SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) NOVEMBER 30, 1996
COASTAL PHYSICIAN GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 001-13460 56-1379244
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
2828 CROASDAILE DRIVE, DURHAM, NC 27705
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (919)383-0355
N/A
(Former name or former address, if changed since last report)
ITEM 2. - DISPOSITION OF ASSETS
Effective November 30, 1996, Coastal Physician Group, Inc. (the
"Company") sold certain assets of the HealthNet Medical Group
division of Physicians Planning Group, Inc. ("HealthNet"), the
Company's New Jersey-based clinic operations, to the Valley Care
Corporation, the parent of The Valley Hospital, for approximately
$9.5 million in cash, and an additional $1.05 million which is to
be received by December 31, 1996. HealthNet employs 32
physicians at the group's nine primary care sites in New Jersey
and New York. Net proceeds to the Company have been used
primarily to reduce bank borrowings under the Company's credit
facilities.
ITEM 7. - FINANCIAL STATEMENTS AND EXHIBITS
The following financial information and exhibits are filed as
part of this report:
(b) PRO FORMA FINANCIAL INFORMATION:
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA FINANCIAL
INFORMATION OF COASTAL PHYSICIAN GROUP, INC.
Unaudited Condensed Consolidated Pro Forma Balance Sheet as
of September 30, 1996
Unaudited Condensed Consolidated Pro Forma Statements of
Operations for the nine months ended September 30, 1996 and
the year ended December 31, 1995
(c) EXHIBITS:
The exhibits which are filed with this Form 8-K are set
forth in the Exhibit Index, which immediately precedes the
exhibits to this report.
COASTAL PHYSICIAN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA
FINANCIAL INFORMATION
The following unaudited condensed consolidated pro forma balance
sheet as of September 30, 1996, and the unaudited condensed
consolidated pro forma statements of operations for the nine
month period ended September 30, 1996 and the year ended December
31, 1995 have been prepared to give effect to the sale of certain
assets of HealthNet. The adjustments to the unaudited condensed
consolidated pro forma balance sheet have been prepared as if the
transaction was consummated on September 30, 1996, while the
adjustments to the unaudited condensed consolidated pro forma
statements of operations have been prepared as if the transaction
was consummated as of the beginning of the respective periods
presented. The unaudited condensed consolidated pro forma
financial information has been adjusted to reflect the effect of
the pro forma adjustments described in the accompanying notes and
is not necessarily indicative of the consolidated financial
position or results of operations as they may be in the future or
as they might have been had the sale transaction been effected as
of the assumed dates. The unaudited condensed consolidated pro
forma financial information should be read in conjunction with
the Company's unaudited condensed consolidated financial
statements and notes thereto as of September 30, 1996 and for the
nine months then ended included in the Company's Quarterly Report
on Form 10-Q filed on November 14, 1996.
COASTAL PHYSICIAN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
PRO FORMA
HISTORICA ADJUSTMEN PRO FORMA
L TS
(UNAUDITE
D)
ASSETS
Current assets:
Cash and cash equivalents 11,205 9,459 (b 12,353
)
(8,311) (d
)
Marketable securities 9,227 9,227
Trade accounts receivable, net 111,320 (1,261) (a 110,059
)
Accounts receivable, other 15,282 1,050 (c 16,332
)
Other current assets 12,300 12,300
Total current assets 159,334 937 160,271
Property and equipment, at
cost, 21,901 (612) (a 21,289
less accumulated )
depreciation
Excess of cost over fair value
of 36,833 36,833
net assets acquired,
net
Other assets 20,198 (102) (a 20,096
)
Total assets 238,266 223 238,489
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Current maturities and other
short-term borrowings 83,236 (73) (a 74,852
)
(8,311) (d
)
Accounts payable and
accrued expenses 48,864 889 (a 49,753
)
Accrued physician fees
and medical costs 30,843 30,843
Total current liabilities 162,943 (7,495) 155,448
Long-term debt, excluding
current maturities 3,064 (172) (a 2,892
)
Total liabilities 166,007 (7,667) 158,340
Shareholders' equity:
Preferred stock --- ---
Common stock 239 239
Additional paid-in capital 142,386 142,386
Common stock warrants 987 987
Accumulated deficit (71,419) 7,890 (f (63,529)
)
Unrealized appreciation of
available-for-sale 66 66
securities
Total shareholders' 72,259 7,890 80,149
equity
Total liabilities and
shareholders' equity 238,266 223 238,489
COASTAL PHYSICIAN GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1996
DETAILS OF PRO FORMA ADJUSTMENTS
(a) To record the disposition of the assets and liabilities
of the clinics sold.
(b) To record the estimated net cash proceeds from the sale.
(c) To record a receivable for 1.05 million of the sale
proceeds to be received by December 31, 1996 per the asset
purchase agreement.
(d) To reflect the application of 8.311 million of net cash
proceeds from the sale to reduce outstanding amounts on the
Company's credit facilities.
(e) To record various estimated transaction-related expenses.
(f) To record the estimated retained earnings impact of the
sale.
COASTAL PHYSICIAN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA
HISTORICA ADJUSTMENT PRO FORMA
L S
Operating revenue, net:
Operating revenue, net 344,021 344,021
Operating revenue, net - divested
and
to be divested entities 92,556 (8,245) (a 84,311
)
Total operating revenue, net 436,577 (8,245) 428,332
Costs and expenses:
Physician and other provider 281,202 281,202
services
Medical support services 42,050 42,050
Professional and consulting fees 11,071 11,071
Other selling, general and
administrative 62,808 62,808
Costs and Expenses - divested and
to be 103,208 (8,214) (a 94,994
divested entities )
Total costs and expenses 500,339 (8,214) 492,125
Gain on divested assets, net 1,780 1,780
Operating loss (61,982) (31) (62,013)
Other income (expense):
Proxy and related litigation (5,472) (5,472)
costs
Interest income (expense), net (6,196) 32 (a (5,592)
)
572 (b
)
Amortization of debt issuance (2,516) (2,516)
costs
Other, net (226) (226)
Total other expense (14,410) 604 (13,806)
Loss before income taxes and
extraordinary item (76,392) 573 (75,819)
Income tax provision 516 516
Loss before extraordinary item (76,908) 573 (76,335)
Extraordinary item - gain on
pooled
portion of south Florida 1,864 1,864
divestiture,
net of income taxes of $647
Net loss (75,044) 573 (74,471)
Loss per common share:
Loss before extraordinary item (3.23) (3.20)
Extraordinary gain 0.08 0.08
Net loss (3.15) (3.12)
Weighted average number of shares
outstanding 23,832 23,832
COASTAL PHYSICIAN GROUP, INC.
UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA
HISTORICA ADJUSTMENT PRO
L S FORMA
Operating revenue, net 810,387 (12,630) (a) 797,757
Costs and expenses:
Physician and other provider 603,881 (5,782) (a) 598,099
services
Medical support services 131,097 (7,154) (a) 123,943
Selling, general and administrative 124,422 (13,173) (a,d 111,249
)
Total costs and expenses 859,400 (26,109) 833,291
Operating loss (49,013) 13,479 (35,534
)
Other income (expense):
Interest income (expense), net (7,157) 58 (a) (6,430)
669 (b)
Loss on purchased portion of south
Florida divestiture (20,195) (20,195
)
Other, net (3,909) (3,909)
Total other expense (31,261) 727 (30,534
)
Loss before income taxes and
extraordinary item (80,274) 14,206 (66,068
)
Income tax benefit 17,136 (453) (c) 16,683
Loss before extraordinary item (63,138) 13,753 (49,385
)
Extraordinary item - gain on
pooled
portion of south Florida 16,237 16,237
divestiture,
net of income taxes of 9,976
Net loss (46,901) 13,753 (33,148
)
Loss per common share:
Loss before extraordinary item (2.67) (2.09)
Extraordinary gain 0.69 0.69
Net loss (1.98) (1.40)
Weighted average number of shares
outstanding 23,656 23,656
COASTAL PHYSICIAN GROUP, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
DETAILS OF PRO FORMA ADJUSTMENTS
(a) To record the direct operations of the assets disposed
of in the sale transaction.
(b) To reduce interest expense based on the reduction of debt
outstanding assuming the sale transaction was consummated at
the beginning of each period presented using effective
interest rates of 9.17% and 8.05% for the nine months ended
September 30, 1996 and the year ended December 31, 1995,
respectively.
(c) To reverse the estimated tax benefit related to the
operations of the assets sold at an assumed effective tax rate
of approximately 34% for the year ended December 31, 1995.
(d) As noted in the Company's 1995 Annual Report on Form 10-K,
during the fourth quarter of 1995 HealthNet recognized a
goodwill impairment loss of 12.588 million, included in
Selling, general and administrative expenses.
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
2.1 Asset Purchase Agreement between
Physicians Planning Group, Inc.;
HealthNet Medical Group of New Jersey,
P.A.; HealthNet Medical Services of New
York, P.C.; Coastal Physician Networks,
Inc.; Coastal Physician Group, Inc. and
Valley Care Corporation
Dated: October 29, 1996
2.1(a) Index of Omitted Exhibits and Schedules;
Agreement to Furnish Upon Request
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
COASTAL PHYSICIAN GROUP, INC.
(registrant)
Date: December 16, 1996 By: /S/ TIMOTHY W. TROST
Timothy W. Trost
Executive Vice President
and Chief Financial Officer
Date: December 16, 1996 By: /S/ W. RANDALL DICKERSON
W. Randall Dickerson
Vice President, Corporate
Controller and Chief
Accounting Officer
TABLE OF CONTENTS
(continued)
Page
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
between
PHYSICIANS PLANNING GROUP, INC.
HEALTHNET MEDICAL GROUP OF NEW JERSEY, P.A.
HEALTHNET MEDICAL SERVICES OF NEW YORK, P.C.
COASTAL PHYSICIAN NETWORKS, INC.
COASTAL PHYSICIAN GROUP, INC.
and
VALLEY CARE CORPORATION
Dated: October 29, 1996
TABLE OF CONTENTS
PAGE
RECITALS 1
1. PURCHASE OF ASSETS. 3
1.1 Purchase of Seller Assets. 3
(1) Real Property Leases. 3
(2) Other Leases. 3
(3) Operating Documents. 3
(4) Inventory. 4
(5) Equipment. 4
(6) Supplies. 4
(7) Executory Contracts. 4
(8) Employment Contracts. 4
(9) Records. 4
(10) Computer Software. 4
(11) Telephone. 5
(12) Name. 5
(13) Intangible Assets. 5
(14) Other. 5
1.2 PURCHASE OF NJ DOCTORS' ASSETS. 5
(1) Leases. 5
(2) Operating Documents. 5
(3) Inventory. 6
(4) Equipment. 6
(5) Supplies. 6
(6) Employment Contracts. 6
(7) Records. 6
(8) Computer Software. 6
(9) Telephone. 7
(10) Name. 7
(11) Intangible Assets. 7
(12) Other. 7
1.3 Purchase of NY Doctors' Assets. 7
(1) Leases. 7
(2) Operating Documents. 7
(3) Inventory. 8
(4) Equipment. 8
(5) Supplies. 8
(6) Employment Contracts. 8
(7) Records. 8
(8) Computer Software. 9
(9) Telephone. 9
(10) Name. 9
(11) Intangible Assets. 9
(12) Other. 9
1.4 Purchase of Accounts Receivable. 9
2. PURCHASE PRICE. 10
2.1 Asset Purchase Price. 10
2.2 Accounts Receivable Purchase Price.11
2.3 Earnest Money Deposit. 11
2.4 NJ Tax Notice. 11
2.5 Allocation of Purchase Price. 11
3. ASSUMPTION OF OBLIGATIONS. 11
3.1 MSO Nominee. 11
3.2 NJ Nominee. 12
3.3 NY Nominee. 12
3.4 Assuming No Other Obligations. 12
4. EMPLOYEES OF SELLER. 12
4.1 Employees at the Sites. 12
4.2 Employees at Oakland Offices. 13
5. CLOSING; DELIVERY OF DOCUMENTS. 13
5.1 Deliveries by Seller. 13
5.2 Deliveries by NJ Doctors. 14
5.3 Deliveries by NY Doctors. 15
5.4 Deliveries by MSO Nominee, NJ Nominee and NY
Nominee. 16
6. ADJUSTMENTS AND UNASSUMED LIABILITIES. 16
6.1 Closing Books. 16
6.2 Existing Liabilities. 16
6.3 Invoices. 17
7. WARRANTIES AND REPRESENTATIONS OF SELLER, NJ
DOCTORS AND NY DOCTORS. 17
7.1 Organization; Licenses. 17
7.2 Authority. 17
7.3 Subsidiaries. 17
7.4 Other Business Names. 17
7.5 Sites. 17
7.6 Leases. 17
7.7 Tangible Personal Property. 18
7.8 Intangible Personal Property; Computer
Programs. 18
7.9 Title to Assets. 18
7.10 Current Employees and Employment Practices.
18
7.11 ERISA. 19
7.12 Insurance. 19
7.13 Compliance with Applicable Laws. 19
7.14 Environmental and Medical Waste Compliance.
20
7.15. Taxes. 20
7.16 Litigation. 20
7.17 Contracts. 21
7.18 Brokerage. 21
7.19 Collection Contracts. 21
7.20 Dr. Bertram E. Walls. 21
7.21 Jurisdictions Doing Business. 21
7.22 Copies of Material Documents. 21
7.23 Medicaid Accounts Receivable. 22
7.24 Additional Warranties and Representations
Concerning Seller Group. 22
7.25 Full Disclosure. 22
8. WARRANTIES AND REPRESENTATIONS OF BUYER. 22
8.1 Organization. 22
8.2 Authority. 22
8.3 Full Disclosure. 22
9. CONDUCT PENDING CLOSING. 22
9.1 Consents. 22
9.2 Ordinary Course of Dealing. 23
9.3 Exclusive Dealing. 23
9.4 Transition. 23
9.5 Cooperation. 23
9.6 Right of First Refusal. 23
10. INSPECTION CONTINGENCY. 24
11. RISK OF LOSS. 24
12. ACCESS AND OTHER MATTERS. 25
12.1 Access. 25
12.2 Filings and Other Actions. 25
12.3 Taxes. 25
12.4 Non-Competition and Non-Solicitation of
Seller Group. 25
12.5 Confidentiality. 26
12.6 News Release. 26
13. CONDITIONS TO OBLIGATIONS OF BUYER. 27
13.1 Representations and Warranties True at the
Closing Date. 27
13.2 No Material Adverse Change. 27
13.3 Consents to Assignments. 27
13.4 Regulatory Approvals. 27
13.5 Board Approval. 28
13.6 Opinions of Counsel. 28
13.7 Consents. 28
13.8 Good Title. 28
13.9 ISRA Compliance. 28
13.10 Bulk Sales. 28
13.11 Tax Notice. 29
13.13 Compliance with Laws. 29
13.14 Termination of Pension Plans. 29
13.15 Insurance. 29
13.16 No Regulatory Proceedings. 29
14. CONDITIONS TO OBLIGATIONS OF SELLER, NJ DOCTORS
AND NY DOCTORS. 30
14.1 Representations and Warranties True at the
Closing Date. 30
14.2 Board Approval. 30
14.3 Opinions of Counsel. 30
14.5 No Regulatory Proceedings. 30
15. POST CLOSING COVENANTS. 30
15.1 Survival of Representations and Warranties.
30
15.2 Indemnification by Seller Group. 31
(a) Indemnification. 31
(b) Limit of Indemnification. 31
15.3 Enforcement of Indemnification Rights.
32
(a) Notification. 32
(b) Disputes. 32
15.4 Set-off. 32
15.5 Remedies Cumulative. 32
15.6 Employee Compensation and Accrued Benefits.
32
15.7 Litigation Procedure. 33
15.8 Equipment Leases Assigned Without Lessor
Consent. 33
16. EXPENSES. 34
17. BROKERAGE. 34
18. NOTICES. 34
19. SUCCESSORS AND ASSIGNS. 34
20. GOVERNING LAW. 35
21. CONSENT TO JURISDICTION. 35
22. COUNTERPARTS. 35
23. FURTHER ASSURANCES. 35
24. ENTIRE AGREEMENT. 35
25. SEVERABILITY. 35
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made
as of the 29th day of October, 1996, by and among
PHYSICIANS PLANNING GROUP, INC. a Maryland corporation,
having an address at 2828 Croasdaile Drive, Durham,
North Carolina 27704 (the "Seller"); HEALTHNET
MEDICAL GROUP OF NEW JERSEY, P.A., a New Jersey
professional corporation, having an address at 2828
Croasdaile Drive, Durham, North Carolina 27704 (the
"NJ Doctors"); HEALTHNET MEDICAL SERVICES OF NEW YORK,
P.C., a New York professional corporation, having an
address at 2828 Croasdaile Drive, Durham, North
Carolina 27704 (the "NY Doctors"); COASTAL PHYSICIAN
NETWORKS, INC. a North Carolina corporation, having an
address at 2828 Croasdaile Drive, Durham, North
Carolina 27704 (the "Parent") (The Parent is a party
to this Agreement only with respect to the specific
sections applicable to it as described on the signature
page.); COASTAL PHYSICIAN GROUP, INC. (f/k/a Coastal
Healthcare Group, Inc.) a Delaware corporation, having
an address at 2828 Croasdaile Drive, Durham, North
Carolina 27704 (the "Ultimate Parent") (The Ultimate
Parent is a party to this Agreement only with respect
to the specific sections applicable to it as described
on the signature page.); AND VALLEY CARE CORPORATION,
a New Jersey non-profit corporation, having an address
at 223 North Van Dien Avenue, Ridgewood, New Jersey
07456 (the "Buyer").
RECITALS
A. Seller is a physician practice management services
organization that through its HealthNet Medical Group division
(the "Division") owns and operates nine (9) primary care
facilities in northern New Jersey and the lower Hudson Valley of
New York (collectively, the "Business").
B. NJ Doctors and NY Doctors are professional
corporations which practice medicine at the nine (9) primary care
facilities of Seller.
C. Seller is a wholly owned subsidiary of Coastal
Physician Networks, Inc. (the "Parent"), which is a wholly owned
subsidiary of Coastal Physician Group, Inc. (the "Ultimate
Parent").
D. NJ Doctors and NY Doctors are wholly owned by Dr.
Bertram E. Walls M.D., a director of the Ultimate Parent
(collectively, Seller, NJ Doctors, NY Doctors, Parent and
Ultimate Parent shall be referred to as the "Seller Group").
E. Seller desires to sell to a nominee of Buyer and
Buyer desires its nominee to purchase from Seller substantially
all the assets of Seller used in connection with the operation of
the Business pursuant to the terms and subject to the conditions
set forth in this Agreement.
F. Buyer plans to form a New Jersey corporation to
take title to the assets of Seller being transferred hereunder
(the "MSO Nominee").
G. Seller desires to cause NJ Doctors to sell to a
nominee of Buyer and Buyer desires its nominee to purchase from
NJ Doctors substantially all of the assets of NJ Doctors used in
connection with the operation of NJ Doctors' business pursuant to
the terms and subject to the conditions set forth in this
Agreement.
H. Buyer plans to form a New Jersey professional
corporation owned by a doctor associated with Buyer to take title
to the assets of NJ Doctors being transferred hereunder (the "NJ
Nominee")
I. Seller desires to cause NY Doctors to sell to a
nominee of Buyer and Buyer desires its nominee to purchase from
NY Doctors substantially all of the assets of NY Doctors used in
connection with the operation of NY Doctors' business pursuant to
the terms and subject to the conditions set forth in this
Agreement.
J. Buyer plans to form a New York professional
corporation owned by a doctor associated with Buyer to take title
to the assets of NY Doctors being transferred hereunder (the "NY
Nominee") (collectively, the Buyer, MSO Nominee, NJ Nominee and
NY Nominee shall be referred to as the "Buyer Group").
NOW, THEREFORE, in consideration of the mutual
covenants and agreements hereinafter set forth and other good and
valuable consideration, the parties agree as follows:
PURCHASE OF ASSETS.
1.1 PURCHASE OF SELLER ASSETS.
(a) Seller agrees to sell and transfer to the MSO
Nominee at the Closing (as hereinafter defined) and Buyer agrees
to cause MSO Nominee to purchase from Seller at the Closing all
of Seller's right, title and interest to, in and under its
Assets, free and clear of any and all liens, encumbrances and
liabilities (other than liabilities specifically assumed pursuant
to this Agreement). The term "Assets" means all assets,
properties and rights of Seller as of the Closing (other than
Excluded Assets (as defined below)) of every kind and
description, real, personal and mixed, tangible and intangible
(i) used by Seller to provide management services to NJ Doctors
or NY Doctors, or (ii) located at the Sites (as defined below),
including but not limited to the following:
(1) REAL PROPERTY LEASES. Subject to the receipt
of required landlord approvals, all right, title and interest of
Seller in and to (i) all leases and other agreements for use or
occupancy of any land and/or any improvements, or any part
thereof (the "Leases") of the eleven (11) sites described on
SCHEDULE 1.1(a)(1) attached hereto and made a part hereof (the
"Sites"), and (ii) all of Seller's right to any security, advance
rental or other deposits made under the Leases (subject to an
adjustment in the purchase price as described below);
(2) OTHER LEASES. Subject to the receipt of
required approvals from certain lessors, all right, title and
interest of the Division in and to all leases, subleases and
rights thereunder for property other than real property
(including but not limited to the personal property and equipment
listed on SCHEDULE 1.1(a)(2) attached hereto and made a part
hereof) (the "Personal Property Leases");
(3) OPERATING DOCUMENTS. All right, title and
interest of Seller in and to (i) the management services contract
dated as of June 24, 1994 between Seller and NJ Doctors and the
amended and restated management services contract dated as of
June 24, 1994 between Seller and Ambulatory Medical Services of
New York, P.C., (ii) all managed care, management services,
maintenance, utility and other similar contracts and agreements
related or pertaining to the delivery of medical services to
patients, the operation, maintenance or management of the
Business (including without limitation those listed on SCHEDULE
1.1(a)(3)(A) attached hereto and made a part hereof) (the
"Operating Contracts"), (iii) all certificates of occupancy or
use and all other material permits, licenses, consents and
authorizations held in connection with the ownership, use,
occupancy or operation of the Business (including, without
limitation, those listed on SCHEDULE 1.1(a)(3)(B) attached hereto
and made a part hereof), all warranties, guaranties and
agreements relating or pertaining to the Assets (collectively,
with the Operating Contracts, the "Operating Documents")
(4) INVENTORY. All inventory owned by the
Division, including but not limited to all inventory located at
or in transit to the Sites;
(5) EQUIPMENT. All furniture, beds, desks,
chairs, medical equipment, telephone equipment, fixtures,
computer hardware (including but not limited to two IBM RISC 6000
central processing units), computer software, cash registers, gas
and electric fixtures, hot water heaters, wall-to-wall carpets,
linoleum, screens, shades, awnings, trash cans, heating
apparatus, storm sash, doors and other equipment or personal
property owned by the Division and located at the Sites or used
in connection with the operation of the Business;
(6) SUPPLIES. All supplies of the Division,
medical and non-medical, used in connection with the operation of
the Business or located at or in transit to the Sites;
(7) EXECUTORY CONTRACTS. All of Seller's rights
and interests in and to any contracts for products of any nature
relating to the Business and any other executory contracts
relating to the Business, including, without limitation, those
listed on SCHEDULE 1.1(a)(7) attached hereto and made a part
hereof;
(8) EMPLOYMENT CONTRACTS. All of the employment
contracts listed on SCHEDULE 1.1(a)(8) attached hereto and made a
part hereof.
(9) RECORDS. All of Seller's patient records,
medical records, medical charts, databases, books, papers,
records and files pertaining in any way to the Business no matter
where they are located and whether on paper, on computer diskette
or in another form, except for minute books, stock books, tax
returns and all supporting documents related thereto; and all of
Seller's books, papers, records and files pertaining in any way
to the Division's patients or customers, including without
limitation, correspondence, insurance claims, patient histories,
patient lists, credit reports, collection and sales records,
billing records, purchasing records and related data processing
records; and all of Seller's books, papers, records and files
pertaining in any way to the Division's suppliers;
(10) COMPUTER SOFTWARE. All of Seller's right,
title and interest in computer programs (including but not
limited to the current version of "Medical Manager" and case
management programs utilized by Seller in connection with the
operations of the Business, and all of Seller's documentation,
narrative descriptions, data processing tapes, data storage
devices, computer diskettes and records relating thereto;
provided, however, that in the event Seller is unable to transfer
its license for the Medical Manager software to Buyer, Seller
shall at its cost cause a new license for the now current version
of such Medical Manager software to be issued to Buyer or make
other arrangements with respect to the failure to transfer this
license mutually satisfactory to Buyer and Seller.
(11) TELEPHONE. All of Seller's right, title and
interest in telephone numbers used in connection with the
Business;
(12) NAME. All of Seller's right, title and
interest in the "HealthNet" and "HealthNet Medical Group" names
and logos as presently or previously used by Seller or its
predecessors in connection with the Business;
(13) INTANGIBLE ASSETS. All of Seller's right,
title and interest in formulae utilized in the Business and all
other trade names, trademarks, service marks, good will or
intangible assets used by Seller in its Business; and
(14) OTHER. All of Seller's right, title and
interest in other personal property appurtenant to, or located on
or in the Sites and all other assets used by Seller in the
Business.
(b) The assets of Seller listed on SCHEDULE
1.1(b) are hereby excluded from Section 1.1(a) above ("Excluded
Assets").
1.2 PURCHASE OF NJ DOCTORS' ASSETS.
(a) NJ Doctors agrees to sell and transfer to NJ
Nominee at the Closing and Buyer agrees to cause NJ Nominee to
purchase from NJ Doctors at the Closing all of NJ Doctor's right,
title and interest to, in and under its NJ Assets, free and clear
of any and all liens, encumbrances and liabilities (other than
liabilities specifically assumed pursuant to this Agreement).
The term "NJ Assets" means all assets, properties and rights of
NJ Doctors as of the Closing of every kind and description, real,
personal and mixed, tangible and intangible, wherever situated,
excluding the NJ Excluded Assets, but including the following:
(1) LEASES. All right, title and interest of NJ
Doctors in and to all leases, subleases and rights thereunder;
(2) OPERATING DOCUMENTS. All right, title and
interest of NJ Doctors in and to (i) the management services
agreement dated as of June 24, 1994 between Seller and NJ
Doctors, (ii) all managed care, management services, maintenance,
utility and other similar contracts and agreements related or
pertaining to the delivery of medical services to patients, the
operation, maintenance or management of NJ Doctors' business
(including without limitation those listed on SCHEDULE
1.2(A)(2)(A) attached hereto and made a part hereof) (the "NJ
Operating Contracts"), (iii) all certificates of occupancy or use
and all other material permits, licenses, consents and
authorizations held in connection with the ownership, use,
occupancy or operation of NJ Doctors' business (including,
without limitation, those listed on SCHEDULE 1.2(A)(2)(B)
attached hereto and made a part hereof), all warranties,
guaranties and agreements relating or pertaining to the NJ Assets
(collectively, with the Operating Contracts, the "NJ Operating
Documents")
(3) INVENTORY. All inventory owned by NJ
Doctors, including but not limited to inventory located at or in
transit to the Sites;
(4) EQUIPMENT. All furniture, beds, desks,
chairs, medical equipment, telephone equipment, fixtures,
computer hardware, computer software, cash registers, gas and
electric fixtures, hot water heaters, wall-to-wall carpets,
linoleum, screens, shades, awnings, trash cans, heating
apparatus, storm sash, doors and other equipment or personal
property owned by NJ Doctors, including but not limited to all
such property owned by NJ Doctors and located at the Sites or
used in connection with the operation of NJ Doctors' business;
(5) SUPPLIES. All supplies of NJ Doctors,
medical and non-medical, including but not limited to those
supplies owned by NJ Doctors and used in connection with the
operation of NJ Doctors business and located at or in transit to
the Sites;
(6) EMPLOYMENT CONTRACTS. All NJ Doctors' right,
title and interest in the employment contracts listed on SCHEDULE
1.2(A)(6) attached hereto and made a part hereof, as well as the
right to employ the at-will part time physicians listed on
SCHEDULE 1.2(A)(6).
(7) RECORDS. All NJ Doctors' right, title and
interest in patient records, medical records, medical charts,
databases, books, papers, records and files pertaining in any way
to NJ Doctors' assets or its business to be transferred pursuant
to this Agreement whether on paper, on computer diskette or in
another form, except for minute books, stock books, tax returns
and all supporting documents related thereto; and all books,
papers, records and files pertaining in any way to NJ Doctors'
patients or customers, including without limitation,
correspondence, insurance claims, patient histories, patient
lists, credit reports, collection and sales records, billing
records, purchasing records and related data processing records;
and all books, papers, records and files pertaining in any way to
NJ Doctors' suppliers;
(8) COMPUTER SOFTWARE. All NJ Doctors' right,
title and interest in computer programs utilized by NJ Doctors in
connection with the operations of its business, and all
documentation, narrative descriptions, data processing tapes,
data storage devices, computer diskettes and records relating
thereto;
(9) TELEPHONE. All NJ Doctors' right, title and
interest in telephone numbers used in connection with NJ Doctors'
business;
(10) NAME. NJ Doctors' right, title and interest
in the "HealthNet" and "HealthNet Medical Group of New Jersey"
names and logos as presently or previously used by NJ Doctors or
its predecessors in connection with its business (and NJ Doctors
agrees to provide NJ Nominee at Closing with all executed
documents NJ Nominee needs to file to change NJ Doctors'
corporate name immediately after the Closing to delete any
reference to HealthNet);
(11) INTANGIBLE ASSETS. All of NJ Doctors' right,
title and interest in all formulae utilized in NJ Doctors'
business and all other trade names, trademarks, service marks,
good will or intangible assets used by NJ Doctors in its
business; and
(12) OTHER. All of NJ Doctors' right, title and
interest in other personal property appurtenant to, or located on
or in the Sites and all other assets used by NJ Doctors in its
business.
(b) The assets of NJ Doctor listed on SCHEDULE
1.2(B) are hereby excluded from Section 1.2(a) above ("NJ
Excluded Assets").
1.3 PURCHASE OF NY DOCTORS' ASSETS.
(a) NY Doctors agrees to sell and transfer to NY
Nominee at the Closing and Buyer agrees to cause NY Nominee to
purchase from NY Doctors at the Closing all of NY Doctors' right,
title and interest to, in and under its NY Assets, free and clear
of any and all liens, encumbrances and liabilities (other than
liabilities specifically assumed pursuant to this Agreement).
The term "NY Assets" means all assets, properties and rights of
NY Doctors as of the Closing of every kind and description, real,
personal and mixed, tangible and intangible, wherever situated,
excluding the NY Excluded Assets, but including the following:
(1) LEASES. All right, title and interest of NY
Doctors in and to all leases, subleases and rights thereunder
(the "NY Leases");
(2) OPERATING DOCUMENTS. All right, title and
interest of NY Doctors in and to (i) the amended and restated
management services contract between Seller and Ambulatory
Medical Services of New York, P.C. (a predecessor of NY Doctors),
(ii) all managed care, management services, maintenance, utility,
and other similar contracts and agreements related or pertaining
to the delivery of medical services to patients, the operation,
maintenance or management of NY Doctors' business (including
without limitation those listed on SCHEDULE 1.3(A)(2)(A) attached
hereto and made a part hereof) (the "NY Operating Contracts"),
(iii) all certificates of occupancy or use and all other material
permits, licenses, consents and authorizations held in connection
with the ownership, use, occupancy or operation of NY Doctors'
business (including, without limitation, those LISTED ON SCHEDULE
1.3(A)(2)(B) attached hereto and made a part hereof), all
warranties, guaranties and agreements relating or pertaining to
the NY Assets (collectively, with the Operating Contracts, the
"NY Operating Documents")
(3) INVENTORY. All inventory owned by NY
Doctors, including but not limited to inventory located at or in
transit to the Sites;
(4) EQUIPMENT. All furniture, beds, desks,
chairs, medical equipment, telephone equipment, fixtures,
computer hardware, computer software, cash registers, gas and
electric fixtures, hot water heaters, wall-to-wall carpets,
linoleum, screens, shades, awnings, trash cans, heating
apparatus, storm sash, doors and other equipment or personal
property owned by NY Doctors, including but not limited to all
such property owned by NY Doctors and located at the Sites or
used in connection with the operation of NY Doctors' business;
(5) SUPPLIES. All supplies of NY Doctors,
medical and non-medical, including but not limited to those
supplies owned by NY Doctors and used in connection with the
operation of NY Doctors business and located at or in transit to
the Sites;
(6) EMPLOYMENT CONTRACTS. All NY Doctors' right,
title and interest in the employment contracts listed on SCHEDULE
1.3(A)(6) attached hereto and made a part hereof, as well as the
right to employ the at-will part time physicians listed on
SCHEDULE 1.3(B)(6).
(7) RECORDS. All NY Doctors' right, title and
interest in patient records, medical records, medical charts,
databases, books, papers, records and files pertaining in any way
to NY Doctors' assets or its business to be transferred pursuant
to this Agreement whether on paper, on computer diskette or in
another form, except for minute books, stock books, tax returns
and all supporting documents related thereto; and all books,
papers, records and files pertaining in any way to NY Doctors'
patients or customers, including without limitation,
correspondence, insurance claims, patient histories, patient
lists, credit reports, collection and sales records, billing
records, purchasing records and related data processing records;
and all books, papers, records and files pertaining in any way to
NY Doctors' suppliers;
(8) COMPUTER SOFTWARE. All NY Doctors' right,
title and interest in computer programs utilized by NY Doctors in
connection with the operations of its business, and all
documentation, narrative descriptions, data processing tapes,
data storage devices, computer diskettes and records relating
thereto;
(9) TELEPHONE. All NY Doctors' right, title and
interest in telephone numbers used in connection with NY Doctors'
business;
(10) NAME. NY Doctors' right title and interest
in the "HealthNet" and "HealthNet Medical Services of New York"
names and logos as presently or previously used by NY Doctors or
its predecessors in connection with its business (and NY Doctors
agrees to provide NY Nominee at Closing with all executed
documents NY Nominee needs to file to change NY Doctors'
corporate name immediately after the Closing to delete any
reference to HealthNet);
(11) INTANGIBLE ASSETS. All of NJ Doctors' right,
title and interest in all formulae utilized in NY Doctors'
business and all other trade names, trademarks, service marks,
good will or intangible assets used by NY Doctors in its
business; and
(12) OTHER. All other personal property
appurtenant to, or located on or in the Sites and all other
assets used by NY Doctors in its business.
(b) The assets of NY Doctor listed on SCHEDULE
1.3(B) are hereby excluded from Section 1.3(a) above ("NY
Excluded Assets").
1.4 PURCHASE OF ACCOUNTS RECEIVABLE.
(a) In addition to the transactions described
above, Seller, NJ Doctors and NY Doctors each agrees to sell and
transfer to the MSO Nominee at Closing and Buyer agrees to cause
the MSO Nominee to purchase from Seller, NJ Doctors and NY
Doctors at Closing all of Seller's, NJ Doctors' and NY Doctors'
right, title and interest in the Accounts Receivable, free and
clear of any and all liens, encumbrances and liabilities (other
than liabilities specifically assumed pursuant to this
Agreement). "Accounts Receivable" means all accounts receivable
of Seller, NJ Doctors and NY Doctors existing as of the Closing
with respect to the Sites, other than MediCare and Medicaid
accounts receivable and accounts receivable of Dr. Meyers as
further described on SCHEDULE 1.4(A) attached hereto and made a
part hereof.
(b) Within fifteen (15) days of Closing, Seller
will provide the Buyer Group with a list of the Accounts
Receivable as of Closing which shall be presented in form
substantially similar to SCHEDULE 1.4(A) attached hereto and made
a part hereof ("Closing Account Receivables").
(i) In the event the aggregate amount of the Closing
Account Receivables is less than $2,831,232, the
Accounts Receivable Purchase Price shall be
adjusted downward on a dollar-for-dollar basis by
($2,831,232 minus the aggregate amount of the
Closing Account Receivables).
(ii) In the event that the amount of Closing Account
Receivables less than ninety (90) days old differs
from the amount of Account Receivables less than
ninety (90) days old set forth on SCHEDULE 1.4(A)
by more than three percent (3%), the Accounts
Receivable Purchase Price shall be adjusted upward
on a dollar-for-dollar basis by the amount the
Closing Accounts Receivable less than ninety (90)
days old is more than $1,055,834 or downward on a
dollar-for-dollar basis by the amount the Closing
Accounts Receivable less than ninety (90) days old
is less than $994,329.
All adjustments to the Accounts Receivable Purchase Price shall
be made with respect to the payment due on or before December 31,
1996. Notwithstanding anything above, the Accounts Receivable
Purchase Price shall not exceed ONE MILLION FIFTY THOUSAND and
00/100 DOLLARS ($1,050,000). Notwithstanding anything to the
contrary in Sections 1.4(b)(i) and (ii) above, should the
aggregate Closing Account Receivables be less than $2,831,232 AND
the amount of Closing Account Receivables less than ninety (90)
days old be less than $994,329, the Account Receivable Purchase
Price shall be adjusted downward by the greater of the
adjustments calculated under Sections 1.4(b)(i) and (ii).
PURCHASE PRICE.
2.1 ASSET PURCHASE PRICE. The purchase price for
the Assets, the NJ Assets and the NY Assets shall be NINE MILLION
THREE HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 DOLLARS
($9,375,000) (the "Asset Purchase Price"), payable at Closing by
wire transfer. The Asset Purchase Price shall be (a) increased
by an amount equal to the amount of real estate lease and/or
equipment lease deposits (i) assigned by Seller to MSO Nominee,
and (ii) confirmed to exist without a claim from the applicable
landlord/lessor as of the Closing by such landlord/lessor, (b)
increased by the amount of prepaid expenses scheduled and
mutually agreed to by Buyer and Seller at Closing, (c) decreased
by the amount of the Escrow Deposit (as defined below), and (d)
increased or decreased as required on a pro rata basis to reflect
revenue collected prior to Closing under agreements listed on
SCHEDULE 2.1 attached hereto for services to be provided after
Closing.
2.2 ACCOUNTS RECEIVABLE PURCHASE PRICE. The
purchase price for the Accounts Receivable shall be ONE MILLION
AND 00/100 DOLLARS ($1,000,000) (the "Accounts Receivable
Purchase Price"), with the first FOUR HUNDRED THOUSAND AND 00/100
DOLLARS payable within thirty (30) days of Closing and the
remainder of the Accounts Receivable Purchase Price (up to SIX
HUNDRED THOUSAND AND 00/100 DOLLARS ($600,000)) payable on or
before December 31, 1996.
2.3 EARNEST MONEY DEPOSIT. Buyer has already
paid $250,000 into an escrow account at Boston Private Bank &
Trust Company (the "Escrow Agent") pursuant to a certain escrow
agreement by and among Seller, Buyer and Escrow Agent (the
"Escrow Agreement"). At Closing, this $250,000 deposit, plus
interest earned thereon and less any fees and expenses due the
Escrow Agent pursuant to the Escrow Agreement (the "Escrow
Deposit") shall be credited toward the Asset Purchase Price.
However, should there fail to be a Closing on or before November
30, 1996 and any condition precedent to Buyer's obligation to
close has not been met, the Escrow Deposit shall be immediately
refunded to Buyer pursuant to the Escrow Agreement. Should all
of Buyer's conditions precedent to Closing be met and there fails
to be a Closing on or before November 30, 1996, the Escrow
Deposit shall be forwarded to Seller.
2.4 NJ TAX NOTICE. Notwithstanding anything in
Section 2.1 hereof to the contrary, Buyer Group shall file two
Notifications of Sale, Transfer of Assignment in Bulk with the
State of New Jersey Department of the Treasury, Division of
Taxation (the "Division"), one for Seller and one for NJ Doctors.
The Initial Payment of the purchase price set forth in Section
2.1 shall be reduced by any amount which the Division informs
Buyer Group must be withheld and paid to the Department of the
Treasury unless the Division informs Buyer Group that it may pay
the withheld amount to Seller and/or NJ Doctors without incurring
liability to the State of New Jersey for so doing.
2.5 ALLOCATION OF PURCHASE PRICE. The allocation
of the purchase price shall be negotiated and agreed to by the
parties prior to the Closing. Each of the parties agrees to
execute and file any and all necessary documents to report the
transactions contemplated by this Agreement in accordance with
the such allocation, including but not limited to Form 8594.
ASSUMPTION OF OBLIGATIONS.
3.1 MSO NOMINEE. Buyer agrees that MSO Nominee
will assume Seller's obligations from the Closing Date forward
(a) under contracts set forth by Seller on SCHEDULE 3.1 attached
hereto and made a part hereof, and (b) to pay vendors for
supplies ordered in the ordinary course of business and received
after Closing, if such vendors have been scheduled by Seller
prior to Closing and approved by Buyer in advance of Closing and
no single vendor is owed more than $2,500 for medical supplies or
$1,000 for non-medical supplies. Buyer shall not assume any
obligations for breaches or failure to pay on or prior to the
Closing Date.
3.2 NJ NOMINEE. Buyer agrees that NJ Nominee
will assume NJ Doctors' obligations from the Closing Date forward
under (a) all employment contracts of NJ Doctors listed on
SCHEDULE 1.2(A)(6) and (b) the management services contract dated
as of June 24, 1994 by and between Seller and NJ Doctors, a
complete copy of which is attached hereto as EXHIBIT A. NJ
Nominee shall not assume any obligations for breaches or failure
to pay on or prior to the Closing Date.
3.3 NY NOMINEE. Buyer agrees that NY Nominee
will assume NY Doctors' obligations from the Closing Date forward
under (a) all existing, written employment contracts of NY
Doctors listed on SCHEDULE 1.3(A)(6) and (b) the management
services contract dated as of June 24, 1994 by and between Seller
and NY Doctors, a complete copy of which is attached hereto as
EXHIBIT B. NY Nominee shall not assume any obligations for
breaches or failure to pay on or prior to the Closing Date.
3.4 ASSUMING NO OTHER OBLIGATIONS. EXCEPT FOR
THE FOREGOING OBLIGATIONS, BUYER, MSO NOMINEE, NJ NOMINEE AND NY
NOMINEE SHALL NOT ASSUME NOR DISCHARGE ANY DEBTS, OBLIGATIONS,
LIABILITIES OR COMMITMENTS OF SELLER, NJ DOCTORS OR NY DOCTORS
WHETHER ACCRUED NOW OR HEREAFTER, WHETHER FIXED OR CONTINGENT,
WHETHER KNOWN OR UNKNOWN. ALL ASSETS, NJ ASSETS, NY ASSETS AND
ACCOUNTS RECEIVABLE ARE TO BE TRANSFERRED TO MSO NOMINEE, NJ
NOMINEE AND NY NOMINEE FREE AND CLEAR OF ANY LIENS, CLAIMS,
SECURITY INTERESTS OR ENCUMBRANCES WHATSOEVER.
EMPLOYEES OF SELLER.
4.1 EMPLOYEES AT THE SITES. Buyer agrees to
cause the MSO Nominee to offer at-will employment to
substantially all of Sellers' employees listed on the attached
SCHEDULE 4.1 who have all necessary licenses and permits to carry
out their duties at the Sites at which they currently work, all
of whom work at the Sites at substantially the same compensation
and benefits as described on SCHEDULE 4.1. Except as set forth
on SCHEDULE 4.1, Seller will not increase such employees'
compensation and benefits without the prior written consent of
Buyer. Notwith-standing anything above, Buyer shall be permitted
time after the Closing Date to put together a comparable benefits
package for the employees listed on SCHEDULE 4.1 and shall
provide such package effective not later than sixty (60) days
after Closing. Except as provided below, the Buyer Group will
not be providing any benefits to such employees until it
establishes a benefits package comparable to their benefits
package with the Seller Group. The Seller, NJ Doctors and NY
Doctors shall be under no obligation to provide any benefits to
their respective employees accepting employment with the MSO
Nominee, the NJ Nominee or the NY Nominee with respect to their
employment on or after the Closing Date other than as required
under COBRA. The Seller, the NY Doctors and the NJ Doctors shall
assign their respective interests under each split-dollar
agreement identified in SCHEDULE 7.11 to the NJ Nominee and the
NY Nominee, as applicable, following the Closing Date. The
Ultimate Parent shall reasonably cooperate with the Buyer in
effecting the assignment of these agreements. The Buyer agrees
to cause the appropriate nominee to assume as of the Closing Date
all accrued vacation time, sick time, personal time and holidays
as described on SCHEDULE 7.11 accrued (but unused) by employees
of the Seller, NJ Doctors and the NY Doctors who begin working
for the MSO Nominee, the NJ Nominee or the NY Nominee as of the
Closing Date. Seller Group agrees to reasonably cooperate with
the Buyer in the transition period, such cooperation shall
include Seller Group (i) providing COBRA notices to applicable
employees, and (ii) providing continuation health and medical
insurance coverage to such employees as required by the
applicable COBRA provisions, it being understood that Seller
Group shall not be responsible for the cost of such extended
coverage under COBRA. Buyer shall notify Ultimate Parent as
former employees of Seller Group join benefit plans of Buyer
Group pursuant to this transaction.
4.2 EMPLOYEES AT OAKLAND OFFICES. Buyer may, but
is not required to, offer employment on any terms it chooses to
any of Seller's employees listed on attached SCHEDULE 4.2, all of
whom work at the Oakland, New Jersey offices.
CLOSING; DELIVERY OF DOCUMENTS. The closing of the
purchase and sale of the Assets, the NJ Assets, the NY Assets and
the Accounts Receivable will take place at the offices of Riker,
Danzig, Scherer, Hyland & Perretti, Headquarters Plaza, One
Speedwell Avenue, Morristown, New Jersey 07962 (the "Closing") on
or about October 31, 1996 (the "Closing Date") or at such other
place or on such other date following October 31, 1996 as the
parties shall mutually agree.
5.1 DELIVERIES BY SELLER. At the Closing, Seller
will deliver the following documents and instruments to MSO
Nominee:
(a) an executed bill of sale for the Assets,
transferring the Assets to MSO Nominee, along with all other
documents of conveyance required to convey and transfer the
Assets to the MSO Nominee free and clear of all liens, claims and
encumbrances;
(b) all documents necessary to convey all of
Seller's right, title and interest in the Account Receivables to
MSO Nominee free and clear of all liens, claims and encumbrances;
(c) executed assignments of leases, employment
agreements, contracts and licenses;
(d) executed consents to the above assignment for
the contracts and licenses listed on SCHEDULE 5.1(D) attached
hereto and made a part hereof;
(e) all of Seller's records and books of accounts,
papers and files pertaining to the operation of the Business not
previously provided to Buyer or MSO Nominee;
(f) an opinion of Seller's counsel in the form
annexed hereto as EXHIBIT C;
(g) an incumbency certificate and certified copies
of the corporate resolutions and shareholder consents authorizing
the sale of the Assets, the assignment of contracts and licenses
and the other transactions described herein;
(h) an executed consent of all lenders or others
with liens or encumbrances on the Assets or Seller's Accounts
Receivable;
(i) proof of payment of the medical malpractice
tail policy and a copy of the policy;
(j) a fully executed letter agreement with HCA as
described in Section 13.17; and
(k) all other documents required or contemplated
to be delivered to Buyer or MSO Nominee under the provisions of
this Agreement.
5.2 DELIVERIES BY NJ DOCTORS. At the Closing, NJ
Doctors will deliver the following documents and instruments to
NJ Nominee and MSO Nominee:
(a) an executed bill of sale for the NJ Assets,
transferring the NJ Assets to NJ Nominee, along with all other
documents of conveyance required to convey and transfer the NJ
Assets to the NJ Nominee free and clear of all liens, claims or
encumbrances;
(b) all documents necessary to convey all of NJ
Doctors' right, title and interest in the Account Receivables to
MSO Nominee free and clear of all liens, claims and encumbrances;
(c) executed assignments of leases, employment
agreements, contracts and licenses;
(d) executed consents to the above assignment for
the contracts and licenses listed on SCHEDULE 5.2(D) attached
hereto and made a part hereof;
(e) all of NJ Doctors' records and books of
accounts, papers and files pertaining to the operation of its
business not previously provided to NJ Nominee;
(f) an opinion of NJ Doctors' counsel in the form
annexed hereto as EXHIBIT C; and
(g) an incumbency certificate and certified copies
of the corporate resolutions and shareholder consents authorizing
the sale of the NJ Assets, the assignment of contracts and
licenses and the other transactions described herein;
(h) executed documents changing NJ Doctors' name
as described in Section 1.2(a)(10) above;
(i) an executed consent of all lenders or others
with liens or encumbrances on the NJ Assets or NJ Doctors'
Accounts Receivable;
(j) proof of payment of the medical malpractice
tail policy and a copy of the policy; and
(k) all other documents required or contemplated
to be delivered to NJ Nominee under the provisions of this
Agreement.
5.3 DELIVERIES BY NY DOCTORS. At the Closing, NY
Doctors will deliver the following documents and instruments to
NY Nominee and MSO Nominee:
(a) an executed bill of sale for the NY Assets,
transferring the NY Assets to NY Nominee, along with all other
documents of conveyance required to convey and transfer the NY
Assets to the NY Nominee free and clear of all liens, claims and
encumbrances;
(b) all documents necessary to convey all of NY
Doctors' right, title and interest in the Account Receivables to
MSO Nominee free and clear of all liens, claims and encumbrances;
(c) executed assignments of leases, employment
agreements, contracts and licenses;
(d) executed consents to the above assignment for
the contracts and licenses listed on SCHEDULE 5.3(D) attached
hereto and made a part hereof;
(e) all of NY Doctors' records and books of
accounts, papers and files pertaining to the operation of its
business not previously provided to NY Nominee;
(f) an opinion of NY Doctors' counsel in the form
annexed hereto as EXHIBIT C;
(g) an incumbency certificate and certified copies
of the corporate resolutions and shareholder consents authorizing
the sale of the NY Assets, the assignment of contracts and
licenses and the other transactions described herein;
(h) executed documents changing NY Doctors' name
as described in Section 1.2(a)(10) above;
(i) an executed consent of all of the lenders or
others with liens or encumbrances on all of the NY Assets or NY
Doctors' Accounts Receivable;
(j) proof of payment of the medical malpractice
tail policy and a copy of the policy; and
(k) all other documents required or contemplated
to be delivered to NY Nominee under the provisions of this
Agreement.
5.4 DELIVERIES BY MSO NOMINEE, NJ NOMINEE AND NY
NOMINEE. At the Closing, Buyer will cause MSO Nominee, NJ
Nominee and NY Nominee to deliver the following documents and
instruments to Seller, NJ Doctors and NY Doctors:
(1) the Asset Purchase Price as set forth in
Section
2.1;
(2) incumbency certificates and certified copies
of resolutions authorizing the purchase of the Assets, the NJ
Assets, the NY Assets and the Accounts Receivable;
(3) an opinion of counsel to MSO Nominee, NJ
Nominee and NY Nominee in the form annexed hereto as EXHIBIT D;
and
(4) an assignment and assumption agreement for all
contracts assigned at Closing.
ADJUSTMENTS AND UNASSUMED LIABILITIES.
6.1 CLOSING BOOKS. It is the intention of the
parties that Seller's, NJ Doctors' and NY Doctors' books be
closed as of 11:59 p.m. on the Closing Date (the "Apportionment
Time").
6.2 EXISTING LIABILITIES. Seller, NJ Doctors and
NY Doctors shall be responsible for all obligations with respect
to the Assets, the NJ Assets and the NY Assets and the operation
of their respective businesses which have accrued and/or resulted
from actions or omissions of Seller, NJ Doctors and/or NY Doctors
at or prior to the Apportionment Time.
6.3 INVOICES. MSO Nominee, NJ Nominee and/or NY
Nominee will provide Seller with copies of any invoices to be
paid in whole or in part by Seller pursuant to this Section 6,
and Seller shall promptly pay such invoices or portions thereof
after receipt of such invoices.
WARRANTIES AND REPRESENTATIONS OF SELLER, NJ DOCTORS
AND NY DOCTORS. Individually, Seller, NJ Doctors and NY Doctors
each hereby warrants and represents to Buyer, MSO Nominee, NJ
Nominee and NY Nominee respectively as follows:
7.1 ORGANIZATION; LICENSES. Seller, NJ Doctors
and NY Doctors are each a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation. Seller, NJ Doctors and NY Doctors each has all
corporate power, franchises, licenses and permits to own its
property and conduct its business.
7.2 AUTHORITY. Seller, NJ Doctors and NY Doctors
each has the corporate power to execute and deliver this
Agreement, to perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement constitutes the
legal, valid and binding obligation of Seller, NJ Doctors and NY
Doctors, enforceable in accordance with its terms.
7.3 SUBSIDIARIES. Seller, NJ Doctors and NY
Doctors each does not directly or indirectly have any investment
in, own or otherwise control, any corporation or other entity,
nor is it a party to any partnership agreement, joint venture or
similar agreement.
7.4 OTHER BUSINESS NAMES. Except for HealthNet
and as disclosed on SCHEDULE 7.4 attached hereto and made a part
hereof, Seller, NJ Doctors and NY Doctors and each of their
predecessors and any companies acquired by or merged into them
have not used any other business names.
7.5 SITES. Seller has complied in all material
respects with municipal, state and federal statutes, ordinances,
rules and regulations applicable to the Business, NJ Doctors'
business and NY Doctors' business, including but not limited to
zoning, building, environmental and occupational, safety and
health regulations.
7.6 LEASES. Seller is not in default under any
Leases or, subject to obtaining necessary consents, will be in
default as a result of the execution of this Agreement or the
Closing of this transaction. As of Closing, consents to assign
the Leases to the MSO Nominee will be obtained.
7.7 TANGIBLE PERSONAL PROPERTY. SCHEDULE 7.7
contains an accurate and complete list of all equipment leased by
Seller, NJ Doctors and NY Doctors; copies of all equipment leases
are annexed hereto as EXHIBIT E. SCHEDULE 7.7 also includes the
name and address of the lessor, the expiration date of the lease,
and the monthly rent and any additional rent payable under each
such lease. Copies of all such equipment leases have been
furnished to Buyer Group, Seller, NJ Doctors and NY Doctors are
not in default under any of such equipment leases and are not
aware of any fact which, with notice and/or passage of time,
would constitute such a default.
7.8 INTANGIBLE PERSONAL PROPERTY; COMPUTER
PROGRAMS. Each of Seller, NJ Doctors and NY Doctors has set
forth a list of any and all franchises or licenses, any
registered trademarks, trademark applications, service marks,
copyrights, trade names, formulations, customer lists and
computer programs held or used by such entities on SCHEDULE 7.8.
Copies of all written instruments which evidence such intangible
personal property have been attached to said Schedule. To
Seller's, NJ Doctors' and NY Doctors' best knowledge, there are
no claims or demands against Seller, NJ Doctors or NY Doctors
with respect to any of such items of intangible personal
property, and no proceedings have been instituted, are pending
against Seller, NJ Doctors or NY Doctors, or to the knowledge of
Seller, NJ Doctors or NY Doctors have been threatened against
Seller, NJ Doctors or NY Doctors to challenge the rights of
Seller, NJ Doctors or NY Doctors with respect to any of such
assets. To their knowledge, each of Seller, NJ Doctors and NY
Doctors has the unrestricted right to use, free from any rights
or claims of others, all trade names, trade secrets, patient
records and patient lists which they have used or which they are
now using in connection with the Business, NJ Doctors' business
or NY Doctors' business.
7.9 TITLE TO ASSETS. Except as set forth on
SCHEDULE 7.9, each of Seller, NJ Doctors and NY Doctors has good
and marketable title in and to all of the Assets, NJ Assets, NY
Assets and the Accounts Receivable that each is selling, which
property is free and clear of any security interests,
consignments, liens, judgments, encumbrances, restrictions, or
claims of any kind.
7.10 CURRENT EMPLOYEES AND EMPLOYMENT PRACTICES.
Annexed hereto as SCHEDULE 7.10(A) is a list, as of the date of
this Agreement, showing the names of all employees of Seller, NJ
Doctors and NY Doctors, their original dates of employment, job
titles and annual rates of pay for salaried employees and hourly
rates for hourly compensation employees. All employees of
Seller, NJ Doctors and NY Doctors (other than those listed on
attached SCHEDULE 7.10(B)) are employees at will who may be
terminated by Seller, NJ Doctors or NY Doctors at any time with
no obligation to make any payment except wages to the date of
termination. Except as described on the attached SCHEDULE
7.10(C), no employment discrimination or unfair labor practice
complaints against Seller, NJ Doctors or NY Doctors have been
filed, nor to the knowledge of Seller, NJ Doctors or NY Doctors
after conferring with each employee in a supervisory position,
threatened to be filed, with any court, agency or other entity
having jurisdiction over Seller's, NJ Doctors' or NY Doctors'
labor matters. Other than as disclosed on SCHEDULE 7.10(C), to
the knowledge of Seller, NJ Doctors and NY Doctors, after
conferring with each employee in a supervisory position, have not
been threatened by any former employee with any suit alleging
wrongful termination. SCHEDULE 7.10(B) attached hereto and made
a part hereof lists all employment agreements of Seller, NJ
Doctors and NY Doctors, copies of which have been provided to the
Buyer Group. Seller, NJ Doctors and NY Doctors each has no
employees who are members of a union.
7.11 ERISA. Except as disclosed in SCHEDULE
7.11, the Seller, the NJ Doctors and the NY Doctors do not
separately maintain any employee benefit plans or other
compensation arrangements which provide profit sharing, pension,
retirement, life insurance, medical, hospitalization, dental,
vision, disability, workers' compensation, deferred or incentive
compensation or severance benefits. The Ultimate Parent shall be
responsible to terminate the HealthNet Profit Sharing Plan, and
any other plans described on SCHEDULE 7.11 and distribute plan
benefits to participants and beneficiaries. Participation by
employees of the Seller, the NJ Doctors and the NY Doctors in any
employee benefit plan or other compensation arrangement sponsored
by the Ultimate Parent, NJ Doctors or NY Doctors shall cease
effective as of the Closing Date.
7.12 INSURANCE. Seller, NJ Doctors and NY
Doctors shall deliver prior to Closing copies of the originals of
any and all insurance policies which Seller, NJ Doctors and NY
Doctors each has in effect covering itself or its employees,
officers or directors, including policies of professional
liability insurance. Seller and NJ Doctors each have had general
liability and malpractice insurance in full force and effect from
the date each was formed through the date of Closing. Each
physician employed by NJ Doctors or NY Doctors has been
continuously covered by a policy of professional liability
insurance during the period of their employment. For each
employed physician who has not been covered by an occurrence
based policy of professional liability insurance, Seller, NJ
Doctors or NY Doctors will exercise the reporting form
endorsement or "tail" to assure coverage for any and all claims
occurring during the employment period prior to Closing.
7.13 COMPLIANCE WITH APPLICABLE LAWS. Seller, NJ
Doctors and NY Doctors are each in compliance in all material
respects with all federal, state, county, and municipal laws,
ordinances, regulations, judgments, orders or decrees applicable
to the conduct of its business or to the assets owned, used, or
occupied by it, and Seller, NJ Doctors and NY Doctors have
received no notice or advice to the contrary. Except as set
forth on SCHEDULE 7.13, neither this Agreement nor the
consummation of the transaction by Seller Group contemplated
hereby will (a) violate any order, writ, injunction, statute,
rule or regulation applicable to Seller, NJ Doctors or NY Doctors
or (b) require the consent, approval, authorization or permission
of, or the filing with or the notification of any federal, state
or local government agency.
7.14 ENVIRONMENTAL AND MEDICAL WASTE COMPLIANCE.
Seller, NJ Doctors and NY Doctors each have not been alleged to
be in violation of any federal, state or local laws, statutes,
codes, ordinances, rules, regulations, permits, or orders
relating to or addressing the environment, health, medical waste
or safety, which shall include, but not be limited to, the use,
handling or disposal of or the record keeping, notification and
reporting requirements respecting, any pollutant, hazardous
substance, radioactive substance, toxic substance, solid waste,
hazardous waste, medical waste, radioactive waste, special waste,
petroleum or petroleum-derived substance or waste, asbestos,
polychlorinated biphenyis, or any hazardous or toxic constituent
thereof (collectively "Hazardous Materials") or workplace or
worker safety and health; nor are they subject to any
administrative or judicial proceeding alleging any violation of
any federal, state or local laws, statutes, codes, ordinances,
rules, regulations, permits relating to the environment, health,
medical waste or safety.
7.15. TAXES. No assessments or additional tax
liabilities (including all federal, state and local taxes,
charges, penalties and interest) have been proposed or to their
knowledge threatened against Seller, NJ Doctors or NY Doctors or
any of their assets, and Seller, NJ Doctors and NY Doctors have
not executed any waiver of the statute of limitations on the
assessment or collection of such tax liabilities. There are no
federal, state or local tax liens upon any of Seller's, NJ
Doctors' and NY Doctors' assets other than inchoate liens for
taxes not yet due and payable. There are no past, pending or to
their knowledge threatened audits against Seller, NJ Doctors or
NY Doctors. Except as set forth on SCHEDULE 7.15, all tax
returns for Seller, NJ Doctors and NY Doctors have been timely
filed and are complete and accurate. All taxes due and owing by
Seller, NJ Doctors or NY Doctors have been fully paid and Seller,
NJ Doctors and NY Doctors have adequate reserves to pay and will
pay all taxes not yet due, including any taxes resulting from the
transactions contemplated hereunder.
7.16 LITIGATION. Except as set forth on SCHEDULE
7.16 attached hereto and made a part hereof, there are no
actions, suits or proceedings pending or to their knowledge
threatened against Seller, NJ Doctors or NY Doctors or against
the Seller Group and materially affecting the Assets, the NJ
Assets, the NY Assets, the Accounts Receivable or the ability of
the Seller Group to perform under this Agreement, at law or in
equity or before any federal, state, municipal or governmental
department, commission, board, bureau, agency or instrumentality.
7.17 CONTRACTS. All contracts involving payment
by Seller, NJ Doctors or NY Doctors and otherwise (a) affecting
the Assets, NJ Assets, NY Assets or the Account Receivables, or
(b) material to the Business, NJ Doctors' business or NY Doctors'
business have been delivered to Buyer Group and are listed on
SCHEDULE 7.17 attached hereto and made a part hereof.
7.18 BROKERAGE. Except as set forth ON SCHEDULE
7.18, no broker or finder has rendered services to Seller, NJ
Doctors or NY Doctors, the Parent, the Ultimate Parent or any of
their affiliates (collectively, the "Seller Group") in connection
with this Agreement or transaction.
7.19 COLLECTION CONTRACTS. Seller, NJ Doctors and
NY Doctors do not have an agreement, contract or understanding
with any person or entity to collect amounts owed to Seller, NJ
Doctors or NY Doctors other than its agreement with HealthCare
Automation, Inc. ("HCA") fully described in the letter attached
hereto as Exhibit F. All equipment, hardware, software and data
used by HCA to service the NJ Doctors and the NY Doctors is owned
or leased by Seller and is being transferred to MSO Nominee
pursuant to this Agreement.
7.20 DR. BERTRAM E. WALLS. Seller, NJ Doctors, NY
Doctors, Parent, Ultimate Parent and their affiliates do not have
any shareholder agreement, employment agreement or contractual
relationship (other than the by-laws of the NJ Doctors and the NY
Doctors and an indemnification agreement) with Dr. Bertram E.
Walls M.D. relating in any way to his ownership of the shares of
NJ Doctors and/or NY Doctors.
7.21 JURISDICTIONS DOING BUSINESS. Attached
hereto as SCHEDULE 7.21 is a complete list of all jurisdictions
in which Seller, NJ Doctors and NY Doctors have done business as
well as any and all trade names or other names they have used in
those jurisdictions.
7.22 COPIES OF MATERIAL DOCUMENTS. Seller, NJ
Doctors and NY Doctors have supplied complete copies of all
material documents relating to the Business, NJ Doctors' business
and NY Doctors' business, including but not limited to (a)
complete copies of all employment agreements, (b) complete copies
of all Leases, (c) complete copies of all equipment leases, (d)
complete copies of all managed care contracts, and (e) complete
copies of the management services contracts between Seller and NJ
Doctors and between Seller and NY Doctors.
7.23 MEDICAID ACCOUNTS RECEIVABLE. Seller, NJ
Doctors and NY Doctors do not presently and have never billed or
sought reimbursement for services provided to Medicaid
recipients.
7.24 ADDITIONAL WARRANTIES AND REPRESENTATIONS
CONCERNING SELLER GROUP. Except as otherwise disclosed on
SCHEDULE 7.24 attached hereto and made a part hereof, neither the
execution and delivery by Seller Group of this Agreement nor
performance of the terms and provisions of this Agreement will
conflict with, violate or result in a breach of or constitute a
default (or an event which with notice or passage of time or
both, may constitute a default) under any indenture, deed of
trust, mortgage, contract, permit or other agreement to which any
member of the Seller Group is a party or by which any of its
respective assets or properties may be subject.
7.25 FULL DISCLOSURE. No representation or
warranty made by Seller, NJ Doctors or NY Doctors in this
Agreement, and no certification furnished or to be furnished to
Buyer Group pursuant to this Agreement contains or will contain
any untrue statement of a material fact or omits, or will omit,
to state a material fact necessary to make the statements
contained herein or therein not misleading.
WARRANTIES AND REPRESENTATIONS OF BUYER. Buyer
warrants and represents to Seller, NJ Doctors and NY Doctors as
follows:
8.1 ORGANIZATION. Buyer is a New Jersey non-
profit corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey.
8.2 AUTHORITY. Buyer has the power to execute and
deliver this Agreement, to perform this Agreement and to
consummate the transactions contemplated hereby. This Agreement
constitutes the legal, valid and binding obligations of Buyer,
enforceable in accordance with its terms.
8.3 FULL DISCLOSURE. No representation or
warranty made by the Buyer in this Agreement contains or will
contain any untrue statement of a material fact or omits, or will
omit, to state a material fact necessary to make the statements
contained herein or therein not misleading.
CONDUCT PENDING CLOSING.
9.1 CONSENTS. From and after the date hereof,
Seller, NJ Doctors and NY Doctors shall use their best efforts to
accomplish the following:
(a) Obtain consents for the assignments of all
agreements listed on SCHEDULE 5.1(D), 5.2(D) and 5.3(D) to Buyer,
MSO Nominee, NJ Nominee and NY Nominee;
(b) Obtain consents and related lien release
instruments (including UCC-1 discharges) from all creditors;
(c) Obtain consents from the requisite number of
shareholders, directors and officers of Seller, NJ Doctors and NY
Doctors.
9.2 ORDINARY COURSE OF DEALING. Prior to the
Closing, Seller, NJ Doctors and NY Doctors shall conduct their
businesses in the ordinary course, except as otherwise permitted
or required by this Agreement, or consented to by Buyer in
writing.
9.3 EXCLUSIVE DEALING. Until this Agreement
shall be consummated in accordance with its terms or terminated,
Seller Group and their affiliates (as defined under the
Investment Company Act, 15 U.S.C.A. Section 80a-2) agree to
negotiate only with Buyer and its affiliates and will not take
and will not permit any person acting on their behalf (including
without limitation, Advest, Inc.), to take any action, directly
or indirectly, to encourage, initiate, support or engage in
discussions or negotiations with, or provide information to, any
person or group other than Buyer Group with respect to the sale
of any of the Assets, NJ Assets, the NY Assets and/or the
Accounts Receivables, or the purchase of the stock of Seller, NJ
Doctors and/or NY Doctors or merger with Seller, NJ Doctors or NY
Doctors, other than disclosures consented to in writing by Buyer.
9.4 TRANSITION. Prior to Closing, Seller, NJ
Doctors and NY Doctors will use their best efforts to work with
Buyer Group to thoroughly familiarize Buyer Group with all
aspects of the Business, NJ Doctors' business and NY Doctors'
business, including introductions to all major suppliers, all
physicians, all lessors, all landlords and all managed care
companies with which they do business.
9.5 COOPERATION. Seller, NJ Doctors, NY Doctors,
Buyer, MSO Nominee, NJ Nominee and NY Nominee shall each use
their best efforts, and shall cooperate with and assist the other
parties in their efforts to obtain such regulatory approvals,
licenses, consents and approvals of third parties to the
transaction contemplated hereby as may be necessary to transfer
the Assets, the NJ Assets, the NY Assets and the Account
Receivables to MSO Nominee, NJ Nominee and NY Nominee and to
consummate this Agreement.
9.6 RIGHT OF FIRST REFUSAL. In the event that
this Agreement terminates because any of the conditions listed in
Section 13 are not met, at the option and sole discretion of
Buyer (a) the Agreement may be extended for up to two (2)
consecutive forty-five (45) calendar-day periods of time so that
the items required by Section 13 to be delivered to Buyer, MSO
Nominee, NJ Nominee and NY Nominee at the Closing may be obtained
or compliance with any representation, warranty or covenant set
forth in this Agreement may be achieved, or (b) this Agreement
may be terminated.
INSPECTION CONTINGENCY. During the period (the "Due
Diligence Period") commencing on the date hereof and terminating
as of 6:00 p.m. on the tenth business day after the date hereof,
Buyer, MSO Nominee, NJ Nominee, NY Nominee, their employees,
agents and independent contractors shall have the right to enter
upon the Sites, upon reasonable notice to Seller, for the
purposes of conducting, at Buyer's expense, such studies,
surveys, inspections and tests pertaining to the structure and
condition of the Sites, the Assets, NJ Assets and NY Assets as
Buyer desires to conduct. In addition, Buyer shall have the
right to conduct any environmental inspections, financial audits,
regulatory due diligence which Buyer desires to conduct (the
above-referenced work being hereinafter collectively referred to
as the "Studies"), the cost of which shall be borne by Buyer, and
Seller, NJ Doctors and NY Doctors shall cooperate with all
reasonable requests of Buyer, its employees, agents and
independent contractors in conducting the Studies. During the
Due Diligence Period, Seller, NJ Doctors and NY Doctors shall
make available to Buyer, its employees, agents and attorneys, for
inspection, review and copying, all documents, licenses,
approvals and permits relating to the Business, NJ Doctors'
business and NY Doctors' business and such other information and
documentation with respect to the Business, NJ Doctors' business
and NY Doctors' business as Buyer shall reasonably request
(including appraisals and environmental site assessments and
reports). If Buyer is for any reason dissatisfied with the
conditions disclosed by the study, Buyer shall have the option to
terminate this Agreement, and, upon notifying Seller of the
failure of this contingency, Seller, NJ Doctors, NY Doctors and
Buyer, MSO Nominee, NJ Nominee and NY Nominee shall be released
and discharged from all liability under this Agreement and the
Escrow Deposit shall be returned to Buyer. When Buyer is
satisfied with the studies and any repairs taken as a result
thereof, it shall notify Seller.
RISK OF LOSS. The risk of loss due to damage to the
Assets, NJ Assets, NY Assets and the Account Receivables beyond
ordinary wear and tear or collection practices (as applicable)
prior to the Closing shall be upon Seller, NJ Doctors and NY
Doctors as applicable. If the Assets, NJ Assets, NY Assets or
the Accounts Receivable are damaged beyond ordinary wear and tear
or ordinary collection practices prior to the Closing, Seller, NJ
Doctors and NY Doctors will, at their option: (a) repair the
damage before Closing or as reasonably soon thereafter as is
feasible, (b) at Closing give Buyer, MSO Nominee, NJ Nominee and
NY Nominee a credit against the Asset Purchase Price or the
Accounts Receivable Purchase Price (as applicable) in the amount
of the estimated cost of repair, or (c) if the loss was insured
against, assign to Buyer, MSO Nominee, NJ Nominee and NY Nominee
at Closing any insurance proceeds received or receivable by
Seller, NJ Doctors or NY Doctors on account of any damage and
give Buyer, MSO Nominee, NJ Nominee and NY Nominee a credit
against the Asset Purchase Price or the Accounts Receivable
Purchase Price (as applicable) in the amount of any deductible.
Notwithstanding anything in this Section 12 to the contrary, if
the estimated cost to repair the damage beyond ordinary wear and
tear or ordinary collection practices exceeds $100,000, Buyer,
MSO Nominee, NJ Nominee and NY Nominee shall have the right to
terminate this Agreement.
ACCESS AND OTHER MATTERS.
12.1 ACCESS. Between the date hereof and the
Closing, Seller, NJ Doctors and NY Doctors shall give to
authorized representatives of Buyer, MSO Nominee, NJ Nominee and
NY Nominee full access, during normal business hours and upon
reasonable notice, in such a manner as not to disrupt normal
business activities, to the Assets, NJ Assets, NY Assets, records
of the Account Receivables, employees, facilities, account
debtors, material contracts and books of accounts and records of
Seller, NJ Doctors, NY Doctors relevant to an evaluation of the
Assets, NJ Assets, NY Assets and the Account Receivables.
12.2 FILINGS AND OTHER ACTIONS. Promptly
following the execution of this Agreement, Seller, NJ Doctors, NY
Doctors, Buyer, MSO Nominee, NJ Nominee and NY Nominee will make
all filings and take all actions required under any federal,
state, county or municipal statute, rule, regulation or ordinance
which are necessary to consummate the transactions contemplated
by this Agreement.
12.3 TAXES. Seller, NJ Doctors and NY Doctors
shall be responsible for any taxes due from the Seller Group
which may be incurred by reason of the transfer of the Assets, NJ
Assets, NY Assets and Accounts Receivable pursuant to this
Agreement. Seller, NJ Doctors and NY Doctors shall also be
responsible for any sales taxes due from any party which may be
incurred by reason of the transfer of the Assets, NJ Assets, NY
Assets and Accounts Receivable pursuant to this Agreement.
Buyer, MSO Nominee, NJ Nominee and NY Nominee are not assuming
any of Seller's, NJ Doctors' or NY Doctors' tax liabilities of
any kind.
12.4 NON-COMPETITION AND NON-SOLICITATION OF
SELLER GROUP.
(a) Seller Group covenant and agree not to engage in
or carry on, directly or indirectly, the business of owning or
operating a business substantially similar to the Business, NJ
Doctors' business or NY Doctors' business in any county in which
there is a Site, either for itself or themselves or as a member
of a corporation, partnership, limited partnership, limited
liability company or joint venture, investor, agent, associate or
consultant of or to any person or entity. The covenant contained
in the preceding sentence shall continue for a period of four (4)
years from and after the date of this Agreement. Seller Group
also agrees not to use the name "HealthNet". They acknowledge
that they have carefully read and considered the restraints
imposed upon them pursuant to this Section and agree that such
restraints are necessary for the reasonable and proper protection
of Buyer Group and the value of the Assets, NJ Assets and NY
Assets which it has acquired from Seller, NJ Doctors and NY
Doctors and that such restraints are reasonable in respect to
subject matter, length of time and area. Seller Group further
acknowledge that damages at law would not be a measurable or
adequate remedy for a breach of the restrictive covenant
contained in this Section 12.4 and accordingly consent to the
entry by any court of competent jurisdiction of an order
enjoining them from violating such covenants.
(b) For a period of two (2) years from and after the
date of this Agreement, the Seller Group shall not, either
directly or indirectly:
(i) Solicit, attempt to hire or hire any person who is
then, or was within the one year period ending on
the date such determination is made, employed by,
a consultant to, or an agent of, the Buyer Group.
(ii) Encourage, induce or attempt to induce, or aid,
assist or abet any other party or person in
encouraging, inducing or attempting to induce, any
such employee, consultant or agent to alter or
terminate his or her employment, consultation or
agency with the Buyer Group.
12.5 CONFIDENTIALITY. The parties executed a
confidentiality agreement in August, 1996 and the terms of that
agreement shall remain in full force and effect. In addition,
except as required by court order, the Seller Group shall not at
any time disseminate, disclose, use, communicate or otherwise
appropriate, either directly or indirectly, Confidential
Information. "Confidential Information" means all information
known or used by Buying Group which is not otherwise properly,
legally and generally known in the healthcare industry.
12.6 NEWS RELEASE. The parties agree that none
of them will announce this transaction nor publicize the change
in ownership of the Assets, NJ Assets, NY Assets or Accounts
Receivable in any way without the prior consent of the other
parties as to the form and content of any such news releases,
announcements, advertisements or publicity. Notwithstanding
anything above to the contrary, the Ultimate Parent shall have
the right to publicly disclose the contents of this Agreement as
necessary to comply with all applicable securities laws, subject
to providing Buyer with an opportunity to preview and comment
upon the contents of such public disclosure.
CONDITIONS TO OBLIGATIONS OF BUYER. The obligations
of Buyer to effect this transaction shall be subject to the
fulfillment, at or prior to the Closing, of the following
additional conditions:
13.1 REPRESENTATIONS AND WARRANTIES TRUE AT THE
CLOSING DATE. The representations and warranties of Seller, NJ
Doctors, and NY Doctors contained in Section 7 of this Agreement
shall be deemed to have been made again at and as of the Closing
Date and shall then be true and correct in all material respects
and, at the Closing, Seller, NJ Doctors and NY Doctors shall have
delivered to Buyer Group certificates signed by the each of their
Presidents and dated the Closing Date to such effect.
13.2 NO MATERIAL ADVERSE CHANGE. During the
period from the date of this Agreement to the Closing, there
shall not have been any material loss or damage to the Assets, NJ
Assets, the NY Assets or the Accounts Receivable whether or not
insured, which materially affects Seller's, NJ Doctors' or NY
Doctors' ability to conduct its business or collect the Account
Receivables; and Buyer Group shall have received certificates
signed by the each of their Presidents dated the Closing Date to
such effect.
13.3 CONSENTS TO ASSIGNMENTS. On or prior to the
Closing Date, Seller, NJ Doctors and NY Doctors shall furnish
Buyer Group with (a) consents to the assignments of the physician
employment contracts listed on SCHEDULE 13.3 acknowledging that
the physicians will continue to provide professional services at
the Sites for the Buyer Group pursuant to the terms of their
existing employment agreements, and (b) consents to the
assignments of the Leases acknowledging that the MSO Nominee can
assume the Leases on the terms of the existing lease agreements,
(c) consents of the lessor of (i) any equipment used by Seller in
connection with billing services provided to NJ Doctors or NY
Doctors, and (ii) any leases which have annual lease payments of
$20,000 or more. Should Seller be unable to obtain these
consents despite its best efforts, on or before October 31, 1996,
and Buyer has not waived such requirement on or before October
31, 1996, Seller may terminate this Agreement with (10) business
days written notice to Buyer.
13.4 REGULATORY APPROVALS. Buyer Group shall
have received all regulatory approvals, certificates of need,
permits and licenses necessary to conduct and fully operate the
Business, NJ Doctors' business and NY Doctors' business as
presently conducted by Seller Group in and from each of the
Sites, including but not limited to the permits and licenses
listed on SCHEDULE 13.4 attached hereto and made a part hereof.
Buyer Group shall use its best efforts to apply for the permits
and licenses listed on SCHEDULE 13.4 promptly. If required by
the municipality or any other government entity as a precondition
to either the conveyance or the occupancy of any of the Sites,
Seller, NJ Doctors and NY Doctors shall obtain and at the Closing
deliver to Buyer Group a Certificate of Occupancy and any other
certificate or approval issued by the applicable municipality or
other entity having jurisdiction. Any such certificate or
approval shall be unconditional. In the event the certificate or
approval is conditioned upon or requires the completion of work
or the expenditure of moneys, or both, same shall be Seller's
responsibility and effected prior to Closing. Notwithstanding
anything above, it shall not be a condition of Closing that Buyer
Group obtain licensure or regulatory approvals to operate the
Sites as other than physician practices.
13.5 BOARD APPROVAL. MSO Nominee, NJ Nominee and
NY Nominee shall have obtained approval from their boards for
this Agreement and the transactions contemplated herein.
13.6 OPINIONS OF COUNSEL. Buyer Group shall have
received an opinion of counsel to Seller, NJ Doctors, NY Doctors
and Ultimate Parent in form and substance reasonably satisfactory
to Buyer Group and its counsel.
13.7 CONSENTS. Buyer Group shall have received
satisfactory evidence that Seller, NJ Doctors, NY Doctors, Parent
and Ultimate Parent have obtained all necessary creditor,
shareholder and director consents to consummate the transactions
contemplated by this Agreement.
13.8 GOOD TITLE. MSO Nominee, NJ Nominee and NY
Nominee shall have received good and marketable title to the
Assets, NJ Assets, NY Assets and the Accounts Receivable free of
all liens, claims or encumbrances.
13.9 ISRA COMPLIANCE. Buyer Group shall have
received such approval or exemption they deem appropriate,
(including, but not limited to, letters of non-applicability for
each New Jersey Site) permitting the closure of the transaction
contemplated by the Agreement with respect to the New Jersey
Industrial Site Recovery Act, formerly known as the Environmental
Cleanup Responsibility Act, as amended, N.J.S.A. 13:1K-6 ET SEQ.
("ISRA").
13.10 BULK SALES. Seller has represented and
warranted to Buyer Group that no notifications to creditors are
required pursuant to any applicable bulk sales laws and the
parties acknowledge and agree that, based upon such
representation, Buyer Group will not send any notifications that
may otherwise be required under such laws.
13.11 TAX NOTICE. Seller has represented and
warranted to Buyer Group that no tax or other notifications to
federal, state or local governments are required by Seller Group
to consummate this transaction or to protect the Buyer Group from
potential liability related to this transaction (other than as
provided in Section 2.4).
13.12 MARYLAND FILINGS. All filings with the
State of Maryland required in connection with this transaction,
including, but not limited to notice to the Maryland Department
of Labor and Employment, the filing of articles of transfer and
the filing of a sales and use tax return.
13.13 COMPLIANCE WITH LAWS. Any and all permits,
approvals and consents material to the Business, NJ Doctors'
business or NY Doctors' business as presently conducted shall
have been obtained, and any and all permits, approvals and
consents which counsel to Buyer reasonably deems appropriate to
consummate the Closing have been obtained.
13.14 TERMINATION OF PENSION PLANS. Termination
of any and all pension plans of Seller, NJ Doctors, NY Doctors
and their predecessors in accordance with applicable law without
any potential liability for Buyer, MSO Nominee, NJ Nominee or NY
Nominee.
13.15 INSURANCE. Receipt of evidence that Seller,
NJ Doctors, NY Doctors and all of their current and former
officers, employees and agents have "tail" malpractice insurance
policies insuring against claims made after the date of Closing
relating to professional services furnished on or before the date
of Closing.
13.16 NO REGULATORY PROCEEDINGS. No proceeding,
regulation or legislation shall have been instituted, threatened
or postponed, nor any order issued by any governmental body to
enjoin, restrain or prohibit this transaction or the Closing or
adversely affect the Assets, NJ Assets, NY Assets or the Accounts
Receivable.
13.17 HCA LETTER. The delivery of a letter
agreement executed by Seller, NJ Doctors, NY Doctors and HCA (a)
confirming that Buyer, MSO Nominee, NJ Nominee and NY Nominee are
not responsible for any amounts due to HCA on or before Closing,
(b) consenting to the assignment of the billing arrangement to
MSO Nominee, (c) confirming that MSO Nominee can terminate the
arrangement without cause within 90 days written notice, and (d)
agreeing that any equipment, software, data, files and records
used to provide the billing services to Seller, NJ Doctors, NY
Doctors, MSO Nominee, NJ Nominee, and/or NY Nominee which is
currently located at HCA's offices or is otherwise controlled by
HCA will be owned by MSO Nominee as of Closing free of any claims
from HCA and can be obtained from HCA by MSO Nominee upon
reasonable notice without additional cost.
CONDITIONS TO OBLIGATIONS OF SELLER, NJ DOCTORS
AND NY DOCTORS. The obligations of Seller, NJ Doctors and NY
Doctors to effect this transaction shall be subject to the
fulfillment, at or prior to the Closing, of the following
additional conditions:
14.1 REPRESENTATIONS AND WARRANTIES TRUE AT THE
CLOSING DATE. The representations and warranties of Buyer
contained in Section 8 of this Agreement shall be deemed to have
been made again at and as of the Closing Date and shall then be
true and correct in all material respects and, at the Closing,
Buyer shall have delivered to Seller a certificate signed by its
President and dated the Closing Date to such effect.
14.2 BOARD APPROVAL. Seller, NJ Doctors and NY
Doctors shall have obtained approval from their boards for this
Agreement and the transactions contemplated herein.
14.3 OPINIONS OF COUNSEL. Seller shall have
received an opinion of counsel to Buyer in form and substance
reasonably satisfactory to Seller and its counsel.
14.4 CONSENTS. Seller Group shall have received
satisfactory evidence that Buyer, MSO Nominee, NJ Nominee and NY
Nominee have obtained all necessary shareholder and director
consents to consummate the transactions contemplated by this
Agreement.
14.5 NO REGULATORY PROCEEDINGS. No proceeding,
regulation or legislation shall have been instituted, threatened
or postponed, nor any order issued by any governmental body to
enjoin, restrain or prohibit this transaction or the Closing.
POST CLOSING COVENANTS. The parties covenant and
agree to take the following actions following the Closing:
15.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties, covenants and agreements of
Seller, NJ Doctors, NY Doctors, Buyer, MSO Nominee, NJ Nominee
and NY Nominee contained in this Agreement, or in any document
and certificate delivered pursuant hereto, and the respective
obligation of the parties with respect thereto, shall survive the
making of this Agreement, any investigations made by or on behalf
of the parties hereto, and the Closing, and shall continue in
full force and effect until, (a) with respect to the
representations in Sections 7.11, 7.15, 12.4, 12.5 and Section
15, the expiration of the applicable statute of limitations, (b)
with respect to the representations in Section 7.14, the
expiration of 72 months from the Closing, (c) the representations
and warranties in Section 7.9, the expiration of 18 months from
the Closing, (d) all other representations and warranties, the
expiration of 12 months from the Closing. At the respective
times described in (a), (b), (c) and (d) above, such
representations and warranties and liabilities shall expire and
terminate, except for any claims relating to the breach of any
representations or warranties which are asserted in writing on or
before the termination date; and except that the expiration of
such period shall not preclude a counterclaim by Buyer, MSO
Nominee, NJ Nominee or NY Nominee in any action by Seller Group
against them. Each of the parties agrees to give notice to the
breaching party of any breach of any such representation,
warranty, covenant, or agreement, describing such breach in
reasonable detail, as soon as practicable after the discovery
thereof; providing that the failure to receive such notice shall
not relieve the breaching party from any liability in respect to
such breach unless and to the extent that the breaching party
shall be prevented from curing such breach as a direct result of
its failure to receive a timely notice.
15.2 INDEMNIFICATION BY SELLER GROUP.
(a) INDEMNIFICATION. Ultimate Parent,
Seller, NJ Doctors and NY Doctors agree to and do hereby
indemnify and hold Buyer, MSO Nominee, NJ Nominee and NY Nominee
harmless on a joint and several basis against any claims, suits,
losses, expenses, damages, obligations, liabilities (including
costs and reasonable attorneys' fees) which result from or are
related to (i) any breach or failure of Ultimate Parent, Parent,
Seller, NJ Doctors or NY Doctors to perform any of their
covenants or agreements set forth herein, (ii) the inaccuracy of
any representation or warranty made by Ultimate Parent, Parent,
Seller, NJ Doctors or NY Doctors herein, (iii) any fixed or
contingent obligation or liability of Seller, NJ Doctors, NY
Doctors, Parent or Ultimate Parent arising from Seller's, NJ
Doctors' or NY Doctors' operation of their businesses or related
to the Sites or the other Assets, NJ Assets or NY Assets which is
not expressly assumed by Buyer, MSO Nominee, NJ Nominee or NY
Nominee, (iv) the lawsuits and potential lawsuits described on
SCHEDULES 7.10(C) and 7.16 attached hereto and made a part hereof
and/or (v) obtaining and transporting any Assets, NJ Assets or NY
Assets located at a HCA facility or under HCA control.
(b) LIMIT OF INDEMNIFICATION. The aggregate
liability of the Seller Group under 15.2(a)(ii) above shall not
exceed $1,000,000.
(c) INDEMNIFICATION BASKET. The Buyer Group
shall not be entitled to any indemnification under Section 15.2
until the aggregate liability of Seller Group under Section 15.2
equals or exceeds $25,000, in which event Buyer Group shall then
be entitled to indemnification thereunder including for the first
$25,000.
15.3 ENFORCEMENT OF INDEMNIFICATION RIGHTS.
(a) NOTIFICATION. Buyer, MSO Nominee, NJ
Nominee or NY Nominee shall notify Ultimate Parent of any
liability, obligation or claim to which the foregoing indemnity
applies. Such notification shall include a specific demand for
indemnification if Buyer, MSO Nominee, NJ Nominee or NY Nominee
wishes to assert its indemnification rights hereunder.
(b) DISPUTES. If Ultimate Parent should
dispute the right of Buyer, MSO Nominee, NJ Nominee or NY Nominee
to indemnification hereunder, Ultimate Parent shall give Buyer,
MSO Nominee, NJ Nominee or NY Nominee written notice of such
dispute, specifying in detail the basis of the dispute, not later
than 10 days after receipt of demand for indemnification. If the
dispute cannot be resolved amicably, any party may institute suit
against the other party in the New Jersey Superior Court, Bergen
County to resolve the matter. All parties hereto agree to submit
to the jurisdiction of such court for the purpose of such suit or
suits.
15.4 SET-OFF. Buyer, MSO Nominee, NJ Nominee and
NY Nominee shall have the right to set off any sum or sums owed
by Seller, NJ Doctors and/or NY Doctors to Buyer pursuant to
Section 15, MSO Nominee, NJ Nominee and/or NY Nominee, pursuant
to the foregoing indemnity against any sum which Buyer, MSO
Nominee, NJ Nominee or NY Nominee may owe to Ultimate Parent,
Parent, Seller, NJ Doctors or NY Doctors up to $1,000,000.
Buyer's, MSO Nominee's, NJ Nominee's and NY Nominee's set-off
right shall be in addition to, and not in lieu of, any other
rights and remedies that Buyer, MSO Nominee, NJ Nominee or NY
Nominee may have against Ultimate Parent, Parent, Seller, NJ
Doctors or NY Doctors pursuant to this Agreement. For the
purposes of this Section 15.4 only, the term "owed" shall be
losses incurred by Buyer, MSO Nominee, NJ Nominee and/or NY
Nominee such losses to include without limitation any sums paid
by Buyer, MSO Nominee, NJ Nominee or NY Nominee and sums which
have been adjudged due and owing by Buyer, MSO Nominee, NJ
Nominee or NY Nominee by a court or governmental entity.
15.5 REMEDIES CUMULATIVE. Buyer, MSO Nominee, NJ
Nominee and NY Nominee be entitled to such indemnification from
time to time and shall be entitled to rely upon one or more
provisions of this Agreement without waiving their right to rely
upon any other provisions at the same time or at any other time.
However, with respect to any claims of misrepresentation or the
breach of any representation or warranty, Buyer Group shall
comply with the indemnification procedures prior to relying on
any other remedy.
15.6 EMPLOYEE COMPENSATION AND ACCRUED BENEFITS.
Seller, NJ Doctors and NY Doctors will pay all compensation and
benefits to their employees accrued as of the Closing Date.
15.7 LITIGATION PROCEDURE. Promptly after
receipt by Buyer, MSO Nominee, NJ Nominee or NY Nominee of notice
of the commencement of any action for which a claim for
indemnification is to be made under this Agreement, Buyer, MSO
Nominee, NJ Nominee or NY Nominee shall notify Ultimate Parent of
the commencement thereof; but the failure to so notify Ultimate
Parent will not relieve Ultimate Parent from any liability which
they may have to Buyer, MSO Nominee, NJ Nominee or NY Nominee
otherwise under this Agreement other than to the extent such
failure to notify results in an increase in loss. In case any
such action is brought against Buyer, MSO Nominee, NJ Nominee or
NY Nominee and one of them notifies Ultimate Parent of the
commencement thereof, Ultimate Parent will be entitled to
participate therein and, to the extent that Ultimate Parent may
wish, assume the defense thereof, with counsel satisfactory to
Buyer, MSO Nominee, NJ Nominee and NY Nominee and after notice
from Ultimate Parent to Buyer of its election to so assume the
defense thereof, Ultimate Parent will not be liable to Buyer, MSO
Nominee, NJ Nominee or NY Nominee under this Agreement for any
legal fees or other expenses subsequently incurred by Buyer, MSO
Nominee, NJ Nominee or NY Nominee in connection with the defense
thereof other than reasonable costs of investigation. If
Ultimate Parent has assumed the defense thereof, they shall not
settle or otherwise compromise any claim subject to such action
without the prior written consent of Buyer, which shall not be
unreasonably withheld. If after Ultimate Parent's request Buyer
refuses to consent to a settlement offer agreed to by the
opponent in a non-criminal matter, Ultimate Parent shall not be
liable under this Section 15 with respect to such action for
greater than the amount of the settlement rejected by Buyer.
15.8 EQUIPMENT LEASES ASSIGNED WITHOUT LESSOR
CONSENT. The parties agree that if any equipment lease consent
to assignment is (a) required in order to assign the equipment
lease, (b) is not obtained by the date of Closing, and (c) is not
a condition of Closing under Section 13.3, then each party will
cooperate to enable the MSO Nominee to use such equipment and the
MSO Nominee will assume the expenses associated with such
equipment lease to the extent it has the use of the equipment
subject to such lease.
15.9 MEDICAL RECORDS. Buyer Group shall take
custody of all medical records provided to them by the Seller
Group pursuant to this Agreement. Buyer Group may utilize said
medical records with respect to any patient who becomes a patient
of the Buyer Group on or after the Closing. After receiving all
necessary consents and as long as it is permitted by law, Buyer
Group shall permit Seller or its agents access to said records
during normal business hours in the event that Seller has any
legitimate business or professional reason for such access. In
the event that Buyer Group should transfer such medical records
to another physician or group of physicians within 7 years from
Closing, Buyer Group shall notify the Seller of such transfer and
shall, as a condition of said transfer, obligate the purchasing
physician or group of physicians to make said records available
to Seller under the same conditions Buyer Group has made such
records available until the seventh anniversary of the Closing.
Buyer Group's obligations under this Section 15.9 are hereafter
referred to as the "Buyer Group's Medical Records Obligation".
Notwithstanding anything to the contrary contained herein, Buyer
Group's Medical Records Obligation shall terminate on the seventh
anniversary of the Closing. Buyer Group shall not be in default
with respect to Buyer Group's Medical Records Obligation if any
delay or failure to perform such obligation is caused by events
of force majeure beyond Buyer Group's control.
15.10 Payroll. In order to assist the transition,
Seller shall provide payroll services to MSO Nominee, NJ Nominee
and NY Nominee for up to sixty (60) days after Closing without
charge; provided, however, that Seller shall be reimbursed for
any reasonable out-of-pocket costs.
EXPENSES. Each party to this Agreement shall pay
its own fees and expenses incident to this Agreement and the
transactions contemplated in this Agreement, including, without
limitation, counsel fees, brokerage or financial advisor fees and
accounting fees.
BROKERAGE. Buyer Group shall joint and severally
hold Seller Group harmless and Seller Group shall joint and
severally hold Buyer Group harmless from any claim asserted by
any third party for any broker's or finder's fee alleged to be
due and owing as a result of contacts initiated by such party in
connection with this transaction.
NOTICES. Any notices or other communications
provided for hereunder may be given to any party to this
Agreement at the address set forth above, with a copy to that
party's attorney (Buyer, MSO Nominee, NJ Nominee and NY Nominee:
Riker, Danzig, Scherer, Hyland & Perretti, Headquarters Plaza,
One Speedwell Avenue, Morristown, New Jersey 07962-1981, ATTN:
Maryann P. Kicenuik, Esq.; Seller, NJ Doctors, NY Doctors, Parent
and Ultimate Parent: McDermott, Will & Emery, 75 State Street,
Boston, MA 02109-1807, ATTN: Thomas Sullivan, P.C.) and shall
either be (a) hand-delivered, (b) deposited with an overnight
courier delivery service or (c) mailed by certified mail, return
receipt requested, postage prepaid. All notices shall be deemed
to have been given either when hand-delivered, 1 day after having
been deposited with an overnight courier delivery service or 2
days following the date of mailing.
SUCCESSORS AND ASSIGNS. This Agreement shall inure
to the benefit of and shall be binding upon Buyer, MSO Nominee,
NJ Nominee, NY Nominee, Seller, NJ Doctors, NY Doctors, Parent
and Ultimate Parent, their heirs, successors and assigns. Buyer,
MSO Nominee, NJ Nominee and NY Nominee may not assign this
Agreement without obtaining the prior written consent of Seller,
except that this Agreement may be assigned to any person,
corporation, limited partnership, limited liability company,
partnership or other entity affiliated or associated with, or
under the control of or under common control with Buyer, MSO
Nominee, NJ Nominee, NY Nominee or The Valley Hospital, all
without Seller's consent. Notwithstanding anything above in this
Section 19, Buyer shall remain liable for the Accounts Receivable
Purchase Price despite any assignment of this Agreement. Seller,
NJ Doctors, NY Doctors, Parent and Ultimate Parent may not assign
this Agreement without Buyer's consent.
GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New Jersey.
CONSENT TO JURISDICTION. Seller, NJ Doctors, NY
Doctors, Parent, Ultimate Parent, Buyer, MSO Nominee, NJ Nominee
and NY Nominee hereby irrevocably consent to the jurisdiction of
the courts of the State of New Jersey or any Federal Court in New
Jersey in connection with any action or proceeding arising out of
or related to this Agreement or any other document delivered in
connection with this Agreement.
COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute an original hereof. When counterparts have been
executed by all parties, they shall have the same effect as if
the signatures were upon the same document.
FURTHER ASSURANCES. Provided Buyer reimburses them
for their actual costs, Seller, NJ Doctors and NY Doctors shall
take such action as Buyer, MSO Nominee, NJ Nominee or NY Nominee
may reasonably request from time to time to perfect Buyer's, MSO
Nominee, NJ Nominee's and NY Nominee's title to the Assets, NJ
Assets, NY Assets and Account Receivables to be acquired from
Seller, NJ Doctors and NY Doctors pursuant to this Agreement and
to enable Buyer, MSO Nominee, NJ Nominee and NY Nominee to enjoy
any other benefits of this Agreement.
ENTIRE AGREEMENT. This Agreement (including the
exhibits and schedules referred to herein) contains the entire
agreement among the parties with respect to the transactions
contemplated under this Agreement and supersedes all prior
agreements or commitments, written and oral, with respect
thereto, including, without limitation, the letter of intent
dated September 24, 1996.
SEVERABILITY. Any term or provision of this
Agreement that is invalid or unenforceable in any situation in
any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If any one or more of
the provisions contained in this Agreement shall, for any reason,
be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed by
limiting and reducing it so as to be enforceable to the fullest
extent permitted under the applicable law.
IN WITNESS WHEREOF, the parties have executed or caused
their authorized representatives to execute this Agreement as of
the date set forth above.
ATTEST: PHYSICIANS PLANNING GROUP,
INC.
By:_________________________ By:__________________________
Name: Name:
Title: Title:
For the applicable provisions of Sections 9.3, 9.7, 12.4, 12.5,
12.6, 15, 20, 21, 22, 24 and 25 only:
ATTEST: HEALTHNET MEDICAL GROUP OF
NEW JERSEY, P.A.
By:_________________________ By:__________________________
Name: Name:
Title: Title:
ATTEST: HEALTHNET MEDICAL SERVICES OF
NEW YORK, P.C.
By:_________________________ By:__________________________
Name: Name:
Title: Title:
ATTEST: COASTAL PHYSICIAN NETWORKS,
INC.
By:_________________________ By:__________________________
Name: Name:
Title: Title:
ATTEST: COASTAL PHYSICIAN GROUP, INC.
By:_________________________ By:__________________________
Name: Name:
Title: Title:
BUYER: ATTEST: VALLEY CARE CORPORATION
By:________________________ By:_________________________
Name: Name:
Title: Title:
EXHIBIT 2.1(a)
LIST OF EXHIBITS
Exhibit A - NJ Doctors Management Services Agreement
Exhibit B - NY Doctors Management Services Agreement
Exhibit C - Form of Opinion of Seller's, NJ Doctors' and NY
Doctors' Counsel
Exhibit D - Form of Opinion of Buyer Group's Counsel
Exhibit E - Copies of Equipment Leases
Exhibit F - Letter Describing HCA Agreement
LIST OF SCHEDULES
Schedule 1.1(a)(1)
Schedule 1.1(a)(2)
Schedule 1.1(a)(3)(A)
Schedule 1.1(a)(3)(B)
Schedule 1.1(a)(7)
Schedule 1.1(a)(8)
Schedule 1.1(b)
Schedule 1.2(a)(2)(A)
Schedule 1.2(a)(2)(B)
Schedule 1.2(a)(6)
Schedule 1.2(b)
Schedule 1.3(a)(2)(A)
Schedule 1.3(a)(2)(B)
Schedule 1.3(a)(6)
Schedule 1.3(b)
Schedule 1.3(b)(6)
Schedule 1.4(a)
Schedule 2.1
Schedule 3.1
Schedule 4.1
Schedule 4.2
Schedule 5.1(d)
Schedule 5.2(d)
Schedule 5.3(d)
Schedule 7.4
Schedule 7.7
Schedule 7.8
Schedule 7.9
Schedule 7.10(a)
Schedule 7.10(b)
Schedule 7.10(c)
Schedule 7.11
Schedule 7.13
Schedule 7.15
Schedule 7.16
Schedule 7.17
Schedule 7.18
Schedule 7.21
Schedule 7.24
Schedule 13.3
Schedule 13.4
