohibited transaction rules of the Code.
Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a
Qualified Plan is considered to be a fiduciary of such Qualified
Plan (subject to certain exceptions not here relevant).
ERISA Section 404(a)(1) requires a fiduciary of a Qualified
Plan to "discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries and (A) for the
exclusive purpose of: (i) providing benefits to participants and
their beneficiaries, and (ii) defraying reasonable expenses of
administering the plan; (B) with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent
man acting in a like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims; (C) by diversifying the investments of a plan so as to
minimize the risk of large losses, unless under the circumstances
it is clearly prudent not to do so; and (D) in accordance with the
documents and instruments governing the plan."
FIDUCIARIES WHO BREACH THE DUTIES THAT ERISA IMPOSES MAY
SUFFER A WIDE VARIETY OF LEGAL AND EQUITABLE REMEDIES, INCLUDING
(i) THE REQUIREMENT TO RESTORE QUALIFIED PLAN LOSSES AND TO PAY
OVER ANY FIDUCIARY'S PROFITS TO THE QUALIFIED PLAN; (ii) REMOVAL AS
FIDUCIARY OF THE QUALIFIED PLAN; AND (iii) LIABILITY FOR EXCISE
TAXES THAT SECTION 4975 OF THE CODE IMPOSES.
<PAGE> 29
ERISA Section 405 imposes liability upon any Qualified Plan
fiduciary who (a) knowingly participates in or conceals a breach of
duty by another fiduciary; (b) enables another fiduciary to breach
a duty by failing to meet the general standards discussed above;
and (c) takes no steps to remedy a known breach of duty by another
fiduciary. Under this provision, personal liability for Qualified
Plan losses might be imposed upon a Qualified Plan fiduciary who
participates in an investment in the Common Stock that constitutes
a breach of fiduciary duty.
Each fiduciary of a Qualified Plan should realize that an
investment in Common Stock raises many difficult issues. For
example, a Qualified Plan may incur tax on its unrelated business
taxable income ("UBTI"). Substantial tax liability on UBTI may
adversely affect a Qualified Plan's ability to meet its current
obligations to participants and creditors of the Qualified Plan.
In addition, each fiduciary should understand that the Common Stock
may not be traded on an established securities exchange;
consequently, it may not be possible to liquidate the Debenture in
an effort to discharge obligations of any Qualified plan. Given
that fact, and other facts stated in this Information Statement,
each fiduciary should consider whether an investment in Common
Stock will satisfy the exclusive benefit, prudence and
diversification requirements of ERISA Section 404 and whether the
documents and instruments governing the Qualified Plan permit the
investment.
Prohibited Transactions
ERISA Section 406(a) prohibits a fiduciary from causing a
Qualified Plan to engage in a transaction if he knows or should
know that the transaction constitutes a direct or indirect: (a)
sale or exchange, or leasing, of any property between the Qualified
Plan and a party-in-interest (as defined in ERISA Section 3(14));
(b) lending of money or other extension of credit between the
Qualified Plan and a party-in-interest; (c) furnishing of goods,
services, or facilities between the Qualified Plan and a
party-in-interest; (d) transfer to, or use by or for the benefit
of, a party-in-interest of any assets of the Qualified Plan; or (e)
acquisition, on behalf of violation of ERISA Section 407(a). If a
fiduciary permits one of these "prohibited transactions" to occur,
he may be found to have breached his fiduciary duty and may be
liable for certain excise taxes that the Code imposes on
prohibited transactions.
ERISA Section 406(b) prohibits a fiduciary from: (a) dealing
with or using the income or the assets of a Qualified Plan in his
own interest or for his own account or benefit; (b) receiving any
consideration from any party dealing with the Qualified Plan in a
transaction involving the assets of the Qualified Plan; or (c)
acting in his individual or other capacity in a transaction
involving the Qualified Plan on behalf of a party whose interests
<PAGE> 30
are adverse to those of the Qualified Plan or its beneficiaries.
A fiduciary should consider whether the purchase of Common Stock
will involve any of these prohibited self-dealing transactions.
Section 4975 of the Code imposes a tax on prohibited
transactions between a Qualified Plan and its fiduciaries or other
"disqualified persons" (as defined in Section 4975(e)(2) of the
Code). This tax could exceed 100% of the "amount involved" if the
transaction is not corrected within a certain period of time.
Treatment of the Company's Assets as Assets of Qualified Plan
The DOL has issued final regulations ("Final DOL Regulations")
concerning the definition of what constitutes the assets of a
Qualified Plan. DOL Reg. Section 2510.3-101, 51 Fed. Reg. 41252
(1986). Under the Final DOL Regulations, the assets and properties
of an entity such as the Company are not plan assets if equity
participation in the Company by Tax-Exempt Investors/Shareholders
is not significant. Equity participation in an entity by benefit
plan investors is significant on any date if, immediately after the
most recent acquisition of any equity interest in an entity, 25% or
more of the value of any class of equity interests is held by a
benefit plan investor/shareholder.
In the case of the Common Stock, the Company will not sell
more than 25% of the Common Stock to Tax-Exempt
Investors/Shareholders and therefore, the assets of the Company
will not constitute plan assets and the plan asset and prohibited
transaction rules will not apply.
Importance of Obtaining Professional Advice
THE FOREGOING ANALYSIS IS NOT INTENDED AS A SUBSTITUTE FOR
CAREFUL ERISA PLANNING, PARTICULARLY SINCE THE ERISA CONSEQUENCES
OF AN INVESTMENT IN THE DEBENTURES VARY SIGNIFICANTLY WITH THE
PARTICULAR SITUATION OF EACH PROSPECTIVE TAX-EXEMPT
INVESTOR/SHAREHOLDER. ACCORDINGLY, PROSPECTIVE TAX-EXEMPT
INVESTORS/SHAREHOLDERS ARE STRONGLY URGED TO CONSULT THEIR ERISA
ADVISORS WITH SPECIFIC REFERENCE TO THEIR OWN SITUATIONS REGARDING
THE POSSIBLE ERISA CONSEQUENCES OF AN INVESTMENT IN DEBENTURES.
Summary
THE FOREGOING IS ONLY A SUMMARY OF SOME OF THE IMPORTANT ERISA
CONSIDERATIONS GENERALLY AFFECTING TAX-EXEMPT
INVESTORS/SHAREHOLDERS WHO ARE UNITED STATES CITIZENS OR RESIDENTS.
MOREOVER, THE ERISA MATTERS DISCUSSED ABOVE ARE, AS STATED, SUBJECT
TO CHANGE BY LEGISLATION, ADMINISTRATIVE ACTION OR JUDICIAL
DECISIONS. THE FOREGOING ANALYSIS OF ERISA CONSIDERATIONS IS NOT
INTENDED AS A SUBSTITUTE FOR CAREFUL ERISA PLANNING, SINCE IT IS
NOT FEASIBLE TO PRESENT AN EXPLANATION HEREIN OF ALL POTENTIAL
ERISA CONSEQUENCES WHICH MIGHT AFFECT TAX-EXEMPT SHAREHOLDERS.
<PAGE> 31
Certain Factors
There has been no public market for Acadia Common Stock. The
Acadia Common Sock will be traded in the over-the-counter market in
the near future, however, there can be no assurance as to the price
at which trading in Acadia Common Stock will occur.
With respect to financial and other information relating to
Acadia, Mark T. Thatcher, P.C., whose address is 360 Thames Street,
Newport, Rhode Island 02840 will file annual and periodic reports
with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934. Copies of such reports may be
inspected by anyone without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington D.C. 20549, and copies may be obtained from
the Commission at prescribed rates. In addition, Acadia will
provide without charge, upon the request of any stockholder, a copy
of its Annual Report on Form 10-KSB for the fiscal year ended
September 26, 1997, to be filed with the Commission. Any such
requests should be directed to the Secretary of Acadia National
Health Systems, Inc., Jacquelyn Magno, whose address is 460 Main
Street, Lewiston, Maine 04240.
<PAGE> 32
CAPITALIZATION AND BOOK VALUE PER SHARE OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Book Value Per Share
The net tangible book value of the Company at September 27, 1996
was approximately $155,090.00, or $.042 per share. Net tangible
book value per share is determined by dividing the number of
shares of Common Stock outstanding as of September 27, 1996 of
3,733,987 on a fully diluted basis into the net tangible book
value of the Company (total net tangible assets less total
liabilities) of $155,090.00.
<TABLE>
Capitalization
The following table sets forth the capitalization of the
Company at September 27, 1996:
<CAPTION>
9/27/96
Actual
<S> <C>
Liabilities $ 249,210.00
Stockholders'
equity:
Class A, Common Stock,
no par value,
50,000,000 shares authorized;
3,733,987 issued and
outstanding $ 251,640.00
Additional
paid-in capital $ 0
Net $ 251,640.00
TOTAL
STOCKHOLDERS'
EQUITY $ 251,640.00
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 500,850.00
============
============
</TABLE>
<PAGE> 33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the next twelve months, Acadia will seek a five
hundred thousand dollar ($500,000) term loan in addition to the
present three hundred fifty thousand dollar ($350,000) lines of
credit established at People's Heritage Bank, Lewiston, Maine.
These funds will be used primarily to provide working capital
needed for increased accounts receivable. As a result of
Acadia's acquisition of the assets of PRI, Acadia has accumulated
fifty two thousand dollars ($52,000) in unbooked commissions owed
by clients on client receivables that have not been billed.
Acadia recognizes this as a receivable.
Although no assurances can be given in this regard, Acadia
anticipates slight reductions in medical billing preparation
costs as a percentage of sales. This is due to discontinuing a
relatively expensive employee profit sharing plan and recognizing
a gradual improvement in operating efficiency through the use of
new technology. These savings will be largely offset by higher
fixed costs and increased marketing cost. Higher profitability
will be achieved through significant increases in volume.
As a service company, Acadia has very little technical
Research and Development ("R&D"). The Company will work with its
software firm to add features as needed. It will also develop
procedures for practice management and other services that may be
offered in the near future.
Increased client and customer volume will necessitate the
purchase of additional office and computer equipment throughout
the planning period; $4,000 per additional employee is budgeted
for this activity. Home office employee headcount will make it
necessary to lease additional space each year, reaching up to
40,000 square feet by 2001.
Planned growth will increase the total employee headcount
from the present to approximately sixty (60) by the end of 1997
and four hundred twenty-five (425) by the end of 2001.
Quarterly Results
The following table summarizes certain selected quarterly
financial information with respect to Acadia and is based upon
the financial statements of PRI. The information set forth below
should be read in conjunction with Management's Discussion and
Analysis and the financial statements, included elsewhere herein.
<PAGE> 34
<TABLE>
The unaudited quarterly financial information for fiscal 1994 and
1995 reflects, in the opinion of management, all adjustments (as
explained in the footnote set forth below or which comprise only
normal recurring items) which are necessary for a fair
presentation of PRI's quarterly financial position and results of
operations as of and for the dates and periods indicated.
Quarterly results should not be indicative of results to be
expected for any other quarter or for the full fiscal year.
<CAPTION>
Fiscal 1994 Fiscal 1995
Quarters Ended Quarters Ended
03/31 06/30 09/30 12/31 03/31 06/30 09/30
12/31
<C> <S> <S> <S> <S> <S> <S> <S> <S>
Net Sales 110,344 117,999 112,455 121,891 120,215 128,921 135,745140,081
Total
Operating
Expenses 69,170 73,534 73,487 126,912 87,953 80,360 83,183142,411
Operating
Income
(Loss) 41,174 44,465 38,968 (5,021) 32,262 48,561 52,562(2,330)
Other
Income
(Expenses) (1,573) (3,284) (425) (3,287) 4,851 (3,625)(5,678)(4,569)
Net Income
(Loss) 39,601 41,181 38,543 (8,308) 37,113 44,936 46,884(6,899)
Selected Information as a Percentage of Net Sales:
General and
Administ. 62.7% 62.3% 65.3% 104.1% 73.2% 62.3% 61.3% 101.7%
Total
Expenses 64.1% 65.1% 65.7% 106.8% 69.1% 65.1% 65.5%104.99%
<PAGE> 35
Operating
Income
(Loss) 35.9% 34.9% 34.3% -6.8% 30.9% 34.9% 34.5% -4.9%
<FN>
*Footnote:
In order to present a fair comparison with Acadia, a public
company, the following items were removed from Physician
Resources' cost structure as filed on its tax returns: 1)
interest, consulting fees and bonuses paid to owners, 2) one half
of employee bonuses on a plan that was canceled in July of 1996.
These amounts do not reflect unbooked commissions owed by clients
which total fifty-two thousand dollars ($52,000.00) as of
September 27, 1996.
</TABLE>
<PAGE> 36
BUSINESS AND PROPERTIES OF ACADIA NATIONAL HEALTH SYSTEMS, INC.
THE COMPANY
HISTORY
Thomas N. Hackett founded what later became Physician Resources
(PRI) in 1971 as the financial services arm of Advantage Business
Services. In 1990 bookkeeping and doctor billing were separated as
Bookkeeping Resources, Inc. In 1992 doctor billing was moved to a
new company, Physician Resources, Inc., and commercial bookkeeping
operations ceased. Physician Resources provides practice
management, invoicing and accounts receivable collection services
for doctors offices, foster homes and hospital-based practices.
The doctor billing service has undergone several technical
transitions since its inception. In the early days the service
supported physicians who wished to avoid an elaborate business
function or complex computer systems. As computer systems became
simpler and easier to use, the company found other value added
services to retain clients. This led to practice management
consulting and, in the last few years, electronic billing. Many
health service payers, led by Medicare and Medicaid have begun to
require electronic billing to reduce processing costs. Electronic
billing brought the added benefit of improved reliability and
timeliness of third party payments. This improved medical practice
asset utilization and profitability. Since electronic billing
requires complex data modalities and sophisticated software
procedures, it is more adaptable to a high volume billing service
than to a single medical practitioner. This has been a very
successful service for Physician Resources and continues to grow
briskly. The company is currently expanding its state-of-the-art
full featured software system that will become the basis for a
national billing service.
In January 1995, the company began billing for foster homes under
guidelines and funding established by the Maine Department of Human
Services. This electronic billing service offers clients
well-regulated cash flow and differentiates Physician Resources as the
only billing service in Maine to finance provider receivables. As
a result, it has obtained new business through referral without
major marketing effort. The waivered foster care approach is
undergoing explosive growth nationally and the potential national
revenue from this and other small health providers is significant.
In July 1996, the principals formed Acadia National Health Systems,
a Colorado corporation that will be the legal platform for a
nationwide Physician Practice Management Company (PPMC). The
assets of Physician Resources will be transferred to Acadia in
September 1996. Personnel, procedures and experiences gained in 25
years of medical billing and practice management will be combined
<PAGE> 37
with innovative franchising methods to make Acadia a national
competitor.
OBJECTIVES, NEAR-TERM
By the end of 1996, Acadia will become a publicly traded company
capable of raising equity needed to fuel growth. Access to public
markets is critical, since the growth rates of this and other
medical billing organizations will exceed ratios that can be funded
through earnings or debt.
The founder and CEO of Acadia, Thomas N. Hackett, also founded a
nationally franchised payroll processing company, Advantage
Business Services. Since franchising began thirteen years ago,
Advantage has grown to become the eighth largest payroll company in
the United States. Although Hackett is not active in Advantage on
a daily basis, his many years of owning PRI and his experiences in
franchising a financial/data processing service are directly
transferable to medical billing. Acadia will complete franchising
documents for FTC compliance by spring 1997.
Senior professional staff will be added in marketing, compliance
management and finance to prepare the management team for regional
and then national presence. Since practice management is closely
tied to medical billing, Acadia will increase its affiliation with
practice management consultants in various parts of the country.
These services will complement billing services and eventually lead
Acadia to become a full service PPMC.
Acadia will complete review and selection of expanded software
technology by the end of 1996. This system will include the
capability of: automated scheduling, electronic charting features,
scanning, electronic billing, direct funds transfer, distributed
data processing, multiple location data entry and paper copy
printing, unlimited client accounts and patient census. Later full
service computerized patient charting systems and state of the art
dictation technology will be added. These attributes will provide
the technological base that will permit the company to become a
clearinghouse for franchised medical billing activities.
OBJECTIVES, LONG-TERM
Acadia will franchise a network of local companies to market full
service Physician Practice Management (PPM) services regionally and
then nationwide. Franchisees (associates) will sell practice
management, billing, accounts receivable financing, accounting and
office systems services to doctors, foster homes and other small
and medium sized health care providers. They will also seek joint
venture and strategic partner alliances. Acadia's home office will
provide centralized and decentralized data support, training,
counseling and cash control services for associates. Much of the
franchising support, processing, and cash management techniques
<PAGE> 38
will be drawn from Hackett's experience in the payroll industry.
Besides franchising, the Company will grow through acquisitions,
joint ventures and internal expansion. Many smaller billing
services and some practice management consultancies are ill
equipped to deal with the changes occurring in the health care
market and the regulatory environment. Some will reach a point of
personal and/or financial distress before they seek help. These
are candidates for direct acquisition. Acadia will relieve the
former owner of billing responsibility and sometimes give him a
job.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
<PAGE> 39
THE SERVICE/BUSINESS SERVICES
Acadia and its franchisees will provide business and financial
services to smaller health care providers and organizations in
suburban and rural areas.
Services will include:
Type of Health
Provider>>>>>>
D F N S S O
O O U M M T
C S R A A H
T T S L L E
O E I L L R
R R N
S G H H H
H O O E
O H S M A
M O P E L
E M I T
S E T H H
S A E
L A A
L G
T E
H
Type of Service
Billing, accounts receivable
management and cash controls X X X X X X
Accounts receivable financing X X
Bookkeeping and internal financial
reporting X X X X X X
Remote and local data processing
services X X X X X X
Data collection, analysis and
compilation for rate negotiation,
financial audits and compliance
investigations X X X X X X
Practice management consulting X X X
Dictation services X X X
Electronic medical charting X X X X X X
<PAGE> 41
SERVICE DELIVERY METHODS
Any organization that delivers goods or services over a wide
geographic area must contend with the issue of what functions to
do centrally and what functions to distribute into the field.
Since Acadia's core activity will be billing, these issues are
first discussed in billing terms.
BILLING SERVICE
Billing service operations have four essential components:
1. Selling the client (provider/doctor) the service and
executing fiduciary contracts
2. Entering demographic and billing data into the system
3. Processing data and monitoring performance
a. Billing payers
b. Collecting funds
c. Compiling and reporting service data for later use in
audits and negotiations
4. Management reporting systems
Some elements require regimentation and tight controls to satisfy
fiduciary and regulatory responsibilities. Others must be loose
to foster initiative, creativity and growth. Development of
staff, business systems and selection of software to promote this
loose/tight approach is a key for rapidly growing financial
services companies in the information age.
Sales always occur at the client site or a regional office near
the client. Sales will be the primary responsibility of the
Acadia franchisee. Each will have the latitude to cultivate a
variety of relationships with health providers in his area and
the incentives toward building volume. Franchisees will sell
billing services at retail and receive a wholesale discount. The
value of a discount will vary with service functions done by the
franchisee.
In today's communications environment, data entry and client
service can be done anywhere. A personal relationship with a
client service representative (CSR) can be established over a
national 800 line almost as easily as in the same town. Data
entry locations will be determined more by local economics and
franchisee preference than by geography. A franchisee in New
York City that pays $60 per square foot for office space and $19
per hour for local data entry clerks may want to have data entry
done by Acadia in Lewiston, Maine, where the rates might be $9
per square foot and $10 per hour, respectively. A franchisee in
an economically depressed area with rates of $4 per square foot
and $7 per hour might prefer local data entry. A franchisee
whose primary activity is practice management might not want the
supervisory responsibility for billing data entry, despite
comparative economics.
<PAGE> 42
Some providers may wish to have original data entry done in their
offices and certain management reports returned via a local
printer. Acadia will offer this service with either provider
employees or franchisee employees. Under this configuration, CSR
activity will remain at the franchise office or data center and
be separated from data entry.
The growth of third party payment organizations, both public and
commercial, and their demands for timeliness, quality and
technical capability make centralized processing, transactions
and quality control essential. As communication costs have
fallen, the drawback of processing thousands of miles away has
disappeared when compared with the advantages of a large,
efficient, tightly managed "back room" organization. Acadia will
process all claims and originate all reports in central
support/data centers. The first center will be in the Northeast
and other centers added as the market dictates. The first center
should be adequate through two to three years.
The central support and processing facility will also provide:
> Consulting in negotiating joint ventures, strategic
alliances and mergers will be offered by the home office.
Practice management support staff for franchisees who need
assistance in that function, but wish to offer it to clients
will also be offered. These will be profit centers directly
chargeable to clients or franchisees.
> Provider and franchisee cash management services. Billing
will be done electronically whenever payers have that
capability. Funds will be received and distributed
electronically (EDI) whenever the payers have that
capability. Acadia will act as a clearinghouse for all
payments and direct deposit the appropriate amounts to
provider and franchisee accounts as required.
> A compliance department with a corporate officer, personnel
and software to monitor billing compliance with payer rules
and regulations. The Compliance Officer will be empowered
to take internal action on errors and violations and to act
in a fiduciary capacity for the entire Acadia system when
responding to regulatory issues. The compliance department
will also survey and screen new franchisees and new provider
clients for potential problems.
Physician Resources has been processing data remotely entered at
medical offices for about four years. Advantage Payroll Services
has been accepting data from franchisee operations for 14 years.
This experience will be directly transferred to upgrading
operating policies, procedures and software to function in the
new organization. Both existing companies have extensive written
procedures and experienced personnel that will serve to guide
Acadia operating procedure development.
<PAGE> 43
OTHER SERVICES
PRACTICE MANAGEMENT
Health care providers, particularly doctors, frequently
experience business operations difficulties. The discipline of
practice management has evolved to fill this need. Medical
practice managers may be accountants, lawyers, business
consultants or they may be doctors who have chosen to specialize
in the business aspects of medicine. Practice managers work with
providers to develop procedures and techniques to improve
responsiveness to patients' needs and increase productivity and
profitability. They often manage special projects, such as fee
schedule negotiations or new clinician screening. Practice
managers can be part of a large consulting or billing
organization or independent, one-person businesses.
Physician Resources has always offered practice management as an
integral part of its billing service, but practice management
volume has been limited by lack of volume for a dedicated
practice management department. Strategic alliances between
Acadia and practice managers in all sizes and types of
organizations will be a symbiotic relationship with billing and
systems services. Practice management will be available from
individual consultants affiliated with the company, franchisees
and Acadia itself. Affiliations, franchises and strategic
alliances will enable billing services to offer practice
management and practice managers to offer billing, without
necessarily adding staff.
ACCOUNTS RECEIVABLE FINANCING
Physician Resources pioneered financing of waivered foster home
care accounts receivable in 1994. The foster home program
includes small, thinly capitalized boarding homes that incur
substantial costs in providing care, but do not normally receive
payment for several weeks. PRI converted clients to electronic
billing, cutting accounts receivable turnaround to approximately
one week and then advanced funds to the homes for a percentage
fee. This program has been very successful in the last two years
and enjoys an excellent growth rate.
Similar programs will be developed nationally for:
> New independent physicians whose medical school debt may
cause them to be unable to fund their business needs or to
be ineligible for conventional bank financing
> Established practices damaged by retirement, restructuring
and other financial malaise
> Other foster home programs and similarly undercapitalized,
yet trustworthy, providers
> New franchises that are too strong to buy outright but not
strong enough to finance the complete program themselves
<PAGE> 44
All receivable financing clients will also be billing and
practice management clients.
INTERNAL CLINICAL SYSTEMS DEVELOPMENT
Acadia will purchase (and develop only if absolutely necessary)
significant software, hardware and communications expertise to
expand billing to a decentralized national venue. Much of that
expertise will also be transferable to clinical systems.
Practice management consulting provides ready access to potential
clients for clinical systems. After the billing systems are
fully developed and stabilized, Acadia will turn toward clinical
systems as the next area of market development.
METHODS OF OPERATION, BILLING
Each medical office has a standard protocol that lists all
procedures. The listings reference an industry standard CPT
code. Coding errors are among the most common causes of claims
rejection or charges of misbilling. After doing a procedure, the
provider will complete the appropriate steps that enable Acadia
to correctly gather required patient data. This information will
be keyed into a computer network, along with general information
and third party payment data on each new patient. Compliance
management software will screen procedures for appropriateness
before billing. The software will screen to see that:
> Both the provider and patient were appropriate for the
procedure.
[Example: An orthopedic surgeon could not bill for a
cesarean section on a male.]
> The provider had adequate time in his or her schedule to do
all the procedures billed.
> The procedure was appropriate at the stage of care and was
not included in some broader procedure billed
simultaneously.
Charges not passing the software screen will be referred to the
compliance staff for additional review, contact with the
clinician and possible change.
Information will then be sorted by payer and invoices generated.
Some payers will receive paper invoices by mail and others
electronic invoices by telecommunications. Those receiving
electronic invoices pay an average of 14 days sooner than with
paper invoices.
When payment is received, funds will be deposited in a savings
escrow account belonging to that provider. Each practice will
receive a payment and reconciliation weekly or monthly. Acadia
will maintain the checkbook and general ledger for some practices
and provide a full monthly accounting of all activities.
<PAGE> 45
All billing and collection information will be compiled and
reported to the practice in summary form. This information will
be available in special report form as supporting data for fee
for service and capitation negotiations with third party payers.
FACILITIES NEEDED
SOFTWARE
The billing software at PRI is a Unix-based system that is two
years old. Although the company continues to purchase current
updates, Management feels a major enhancement is needed before
moving to a national venue. PRI combined forces with a larger
billing company to establish written software criteria and began
a formal search in October 1995. Proven software will be
selected, installed and tested in actual operations before the
end of 1996.
One major PPMC, Medaphis, spent $46 million over the last two
years to retool its software, eliminating 1995 profits in the
process. Thomas Hackett experienced similar, although less
devastating, problems with an Advantage Business Service software
conversion several years ago. He learned the most efficient means
of carrying out a major conversion is to buy a quality package
and hire (or buy) the company that wrote it to customize. The
company will purchase and modify existing software for
implementation in a wide area network and integration with later
software products such as a clinical package.
Some considerations are:
> Windows NT software would have more robust structure, easier
maintenance and better capability to interface with multiple
systems and disciplines, including:
> Compliance management software
> Front end systems at third party payers
> Scheduling
> EDI
> Clinical systems
> Enhanced native mode communications capabilities for
multiple servers, multiple data entry and report output
points and several different modes of data transfer
> Improved data analysis and reporting capability:
> Management performance reporting
> Demographic and cost analysis in support of rate
negotiations for managed care
> Custom reports for situations not preconceived
<PAGE> 46
> Windows type "user friendliness" for:
> Ease of training
> Improved performance and focus on content rather than
process
> Reduced operator fatigue
HARDWARE
Since Acadia will use Windows NT software, most hardware will be
IBM compatible equipment locally available throughout the
country. To reduce maintenance, repair and connectivity issues,
the company may form a strategic alliance with a national
computer dealer.
REAL ESTATE
Acadia and its franchisees will need Class A office space of 50-100
square feet per CSR, wired for networking, wired for
intensive communications and air conditioned for high PC density.
Sales per employee are expected to be about $70,000, based on
current PRI performance, software improvements and industry
averages. However, many CSRs will be found in franchisee
offices. Therefore, Acadia's data center should start at about
4,500 square feet and grow to 40,000 square feet over the five-year
projection period.
Executive offices at 460 Main Street, Lewiston, Maine will be
adequate for the first two to three years.
MARKETS, COMPETITION & SELLING
THE PRESENT MARKET
In the US 527,000 physicians are in active practice, with 184,000
in 16,000 group practices and with the remainder operating
independently. Private companies provide billing services for
medical practices throughout the country. This industry is very
fragmented with regional services, smaller companies and
hospital-based services. The industry has been in flux in recent
years with mergers, acquisitions and divestitures leading toward
consolidation and the creation of much larger services. Many
offer ancillary services including practice management, software
development and sales.
Publicly traded regional and national billing services range from
less than $5 million sales to just under $1 billion sales. The
largest companies have averaged 50% annual growth over the last
seven years and the growth appears to be accelerating. Most
focus on very large group practices and hospitals. Hospital cost
cutting and outsourcing have contributed to growth in recent
years but there are signs that cost pressures and low hospital
census are beginning to limit internal growth. Most of these
<PAGE> 47
companies are now growing through acquisition of smaller firms
that lack the technical, financial or marketing prowess for long
term viability in a very complex market. Few of these larger
players focus on rural/tertiary markets, small group and solo
practices, leaving that market to small local billing services.
Each large company takes a different approach. Emcare Holdings,
for example, specializes in emergency medicine and employs the
clinical staff besides providing billing services. Medaphis owns
some clients but also markets clinical and business office
software and services to clients. None are known to franchise
and few provide receivables financing to their clients. Most
companies fall into one of three broad categories:
> Hospital Oriented - Physician Hospital Organizations (PHO)
where physicians are company employees and have little
profit incentives. Emcare is an example.
> Managed Care Organizations (MCO)- Health Maintenance
Organizations (HMO) and Preferred Provider Organizations
(PPO) are institutionally driven with cost control taking
precedent over patient care. Managed care uses the notion
of "capitation" to control costs. Under capitation, a
provider contracts to make certain medical services
available to an insured group for a fixed monthly per capita
fee, no matter the amount of patient services actually
delivered. Since contracts are awarded on a competitive
basis, this presents significant risk to the individual
provider, particularly when costs and demographics are not
well known. This is the fastest growing market segment,
with an expectation of a 64-67% market share. It is
expected that this industry will consolidate to 4-8 for-profit
hospital chains such as the $17.5 billion Columbia/HCA Health
care Corp.
> Physician Oriented - Physician Practice Management Company
(PPMC) and Management Services Organization (MSO) - these
firms retain many traditional aspects of the physician owned
practice or other standalone health care provider while
offering staffing and systems support of a larger
organization. These firms can negotiate effectively with
large third party payers, including managed care
organizations, providing accurate patient charting; service
histories and cost information to facilitate negotiated fee
and capitation structures.
Doctors are demoralized and fearful of the future. Changes in
payment rules and the radical shift toward managed care place
severe pressures on income and on the doctors traditional control
of the clinical environment. They are looking for organizations
that can provide them with trusted business leadership, financial
security and still give them control over medical matters.
<PAGE> 48
Many medical offices and other small providers still generate
claims manually using office personnel that bill in addition to
other patient/office duties. These offices are labor inefficient
and suffer high rates of claim rejection due to processing or
coding errors. Most have little or no mechanism to keep staff
abreast of regulatory and coding changes.
Small medical billing services are found in local markets
throughout the country. Entrepreneur Magazine lists medical
claims processing as first on its list of "The 17 Hottest
Businesses of the Nineties." Home Incorporated Magazine
describes them as "one of the best examples of how savvy
entrepreneurs are transforming an entire industry." However,
most of these cottage industries will fail if they do not have
highly trained professional staffs, superior technology, capable
marketing, good capitalization or regulation sensitive systems
support.
All billing services face increased pressure on profits and even
survival:
> As the market moves toward managed care, health care
providers must have accurate mix and cost data to negotiate
capitation rates that are comprehensive, competitive and
profitable. Billing companies that can handle only fee for
service products will be unable to survive.
> Every billing service must have a very professional staff
that can offer practice management advice and
recommendations to doctors on issues ranging from
malpractice insurance to succession planning to personnel
policies.
> Completely electronic medical and business systems will
become the norm rather than the exception. Standards are
changing frequently and very sophisticated software and
staff are needed just to keep up. By early 1997, Medicare
is expected to require electronic billing; Medicaid and most
insurance companies are expected to follow suit. Firms that
cannot meet all electronic standards will be unable to offer
a comprehensive product. Standards include: being on line
with hospitals, clinics, being active users of the Internet
and having their own intranet system. Even when they can
meet billing standards, most small firms are not ready for
the next level of development, EDI or electronic funds
transfer. EDI requires an affiliation with an organization
permitted by the Federal Reserve to make direct funds
transfer. This procedure reduces "float" and places funds
in provider bank accounts several days sooner than paper
checks at much less cost to all involved.
<PAGE> 49
> In Maine, the State's Medicaid program will be converted to
a private HMO during 1996 and 1997. This will generate new
cost pressures and bring managed care and capitation to a
significant market segment. This change is echoed in other
parts of the country.
> The Federal Sentencing Reform Act and the Federal False
Claims Act (or "whistle blowers" act) provide reporting
incentives and substantial penalties for incorrectly filing
Federal claims, including Medicare and Medicaid billing.
These can include large fines and prohibition from
submitting claims in future years. In an extreme case the
court can impose a "corporate death penalty" equal to all
the assets of the corporation. The Federal government is
aggressively prosecuting these cases and even when no fault
is found. The human and financial resources necessary to
cooperate with an investigation can render a mortal blow to
small company operators. Larger, stronger firms are
developing written Medicare compliance programs to deal with
these issues. Those that do not comply will become excluded
from Federal billing.
Practice management consultants must divide their time between
continuing education and actual consulting to earn a living.
Many chose not to employ staff to keep overhead low. Affiliation
with a national billing service is a means to create a strategic
alliance and delegate certain aspects of practice management. It
also enables the consultant to make profitable referrals for very
real client needs while enhancing his professional credibility
and reputation. Practice managers are often employed by billing
companies, but even when they are not, formal affiliation is
mutually productive.
Larger firms and small firms with extensive support systems can
deal with these issues, while independent firms may be headed for
extinction. Faced with increased market complexity, regulation
and competition, most small firms find themselves with
inadequately skilled staff, obsolete computer systems, internal
procedures incapable of coping with new requirements and
insufficient capital to do anything about it. The small firm
that survives will be one that formally associates itself with a
larger firm willing and able to provide these resources.
Physician Resources has continued to grow, widening its provider
base and improving profits and cash flow under original ownership
while several competitors were absorbed or dissolved in recent
years. The key to capturing and retaining providers is
competitive price, competitive technologies and good service.
Low overhead and efficient processing systems operated by well
trained, well-paid professional staff enables the company to
focus on provider service and be price competitive with larger
regional services.
<PAGE> 50
The Company specializes in smaller tertiary communities and
providers ignored by larger firms. Competition comes from the
provider's archaic internal systems and from very small billing
firms. These billing entities will soon discover that the
software and training needed to meet quickly evolving standards
is prohibitively expensive for the small office or billing firm.
They will have no choice but to seek, at minimum, a strategic
alliance with a large, well funded, small account billing and
practice management specialist.
In an environment of health care uncertainty, doctors already
fearful of long term viability are reluctant to invest in new
billing systems out of concern that they might be forced to
change again. Physician Resources' marketing strategy has been
that of personal referral leading to long term, low key, contact.
When the physician is ready to consider a change or to make a
referral, Physician Resources is there, a stable entity with
known positive benefits. This approach has resulted in slower
but steady growth with a few major new providers added each
year.
This mode of growth is about to change because it will not
support the overhead needed to meet the market challenges
discussed above. As Acadia, the Company will capitalize on the
lessons learned in 25 years of smaller provider billing,
recognizing industry trends toward consolidation, intense
capitalization and increased automation and regulation. It will
continue to specialize in smaller providers in rural markets but
will offer sophisticated staffing, state of the art operating
techniques and regulatory compliance.
BENEFITS OF USING BILLING AND PRACTICE MANAGEMENT SERVICES
BILLING SERVICE
Billing services represent a drastic reduction in operating costs
and capital investment from in-house operations while creating a
variable expense to the provider. Billing clerks are better
trained, more focused on the task and use up to date tools.
Larger billing staffs assure flexibility to bill on time during
employee absences and vacations. Providers can replace
expensive, obsolete computer or manual systems for a less
expensive monthly fee and be assured that bills follow the
current form and regulation. Correct coding reduces claims
rejection rates from in-house processing while avoiding
regulatory violations. Electronic filing significantly speeds
collection of fees. The large billing service offers very high
level practice management advice plus general financial guidance
for the providers.
<PAGE> 51
Small practices that cannot afford a massive billing operation
can now have state of the art patient service and billing
procedures:
> For the first time providers will need to market their
services to MCOs in order to have adequate business base.
PPMCs such as Acadia can provide a market conduit to reach
these new large players.
> New patient services can be added:
> Electronic charting
> Automated patient scheduling
> Transcription technologies
> Accurate CPT coding
> Data, audit trails and staff to support successful payer
audits without disruption of the regular work flow and
without penalties for noncompliance
> Electronic filing and electronic funds transfer for faster
processing
> More frequent billing for improved cash flow
> Monitoring and action on denials and delinquencies to
eliminate orphaned claims
> The ability to interface with all payers including Medicare,
Medicaid, group insurances, managed care (capitation) and
private pay
> Historical databases with reports that will support
negotiated capitation rates in managed care environments,
including services by:
> Contract (employer or provider)
> Code
> Complete utilization review & profit analysis
> Optional internal control through medical office terminals
of original entry. These can be manned by provider staff or
by billing service employees.
> Separate billing becomes a vital component of GPWW (Group
Practice Without Walls). Volume and comprehensive services
give GPWW providers negotiating power with managed care
organizations.
PRACTICE MANAGEMENT SERVICES
Hiring a practice management consultant can free professional
medical staff to concentrate on clinical issues. He or she
offers an experienced, objective outside review of office
procedures, practices and staffing. A practice manager can do
special projects, such as a fee schedule review and adjustment,
that are not within the capacity of in-house staff. The practice
manager can also advise principals on business and financial
issues encountered in benefits, investment and retirement
planning.
<PAGE> 52
MARKET, NEAR TERM
Hospitals are expanding their operations to include primary care
medical practices to provide added patient referral flow.
Hospitals offer financing and the security of a steady income to
doctors. Frequently, hospital billing systems and staff lack the
capacity (or capability) to deal with doctor billing and
sophisticated practice management issues. Acadia can offer
supplemental services to hospitals that will permit them to own
practices without disrupting themselves or upsetting their
providers. The company is already discussing this option with
one area hospital. External billing can be a win, win situation
for all parties.
Office-based billing systems and small billing companies will
increasingly face barriers to remaining in the marketplace.
Billing company owners are often older entrepreneurs who lack the
energy or remaining working years to invest in new technologies
and procedures.
MARKET, LONG TERM
After decades of health care inflation well in excess of general
levels, the public now demands a more efficient and affordable
health care delivery system. This led to the growth of managed
care and reducing physician autonomy. Managed care is expected
to dominate the market by the end of the century. Physicians need
tools to regain their autonomy while satisfying the demands of
public pressure and managed care. Close partnership with
efficient business organizations offers the provider medical
control and profit incentives. It also gives the physician
accurate and predictable business and financial results.
Specialization, increased capital intensity and technological
change are leading to increased outsourcing in all areas of human
commerce. The health industry is no exception. Today's
communications technology makes it practical to deliver medical
services in multiple locations, enter billing data elsewhere and
process and audit the data at another site(s). Increased
regulatory pressure will replace the office clerk with a highly
trained billing specialist who does nothing but bill services in
a narrow medical specialty.
COMPETITION
Many of Physician Resources current competitors will become
franchise or acquisition candidates as the Company moves toward
becoming a full service PPMC. These include:
<PAGE> 53
Billing Plus, Gorham, Maine - Formerly Hilton Health care, is now
owned by NCS, a software supplier from New Hampshire. Billing
Plus focused on Southern Maine, New Hampshire and Massachusetts.
Smaller services - There are approximately ten smaller services
concentrated in Cumberland County, Maine. Most do not compete
with Physician Resources and few can offer the breadth of service
in practice management or state of the art systems.
Hospital-based services - These often serve only practices on a
hospital's payroll. They rarely compete directly with Physician
Resources.
Several large national firms offer PPMC services. Each has a
different variation of ownership and structure. Most concentrate
on larger metropolitan practices and hospitals. Acadia will be
the only national service to use franchising as a growth media
and the only PPMC to concentrate on small accounts and rural
areas. Listed below is a sample of companies:
Phycor, Inc., Nashville, Tennessee - is the fastest growing PPMC
with 82% growth in 1995 to sales of $441.6 million. Growth is
based on the philosophy that physician decisions control 80% of
health expenditures and so physicians must "choose to lead"
health care reform. Phycor creates a corporate partnership with
physicians, providing capital, management and business resources
to improve service delivery performance. This approach has been
very well received in both the medical market and the stock
market. Average sales growth was 65.9% over the last five years
and the current price/earnings ratio (P/E) is 75.52. Much of
what Phycor is doing will also be done by Acadia, but with the
added financial benefits of franchising. Phycor affiliates with
large practices, typically 50-100 physicians, so it is expected
that it will rarely compete against Acadia in rural America in
the small practice market.
FPA Medical Management, San Diego, California - calls itself an
MSO, but much of its activities fall into the PPMC
classification. FPA contracts with doctors, and HMOs in a way
that permits HMO patients to remain with the same doctor even
when they change HMO. Doctors can be members of all local HMOs
without drowning in compliance paperwork. The company grew more
than 50% per year until 1995 when it went public. Since late
1995, sales have increased 150% to a current level of about $45
million. Like Phycor, FPA also addresses big metropolitan
practices, with one of its contract groups numbering more than
700 physicians.
<PAGE> 54
Medaphis Physician Services Corporation, Atlanta, Georgia - This
is a national service that competes on price for large
hospital-based practices. The company also markets software and
systems to other medical management companies. Although services
are similar, Medaphis does not seek small clients. Medaphis
recently spent nearly $50 million to overhaul its software and is
in the process of re-engineering its data processing structure.
These changes, combined with falling hospital census figures have
slowed growth. Unless Medaphis chooses to market to small
groups, there will be very little direct competition.
Emcare Holdings, Inc., Dallas, TX - is a specialty PPMC in
emergency medicine. All practices are corporate owned, with
physicians working as independent contractors hourly. Annual
revenue growth in this twenty-four-year-old company has been
about 28% in recent years, with 1994 sales of $118.3 million.
PROJECTED SALES AND MARKET SHARE
The total market for PPMCs is difficult to measure, since they
report under a variety of SIC (Standard Industrial
Classification) codes. The Sherlock Company estimates aggregate
1995 revenues for the six largest "pure" PPMCs at $1.122
billion. Allowing for smaller companies the author estimates
the 1995 market at $1.3 billion. The seven-year historical
growth rate is more than 50%. Several companies grew 250-1,000%
the first year after going public and gained critical mass
for 50-100% growth after that.
<TABLE>
Management estimates the following growth and market share for
Acadia ($ millions):
<CAPTION>
1997 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C>
U.S. PPMC
Market $3,000 $4,400 $6,600 $9,900 $14,800
Acadia $2 $7 $17 $31 $50
Market
Share 0.1% 0.2% 0.3% 0.3% 0.3%
</TABLE>
<PAGE> 55
SPECIFIC TARGET MARKETS & NEAR TERM SALES STRATEGY
Franchisees will be recruited by Acadia National Health Systems
from independent billing services, the medical products industry,
practice managers and other small financial service companies.
It will recruit corporate "downsizers," who have the managerial
experience and financial resources to start and grow a small
billing service or a practice management company, but need
high-level professional support and state-of-the-art industry
specific systems support. Acadia will form strategic partnerships
or merge with medium sized ($5-25 million) billing services and
MSOs that offer significant complimentary resources in marketing,
software or leadership/management talent. Franchise leads will
be developed through:
> Advertising in high level publications such as the New York
Times and the Wall Street Journal
> Management's existing network of industry contacts:
> International Billing Association - the trade
association of medical billing companies
> Service Bureau User's Group - a high level forum of
financial services executives
> Payroll associations and Advantage Payroll franchisees
> International Franchise Association
Experience with franchising taught Management that offering
proven business methods to professional managers with
entrepreneurial ambitions is an excellent formula for growth.
Decentralization of selling, with the "owner in the store"
fosters much higher growth rates than a salaried or commissioned
sales force with its customary high turnover. Central control of
critical production and financial elements of the process assures
quality, accuracy and accountability to regulatory agencies.
Franchisees will market billing, practice management, systems and
other physician oriented business services to small medical
practices in tertiary markets. Most practices will be less than
five physicians and will be found in cities and towns of less
than 75,000 people. Catering to this market will play to small
practice strengths inherited from Physician Resources and
simultaneously minimize direct competition with companies such as
Phycor, which has a 5-10 year growth lead.
Franchisees will become the company's eyes and ears as they
constantly facilitate affiliations with other franchisees, with
third party payers, merger/takeover candidates and with new
strategic partners or joint ventures. These affiliations will
earn the franchisee participation in each new affiliation formed.
Thus, the system will grow at a network pace, rather than a sales
based pace.
<PAGE> 56
Much of the growth of PPMCs has been through acquisition. In
this industry, the primary business asset is the client list but
small business prices decimate the true value of these hard
earned relationships. In small, privately held business a stock
price earnings ratio (P/E) of less than five is common, while
high growth PPMCs can reach P/Es of 30-100. This makes capital
stock exchange very attractive to shareholders of a takeover
prospect. Acadia will use this tool for rapid growth besides
franchising. It will also use operating cash flow and stock
market appreciation (capital stock swaps) to generate funds for
nominal cash purchase of weaker companies.
SELLING METHODS, LONG TERM
An experienced national sales manager with medical or financial
services background will develop a sales team that includes
intermediate sales managers. They will work with
salespeople/franchisees from both billing and practice management
to develop additional franchise territories and recruit other
franchisees. Practice management consulting will be used as lead
in to billing proposals. Billing surveys by operations personnel
will be used to evaluate office or small billing agency
procedures and develop proposals for increased net revenue and
reduced billing costs when compared with current systems. New
software will enable automated matching of actual vs. expected
payments. Each franchise will use proven systems and standards
but will have an organization custom tailored to the local market
and available resources.
SERVICE PRICING
As with other market elements, pricing will occur at two levels:
RETAIL, the price paid by the clinical provider will be based on
several factors:
> National surveys that show average, high and low prices for
each specialty. Currently the billing commission on cash
collected can run from a low of 2% of actual cash collected
for CT Surgery to a high of 15% for Psychiatry.
> Practice transaction volume
> Other services included in the base fee including:
> Bookkeeping
> Practice management
> Remote (clinic based) data entry equipment or personnel
> Financing provided to the clinician by Acadia
<PAGE> 57
WHOLESALE, the price paid by the franchisee for centralized
processing and support services will depend on the above plus:
> Whether data entry and client service is provided by the
franchisee, a related party, or by Acadia
> The level of core competency at the franchisee level in
compliance management and practice management consulting
> Financing provided to the franchisee by Acadia
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
<PAGE> 58
RISK FACTORS
Potential Fluctuations in Quarterly Operating Results.
There can be no assurance that the Company will be able to
maintain quarterly profitability in the future. The Company's
quarterly and annual results may vary significantly in the future
due to a number of factors, including: the timing and level of
product and process development costs; changes in revenue and
product mix; variations in average selling prices; timing of
announcement and introduction of new products by the Company and
its competitors; market acceptance of the Company's and its
customer's products; gain or loss of significant customers; and
competitive factors. Any unfavorable changes in such factors or
others could have a material adverse effect on the Company's
operating results.
Service and Process Development and Technological Change.
The markets for the Company's services are characterized by rapid
changes in both product and process technologies. Because of
continual improvements in these technologies, the Company
believes that its future success will depend, in part, upon its
ability to continue to improve its service and process
technologies and develop new technologies in order to remain
competitive. In addition, the Company must also adapt its
services, products and processes to incorporate technological
changes and to support emerging target market industry standards.
Competition.
Large competitors may saturate urban markets and move into
tertiary markets with strong price competition in order to
maintain current growth rates. To date most large PPMCs seem
more interested in growing through consolidation than in seeking
new markets. It is anticipated that they will continue to
consolidate through the end of the century and turn to smaller
markets only when less than ten large companies are left. While
there is no meaningful defense against a very large firm that
targets Acadia's market niche and undersells the market long
enough to drive out competition, management considers this
improbable.
Risk of Failure to Manage Potential Growth.
Acadia growth will outpace development of a management
infrastructure, leading to major marketing and operations issues.
The Company expects to continue to experience growth in the
number of its employees and the scope of its operating and
financial systems, resulting in increased responsibilities for
the Company's management. To manage future growth effectively,
the Company will need to hire, train, motivate and manage its
<PAGE> 59
employees and to continue to implement and improve its
operational, financial and management information systems. There
can be no assurance that the Company will be able to mange such
growth effectively and failure to do so could have a material
adverse effect on the quality of the Company's products, its
ability to retain keep personnel and the Company's business and
operating results.
Product and Process Development and Technological Change.
Software development issues hinder growth. Several medical
companies have suffered reduced growth or losses due to software
development projects that were behind schedule, over budget or
unworkable. Management experienced some of these issues during
earlier software conversions at Advantage Payroll Services and
has a plan that will minimize this risk. PRI/Acadia is buying a
state of the art software package that has already proven itself
with a large installed base. Although the company has source
code as insurance against vendor nonperformance, it intends to
avoid custom code whenever possible. Modifications, if any, will
be done by the original developer.
Risk of Failure to Finance Potential Growth.
Financing delays hinder growth. Acadia's strategy will be to use
debt to build the business and then "fill in" with equity issues
as the company prepares to move to each successive level of
expansion. Contracts and other relationships will be in place
before each equity raise that will support the earnings per share
needed for equity market acceptance. Delays in either side of
the debt/equity equation could slow growth or create liquidity
issues. Acadia plans orderly growth, maintaining solid
relationships with both debt and equity markets and staging each
fund raise in a timely manner.
Dependence on Key Personnel.
The Company's future success depends in large on part of the
continued service of its key technical, marketing and management
personnel and on its ability to continue to attract an retain
qualified employees. The competition for such personnel is
intense, and the loss of key employees could have a material
effect on the Company's financial condition and results of
operations.
Thomas Hackett is a team builder with a long track record of
recognizing talent. Much of the growth will come from
affiliation with existing companies that have talented, and often
underutilized, managers. This pool will be supplemented with
outside recruiting where needed. A board of directors capable
of running the company, backed by a rapidly developing management
team will assure that Acadia continues to grow should something
<PAGE> 60
happen to Thomas Hackett.
Control by Principal Shareholders, Officers and Directors.
The Company's principal shareholders, officers and directors will
beneficially own approximately eighty-four percent (84%) of the
Company's Common Stock. As a result, such persons may have the
ability to control the Company and direct its affairs and
business. Such concentration of ownership may also have the
effect of delaying, deferring or preventing change in control of
the Company. See "Principal Stockholders."
Issuance of Preferred Stock may adversely Affect Holders of
Common Stock or Delay or Prevent Corporate Take-Over:
The Company's Articles of Incorporation provide that preferred
stock may be issued by the Company from time to time in one or
more series. The Board of Directors of the Company is authorized
to determine the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series of
preferred stock and the designation of any such shares, without
any vote or action by the Company's shareholders. The Board of
Directors may authorize and issue Preferred stock with voting
power or other rights that could adversely affect the voting
power or other rights of the holders of Common Stock. In
addition, the issuance of preferred stock could have the effect
of delaying, deferring or preventing a change in control of the
Company, because the terms of preferred stock that might be
issued could potentially prohibit the Company's consummation of
any merger, reorganization, sale of substantially all of its
assets, liquidation or other extraordinary corporate transaction
without the approval of the holders of the outstanding shares of
the preferred stock.
No prior Trading Market; Potential Volatility of Stock Price.
There has been no public market for the Common Stock, and there
can be no assurance that an active trading market will develop or
be sustained. At a future date, provided a public market for the
stock does develop, the market price of the shares of Common
Stock is likely to be highly volatile and may be significantly
affected by factors such as fluctuations in the Company's
operating results, announcements of technological innovations or
new products and/or services by the Company or its competitors,
governmental regulatory action, developments with respect to
patents or proprietary rights and general market conditions. In
addition, the stock market has from time-to-time experienced
significant price and volume fluctuations that are unrelated to
the operating performance of particular companies.
<PAGE> 61
MANAGEMENT OF ACADIA NATIONAL HEALTH SYSTEMS, INC.
MANAGEMENT OBJECTIVES
THE MANAGEMENT TEAM
Physician Resources strives to provide a pleasant working
environment and a strong team spirit. A cash profit sharing plan
permits staff members to share in the company's success resulting
in low employee turnover. As the company becomes Acadia National
Health Systems, the philosophy of staff participation will be
carried further through corporate office incentives and business
unit ownership (franchising).
Board of Directors - will be drawn from leaders in the financial
services, insurance and medical industries.
Thomas N. Hackett, CEO/Acting National Sales Manager - is a
business leader with interests in doctor billing, payroll
processing, financial services, health insurance and medical
technologies. Until recently, Physician Resources was not his
primary focus, but he provided overall direction to the company and
consulting & management services to its medical practice clients.
Hackett will work full-time at Acadia and is the principal
architect of the expansion into franchised operations. Within a
short time he will relinquish the National Sales Manager's role to
a qualified executive. As CEO, he is responsible for staying
abreast of industry trends and, with the board of directors, he
leads the strategic planning process that charts the overall
direction of the company. He will work with the National Sales
Manager and staff to structure each major franchise or strategic
alliance. He works with the Operations Manager and staff to shape
operating procedures, select business systems and regulate
associate activities. His experience in helping to take Advantage
Payroll Services national roughly parallels Acadia, with
similarities in franchising, staff disciplines, capitalization,
marketing, information processing and cash management for clients.
Jacquelyn Magno, Operations Manager - has been with Physician
Resources for 24 years. She became general manager in 1985. She
has been responsible for sales, operations, provider setup and
liaison. Magno keeps the company abreast of the latest changes in
third party policy and the latest equipment and software. She
manages the billing and bookkeeping staffs and is responsible for
day to day operations. In Acadia she will expand the operations
role, while delegating sales to Hackett and others. The role will
include monitoring billing and cash clearing activities in Acadia's
central processing operation and dealing with software and hardware
issues as the company grows.
<PAGE> 62
Marise Lebel, Internal Auditor/Accountant - has been with the
company 15 years. She provides lead accounting and bookkeeping
services to health provider clients and Physician Resources itself.
She also acts as internal auditor and works with the company's
external auditors in financial and compliance matters. Bookkeeping
is computerized and results in timely monthly financial statements
for clients and the company.
The following positions will be recruited in late 1996 and early
1997:
National Sales Manager - will work with the CEO to establish new
franchises, strategic alliances, joint ventures and clients. This
person will recruit franchisees and assist in their training and
motivation to fully empower them for their role of selling services
to medical providers. The individual selected will be a career
sales leader and manager with extensive prior national experience
in the medical industry, financial services, franchising or a
combination of all three. He or she will be self motivated and
share a vision of Acadia becoming one of the top 20 PPMCs in the
country within five years.
Compliance Officer - will develop and monitor a comprehensive
written plan for meeting State and Federal regulatory standards for
Acadia and its clients. The compliance function will be a profit
center. It will include employee training, procedures for
detecting and reporting violations and for responding to violation
reports. The person selected will be thoroughly familiar with
current regulations and will strive to maintain currency. He or
she will have excellent communication skills.
CFO - will be a CPA or CPA/MBA with experience in the medical
industry. The CFO will manage the massive cash flow of the medical
billing operation for a maximum yield to Acadia and client
providers. The CFO will manage Acadia's balance sheet, budgets and
cash flows, work with underwriters, investors and lenders to give
Acadia the financial platform for rapidly expanding operations.
This person will supervise due diligence activities on joint
ventures, strategic alliances, acquisitions and franchisee and
provider setup. He or she will be a primary liaison with the legal
staff in codifying all financial arrangements. Occasionally the
CFO may arrange franchisee or provider financing. The individual
selected will be an entrepreneurial personality with extensive cash
management experience, good analytical skills and prior CFO
experience in a rapidly expanding company.
<PAGE> 63
Executive Compensation
SUMMARY COMPENSATION TABLE
Long Term Compensation
____________________________________________________________________________
Annual Compensat. Awards Payouts
____________________________________________________________________________
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Rest. All
Name and Annual Stock LTIP Other
Principal Comp. Award(s) Opt. P/outs Comp.
Position Year Salary Bonus($) ($) ($) SARs(#)($) ($)
_____________________________________________________________________________
CEO
Hackett,
Thomas N. 1996 65,000.00
(Annualized)
1995 48,575.00 14,509.46
1994 42,125.00 14,000.00
V.P.
Magno,
Jacquelyn 1996 50,000.00
(Annualized)
1995 49,044.82 13,250.00
(Consulting)
1994 45,715.39 12,000.00
(Consulting)
Treasurer
Lebel,
Marise 1996 26,000.00
(Annualized)
1995 27,484.53
1994 26,033.16
<PAGE> 64
PRINCIPAL STOCKHOLDERS
The following table sets forth the anticipated beneficial
ownership of Acadia Common Stock on the Distribution Record
Date of each director of Acadia and of each person who is
expected to own beneficially more than five percent (5%) of the
outstanding shares of Acadia and by all officers and directors as
a group:
Shares of Acadia
Common Stock to be
Beneficially Owned
Name and as of the Distrib. Percent
Address Record Date of
Class
Peacock Hill Farm, 2,509,000 67.2%
Limited Liability Co.
460 Main Street
Lewiston, Maine 04240
Members-
Description of
Control Relationship:
Thomas N. Hackett 200,720 5.4%
General Manager
Total Voting Rights
Beth Pamela H. Sutherland 577,070 15.5%
Manager (Daughter)
No Voting Rights
Matthew Thomas Hackett 577,070 15.5%
Manager (Son)
No Voting Rights
Jeremiah Coleman Hackett 577,070 15.5%
Manager (Son)
No Voting Rights
Thomas N. & Elaine H. 577,070 15.5%
Hackett
Grandchildren Trust
Physician Resources, Inc. 300,000 8.0%
460 Main Street
Lewiston, ME 04240
<PAGE> 65
Thomas N. Hackett 166,000 4.4%
301 Peacock Hill Road
New Gloucester, ME
04260
Jacquelyn Magno 100,000 2.7%
460 Main Street
Lewiston, Maine 04240
Marise and Philip Lebel 14,000 0.4%
460 Main Street
Lewiston, Maine 04240
Management of Acadia has advised that they may acquire
additional shares of Acadia Common Stock from time to time in the
open market at prices prevailing at the time of such purchases.
The Company currently leases office space from an entity
related to the Company's majority stockholder under an operating
lease agreement calling for monthly rental payments of $1,700.
The lease expires on December 31, 1996 and is renewable on an
annual basis.
DESCRIPTION OF ACADIA COMMON STOCK
The authorized capital stock of Acadia consists of fifty
million (50,000,000) shares of Common Stock, no par value, of which
3,733,987 shares will be outstanding on the Distribution Record
Date.
Holders of Acadia Common Stock will be entitled to one vote
per share on all matters submitted to any vote of stockholders.
Cumulative voting for the election of directors is not permitted
and therefore the holders of a majority of the shares of Acadia
Common Stock will be able to elect all of the directors. The
Acadia Common Stock does not have preemptive rights and is not
convertible, redeemable or assessable. The holders of Acadia
Common Stock are entitled to receive dividends as may be declared
by the Board of Directors out of funds legally available therefor.
See Dividends on Acadia Common Stock below. Upon liquidation or
dissolution, holders of Acadia Common Stock are entitled to share
ratably in all net assets available for distribution to
stockholders.
Restrictions of Transfer
Shares of Acadia Common Stock distributed to Acadia's
stockholders will be freely transferable, except for shares
received by persons who may be deemed to be "affiliates" of Acadia
under the Securities Act of 1933, as amended (the "Securities
Act"). Persons who may be deemed to be affiliates of Acadia after
the Distribution generally include individuals or entities that
<PAGE> 66
control, are controlled by, or are under common control with Acadia
and may include certain officers and directors of Acadia as well as
principal stockholders of Acadia. Persons who are affiliates of
Acadia will be permitted to sell their shares of Acadia only
pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements
of the Securities Act, such exemptions afforded by Section 4(1) of
the Securities Act or Rule 144 thereunder.
Approximately 27,890 shares of Acadia Common Stock could be
sold pursuant to Rule 144 under the Securities Act.
Dividends on Acadia Common Stock
Acadia does not intend to pay any dividends in the foreseeable
future and will follow a policy of retaining its earnings for use
in its operations. In addition, under its proposed loan agreement,
Acadia will be prohibited from paying cash dividends without prior
approval of its lender banks.
Transfer Agents
The transfer agents for the Acadia National Health Systems,
Inc. Common Stock are American Securities Transfer, Inc., whose
address is 1825 Lawrence Street, Suite 444, Denver, Colorado
80202-1817 and whose telephone number is (303) 298-5370.
ADDITIONAL INFORMATION
Following the Distribution, Acadia will furnish its
stockholders with annual reports containing audited financial
statements and quarterly reports containing unaudited financial
information.
Acadia is hereby filing a Registration Statement on Form 10SB
with the Securities and Exchange Commission, Washington D.C.,
pursuant to the Securities Exchange Act of 1934 and will hereafter
file periodic reports with the Commission pursuant to such Act.
Copies of all information filed with the Commission may be obtained
from the Commission's principal office in Washington, D.C. upon
payment of the prescribed fees.
<PAGE> F-1
INDEX TO FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Balance Sheet, September 27, 1996
(Acadia) F-3
Notes to Balance Sheet, September 27, 1996
(Acadia) F-4
<PAGE> F-2
INDEPENDENT AUDITORS' REPORT
Baker Newman & Noyes
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Acadia National Health Systems, Inc.
We have audited the accompanying balance sheet of Acadia National
Health Systems, Inc. as of September 27, 1996. This balance sheet is the
responsibility of the Company's management. Our responsibility is
to express an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the balance sheet is free
of material misstatement. An audit of a balance sheet includes
examining, on a test basis, evidence supporting the amounts and disclosures in
that balance sheet. An audit of a balance sheet also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for
our opinion.
In our opinion, the balance sheet referred to above presents
fairly, in all material respects, the financial position of Acadia National
Health Systems, Inc. at September 27, 1996 in conformity with generally
accepted accounting principles.
Baker Newman & Noyes
October 25, 1996 Limited Liability
Company
<PAGE> F-3
BALANCE SHEET, SEPTEMBER 27, 1996
(ACADIA)
<PAGE> F-4
ACADIA NATIONAL HEALTH SYSTEMS, INC.
BALANCE SHEET
September 27, 1996
ASSETS (Note 3)
Current assets:
Cash $120,988
Accounts receivable (notes 6 and 7) 220,283
Prepaid expenses and other assets 4,806
Deferred income taxes (note 5) 2,000
_________
Total current assets 348,077
Property and equipment:
Leasehold improvements 14,540
Equipment 59,169
Furniture and fixtures 17,588
_________
91,297
Less accumulated depreciation 52,574
_________
Net property and equipment 38,723
Other assets:
Deferred income taxes (note 5) 5,500
Deposits 12,000
Organizational costs 96,550
_________
$ 500,850
===========
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable under line of credit (note 3) $ 88,917
Current installments on long-term debt (note 3) 10,805
Accounts payable and accrued expenses 33,502
Other 13,572
_________
Total current liabilities 146,796
Long-term debt, excluding current installments (note 3) 88,367
Notes payable to stockholder (note 3) 14,047
_________
Total liabilities 249,210
Commitments (note 4)
Stockholders' equity:
Common stock, without par value. Authorized
50,000,000 shares; issued and outstanding
3,733,987 shares 251,640
_________
$ 500,850
===========
See accompanying notes.
<PAGE> F-4
NOTES TO BALANCE SHEET, SEPTEMBER 27, 1996
(ACADIA)
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO BALANCE SHEET
September 27, 1996
1. Summary of Significant Accounting Policies
Nature of Business
Acadia National Health Systems, Inc. (the Company) was formed
on August 2, 1996 to provide practice management, invoicing and
accounts receivable collection services for doctors' offices, foster homes,
and hospital-based practices. The Company has adopted a 52/53 week
year ending on the last Friday in September.
The Company's operations commenced on September 27, 1996 after
the acquisition of an affiliate (see note 2); until that time the
Company did not earn any revenues or incur any expenses.
Property and Equipment
Property and equipment are recorded at cost and depreciated
over the estimated useful lives of the assets using straight-line and
accelerated methods.
Income Taxes
The Company follows the asset and liability method of
accounting for income taxes, whereby deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in the period that includes the
enactment date.
Management Estimates
The preparation of a balance sheet in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the balance sheet. Actual results could differ from those estimates.
Organizational Costs
Organizational costs have been capitalized and will be
amortized on a straight-line basis over five years.
2. Acquisition of Assets
On September 27, 1996, the Company acquired all of the assets
of Physician Resources, Inc., whose majority owner is also the
majority owner of the Company, in exchange for 300,000 shares of stock. The
Company also assumed the liabilities of Physician Resources, Inc. This
transaction was accounted for as a purchase, but because the parties to the
transaction were entities under common control, the acquired net assets were
recorded at amounts equal to Physician Resources, Inc.'s carrying values.
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO BALANCE SHEET
September 27, 1996
2. Acquisition of Assets (Continued)
Summarized financial information of the assets acquired and
liabilities assumed in this transaction is as follows:
Current assets $ 348,077
Other assets 82,773
Current liabilities (146,796)
Other liabilities (268,414)
__________
$ 15,640
==========
Immediately following the acquisition, $166,000 of debt owed
to the majority stockholder was converted to common stock. Additionally,
common stock valued at $70,000 was issued with respect to organizational
costs incurred.
3. Indebtedness
Long-term Debt
Long-term debt consists of the following:
Note payable to bank at 9.75%, due in monthly
installments of principal and interest, with
a final balloon payment in August 2001, secured
by substantially all assets of the Company $ 99,172
Less current installments of long-term debt 10,805
_________
$ 88,367
Maturities of long-term debt are as follows:
Fiscal
Year Amount
1997 $ 10,805
1998 11,907
1999 13,121
2000 14,459
2001 48,880
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO BALANCE SHEET
September 27, 1996
3. Indebtedness (Continued)
Line of Credit
The Company has a revolving line of credit agreement with a
bank providing for borrowings up to $250,000 at 1% over the Bank of
Boston base rate (9.25% at September 27, 1996). The line is secured by all
assets of the Company, and is guaranteed by a stockholder.
Note Payable - Stockholder
The Company has a note payable due on demand to a stockholder.
The stockholder has agreed that no demand will be made during 1997.
The note is unsecured and requires monthly interest payments at a rate of
10%.
4. Lease
The Company currently leases office space from an entity
related to the Company's majority stockholder under an operating lease
agreement calling for monthly rental payments of $1,700. The lease expires
on December 31, 1996 and is renewable on an annual basis.
5. Income Taxes
Assets transferred to the Company have a tax basis that
differs from the Company's carrying amount. The tax effects of such temporary
differences that give rise to deferred income taxes at September
27, 1996 are as follows:
Net property, plant and equipment $ 5,500
Accrued expenses 2,000
_________
$ 7,500
==========
The deferred tax asset is expected to be recovered through
taxable income earned in the carryforward period.
6. Related Party Transactions
A company affiliated with the Company's majority stockholder
provides payroll processing and similar services to the Company at no cost.
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
NOTES TO BALANCE SHEET
September 27, 1996
6. Related Party Transactions (Continued)
The receivables acquired from Physician Resources, Inc. (see
note 2) are guaranteed as to their collection by Physician Resources, Inc.
and certain of its stockholders, who are also stockholders of the
Company.
7. Concentration of Credit Risk
Approximately 42% of the Company's accounts receivable at
September 27, 1996 are derived from medical practices in Central Maine.
Accounts receivables from two customers totaled $45,166 at September 27,
1996.
8. Fair Value of Financial Instruments
Financial instruments included in the Company's balance sheet
at September 27, 1996 include cash, accounts receivable, accounts
payable and debt. It is not practical to estimate the fair value of notes
payable to a stockholder since the stockholder is a related party and there
would be no market for this instrument. The nature of all other financial
instruments is such that carrying value approximates fair market
value.
<PAGE> E-1
INDEX TO EXHIBITS
Page
(b) Exhibits:
2-Assets Purchase Agreement between
Acadia National Health Systems, Inc. and
Physician Resources, Inc.,
dated September 27, 1996; E-2
3.(i)-Articles of Incorporation
of the Company, as amended; E-3
3.(ii)-Bylaws of the Company; E-4
4.(i)-Instruments Defining Rights of
Security Holders/Minutes of Annual/Special
Meetings of the Company; E-5
4.(ii)-Loan Agreements Secured by Demand
Notes/Promissory Notes, Defining Rights
of Holders of Long Term Debt; E-6
10.(i)-Software License Master Agreement; E-7
10.(ii)-Lease of Premises, Acadia Corporate
Headquarters, 460 Main Street, Lewiston,
Maine 04240 (Assignment); E-8
10.(iii)-Employment Agreements, dated
September 27, 1996 between Acadia and
THOMAS N. HACKETT, C.E.O.,
JACQUELYN J. MAGNO, Vice-President; E-9
10.(iv)-Internal Revenue Code Section 125
Cafeteria Plan dated June 1, 1996; E-10
10.(v)-Line of Credit Memorandum dated
September 8, 1995 with PEOPLE'S HERITAGE
BANK in the amount of $250,000.00; E-11
10.(vi)-Line of Credit Memorandum dated
July 29, 1996 with PEOPLE'S HERITAGE
BANK in the amount of$100,000.00; E-12
27-Financial data schedule E-14
99-Financial Statements Schedules E-15
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (the "Agreement") is made and
entered into this 25th day of September, 1996, by and among PHYSICIAN
RESOURCES, INC.("PRI"),a Maine corporation (the "Seller") and THOMAS N.
HACKETT and JACQUELYN MAGNO (hereinafter collectively, jointly and severally,
referred to as the "Stockholders and/or "Majority Stockholders"), and ACADIA
NATIONAL HEALTH SYSTEMS, INC. ("ACADIA"), a Colorado corporation (the
"Purchaser").
Explanatory Statement
A. The Seller is a Maine corporation that engages in the
business ofproviding physician practice management services including billing,
consulting, software, business systems, related services and sometimes
financing to physicians and other health care providers.
B. The Stockholders own of record and beneficially a majority
of the outstanding shares of the capital stock of the Seller, and
constitute all of the directors and officers of the Seller.
C. The Seller desires to sell, assign, transfer and deliver to
the Purchaser, and the Purchaser desires to purchase from the Seller,
certain of the assets of the Seller described in Section 1 hereof on the
terms and subject to the conditions hereinafter contained.
D. The Purchaser and the Stockholders desire to enter into
certain agreements among them providing for, among other things, the
provision of certain services by A and B for the Purchaser, on the terms and
subject to the conditions hereinafter contained.
NOW THEREFORE, in consideration of the Explanatory Statement
that shall be deemed to be a substantive part of this Agreement and the mutual
covenants, promises, agreements, representations and warranties contained in
this Agreement, the parties hereto do hereby covenant, promise, agree,
represent and warrant as follows:
1. Purchase and Sale of Assets.
1.1. Purchase and Sale. On the terms and subject to the
conditions set forth in this Agreement, at the Closing on the Closing Date (as
such terms are defined in Section 13 hereof), the Seller shall sell, assign,
transfer and deliver to the Purchaser and the Purchaser shall purchase from the
Seller all of the right, title and interest of
<PAGE>
Seller in and to the following assets of the Seller (all of which
assets of the Seller are hereinafter collectively referred to as the "Assets"):
1.1.1. All of the Seller's equipment, furniture,
materials and supplies, including, but not limited to, all of the equipment,
furniture, materials and supplies described in Exhibit 1A attached hereto and
incorporated by reference herein (the "Equipment").
1.1.2. All of the Seller's fixed assets, including, but
not limited to, all of the fixed assets described in Exhibit 1B attached hereto
and incorporated by reference herein (the "Fixed Assets").
1.1.3. All of the Seller's Accounts Receivable (as
defined in Section 1.3 hereof).
1.1.4. All of the Seller's Inventory (as defined in
Section 1.3 hereof).
1.1.5. All of the Seller's Cash (as defined in Section
1.3 hereof).
1.1.6. All of the Seller's customer lists and customer
sales files ("Customer Lists").
1.1.7. All of the Seller's goodwill and copies of all
of Seller's employment and personnel records, books and records relating or
pertaining to Seller's business of providing physician practice management
services including billing, consulting, software, business systems, related
services and sometimes financing to physicians and other health care providers,
including all sales records and similar data (hereinafter collectively referred
to as the "Records"); the Seller shall deliver to the Purchaser copies of the
Records upon the written request of the Purchaser.
1.2. Purchase Price for Assets; Allocations. The purchase
price for the Assets shall be 300,000 shares of Acadia National Health Systems,
Inc. common capital stock no par value at a stated value of $.50 per share (the
"Purchase Price"). The parties agree that the Purchase Price for the Assets
shall be allocated among the Assets as follows:
Equipment
Fixed Assets
Goodwill
1.3. Closing Account Statement; Value of Certain Assets. At
the Closing, the Seller and the Stockholders shall deliver to the
Purchaser a closing account statement (the "Closing Account Statement") on
which shall be set forth the Value (as
<PAGE>
hereinafter defined) of all of the Seller's (i) Accounts
Receivable, billed and unbilled ("Total Receivables"), (ii) inventory,
including, but not limited to, all of the inventory described in an inventory
list (the "Inventory List") prepared as hereinafter set forth in this Section
1.3 (the "Total Inventory"), and (iii) cash, cash equivalents, including, but
not limited to, all certificates of deposit and money market accounts, and
similar current assets ("Total Cash"), all as of the close of business on
the day immediately preceding the Closing Date. The Closing Account Statement
shall be in accordance with the true, complete and correct books and records of
the Seller and shall be true, complete and correct and accurately present the
financial information in respect of the Seller set forth therein as of the
close of business on the date thereof, and in accordance with the covenants,
promises, agreements, representations and warranties of the Seller set forth
in this Agreement.
The Inventory List shall be prepared by representatives of the
Seller and the Purchaser (the "Closing Account Statement Representatives")
jointly by the taking of a physical inventory of the Seller's inventory
beginning immediately after the close of business on the day immediately
preceding the Closing Date. The Total Cash shall be verified by the Closing
Account Statement Representatives through examination of the books and
records of the Seller, including, but not limited to, the Seller's bank books,
checking account statements and cheek books, certificates of deposits, and money
market account statements, after the close of business on the day immediately
preceding the Closing Date.
1.3.1. For purposes of this Section 1.3, "Value" shall
mean with respect to:
1.3.1.1. Total Receivables or Accounts Receivable, the
full, aggregate, face value of the Total Receivables or Accounts
Receivable.
1.3.1.2. Total Inventory or Inventory, the direct cost
to the Seller of the Total Inventory or Inventory.
1.3.1.3. Total Cash or Cash, the full, aggregate face
value thereof.
1.3.2. At the Closing on the Closing Date, the Seller
shall sell, assign, transfer and deliver to the Purchaser such of the Seller's
Total Receivables, Total Inventory and Total Cash in exchange for 300,000
shares of Acadia National Health Systems, Inc., no par value common stock at
a stated value of $.50 per share.
1.3.3. In the event that the Value of the Inventory and
Accounts Receivable to be sold, assigned, transferred and delivered to the
Purchaser at the Closing shall be less than the Value of the Total Inventory and
Total Receivables, respectively, the Seller shall designate at the
Closing those items of Total Inventory and those of the Total Receivables that
shall be sold, assigned, transferred and delivered to the Purchaser at the
Closing as the Inventory and Accounts Receivable.
<PAGE>
1.4. Consulting and Noncompetition Agreements. At the
Closing, the Purchaser and each officer shall enter into Consulting and
Noncompetition Agreements in the form attached hereto as Exhibit 2A (hereinafter
referred to as the "Consulting and Noncompetition Agreements") pursuant to which
such Stockholders shall agree to render consulting services to the
Purchaser for a period of 5 years from and after the Closing Date and shall
agree not to compete with the business of the Purchaser for a like period.
2. Liabilities of Seller. Anything contained in this Agreement to
the contrary notwithstanding, the Seller shall assign to Purchaser all
debts, obligations, duties and liabilities of the Seller including any
debts and leases not disclosed within this agreement that were the sole
responsibility of the Seller and its stockholders. The Purchaser shall assume,
agree to pay or pay any debts, obligations, duties or liabilities of any nature
of the Seller or its business, including, but not limited, to any debts,
obligations, duties or liabilities relating to the Seller's employees or
employee benefit plans, regardless of whether any such debt, obligation,
duties or liability arises under any contract, agreement, practice, arrangement,
statute, law, ordinance, rule, regulation or otherwise, and nothing in this
Agreement or otherwise is intended or shall be construed to the contrary. The
parties further covenant, promise and agree that the Purchaser is not and
shall not be obligated to employ any of the Seller's employees.
3. Creditor Matters.
3.1. Present and Reasonably Equivalent Value. The
transactions contemplated by this Agreement are intended by the parties to be a
contemporaneous exchange between the Seller and the Purchaser and
will be accomplished at Closing Date contemporaneously. To the extent that
Purchaser has assumed any obligations of the Seller and the Stockholders
under this Agreement, the assumption of the obligations at Closing Date shall
be regarded as a contemporaneous exchange for the transfer of assets as
described in this Agreement. The transactions contemplated by this Agreement
represent a regularly conducted, noncollusive sale, and have been negotiated by
the parties and their respective professional advisors in an arm's-length
manner with due regard for the respective obligations of the parties and value
of the assets transferred.
3.2. List of Creditors. The Stockholders shall provide the
Purchaser with a list of all existing creditors of the Seller and the
Stockholders. Existing creditors shall include any person who has a right to
payment, whether or not the right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured. The list of creditors will include the
amounts of the claim or a reasonable estimate of the amount if the exact amount
of the claim is not known including the name and address. If the Seller and
the Stockholders are the obligor of outstanding issue of bonds, debentures or
similar instruments as to which there is an indenture trustee, the list of
creditors shall include the name and address of the indentured trustee in the
aggregate outstanding principal
<PAGE>
amount of the issue. The Treasurer of the county or counties
wherein any of the property being transferred under this Agreement is
located shall be listed as a creditor of the Seller and the Stockholders with
respect to all taxes, assessments, or other charges to be levied on the property
being transferred hereby. Seller and the Stockholders warrant and
represent that the list of creditors to be furnished under this paragraph
shall be accurate and complete without any omission or deletions.
3.3. Notice to Creditors. Seller and the Stockholders shall
give notice, at Seller and the Stockholders' expense, to all creditors
listed under the list provided by the Seller and the Stockholders under the
foregoing paragraph, which notice shall state the following:
(i) The transfer contemplated by this Agreement is about to
be made;
(ii) The name and business address of the Seller and the
Stockholders;
(iii) Whether or not all of the debts of the Seller and the
Stockholders are to be paid in full as they fall due as a result of this
transaction; and, if so, the address to which the creditors should send their
bills and invoices;
(iv) If the consideration to be given for the transactions
contemplated hereunder is not adequate to pay all Seller and the
Stockholders' creditors in full, the arrangements under which the
Seller and the Stockholders undertake to pay such creditors, and the
procedure to be followed by the creditors to assert
their claims so that they will be paid by the Seller and the
Stockholders as described in the notice.
3.4. Payment to Creditors. Seller covenants, represents and
warrants that it will pay all creditors of Seller and the Stockholders on
the list described in Section 3.2 and pursuant to the foregoing notice
described in Section 3.3.
4. Accounts Receivable.
4.1. Collection of Accounts Receivable. At the Closing, the
Seller shall deliver to the Purchaser a complete and correct list of the
Seller's Total Receivables (the "Total Receivables List") as of the close of
business on the day immediately preceding the Closing Date specifying the age of
each of the Accounts Receivable, the amount due, name and address of each
account debtor on the Total Receivables List (the "Total Account Debtors"). In
the event that the Value of the Accounts Receivable shall be less than the
Value of the Total Receivables pursuant to Section 1.3.3 hereof, the Seller
shall, in addition to the Total Receivables List, deliver to the Purchaser at
the Closing a list of all Accounts Receivable to be sold, assigned, transferred
and delivered to the Purchaser at the Closing (the "Accounts Receivable List"),
specifying the age of each of the Accounts Receivable, the amount due, name and
address of each account debtor on the Accounts Receivable List (the "Account
Debtors"). Promptly after the
<PAGE>
Closing, the Seller and the Purchaser shall notify all Total
Account Debtors or the Account Debtors, as the case may be, by notice that
the Purchaser has purchased the Seller's Accounts Receivable, and shall direct
all Account Debtors or Total Account Debtors, as the case may be, to remit
directly to the Purchaser payment of all outstanding amounts represented by the
Accounts Receivable. The Seller and the Stockholders, jointly and severally,
shall remit promptly to the Purchaser in full the amount of any and all
payments received by any of them in respect of the Accounts Receivable, without
any diminution, offset, deduction or discount.
4.2. No Waiver, Discount or Indulgence. The Seller and the
Stockholders, jointly and severally, shall neither grant to any
Account Debtor any waiver, discount, indulgence or other delay in respect of the
Accounts Receivable, nor settle or compromise the amount of any Account
Receivable or the time in which any payment of any Account Receivable is due and
payable.
4.3. Guarantee of Accounts Receivable. The Seller and the
Stockholders hereby absolutely and unconditionally guarantees to the Purchaser
the payment in full after the Closing Date of all of the Accounts Receivable of
the Seller. The parties hereto acknowledge and covenant, promise and agree that
the guarantee by the Seller contained in this Section is a guarantee of payment
and collection; accordingly, except as provided in Section 4.1 of this
Agreement, the Purchaser shall have no obligation whatsoever to enforce or
attempt to enforce against any Account Debtor or in respect of any collateral
any right which the Purchaser has or the Seller may have had in respect of any
of the unpaid Accounts Receivable or such collateral.
4.4. Security Interest in Accounts Receivable. With respect
to and to secure the Seller's obligation and duty hereunder to sell, assign,
transfer and deliver to the Purchaser the Accounts Receivable and the Seller's
guarantee to the Purchaser of payment of the Accounts Receivable as provided in
Section 4.3 hereof, the Seller hereby grants to the Purchaser a security
interest in all of the Seller's Accounts Receivable, and all cash and noncash
proceeds thereof. At the Closing on the Closing Date, the Seller shall execute,
acknowledge, seal and deliver such number of financing statements and in such
form and substance as shall be required by the Purchaser to perfect its
security interest in the Accounts Receivable ("Financing Statements").
5. Removal of Assets. The Seller shall assemble by the time of
Closing on the Closing Date and thereafter maintain at the Seller's premises and
place of business located at the address set forth in Section 16.2 hereof
(the "Premises") all of the Assets (except for certain Records, the
Accounts Receivable, Cash and certificates of title to the Motor Vehicles,
all of which shall be delivered by the Seller to the Purchaser at the Closing)
being purchased by the Purchaser under this Agreement in order to
facilitate the time, place and delivery of the Assets to the Purchaser
concurrently with and following the Closing as hereafter provided. The
Purchaser shall, concurrently with the Closing and continuing for such period
of time as shall be reasonably necessary after the Closing, remove from the
Premises such of the Assets being purchased by the
<PAGE>
Purchaser hereunder as shall not have been delivered by the Seller
to the Purchaser at the Closing. The Seller and the Stockholders shall
cooperate fully with the Purchaser in such removal, and the employees and
agents of the Purchaser for the purpose of such removal shall be granted and
permitted access to the Premises at any and all reasonable times. No rental,
storage or other charges shall be imposed upon the Purchaser or on any of the
Assets while the Assets are being removed from the Premises after the Closing
on the Closing Date.
6. Customer Lists and Records. Prior to or at the Closing the
Seller shall furnish the Purchaser with all of the Seller's Customer Lists,
which shall include a complete and correct list of all of the Seller's
customers and their addresses, and such other and further information as the
Purchaser may reasonably request in respect of the business of the Seller.
7. Approvals.
7.1. Other Permits, Licenses and Authorizations. Promptly
after the execution of this Agreement, the Purchaser shall use its best
efforts to obtain such approvals, consents, permits, licenses and
authorizations, if any, of all Governments and Governmental Agencies (as
hereinafter defined in Section 10.1.4) as may be required to complete lawfully
the transactions contemplated hereby.
The Seller and the Stockholders, jointly and severally, agree to
cooperate fully, execute, acknowledge, swear to, seal and deliver such
instruments and documents and take all such other and further actions as may be
necessary or desirable in order to obtain such approvals, consents, permits,
licenses and authorizations.
8. Transfer of Cash. At the Closing, Seller shall deliver to the
Purchaser a check payable to the order of the Purchaser in an amount equal to
the Cash of Seller at the Closing on the Closing Date determined in accordance
with Section 1.3.1.3.1.2 of this Agreement.
9. Representations and Warranties.
9.1. Representations and Warranties of Seller. The Seller
represents and warrants to the Purchaser as of the date hereof and as of the
Closing on the Closing Date that:
9.1.1. Ownership of Seller's Stock. The Stockholders
are the sole and exclusive record and beneficial owners of all of the
outstanding shares of the capital stock of the Seller, and constitute all of the
directors and officers of the Seller. The Stockholders have the absolute and
unconditional right, power and authority to cause the Seller to sell, assign,
transfer and deliver the Assets to the Purchaser in accordance with the terms of
this Agreement, to consummate the transactions contemplated hereby and
to enter into the Consulting and Noncompetition Agreements.
<PAGE>
9.1.2. Due Organization; Name and Address; Good
Standing, Authority of Seller. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maine.
The only name and business address of the Seller which has been used by the
Seller at any time within the past three years ending at the date of the
Agreement is Physician Resources, Inc., 460 Main Street, P.O. Box 1348 04240.
The Seller has full right, power and authority to own, lease and operate its
properties and assets, and to carry on its business of providing physician
practice management services including billing, consulting, software, business
systems, related services and sometimes financing to physicians and other
health care providers.
The Seller is duly licensed, qualified and authorized to do business in each
jurisdiction in which the properties and assets owned by it or the nature of the
business conducted by it make such licensing, qualification and
authorization legally necessary. The Seller is not in breach or violation of,
and the execution, delivery and performance of this Agreement will not result
in a breach or violation of, any of the provisions of the Seller's articles of
incorporation, as amended to the date of this Agreement (the "Articles") or
bylaws, as amended to the date of this Agreement (the "Bylaws").
9.1.3. Authorization and Validity of Agreements. The
Stockholders have the legal capacity, right, power, and authority to enter into
this Agreement and the Consulting and Noncompetition Agreements. The
Seller has the full right, power and authority to execute, acknowledge, seal and
deliver this Agreement and to perform the transactions contemplated by this
Agreement. The execution, acknowledgment, sealing and delivery of this Agreement
by the Seller and the performance by the Seller of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate and
stockholder action. This Agreement has been duly executed, acknowledged, sealed
and delivered by the Seller and is the legal, valid and binding
obligation of the Seller and enforceable against the Seller in accordance with
its terms. The Consulting and Noncompetition Agreements, when executed,
acknowledged, sealed and delivered by the Seller, will be the legal, valid and
binding obligation of the Seller, enforceable against the Seller, in accordance
with its terms, except in each case as such enforceability may be limited by
general principles of equity, bankruptcy, insolvency, moratorium and similar
laws relating to creditors rights generally.
9.1.4. Agreement Not in Conflict with Other
Instruments; Required Approvals Obtained. The execution, acknowledgment,
sealing, delivery, and performance of this Agreement and the Consulting and
Noncompetition Agreements by the Seller, and the consummation of the
transactions contemplated by this Agreement and the Consulting and
Noncompetition Agreements will not (a) violate or require any consent,
approval, or filing under, (i) any common law, law,
statute, ordinance, rule or regulation (collectively referred to
throughout this Agreement as "Laws") of any federal, state or local government
(collectively referred to throughout this Agreement as "Governments") or any
agency, bureau, commission, instrumentality or judicial body of any Governments
(collectively referred to throughout this Agreement as "Governmental Agencies"),
or (ii) any judgment, injunction, order, writ or decree of any court,
arbitrator,
<PAGE>
Government or Governmental Agency by which the Seller, any of the
Assets or any of the Stockholders are bound; (b) conflict with, require any
consent, approval, or filing under, result in the breach or termination of any
provision of, constitute a default under, or result in the creation of any
claim, security interest, lien, charge, or encumbrance upon any of the Assets
pursuant to, (i) the Seller's Articles or Bylaws, (ii) any indenture, mortgage,
deed of trust, license, permit, approval, consent, franchise, lease, contract,
or other instrument, document or agreement to which the Seller or any of the
Stockholders is a party or by which the Seller, any of the Stockholders or any
of the Assets is bound, or (iii) any judgment, injunction, order, writ or decree
of any court, arbitrator, Government or Governmental Agency by which the Seller,
any of the Assets or any of the Stockholders is bound; and all permits,
licenses and authorizations of any Government or Governmental Agency required to
be obtained prior to the Closing, shall have been obtained and shall be in full
force and effect as of the Closing Date.
9.1.5. Conduct of Business in Compliance with
Regulatory and Contractual Requirements. The Seller has conducted and is
conducting its business in compliance with all applicable Laws of all
Governments and Governmental Agencies. The Motor Vehicles, the Equipment and the
Fixed Assets and the use, operation and maintenance thereof, and the Inventory
and the maintenance and sale of the Inventory by the Seller (i) are in
compliance with all laws of all Governments and Governmental Agencies applicable
with respect thereto, and (ii) are in compliance with all restrictions,
covenants, agreements, contracts, commitments, understandings and arrangements
applicable with respect thereto.
9.1.6. Legal Proceedings. There is no action, suit,
proceeding, claim or arbitration, or any investigation by any person or entity,
including, but not limited to, any Government or Governmental Agency, (i)
pending, to which the Seller or any of the Stockholders is a party, or to the
knowledge of the Seller or any of the Stockholders, threatened against or
relating to the Seller, the Seller's business or any of the Assets, or (ii)
challenging the Seller's or the Stockholders' right to execute, acknowledge,
seal, deliver, perform under or consummate the transactions contemplated by
this Agreement and, as respects the Stockholders, the Consulting and
Noncompetition Agreements, or (iii) asserting any right with respect to any of
the Assets, and, in each such case, there is no basis for any such action, suit,
proceeding, claim, arbitration or investigation.
9.1.7. Tax Matters. Attached hereto as Exhibit 5 are
complete and correct copies of the income tax returns of the Seller for the
Seller's three fiscal years ended December 30, 1993, December 30, 1994, and
December 30, 1995 (collectively, the "Returns"), as filed by the Seller with the
Internal Revenue Service (the "IRS"). All information reported on the Returns is
true, accurate, and complete. The Seller is not a party to, and is not aware of,
any pending or threatened action, suit, proceeding, or assessment against it for
the collection of taxes by any Government or Governmental Agency. The Seller has
duly and timely filed with all appropriate Governments and Governmental
Agencies, all tax returns, information returns, and reports required to be
<PAGE>
filed by the Seller. Except for accruals for taxes payable (the
"Accrued Taxes") as set forth in the Seller's Balance Sheet as of September
30, 1995 (the "Balance Sheet"), the Seller has paid in full all taxes,
interest, penalties, assessments and deficiencies owed by the Seller to all
taxing authorities. All taxes and other assessments and levies which the
Seller is required by applicable Law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper Governments and
Governmental agencies or are properly held by the Seller for such payment. All
claims by the IRS or any state taxing authorities for taxes due and payable by
the Seller have been paid by the Seller. The provisions for the Accrued
Taxes are adequate forthe payment of all of the Seller's liabilities for unpaid
taxes (whether or not disputed). All federal income tax returns required to be
filed by the Seller have either been examined by the IRS, or the period during
which any assessments may be made by the IRS has expired without waiver or
extension for all years through the Seller's fiscal year ended September 30,
1995, and any deficiencies or assessments claimed or made have been paid,
settled or fully provided for in the Financial Statements. The Seller has not
filed a consent pursuant to Section 341(f) of the Internal Revenue Code of 1986,
as amended. The Seller is not a party to, and is not aware of, any pending or
threatened action, suit, proceeding, or assessment against it for the
collection of taxes by any Government or Governmental Agency.
9.1.8. Accounts Receivable. The Accounts Receivable,
including all Accounts Receivable reflected on the Seller's Balance Sheet, all
Accounts Receivable arising after the date of the Balance Sheet and all
Accounts Receivable reflected on the Accounts Receivable List and Total
Receivables List are bona fide accounts receivable, arising from bona fide
transactions in the ordinary course of the Seller's business, the full amount
of which is actually owing to the Seller, subject to no Claims.
9.1.9. Title to Assets; Equipment and Fixed Assets. The
Seller has sole and exclusive, good and marketable title to all of the Assets
free and clear of any and all pledges, claims, threats, liens, restrictions,
agreements, leases, security interests, charges and encumbrances, All of the
Equipment and Fixed Assets are in good, working and operating condition and
repair, reasonable wear and tear excepted, fit for its intended purposes, and
free from any defects known to the Seller.
9.1.10. Inventory. All of the Inventory is
transportable and storable in the ordinary manner in which similar products are
transported and stored; conforms to all applicable Laws of all Governments and
Governmental Agencies; and none of the Inventory consists of products the age of
which is beyond or outside of the guidelines (the "Guidelines") or Inventory
the age of which will go beyond or outside of the Guidelines within reasonable
time after the Closing Date. All of the Inventory was valued in the Financial
Statements on the basis of accounting principles historically utilized by the
Seller and consistently applied. The value of any Inventory not in compliance
with this Section 10.1.12 is not included in any of the Financial Statements.
No product the age of which exceeds the Guidelines will be found in the
possession of
<PAGE>
a retailer to whom the Seller sold such product prior to the date
of this Agreement. All goods, including Inventory, previously sold by the
Seller were of merchantable quality, and the Seller has not breached any express
or implied warranties in connection with the sale of any and all of such
goods.
9.1.11. Records. The Records, including, but not
limited to, the Customer List, that have been delivered by the Seller to the
Purchaser or that shall be delivered by the Seller to the Purchaser are true,
complete and correct.
9.1.12. Employment Matters.
9.1.12.1. None of the Seller's employees are covered by a
collective bargaining agreement or are represented by a labor
organization, and no petition for representation concerning any of the Seller's
employees has been filed with the National Labor Relations Board; the Seller is
not aware of any union organizational activity and has no reason to believe that
any such activity is being contemplated. The Seller has not engaged in any
unfair labor practice.
9.1.12.2. Seller is not in violation of applicable equal
employment opportunity wage and hour or any other Laws of any
Government orGovernmental Agency relating to employment; there are no active,
pending, or threatened administrative or judicial proceedings under any Laws of
any Government or Governmental Agency; there are no claims, charges,
and employment related suits or controversies which have occurred within the
last 10 years orare presently pending or threatened under any employment related
Laws of any Government or Governmental Agency; and the Seller is not subject to
any judgments, decrees, conciliation agreements and settlement
agreements concerning employment related matters.
9.1.12.3. The Seller has not entered into any employment agreements
with any of its employees, and all employees may be terminated at will; there
is no contractual obligation or special termination or severance
arrangement in respect of any of Seller's employees; and there is
no provision of any agreement or arrangement with any of the Seller's employees,
or any other legal or contractual requirement, which would obligate the Seller
to require the Purchaser of the Assets to employ any of the Seller's employees.
9.1.12.4. The Seller has paid all wages or amounts that have been
listed within this agreement, bonuses, commissions and other
benefits and sums due (and all required taxes, insurance, social security and
withholding thereon). All accrued vacation, accrued sick leave, accrued
benefits and accrued payments (and pro rata accruals for a portion of a year)
to its employees.
9.1.12.5. The Seller has maintained in effect all
insurance policies and other employee benefits covering any employee claims
incurred through the Closing Date and will assign, transfer and deliver
contracts to the Purchaser.
<PAGE>
9.1.12.6. The Purchaser is under no obligation or duty,
whether under any contract, agreement, understanding or arrangement or
under any applicable Law of any Government or Governmental Agency to assume
or be responsible for any obligation, duty or liability, now existing or
hereafter arising, relating to or in connection with the Seller's employees
or any compensation, benefits or benefit plans in respect of the Seller's
employees, or otherwise arising out of or in connection with the transactions
contemplated by this Agreement, and the Seller has made no commitment and is
under no obligation to cause the Purchaser of the Assets to assume or to be
responsible for any such obligation, duty or liability.
9.1.14. Absence of Certain Changes or Events. Since
December 30, 1995, the Seller has not:
9.1.14.1. Incurred any indebtedness, obligation, duty
or liability (contingent or otherwise) or acted as a guarantor or surety of any
debt, except normal trade or business obligations incurred in the ordinary
course of the Seller's business, as such business has been operated
historically.
9.1.14.2. Subjected to pledge, lien, charge, claim,
security interest, agreement, deed of trust or encumbrance any of the
Assets.
9.1.14.3. Sold, assigned, transferred, leased, disposed
of, or agreed to sell, assign, transfer, lease, or dispose of, any of the
Assets, except inventory sold in the ordinary course of the Seller's
business, as such business has been operated historically, at the full wholesale
prices and rates currently in effect, without discount or rebate.
9.1.14.4. Canceled or compromised any of the Accounts
Receivable, debts due to or claims of the Seller, or waived or released any of
its rights against Account Debtors or other third parties.
9.1.14.5. Made any capital expenditure in excess of
Fifty Thousand Dollars ($50,000.00) or entered into any contract, agreement,
arrangement, understanding or commitment therefor; or acquired or leased any
assets orproperty of any third person or party other than in the ordinary
course of Seller's business, as such business has been operated historically.
9.1.14.6. Suffered any casualty loss or damage, whether
or not such loss or damage is or was covered by insurance.
9.1.14.7. Suffered any adverse change in Seller's
operations, earnings, assets, liabilities, or business (financial or
otherwise).
<PAGE>
9.1.14.8. Changed the nature or manner of operation of
the Seller's business, the method of the Seller's accounting or the
Seller's fiscal year.
9.1.14.9. Other than in the ordinary course of the
Seller's business, as such business has been operated historically, made any
payment or entered into any transaction, contract, agreement, lease,
arrangement, understanding or commitment.
9.1.14.10. Failed to pay any indebtedness or other
obligation, including any taxes and other charges, when due.
9.1.14.11. Increased any salary, wages or other
remuneration or benefits to any officer, director or employee of the Seller.
9.1.14.12. Repurchased, redeemed or retired shares of
its capital stock or any debt securities (as defined in the Securities Act of
1933) ("Securities"), or issued or sold any Securities.
9.1.14.13. Dissolved, liquidated, or wound up or
carried out any partial liquidation, distribution or other transaction in the
nature of a partial liquidation or distribution; or effected any
recapitalization or reorganization.
9.1.14.14. Entered into any merger or share exchange
with any other person or entity.
9.1.14.15. Amended the Articles.
9.1.14.16. Organized any subsidiary or acquired, directly or
indirectly, any interest in any other person or entity.
9.1.14.17. Funded or advanced money, credit or property
to or for the benefit of any other person or entity.
9.1.14.18. Entered into any transaction with any of the
Stockholders.
9.1.15. Adverse Conditions. Seller has no knowledge of
any past,present or future condition, state of facts or circumstances which
has affected or which might affect adversely the business of the Seller or
prevent the Purchaser from carrying on the Seller's business.
9.1.16. Full Disclosure. This Agreement (including the
Exhibits hereto) does not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements contained
herein not misleading. There is no fact known to the Seller which is not
disclosed in this Agreement which materially
<PAGE>
adversely affects the accuracy of the representations and
warranties contained in this Agreement or the Seller's financial condition,
operations, business, earnings, assets, or liabilities.
9.1.17. No Brokerage. The Seller has not incurred any
obligation or liability, contingent or otherwise, for brokerage fees, finder's
fees, agent's commissions, or the like in connection with this Agreement
or the transactions contemplated hereby.
9.1.18. Customers. The Seller is not aware that any
customer of the Seller intends to cease doing business with the Seller or
intends to alter adversely the amount of business such customer has done with
the Seller.
9.1.19. Operation of Business. Since December 30, 1995,
the Seller has used, and from the date hereof until the Closing the Seller
shall use its best efforts to preserve the business of the Seller. Since
December 30, 1995, the Seller has maintained and preserved, and from the date
hereof until the Closing the Seller shall maintain and preserve the Seller's
business at or above the levels at which the business was previously operated
and the relationship of the Seller with its suppliers and customers.
9.1.20. Disclaimer of Fraudulent Intent. Seller
represents and warrants that the transactions described in this Agreement have
been undertaken in good faith, considering their obligations to any person or
entity to whom the Seller owes a right to payment, whether or not the right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured
(collectively such persons with such claims are called "Creditors" under this
paragraph), and have undertaken these transactions without any intent to hinder,
delay or defraud any such Creditors, and either have disclosed in the ordinary
course of business or will undertake to disclose to all such Creditors the
existence of this transaction, and have not and will not conceal this
transaction or the proceeds of this transaction from any such Creditors.
Seller further represents and warrants that:
(1) they will not retain possession or control of any of the
property transferred under this Agreement following the closing,
except as expressly provided in this Agreement and then only for and on
behalf of the account of the Purchaser;
(2) the Seller has not been sued or threatened with
suit by any Creditor prior to the execution of this Agreement,
except as fully disclosed in an exhibit to this Agreement;
(3) the Seller has not removed or concealed any assets from any Creditors;
(4) the Seller has not incurred any individual or aggregate substantial debt
that is significantly greater than the normal and customary debts of the Seller
in the ordinary course of business;
(5) the Seller at closing believes in good faith that Seller will
receive consideration reasonably equivalent to the value of the assets
transferred under this Agreement.
<PAGE>
9.1.21. Representations as to Solvency. Seller represents
and warrants that:
a. Prior to and after the closing of the transactions
contemplated by this Agreement, Seller will not engage in any business or
transaction for which the remaining assets of the Seller are unreasonably small
in relation to the business or transactions in which they undertake or intend to
engage; and
b. Seller does not intend to incur or have no reasonable
basis to believe that they will incur any debts beyond the Seller's ability
to pay as they become due; and
c. Seller has and will continue to have assets greater than
the Seller's debts, based upon a fair valuation; and
d. As of the date of this Agreement and at closing, Seller
shall have paid and will pay their debts as they become due; and
e. The Purchaser is entitled to rely upon the foregoing
representations in asserting that the Purchaser has no reasonable cause to
believe that the Seller is or will become insolvent as a result of the
transactions contemplated by this Agreement.
9.2. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Seller as of the date hereof and as
of the Closing on the Closing Date that:
9.2.1. Due Organization; Good Standing; Power. The
Purchaser is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Colorado. The Purchaser has full right,
power and authority to enter into this Agreement and the Consulting and
Noncompetition Agreements and to perform its obligations hereunder and
thereunder.
9.2.2. Authorization and Validity of Documents. The
execution, delivery and performance by the Purchaser of this Agreement and the
Consulting and Noncompetition Agreements and the transactions contemplated
hereby and thereby, have been duly and validly authorized by the Purchaser.
This Agreement has been duly executed, acknowledged, sealed and delivered by the
Purchaser and is a legal, valid and binding obligation of the Purchaser, and the
Consulting and Noncompetition Agreements, when executed and delivered, will be
legal, valid and binding obligations of the Purchaser, each enforceable against
the Purchaser in accordance with its terms except as such enforceability may be
limited by general principles of equity, bankruptcy, insolvency, moratorium
and similar laws relating to creditors' rights generally.
<PAGE>
9.2.3. No Brokerage. The Purchaser has not incurred any
obligation or liability, contingent or otherwise, for brokerage fees, finder's
fees, agent's commissions, or the like in connection with this Agreement
or the transactions contemplated hereby.
10. Particular Covenants.
10.1. Affirmative Covenants. The Seller covenants, promises
and agrees that from the date hereof and until the Closing the Seller shall:
10.1.1. Continue to operate the business of the Seller
diligently; and not take any action, omit to take any action, or engage in any
transaction other than in acts or transactions in the ordinary course of
business, as such business has been operated historically.
10.1.2. Preserve the business of Seller and preserve
the relationship of the business with suppliers, customers and others.
10.1.3. Maintain and continue normal and usual
maintenance and repair of the Equipment and Fixed Assets.
10.1.4. Cooperate with the Purchaser to achieve an
orderly transition of the business of the Seller to the Purchaser and an
orderly transfer of the Assets to the Purchaser.
10.1.5. Pay or provide for payment of all sales, use,
personal property, social security, withholding, payroll, unemployment
compensation, income and other taxes, assessments, fees and public charges due
and payable by the Seller in respect of its business and the Assets through the
Closing Date and any portion thereof applicable to any period prior to the
Closing Date.
10.1.6. Pay all wages, bonuses, commissions and other
employment benefits and sums (and all required taxes, insurance and
withholding thereon). All accrued vacation, accrued sick leave, accrued
benefits and accrued payments (and pro rata accruals for a portion of a year)
due to its employees through the Closing Date will be carried forth on the book
of the Purchaser.
10.1.7. Maintain in effect all insurance policies and
other employee benefits covering any employee claims which may be
incurred through the Closing Date and will assign, transfer and deliver
contracts to the Purchaser.
10.1.8. Fully perform and comply with all covenants,
promises and agreements hereunder which are required to be performed or complied
with by the Seller prior to or at the Closing, and exert their best efforts to
completely satisfy and
<PAGE>
fulfill all conditions precedent to the Purchaser's obligations to
close hereunder at the Closing on the Closing Date.
10.1.9. Exert their best efforts to prevent the
occurrence of any event which could result in any of Seller's representations
and warranties contained in this Agreement not being true and correct at or as
of the time immediately after the occurrence of such event, and the Seller
shall promptly notify the Purchaser of the occurrence of any event or the
discovery of any fact which would cause any of their covenants, promises and
agreements to be breached or violated or any of their representations and
warranties to become not true and correct or which could interfere with or
prevent the consummation of the transactions contemplated hereby.
10.1.10. Not apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or
liquidator of Seller or any of their respective property, make a general
assignment for the benefit of creditors, or file a petition for relief under
Title 11 of the United States Code or any similar federal or state statute.
10.1.11. (i) Provide the Purchaser and its
representatives with full access during normal business hours to all of the
Seller's properties, Assets and Records, (ii) provide the Purchaser and its
representatives with such financial and operating data and other information
with respect to the Seller's business and properties as the Purchaser shall
from time to time request, and (iii) permit the Purchaser and its
representatives to consult with the Seller's representatives, officers,
employees and accountants up to the time of Closing and for 120 days thereafter.
10.1.12. Take none of the actions described in Section
10.1.15 of this Agreement or any action which is or would cause a violation of
any Laws of any Governments or Governmental Agencies.
10.2. Risk of Loss. All risk of loss or damage to or
destruction of the Assets, in whole or in part, shall be and remain with the
Seller until the Closing and all of the transactions contemplated hereby shall
have been consummated. The Seller shall, promptly following the Seller's
execution hereof, have all of Seller's policies of insurance insuring the
Assets duly endorsed to protect the respective interests of the Seller and the
Purchaser under this Agreement and shall deliver to the Purchaser a copy of
such policy endorsement.
10.3. Negotiations with Other Persons. Until the Closing,
the Seller shall not initiate, encourage the initiation by others, or
participate in any discussion or negotiations with any other person or entity
relating to the sale of any or all of the Assets, the business of the Seller or
any Securities of the Seller. From the date of this Agreement and until after
the Closing and the consummation of the transactions contemplated by this
Agreement, the Stockholders shall not offer for sale, sell or
<PAGE>
otherwise transfer (with or without consideration) any Securities
of the Seller owned of record or beneficially by them.
12. Opinions of Counsel.
12.1. Opinion of Seller's Counsel. At the Closing, the
Seller shall deliver to the Purchaser the opinion of their counsel, dated as of
the Closing Date, that:
12.1.1. Ownership of Seller's Stock. The Stockholders
are the sole and exclusive record and beneficial owners of all of the
outstanding shares of the capital stock of the Seller, and constitute all of the
directors and officers of the Seller. The Stockholders have the absolute and
unconditional right, power and authority to cause the Seller to sell, assign,
transfer and deliver the Assets to the Purchaser in accordance with the terms of
this Agreement, to consummate the transactions contemplated hereby and
to enter into the Consulting and Noncompetition Agreements.
12.1.2. Due Organization; Good Standing; Authority of
Seller. The Seller is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maine. The Seller has full right,
power, and authority to own, lease and operate its properties and assets, and
to carry on its business of providing physician practice management services
including billing, consulting, software, business systems, related services
and sometimes financing to physicians and other health care providers. The
Seller is duly licensed, qualified and authorized to do business in each
jurisdiction in which the properties and assets owned by it or the nature of the
business conducted by it make such licensing, qualification and authorization
legally necessary. The Seller is not in breach or violation of, and the
execution, delivery and performance of this Agreement will not result in a
breach or violation of, any of the provisions of the Seller's Articles or
Bylaws.
12.1.3. Authorization and Validity of Agreements. The
Stockholders have the legal capacity, right, power and authority to enter into
this Agreement and the Consulting and Noncompetition Agreements. The Seller has
the full right, power and authority to execute, acknowledge, seal and deliver
this Agreement and to perform the transactions contemplated by this Agreement.
The execution, acknowledgment, sealing and delivery of this Agreement by the
Seller and the performance by the Seller of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action. This
Agreement has been duly executed, acknowledged, sealed and delivered by the
Seller and is the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms. The Consulting and
Noncompetition Agreements are legal, valid and binding obligations of each of
the Stockholders, enforceable against each of the Stockholders in accordance
with its terms, except in each case as such enforceability may be limited by
general principles of equity, bankruptcy, insolvency, moratorium and similar
laws relating to creditors' rights generally.
<PAGE>
12.1.4. Agreement Not in Conflict with Other
Instruments; Required Approvals Obtained. The execution, acknowledgment,
sealing, delivery, and performance of this Agreement and the Consulting and
Noncompetition Agreements by the Seller, and the consummation of the
transactions contemplated by this Agreement and the Consulting and
Noncompetition Agreements will not
(a) violate or require any consent, approval, or filing under, (i) any Laws of
any Governments or any Governmental Agencies, or (ii) any judgment,
injunction, order, writ or decree of any court, arbitrator, Government or
Governmental Agency by which the Seller or any of the Assets are bound;
(b) conflict with, require any consent, approval, or filing under, result in the
breach or termination of any provision of, constitute a default under, or
result in thecreation of any claim, security interest, lien, charge, or
encumbrance upon anyof the Assets pursuant to, (i) the Seller's Articles or
Bylaws, (ii) any indenture, mortgage, deed of trust, license, permit, approval,
consent, franchise, lease, contract, or other instrument, document or
agreement to which the Seller is a party or by which any of the Assets of any of
the Stockholders is bound, or (iii) any judgment, injunction, order, writ or
decree of any court, arbitrator, Government or Governmental Agency by which the
Seller or any of the Assets is bound.
12.1.5. Conduct of Business in Compliance with
Regulatory and Contractual Requirements. The Seller has conducted and is
conducting its business in compliance with all applicable Laws of all
Governments and Governmental Agencies. The Equipment and the Fixed Assets and
the use, operation and maintenance thereof and the Inventory and the maintenance
and sale of the Inventory by the Seller (i) are in compliance with all Laws
of all Governments and Governmental Agencies applicable with respect
thereto, and (ii) are in compliance with all restrictions, covenants,
agreements, contracts, commitments, understandings and arrangements applicable
with respect thereto.
12.1.6. Legal Proceedings. There is no action, suit,
proceeding, claim or arbitration, or any investigation by any person or entity,
including any Government or Governmental Agency, (i) pending, to which the
Seller is a party, or to the knowledge of the Seller, threatened against or
relating to the Seller, the Seller's business or any of the Assets, or (ii)
challenging the Seller's right to execute, acknowledge, seal, deliver, perform
under or consummate the transactions contemplated by this Agreement and the
Articles and, as respects the Stockholders, the Consulting and Noncompetition
Agreements, or (iii) asserting any right with respect to any of the Assets, and
there is no basis for any such action, suit, proceeding, claim, arbitration or
investigation.
12.1.7. Truth of Warranties. To the best knowledge of
counsel, all representations and warranties of the Seller contained herein are
true, complete and correct, and the Seller is not in breach or violation of or
in default under any covenant, promise or agreement in this Agreement.
<PAGE>
12.2. Opinion of Purchaser's Counsel. At the Closing, the
Purchaser shall deliver to the Seller the opinion of its counsel, dated as of
the Closing Date, that:
12.2.1. Due Organization; Good Standing; Authority of
Purchaser. The Purchaser is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Colorado. The Purchaser has
all requisite corporate power to execute, acknowledge, seal and deliver
this Agreement, the Articles and the Consulting and Noncompetition
Agreements and to perform its obligations hereunder and thereunder.
12.2.2. Authorization and Validity of Agreements. The
execution, delivery, and performance of this Agreement and the Consulting and
Noncompetition Agreements by the Purchaser, and the consummation by
the Purchaser of the transactions contemplated hereby and thereby, have
been duly and validly authorized by the Purchaser. This Agreement and the
Consulting and Noncompetition Agreements have been duly executed, acknowledged,
sealed and delivered by the Purchaser and are the legal, valid, and binding
obligations of the Purchaser, each enforceable against the Purchaser in
accordance with its terms except as such enforceability may be limited by
general principles of equity, bankruptcy, insolvency, moratorium and similar
laws relating to creditors' rights generally.
13. Closing.
13.1. Time, Date and Place. The closing of the purchase and
sale of the Assets and the other transactions contemplated by this Agreement
(referred to throughout this Agreement as the "Closing") shall take place at the
offices of Physician Resources, 460 Main Street, Lewiston, Maine 04240, at
10:00 o'clock A.M., E.S.T., on September 27, 1996, if such day shall be a
business day, and if not a business day, then on the next succeeding day that
shall be a business day. The time, place and date of the Closing are
referred to throughout this Agreement as the "Closing Date."
13.2. Seller's Conditions to Close. The Seller's obligation
to close the transactions contemplated hereby at the Closing shall be
subject to the complete satisfaction and fulfillment of all of the following
conditions precedent, any or all of which may be waived in whole or in part by
the Seller (but no such waiver of any such condition precedent shall be or
constitute a waiver of any covenant, promise, agreement, representation or
warranty made by the Purchaser in this Agreement):
13.2.1. All representations and warranties made by the
Purchaser in this Agreement shall be complete and accurate at and as of the
Closing on the Closing Date.
13.2.2. All covenants, promises and agreements made by
the Purchaser in this Agreement and all other actions required to be
performed or complied
<PAGE>
with by the Purchaser under this Agreement prior to or at the
Closing shall have been fully performed or complied with by the Purchaser.
13.3. Purchaser's Conditions to Close. The Purchaser's
obligation to close the transactions contemplated hereby at the Closing shall be
subject to the complete satisfaction and fulfillment of all of the following
conditions precedent, any or all of which may be waived in whole or in part by
the Purchaser (but no such waiver of any such condition precedent shall
be or constitute a waiver of any covenant, promise, agreement,
representation or warranty made by the Seller in this Agreement):
13.3.1. All representations and warranties made by the
Seller in this Agreement shall be complete and accurate at and as of the
Closing on the Closing Date.
13.3.2. All covenants, promises and agreements made by
the Seller in this Agreement and all other actions required to be performed or
complied with by the Seller under this Agreement prior to or at the Closing
shall have been fully performed or complied with by the Seller.
13.3.3. Seller shall have fully disclosed this
transaction to all creditors of Seller and shall not have concealed this
transaction from any creditor; Seller shall not have been sued or threatened
with suit, except as otherwise fully disclosed to Purchaser in an exhibit to
this Agreement; Seller shall not have removed or concealed any assets, whether
or not such assets are to be transferred under this Agreement; Seller shall have
assets greater than Seller's debts, using a fair valuation; Seller shall pay and
continue to pay their debts as they become due; and Seller shall not have
incurred individually or in the aggregate any substantial debt that is
substantially greater than the debts incurred by the Seller in the ordinary
course of Seller's business.
13.3.4. The Purchaser shall have received all things
required to be delivered or furnished to the Purchaser by the Seller hereunder
prior to or at the Closing.
13.3.5. All necessary permits, licenses and approvals
pursuant to Section 7 of this Agreement shall have been obtained.
13.3.6. There shall not have occurred any material
adverse change in the business of Seller or in the Assets.
13.4. Actions to Be Taken at the Closing. At the Closing,
the following actions, among others, shall occur:
13.4.1. The Seller shall deliver to the Purchaser the
Closing Account Statement pursuant to Section 1.3 hereof.
<PAGE>
13.4.2. The Seller shall deliver to the Purchaser the
Total Receivables List or the Accounts Receivable List, and, if not
previously delivered, the Customer List, pursuant to Sections 4.1 and 6.1
hereof, respectively, and shall deliver the Inventory List in accordance
with Section 1.3 hereof.
13.4.3. The Seller shall execute, acknowledge, seal,
and deliver to the Purchaser a Warranty Bill of Sale in the form attached
hereto as Exhibit 7 and incorporated herein by reference pursuant to which the
Seller shall sell, assign, and transfer to the Purchaser the Equipment, Fixed
Assets and the Inventory.
13.4.4. The Stockholders and the Purchaser shall
execute, acknowledge, seal and deliver the Consulting and Noncompetition
Agreements attached hereto as Exhibits 2A in accordance with Section 1.4
hereof.
13.4.5. The Purchaser shall deliver to the Stockholders
the Contract Price of 300,000 shares of Acadia National Health Systems,
Inc. as full consideration in accordance with Section 1.2 hereof.
13.4.6. The Seller and the Purchaser shall each deliver
to the other the opinions of their respective counsel in accordance with
Section 12 hereof.
13.4.7. The Seller and the Purchaser shall instruct the
Accountants to perform the post-Closing review of the Closing
Balance Sheet pursuant to Section 1.3 hereof.
13.5. Contemporaneous Transfer. All transfers, assignments,
conveyances, and transactions under this Agreement shall be
effected contemporaneously and shall be a contemporaneous exchange for
present value between the Seller and the Purchaser.
13.6. Effective Date of Transfer and Closing.
Notwithstanding anything to the contrary in this Agreement, the Purchaser may
extend and postpone the closing, and the delivery of consideration hereof, and
the closing as extended shall be regarded as contemporaneous and simultaneous,
until (i) all deeds and conveyances of real property have been so far perfected
that a good faith purchaser of the real property from the Seller against whom
applicable law permits the transfer to be perfected cannot acquire an interest
in the real properties superior to the interests of the Purchaser; (ii) with
respect to assets that are not real property, or that are fixtures, when the
transfer to the Purchaser is so far perfected that a creditor on a simple
contract cannot acquire a judicial lien against the Seller superior to the
interests of the Purchaser; and (iii) until the Purchaser has physical
possession of all other such assets.
<PAGE>
13.7. Operation of Business. From and after the close of
business on the day immediately preceding the Closing Date, the Seller shall
cease to operate the business of providing physician practice management
services including billing, consulting, software, business systems, related
services and sometimes financing to physicians and other health care providers,
and shall thereafter not take any action with respect to any of the Assets,
except as expressly provided herein.
14. Indemnification.
14.1. Indemnification by Seller. The Seller shall defend,
indemnify and hold harmless the Purchaser, its officers, directors,
stockholders, agents, servants and employees and their respective heirs,
personal and legal representatives, guardians, successors and assigns, from and
against any and all claims, threats, liabilities, taxes, interest, fines,
penalties, suits, actions, proceedings, demands, damages, losses, costs and
expenses (including attorneys' and experts' fees and court costs) of every kind
and nature arising out of, resulting from, or in connection with:
14.1.1. Any misrepresentation or breach by the Seller
of any representation or warranty contained in this Agreement.
14.1.2. Any nonperformance, failure to comply or breach
by Seller of any covenant, promise or agreement of the Seller contained in
this Agreement.
14.1.3. Any debts, obligations, duties and liabilities
of the Seller unless herein disclosed specifically.
14.1.4. Any matter, act, thing or occurrence caused by
or resulting from any act or omission of Seller prior to the Closing.
14.2. Indemnification by Purchaser. Purchaser shall defend,
indemnify and hold harmless the Sellers and their respective heirs, personal
and legal representatives, guardians, successors and assigns, from and
against any and all claims, threats, liabilities, taxes, interest, fines,
penalties, suits, actions, proceedings, demands, damages, losses, costs and
expenses (including attorneys' and experts' fees and court costs) of every kind
and nature arising out of, resulting from, or in connection with:
14.2.1. Any misrepresentation, omission or breach by
Purchaser of any representation or warranty contained in this Agreement.
14.2.2. Any nonperformance, failure to comply or breach
by the Purchaser of any covenant, promise or agreement of the Purchaser
contained in this Agreement.
<PAGE>
14.3. Defense of Claims. In the event of any claim, threat,
liability, tax, interest, fine, penalty, suit, action, proceeding, demand,
damage, loss, cost or expense with respect to which indemnity is or may be
sought hereunder (an "Indemnity Claim"), the indemnified party shall promptly
notify the indemnifying party of such Indemnity Claim, specifying in
reasonable detail the Indemnity Claim and the circumstances under which it
arose. The indemnifying party may elect to assume the defense of such Indemnity
Claim, at its expense, by written notice to the indemnified party given within
10 days after the indemnifying party receives notice of the Claim, and the
indemnifying party shall promptly engage counsel reasonably acceptable to the
indemnified party to direct and conduct such defense; provided, however, that
the indemnified party shall have the right to engage its own counsel, at its own
expense, to participate in such defense. In the event the indemnifying party
does not so elect to assume the defense of such Indemnity Claim in the manner
specified above, or if, in the reasonable opinion of counsel to the
indemnified party, there are defenses available to the indemnified party which
are different from or additional to those available to the indemnifying party or
which give rise to a material conflict between the defense of the indemnified
party and of the indemnifying party, then upon notice to the indemnifying party,
the indemnified party may elect to engage separate counsel to conduct its
defense, at the expense of the indemnifying party, and the indemnifying party
shall not have the right to direct or conduct such defense.
14.3.1. In the event the indemnifying party assumes the
defenseof any Indemnity Claim, it may at any time notify the indemnified
party of its intention to settle, compromise or satisfy such Indemnity Claim and
may make such settlement, compromise or satisfaction (at its own expense)
unless within 20 days after the giving of such notice the indemnified party
shall give notice of its intention to assume the defense of the Indemnity Claim,
in which event the indemnifying party shall be relieved of its duty hereunder to
indemnify the indemnified party. Unless the indemnified party shall have given
the notice referred to in the preceding sentence, (I) the indemnified party
shall not consent to or make any settlement, compromise or satisfaction with
respect to the Indemnity Claim without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld, and (ii)
any settlement, compromise or satisfaction made by the indemnifying party with
respect to such Indemnity Claim shall be deemed to have been consented to by and
shall be binding upon the indemnified party.
15. Expenses of Transactions. All sales, transfer and use taxes
incurred in connection with the sale, assignment, transfer and delivery of the
Equipment, the Fixed Assets and the Motor Vehicles, and all filing and
recording fees and taxes in connection with the filing and recordation of the
Financing Statements shall be paid by the Purchaser.
16. Miscellaneous.
<PAGE>
16.1. Survival of Representations, Warranties and
Agreements. All of the representations, warranties, covenants, promises and
agreements of the parties contained in this Agreement (or in any document
delivered or to be delivered pursuant to this Agreement or at or in connection
with the Closing) shall survive the execution, acknowledgment, sealing and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
16.2. Notices. All notices, requests, demands, consents, and
other communications which are required or may be given under this
Agreement (collectively, the "Notices") shall be in writing and shall be
given either (a) by personal delivery against a receipted copy, or (b) by
certified or registered United States mail, return receipt requested, postage
prepaid, to the following addresses:
(i) If to Seller, to
Physician Resources, Inc.
460 Main Street
Lewiston, Maine 04240
with a copy to:
Bryan M. Dench, Esquire
Skelton, Taintor & Abbott, P.A.
95 Main Street
Auburn, Maine 04210
(ii) If to the Majority Stockholders, to
Thomas N. Hackett
460 Main Street
Lewiston, Maine 04240
Jacquelyn Magno
460 Main Street
Lewiston, Maine 04240
with a copy to:
Bryan M. Dench, Esquire
Skelton, Taintor & Abbott, P.A.
95 Main Street
Auburn, Maine 04210
(iii)If to the Purchaser:
Acadia National Health Systems, Inc.
460 Main Street
Lewiston, Maine 04240
<PAGE>
with a copy to:
Mark T. Thatcher, Esquire
Mark T. Thatcher, P.C.
360 Thames Street, First Floor
Newport, RI 02840
or to such other address of which written notice in accordance with
this Section 16.2 shall have been provided by such party. Notices may only be
given in the manner hereinabove described in this Section 16.2 and shall be
deemed received when given in such manner.
16.3. Entire Agreement. This Agreement (including the
Exhibits hereto) constitutes the full, entire and integrated agreement between
the parties hereto with respect to the subject matter hereof, and supersedes all
prior negotiations, correspondence, understandings and agreements among
the parties hereto respecting the subject matter hereof.
16.4. Assignability. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other parties
hereto.
16.5. Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their
respective heirs, personal and legal representatives, guardians, successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended
to confer upon any other person any rights, remedies, obligations, or
liabilities.
16.6. Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability,
without invalidating or rendering unenforceable the remaining provisions of
this Agreement.
16.7. Amendment; Waiver. No provision of this Agreement may
be amended, waived or otherwise modified without the prior written consent of
all of the parties hereto. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement herein contained. The waiver by
any party hereto of a breach of any provision or condition contained in this
Agreement shall not operate or be construed as a waiver of any subsequent breach
or of any other conditions hereof.
16.8. Section Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
<PAGE>
16.9. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
16.10. Applicable Law; Jurisdiction and Venue; Service of
Process.
16.10.1. This Agreement was made in the State of Maine,
and shall be governed by, construed, interpreted and enforced in accordance
with the laws of the State of Maine. Any suits, proceedings and other actions
relating to, arising out of or in connection with this Agreement shall be
submitted to the in personam jurisdiction of the courts of the State of Maine
and venue for all such suits, proceedings and other actions shall be in
Androscoggin County, Maine. The Seller and the Purchaser hereby waive any claim
against or objection to in personam jurisdiction and venue in the courts of
Maine.
16.10.2. The Seller hereby irrevocably appoints BRYAN
M. DENCH, ESQ, as its, his or her true and lawful agent to receive service of
process in any suit, action or proceeding against it, him or her relating to,
arising out of or in connection with this Agreement, and hereby consents and
agrees that service upon the aforementioned attorney and agent shall be of the
same force and validity as if served personally upon each of them.
16.11. Remedies. The parties hereto acknowledge that in the
event of a breach of this Agreement, any claim for monetary damages
hereunder may not constitute an adequate remedy, and that it may therefore be
necessary for the protection of the parties and to carry out the terms of this
Agreement to apply for the specific performance of the provisions hereof. It is
accordingly hereby agreed by all parties that no objection to the form of the
action or the relief prayed for in any proceeding for specific performance of
this Agreement shall be raised by any party, in order that such relief may be
expeditiously obtained by an aggrieved party. All parties may proceed to protect
and enforce their rights hereunder by a suit in equity, transaction at law or
other appropriate proceeding, whether for specific performance or for an
injunction against a violation of the terms hereof or in aid of the exercise of
any right, power or remedy granted hereunder or by law, equity or statute or
otherwise. No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice its rights, powers or remedies, and no right, power or
remedy conferred hereby shall be exclusive of any other right, power or remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.
16.12. Further Assurances. The Seller agrees to execute,
acknowledge, seal and deliver, after the date hereof, without additional
consideration, such further assurances, instruments and documents, and to take
such further actions, as the
<PAGE>
Purchaser may reasonably request in order to fulfill the intent of
this Agreement and the transactions contemplated hereby.
16.13. Use of Genders. Whenever used in this Agreement, the
singular shall include the plural and vice versa, and the use of any gender
shall include all genders and the neuter.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement under seal, with the intention of making it a sealed
instrument, on the date first above written.
ATTEST: SELLER:
PHYSICIAN RESOURCES,
INC.
By: Thomas N. Hackett
JACQUELYN J. MAGNO, THOMAS N. HACKETT,
Secretary President
WITNESS: MAJORITY
STOCKHOLDERS:
By:
THOMAS N. HACKETT
By:
JACQUELYN J. MAGNO
<PAGE>
PURCHASER:
ATTEST: ACADIA NATIONAL
HEALTH
SYSTEMS, INC.
By
JACQUELYN J. MAGNO, THOMAS N. HACKETT,
Vice President and Secretary President
<PAGE>
EXHIBIT LIST
Exhibit 1 Asset List
1A Equipment
1B Fixed Assets
Exhibit 2A Consulting and Noncompetition Agreement
Exhibit 4 Financial Statements
Exhibit 5 Tax Returns
Exhibit 6 Articles of Transfer
Exhibit 7 Warranty Bill of Sale
<PAGE>
FIXED ASSETS
DESCRIPTION ACQUIRED COST
NUR Sp Mnth CL Life SV or Bus % ITC
Group #1 - EQUIPMENT
2 1 Sharp Copier 05/31/92 $2,066.00
N S M 5
6 1 Fax Machine 05/31/92 $1,054.00
N S M 5
10 1 Multimate-Comp Disc 05/31/92 $332.00
N S M 5
11 1 Printer 05/31/92 $1,232.00
N S M 5
12 1 Toshiba Printer/Modems 05/31/92 $1,193.00
N S M 5
13 1 MCRCM Modem 05/31/92 $389.00
N S M 5
18 1 Math Co-processor 05/31/92 $259.00
N S M 5
19 12 Wyse Amber Terminals 05/31/92 $312.00
N S M 5
21 1 Epson DFX Printer 05/31/92 $928.00
N S M 5
24 1 Data Set 5/31/92M $440.00
N S M 5 100.00L
25 14 Modems 5/31/92M $792.00
N S M 5 100.00L
27 5 Data Set 7/792M $3,000.00
N S M 5 100.00L
28 1 Microcomputer 8/6/92M $4,091.60
N S M 5 100.00L
29 1 Microcomputer 10/13/92M $2,113.64
N S M 5 100.00L
30 1 Data Set 10/15/92M $1,000.00
N S M 5 100.00L
33 1 Data Set 12/1/92M $1,500.00
N S M 100.00L
34 5 Data Set 02/01/93 $4,500.00
N M 100.00L
35 1 Phone System 07/01/93 $4,311.23
N M 5
36 1 MS Computer 11/01/93 $1,185.40
N M 5 100.00L
37 1 Fax Machine 5/4/94M $1,322.70
N M 5
39 1 Epson Printer 10/26/94M $2,795.00
N M 5
40 1 90MHz Computer System 12/12/94M $3,656.90
N M 5
<PAGE>
41 1 A/C Unit 06/15/95 $958.25
N M 5
42 1 Data Set 07/14/95 $1,315.00
N M 5
43 12 A/C Unit 07/27/95 $947.04
N M 5
3 Computers - Computer Support Ass. 03/31/96 $7,923.50
1 Sharp Photocopier - ABS 07/31/96 $7,308.70
1 Module - Wolf Communication 09/30/96 $1,394.85
1 Fax Machine - ABS 09/30/96 $848.00
Healthpac - partial payment 10/02/96 $8,000.00
Hardware/Monolith -
American Business Systems 10/02/96 $13,836.18
Total: $81,004.99
Group #2 - FURNITURE
1 1 "Office Furniture Cen, Inc." 05/31/92 $195.00
N S M 7
2 1 "Bill Higgins, Inc." 05/31/92 $10,750.00
N S M 7
3 1 Gallery 1257 05/31/92 $3,470.00
N S M 7
4 1 Locke Office 05/31/92 $143.00
N S M
5 1 FX Marcotte 05/31/92 $2,442.00
N S M 7
6 1 Refrigerator 06/30/93 $587.95
N M 7
Total: $17,587.95
Group #3 - LEASEHOLD IMPROVEMENTS
2 1 Improvements 01/31/95 $1,500.00
R M 39
3 1 Improvements 01/31/95 $4,000.00
R M 39
4 1 Improvements 02/28/95 $1,590.23
R M 39
5 1 Improvements 03/30/95 $3,000.00
R M 39
6 1 Improvements 04/30/95 $3,000.00
R M 39
7 1 Improvements 04/30/95 $1,450.00
R M 39 $14,540.23
Total:
Grand Total: $113,133.17
<PAGE>
EXHIBIT 2A
CONSULTING AND NONCOMPETITION AGREEMENT
THIS CONSULTING AND NONCOMPETITION AGREEMENT ("Agreement")
is made this 27th day of September, 1995, by and among ACADIA NATIONAL
HEALTH SYSTEMS, INC. (the "Company"), a Colorado corporation, and PHYSICIAN
RESOURCES, INC. (the "Consultant"), a Maine corporation and its shareholders
Jacquelyn J. Magno and Thomas N. Hackett.
Explanatory Statement
On the date hereof, the Company purchased substantially all
of the assets of the Consultant.
The Company recognizes that the Consultant has unique
knowledge and experience in the Business and of the exclusive territory of the
Consultant (the "Territory"), and that the Consultant has personal relationships
with persons and entities that, on the date hereof are, or at any time during
the two years preceding the date hereof were, customers of the Consultant
("Customers").Accordingly, the Company desires to engage the services of the
Consultant, and the Consultant agrees to provide such services, and the parties
hereto have agreed to certain other terms governing their relationship, on the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the Explanatory
Statement hereto, which the parties agree constitutes a substantive part of this
Agreement, the mutual covenants, promises and agreements herein contained, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto do hereby covenant, promise and
agree as follows:
1. Consulting Services.
1.1. Provided that the Consultant is not dissolved, the
Consultant hereby agrees to be available to the Company from time to time, at
reasonable times, upon prior reasonable notice, during the term of this
Agreement, to consult with the Company regarding the Business, the Territory,
the Customers and all other matters concerning the Consultant and its products,
including, but not limited to, advising the Company regarding the following
consultation matters (the "Services"):
(a) The Company's relationship with the Customers and
the collection of accounts receivable.
<PAGE>
(b) Potential new customers and customer locations, and
new developments and contacts in the Territory.
Customer tastes and preferences, purchasing habits,
trends in the Customer base and the Territory, and Customer demand.
(d) The Company's purchases, including timing,
quantities, components of orders and selection of new products.
(e) Marketing, development of new markets, achieving
greater market penetration, marketing techniques and market performance.
(f) The relationship of Company personnel with the
Customers, contact with the Customers, planning of delivery routes and
scheduling.
In the event the Consultant shall be unable to perform the Services
due to dissolution or reasonable unavailability, then the Company by
reason thereof shall not have the right to recover any part of the
consideration.
2. Term. The term of this Agreement shall be for a period of 5
years from the date hereof.
3. Covenant against Competition.
3.1. The parties hereto acknowledge and agree that the
Consultant's services will be of a special and unusual character which have a
unique value to the Company, the loss of which cannot be adequately compensated
by damages in an action at law and, if used in competition with the Company,
could cause serious harm to the Company. Further, the Consultant and the Company
also recognize that an important part of the Consultant's duties will be to
develop the Company's customer base through the Consultant's personal contact
with the Customers and other persons having business relationships with the
Company, and that there is a danger that this customer base may follow the
Consultant.
Accordingly, the Consultant agrees that, during the period that the Consultant
is engaged as a consultant to the Company hereunder, the Consultant shall not do
any of the following:
(a) Offer to sell, or solicit an offer to buy, any
products sold by the Consultant during the two years preceding the date hereof
or sold by the Company during the term hereof ("Products") to any Customers or
any persons or entities that are or were customers or accounts of the Company at
any time during the term hereof ("Company Customers") to or for the benefit
or account of any person or entity other than the Company.
<PAGE>
(b) Sell or attempt to sell any Products to any
Customer or Company Customer to or for the benefit or account of any person
other than the Company.
(c) Solicit for employment or employ to or for the
benefit or account of any person or entity other than the Company any employee
of the Company, nor shall the Consultant urge, directly or indirectly, any
Customers or Company Customers to discontinue, in whole or in part, business
with the Company or not to do business with the Company.
(d) Engage, either as a consultant, independent
contractor, proprietor, stockholder, partner, member, manager, officer,
director, employee, or, otherwise in any business which sells Products or which
otherwise competes with the Company in Counties of the State of Maine.
3.2. The parties hereto agree that to the extent that any
provision or portion of Section 3.1 of this Agreement shall be held, found or
deemed to be unreasonable, unlawful or unenforceable by a court of competent
jurisdiction, then any such provision or portion thereof shall be deemed to be
modified to the extent necessary in order that any such provision or portion
thereof shall be legally enforceable to the fullest extent permitted by
applicable law; and the parties hereto do further agree that any court of
competent jurisdiction shall, and the parties hereto do hereby expressly
authorize, request and empower any court of competent jurisdiction to, enforce
any such provision or portion thereof or to modify any such provision or portion
thereof in order that any such provision or portion thereof shall be enforced
by such court to the fullest extent permitted by applicable law.
3.3. As used in this Section 3, "Customers" and "Company
Customers" shall include any person or entity that, directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, any such "Customers" or "Company Customers."
4. Confidential Information. The Consultant and the Company
recognize that due to the nature of the Consultant's engagement with the Company
and the relationship of the Consultant to the Company's business, the
Consultant will have access to and will acquire, and may assist in developing,
confidential and proprietary information (as described below) relating to the
business and operations of the Company. The Consultant acknowledges that such
information has been and will continue to be of critical importance to the
business of the Company and that disclosure of it to or its use by others could
cause substantial loss to the Company. The Consultant and the Company
also recognize that an important part of the Consultant's duties will be to
develop strong business relationships for the exclusive benefit of the Company
through the use of such confidential and proprietary information and the
Consultant's personal contact with customers, agents and others having business
relationships with the Company. Accordingly, the Consultant agrees as follows:
<PAGE>
4.1. The Consultant will keep confidential any and all
"trade secrets and confidential and proprietary information" of the Company
which are now known or which hereafter may become known to the Consultant as a
result of the Consultant's relationship with the Company and shall not at any
time directly or indirectly disclose any such information to any person, or
entity, or use thesame in any way other than in connection with the business of
the Company during and at all times after the term hereof. The Consultant
further agrees that, upon termination of this Agreement the Consultant shall
return to the Company all books, records, lists and other written, typed or
printed materials or data, and all copies thereof and excerpts therefrom,
whether furnished by the Company or prepared by the Consultant, which contain
any information relating to the Company's business, and agrees neither to make
nor retain any copies of such materials after termination of this Agreement.
4.2. For purposes of this Agreement, "trade secrets and
confidential and proprietary information" shall include information, whether
written or otherwise, unique to the Company which has a significant business
purpose and is not known or generally available from sources outside the Company
or typical ofindustry practice, including, but not limited to, information with
respect to costs, pricing, present and prospective products, Customers and
Company Customers and prospective customers, sales and marketing
information and data, data relating to customers' buying practices and
procedures, prospective and executed contracts and other business arrangements,
information regarding earnings, forecasts, reports, bidding information,
marketing, and any other information regarding the Company, its business,
methods of operations, personnel, assets and activities.
5. Remedies.
5.1. As the violation by the Consultant of any of the
provisions of Section 3 and Section 4 of this Agreement would cause irreparable
injury to the Company, and there is no adequate remedy at law for such
violation, the Company shall have the right, in addition to any other remedies
available at law or in equity, to enjoin the Consultant in a court of equity
from violating such provisions, and no objection as to the form of relief
prayed will be raised by the Consultant, or if raised, shall not be effective,
in connection with any such action.
5.2. The provisions of Sections 3.1(a) through (d) of this
Agreement and of Section 4 of this Agreement are cumulative. Compliance with
all provisions of such Sections is a condition precedent to the
Company's obligation to make any payments of any nature to the Consultant
whether under this Agreement or otherwise. Nothing in this Agreement shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for a breach or threatened breach of Section 3 or Section 4 of this
Agreement.
<PAGE>
6. Consideration. In consideration of the Services and the
covenants and agreements of the Consultant under Section 3 hereof, the Company
shall pay the Consultant, concurrently with the execution of this Agreement,
good and valuable consideration (the "Contract Price"), and the Consultant, by
executing this Agreement, hereby acknowledges receipt of payment in full of the
Contract Price.
The parties acknowledge and agree that the amount of the Contract
Price represents (I) consideration for the Services for each year during
the term hereof, and (ii) consideration for the covenants and agreements
contained in Section 3 hereof for each year during the term hereof.
7. Miscellaneous.
7.1. Survival of Certain Covenants. The covenants of the
Consultant contained in Sections 3 and 4 of this Agreement shall survive the
termination and expiration of the term of this Agreement, except that this
shall not be construed to have the effect of preventing the Consultant from
engaging in the full range of activities available to him prior to the
execution of this Agreement after the term of this Agreement shall have expired.
7.2. Notices. All notices, requests, demands, consents, and
other communications which are required or may be given under this
Agreement (collectively, the "Notices") shall be in writing and shall be
given either (a) by personal delivery against a receipted copy, or (b) by
certified or registered U.S. mail, return receipt requested, postage prepaid,
to the following addresses:
If to the Consultant:
PHYSICIAN RESOURCES, INC.
460 Main Street
Lewiston, Maine 04240
If to the Company:
Bryan M. Dench, Esq.
Skelton, Taintor & Abbott, P.A.
95 Main Street
Auburn, Maine 04210
or to such other address of which written notice in accordance with
this Section. 7.2 shall have been provided by such party. Notices may
only be given in the manner hereinabove described in this Section 7.2 and shall
be deemed received when given in such manner.
7.3. Entire Agreement. This Agreement constitutes the full,
entire and integrated agreement between the parties hereto with respect to the
subject matter hereof, and supersedes all prior negotiations,
correspondence, understandings and agreements among the parties hereto
respecting the subject matter hereof.
<PAGE>
7.4. Assignability. This Agreement shall not be assignable
by any party hereto without the prior written consent of the other party hereto.
7.5. Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or unenforceable
shall be ineffective to the extent of such prohibition or unenforceability,
without invalidating or rendering unenforceable the remaining provisions of
this Agreement.
7.6. Amendment; Waiver. No provision of this Agreement may
be amended, waived, or otherwise modified without the prior written consent of
all of the parties hereto. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
provision herein contained. The waiver by any party hereto of a breach of any
provision or condition contained in this Agreement shall not operate or be
construed as a waiver of any subsequent breach or of any other conditions or
terms hereof.
7.7. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and
all of which together shall be deemed to be one and the same instrument.
7.8. Applicable Law; Jurisdiction and Venue; Service of
Process.
(a) This Agreement was made in the State of Maine, and
shall be governed by, construed, interpreted and enforced in accordance with
the laws of the State of Maine. All suits, proceedings and other actions
relating to, arising out of or in connection with this Agreement shall be
submitted to the in personam jurisdiction of the courts of the State of Maine,
and venue for all such suits, proceedings and other actions shall be in
Androscoggin County, Maine. The Consultant hereby waives any claim against or
objection to in personam jurisdiction and venue in the courts of Androscoggin
County, Maine.
(b) The Consultant hereby irrevocably appoints BRYAN M.
DENCH, ESQ., whose address is 95 Main Street, Auburn, Maine 04210, as its
true and lawful agent to receive service of process in any suit, action or
proceeding against the Consultant relating to, arising out of or in connection
with this Agreement, and hereby consents and agrees that service upon the
aforementioned agent shall be of the same force and validity as if served
personally upon the Consultant.
7.9. Use of Genders. Whenever used in this Agreement, the
singular shall include the plural and vice versa, and the use of any gender
shall include all genders and the neuter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement under seal, with the intention of making it a sealed
instrument, on the date first above written.
ATTEST: COMPANY:
ACADIA NATIONAL HEALTH
SYSTEMS, INC.
By:
JACQUELYN J. MAGNO, THOMAS N. HACKETT,
Secretary President
WITNESS: CONSULTANT:
PHYSICIAN RESOURCES, INC.
By:
Thomas N. Hackett,
Stockholder
By:
Jacquelyn J. Magno,
Stockholder
<PAGE>
State of Maine
Department of State
I the Secretary of State of Maine, certify that according to the
provisions of the Constitution and Laws of the State of Maine,
the Department of the Secretary of State is the legal custodian
of the Great Seal of the State of Maine which is hereunto affixed
and of the records of organization, amendment, and dissolution
of corporations and annual reports filed by the same.
I further certify that PRI, INC., formerly
PHYSICIAN RESOURCES, INC., is a duly organized business
corporation under the laws of the State of Maine and that the
date of incorporation is 04/03/1992.
I further certify that said business corporation has filed annual
reports due to this Department, and that no action is now
pending by or on behalf of the State of Maine to forfeit the
charter and that according to the records in the Department
of the Secretary of State,, said corporation is a legally existing
business corporation in good standing under the laws of the
State of Maine at the present time.
In testimony whereof, I have caused the Great Seal of the State
of Maine to be hereunto affixed, given under my hand at
Augusta, October 30. 1996.
/s/ Bill Diamond
BILL DIAMOND
Secretary of State
Authentication: 17409476
<PAGE>
MINUTES OF THE SPECIAL MEETING OF
STOCKHOLDERS OF
PHYSICIAN RESOURCES, INC.
October 16, 1996
Pursuant to written notice to each of the Stockholders, a Special
Meeting of Stockholders of PHYSICIAN RESOURCES, INC. (the Corporation), a
Maine corporation, was held at 95 Main Street, Auburn, Maine, on October
16, 1996, at 9:00 a.m. local time. Thomas N. Hackett, President of the
Corporation, presided.
The President called the meeting to order and the Clerk
established proof of notice to Stockholders and presented a copy of the notice
sent to each. The Clerk confirmed that the notice had been timely mailed.
The Clerk announced that there was represented at the meeting in
person or by proxy the following shares:
THOMAS N. HACKETT
(shares being a majority of the issued and outstanding capital
stock of the
Corporation.)
JACQUELYN J. MAGNO
The Clerk announced that there was a quorum present, and that all
the stock represented at the meeting was qualified to vote.
The President then announced that the purpose of the meeting was
to consider and vote upon the Transfer of the Assets of the Corporation in
exchange for capital stock of Acadia National Health Systems, Inc. (hereinafter
referred to as "Acadia").
Upon motion made, duly seconded and passed by the vote of
ninety-three (93) shares, being the entire amount of stock represented at the
meting and constituting a majority of the issued and outstanding capital stock
of the Corporation, it was
RESOLVED: That the transfer of assets of the Corporation on
substantially the terms and conditions as set forth in the form of the Agreement
for Purchase and Sale of Assets of the Corporation, attached hereto and
incorporated by reference herein, be and the same is hereby approved.
RESOLVED: That the President of the Corporation is hereby
authorized and directed to execute and deliver the Agreement for Purchase and
Sale of Assets in substantially the form attached hereto and incorporated by
reference herein, and the proper officers of the Corporation be and they are
hereby authorized to take any and all action to execute, acknowledge, seal, file
and perform any and all instruments, documents and actions deemed necessary or
proper in
<PAGE>
connection therewith or to complete the transactions contemplated
therein.
There being no further business, the Special Meeting of
Stockholders was, upon motion, adjourned.
/s/Bryan M. Dench
Bryan M. Dench, Clerk
<PAGE>
PHYSICIAN RESOURCES, INC.
Written Consent of the Board of Directors
Recommending the Transfer of Assets
October 9, 1996
The undersigned, constituting all of the Directors of PHYSICIAN
RESOURCES, INC., a Maine corporation (hereinafter referred to as the
"Corporation"), in accordance with Section 712 of the Maine Business Corporation
Act, do hereby take the actions below set forth, and to evidence their waiver of
any right to dissent from such actions, do hereby consent as follows:
RESOLVED: That the transfer of assets of the Corporation on
substantially the terms and conditions as set forth in the proposed Agreement
for Purchase and Sale of Assets attached hereto and incorporated by reference
herein, be and the same is hereby approved.
RESOLVED: That the Agreement for Purchase and Sale of Assets be
submitted for consideration by all of the stockholders entitled to vote thereon
at a special meeting of such stockholders at 9:00 Wednesday, October 16, 1996,
at the office of the Clerk at 95 Main Street, Auburn, Maine.
RESOLVED: That the proper officers of the Corporation be and they
are hereby authorized and directed in the name and on behalf of the
Corporation to execute, acknowledge, seal and deliver the Agreement for Purchase
and Sale of Assets to the other parties thereto following the due approval
thereof by the stockholders of the Corporation, and to take any and all other
actions and to execute, acknowledge, seal and file any and all instruments and
documents deemed necessary or proper in connection therewith.
This Written Action of Directors may be executed in counterparts.
WITNESS the execution hereof the day and year first above
written.
BOARD OF DIRECTORS:
/s/ Thomas N. Hackett
THOMAS N. HACKETT
/s/Jacquelyn J. Magno
JACQUELYN J. MANGO
<PAGE>
Bryan M. Dench
October 1, 1996
Acadia National Health Systems, Inc.
460 Main St.
Lewiston, ME 04240
RE: Physician Resources, Inc.
Gentlemen:
We are counsel to Physician Resources, Inc., a Maine
corporation (hereinafter referred to as the "Corporation") We have recently
represented the Corporation in connection with certain transactions which are
closing, and you have asked for our opinion with respect to certain
Corporate matters.
We have examined either original, certified copies, or
copies otherwise authenticated to our satisfaction of the following:
(1) The Corporation's Certificate of Good Standing dated
October 30, 1996, issued by the Maine Secretary of State;
(2) The Corporation's corporate record book;
(3) The written action of directors of the Corporation
dated October 9, 1996;
(4) The Minutes of Special Meeting of Stockholders dated
October 16, 1996; and
(5) The Assets Purchase Agreement dated September 25, 1996.
Based upon the foregoing, we are of the opinion that:
(a) The Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maine, and
has full corporate power and authority to own and use Corporation's
properties and carry on Corporation's business as being conducted immediately
prior to the Closing Date;
<PAGE>
(b) The majority of the authorized and outstanding common
stock is owned by Thomas N. Hackett and Jacquelyn J. Magno; and
(c) The Agreement and the consummation of the transactions
contemplated thereby have been duly authorized by the Board of
Directors and by the Shareholders and the Agreement has been duly executed
and delivered by the Corporation and the Shareholders.
The opinions set forth above are subject to the
following limitations and qualifications:
(a) We express no opinion with respect to title to any
property or interest purported to be conveyed by any of the documents executed
by the Corporation in connection with this transaction (the
"Documents"), or the validity, binding effect and enforceability of the
Documents.
(b) We are not admitted to practice in any jurisdiction
other than the State of Maine. Accordingly, we express no opinion as to the
laws of any State or jurisdiction other than those of the State of
Maine.
This opinion is rendered solely for your benefit in
connection with the transaction described herein and may not be furnished to
or relied upon any other party or entity for any purpose without
our prior written consent. This opinion has been furnished to you at
your request and at the instruction of and with authorization from our
client in connection with the transaction referred above.
Very truly yours,
Bryan M. Dench
<PAGE>
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS,
That PHYSICIAN RESOURCES, INC., a Maine business
corporation ("Seller"), in consideration of 300,000 shares
of the common capital stock of Acadia National Health
Systems, Inc. ("Purchaser") and other valuable
consideration, the receipt whereof is hereby acknowledged,
does hereby grant, sell, transfer and deliver unto the said
Purchaser, the following goods and chattels, namely: all of
Seller's Equipment, Fixed Assets, Accounts Receivable,
Inventory, Cash, Customer Lists, and Records, and Seller's
goodwill, and all Seller's other assets, as those terms are
defined and described in that certain Assets Purchase
Agreement between the Purchaser and the Seller dated
September 25, 1996, collectively referred to herein as "the
Assets."
TO HAVE AND TO HOLD, all and singular the said Assets to
the Purchaser, its successors and assigns, to their own use
and behoof forever.
AND Seller does hereby covenant with the Purchaser that
it is the lawful owner of said Assets; that they are free
from all encumbrances other than those encumbrances which
the Purchaser has expressly agreed to assume; that it has
good right to sell the same as aforesaid; and that it will
warrant and defend the same unto the said Purchaser, its
successors and assigns, against the lawful claims and
demands of all persons.
IN WITNESS WHEREOF, the Seller, has caused this
<PAGE>
instrument to be signed and sealed this 27th day of September,
1996, by Thomas N. Hackett, its President, duly authorized
thereunto.
SIGNED AND SEALED IN THE
PRESENCE OF
PHYSICIAN RESOURCES, INC.
/s/ Mala A Vandal /s/Thomas N. Hackett
By:
Witness Thomas N. Hackett, President
STATE OF MAINE
ANDROSCOGGIN, SS.
The foregoing instrument was acknowledged before me this
1st. day of November, 1996, by Thomas N. Hackett, President of
Physician Resources, Inc., on behalf of the corporation.
/s/ Bryan M. Dench
Notary Public
Bryan M. Dench
Please Print or Type Name
My Commission Expires: 8/10/003
STATE OF COLORADO
DEPARTMENT OF STATE
CERTIFICATE
I, VICTORIA BUCKLEY, Secretary of State, of the State of
Colorado hereby certify that According to the records of this office
ACADIA NATIONAL HEALTH SYSTEMS, INC.
(COLORADO CORPORATION)
file # 961101641 was filed in this office on AUGUST 02, 1996,
and has complied with the applicable provisions of the laws of the State of
Colorado and on this date is in good standing and authorized and competent
to transact business or to conduct its affairs within this state.
Dated: OCTOBER 30, 1996
/s/
SECRETARY OF STATE
<PAGE>
ARTICLES OF INCORPORATION
OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned incorporator, being a natural person
of the age of eighteen (18) years or more, and desiring to form a
corporation under the laws of the State of Colorado, does hereby sign,
verify and deliver in duplicate to the Secretary of State of the State of
Colorado these Articles of Incorporation.
ARTICLE I
NAME
The name of the corporation shall be ACADIA NATIONAL
HEALTH SYSTEMS, INC.
ARTICLE II
PERIOD OF DURATION
This corporation shall exist perpetually unless dissolved
according to law.
ARTICLE III
PURPOSE
The purpose for which this corporation is organized is to
transact any lawful business or businesses for which corporations may be
incorporated pursuant to the Colorado Business Corporation Act.
ARTICLE IV
POWERS
In furtherance of the foregoing purposes the corporation
shall have and may exercise all of the rights, powers and privileges
now or hereafter conferred upon corporations organized under the
Colorado Business Corporation Act, as amended, or by law. In
addition, it may do everything necessary, suitable or proper
for the accomplishment of any corporate purpose.
<PAGE>
ARTICLE V
CAPITAL
The aggregate number of shares which this corporation shall
have the authority to issue is fifty million (50,000,000)
common shares, each without par value which shares shall be designated
common stock. No share shall be issued without consideration
being exchanged, and it shall thereafter be nonassessable.
Shares of the corporation not having a par value shall be
issued for such consideration expressed in dollars as may be fixed from
time to time by the vote of the director(s).
ARTICLE VI
PREEMPTIVE RIGHTS
A shareholder of the corporation shall not be entitled to
a preemptive or preferential right to purchase, subscribe for, or
otherwise acquire any unissued or treasury shares of stock of
the corporation, or any options or warrants to purchase, subscribe
for or otherwise acquire any such unissued or treasury shares,
or any shares, bonds, notes, debentures, or other securities
convertible into or carrying options or warrants to purchase,
subscribe for or otherwise acquire any such unissued or treasury
shares.
ARTICLE VII
CUMULATIVE VOTING
The shareholders shall not be entitled to cumulative
voting.
ARTICLE VIII
SHARE TRANSFER RESTRICTIONS
The corporation shall have the right to impose
restrictions upon the transfer of any of its authorized shares or any
interest therein.
The board of directors is hereby authorized on behalf of the
corporation to exercise the corporation's right to so impose such
restrictions.
<PAGE>
ARTICLE IX
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the
corporation shall be 17 West Cheyenne Mountain Boulevard, Colorado Springs, CO
80906, and the name of the initial registered agent at such address is
Mark T. Thatcher, Esq. Either the registered office or the registered
agent may be changed in the manner provided by law.
THE UNDERSIGNED CONSENTS TO THE APPOINTMENT AS THE
INITIAL REGISTERED AGENT
Mark T. Thatcher, Esq.
REGISTERED AGENT
ARTICLE X
INITIAL BOARD OF DIRECTORS
The initial board of directors of the corporation shall consist
of two (2) directors, and the names and addresses of the persons who shall
serve as directors until the first annual meeting of shareholders or
until their successors are elected and shall qualify are as follows:
Name Address
Thomas N. Hackett 460 Main Street
Lewiston, ME 04243
Jacquelyn Magno 460 Main Street
Lewiston, ME 04243
The number of directors shall be fixed in accordance
with the bylaws. So long as the number of directors shall be less than
three (3), no shares of this corporation may be issued and held of
record by more shareholders than there are directors. Any shares
issued in violation of this paragraph shall be null and void. This
provision shall also constitute a restriction on the transfer of shares and a
legend shall be conspicuously placed on each certificate respecting shares
preventing transfer of the shares to more shareholders than there are
directors.
<PAGE>
ARTICLE XI
INDEMNIFICATION
The corporation may:
(A) Indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by or in the right of the corporation), by
reason of the fact that he is or was a director, officer, employee,
fiduciary or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorney fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, or conviction or upon a plea of
nolo contendere or its equivalent shall not of itself create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in the best interests of the corporation and,
with respect to any criminal action or proceeding, had reasonable cause to
believe his conduct was unlawful.
(B) The corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending,
or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee,
fiduciary or agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorney fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the
corporation; but no indemnification shall be made in respect of any claim,
issue, or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the corporation
unless and only to the extent that the court in which such action or suit
was brought determines upon application that, despite the adjudication of
liability, but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnification for such expenses which
such court deems proper.
(C) To the extent that a director, officer, employee,
fiduciary or agent of a corporation has been successful on the merits in
defense of any action, suit, or proceeding referred to in (A) or (B) of this
Article XI or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses (including attorney fees) actually and
reasonably incurred by him in connection therewith.
<PAGE>
(D) Any indemnification under (A) or (B) of this Article
XI (unless ordered by a court) and as distinguished from (C) of this
Article shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer,
employee, fiduciary or agent is proper in the circumstances because he has
met the applicable standard of conduct set forth in (A) or (B) above.
Such determination shall be made by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit, or proceeding, or, if such a quorum is not obtainable or,
even if obtainable, if a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or by the shareholders.
(E) Expenses (including attorney fees) incurred in
defending a civil or criminal action, suit, or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding as authorized in (C) or (D) of this Article XI upon receipt of an
undertaking by or on behalf of the director, officer, employee, fiduciary or
agent to repay such amount unless it is ultimately determined that he is
entitled to be indemnified by the corporation as authorized in this Article
XI.
(F) The indemnification provided by this Article XI shall
not be deemed exclusive of any other rights to which those indemnified
may be entitled under any bylaw, agreement, vote of shareholders or
disinterested directors, or otherwise, and any procedure provided for by any
of the foregoing, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee,
fiduciary or agent and shall inure to the benefit of heirs, executors, and
administrators of such a person.
(G) The corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee,
fiduciary or agent of the corporation or who is or was serving at the request
of the corporation as a director, officer, employee, fiduciary or agent
of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in any
such capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
provisions of this Article XI.
ARTICLE XII
TRANSACTIONS WITH INTERESTED DIRECTORS
No contract or other transaction between the corporation
and one (1) or more of its directors or any other corporation, firm,
association, or entity in which one (1) or more of its directors are
directors or officers or are financially interested shall be either void or
voidable solely because of such relationship or interest, or solely because such
directors are present at the meeting of the board of directors or a committee
thereof which authorizes, approves, or ratifies such contract or
transaction, or solely because their votes are counted for such purpose if:
<PAGE>
(A) The fact of such relationship or interest is
disclosed or known to the board of directors or committee which authorizes,
approves, or ratifies the contract or transaction by a vote or consent
sufficient for the purpose without counting the votes or consents of such
interested directors;
(B) The fact of such relationship or interest is
disclosed or known to the shareholders entitled to vote and they authorize,
approve, or ratify such contract or transaction by vote or written consent;
or
(C) The contract or transaction is fair and reasonable to
the corporation.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the board of directors
or a committee thereof which authorizes, approves, or ratifies such
contract or transaction.
ARTICLE XIII
VOTING OF SHAREHOLDERS
If a quorum is present, the affirmative vote of a majority
of the outstanding shares represented at the meeting and entitled to
vote thereon, or of any class or series, shall be the act of the
shareholders.
ARTICLE XIV
INCORPORATOR
The name and address of the incorporator is as follows:
Name Address
Thomas N. Hackett 460 Main Street
Lewiston, ME 04243
<PAGE>
IN WITNESS WHEREOF, the above named incorporator
signed these Articles of Incorporation on July 1, 1996.
THOMAS N. HACKETT,
Incorporator
STATE OF MAINE )
: ss
COUNTY OF ANDROSCOGGIN)
I, the undersigned, a notary public, hereby certify
that on July 1, 1996, the above named incorporator personally appeared
before me and being by me first duly sworn declared that he is the person
who signed the foregoing document as incorporator, and that the statements
therein contained are true.
WITNESS my hand and official seal.
Margaret M. Heath
Notary Public
Address:
357 Harris Hill Road
Poland, ME 04274
(Seal) My Commission Expires:
November 21, 2000
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
AMENDMENT TO ARTICLES OF INCORPORATION
FIRST: I, THOMAS N. HACKETT, Chairman of the Board of
Directors, President and Majority Shareholder, whose address is
460 Main Street, Lewiston, Maine 04240, being at least eighteen (18)
years of age, hereby amend the Articles of Incorporation, filed
August 2, 1996 with the office of the Colorado Secretary of
State, under and by virtue of the Colorado Business Corporation Act.
SECOND: The name of the corporation (which is hereafter
referred to as the "Corporation") is ACADIA NATIONAL HEALTH
SYSTEMS, INC.
THIRD: The purposes for which the Corporation is formed
are:
To engage in the business of providing physician
practice management services including billing, consulting, software,
business systems, related services and sometimes financing to
physicians and other health care providers; and to engage in any
other lawful purpose and business.
FOURTH: The address of the corporation's principal office
in the state of Maine is 460 Main Street, Lewiston, Maine 04240.
FIFTH: The street address of the corporation's initial
Registered Office is 17 West Cheyenne Mountain Boulevard,
Colorado Springs, Colorado 80903. The name of the corporation's initial
Registered Agent at that office is Mark T. Thatcher, Esq.,
Colorado Attorney Registration number 025-275, and the consent of the
Registered Agent is designated by the signature of the initial
Registered Agent on these Articles of Incorporation.
SIXTH: The total number of shares of capital stock which
the Corporation has authority to issue is fifty million (50,000,000)
common shares, without par value (hereinafter referred to as the
"Common Stock").
<PAGE>
The following is a description of each class of stock of
the Corporation with the preferences, conversion and other rights,
restrictions, voting powers, limitations as to distributions,
qualifications, and terms and conditions of redemption of each
class:
1. In the event of any voluntary or involuntary
liquidation, dissolution, or winding-up of the Corporation, the holders of
any Preferred Stock then outstanding shall be paid out of the assets
of the Corporation available for distribution to its stockholders
an amount equal to One Dollar ($1.00) per share plus an amount
equal to all unpaid declared distributions thereon, without interest,
and no more, before any amount shall be paid or any assets of the
Corporation shall be distributed among the holders of the Common
Stock and, if the assets of the Corporation available for
distribution to its stockholders shall be insufficient to permit
the payment in full to the holders of the Preferred Stock, as
aforesaid, then the entire assets of the Corporation available
for distribution to its stockholders shall be distributed ratably
among the holders of the Preferred Stock; then and thereafter, the
remaining assets of the Corporation available for distribution
to its stockholders shall be distributed among and paid to the
holders of the Preferred Stock and the Common Stock, share and share
alike and without any distinction as to class, in proportion to their
respective stockholding.
A merger of the Corporation with or into any other
corporation, a share exchange involving the Corporation, or a
sale, lease, exchange, or transfer of all or any part of the assets of
the Corporation which shall not in fact result in the
liquidation of the Corporation and the distribution of its assets to its
stockholders shall not be deemed to be a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation within
the meaning of this Article SIXTH, paragraph 1.
2. Except as hereinabove provided in paragraph 1 of this
Article SIXTH, the Preferred Stock and the Common Stock of the
Corporation shall be identical in all respects and for all
purposes and the holders of the Preferred Stock and the holders of the
Common Stock voting together and without distinction as to class
shall be entitled to one vote per share in all proceedings in
which actions shall be taken by the stockholders of the Corporation.
<PAGE>
SEVENTH: The number of directors of the Corporation shall
be two (2), which number may be increased or decreased pursuant to
the Bylaws of the Corporation. The names and addresses of the
Directors, who shall act until the first annual meeting or until
their successors are duly chosen and qualified are:
Name Address
Thomas N. Hackett 460 Main Street
Lewiston, ME 04240
Jacquelyn J. Magno 460 Main Street
Lewiston, ME 04240
EIGHTH: The following provisions are hereby adopted for the
purpose of defining, limiting and regulating the powers of the
Corporation and of the directors and stockholders:
(1) The Board of Directors of the Corporation is hereby
empowered to authorize the issuance from time to time of shares
of its stock of any class, whether now or hereafter authorized, or
securities convertible into shares of its stock of any class or
classes, whether now or hereafter authorized.
(2) The Board of Directors of the Corporation may classify
or reclassify any unissued stock by setting or changing in any one
or more respects, from time to time before issuance of such stock,
the preferences, conversion or other rights, voting powers,
restrictions, limitations as to distributions, qualifications,
and terms or conditions of redemption of such stock.
(3) The Board of Directors shall have power, if authorized
by the Bylaws, to designate by resolution or resolutions adopted by
a majority of the whole Board of Directors, one or more
committees, each committee to consist of two or more of the directors
of the Corporation, which, to the extent provided in said resolutions
or in the Bylaws of the Corporation and permitted by the Colorado
Business Corporation Act, shall have and may exercise any or all
of the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all
instruments and documents which may require it.
<PAGE>
(4) If the Bylaws so provide, the Board of Directors of the
Corporation shall have power to hold its meetings, to have an
office or offices and, subject to the provisions of the Colorado
Business Corporation Act, to keep the books of the Corporation,
outside of said State at such place or places as may from time
to time be designated by it.
(5) The Board of Directors shall have power to borrow or
raise money, from time to time and without limit, and upon any terms,
for any corporate purposes; and, subject to the Colorado Business
Corporation Act, to authorize the creation, issue, assumption or
guaranty of bonds, notes or other evidences of indebtedness for
moneys so borrowed, to include therein such provisions as to
redeemability, convertibility or otherwise, as the Board of
Directors, in its sole discretion, may determine and to secure
the payment of principal, interest or sinking fund in respect
thereof by mortgage upon, or the pledge of, or the conveyance or
assignment in trust of, the whole or any part of the properties, assets and
goodwill of the Corporation then owned or thereafter acquired.
The enumeration and definition of a particular power of the
Board of Directors included in the foregoing shall in no way be
limited or restricted by reference to or inference from the
terms of any other clause of this or any other article of these
Articles of Incorporation, or construed as or deemed by inference or
otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the laws of the State of
Colorado now or hereafter in force.
NINTH: Notwithstanding any provision of law to the
contrary, the affirmative vote of a majority of all the votes entitled to
be cast on the matter shall be sufficient, valid and effective,
after due authorization, approval or advice of such action by the
Board of Directors, as required by law, to approve and authorize the
following acts of the Corporation:
(i) the amendment of these Articles of Incorporation;
(ii) the merger of the Corporation into another corporation
or the merger of one or more other corporations into the
Corporation;
(iii) the sale, lease, exchange or other transfer of all,
or substantially all, of the property and assets of the
Corporation, including its goodwill and franchises;
(iv) the participation by the Corporation in a share
exchange (as defined in the Colorado Business Corporation Act)
as the corporation the stock of which is to be acquired; and
<PAGE>
(v) the voluntary or involuntary liquidation, dissolution
or winding-up of or the revocation of any such proceedings
relating to the Corporation.
TENTH: Cumulative voting of shares in the election of
directors of the Corporation shall not be permitted.
IN WITNESS WHEREOF, I have signed these Articles of
Incorporation this 1st day of October, 1996, and I acknowledge
the same to be my act.
THOMAS N. HACKETT,
Incorporator
CONSENT OF REGISTERED AGENT
I hereby consent to my appointment as initial Registered
Agent of the Corporation in the foregoing Articles of Incorporation.
MARK T. THATCHER,
Registered Agent
STATE OF MAINE )
) ss.
COUNTY OF ANDROSCOGGIN)
The foregoing Articles of Incorporation were signed and
sworn to before me by THOMAS N. HACKETT, as Incorporator, and by
MARK T. THATCHER, as initial Registered Agent, on this 1st day
of October, 1996.
My Commission Expires:
November 21, 2000
Margaret M. Heath
Notary Public
Address:
357 Harris Hill Road
Poland, ME 04274
<PAGE>
$180.00 File No. 19970416 F Pages 2
Fee Paid $ 180.00
DAN. 1963031600003 QUAL
FILED
10/28/1996
/s/ Gary Cooper
Deputy Secretary of State
A True copy when attested by signature
/s/ Gary Cooper
Deputy Secretary of State
STATE OF MAINE
APPLICATION OF FOREIGN CORPORATION
FOR AUTHORITY TO DO BUSINESS
Pursuant to 13-A MESA Sec. 1202, the undersigned corporation
applies for authority to do business in the State of Maine:
FIRST: Jurisdiction of incorporation: Colorado
SECOND: Date of incorporation: 8/2/96; period of duration:
perpetual
THIRD: Business(e's) it is authorized to do under the laws of
its jurisdiction of incorporation: any lawful business
FOURTH: Does it seek authority to engage in all businesses
authorized in its jurisdiction and allowed by Maine Law?
X Yes No if no, specify business(s) for which authority is
No sought:
FIFTH: Address of the registered or principle 17 West Cheyenne
Mountain Boulevard of office in jurisdiction of incorporation:
Colorado Springs, CO 80906
(street, city, state and zip code)
SIXTH: name of proposed registered agent, an individual resident
in Maine or a corporation authorized to do business in Maine, and
address of its proposed registered office in Maine is: Bryan M.
Dench, Clerk 95 Main Street, P.O. Box 3200, Auburn, ME 04212-3200
(street, city, state, and zip code)
SEVENTH: Number of shares it has authority to issue, itemized as
follows: (attach separate sheet if necessary)
Class Series Par Value Per Share Number of Shares
Common N/A 2,000
EIGHTH: This application is accompanied by a certificate of good
standing, executed by the official in the jurisdiction of
incorporation having custody of the corporate record) stating that the
corporation has legal existence, good standing or similar language and dated not
earlier than 90 days prior to the date of delivery for filing of this
application.
By: * /s/
(signature)
Bryan M. Dench, Clerk
(type or print name and capacity)
Acadia National Health Systems. Inc.
(name of corporation)
By*
(signature)
Dated: October 16 1996
(type or print name and capacity)
*This document MUST be signed by (1) the Clerk OR (2) by the
President or a vice-president AND BY THE Secretary, an assistant
Secretary or other officer the bylaws designate as second
certifying officer OR (3) if no such officers, then by a majority of the
directors or by such directors designated by a majority of directors then in
office OR (4) if no directors, then by the holders, or such of them
designated by the holders, of record of a majority of all
outstanding shares entitled to vote thereon OR (5) by the holders of all
outstanding shares.
<PAGE>
File No. 19970416 F Pages 1
Fee Paid $ 105.00
DAN. 1963031600004 AMME
FILED
10/28/1996
/s/ Gary Cooper
Deputy Secretary of State
A True copy when attested by signature
/s/ Gary Cooper
Deputy Secretary of State
STATE OF MAINE
STATEMENT OF INTENTION
TO DO BUSINESS
AN ASSUMED NAME
Pursuant to 13-A MESA Sec. 307, the undersigned, a corporation
(incorporated under the laws of the State of Maine), (incorporated
under the laws of the State of Colorado , and authorized to do
business in Maine), gives notice of its intention to do business in this
State under an assumed name.
FIRST: The name of the corporation is Acadia National Health
Systems, Inc.
SECOND: The address of the registered office Of the corporation
in the State of Maine is 95 Main St., P.O. Box 3200, Auburn, ME
04212-3200
(street, city, state and zip code)
THIRD: The corporation intends to transact business under the
assumed name of Physician Resources, Inc.
COMPLETE THE FOLLOWING IF APPLICABLE
FOURTH: If such assumed name is to be used at fewer than all of
the corporation's places of business in this
State, the location(s) where it will be used is (are):
Dated: October 16, 1996
By: * /s/
(signature)
Bryan M. Dench, Clerk
(type or print name and capacity)
Acadia National Health Systems. Inc.
(name of corporation)
By*
(signature)
Dated: October 16 1996
(type or print name and capacity)
*This document MUST be signed by (1) the Clerk OR
(2) by the President or a vice-president AND BY THE Secretary,
an assistant Secretary or other officer the bylaws designate as
second certifying officer OR (3) if no such officers, then by a majority
of the directors or by such directors designated by a majority of
directors then in office OR (4) if no directors, then by the holders, or such of
them designated by the holders, of record of a majority of all
outstanding shares entitled to vote thereon OR (5) by the holders of all
outstanding shares.
<PAGE>
Filing Fee $20.00
BUSINESS
File No. 19882546 Pages 1
BOOKKEEPING RESOURCES, INC.
Written Consent of Sole Shareholder
The undersigned, being the sole shareholder of Bookkeeping
Resources, Inc., a Maine corporation without directors, hereby takes the
following action by written consent.
1. To authorize and approve the use of the similar name of
Physician Resources, Inc.
Dated this 25 day of October, 1996.
/s/
Thomas N. Hackett
<PAGE>
EXHIBIT A
To change the name of the corporation to PRI, Inc.
BYLAWS
OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
ARTICLE I
OFFICES
Section 1.1 PRINCIPAL OFFICE. The principal office of the
corporation in the State of Maine shall be located in the City of
Lewiston, County of Androscoggin. The corporation may have such
other offices, either within or outside of the State of Colorado,
as the Board of Directors may designate, or as the business of the
corporation may require from time to time.
Section 1.2 REGISTERED OFFICE. The registered office of the
corporation, required by the Colorado Business Corporation Act to
be maintained in the State of Colorado, may be, but need not be,
identical with the principal office in the State of Colorado, and
the address of the registered office may be changed from time to
time by the Board of Directors.
ARTICLE II
SHAREHOLDERS
Section 2.1 ANNUAL MEETING. The annual meeting of the
shareholders shall be held on the St. day of September in each
year, commencing with the year 1996, at the hour of 9:00 A.M., or
at such other time on such other day as shall be fixed by the Board
of Directors, for the purpose of electing directors and for the
transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday in
the State of Maine, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be
held on the day designated herein for any annual meeting of the
shareholders, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be convenient.
<PAGE>
A shareholder may apply to the district court in the county in
Colorado where the corporation's principal office is located or, if
the corporation has no principal office in Colorado, to the
district court of the county in which the corporation's registered
office is located to seek an order that a shareholder meeting be
held (i) if an annual meeting was not held within six months after
the close of the corporation's most recently ended fiscal year or
fifteen months after its last annual meeting, whichever is earlier,
or (ii) if the shareholder participated in a proper call or of
proper demand for a special meeting and notice of the special
meeting was not given within thirty days after the date of the call
or the date the last of the demands necessary to require calling of
the meeting was received by the corporation pursuant to C.R.S.
Sec. 7-107-102(1)(b), or the special meeting was not held in accordance
with the notice.
Section 2.2 SPECIAL MEETINGS. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the President or by the
Board of Directors, and shall be called by the President upon the
receipt of one or more written demands for a special meeting,
stating the purpose or purposes for which it is to be held, signed
and dated by the holders of shares representing at least ten
percent of all the votes entitled to be cast on any issue proposed
to be considered at the meeting.
Section 2.3 PLACE OF MEETINGS. The Board of Directors may
designate any place, either within or outside of the State of
Colorado, as the place of meeting for any annual meeting or for any
special meeting called by the Board of Directors. If no designation
is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the corporation in the
State of Colorado.
Section 2.4 NOTICE OF MEETING. Written notice stating the
place, day and hour of the meeting of shareholders and, in case of
a special meeting, the purpose or purposes for which the meeting is
called, shall, unless otherwise prescribed by statute, be delivered
not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of
the President, or the Secretary, or the officer or other persons
calling the meeting, to each shareholder of record entitled to vote
at such meeting; provided, however, that if the number of
authorized shares is to be increased, at least thirty days' notice
shall be given.
Notice of a special meeting shall include a description of the
purpose or purposes of the meeting. Notice of an annual meeting
need not include a description of the purpose or purposes of the
meeting except the purpose or purposes shall be stated with respect
to (i) an amendment to the articles of incorporation of the
corporation, (ii) a merger or share exchange in which the
<PAGE>
corporation is a party and, with respect to a share exchange, in
which the corporation's shares will be acquired, (iii) a sale,
lease, exchange or other disposition, other than in the usual and
regular course of business, of all or substantially all of the
property of the corporation or of another entity which this
corporation controls, in each case with or without the goodwill,
(iv) a dissolution of the corporation, or (v) any other purpose for
which a statement of purpose is required by the Colorado Business
Corporation Act.
Notice shall be given personally or by mail, private carrier,
telegraph, teletype, electronically transmitted facsimile or other
form of wire or wireless communication by or at the direction of
the president, the secretary, or the officer or persons calling the
meeting, to each shareholder of record entitled to vote at such
meeting. If mailed and if in a comprehensible form, such notice
shall be deemed to be given and effective when deposited in the
United States mail, addressed to the shareholder at his address as
it appears in the corporation's current record of shareholders,
with postage prepaid. If notice is given other than by mail, and
provided that such notice is in a comprehensible form, the notice
is given and effective on the date received by the shareholder.
If requested by the person or persons lawfully calling such
meeting, the notice shall be given at corporate expense.
When a meeting is adjourned to another date, time or place,
notice need not be given of the new date, time or place if the new
date, time or place of such meeting is announced before adjournment
at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which may have
been transacted at the original meeting. If the adjournment is for
more than 120 days, or if a new record date is fixed for the
adjourned meeting, a new notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the meeting
as of the new record date.
A shareholder may waive notice of a meeting before or after
the time and date of the meeting by a writing signed by such
shareholder. Such waiver shall be delivered to the corporation for
filing with the corporate records. Further, by attending a meeting
either in person or by proxy, a shareholder waives objection to
lack of notice or defective notice of the meeting unless the
shareholder objects at the beginning of the meeting to the holding
of the meeting or the transaction of business at the meeting
because of lack of notice or defective notice. By attending the
meeting, the shareholder also waives any objection to consideration
in the meeting of a particular matter not within the purpose or
purposes described in the meeting notice unless the shareholder
objects to considering the matter when it is presented.
<PAGE>
No notice need be sent to any shareholder if three successive
notices mailed to the last known address of such shareholder have
been returned as undeliverable until such time as another address
for such shareholder is made known to the corporation by such
shareholder. In order to be entitled to receive notice of any
meeting, a shareholder shall advise the corporation in writing of
any change in such shareholder's mailing address as shown on the
corporation's books and records.
Section 2.5 MEETING OF ALL SHAREHOLDERS. If all of the
shareholders shall meet at any time and place, either within or
outside of the State of Colorado, and consent to the holding of a
meeting at such time and place, such meeting shall be valid without
call or notice, and at such meeting any corporate action may be
taken.
Section 2.6 CLOSING OF TRANSFER BOOKS OR FIXING
OF RECORD DATE. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or shareholders entitled to receive payment of
any distribution, or in order to make a determination of
shareholders for any other purpose, the Board of Directors of the
corporation may provide that the share transfer books shall be
closed for a stated period but not to exceed, in any case, seventy
days. If the share transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for at least
ten days immediately preceding such meeting. In lieu of closing the
share transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders,
such date in any case to be not more than seventy days and, in case
of a meeting of shareholders, not less than ten days prior to the
date on which the particular action, requiring such determination
of shareholders, is to be taken. If the share transfer books are
not closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
distribution, the date on which notice of the meeting is mailed or
the date on which the resolution of the Board of Directors
declaring such distribution is adopted, as the case may be, shall
be the record date for such determination of shareholders. Whena
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the
meeting is adjourned to a date more than one hundred twenty days
after the date fixed for the original meeting, in which case the
Board of Directors shall make a new determination as provided in
this section.
<PAGE>
Section 2.7 VOTING RECORD. The officer or agent having
charge of the stock transfer books for shares of the corporation shall
make, at least ten days before such meeting of shareholders, a
complete record of the shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof, arranged by
voting groups and within each voting group by class or series of
shares, in alphabetical order within each class or series, with the
address of and the number of shares held by each shareholder in
each class or series. For a period beginning the earlier of ten
days before the meeting for which the record was prepared or two
business days after notice of the meeting is given and continuing
through the meeting, the record shall be kept on file at the
principal office of the corporation or at a place identified in the
notice of the meeting in the city where the meeting will be held,
whether within or outside of the State of Colorado, and shall be
subject to inspection by any shareholder upon written demand at any
time during usual business hours. Such record shall be produced and
kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
The original stock transfer books shall be the prima facie
evidence as to who are the shareholders entitled to examine the
record or transfer books or to vote at any meeting of shareholders.
Section 2.8 QUORUM. A majority of the votes entitled to be
cast on the matter by a voting group, represented in person or by
proxy, constitutes a quorum of that voting group for action on that
matter. If no specific voting group is designated in the Articles
of Incorporation or under the Colorado Business Corporation Act for
a particular matter, all outstanding shares of the corporation
entitled to vote, represented in person or by proxy, shall
constitute a voting group. In the absence of a quorum at any such
meeting, a majority of the shares so represented may adjourn the
meeting from time to time for a period not to exceed one hundred
twenty days without further notice. However, if the adjournment is
for more than one hundred twenty days, or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each shareholder of record
entitled to vote at the meeting.
At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed. The
shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal
during such meeting of that number of shareholders whose absence
would cause there to be less than a quorum.
<PAGE>
Section 2.9 MANNER OF ACTING. If a quorum is present, an
action is approved if the votes cast favoring the action exceed the
votes cast within the voting group opposing the action and such
action shall be the act of the shareholders, unless the vote of a
greater proportion or number or voting by groups is otherwise
required by the Colorado Business Corporation Act, the Articles of
Incorporation or these Bylaws.
Section 2.10 PROXIES. At all meetings of shareholders a
shareholder may vote by proxy by signing an appointment form or
similar writing, either personally or by his or her duly authorized
attorney-in-fact. A shareholder may also appoint a proxy by
transmitting or authorizing the transmission of a telegram,
teletype, or other electronic transmission providing a written
statement of the appointment to the proxy, a proxy solicitor, proxy
support service organization, or other person duly authorized by
the proxy to receive appointments as agent for the proxy, or to the
corporation. The transmitted appointment shall set forth or be
transmitted with written evidence from which it can be determined
that the shareholder transmitted or authorized the transmission of
the appointment. The proxy appointment form or similar writing
shall be filed with the secretary of the corporation before or at
the time of the meeting. The appointment of a proxy is effective
when received by the corporation and is valid for eleven months
unless a different period is expressly provided in the appointment
form or similar writing.
Any complete copy, including an electronically transmitted
facsimile, of an appointment of a proxy may be substituted for or
used in lieu of the original appointment for any purpose for which
the original appointment could be used.
Revocation of a proxy does not affect the right of the
corporation to accept the proxy's authority unless (i) the
corporation had notice that the appointment was coupled with an
interest and notice that such interest is extinguished is received
by the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his or her authority under the
appointment, or (ii) other notice of the revocation of the
appointment is received by the secretary or other officer or agent
authorized to tabulate votes before the proxy exercises his or her
authority under the appointment. Other notice of revocation may, in
the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who
granted the proxy and his or her voting in person on any matter
subject to a vote at such meeting.
<PAGE>
The death or incapacity of the shareholder appointing a proxy
does not affect the right of the corporation to accept the proxy's
authority unless notice of the death or incapacity is received by
the secretary or other officer or agent authorized to tabulate
votes before the proxy exercises his or her authority under the
appointment.
The corporation shall not be required to recognize an
appointment made irrevocable if it has received a writing revoking
the appointment signed by the shareholder (including a shareholder
who is a successor to the shareholder who granted the proxy) either
personally or by his or her attorney-in-fact, notwithstanding that
the revocation may be a breach of an obligation of the shareholder
to another person not to revoke the appointment.
Section 2.11 VOTING OF SHARES. Unless otherwise provided by
these Bylaws or the Articles of Incorporation, each outstanding
share entitled to vote shall be entitled to one vote upon each
matter submitted to a vote at a meeting of shareholders, and each
fractional share shall be entitled to a corresponding fractional
vote on each such matter. Only shares are entitled to vote.
Section 2.12 VOTING OF SHARES BY CERTAIN SHAREHOLDERS.
If the name on a vote, consent, waiver, proxy appointment, or proxy
appointment revocation corresponds to the name of a shareholder,
the corporation, if acting in good faith, is entitled to accept the
vote, consent, waiver, proxy appointment or proxy appointment
revocation and give it effect as the act of the shareholder.
If the name signed on a vote, consent, waiver, proxy
appointment or proxy appointment revocation does not correspond to
the name of a shareholder, the corporation, if acting in good
faith, is nevertheless entitled to accept the vote, consent,
waiver, proxy appointment or proxy appointment revocation and to
give it effect as the act of the shareholder if:
(i) the shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity;
(ii) the name signed purports to be that of an administrator,
executor, guardian or conservator representing the shareholder and,
if the corporation requests, evidence of fiduciary status
acceptable to the corporation has been presented with respect to
the vote, consent, waiver, proxy appointment or proxy appointment
revocation;
(iii) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the corporation
requests, evidence of this status acceptable to the corporation
has been presented with respect to the vote, consent, waiver,
proxy appointment or proxy appointment revocation;
<PAGE>
(iv) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder and, if
the corporation requests, evidence acceptable to the corporation
of the signatory's authority to sign for the shareholder has been
presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(v) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least
one of the co-tenants or fiduciaries, and the person signing
appears to be acting on behalf of all the co-tenants or
fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is otherwise proper
under rules established by the corporation that are not
inconsistent with this Section 2.12.
The corporation is entitled to reject a vote, consent, waiver,
proxy appointment or proxy appointment revocation if the secretary
or other officer or agent authorized to tabulate votes, acting in
good faith, has reasonable basis for doubt about the validity of
the signature on it or about the signatory's authority to sign for
the shareholder.
Neither the corporation nor any of its directors, officers
employees, or agents who accepts or rejects a vote, consent,
waiver, proxy appointment or proxy appointment revocation in good
faith and in accordance with the standards of this Section is
liable in damages for the consequences of the acceptance or
rejection.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem
the shares has been deposited with a bank, trust company or other
financial institution under an irrevocable obligation to pay the
holders of the redemption price on surrender of the shares.
Section 2.13 ACTION BY SHAREHOLDERS WITHOUT A
MEETING. Unless the Articles of Incorporation or these Bylaws
provide otherwise, action required or permitted to be taken at a
meeting of shareholders may be taken without a meeting if the action
is evidenced by one or more written consents describing the action
taken, signed by each shareholder entitled to vote and delivered to
the Secretary of the corporation for inclusion in the minutes or
for filing with the corporate records. Action taken under this
section is effective when all shareholders entitled to vote have
signed the consent, unless the consent specifies a different
effective date.
<PAGE>
Any such writing may be received by the corporation by
electronically transmitted facsimile or other form of wire or
wireless communication providing the corporation with a complete
copy thereof, including a copy of the signature thereto. The
shareholder so transmitting such a writing shall furnish an
original of such writing to the corporation, but the failure of the
corporation to receive or record such original writing shall not
affect the action so taken.
The record date for determining shareholders entitled to take
action without a meeting shall be the date the written consent is
first received by the corporation.
Section 2.14 VOTING BY BALLOT. Voting on any question
or in any election may be by voice vote unless the presiding officer
shall order or any shareholder shall demand that voting be by ballot.
Section 2.15 NO CUMULATIVE VOTING. No shareholder shall be
permitted to cumulate his or her votes.
Section 2.16 WAIVER OF NOTICE. When any notice is required to
be given to any shareholder, a waiver thereof in writing signed by
the person entitled to such notice, whether before, at, or after
the time stated therein, shall be equivalent to the giving of such
notice.
The attendance of a shareholder at any meeting shall
constitute a waiver of notice, waiver of objection to defective
notice of such meeting, or a waiver of objection to the
consideration of a particular matter at the shareholder meeting
unless the shareholder, at the beginning of the meeting, objects to
the holding of the meeting, the transaction of business at the
meeting, or the consideration of a particular matter at the time it
is presented at the meeting.
Section 2.17 PARTICIPATION BY ELECTRONIC MEANS. Any
shareholder may participate in any meeting of the shareholders by
means of telephone conference or similar communications equipment
by which all persons participating in the meeting can hear each
other at the same time. Such participation shall constitute
presence in person at the meeting.
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
Section 3.1 GENERAL POWERS. The business and affairs of the
corporation shall be managed by its Board of Directors.
Section 3.2 PERFORMANCE OF DUTIES. A director of the
corporation shall perform his or her duties as a director,
including his or her duties as a member of any committee of the
board upon which he or she may serve, in good faith, in a manner he
or she reasonably believes to be in the best interests of the
corporation, and with such care as an ordinarily prudent person in
a like position would use under similar circumstances. In
performing his duties, a director shall be entitled to rely on
information, opinions, reports, or statements, including financial
statements and other financial data, in each case prepared or
presented by persons and groups listed in paragraphs (a), (b), and
(c) of this Section 3.2; but he or she shall not be considered to be
acting in good faith if he or she has knowledge concerning the
matter in question that would cause such reliance to be
unwarranted. A person who so performs his or her other duties shall
not have any liability by reason of being or having been a director
of the corporation. Those persons and groups on whose information,
opinions, reports, and statements a director is entitled to rely
are:
(a) One or more officers or employees of the corporation whom
the director reasonably believes to be reliable and competent in
the matters presented;
(b) Legal counsel, public accountants, or other persons as to
matters which the director reasonably believes to be within such
persons' professional or expert competence; or
(c) A committee of the board upon which he or she does not
serve, duly designated in accordance with the provision of the
Articles of Incorporation or the Bylaws, as to matters within its
designated authority, which committee the director reasonably
believes to merit confidence.
Section 3.3 NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be fixed from time
to time by resolution of the Board of Directors, but in no instance
shall there be less than one director. Each director shall hold office
until the next annual meeting of shareholders or until his or her
successor shall have been elected and qualified. Directors need not
be residents of the State of Colorado or shareholders of the
corporation.
<PAGE>
There shall be a Chairman of the Board, who has been elected
from among the directors. He or she shall preside at all meetings
of the stockholders and of the Board of Directors. He or she shall
have such other powers and duties as may be prescribed by the Board
of Directors.
Section 3.4 REGULAR MEETINGS. A regular meeting of the
Board of Directors shall be held without other notice than this Bylaw
immediately after, and at the same place as, the annual meeting of
shareholders. The Board of Directors may provide, by resolution,
the time and place, either within or without the State of Colorado,
for the holding of additional regular meetings without other notice
than such resolution.
Section 3.5 SPECIAL MEETINGS. Special meetings of the Board
of Directors may be called by or at the request of the President or
any two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within
or without the State of Colorado, as the place for holding any
special meeting of the Board of Directors called by them.
Section 3.6 NOTICE. Written notice of any special meeting of
directors shall be given as follows:
By mail to each director at his or her business address at
least two days prior to the meeting; or
By personal delivery, facsimile or telegram at least
twenty-four hours prior to the meeting to the business address of
each director, or in the event such notice is given on a Saturday,
Sunday or holiday, to the residence address of each director. If
mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, so addressed, with postage thereon
prepaid. If notice is given by facsimile, such notice shall be
deemed to be delivered when a confirmation of the transmission of
the facsimile has been received by the sender. If notice be given
by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company.
Any director may waive notice of any meeting.
The attendance of a director at any meeting shall constitute
a waiver of notice of such meeting, except where a director attends
a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or
convened.
Neither the business to be transacted at, nor the purpose of,
any regular or special meeting of the Board of Directors need be
specified in the notice or waiver of notice of such meeting.
<PAGE>
When any notice is required to be given to a director, a
waiver thereof in writing signed by such director, whether before,
at or after the time stated therein, shall constitute the giving of
such notice.
Section 3.7 QUORUM. A majority of the number of directors
fixed by or pursuant to Section 3.2 of this Article III, or if no
such number is fixed, a majority of the number of directors in
office immediately before the meeting begins, shall constitute a
quorum for the transaction of business at any meeting of the Board
of Directors, but if less than such majority is present at a
meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
Section 3.8 MANNER OF ACTING. Except as otherwise
required by law or by the Articles of Incorporation, the affirmative
vote of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
Section 3.9 INFORMAL ACTION BY DIRECTORS OR
COMMITTEE MEMBERS. Unless the Articles of Incorporation
or these By-laws provide otherwise, any action required or permitted
to be taken at a meeting of the board of directors or any committee
designated by said board may be taken without a meeting if the action
is evidenced by one or more written consents describing the action
taken, signed by each director or committee member, and delivered
to the Secretary for inclusion in the minutes or for filing with
the corporate records. Action taken under this section is effective
when all directors or committee members have signed the consent,
unless the consent specifies a different effective date. Such
consent has the same force and effect as a unanimous vote of the
directors or committee members and may be stated as such in any
document.
Section 3.10 PARTICIPATION BY ELECTRONIC MEANS.
Any members of the Board of Directors or any committee designated
by such Board may participate in a meeting of the Board of Directors
or committee by means of telephone conference or similar communications
equipment by which all persons participating in the meeting can
hear each other at the same time. Such participation shall constitute
presence in person at the meeting.
Section 3.11 VACANCIES. Any vacancy on the Board of Directors
may be filled by the affirmative vote of a majority of the
shareholders or the Board of Directors. If the directors remaining
in office constitute fewer than a quorum of the board, the
directors may fill the vacancy by the affirmative vote of a
majority of all the directors remaining in office.
<PAGE>
If elected by the directors, the director shall hold office
until the next annual shareholders' meeting at which directors are
elected. If elected by the shareholders, the director shall hold
office for the unexpired term of his or her predecessor in office;
except that, if the director's predecessor was elected by the
directors to fill a vacancy, the director elected by the
shareholders shall hold the office for the unexpired term of the
last predecessor elected by the shareholders.
If the vacant office was held by a director elected by a
voting group of shareholders, only the holders of shares of that
voting group are entitled to vote to fill the vacancy if it is
filled by the shareholders, and, if one or more of the remaining
directors were elected by the same voting group, only such
directors are entitled to vote to fill the vacancy if it is filled
by the directors.
Section 3.12 RESIGNATION. Any director of the corporation may
resign at any time by giving written notice to the Secretary of the
corporation. The resignation of any director shall take effect upon
receipt of notice thereof or at such later time as shall be
specified in such notice; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make
it effective. When one or more directors shall resign from the
board, effective at a future date, a majority of the directors then
in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect
when such resignation or resignations shall become effective.
Section 3.13 REMOVAL. Subject to any limitations contained in
the Articles of Incorporation, any director or directors of the
corporation may be removed at any time, with or without cause, in
the manner provided in the Colorado Business Corporation Act.
Section 3.14 COMMITTEES. By resolution adopted by a majority
of the Board of Directors, the directors may designate two or more
directors to constitute a committee, any of which shall have such
authority in the management of the corporation as the Board of
Directors shall designate and as shall be prescribed by the
Colorado Business Corporation Act and Article XI of these Bylaws.
Section 3.15 COMPENSATION. By resolution of the Board of
Directors and irrespective of any personal interest of any of the
members, or the Board of Directors, each director may be paid his
or her expenses, if any, of attendance at each meeting of the Board
of Directors, and may be paid a stated salary as director or a
fixed sum for attendance at each meeting of the Board of Directors
or both. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation
therefor.
<PAGE>
Section 3.16 PRESUMPTION OF ASSENT. A director of the
corporation who is present at a meeting of the Board of Directors
or committee of the board at which action on any corporate matter
is taken shall be presumed to have assented to the action taken
unless (i) the director objects at the beginning of the meeting, or
promptly upon his or her arrival, to the holding of the meeting or
the transaction of business at the meeting and does not thereafter
vote for or assent to any action taken at the meeting, (ii) the
director contemporaneously requests that his or her dissent or
abstention as to any specific action taken be entered in the
minutes of the meeting, or (iii) the director causes written notice
of his or her dissent or abstention as to any specific action to be
received by the presiding officer or the meeting before its
adjournment or by the corporation promptly after the adjournment of
the meeting. A director may dissent to a specific action at a
meeting, while assenting to others. The right to dissent to a
specific action taken at a meeting of the Board of Directors or a
committee of the board shall not be available to a director who
voted in favor of such action.
ARTICLE IV
OFFICERS
Section 4.1 NUMBER. The officers of the corporation shall be
a President, a Secretary, and a Treasurer, each of whom must be a
natural person who is eighteen years or older and shall be elected
by the Board of Directors. Such other officers and assistant
officers as may be deemed necessary may be elected or appointed by
the Board of Directors. Any two or more offices may be held by the
same person.
Section 4.2 ELECTION AND TERM OF OFFICE. The officers of the
corporation to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting of
the Board of Directors held after the annual meeting of the
shareholders. If the election of officers shall not be held at such
meeting, such election shall be held as soon thereafter as
practicable. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his
or her death or until he shall resign or shall have been removed in
the manner hereinafter provided.
Section 4.3 REMOVAL AND RESIGNATION. Any officer or agent may
be removed by the Board of Directors at any time, with or without
cause, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment
of an officer or agent shall not of itself create contract rights.
<PAGE>
An officer or agent may resign at any time by giving written
notice of resignation to the Secretary of the corporation. The
resignation is effective when the notice is received by the
corporation unless the notice specifies a later effective date.
Section 4.4 VACANCIES. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, may be
filled by the Board of Directors for the unexpired portion of the
term.
Section 4.5 PRESIDENT. The President shall be the chief
executive officer of the corporation and, subject to the control of
the Board of Directors, shall, in general, supervise and control
all of the business and affairs of the corporation. He or she
shall, when present, and in the absence of a Chair of the Board,
preside at all meetings of the shareholders and of the Board of
Directors. He or she may sign, with the Secretary or any other
proper officer of the corporation thereunto authorized by the Board
of Directors, certificates for shares of the corporation and deeds,
mortgages, bonds, contracts, or other instruments which the Board
of Directors has authorized to be executed, except in cases where
the signing and execution thereof shall be expressly delegated by
the Board of Directors or by these Bylaws to some other officer or
agent of the corporation, or shall be required by law to be
otherwise signed or executed; and in general shall perform all
duties incident to the office of President and such other duties as
may be prescribed by the Board of Directors from time to time.
Section 4.6 VICE PRESIDENT. If elected or appointed by the
Board of Directors, the Vice President (or in the event there be
more than one vice president, the vice presidents in the order
designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall, in the
absence of the President or in the event of his or her death,
inability or refusal to act, perform all duties of the President,
and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President. Any Vice President may
sign, with the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary, certificates for shares of the
corporation; and shall perform such other duties as from time to
time may be assigned to him by the President or by the Board of
Directors.
Section 4.7 SECRETARY. The Secretary shall: (a) prepare and
maintain as permanent records the minutes of the proceedings of the
shareholders and the Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting,
a record of all actions taken by a committee of the Board of
Directors in place of the Board of Directors on behalf of the
corporation, and a record of all waivers of notice and meetings of
shareholders and of the Board of Directors or any committee thereof
(b) ensure that all notices are duly given in accordance with the
<PAGE>
provisions of these Bylaws and as required by law, (c) serve as
custodian of the corporate records and of the seal of the
corporation and affix the seal to all documents when authorized by
the Board of Directors, (d) keep at the corporation's registered
office or principal place of business a record containing the names
and addresses of all shareholders in a form that permits
preparation of a list of shareholders arranged by voting group and
by class or series of shares within each voting group, that is
alphabetical within each class or series and that shows the address
of, and the number of shares of each class or series held by, each
shareholder, unless such a record shall be kept at the office of
the corporation's transfer agent or registrar, (e) maintain at the
corporation's principal office the originals or copies of the
corporation's Articles of Incorporation, Bylaws, minutes of all
shareholders' meetings and records of all action taken by
shareholders without a meeting for the past three years, all
written communications within the past three years to shareholders
as a group or to the holders of any class or series of shares as a
group, a list of the names and business addresses of the current
directors and officers, a copy of the corporation's most recent
corporate report filed with the Secretary of State, and financial
statements showing in reasonable detail the corporation's assets
and liabilities and results of operations for the last three years,
(f) have general charge of the stock transfer books of the
corporation, unless the corporation has a transfer agent, (g)
authenticate records of the corporation, and (h) in general,
perform all duties incident to the office of secretary and such
other duties as from time to time may be assigned to him by the
president or by the board of the Board of Directors. Assistant
Secretaries, if any, shall have the same duties and powers, subject
to supervision by the Secretary. The directors and/or shareholders
may however respectively designate a person other than the
Secretary or Assistant Secretary to keep the minutes of their
respective meetings.
Any books, records, or minutes of the corporation may be in
written form or in any form capable of being converted into written
form within a reasonable time.
Section 4.8 TREASURER. The Treasurer shall: (a) have charge
and custody of and be responsible for all funds and securities of
the corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit
all such moneys in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in accordance
with the provisions of Article V of these Bylaws; and (c) in general
perform all of the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him or
her by the President or by the Board of Directors.
<PAGE>
Section 4.9 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.
The Assistant Secretaries, when authorized by the Board of
Directors, may sign with the Chair or Vice Chair of the Board of
Directors or the President or a Vice President certificates for
shares of the corporation the issuance of which shall have been
authorized by a resolution of the Board of Directors. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform
such duties as shall be assigned to them by the Secretary or the
Treasurer, respectively, or by the President or the Board of
Directors.
Section 4.10 BONDS. If the Board of Directors by resolution
shall so require, any officer or agent of the corporation shall
give bond to the corporation in such amount and with such surety as
the Board of Directors may deem sufficient, conditioned upon the
faithful performance of their respective duties and offices.
Section 4.11 SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors and no officer
shall be prevented from receiving such salary by reason of the fact
that he is also a director of the corporation.
ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.1 CONTRACTS. The Board of Directors may authorize
any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or
confined to specific instances.
Section 5.2 LOANS. No loans shall be contracted on behalf of
the corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the Board of
Directors. Such authority may be general or confined to specific
instances.
Section 5.3 CHECKS, DRAFTS, ETC. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation and
in such manner as shall from time to time be determined by
resolution of the Board of Directors.
Section 5.4 DEPOSITS. All funds of the corporation not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the Board of Directors may select.
<PAGE>
ARTICLE VI
SHARES, CERTIFICATES FOR SHARES
AND TRANSFER OF SHARES
Section 6.1 REGULATION. The Board of Directors may make such
rules and regulations as it may deem appropriate concerning the
issuance, transfer and registration of certificates for shares of
the corporation, including the appointment of transfer agents and
registrars.
Section 6.2 SHARES WITHOUT CERTIFICATES. Unless otherwise
provided by the Articles of Incorporation or these Bylaws, the
board of directors may authorize the issuance of any of its classes
or series of shares without certificates. Such authorization shall
not affect shares already represented by certificates until they
are surrendered to the corporation.
Within a reasonable time following the issue or transfer of
shares without certificates, the corporation shall send the
shareholder a complete written statement of the information
required on certificates by the Colorado Business Corporation Act.
Section 6.3 CERTIFICATES FOR SHARES. If shares of the
corporation are represented by certificates, the certificates shall
be respectively numbered serially for each class of shares, or
series thereof, as they are issued, shall be impressed with the
corporate seal or a facsimile thereof, and shall be signed by the
Chair or Vice Chair of the Board of Directors or by the President
or a Vice President and by the Treasurer or an Assistant Treasurer
or by the Secretary or an Assistant Secretary; provided that such
signatures may be facsimile if the certificate is countersigned by
a transfer agent, or registered by a registrar other than the
corporation itself or its employee. Each certificate shall state
the name of the corporation, the fact that the corporation is
organized or incorporated under the laws of the State of Colorado,
the name of the person to whom issued, the date of issue, the class
(or series of any class), and the number of shares represented
thereby. A statement of the designations, preferences,
qualifications, limitations, restrictions and special or relative
rights of the shares of each class shall be set forth in full or
summarized on the face or back of the certificates which the
corporation shall issue, or in lieu thereof, the certificate may
set forth that such a statement or summary will be furnished to any
shareholder upon request without charge. Each certificate shall be
otherwise in such form as may be prescribed by the Board of
Directors and as shall conform to the rules of any stock exchange
on which the shares may be listed.
<PAGE>
The corporation shall not issue certificates representing
fractional shares and shall not be obligated to make any transfers
creating a fractional interest in a share of stock. The corporation
may, but shall not be obligated to, issue scrip in lieu of any
fractional shares, such scrip to have terms and conditions
specified by the Board of Directors.
Section 6.4 CANCELLATION OF CERTIFICATES. All certificates
surrendered to the corporation for transfer shall be canceled and
no new certificates shall be issued in lieu thereof until the
former certificate for a like number of shares shall have been
surrendered and canceled, except as herein provided with respect to
lost, stolen or destroyed certificates.
Section 6.5 LOST, STOLEN OR DESTROYED CERTIFICATES. Any
shareholder claiming that his certificate for shares is lost,
stolen or destroyed may make an affidavit or affirmation of that
fact and lodge the same with the Secretary of the corporation,
accompanied by a signed application for a new certificate.
Thereupon, and upon the giving of a satisfactory bond of indemnity
to the corporation not exceeding an amount double the value of the
shares as represented by such certificate (the necessity for such
bond and the amount required to be determined by the President and
Treasurer of the corporation), a new certificate may be issued of
the same tenor and representing the same number, class and series
of shares as were represented by the certificate alleged to be
lost, stolen or destroyed.
Section 6.6 TRANSFER OF SHARES. Subject to the terms of any
shareholder agreement relating to the transfer of shares or other
transfer restrictions contained in the Articles of Incorporation or
authorized therein, shares of the corporation shall be transferable
on the books of the corporation by the holder thereof in person or
by his duly authorized attorney, upon the surrender and
cancellation of a certificate or certificates for a like number of
shares. Upon presentation and surrender of a certificate for shares
properly endorsed and payment of all taxes therefor, the transferee
shall be entitled to a new certificate or certificates in lieu
thereof. As against the corporation, a transfer of shares can be
made only on the books of the corporation and in the manner
hereinabove provided, and the corporation shall be entitled to
treat the holder of record of any share as the owner thereof and
shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or
not it shall have express or other notice thereof, save as
expressly provided by the statutes of the State of Colorado.
<PAGE>
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall end on the last day
of December in each calendar year.
ARTICLE VIII
DISTRIBUTIONS
The Board of Directors may from time to time declare, and the
corporation may pay, distributions on its outstanding shares in the
manner and upon the terms and conditions provided by the Colorado
Business Corporation Act and its Articles of Incorporation.
ARTICLE IX
CORPORATE SEAL
The Board of Directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name
of the corporation and the state of incorporation and the words
"CORPORATE SEAL."
ARTICLE X
The Board of Directors shall have power, to the maximum extent
permitted by the Colorado Business Corporation Act, to make, amend
and repeal the Bylaws of the corporation at any regular or special
meeting of the board unless the shareholders, in making, amending
or repealing a particular Bylaw, expressly provide that the
directors may not amend or repeal such Bylaw. The shareholders also
shall have the power to make, amend or repeal the Bylaws of the
corporation at any annual meeting or at any special meeting called
for that purpose.
<PAGE>
AMENDMENTS
ARTICLE XI
EXECUTIVE COMMITTEE
Section 11.1 APPOINTMENT. The Board of Directors by resolution
adopted by a majority of the full Board, may designate two or more
of its members to constitute an Executive Committee. The
designation of such Committee and the delegation thereto of
authority shall not operate to relieve the Board of Directors, or
any member thereof, of any responsibility imposed by law.
Section 11.2 AUTHORITY. The Executive Committee, when the
Board of Directors is not in session, shall have and may exercise
all of the authority of the Board of Directors except to the
extent, if any, that such authority shall be limited by the
resolution appointing the Executive Committee and except also that
the Executive Committee shall not have the authority of the Board
of Directors in reference to authorizing distributions, filling
vacancies on the Board of Directors, authorizing reacquisition of
shares, authorizing and determining rights for shares, amending the
Articles of Incorporation, adopting a plan of merger or
consolidation, recommending to the shareholders the sale, lease or
other disposition of all or substantially all of the property and
assets of the corporation otherwise than in the usual and regular
course of its business, recommending to the shareholders a
voluntary dissolution of the corporation or a revocation thereof,
or amending the Bylaws of the corporation.
Section 11.3 TENURE AND QUALIFICATIONS. Each member of the
Executive Committee shall hold office until the next regular annual
meeting of the Board of Directors following his or her designation
and until his or her successor is designated as a member of the
Executive Committee and is elected and qualified.
Section 11.4 MEETINGS. Regular meetings of the Executive
Committee may be held without notice at such time and places as the
Executive Committee may fix from time to time by resolution.
Special meetings of the Executive Committee may be called by any
member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or
oral, and if mailed, shall be deemed to be delivered when deposited
in the United States mail addressed to the member of the Executive
Committee at his or her business address. Any member of the
Executive Committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in
person. The notice of a meeting of the Executive Committee need not
state the business proposed to be transacted at the meeting.
<PAGE>
Section 11.5 QUORUM. A majority of the members of the
Executive Committee shall constitute a quorum for the transaction
of business at any meeting thereof, and action of the Executive
Committee must be authorized by the affirmative vote of a majority
of the members present at a meeting at which a quorum is present.
Section 11.6 INFORMAL ACTION BY EXECUTIVE COMMITTEE. Any
action required or permitted to be taken by the Executive Committee
at a meeting may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all
of the members of the Executive Committee entitled to vote with
respect to the subject matter thereof.
Section 11.7 VACANCIES. Any vacancy in the Executive Committee
may be filled by a resolution adopted by a majority of the full
Board of Directors.
Section 11.8 RESIGNATIONS AND REMOVAL. Any member of the
Executive Committee may be removed at any time with or without
cause by resolution adopted by a majority of the full Board of
Directors. Any member of the Executive Committee may resign from
the Executive Committee at any time by giving written notice to the
President or Secretary of the corporation, and unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 11.9 PROCEDURE. The Executive Committee shall elect a
presiding officer from its members and may fix its own rules of
procedure which shall not be inconsistent with these Bylaws. It
shall keep regular minutes of its proceedings and report the same
to the Board of Directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
ARTICLE XII
EMERGENCY BY-LAWS
The Emergency Bylaws provided in this Article XII shall be
operative during any emergency in the conduct of the business of
the corporation resulting from a catastrophic event that prevents
the normal functioning of the offices of the Corporation,
notwithstanding any different provision in the preceding articles
of the Bylaws or in the Articles of Incorporation of the
corporation or in the Colorado Business Corporation Act. To the
extent not inconsistent with the provisions of this Article, the
Bylaws provided in the preceding articles shall remain in effect
during such emergency and upon its termination the Emergency Bylaws
shall cease to be operative.
<PAGE>
During any such emergency:
(a) A meeting of the Board of Directors may be called by any
officer or director of the corporation. Notice of the time and
place of the meeting shall be given by the person calling the
meeting to such of the directors as it may be feasible to reach by
any available means of communication. Such notice shall be given at
such time in advance of the meeting as circumstances permit in the
judgment of the person calling the meeting.
(b) At any such meeting of the Board of Directors, a quorum
shall consist of the number of directors in attendance at such
meeting.
(c) The Board of Directors, either before or during any such
emergency, may, effective in the emergency, change the principal
office or designate several alternative principal offices or
regional offices, or authorize the officers so to do.
(d) The Board of Directors, either before or during any such
emergency, may provide, and from time to time modify, lines of
succession in the event that during such an emergency any or all
officers or agents of the corporation shall for any reason be
rendered incapable of discharging their duties.
(e) No officer, director or employee acting in accordance with
these Emergency Bylaws shall be liable except for willful
misconduct.
(f) These Emergency Bylaws shall be subject to repeal or
change by further action of the Board of Directors or by action of
the shareholders, but no such repeal or change shall modify the
provisions of the next preceding paragraph with regard to action
taken prior to the time of such repeal or change. Any amendment of
these Emergency Bylaws may make any further or different provision
that may be practical and necessary for the circumstances of the
emergency.
<PAGE>
CERTIFICATE
I hereby certify that the foregoing Bylaws, consisting of
twenty three (23) pages, including this page, constitute the Bylaws
of Acadia National Health Systems, Inc., adopted by the Board of
Directors of the corporation as of September 1, 1996.
JACQUELYN MAGNO, Secretary
ACTION TAKEN BY THE UNANIMOUS CONSENT OF
THE INITIAL BOARD OF DIRECTORS
OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Pursuant to the provisions of the Colorado Business
Corporation Act, as amended, the following actions were taken
without a meeting of the initial Board of Directors of Acadia
National Health Systems, Inc., a Colorado corporation, on August 3,
1996, by the unanimous written consent of each of the members of
the initial Board of Directors of the Corporation:
1. RESOLVED, that Bylaws for the corporation be and hereby
are adopted, and the Secretary is hereby authorized and
instructed to certify a copy of such Bylaws and to insert
it in the minute book of the corporation immediately
preceding the minutes of meetings of directors and
shareholders.
2. RESOLVED, that the Secretary be and hereby is authorized
and directed to purchase a minute book, stock
certificates and such stationery as, in the judgment of
the President, may be necessary for the transaction of
business of the corporation.
3. RESOLVED, that a corporate seal bearing the words,
"Acadia National Health Systems, Inc." and identified by
the impression thereof in the margin of this page, be and
hereby is adopted by the corporation.
4. RESOLVED, that the Treasurer be and hereby is authorized
to pay all fees and expenses incident to and necessary
for the organization of the corporation.
5. RESOLVED, that the following persons be and hereby are
elected as officers of the corporation to serve in the
capacities set forth opposite their respective names
until the first annual meeting of the Board of Directors
and until their successors shall have been duly elected
and qualified:
NAME TITLE
Thomas N. Hackett President
<PAGE>
Jacqueline Magno Vice President/
Secretary
Marise Lebel Treasurer
6. RESOLVED, that Peoples Heritage Bank of Auburn, Maine
be and it is hereby designated the depository of the corporation;
and that the customary forms of resolution of said bank conferring
banking and borrowing authority upon certain of the
corporation's officers be and they are hereby adopted;
and that a copy of such resolution be placed in the
corporation's minute book.
7. RESOLVED, that in consideration of Physician Resources,
Inc.'s ("PRI") contribution and transfer to the
corporation pursuant to Section 368(a)(1)(c) of the Internal
Revenue Code, of assets, the proper officers of the
corporation are hereby authorized and directed to issue
and deliver to PRI three hundred thousand (300,000)
shares of the corporation's no par value common stock, at
a stated value of $.50 per share.
"The sale, transfer, or encumbrance of these shares by
the holder thereof is restricted by the terms of the
resolution of the corporation dated September 25, 1996,
and no sale, transfer or encumbrance of the shares may be
made other than in conformance with the terms of that
resolution."
DATED: September 25, 1996.
THOMAS N. HACKETT,
Director
JACQUELYN J. MAGNO,
Director
<PAGE>
Notice of Formal Organizational Board of Directors Meeting
By a call of a majority of the initial Directors, notice is hereby
given to the Board of Directors of ACADIA NATIONAL HEALTH
SYSTEMS, INC. of the organizational meeting of the Board of Directors
to be held on August 13, 1996 at 9:00 a.m. at 460 Main Street, Lewiston,
Maine 04240 to take action on the organizational matters of the
Corporation.
/S/Jacquelyn J. Magno
JACQUELYN J. MAGNO,
Secretary
<PAGE>
Organizational Board of Directors Action by Formal Meeting
Including:
(A) Adoption of Articles of Incorporation and Bylaws
(B) Election of Officers
(C) Adoption of Form of Corporate Seal
(D) Designation of Corporate Banking Authority
(E) Authorization of Treasurer to Pay Expenses and Fees IncurredPursuant
to Organizational Matters
(F) Opening Corporate Record Books
(G) Approval of Employment Contracts
(H) Adoption by the Corporation of All Prior Actions andContracts
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
First Meeting of the Board of Directors
The first meeting of the Board of Directors named in the Articles of
Incorporation of ACADIA NATIONAL HEALTH SYSTEMS, INC., a corporation organized
under the laws of the State of Colorado (the "Corporation"), was held at 460
Main Street, Lewiston, Maine 04240, on August 13, 1996 at 9:00 a.m. pursuant to
the call of the majority of the initial directors and written waiver of notice
signed by each member and attached to these minutes.
The following members were present, constituting the entire
Board:
THOMAS N. HACKETT
JACQUELYN J. MAGNO
Upon motion duly made, seconded and unanimously carried, Thomas N. Hackett
was named Chair of the meeting and Jacquelyn J. Magno was designated to act as
Secretary.
The Chair announced that the Articles of Incorporation were filed with and
approved by the Secretary of State on August 2, 1996. The Chair presented to
the meeting a certified copy of the Articles of Incorporation and the
Certificate of Incorporation issued by the Secretary of State and thereupon the
following resolutions were offered, seconded and unanimously adopted:
RESOLVED: That the Articles of Incorporation of this
Corporation filed with the Secretary of State on August 2, 1996, be and the same
hereby are approved and accepted.
RESOLVED: That a certified copy of the Articles of Incorporation and the
Certificate of Incorporation issued by the Secretary of State be annexed to the
minutes of this meeting and made a part of the corporate records of the
Corporation.
The Chair then presented to the meeting a set of Bylaws for the conduct and
regulation of the business and affairs of the Corporation. The Bylaws were read
and the following resolutions were offered, seconded and unanimously adopted:
RESOLVED: That the Bylaws submitted to and read at this meeting of the
board of Directors of the Corporation be and the same are hereby declared to be
the Bylaws of this Corporation.
RESOLVED: That the Secretary of this meeting be and is hereby instructed
to cause the Bylaws referred to in the foregoing resolution to be annexed to the
minutes of this meeting and made a part of the corporate records of the
Corporation.
The Chair announced that it was in order to elect officers of the
Corporation to serve until the first annual meeting and until their successors
may be elected and qualify. Thereupon, the
<PAGE>
following persons were nominated to serve as officers of the Corporation in
the respective capacities set after their several names, the terms
of office of each such person to be until the first annual meeting of the
Board of Directors and until their respective successors shall be elected
and qualified:
Thomas N. Hackett, President
Jacquelyn J. Magno, Vice President
Marise N. Lebel, Treasurer
Jacquelyn J. Magno, Secretary
There being no further nominations, on motion duly made,
seconded and unanimously carried, the nominations were closed and the Secretary
was directed to cast the ballot for the unanimous election of the persons
nominated for the respective offices as set forth above. The ballot was cast
and the Chair declared all such persons to be elected to the respective offices
which they were nominated to serve until the first annual meeting of the Board
of Directors of the Corporation and until their respective successors have been
elected and qualified.
The following resolutions were offered, seconded and
unanimously adopted:
RESOLVED: That the seal of the Corporation shall consist of a circular
impression bearing around the outside rim the words "ACADIA NATIONAL HEALTH
SYSTEMS, INC." and the word "Colorado".
RESOLVED: That the seal presented to this meeting by the
Secretary is hereby adopted as the seal of the Corporation and the Secretary is
hereby directed to place an impression thereof on the minutes of this
meeting.
The Chair stated that it was in order to nominate a depository for the
funds of the Corporation and to make appropriate provisions for the drawing of
checks or drafts thereon and for the transaction of other business incidental
thereto. The following resolutions were offered, seconded and unanimously
adopted:
RESOLVED: That People's Heritage Bank of Auburn, Maine be and it hereby is
designated as a depository of the Corporation, and that the corporate banking
resolutions of said bank be and the same hereby are adopted and approved.
RESOLVED: That the Secretary of this meeting be and is hereby instructed
to cause the corporate banking resolutions referred to in the foregoing
resolution to be annexed to the minutes of this meeting and made a part of the
corporate records of the Corporation.
RESOLVED: That the Treasurer be and is hereby authorized and directed to
pay all fees and expenses incidental to and necessary for the organization and
qualification of the Corporation,
<PAGE>
including, without limitation, all legal and accounting fees and costs to
procure proper corporate books.
The Chair stated that it was in order to authorize the opening of stock
books to record ownership of capital stock of the Corporation and to authorize
the issuance of stock.
The following resolution was offered, seconded and unanimously
adopted:
RESOLVED: That the proper officer of the Corporation cause to be prepared
appropriate books and records with respect to the capital stock of the
Corporation in which shall be recorded, among other things, the names and
addresses of the several stockholders and the number of shares held
by each.
The Chair raised the question of whether the Corporation should elect to
qualify as a tax option corporation pursuant to Subchapter S of the Internal
Revenue Code of 1986. After a discussion, the following resolution was offered,
seconded and unanimously adopted:
RESOLVED: That the Corporation NOT elect to qualify as an S corporation
pursuant to Subchapter S of the Internal Revenue Code of 1986.
The Chair raised the question of whether the Corporation should enter into
an employment agreement with Thomas N. Hackett. After a discussion, the
following resolution was offered, seconded and unanimously adopted:
RESOLVED: That the Corporation contract the services of Thomas N. Hackett,
substantially upon the terms, covenants and conditions set forth in the written
Employment Agreement between the Corporation and Thomas N. Hackett, attached
hereto and incorporated by reference herein, and that the Vice President of the
Corporation be and is hereby authorized and directed in the name, and on behalf
of the Corporation to execute and deliver such written Employment Agreement.
The Chair raised the question of whether the Corporation should approve the
prior actions of the promoters, officers and directors. After a discussion, the
following resolution was offered, seconded and unanimously adopted:
RESOLVED: That any and all actions taken or contracts entered into
heretofore by any promoter, officer or director for the Corporation, either as
promoter, officer or director, as well as any and all actions taken or contracts
entered into by said persons as individuals, acting for the Corporation, be and
the same are hereby ratified, approved and confirmed by the Corporation, and all
such contracts adopted as though said individual had at such time full power and
authority to act for and by the Corporation and in the same manner as if each
and every act had been done pursuant to the specific authorization of the
Corporation.
There being no further business to come before the meeting, the meeting
was adjourned.
<PAGE>
Respectfully submitted,
/S/Jacquelyn J.Magno
JACQUELYN J. MAGNO
Secretary of the Meeting
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 1, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of September
1, 1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED, that the officers shall be elected annually by
the Board of Directors at its first meeting following the
annual meeting of stockholders, except where a longer
term is expressly provided in an employment contract duly
authorized and approved by the Board of Directors. In any
such employment contract, an officer may be employed for
a term in excess of one year and for so long a term as
shall be determined by the Board of Directors otherwise
in accordance with the Colorado Business Corporation Act.
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
<PAGE>
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Indemnification of Directors,
Officers, Agents and Employees
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. (hereinafter referred to as
"ACADIA" or the "Corporation") INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following action, as of September
1, 1996:
(1) RESOLVED, pursuant to the Articles of Incorporation,
Amendments to the Articles of Incorporation, Annual Minutes,
Minutes of the Board of Directors, Corporate Resolutions of the
Board and all Shareholder Agreements, and, as used in this Article,
any word or words that are defined in Sections 7-109-101 et. seq.
of the Colorado Business Corporation Act, as amended from time to
time (the "Indemnification Sections"), shall have the same meaning
as provided in the Indemnification Sections.
(2) RESOLVED, the Corporation may, as determined by the Board
of Directors of the Corporation, indemnify and advance expenses to
a director, officer, employee or agent in connection with a
proceeding to the extent permitted by and in accordance with the
Indemnification Sections.
(3) RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes of the
Board of Directors are hereby ratified, approved and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
MARISE LEBEL
LINDA BELLMORE
DATED: September 1, 1996
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Indemnification of Directors,
Officers, Agents and Employees
A.
(1) As used in this Article, any word or words defined in
Sections 7-109-101 et. seq. of the Colorado Business Corporation
Act, as amended from time to time (the "Indemnification Sections"),
shall have the same meaning as provided in the Indemnification
Sections.
(2) The Corporation shall indemnify and advance expenses to a
director, officer, employee or agent of the Corporation in
connection with a proceeding to the fullest extent permitted by and
in accordance with the Indemnification Sections.
B.
(1) As used in this Article, any word or words defined in
Sections 7-109-101 et. seq. of the Colorado Business Corporation
Act, as amended from time to time (the "Indemnification Sections"),
shall have the same meaning as provided in the Indemnification
Sections.
(2) The Corporation shall indemnify and advance expenses to a
director of the Corporation in connection with a proceeding to the
fullest extent permitted by and in accordance with the
Indemnification Sections.
(3) With respect to an officer, employee or agent, other than
a director, of the Corporation, the Corporation may, as determined
by the Board of Directors of the Corporation, indemnify and advance
expenses to such officer, employee or agent in connection with a
proceeding to the extent permitted by and in accordance with the
Indemnification Sections.
<PAGE>
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
MARISE LEBEL
LINDA BELLMORE
DATED: September 1, 1996
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 1, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of September
1, 1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED, that newly created directorships resulting from
any increase of the authorized number of Directors or any
vacancies in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from
office or other cause shall be filled by a majority vote
of the remaining Directors, though less than a quorum,
and the Directors so chosen shall hold office for a term
expiring at the next annual meeting of shareholders at
which a successor shall be elected and shall qualify.
The shareholders shall not be entitled to fill a vacancy
created on the Board of Directors.
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
<PAGE>
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 1, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of September
1, 1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED, that the following provision is hereby adopted
for the purpose of defining, limiting and regulating the
powers of the Corporation and of the directors and
stockholders:
The Corporation shall issue shares of stock of any class
now or hereafter authorized, or any securities
exchangeable for, or convertible into such shares, or
warrants or other instruments evidencing rights or
options to subscribe for, or otherwise acquire such
shares, only if the issuance of such shares or such
securities exchangeable for, or convertible into such
shares, or such warrants or any other instruments
evidencing rights or options to subscribe for, purchase
or otherwise acquire such shares, shall be authorized by
the unanimous vote of all of the directors comprising the
Board of Directors of the Corporation.
<PAGE>
In the event that the issuance of such shares, or such
securities exchangeable for, or convertible into such
shares, or such warrants or any other instruments
evidencing rights or options to subscribe for, purchase
or otherwise acquire such shares, shall be authorized by
the unanimous vote of all of the directors comprising the
Board of Directors of the Corporation, the issuance of
such shares or such securities exchangeable for, or
convertible into such shares, or such warrants or, any
other instruments evidencing rights or options to
subscribe for, purchase or otherwise acquire such shares,
shall be made for such consideration as the Board of
Directors of the Corporation by the unanimous vote of all
of the directors thereof shall deem advisable.
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 1, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of September
1, 1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED, that the following provision is hereby adopted
for the purpose of defining, limiting and regulating the
powers of the Corporation and of the directors and
stockholders:
The Board of Directors of the Corporation is hereby
empowered to fix the value of and to authorize the
issuance from time to time of shares of its stock of any
class, whether now or hereafter authorized, or securities
convertible into shares of its stock of any class or
classes, whether now or hereafter authorized.
<PAGE>
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 1, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of September
1, 1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED, that the following provision is hereby adopted
for the purpose of defining, limiting and regulating the
powers of the Corporation and of the directors and
stockholders:
The Board of Directors may classify or reclassify any
unissued stock by setting or changing in any one or more
respects, from time to time before issuance of such
stock, the preferences, conversion or other rights,
voting powers, restrictions, limitations as to
distributions, qualifications, and terms or conditions of
redemption of such stock.
<PAGE>
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 1, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following actions, as of September
1, 1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED, that Members of the Board of Directors and the
shareholders at any annual or special meeting may
participate in a meeting by means of a conference
telephone, videolink or similar communications equipment
if all persons participating in the meeting can hear and
speak to each other at the same time. Participation in a
meeting by these means constitutes presence in person at
a meeting.
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
<PAGE>
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
UNANIMOUS CONSENT MINUTES OF
THE BOARD OF DIRECTORS OF
ACADIA NATIONAL HEALTH SYSTEMS, INC.
September 15, 1996
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. by way of a formal meeting of
the Directors of the Corporation do hereby unanimously take,
ratify, confirm and approve the following actions, as of October 1,
1996:
1. RESOLVED, that these Minutes of action shall constitute
the record of an Annual Meeting of the Board of Directors
of ACADIA NATIONAL HEALTH SYSTEMS, INC., and when signed
by all of the Directors, the Secretary of the
Corporation, or any other proper officer, is hereby
authorized to certify any of the actions hereinafter
taken of this Corporation, on the date hereof, in
accordance with the requirements established by law.
2. RESOLVED: That the proper officers of the Corporation be
and they are hereby authorized and directed, in
conjunction with the Corporation's legal counsel and
accountants, to complete, execute, and file with the
Securities and Exchange Commission, for and on behalf of
the Corporation, a Registration Statement of Form 10, a
copy of which is filed with the Secretary of the
Corporation and incorporated by reference herein,
pursuant to the Federal Securities Exchange Act of 1934,
as amended, and all schedules and exhibits in connection
therewith, and all filings under applicable state
securities laws in connection therewith, and that said
officers be and they are hereby authorized to do and
perform all other necessary and proper acts incident
thereto that Members of the Board of Directors and the
shareholders at any annual or special meeting may
participate in a meeting by means of a conference
telephone, videolink or similar communications equipment
if all persons participating in the meeting can hear and
speak to each other at the same time. Participation in a
meeting by these means constitutes presence in person at
a meeting.
<PAGE>
3. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes
of the Board of Directors are hereby ratified, approved
and confirmed.
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN MAGNO
<PAGE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Board of Directors' Resolution Respecting a
Tax-Free Section 351 Transfer
Pursuant to the provisions of the Colorado Business
Corporation Act, the undersigned, being all of the Directors of
ACADIA NATIONAL HEALTH SYSTEMS, INC. (hereinafter referred to as
"ACADIA" or the "Corporation") INC. do hereby waive any and all
notice that may be required to be given with respect to a meeting
of the Directors of the Corporation and do hereby unanimously take,
ratify, confirm and approve the following action, as of September
25, 1996:
WHEREAS: ACADIA has received a written subscription and an
assignment offer (hereinafter collectively referred to as the
"Offer") from PHYSICIAN RESOURCES, INC. ("PRI") to transfer to the
Corporation those certain assets described on the Schedule marked
Exhibit "A" which is attached to the Offer, which Offer is in
consideration of the issuance to PRI of three hundred thousand
(300,000) shares of Common Stock of the Corporation;
1. RESOLVED: That the Offer dated September 25, 1996 to
transfer to the Corporation the assets set forth and referred to in
the Offer and described in the attached Schedule marked Exhibit "A"
in exchange for the issuance to PRI of three hundred thousand
(300,000) shares of Common Stock of the Corporation be and the same
is hereby accepted.
2. RESOLVED: That the President of the Corporation be and is
hereby authorized and directed in the name of the Corporation and
upon its behalf to accept the Offer and to execute, acknowledge,
seal and deliver the acceptance by the Corporation of such Offer.
3. RESOLVED: That the value of the assets acquired from PRI
in exchange for such ACADIA shares of Common Stock is determined by
the Board of Directors to be not less than one hundred fifty
thousand dollars ($150,000.00).
4. RESOLVED, that all other actions taken by the officers of
the Corporation since the date of the last Annual Minutes of the
Board of Directors are hereby ratified, approved and confirmed.
<PAGE>
IN WITNESS WHEREOF, the undersigned Directors have evidenced
their approval of the above proceedings as of the date first above
mentioned.
THOMAS N. HACKETT
JACQUELYN J. MAGNO
DATED: September 25, 1996
DEMAND NOTE
September 27, l996
Dated
$12,850. Lewiston, Maine
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of Jacquelyn J. Magno , her heirs, executors,
administrators or assigns, the sum of Twelve Thousand Eight
Hundred Fifty Dollars and no/100 ($12,850) in the manner as
follows:
ON DEMAND from the date hereof, the principal sum of
Twelve Thousand Eight Hundred Fifty Dollars and no/100
($12,850) shall be due and payable in full. Until paid on the
due date, interest at the rate of ten percent (10%) per annum
on the unpaid principal balance shall be paid monthly
commencing one (1) month from the date hereof and monthly
thereafter until the principal balance is paid in full.
The undersigned shall have the right to prepay the
principal amount outstanding in whole or in part without
penalty.
Upon the occurrence of any of the following events of
default: a) default in any payment due hereon and such default
is continued for thirty (30) days; b) dissolution, termination
of existence, insolvency, business failure, appointment of
receiver or assignment for the benefit of creditors by, or the
commencement of, any proceedings under any bankruptcy or
insolvency laws by or against the Maker; Note Holder, at his
option, may declare all obligations of the undersigned to be
immediately due and payable without further notice or demand
and may invoke any of the remedies permitted by applicable law.
The failure of the Holder of this Note to exercise any of
the rights granted hereunder, in any particular instance,
shall not constitute a waiver in that or any subsequent
instance.
This Note evidences a loan for business and commercial
purposes.
The terms and provisions of this Note shall be construed
pursuant to the laws of the State of Maine.
IN WITNESS WHEREOF, the Maker has executed this instrument
under seal on the date first above written.
ACADIA NATIONAL HEALTH SYSTEMS, INC.
/S/ Thomas N. Hackett
By:
Witness Thomas N. Hackett
Its: President
<PAGE>
DEMAND NOTE
December 29, l995 Dated
$6,500. Lewiston, Maine
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of Jacquelyn J. Magno , his heirs, executors,
administrators or assigns, the sum of Six Thousand Five Hundred
Dollars and no/100 ($6,500) in the manner as follows:
ON DEMAND from the date hereof, the principal sum of Six
Thousand Five Hundred and no/100 ($6,500) shall be due and
payable in full. Until paid on the due date, interest at the
rate of ten percent (10%) per annum on the unpaid principal
balance shall be paid in full on demand.
The undersigned shall have the right to prepay the
principal amount outstanding in whole or in part without
penalty.
Upon the occurrence of any of the following events of
default: a) default in any payment due hereon and such default
is continued for thirty (30) days; b) dissolution, termination
of existence, insolvency, business failure, appointment of
receiver or assignment for the benefit of creditors by, or the
commencement of, any proceedings under any bankruptcy or
insolvency laws by or against the Maker; Note Holder, at his
option, may declare all obligations of the undersigned to be
immediately due and payable without further notice or demand
and may invoke any of the remedies permitted by applicable law.
The failure of the Holder of this Note to exercise any of
the rights granted hereunder, in any particular instance,
shall not constitute a waiver in that or any subsequent
instance.
This Note evidences a loan for business and commercial
purposes.
The terms and provisions of this Note shall be construed
pursuant to the laws of the State of Maine.
IN WITNESS WHEREOF, the Maker has executed this instrument
under seal on the date first above written.
Physician Resources, Inc.
/s/Margaret Heath /s/Thomas N. Hackett
By:
Witness Thomas N. Hackett,
President
<PAGE>
ASSIGNMENT OF NOTE
PHYSICIAN RESOURCES, INC., of Lewiston , County of
Androscoggin, State of Maine, maker of a Demand Note to
Jacquelyn J. Magno, of Auburn, County of Androscoggin, State
of Maine dated December 29, l995, in the amount of $6,500
with $1,500 principal payment made April 15, l996 leaving a
balance of $5,000 at ten (10%) for valuable consideration
does hereby assign said Demand Note to ACADIA NATIONAL HEALTH
SYSTEMS, INC.
PHYSICIAN RESOURCES, INC.
/S/ Thomas N. Hackett
Dated: September 27, l996 By:
Thomas N. Hackett
Its: President
STATE OF MAINE
ANDROSCOGGIN, SS.
PERSONALLY APPEARED the above-named Thomas N. Hackett in
his capacity as President of Physician Resources, Inc. and
acknowledges the foregoing instrument to be his free act and
deed and the free act and deed of Physician Resources, Inc.
/S/ Margaret M. Heath
NOTARY PUBLIC
<PAGE>
ASSIGNMENT OF NOTE
PHYSICIAN RESOURCES, INC., of Lewiston , County of
Androscoggin, State of Maine, maker of a Promissory Note to
Jacquelyn J. Magno, of Auburn, County of Androscoggin, State
of Maine dated January 1, l995, in the amount of $9,000 at
ten (10%) for valuable consideration does hereby assign
said Promissory Note to ACADIA NATIONAL HEALTH SYSTEMS, INC.
PHYSICIAN RESOURCES, INC.
/S/Thomas N. Hackett
Dated: September 27, l996 By:
Thomas N. Hackett
Its: President
STATE OF MAINE
ANDROSCOGGIN, SS.
PERSONALLY APPEARED the above-named Thomas N. Hackett
in his capacity as President of Physician Resources, Inc.
and acknowledges the foregoing instrument to be his free act
and deed and the free act and deed of Physician Resources,
Inc.
/S/ Margaret M. Heath
NOTARY PUBLIC
PREPARED FOR: Physicians Resources Inc.
MINOLTA MIMS 3000 Version 3.1 SINGLE-USER
DOCUMENT IMAGING SYSTEM SOFTWARE AND HARDWARE INCLUDED
ITEM DESCRIPTION PRICE
1 DS 2200 Document Scanner "/Automatic Document Feed (22 $ 5,995.40
pages per minute), 8.5"x 14" maximum document size, Cable,
and Software Drivers
2 SP 3100M 10 page per minute Laser Printer with Imaging Unit and
$ 2,895.00 Windows Print Driver with Cable
3 Compaq 100 MHZ Pentium Personal Computer with 1 GB HDD, 8 $4,395.00
MB RAM, Microsoft DOS 6.2, Windows 3.1 and System Mouse,
and 20" SVGA Monitor
4 Minolta MIMS 3000 Version 3.1 Single-User Software Module $4,395.00
5 OD 2000, 1.3 GB Optical Disk Drive with cables and WORM $4,795.00
software driver, includes one optical disk
System Total $22,475.10
Annual Hardware Maintenance Agreement $ 1,895.00
Annual Software Maintenance Agreement $ 495.00
UHIblMl
ASSIGNMENT OF LEASE
(Tenant's Interest)
KNOW ALL PERSONS BY THESE PRESENTS that Physician Resources, Inc., a
Maine corporation, with a principal place of business at Lewiston, County of
Androscoggin, State of Maine, and having a mailing address of 460 Main Street,
Lewiston, Maine 04240 (herein after called the "Assignor"), in consideration of
One Dollar ($1.00) and other valuable consideration paid to it by Acadia
National Health Systems, Inc., a Colorado corporation organized and existing
under the laws of the State of Colorado, and having a mailing address of 460
Main Street, Lewiston, Maine 04240 (herein after called "Assignee"), the
receipt of which is hereby acknowledged, does hereby grant, assign, transfer,
set over and convey to Lender, its successors and assigns, with full right of
reassignment, the following rights and property, viz.:
1. A certain lease between Main Street Realty as landlord and Assignor as
tenant dated December 14, 1994, which lease relates to the premises located at
460 Main Street, Lewiston, Maine; and
2. All rights, privileges and benefits now existing or hereafter arising
under the Lease, including, without limitation, all rights to exercise options
to extend or renew the Lease and all rights to insurance proceeds, eminent
domain awards or payments in lieu thereof; and
3. All rights of the Assignor in and to the fixtures, improvements,
alterations, or additions now or hereafter erected by Assignor on the Leased
Premises; and
4. All subleases of the Leased Premises or any portion thereof, and all
monies, rents, incomes and profits from said premises or subleases thereof and
rights derived therefrom all whether now existing or hereafter arising, provided
that the Assignor shall not sublease the Leased Premises or any portion thereof
without Lender's prior written consent.
The Assignor REPRESENTS TO AND COVENANTS AND AGREES WITH
ASSIGNEE as follows:
1. The lease is in full force and effect in accordance with its terms, and
it has not been modified or amended; and
2. All rents and payments under the Lease have been paid to the landlord,
to the extent payable to date; and
3. No defaults exist under the Lease, and no event has occurred or is
occurring which, with the passage of time or service of notice, or both, would
constitute an event of default thereunder; and
4. The Lease is subject to no liens or encumbrances, and Assignor has not
previously transferred in any manner any of its interests in or under the Lease
or consent to any subordination of the Lease; and
<PAGE>
5. Assignor is fully authorized to assign the Lease as provided herein, and
the execution of the Lease and this Assignment does not violate the terms and
conditions of any other agreement or instrument to which the Assignor is a party
or by which it is bound or affected; and
6. Assignee shall at times promptly and faithfully perform all the
covenants and obligations to be performed by Tenant under the Lease, and will
not do or permit anything to be done which will impair or tend to impair the
existence of the Lease or which would be grounds for the declaration of a
default thereunder; and
7. The Lease will not be altered, modified, or amended nor will the Lease
be surrendered or canceled by Assignor or by Assignor's Trustee in the event of
any bankruptcy or reorganization proceeding, and Assignor or said Trustee shall
not have the power to agree to any of the foregoing without the prior written
consent of Lender.
Dated: September 27, 1996
PHYSICIAN RESOURCES, INC
/S/ Margaret M. Heath /S/ Jacquelyn J. Magno
Witness By: Jacquelyn J. Magno
Treasurer & Operations
Manager
STATE OF MAINE
ANDROSCOGGIN, SS. Sept 27, 1996
Then personally appeared before me the above-named Jacquelyn J. Magno in
her capacity as Operations Manager and acknowledged the foregoing instrument to
her be free act and deed.
/S/ Margaret M. Heath
Notary Public /
Attorney-at-Law
Printed Name: Margaret M.
Heath
<PAGE>
CONSENT OF LESSOR (LANDLORD)
For consideration received, the undersigned Lessor (Landlord) of the
Lease mentioned in the aforewritten Assignment of Lease hereby consents to said
Assignment according to its terms.
Dated: September 27, l996
MAIN STREET REALTY ASSOCIATES
/S/ Thomas N. Hackett
By: Thomas N. Hackett
General Partner
<PAGE>
L E A S E
Lease made this 14th day of December, l994, by
and between Main Street Realty Associates, a Maine general
partnership of Lewiston, County of Androscoggin and State of
Maine (hereinafter referred to as the LESSOR), and Physician
Resources, Inc., a Maine corporation of Lewiston, County
Androscoggin and State of Maine (hereinafter referred to as
the LESSEE).
W I T N E S S E T H:
I. DESCRIPTION OF PREMISES
In consideration of the rent and other covenants herein
contained to be performed and observed by the respective
parties hereto, the LESSOR does hereby demise and lease the
third floor at 460 Main Street, Lewiston, Maine.
II. TERM
l. To have and to hold the premises hereby demised unto
the LESSEE for a term of one (1) year commencing on January 1,
l995, yielding and paying therefor rent as hereinafter set
forth.
2. The Lease shall be automatically extended from year
to year unless terminated by either party by giving thirty
(30) days' notice in writing prior to the end of the then
current term.
III. RENTAL
l. Rental for the term of this Lease shall be payable
monthly in advance at the rate of One Thousand Seven Hundred
Dollars ($1,700) per month.
2. The option to extend the term shall be upon the same
terms and conditions as contained herein except the rate of
rental.
<PAGE>
The rental rate shall be negotiated by and between the parties
prior to the commencement of the renewal.
IV. USES AND RESTRICTIONS ON USES
l. If the LESSEE shall pay the rent as aforesaid, and
observe all other covenants, terms and conditions of this
Lease, the LESSEE shall have the peaceful and quiet enjoyment
of the leased premises without hindrance on the part of the
LESSOR and LESSOR shall warrant and defend the LESSEE to such
peaceful and quiet enjoyment of the leased premises against
all persons claiming by, through or under the LESSOR.
2. The LESSEE agrees that the demised premises shall
not be occupied during the term of this Lease or any extension
thereof for any purpose usually denominated extra hazardous as
to fire by fire insurance companies.
3. The demised premises shall be used by the LESSEE
solely and exclusively as office space.
V. ALTERATIONS, ADDITIONS AND IMPROVEMENTS
l. The LESSEE may make such alterations, additions or
improvements to the demised premises as he may desire, at its
own expense, provided, however, that no other structural
alterations or additions, other than those noted hereinabove,
may be made without first obtaining the written consent of the
LESSOR, which said written consent shall not be unreasonably
withheld.
2. All repairs, alterations or additions, whether made
by the LESSOR or the LESSEE shall be done in a good and
workmanlike manner in full compliance with all federal, state
and municipal
<PAGE>
laws, ordinances, rules and regulations and in
accordance with specifications and requirements and standards
of any board of fire underwriters and fire inspectors having
jurisdiction over the demised premises.
3. In the event the LESSEE shall erect improvements or
any other alterations upon the demised premises, the said
improvements and/or alterations shall, at the option of the
LESSOR, become the sole property of the LESSOR after the
termination of this Lease or any extension thereof.
4. The LESSEE agrees to perform all maintenance and
make any and all repairs required to the interior of the
demised premises. The LESSOR shall be responsible for
exterior and structural repairs, to include the walls,
foundation, roof, and plumbing and heating systems, providing
such damage is not caused directly or indirectly by fault of
the LESSEE, its agents, employees or business invitees.
VI. INSURANCE AND INDEMNIFICATION
l. The LESSEE agrees to maintain in full force during
the term of this Lease a policy of comprehensive general
liability insurance and property damage insurance under which
the LESSOR (and such other persons are in privity of estate
with LESSOR as may be set out in notice from time to time) and
the LESSEE are named as insureds, and under which the insurer
agrees to insure LESSEE and LESSOR (and those in privity of
estate with LESSOR) from and against all costs, expenses
and/or liability arising from any accident, injury or damage
whatsoever caused to any person or to
<PAGE>
the property of any person occurring during the term of this
Lease in or about the demised premises due to LESSEE'S negligence.
Such policy shall be noncancellable with respect to LESSOR and LESSOR'S
said designees except upon ten (l0) days' written notice to
LESSOR. A duplicate original of certificate thereof shall be
delivered to LESSOR. The minimum limits of such insurance
shall be a Five Hundred Thousand Dollars ($500,000) single
limit policy for injury (or death) to any one or more persons
and for damage to property.
2. LESSEE shall maintain, at its expense, fire and
extended coverage insurance in amounts sufficient to cover any and
all losses which might be incurred through the damage or destruction
of LESSEE'S furniture, equipment and machinery kept on the
premises.
3. LESSOR shall maintain, at its expense, fire and extended coverage
insurance on the premises.
4. All real and personal property insurance which is
carried by either party with respect to the demised premises
shall include provisions which either designate the other
party as one of the insured or deny to the insurer acquisition
by subrogation of rights of recovery against the other party
to the extent such rights have been waived by the insured
party prior to occurrence of loss or injury, insofar as, and
to the extent that such provisions may be effective without
making it impossible to obtain insurance coverage from
responsible companies qualified to do business in Maine, even
though extra premium may result therefrom. Each party hereby
waives all rights of recovery against the other for loss or injury
<PAGE>
against which and to the extent that the waiving party is
protected by insurance containing such provision.
5. LESSEE will indemnify LESSOR and save it harmless
from and against any and all claims, actions, damages,
liability and expense in connection with loss of life,
personal injury and/or damage to property arising from or out
of any occurrence in, upon or at the leased premises or any
part thereof wholly or in part by any act or omission of
LESSEE, its agents, contractors or employees.
6. In case the LESSOR shall, without fault, on its
part, be made party to any litigation commenced by or against
the LESSEE, then the LESSEE shall pay all costs and reasonable
attorney's fees incurred by or against the LESSOR by or in
connection with such litigation, and the LESSEE shall and will
also pay all costs and reasonable attorney's fees incurred by
or against the LESSOR in enforcing the agreements, terms and
provisions of this Lease.
7. The LESSEE shall provide the LESSOR with proof of
insurance that it is required to carry under the terms and
provisions of this Lease.
8. The LESSOR shall not be liable to LESSEE for any
damage arising from acts of neglect of cotenants or other
occupants of the premises.
VII. UTILITIES AND TAXES AND MAINTENANCE
l. The LESSOR shall pay the real estate taxes assessed
on the demised premises.
<PAGE>
2. The LESSOR shall also pay the cost of heating the
demised premises, the cost of all utilities and the water and
sewerage assessment.
3. The LESSEE shall pay any and all personal property
taxes assessed on its personal property located on the demised
premises.
VIII. LESSOR'S ACCESS
The LESSOR shall have the right to enter the demised
premises at all reasonable times for the purpose of making
repairs required of it hereunder and for inspections, and
during the last three (3) months of the term hereof, to show
the same to prospective tenants.
IX. SUBLETTING
The LESSEE shall have no right to assign or to sublet
portions of the premises without the consent of the LESSOR.
X. FIRE, CASUALTY OR EMINENT DOMAIN
l. If all or a substantial portion of the demised
premises or the building of which the demised premises are a
part shall be destroyed or damaged by fire or other casualty
or shall be taken by the exercise of the power of eminent
domain, then this Lease and the term hereof shall terminate at
the election of the LESSOR. If so much of the demised
premises shall be so damaged, destroyed or taken as shall
prevent the LESSEE from occupying the premises in a reasonably
integrated manner after restoration, (provided that such
restoration may be completed within ninety (90) days), the
LESSEE shall have the right to terminate this Lease. If the
Lease shall not be terminated, then the LESSOR may restore the
demised premises, or what may remain thereof after such
taking, as soon as
<PAGE>
reasonably possible to the same condition they were prior to
such damage, destruction or taking. If such restoration shall
not be completed within three (3) months from the date of such
damage, destruction or taking, the LESSEE shall have the right
to terminate this Lease, unless such completion shall be delayed
(in the aggregate more than two [2] months) by strike, labor
difficulties, inability to obtain supplies, fire or other
casualty beyond the reasonable control of LESSOR.
2. In the event of any such damage, destruction or
taking which shall render all or any part of the demised
premises untenantable, the rent and other charges hereunder
shall be equitably suspended or abated according to the nature
and extent of the injury suffered until the same shall have
been fully restored by the LESSOR and made available for
occupancy by LESSEE.
3. All damages in case of such taking shall be the sole
and exclusive property of the LESSOR except such as may be
separately awarded to the LESSEE on its own petition for its
leasehold interest, fixtures, equipment, trade fixtures and/or
for moving expenses and other items which may be compensable
under any law or statute applicable thereto to the LESSEE
without regard to the LESSOR'S award.
XI. HOLDING OVER
It is agreed and understood that any holding over by the
LESSEE of the demised premises after the expiration of the
original term of this Lease or any extension thereof, shall
operate and be construed as a tenancy from month to month
under all the terms and
<PAGE>
conditions of the Lease and at the same rental as is in effect
at the expiration thereof, providing, however, that this shall
not prevent the LESSOR from insisting upon the termination of
the Lease or any extension thereof, according to its terms.
XII. SUBORDINATION
The LESSEE agrees, at the request of the LESSOR, to
subordinate this Lease to any mortgage placed upon the leased
premises by the LESSOR provided that said mortgagee enters
into an agreement with the LESSEE by the terms of which the
mortgagee under said mortgage will agree not to disturb the
possession and other rights of the LESSEE under this Lease so
long as the LESSEE performs its obligations hereunder, and to
accept the LESSEE as LESSEE of the leased premises under the
terms and conditions of this Lease in the event of acquisition
of title by such mortgagee through foreclosure proceedings or
otherwise, and the LESSEE will agree to recognize the holders
of such mortgage as the LESSOR in such event, which agreement
shall be made expressly binding upon the successors and
assigns of the LESSEE and of the mortgagee and upon anyone
purchasing said leased premises at any foreclosure sale. The
LESSEE and LESSOR agree to execute and deliver any appropriate
instruments necessary to carry out the agreements in this
section contained. Any such mortgage to which this Lease
shall be subordinated may contain such other terms, provisions
and conditions as the insurance company, bank or similar
lending institution deems usual or customary.
<PAGE>
XIII. LESSEE'S DEFAULT - LESSOR'S REMEDIES
1. If any one or more of the following events (herein
sometimes called "events of default") shall occur:
(a) If default shall be made in the due and punctual
payment of any installment of rent payable under this Lease
when and as the same shall become due and payable, including
any charges for insurance, taxes, utilities, common area
charges, general maintenance or repairs, and such defaults
shall continue for a period of seven (7) days; or
(b) If default shall be made by LESSEE in the
performance or compliance with any of the agreements, terms,
covenants or conditions in this Lease provided, other than
those referred to in the foregoing subparagraph (a), and such
default shall continue for a period of fifteen (15) days after
written notice from LESSOR to LESSEE specifying the items in
default, or in case of a default or contingency which cannot
with due diligence be cured within said fifteen (15) day
period, to commence to cure the same and thereafter to
prosecute the curing of such default with due diligence and
within a period of time which under all prevailing
circumstances shall be reasonable; or
(c) If LESSEE shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or
shall file any petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future
federal bankruptcy act or any other present or future federal,
state or other bankruptcy or
<PAGE>
insolvency statute or law, or shall seek or consent or acquiesce
in the appointment of any bankruptcy or insolvency trustee,
receiver or liquidator of LESSEE or of all or any substantial
part of its properties or of the demised premises; or
(d) If within sixty (60) days after the commencement of
any proceeding against LESSEE seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future
federal bankruptcy or insolvency statute or law, such
proceeding shall not have been dismissed, or if within sixty
(60) days after the appointment, without the consent or
acquiescence of LESSOR, of any trustee, receiver or
liquidator of LESSEE or of all or substantially all of its
properties or of the demised premises, such appointment shall
not have been vacated or stayed on appeal or otherwise, or if
within sixty (60) days after the expiration of any such stay,
such appointment shall not have been vacated.
Then and in any such event LESSOR, at any time
thereafter, may give written notice to LESSEE specifying such
event of default or events of default and stating that this
Lease and the term hereby demised shall expire and terminate
on the date specified in such notice, and upon the date
specified in such notice this Lease and the term hereby
demised and all rights of LESSEE under this Lease, including
any renewal or extension privileges, whether or not exercised,
shall expire and terminate, and LESSEE shall remain liable as
hereinafter provided.
<PAGE>
2. Upon any such expiration or termination of this
Lease, LESSEE shall quit and peacefully surrender the demised
premises to LESSOR, and LESSOR, upon or at any time after any
such expiration or termination, may without further notice
enter upon and re-enter the demised premises and possess and
repossess itself thereof, by force, summary proceedings or
otherwise, and may dispossess LESSEE and remove LESSEE and all
other persons and property from the demised premises without
being liable to prosecution thereof, and may have, hold and
enjoy the demised premises and the rights to receive all
rental income of and from the same.
3. No such expiration or termination of this Lease or
summary proceedings, abandonment or vacancy shall relieve the
LESSEE of its liability and obligations under this Lease,
whether or not the demised premises shall be relet, and LESSEE
covenants and agrees, in the event of any such expiration or
termination of this Lease, or summary proceedings, abandonment
or vacancy, that it will be liable to the LESSOR for the
difference between the rental stipulated in this Lease and
such rental, if any, as may be actually received by the LESSOR
upon a reletting.
4. In the event of a default by the LESSEE under the
terms of this Lease, the LESSEE agrees to pay all costs and
expenses, including reasonable attorney's fees incurred by the
LESSOR in any legal proceeding arising from or connected with
the enforcement or exercise of the remedies available to the
LESSOR.
<PAGE>
XIV. TRADE FIXTURES
The LESSEE shall at the expiration of the term hereof, or
within thirty (30) days thereafter, remove its goods, effects,
trade fixtures and equipment, heretofore or hereafter placed
or installed therein, provided that the LESSEE shall pay rent
during such period on a per diem basis for the actual space
occupied at the same rate called for hereunder and shall
repair the premises due to any damage caused by such removal.
XV. MISCELLANEOUS
l. Entire Agreement. This Agreement constitutes the
entire understanding of the parties. It supersedes any and
all prior agreements between the parties. There are no
representations or covenants other than those expressly set
forth herein.
2. Modification. No modification or waiver of any of
the terms and provisions hereof shall be valid unless in
writing and signed by all parties.
3. Severability. If any of the provisions of this
Agreement are held to be void or unenforceable, all the other
provisions hereof shall nevertheless continue in full force
and effect.
4. Binding Effect. This Agreement and the terms and
provisions hereof shall be binding upon and inure to the
benefit of the successors and assigns of the parties.
5. Law to Govern. This Agreement shall be governed for
all purposes by the laws of the State of Maine.
<PAGE>
IN WITNESS WHEREOF, this instrument has been executed by
the parties hereto on the day and year first above written.
Main Street Realty Associates
/S/ Pasquale F. Maiorino
By:____________________________
Witness A Partner,
LESSOR
Physician Resources, Inc.
/S/ Jacquelyn J. Magno
By:____________________________
Witness Its,
LESSEE
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective for all purposes
and in all respects as of the 27th day of September, 1996, by and
between ACADIA NATIONAL HEALTH SYSTEMS, INC., a Colorado
corporation (hereinafter referred to as the "Employer" or the
"Corporation"), and THOMAS N. HACKETT (hereinafter referred to as
the "Employee").
WITNESSETH THAT:
WHEREAS, Employee has been employed by Employer since ACADIA
NATIONAL HEALTH SYSTEMS, INC. (hereinafter referred to as "Acadia")
was incorporated on August 2, 1996.
WHEREAS, Employer and Employee desire to set forth in writing
the terms and conditions of their agreements and understandings,
and to extend the term of Employee's employment hereunder;
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending legally to be bound, agree as
follows:
1. Term of Employment.
This Employment Agreement shall supersede and replace all
prior Employment Agreements and amendments thereto. The term shall
commence on August 2, 1996, and shall continue until July 31, 2001
and automatically for additional periods of three (3) years each
thereafter, unless sooner terminated in accordance with the
provisions hereof.
2. Duties of Employee.
2.1 It is understood and agreed that Employee's principal
duties on behalf of Employer at the date of execution hereof are
and shall be as Chief Executive Officer, Chairman of the Board an
President of the Corporation. In accepting employment by Employer,
Employee shall undertake and assume the responsibility of
performing for and on behalf of Employer whatever duties are
necessary and required in his position as Chief Executive Officer,
Chairman of the Board and President of the Corporation.
2.2 Employee covenants and agrees that at all times during
the term of this Agreement, Employee shall devote his efforts to
his duties as an employee of the Employer. Employee further
covenants and agrees that he will not, directly or indirectly,
<PAGE>
engage or participate in any activities at any time during the term
of this Agreement in conflict with the best interests of Employer.
3. Compensation.
3.1 Salary. As compensation for the services to be rendered
by Employee for Employer under this Agreement, Employee shall be
paid not less than the following base annual salary, on a monthly
basis, during the term hereof: $65,000.00, plus annual increases
and bonuses, if any, voted him by the Board of Directors of
Employer.
3.2 Bonus. Employee shall be a participant in the Acadia,
Inc. Incentive Bonus Plan and Stock Option Plan as approved by the
Board of Directors.
3.3 Salary Review. Employee's salary will be reviewed
annually commencing September 30, 1997.
4. Additional Benefits.
In addition to, and not in limitation of, the compensation
referred to in Paragraph 3, Employee shall be paid the following
additional benefits during the term hereof:
4.1 Reimbursement. Reimbursement of all reasonable expenses
incurred by him in connection with performance of his duties as
Chief Executive Officer, Chairman of the Board and President of the
Corporation, upon submission of vouchers. Reasonable expenses
shall include, but not be limited to all out-of-pocket expenses for
entertainment, travel, meals, lodging, automobile expenses and the
like incurred by him in the interest of the Employer.
4.2 Participation in Benefit Plans. Employee shall be a
participant, to the extent he meets all eligibility requirements of
general application to senior executives of the Corporation, in any
and all plans maintained by the Corporation to provide benefits for
its executive senior employees, including, but not limited to,
group term life insurance, hospitalization, medical, disability,
deferred compensation, and profit sharing and retirement plans.
4.3 Vacations. Employee shall be entitled to vacations of
not less than eight (8) weeks per year, in accordance with the
Corporation's regular vacation policies established for senior
executives; provided, that Employee may accrue any unused vacation
time from year to year, and upon termination of employment will be
compensated for any unused vacation time. Any
<PAGE>
specific vacation of more than eight (8) weeks' duration shall be
approved in advance by the Board of Directors.
4.4 Other Perquisites. Employee shall be entitled to such
additional perquisites as may be customarily granted by the
Corporation to senior executives.
4.5 Death or Disability Payments. In the event of the
Employee's disability or death, Employee's salary in effect at the
time of his death or disability shall continue to be paid to the
Employee, or to his designee, for a period of twelve (12) calendar
months from the date of death or from the date of Employee's
termination by reason of disability. For the purposes of this
Employment Agreement, the obligations of the Employer to make the
payments upon the disability of Employee shall not become effective
unless and until all of the following conditions are met, as
determined by an independent physician selected by the Board of
Directors and agreed to by Employee: (1) Employee shall become
physically or mentally incapable (excluding infrequent and
temporary absences due to ordinary illnesses) of properly
performing the services required of him in accordance with his
obligations under paragraph 2 hereof or similar provisions of any
renewal agreement; (2) such incapacities shall exist or be
reasonably expected to exist for more than ninety (90) days in the
aggregate during the period of twelve (12) consecutive months; and
(3) either Employee or Employer shall have given the other thirty
(30) days' written notice of his or its intention to terminate the
active employment of Employee because of such disability. The
benefits payable hereunder shall be in addition to, and shall not
be offset against, any amounts paid to Employee or his spouse by
reason of insurance benefits pursuant to Paragraph 4.2 above.
4.6 Life Insurance. Employee shall be provided with a life
insurance policy in the amount of $175,000 (provided he can meet
the medical conditions for such coverage), payable to such
beneficiaries as he shall designate.
5. Disclosure of Information.
Employee acknowledges that in and as a result of his
employment hereunder, he will be making use of, acquiring, and/or
adding to confidential information of a special and unique nature
and value relating to such matters as Employer's trade secrets,
systems, procedures, manuals, confidential reports, and lists of
clients. As a material inducement to Employer to enter into this
Agreement and to pay to Employee the compensation stated in
Paragraph 3, as well as any additional benefits stated in Paragraph
4, Employee covenants and agrees that he shall not,
<PAGE>
other than in the ordinary course of business, at any time during or
following the term of his employment, directly or indirectly divulge
or disclose for any purpose whatsoever or appropriate to his own use
or to the use of others any confidential information that has been
obtained by, or disclosed to him, as a result of his employment by
Employer.
6. Termination.
6.1 Termination By Either Party Without Cause. At any time
during the term hereof, this Employment Agreement may be terminated
"without cause" by either Employer or Employee upon written notice
to the other party.
(A) In the event of such termination "without cause" by
Employee, Employer shall have the option either (a) to accept
Employee's resignation, effective immediately on receipt of such
notice; or (b) to require Employee to continue to perform his
duties hereunder, for a period not to exceed six (6) months from
the date of receipt of such written notice. In either event, the
Employee's compensation and benefits hereunder shall continue only
until the effective date of termination, as defined in Paragraph
6.4 below.
(B) In the event of such termination "without cause" by
Employer, Employee shall receive severance pay equal to thirty-six
(36) months' salary, plus bonuses equal to those received by him
during the eighteen months prior to termination, and shall be
continued under all group benefit plans for a period of eighteen
(18) months from the effective date of termination, as defined in
Paragraph 6.4(A) below.
6.2 Termination by Employer for Cause. Notwithstanding any
other provision hereof, Employer may terminate Employee's
employment under this Agreement at any time for cause. The
termination shall be effected by written notice thereof to the
Employee, which shall specify the cause for termination. For
purposes hereof, the term "cause" shall mean the failure of
Employee for any reason, within thirty (30) days after receipt by
Employee of written notice thereof from Employer, to correct,
cease, or otherwise alter any action or omission to act that
constitutes a material and willful breach of this Agreement likely
to result in material damage to the Corporation, or willful gross
misconduct likely to result in material damage to the Corporation.
Upon such termination for cause by Employer, Employee shall
not receive any termination pay or benefits beyond the effective
date of termination, as defined in Paragraph 6.4(B) below.
6.3 Termination By Employee for Cause. Notwithstanding any
other provision hereof, Employee may resign his employment under
this Agreement at any time for cause. The termination may be by
written notice thereof to Employer, which shall specify the cause
<PAGE>
for Employee's resignation. For purposes hereof, the term "cause"
shall mean the failure of Employer for any reason, within thirty
(30) days after receipt by Employer of written notice from
Employee, to correct, cease, or otherwise alter any material
adverse change in the conditions of Employee's employment caused by
(a) a change in ownership of the Corporation; or (b) any change in
Employee's position from Chief Executive Officer, Chairman of the
Board and/or President, or the duties assigned to him by the Board
of Directors, unless Employee consents to such change, on terms as
mutually agreed.
Upon such termination for cause by Employee, Employee shall be
continued on the payroll for twelve (12) months from the effective
date of termination (as defined in Paragraph 6.4(B) below) at his
then current salary without further responsibilities to the
Corporation. Employee shall also be continued under all group
benefit plans for a period of twelve (12) months from the effective
date of termination. Employee's stock options shall continue to
vest, and he shall have the continuing right to exercise such
options during the period of twelve (12) months from the effective
date of termination.
6.4 Effective Date of Termination.
(A) The effective date of termination, as used in
Paragraph 6.1 with respect to termination "without cause," shall be
the date on which Employee actually ceases to perform his duties
hereunder.
(B) The effective date of termination, as used in
Paragraphs 6.2 and 6.3 with respect to termination "for cause,"
shall be thirty (30) calendar days after the date on which Employee
receives or gives written notice of termination.
6.5 Limitation on Severance Compensation. Notwithstanding
any other provision of this Agreement, solely in the event of a
Termination Upon a Change In Control, the aggregate of the amount
of severance compensation paid to the Employee under this Agreement
or otherwise, but exclusive of any payments to the Employee by
virtue of the Employee's exercise of any right or payment of any
kind under any incentive or benefit plan upon a change in control,
shall not include any amount that the Employer is prohibited from
deducting for federal income tax purposes by virtue of Section 280G
of the Internal Revenue Code or any successor provision.
7. Other Business Activities.
During the period of his employment under this Agreement, the
Employee shall not be employed by or otherwise engage or be
interested in any business whether or not in competition with the
Corporation, or with any of its subsidiaries or affiliates, with
the following exceptions:
<PAGE>
(A) Employee's investment in any business shall not be
considered a violation of this paragraph, provided that such
business is not in competition with the Corporation and the
Employee does not render management or other personal services to
such business;
(B) Employee may consult with other businesses not in
competition with the Corporation, provided that each such
consulting job shall be expressly considered and approved or
disapproved in advance by the audit committee of the Board of
Directors.
8. Indemnification.
So long as Employee is not found by a court of law to be
guilty of a willful and material breach of this Agreement, or to be
guilty of willful gross misconduct, he shall be indemnified from
and against any and all losses, liability, claims and expenses,
damages, or causes of action, proceedings or investigations, or
threats thereof (including reasonable attorney fees and expenses of
counsel satisfactory to and approved by Employee) incurred by
Employee, arising out of, in connection with, or based upon
Employee's services and the performance of his duties pursuant to
this Employment Agreement, or any other matter contemplated by this
Employment Agreement, whether or not resulting in any such
liability; and Employee shall be reimbursed by Employer as and when
incurred for any reasonable legal or other expenses incurred by
Employee in connection with investigating or defending against any
such loss, claim, damage, liability, action, proceeding,
investigation or threat thereof, or producing evidence, producing
documents or taking any other action in respect thereto (whether or
not Employee is a defendant in or target of such action, proceeding
or investigation).
9. Burden and Benefit.
This Agreement shall be binding upon, and shall inure to the
benefit of, Employer and Employee, and their respective heirs,
personal and legal representatives, successors, and assigns and
shall be expressly binding upon and inure to the benefit of any
person or entity assuring the Corporation, by merger,
consolidation, purchase of assets or stock, or otherwise; provided,
however, that the interests of the Employee hereunder are not
subject to the claims of his creditors, and may not be voluntarily
or involuntarily assigned, alienated or encumbered.
10. Governing Law.
It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all
respects be governed by the laws of the State of Maine, where it is
made and to be performed.
<PAGE>
11. Severability.
The provisions of this Agreement, including particularly but
not solely, the provisions of Paragraphs 5 and 6, shall be deemed
severable, and the invalidity or unenforceability of any one or
more of the provisions of this Agreement shall not affect the
validity and enforceability of the other provisions.
12. Notice.
Any notice required to be given shall be sufficient if it is
in writing and sent by certified or registered mail, return receipt
requested, first-class postage prepaid, to his residence in the
case of Employee, and to its principal office in the case of
Employer.
13. Entire Agreement.
This Agreement contains the entire agreement and understanding
by and between Employer and Employee with respect to the employment
of Employee, and no representations, promises, agreements, or
understandings, written or oral, not contained herein shall be of
any force or effect. No change or modification of this Agreement
shall be valid or binding unless it is in writing and signed by the
party intended to be bound. No waiver of any provision of this
Agreement shall be valid unless it is in writing and signed by the
party against whom the waiver is sought to be enforced. No valid
waiver of any provision of this Agreement at any time shall be
deemed a waiver of any other provision of this Agreement at such
time or at any other time.
14. Counterparts.
The Agreement may be executed in two or more counterparts, any
one of which shall be deemed the original without reference to the
others.
<PAGE>
IN WITNESS WHEREOF, Employer and Employee have duly executed
this Agreement as of the day and year first above written.
EMPLOYER:
ATTEST: ACADIA NATIONAL HEALTH SYSTEMS, INC.,
A Colorado Corporation
By:
Treasurer Jacquelyn J. Magno
Vice President and Secretary
EMPLOYEE:
THOMAS N. HACKETT
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective for all purposes
and in all respects as of the 27th day of September, 1996, by and
between ACADIA NATIONAL HEALTH SYSTEMS, INC., a Colorado
corporation (hereinafter referred to as the "Employer" or the
"Corporation"), and Jacquelyn J. Magno (hereinafter referred to as
the "Employee").
WITNESSETH THAT:
WHEREAS, Employee has been employed by Employer since ACADIA
NATIONAL HEALTH SYSTEMS, INC. (hereinafter referred to as "Acadia")
was incorporated on August 2, 1996.
WHEREAS, Employer and Employee desire to set forth in writing
the terms and conditions of their agreements and understandings,
and to extend the term of Employee's employment hereunder;
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending legally to be bound, agree as
follows:
1. Term of Employment.
This Employment Agreement shall supersede and replace all
prior Employment Agreements and amendments thereto. The term shall
commence on August 2, 1996, and shall continue until July 31, 2001
and automatically for additional periods of three (3) years each
thereafter, unless sooner terminated in accordance with the
provisions hereof.
2. Duties of Employee.
2.1 It is understood and agreed that Employee's principal
duties on behalf of Employer at the date of execution hereof are
and shall be as Chief Executive Officer, Chairman of the Board an
President of the Corporation. In accepting employment by Employer,
Employee shall undertake and assume the responsibility of
performing for and on behalf of Employer whatever duties are
necessary and required in his position as Chief Executive Officer,
Chairman of the Board and President of the Corporation.
2.2 Employee covenants and agrees that at all times during
the term of this Agreement, Employee shall devote his efforts to
his duties as an employee of the Employer. Employee further
covenants and agrees that he will not, directly or indirectly,
<PAGE>
engage or participate in any activities at any time during the term
of this Agreement in conflict with the best interests of Employer.
3. Compensation.
3.1 Salary. As compensation for the services to be rendered
by Employee for Employer under this Agreement, Employee shall be
paid not less than the following base annual salary, on a monthly
basis, during the term hereof: $50,000.00, plus annual increases
and bonuses, if any, voted him by the Board of Directors of
Employer.
3.2 Bonus. Employee shall be a participant in the Acadia,
Inc. Incentive Bonus Plan and Stock Option Plan as approved by the
Board of Directors.
3.3 Salary Review. Employee's salary will be reviewed
annually commencing September 30, 1997.
4. Additional Benefits.
In addition to, and not in limitation of, the compensation
referred to in Paragraph 3, Employee shall be paid the following
additional benefits during the term hereof:
4.1 Reimbursement. Reimbursement of all reasonable expenses
incurred by him in connection with performance of his duties as
Chief Executive Officer, Chairman of the Board and President of the
Corporation, upon submission of vouchers. Reasonable expenses
shall include, but not be limited to all out-of-pocket expenses for
entertainment, travel, meals, lodging, automobile expenses and the
like incurred by him in the interest of the Employer.
4.2 Participation in Benefit Plans. Employee shall be a
participant, to the extent he meets all eligibility requirements of
general application to senior executives of the Corporation, in any
and all plans maintained by the Corporation to provide benefits for
its executive senior employees, including, but not limited to,
group term life insurance, hospitalization, medical, disability,
deferred compensation, and profit sharing and retirement plans.
4.3 Vacations. Employee shall be entitled to vacations of
not less than five (5) weeks per year, in accordance with the
Corporation's regular vacation policies established for senior
executives; provided, that Employee may accrue any unused vacation
time from year to year, and upon termination of employment will be
compensated for any unused vacation time. Any
<PAGE>
specific vacation of more than five (5) weeks' duration shall be
approved in advance by the Board of Directors.
4.4 Other Perquisites. Employee shall be entitled to such
additional perquisites as may be customarily granted by the
Corporation to senior executives.
4.5 Death or Disability Payments. In the event of the
Employee's disability or death, Employee's salary in effect at the
time of his death or disability shall continue to be paid to the
Employee, or to his designee, for a period of twelve (12) calendar
months from the date of death or from the date of Employee's
termination by reason of disability. For the purposes of this
Employment Agreement, the obligations of the Employer to make the
payments upon the disability of Employee shall not become effective
unless and until all of the following conditions are met, as
determined by an independent physician selected by the Board of
Directors and agreed to by Employee: (1) Employee shall become
physically or mentally incapable (excluding infrequent and
temporary absences due to ordinary illnesses) of properly
performing the services required of him in accordance with his
obligations under paragraph 2 hereof or similar provisions of any
renewal agreement; (2) such incapacities shall exist or be
reasonably expected to exist for more than ninety (90) days in the
aggregate during the period of twelve (12) consecutive months; and
(3) either Employee or Employer shall have given the other thirty
(30) days' written notice of his or its intention to terminate the
active employment of Employee because of such disability. The
benefits payable hereunder shall be in addition to, and shall not
be offset against, any amounts paid to Employee or his spouse by
reason of insurance benefits pursuant to Paragraph 4.2 above.
4.6 Life Insurance. Employee shall be provided with a life
insurance policy in the amount of $100,000 (provided he can meet
the medical conditions for such coverage), payable to such
beneficiaries as he shall designate.
5. Disclosure of Information.
Employee acknowledges that in and as a result of his
employment hereunder, he will be making use of, acquiring, and/or
adding to confidential information of a special and unique nature
and value relating to such matters as Employer's trade secrets,
systems, procedures, manuals, confidential reports, and lists of
clients. As a material inducement to Employer to enter into this
Agreement and to pay to Employee the compensation stated in
Paragraph 3, as well as any additional benefits stated in Paragraph
4, Employee covenants and agrees that he shall not,
<PAGE>
other than in the ordinary course of business, at any time during or
following the term of his employment, directly or indirectly divulge
or disclose for any purpose whatsoever or appropriate to his own use
or to the use of others any confidential information that has been
obtained by, or disclosed to him, as a result of his employment by
Employer.
6. Termination.
6.1 Termination By Either Party Without Cause. At any time
during the term hereof, this Employment Agreement may be terminated
"without cause" by either Employer or Employee upon written notice
to the other party.
(A) In the event of such termination "without cause" by
Employee, Employer shall have the option either (a) to accept
Employee's resignation, effective immediately on receipt of such
notice; or (b) to require Employee to continue to perform his
duties hereunder, for a period not to exceed six (6) months from
the date of receipt of such written notice. In either event, the
Employee's compensation and benefits hereunder shall continue only
until the effective date of termination, as defined in Paragraph
6.4 below.
(B) In the event of such termination "without cause" by
Employer, Employee shall receive severance pay equal to thirty-six
(36) months' salary, plus bonuses equal to those received by him
during the eighteen months prior to termination, and shall be
continued under all group benefit plans for a period of eighteen
(18) months from the effective date of termination, as defined in
Paragraph 6.4(A) below.
6.2 Termination by Employer for Cause. Notwithstanding any
other provision hereof, Employer may terminate Employee's
employment under this Agreement at any time for cause. The
termination shall be effected by written notice thereof to the
Employee, which shall specify the cause for termination. For
purposes hereof, the term "cause" shall mean the failure of
Employee for any reason, within thirty (30) days after receipt by
Employee of written notice thereof from Employer, to correct,
cease, or otherwise alter any action or omission to act that
constitutes a material and willful breach of this Agreement likely
to result in material damage to the Corporation, or willful gross
misconduct likely to result in material damage to the Corporation.
Upon such termination for cause by Employer, Employee shall
not receive any termination pay or benefits beyond the effective
date of termination, as defined in Paragraph 6.4(B) below.
6.3 Termination By Employee for Cause. Notwithstanding any
other provision hereof, Employee may resign his employment under
this Agreement at any time for cause. The termination may be by
written notice thereof to Employer, which shall specify the cause
<PAGE>
for Employee's resignation. For purposes hereof, the term "cause"
shall mean the failure of Employer for any reason, within thirty
(30) days after receipt by Employer of written notice from
Employee, to correct, cease, or otherwise alter any material
adverse change in the conditions of Employee's employment caused by
(a) a change in ownership of the Corporation; or (b) any change in
Employee's position from Chief Executive Officer, Chairman of the
Board and/or President, or the duties assigned to him by the Board
of Directors, unless Employee consents to such change, on terms as
mutually agreed.
Upon such termination for cause by Employee, Employee shall be
continued on the payroll for twelve (12) months from the effective
date of termination (as defined in Paragraph 6.4(B) below) at his
then current salary without further responsibilities to the
Corporation. Employee shall also be continued under all group
benefit plans for a period of twelve (12) months from the effective
date of termination. Employee's stock options shall continue to
vest, and he shall have the continuing right to exercise such
options during the period of twelve (12) months from the effective
date of termination.
6.4 Effective Date of Termination.
(A) The effective date of termination, as used in
Paragraph 6.1 with respect to termination "without cause," shall be
the date on which Employee actually ceases to perform his duties
hereunder.
(B) The effective date of termination, as used in
Paragraphs 6.2 and 6.3 with respect to termination "for cause,"
shall be thirty (30) calendar days after the date on which Employee
receives or gives written notice of termination.
6.5 Limitation on Severance Compensation. Notwithstanding
any other provision of this Agreement, solely in the event of a
Termination Upon a Change In Control, the aggregate of the amount
of severance compensation paid to the Employee under this Agreement
or otherwise, but exclusive of any payments to the Employee by
virtue of the Employee's exercise of any right or payment of any
kind under any incentive or benefit plan upon a change in control,
shall not include any amount that the Employer is prohibited from
deducting for federal income tax purposes by virtue of Section 280G
of the Internal Revenue Code or any successor provision.
7. Other Business Activities.
During the period of his employment under this Agreement, the
Employee shall not be employed by or otherwise engage or be
interested in any business whether or not in competition with the
Corporation, or with any of its subsidiaries or affiliates, with
the following exceptions:
<PAGE>
(A) Employee's investment in any business shall not be
considered a violation of this paragraph, provided that such
business is not in competition with the Corporation and the
Employee does not render management or other personal services to
such business;
(B) Employee may consult with other businesses not in
competition with the Corporation, provided that each such
consulting job shall be expressly considered and approved or
disapproved in advance by the audit committee of the Board of
Directors.
8. Indemnification.
So long as Employee is not found by a court of law to be
guilty of a willful and material breach of this Agreement, or to be
guilty of willful gross misconduct, he shall be indemnified from
and against any and all losses, liability, claims and expenses,
damages, or causes of action, proceedings or investigations, or
threats thereof (including reasonable attorney fees and expenses of
counsel satisfactory to and approved by Employee) incurred by
Employee, arising out of, in connection with, or based upon
Employee's services and the performance of his duties pursuant to
this Employment Agreement, or any other matter contemplated by this
Employment Agreement, whether or not resulting in any such
liability; and Employee shall be reimbursed by Employer as and when
incurred for any reasonable legal or other expenses incurred by
Employee in connection with investigating or defending against any
such loss, claim, damage, liability, action, proceeding,
investigation or threat thereof, or producing evidence, producing
documents or taking any other action in respect thereto (whether or
not Employee is a defendant in or target of such action, proceeding
or investigation).
9. Burden and Benefit.
This Agreement shall be binding upon, and shall inure to the
benefit of, Employer and Employee, and their respective heirs,
personal and legal representatives, successors, and assigns and
shall be expressly binding upon and inure to the benefit of any
person or entity assuring the Corporation, by merger,
consolidation, purchase of assets or stock, or otherwise; provided,
however, that the interests of the Employee hereunder are not
subject to the claims of his creditors, and may not be voluntarily
or involuntarily assigned, alienated or encumbered.
10. Governing Law.
It is understood and agreed that the construction and
interpretation of this Agreement shall at all times and in all
respects be governed by the laws of the State of Maine, where it is
made and to be performed.
<PAGE>
11. Severability.
The provisions of this Agreement, including particularly but
not solely, the provisions of Paragraphs 5 and 6, shall be deemed
severable, and the invalidity or unenforceability of any one or
more of the provisions of this Agreement shall not affect the
validity and enforceability of the other provisions.
12. Notice.
Any notice required to be given shall be sufficient if it is
in writing and sent by certified or registered mail, return receipt
requested, first-class postage prepaid, to his residence in the
case of Employee, and to its principal office in the case of
Employer.
13. Entire Agreement.
This Agreement contains the entire agreement and understanding
by and between Employer and Employee with respect to the employment
of Employee, and no representations, promises, agreements, or
understandings, written or oral, not contained herein shall be of
any force or effect. No change or modification of this Agreement
shall be valid or binding unless it is in writing and signed by the
party intended to be bound. No waiver of any provision of this
Agreement shall be valid unless it is in writing and signed by the
party against whom the waiver is sought to be enforced. No valid
waiver of any provision of this Agreement at any time shall be
deemed a waiver of any other provision of this Agreement at such
time or at any other time.
14. Counterparts.
The Agreement may be executed in two or more counterparts, any
one of which shall be deemed the original without reference to the
others.
IN WITNESS WHEREOF, Employer and Employee have duly executed
this Agreement as of the day and year first above written.
EMPLOYER:
ATTEST: ACADIA NATIONAL HEALTH SYSTEMS, INC.,
A Colorado Corporation
By:
Treasurer Thomas N. Hackett
President
EMPLOYEE:
Jacquelyn J. Magno
ADVANTAGE P.O BOX 1330 207-784-0178
Auburn, Maine 800-876-0178
04211-1330 207-786-0490 fax
May 13, 1996
Physician Resources
PO Box 1328
Auburn, ME 04211-1328
Attn: Jackie Magno
Dear Jackie:
I am enclosing the Plan Document and Summary Plan Document for your
Section 125 Plan. The Plan Document should be kept in your files to
satisfy the IRS should you ever be audited. Also, the Summary Plan
Document should be copied and distributed to each employee. This will
satisfy the IRS requirement that the plan be communicated to each employee.
If you have any questions please feel free to give me a all at 1-800-
876-0178 ext. 132
Thank You
Danelle Kane
Danelle Kane
<PAGE>
SUMMARY PLAN DESCRIPTION
OF THE
PHYSICIAN RESOURCES CAFETERIA PLAN
(EFFECTIVE 06/01/96)
<PAGE>
Federal law requires the plan administrator of an employee benefit
plan to furnish a copy of the summary plan description to each
participant. This document has been prepared to assist you in
meeting this requirement. You may wish to have the summary plan
description reviewed by your legal counsel.
<PAGE>
Introduction.......................................3
Cafeteria Plan.....................................3
Contributions Eligible For Salary Reduction........3
Eligibility........................................3
Qualifying for Participation.......................3
IRS Regulations....................................4
Change in Family Status............................4
Increase or Decrease in Cost of Health Insurance...4
Plan Year..........................................4
Duration of Your Salary Agreement..................5
Annual Enrollment..................................5
Claims.............................................5
How Long the Plan Lasts............................5
Administrative Information.........................5
ERISA Rights.......................................6
Employment.........................................7
<PAGE>
SUMMARY PLAN DESCRIPTION
OF THE
PHYSICIAN RESOURCES CAFETERIA PLAN
Introduction
This is a summary plan description outlining the Physician
Resources cafeteria plan available to eligible employees of Physician
Resources.
This plan, as now established, provides only a salary reduction
arrangement. Through this arrangement eligible employees may choose
to have their wages reduced in accordance with Section 125 of the
Internal Revenue Code to pay for employee premiums for qualifying
benefit plans.
This booklet summarizes the cafeteria plan currently available
to eligible employees. If there are any variations between the plan
provisions and this booklet, the provisions of the plan will
prevail.
Cafeteria Plan
The cafeteria plan allows you to reduce your salary and pay your
portion of health insurance premiums on a pre-tax basis for qualified
benefit plans offered by your employer.
Under current federal law, the portion of your pay used to obtain
benefits for you is not considered taxable income to you. Thus, if you
direct your employer to use some of your pay to provide benefits for you,
your employer will withhold from each of your paychecks amounts that
would otherwise be payable to you as taxable compensation. In short,
by reducing your taxable income, you reduce the amount of taxes you pay
and increase your net pay.
Contributions Eligible for Salary Reduction
Employee contributions for the employer-sponsored benefit plans
indicated below qualify for salary reduction treatment under this
plan:
Principal Mutual
3708-883
Eligibility
An employee eligible to participate in this plan has been employed
for 30 days.
Qualifying for Participation
Employees wishing to participate must sign a Benefit Election Form
Salary Reduction Agreement within the appropriate time period. This form
authorizes a reduction in your pay to cover the employee portion of
contributions to employer-sponsored benefit plans. In addition, you may
be required to complete individual carrier applications for certain benefits
you elect.
<PAGE>
The time period works like this: If you are eligible to participate as of
the first day of the plan year, the plan administrator must receive your form
on or before the 15th day of the lst month preceding such plan year. Your
participation will then begin with the first payroll period of the
plan year.
If you become eligible after the first day of the plan year, you
may deliver your form to the plan administrator at any time during the plan
year. Your participation will begin with the fist payroll period following the
date your form is received by the plan administrator.
IRS Regulations
The Internal Revenue Service requires that once money is
allocated under a plan of this type an employee cannot change or cancel that
allocation during the plan year except in the case of a change in family
status. This means that an elected reduction will be in effect for the
entire benefit year unless you terminate employment or have a change in family
status. Cafeteria plan regulations treat plan contributions that are part of
a salary reduction agreement as employer contributions that are not taxed if
used to purchase benefits that are otherwise nontaxable.
Change in Family Status
The following events may enable you to change your salary reduction
agreement:
Marriage or divorce
Birth or Adoption of a Child
Death of a spouse or dependent
Termination or commencement of spouse's employment
Employee's or spouse's change from part-time to full-time or full-time
to part-time status.
Employee or spouse taking an unpaid leave
Significant change in employee's or spouse's health coverage attributable
to spouse's employment.
You must request this change by filing our Benefit Election Change Form
within 30 days of the change in family status.
Increase or Decrease in cost of Health Insurance
If you elected to reduce your salary to pay your portion of the health
insurance premiums for qualified benefit plans offered by your employer, the
Plan Administrator may automatically adjust the amount of your salary reduction
if the cost of the health insurance premiums increases or decreases during the
plan year.
Plan Year
The plan year begins on 06-01-96 and runs through 05-31-97. This plan
year is also known as the period coverage.
<PAGE>
Duration of Your Salary Reduction Agreement
The salary reduction agreement will remain in force until:
1. Your employment is terminated
2. You have a qualifying change in family status
3. The end of the plan year covered by the agreement; or
4. Your employer terminates, suspends or modifies the plan.
Annual Enrollment
Once each year, during the enrollment period, you will be able to change
or revoke your salary reduction agreement to be effective the first day of the
next plan year. If you wish to add or elect benefit plans covered by the
agreement, or revoke your participation under the plan, you should complete a
Benefit Election Change Form. The Plan Administrator must receive this form
15 days before the start of the new plan year.
Claims
Processing and payment of claims for benefits will still take pace under
your individual benefit plans. Those procedures are outlined in the summary
plan descriptions for these plans.
How long the Plan Lasts
Your employer expects to continue the cafeteria plan indefinitely, but
it reserves the right to terminate or amend it at any time.
Administrative Information
This cafeteria plan is made available to you through your employer.
Records are kept on a plan year bass. The Administrative cost of the plan is
borne by the employer.
Employer
Physician Resources
1120 Center Street
Auburn, ME 04210 Tel. 207-784-9185
Employer Identification Number 01-0468899
Plan Administrator
The day-to-day administration of the Plan is handled by Marise
Lebel.
The address and phone number are:
Physician Resources
1120 Center Street
Auburn, ME 04210
207-784-9185
Agent for Service of Legal Process
Service of legal process may be made upon the Plan Administrator
For Additional Information
If you want more information or wish to obtain copies of the annual
report filed with the United States Department of Labor, please call or
send your request to the Plan Administrator.
ERISA Rights
As a participant in the plan you are entitled to certain rights
and protections under the Employee Retirement Income Security Act of
1974 (ERISA). ERISA provides that all participants shall be entitled
to:
Examine, without charge at the plan administrator's office and at
other specified locations, all plan documents, including insurance
contracts, and copies of all documents filed by the plan with the US
Administrator. The administrator may make a reasonable charge for the
copies.
In addition to creating rights for plan participants, ERISA
imposes duties upon the people who are responsible for the operation
of the employee benefit plan. The people who operate your plan, called
"fiduciaries" of the plan, have a duty to do so prudently and in the
interest of you and other plan participants and beneficiaries. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining
welfare benefits or exercising your rights under ERISA. If your claim
for a welfare benefit is denied in whole or in part you must receive a
written explanation for the reason for the denial. You have the right
to have the claim reviewed and reconsidered. Under ERISA, there are
steps you can take to enforce the above rights. For instance, if you
request materials from the plan and do not receive them within 30 days,
you may file suit in a federal court. In such case, the court may
require the plan administrator to provide the materials and pay you up
to $100 a day until you receive the materials, unless the materials
were not sent because of reasons beyond the control of the administrator.
If you have a claim for benefits which is denied or ignored, in
whole or in part, you may file suit in a state or federal court. If
it should happen that plan fiduciaries misuse the plan's money, or if
you are discriminated against for asserting your rights, you may seek
assistance from the US Department of Labor, or you may file suit in a
federal court. The court will decide who should pay court costs and
legal fees. If you lose, the court may order you to pay thesecosts
and fees, for example, if it finds your claim is frivolous. If you
have any questions about your plan, you should contact the plan
administrator. If you
<PAGE>
have any questions about this statement or about your rights under
ERISA, you should contact the nearest Area Office of the US Labor
Management Services Administration, Department of Labor.
Employment
Participation in the cafeteria plan does not give any
participant the right to be retained in the employ of the employer
or any other right not specified in the plan.
September 1, 1995
217 MAIN STREET
Thomas N. Hackett Lewiston MAINE
Physician Resources Inc. :07-795-52
460 Main Street
Lewiston, Maine 04240
Dear Tom:
Pursuant to our recent discussions, Peoples Heritage Savings Bank is pleased
to approve your loan request for Physician Resources Inc. The purpose of this
letter is to outline the terms and conditions of our commitment, which are as
follows:
Borrower: Physician Resources Inc.
Amount: $250,000 Revolver
Purpose: The proceeds of the Loan will be used by
Borrower to payoff a PHSB Bank loan in the
approximate amount of $80,000 and the balance to
be used for working capital.
Interest
Rate: Bank of Boston base borrowing rate (currently
8.75%) plus 1% floating daily.
All interest hereunder shall be computed on the
basis of the actual number of days elapsed over
a 360-day year.
PAYMENT: A-fixed monthly payment of principal in the
amount of $5,000.00, together with accrued
interest on the principal amount of the Loan
shall be due monthly commencing 30 days from
closing.
Collateral: All business assets.
Guarantor: Unlimited Guaranty: Thomas N. Hackett
("Guarantor") shall unconditionally (and jointly and severally if there is
more than one Guarantor) guarantee the payment and performance of all
obligations of Borrower under the Loan documents pursuant to an unconditional
Guaranty of Payment (the "Guaranty'') in form and substance satisfactory to
Lender's counsel.
<PAGE>
Physician Resources, Inc.
Page 2
Term: One year from closing the loan matures and is
subject to renewal.
Default
Interest
Rate: Lender shall have the right to charge interest,
payable on demand, on the unpaid principal
balance of the Loan at an interest rate of three
percent (3%) per annum in excess of the rate of
interest otherwise payable as provided herein,
or any period during which the Borrower shall be
in default under any document governing or
securing the Loan.
Origination
Fee: $1,250(%)
Late
Charge: Borrower shall pay to Lender a late charge of
six percent (6%) of any scheduled payment of
principal and/or interest which is not paid
within fifteen (15) days of the date when due.
Deposits: Borrower will maintain its deposit relationship
with Peoples Heritage Savings Bank during the
Loan term.
Financials: Borrower will provide the Bank with year-end
financials within one hundred twenty (120) days
of Borrowers fiscal year-end. Such statements
are to be prepared by an independent certified
public accountant.
In addition, guarantor will submit an updated
personal financial statement and a copy of
current year's FITR on an annual basis.
Other statements as required by the Bank
will also be provided.
Insurance: Borrower to maintain comprehensive insurance
naming the Bank as loss payee.
Notices will be sent to:
Peoples Heritage Bank
One Portland Square
P.O. Box 9542
Portland, Maine 04112-9542
Physician Resources Inc.
<PAGE>
Page 3
Paid in Capital: Borrower will convert approximately $115,796 to paid in
capital.
Board Approval:
THIS COMMITMENT IS SUBJECT TO FINAL BOARD OF DIRECTORS APPROVAL ON
SEPTEMBER 12, 1995.
Should you have any questions or comments, feel free to call me. Thank you
for giving Peoples Heritage Savings Bank the opportunity to provide this
financing proposal for your consideration.
Very truly yours,
PEOPLES HERITAGE SAVINGS BANK
BY:
Richard L. Roy, Group Vice President
SEEN AND AGREED TO:
Thomas N. Hackett, Guarantor
Date
July 29, 1996
Thomas N. Hackett
Physician Resources, Inc.
460 Main Street
Lewiston, Maine 04240
Dear Tom:
Peoples Heritage Bank (the "Bank") is pleased to approve your loan request.
The purpose of this letter is to outline the terms and conditions of our
commitment to make a loan to you (the "Loan"), which are as follows:
BORROWER: Physician Resources
AMOUNT: $ 100,000
PURPOSE: The proceeds of the Loan will be used by the Borrower to term out a
portion of their existing line of credit.
INTEREST RATE: The Loan shall bear interest at a fixed rate of 9.75% for the
term of the loan.
All interest hereunder shall be computed on the basis of the actual number of
days elapsed over a 360-day year.
DEFAULT INTEREST RATE: Bank shall have the right to charge interest, payable
on demand, on the unpaid principal balance of the Loan at an interest rate of
three percent (3%) per annum in excess of the rate of interest otherwise payable
for any period during which the Borrower shall be in default under any document
governing or securing the Loan.
COMMITMENT
FEE: Lender shall be paid a non refundable commitment fee of $500 payable at
closing.
TERM: The term of the Loan is 5 years.
<PAGE>
Physician Resources, Inc.
Page 2
PAYMENT: A fixed principal plus interest payment will be due monthly
commencing one month after closing. Any unpaid principal plus accrued interest
shall be due and payable at maturity.
LATE
CHARGE: - Borrower shall pay to Bank a late charge of six percent (6%) of
any scheduled payment of principal and/or interest which is not paid within
fifteen (15) days of the date when due.
SECURITY: Collateral for the Loan shall consist of the following:
A first priority security interest in the following business assets of
Borrower: accounts receivable, inventory, fixed assets, equipment and general
intangibles whenever acquired by Borrower.
GUARANTOR: The persons identified below as Guarantor shall unconditionally
(and jointly and severally if there is more than one Guarantor) guarantee the
payment and performance of all obligations of Borrower under the Loan
documents.
DEPOSIT
RELATIONSHIP: Borrower shall establish and maintain its primary deposit
relationship with Bank.
FINANCIALS:
Borrower will provide the Bank with year-end financial statements or tax
returns within one hundred twenty (120) days of Borrower's fiscal year end.
Such statements are to be prepared by an independent certified public
accountant acceptable to Bank in accordance with generally accepted accounting
principles and are to be accompanied by any Management Letter.
In addition, the Guarantor(s) will submit an updated financial statement and a
copy of current year's federal income tax return on an annual basis.
Other statements as may be required by the Bank will also be provided.
<PAGE>
Physician Resources. Inc.
Page 3
INSURANCE:
Borrower agrees to maintain comprehensive insurance naming the Bank as
loss payee. The Bank shall be named on the insurance policy as follows:
Peoples Heritage Bank, its successors and assigns, ATIMA, P.O. Box 9540,
Portland, ME 04112.
EXPENSES:
All fees, including closing fees and legal fees will be paid by the
Borrower whether or not the Loan is closed. Legal fees may include preparation
of Loan documents by Bank counsel.
DOCUMENTATION:
Borrower and any Guarantor shall execute such further documents in connection
with the Loan as the Bank shall require. All documents will be satisfactory to
the Bank both as to form and substance.
The parties hereto agree that this commitment shall survive the Loan closing
and that each of the obligations and undertakings of the Borrower hereunder
shall continue until the entire Loan, together with interest and fees, is paid
in full.
The Loan is subject to the Bank's continued satisfaction with the Borrower's
and Guarantor's financial condition.
The commitment shall not be assigned by Borrower without the prior written
consent of the Bank.
BORROWER, GUARANTOR(S) AND THE BANK, FOR THEMSELVES AND THEIR
RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS, HEREBY KNOWINGLY,
VOLUNTARILY AND MUTUALLY WAIVE ANY AND ALL RIGHTS THAT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON OR RELATED TO THIS COMMITMENT, THE LOAN OR ANY LOAN
DOCUMENTS, THE COLLATERAL GIVEN AS SECURITY FOR THE LOAN, OR IN ANY
WAY RELATED TO THE ADMINISTRATION OF THE LOAN OR THE EXERCISE OF
RIGHTS OR REMEDIES RELATED THERETO.
Borrower agrees that any dispute arising out of or relating to this
commitment, or any alleged breach thereof, shall be settled by arbitration in
Portland, Maine in accordance with the rules of the American Arbitration
Association governing commercial arbitration.
<PAGE>
Physician Resources, Inc.
Page 4
The provisions of this commitment cannot be waived or modified other than in
a written document signed by all of the parties to this commitment.
This commitment shall expire if not accepted by the Borrower, in writing,
within ten (10) business days of the date of this letter and/or the Loan is not
closed within thirty (10) days of the date of this letter.
Should the terms and conditions outlined meet with your approval, please sign
where indicated and return the original to my attention, at Peoples Heritage
Bank.
Should you have any questions or comments, feel free to call me. Thank you for
giving Peoples Heritage Bank the opportunity to provide this financing proposal
for your consideration.
Very truly yours,
PEOPLES HERITAGE BANK
JoAnne P. Campbell, Vice President
Accepted and agreed to
PHYSICIAN RESOURCES, INC.:
By:
Thomas N. Hackett, Its President
GUARANTORS:
Thomas N. Hackett, Guarantor
word/joanne/letter/cipri
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001026491
<NAME> ACADIA NATIONAL HEALTH SYSTEMS, INC.
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C> <C> <C>
<PERIOD-TYPE> OTHER YEAR YEAR
<FISCAL-YEAR-END> SEP-27-1996 SEP-30-1995 SEP-30-1994
<PERIOD-START> SEP-27-1996 JAN-01-1995 JAN-01-1994
<PERIOD-END> SEP-27-1996 DEC-31-1995 DEC-31-1994
<EXCHANGE-RATE> 1 1 1
<CASH> 120,988 85,138 102,298
<SECURITIES> 0 0 0
<RECEIVABLES> 220,283 205,956 21,523
<ALLOWANCES> 0 0 0
<INVENTORY> 0 7,630 4,026
<CURRENT-ASSETS> 348,077 317,360 147,864
<PP&E> 91,297 41,776 55,066
<DEPRECIATION> 52,574 51,858 52,727
<TOTAL-ASSETS> 500,850 359,136 202,929
<CURRENT-LIABILITIES> 146,796 215,679 103,832
<BONDS> 88,367 162,046 115,796
0 0 0
0 0 0
<COMMON> 251,640 18,589 16,699
<OTHER-SE> 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> 500,850 359,136 202,929
<SALES> 0 526,808 464,487
<TOTAL-REVENUES> 0 526,808 464,487
<CGS> 0 0 0
<TOTAL-COSTS> 0 470,537 408,828
<OTHER-EXPENSES> 0 56,640 53,902
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> 0 (370) 1,757
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 0 (370) 1,757
<EPS-PRIMARY> 0 .03 .03
<EPS-DILUTED> 0 0 0
<PAGE> S-1
INDEX TO FINANCIAL STATEMENT SCHEDULES
Schedules
V. Property and Equipment for the years
ended December 31, 1993, 1994 and 1995 S-2
VI. Accumulated Depreciation of Property
and Equipment for the years ended
December 31, 1993, 1994, and 1995 S-3
X. Supplementary Statements of Operations
Information for the years ended
December 31, 1993, 1994, and 1995 S-4
All other schedules are omitted as the required informationis
inapplicable or the information is presented in the financial
statements or related notes.
<PAGE> S-2
<TABLE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Property and Equipment
Years ended December 31, 1992, 1993, 1994 and 1995
<CAPTION>
Balance at Balance at
beginning of Additions at Retirements or end of
period cost sales period
<S> <C> <C> <C> <C>
Year ended 12/31/92:
Equipment 43,092 5,326 48,418
Other 17,000 17,000
Total 60,092 5,326 65,418
Year ended 12/31/93:
Equipment 48,418 9,997 58,415
Other 17,000 6,463 23,463
Total 65,418 16,460 81,878
Year ended 12/31/94:
Equipment 58,415 25,915 84,330
Other 23,463 23,463
Total 81,878 25,915 107,793
Year ended 12/31/95
Equipment 84,330 3,220 26,044 61,506
Other 23,463 14,540 5,875 32,128
Total 107,793 17,760 31,919 93,634
</TABLE>
<PAGE> S-3
<TABLE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Accumulated Depreciation of Property and Equipment
Years ended December 31, 1992, 1993, 1994 and 1995
<CAPTION>
Balance at Balance at
beginning of Additions at Retirements or end of
period cost sales period
<S> <C> <C> <C> <C>
Year ended 12/31/92:
Equipment (14,762) 24,834 10,072
Other 609 2,224 2,833
Total (14,153) 27,058 12,905
Year ended 12/31/93:
Equipment 10,072 17,703 27,775
Other 2,833 4,081 6,914
Total 12,905 21,784 34,689
Year ended 12/31/94:
Equipment 27,775 16,253 44,028
Other 6,914 3,306 10,220
Total 34,689 19,559 54,248
Year ended 12/31/95
Equipment 44,028 16,121 20,648 39,501
Other 10,220 2,739 472 12,487
Total 54,428 18,860 21,120 51,988
</TABLE>
<PAGE> S-4
<TABLE>
ACADIA NATIONAL HEALTH SYSTEMS, INC.
Supplementary Statements of Operation Information
Years ended December 31, 1992, 1993, 1994 and 1995
<CAPTION>
1993 1994 1995 1996
<S> <C> <C> <C> <C>
Maintenance and Repairs:
(a)
Equipment 10,212 10,510 2,518 6,690
Total 10,212 10,510 2,518 6,690
________________________________
(A) Through Seven (7) Months, 1996
</TABLE>
