SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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) April 30, 1996
EMCARE HOLDINGS INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-24986 13-3645287
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(State or Other (Commission (IRS Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
1717 Main Street, Suite 5200, Dallas, Texas 75201
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 712-2000
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On April 30, 1996, EmCare, Inc., a wholly owned subsidiary of EmCare Holdings
Inc. (the "Company"), closed an acquisition of all of the outstanding capital
stock of Medical Emergency Service Associates, Inc. ("MESA"). The acquisition
was effective as of April 1, 1996. MESA's principal assets are practice
management service contracts with eight emergency departments and two
Occupational Medicine clinics located in the Chicago and Western Illinois
markets. During the year ended September 30, 1995, MESA generated net revenue of
$13.4 million from these contracts.
In the acquisition, the Company paid the former stockholders of MESA an
aggregate of $7,815,933 and will issue to them 56,355 shares of the Company's
common stock, par value $.01 per share. These amounts were determined by
arms-length negotiations among the Company, EmCare, Inc., MESA, and the former
stockholders of MESA. One-third of the shares will be issued and delivered to
the former stockholders of MESA on each of the next three anniversaries of the
closing date. The Company used its line of credit with Texas Commerce Bank
National Association, as agent for itself and CoreStates Bank, N.A., NBD Bank,
and First Interstate Bank of Texas, N.A. to pay the $7,815,933. For purposes of
the acquisition, the Company valued the 56,355 shares at $26.617 per share, or
an aggregate of $1,500,000. In addition, under the Stock Purchase Agreement, the
former stockholders of MESA could be entitled to receive three deferred payments
of $325,000 each based upon the continuation of the hospital contracts, three
performance payments in an aggregate amount of $1,200,000 based upon the
adjusted net income attributable to such contracts, and two incentive earnout
payments of up to $1,000,000 each, also based upon the adjusted net income
attributable to such contracts. Prior to the acquisition, neither the Company
nor any of its affiliates, directors, officers, or associates of such directors
or officers had a material relation with MESA or any of its stockholders.
The former stockholders of MESA have agreed to continue to work as employees of
MESA. In the Stock Purchase Agreement, these individuals also agreed not to
compete against the Company for the three years immediately after the
acquisition. The Company allocated $925,000 of the acquisition consideration
paid upon consummation of the acquisition to these covenants not to compete.
The Company and EmCare, Inc. plan to continue to use the plant, equipment, or
other physical property acquired from MESA in the same manner in which they were
used by MESA prior to the acquisition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable to file the financial statements required
by Item 7(a) with the initial filing of this Report on Form
8-K. Such financial statements will be filed by amendment to
this Report as soon as practicable and within 60 days after
the required filing date for this Report.
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(b) Pro Forma Financial Information.
It is impracticable to file the pro forma financial
information required by Item 7(b) with the initial filing of
this Report on Form 8-K. Such pro forma financial information
will be filed by amendment to this Report as soon as
practicable and within 60 days after the required filing date
for this Report.
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 hereunto duly authorized.
EMCARE HOLDINGS INC.
(Registrant)
Date: May 14, 1996 By: /s/ Robert F. Anderson, II
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Name: Robert F. Anderson, II
Title: Chief Financial Officer, Senior Vice
President, Treasurer, and Secretary
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EXHIBIT INDEX
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Exhibit No. Description Page
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2.1 Stock Purchase Agreement, dated as 5
of April 1, 1996, among EmCare
Holdings Inc., EmCare, Inc.,
Medical Emergency Service
Associates (MESA), S.C. and its
Stockholders
STOCK PURCHASE AGREEMENT
AMONG
EMCARE HOLDINGS INC.,
EMCARE, INC.,
MEDICAL EMERGENCY SERVICE ASSOCIATES (MESA), S.C.
AND ITS STOCKHOLDERS
APRIL 1, 1996
TABLE OF CONTENTS
I. CONVERSION AND PURCHASE AND SALE OF SHARES................................1
Section 1.1 Purchase and Sale of the Shares...........................1
Section 1.2 Conversion................................................2
Section 1.3 Effective Date............................................2
Section 1.4 No Transfers of Target Shares.............................2
II. PAYMENT FOR THE TARGET SHARES............................................2
Section 2.1 Payment Agent.............................................2
Section 2.2 Delivery of Closing Date Cash and Closing Date
Shares...........................................................2
Section 2.3 Determination of Number of Parent Shares..................3
Section 2.4 Delivery of Target Share Certificates.....................3
Section 2.5 Contract Retention Payments...............................3
Section 2.6 Performance Payments......................................3
Section 2.7 Incentive Earnout Payments................................4
Section 2.8 Calculation of the Adjusted Net Income....................4
(a) Disagreement With the Calculation............................4
(b) Fees of the Certified Public Accountants.....................5
Section 2.9 Final Balance Sheet.......................................5
(a) Final Balance Sheet Liabilities..............................5
(b) Disagreement With the Final Balance Sheet....................5
(c) Fees of the Certified Public Accountants.....................6
(d) Adjustment to Closing Date Cash..............................6
Section 2.10 Allocation of the Sale Consideration.....................6
Section 2.11 Withholding..............................................7
Section 2.12 Restriction on the Transfer of the Parent Shares.........7
Section 2.13 Lack of Marketability....................................7
(a) No Registration..............................................7
(b) No Transfer..................................................8
(c) Limited Registration Rights..................................8
III. REGISTRATION RIGHTS.....................................................8
Section 3.1 Piggyback Registration Rights.............................8
(a) Piggyback Registration Rights Election.......................8
(b) Underwriter's Cutback........................................8
Section 3.2 Demand Registration Rights................................9
(a) Demand Registration Statement................................9
(b) Delay in Filing the Demand Registration Statement............9
(c) Ineffective Demand Registration Statement...................10
Section 3.3 Preparation of a Stockholder Registration Statement......10
Section 3.4 Underwritten Offerings...................................10
Section 3.5 Blue Sky Registrations...................................10
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Section 3.6 Expenses.................................................10
Section 3.7 Indemnification..........................................10
(a) Indemnification by the Stockholders.........................11
(b) Indemnification by the Parent...............................11
(c) Other Agreements............................................11
Section 3.8 Copies of the Prospectus.................................11
Section 3.9 Legal Opinions and Comfort Letters.......................12
Section 3.10 Registration Rights Nontransferable.....................12
IV. CLOSING.................................................................12
Section 4.1 Consummation of the Conversion and Sale..................12
Section 4.2 Conditions to the Parent's and the Company's
Obligation to Consummate the Sale...............................12
(a) Representations and Warranties..............................12
(b) Covenants...................................................12
(c) Medical Services Subcontract and Assignment of
Physician Contracts.......................................13
(d) Transfer of Miscellaneous Assets............................13
(e) Closing Certificate.........................................13
(f) Consents....................................................13
(g) Addendum to Physician Stockholder Employment Agreements.....13
(h) Target Lease Amendment......................................13
(i) No Material Adverse Change..................................13
(j) Legal Opinion...............................................13
(k) Target Secretary's Certificate..............................13
(l) Wagner Litigation...........................................14
(m) Release of Kirchoff Guaranty................................14
(n) Due Diligence...............................................14
(o) Books and Records...........................................14
(p) Resignations................................................14
(q) Employee Benefit Plans......................................14
(r) Former Stockholder Obligations..............................15
(s) Other.......................................................15
Section 4.3 Conditions to the Target's and the Stockholders'
Obligation to Consummate the Sale...............................15
(a) Representations and Warranties..............................15
(b) Covenants...................................................15
(c) Closing Certificate.........................................15
(d) No Material Adverse Change..................................15
(e) Legal Opinion...............................................15
(f) Parent Secretary's Certificate..............................15
(g) Company Secretary's Certificate.............................16
(h) Service Corporation Secretary's Certificate.................17
(i) Addendum to Physician Stockholder Employment Agreements.....17
(j) Other.......................................................17
V. REPRESENTATIONS AND WARRANTIES...........................................17
Section 5.1 Representations and Warranties of the Parent and the
Company.........................................................17
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(a) Organization of the Parent..................................18
(b) Organization of the Company.................................18
(c) Power and Authority of the Parent...........................18
(d) Power and Authority of the Company..........................18
(e) Execution, Delivery, and Enforceability.....................18
(f) Consents....................................................18
(g) Conflicts...................................................18
(h) Permits.....................................................19
(i) Regulatory Filings..........................................19
(j) Issuance of the Parent Shares...............................19
(k) No Broker...................................................19
(l) Compliance With Applicable Laws.............................19
(m) Funding of the Acquisition..................................19
(n) Disclosure..................................................19
Section 5.2 Representations and Warranties of the Target and the
Stockholders....................................................20
(a) Organization of the Target..................................20
(b) Power and Authority of the Target...........................20
(c) Execution, Delivery, and Enforceability.....................20
(d) Target Shares...............................................20
(e) No Other Securities.........................................20
(f) Subsidiaries................................................20
(g) Hospital Contracts..........................................21
(h) Physician Contracts.........................................21
(i) Other Contracts.............................................22
(j) Contracts Generally.........................................22
(k) Consents....................................................23
(l) No HSR Filing Required......................................23
(m) Conflicts...................................................23
(n) Permits.....................................................23
(o) Compliance with Applicable Laws.............................23
(p) Financial Statements........................................23
(q) Absence of Certain Changes..................................24
(r) Accounts Receivable.........................................24
(s) Tangible Property...........................................24
(t) No Undisclosed Liabilities..................................25
(u) Related Party Indebtedness..................................25
(v) Permitted Liens.............................................25
(w) Litigation and Claims.......................................25
(x) Taxes.......................................................25
(y) Insurance...................................................27
(z) Employee Benefit Plans......................................27
(aa) Labor Relations............................................30
(bb) Environmental Matters......................................31
(cc) Licenses to Practice Medicine..............................31
(dd) No Broker..................................................31
(ee) Absence of Certain Business Practices......................31
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(ff) Solvency...................................................32
(gg) Disclosure.................................................32
(hh) No Corporate Practice......................................32
Section 5.3 Representations and Warranties of Each Stockholder.......32
(a) Legal Capacity..............................................32
(b) Execution, Delivery, and Enforceability.....................32
(c) Target Shares...............................................32
(d) Conflicts...................................................32
(e) Compliance With Applicable Laws.............................32
(f) No Disciplinary Proceedings.................................33
(g) Sophisticated Investor......................................33
(h) Covenant Not to Compete.....................................33
VI. COVENANTS...............................................................34
Section 6.1 Best Efforts to Consummate the Sale......................34
Section 6.2 Access to the Target.....................................34
Section 6.3 Operation of the Target Pending the Sale.................34
(a) Representations and Warranties..............................34
(b) Operate the Business in the Ordinary Course.................34
(c) Maintain Goodwill...........................................34
(d) No Material Adverse Change..................................34
(e) No Transaction in Target Shares.............................34
(f) No Dividends................................................34
(g) Maintain Assets.............................................34
(h) Disposition of Assets.......................................35
(i) Borrow Money................................................35
(j) Make Payments...............................................35
(k) Pay Taxes...................................................35
(l) No Liens....................................................35
(m) No Changes to Contracts.....................................35
(n) Perform Obligations.........................................35
(o) Insurance Coverage..........................................35
(p) No Changes in Accounting Principles.........................35
(q) Change Key Employees........................................35
(r) Compensation................................................35
(s) Employee Benefit Plans......................................35
(t) Loans to Affiliates.........................................35
(u) No Agreements Concerning the Foregoing......................36
Section 6.4 Changes to the Information Disclosed on the
Schedules.......................................................36
(a) Information on the Schedules................................36
(b) Representations, Warranties, and Covenants..................36
Section 6.5 Satisfaction of the Closing Conditions...................36
Section 6.6 NASD Filing..............................................36
Section 6.7 Form 8-K Financial Statements............................36
Section 6.8 Employee Notices.........................................37
Section 6.9 No Transfer of Target Shares.............................37
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Section 6.10 Public Announcements....................................37
Section 6.11 No Shopping.............................................37
Section 6.12 Target Lease............................................37
Section 6.13 Target Directors and Officers Following the Sale........38
Section 6.14 Pending Negotiations and Execution of Hospital
Contracts.......................................................38
VII. COVENANTS NOT TO COMPETE OR DISCLOSE CONFIDENTIAL INFORMATION..........38
Section 7.1 Covenant Not to Compete..................................38
(a) Solicit Hospitals and Physicians............................38
(b) Provide Emergency Department Services.......................38
(c) Assist Competitors..........................................38
(d) Send Clients to Competitors.................................38
Section 7.2 Indirect Competition.....................................39
Section 7.3 No Disclosure of Confidential Information................39
(a) Advisors....................................................39
(b) Public Information..........................................39
(c) Required by Law.............................................39
(d) Tax Returns.................................................39
Section 7.4 Reasonableness...........................................39
Section 7.5 Judicial Enforcement.....................................39
Section 7.6 Condition to Payments....................................40
VIII. INDEMNIFICATION.......................................................40
Section 8.1 Indemnification of the Parent and the Company............40
(a) Breaches....................................................40
(b) Failure to Perform..........................................40
(c) Medical Malpractice Claim...................................40
(d) Physicians..................................................40
(e) Medicare and Medicaid Audits................................40
(f) Violation of Applicable Law.................................41
(g) Employees...................................................41
(h) Employee Claims.............................................41
(i) Environmental Laws..........................................41
(j) Employee Benefit Plans......................................41
(k) Stockholder Claims..........................................41
Section 8.2 Indemnification of the Target and the Stockholders.......42
(a) Breaches....................................................42
(b) Failure to Perform..........................................42
(c) Contracts...................................................42
Section 8.3 Indemnification Procedure................................42
(a) Defense of a Claim..........................................42
(b) Participation of the Indemnitee.............................42
(c) Settlement of Claims........................................42
(d) Cooperation.................................................43
Section 8.4 Negligence...............................................43
<PAGE>
Section 8.5 Non-Exclusivity of Remedies..............................43
Section 8.6 Insurance................................................43
Section 8.7 Tax Indemnification......................................43
(a) Stockholders Liability for Taxes............................43
(b) Parent's Liability for Taxes................................44
(c) Survival....................................................44
IX. TERMINATION.............................................................44
Section 9.1 Termination of this Agreement............................44
(a) Consent.....................................................44
(b) Breach by the Target or the Stockholders....................44
(c) Breach by the Parent or the Company.........................45
(d) Outside Date................................................45
Section 9.2 Effect of Termination....................................45
Section 9.3 Disclosure of this Agreement.............................45
X. GENERAL..................................................................45
Section 10.1 Amendment...............................................45
Section 10.2 Attorneys' Fees.........................................45
Section 10.3 Counterparts............................................46
Section 10.4 Cumulative Remedies.....................................46
Section 10.5 Tax Matters.............................................46
(a) Tax Periods Ending On or Before the Effective Date..........46
(b) Parent......................................................46
(c) Cooperation on Tax Matters..................................46
(d) Tax Consents................................................47
(e) Certain Taxes...............................................48
Section 10.6 Definitions.............................................48
(a) Adjusted Net Income.........................................49
(b) Affiliate...................................................49
(c) Alternate Certified Public Accountants......................49
(d) Applicable Law..............................................49
(e) Business Day................................................49
(f) Certified Public Accountants................................49
(g) Code........................................................49
(h) Claim.......................................................49
(i) Confidential Information....................................50
(j) Contract....................................................50
(k) Document....................................................50
(l) Emergency Department Services...............................50
(m) Environmental Law...........................................50
(n) Law Affecting Creditors' Rights.............................50
(o) Lawsuit.....................................................50
(p) Lien........................................................50
(q) Material Adverse Change.....................................50
(r) Material of Environmental Concern...........................51
<PAGE>
(s) Non-Compete Period..........................................51
(t) Person......................................................51
(u) Subsidiary..................................................51
(v) Tax. .......................................................51
(w) Tax Return..................................................51
Section 10.7 Entire Agreement........................................51
Section 10.8 Expenses................................................51
Section 10.9 Further Assurances......................................52
Section 10.10 Governing Law..........................................52
Section 10.11 Headings...............................................52
Section 10.12 No Assignment..........................................52
Section 10.13 No Third-Party Beneficiaries...........................52
Section 10.14 Notices................................................52
Section 10.15 Performance on Business Days...........................53
Section l0.16 Plural and Singular Words..............................53
Section 10.17 Pronouns...............................................53
Section 10.18 Schedules..............................................54
Section 10.19 Set-Off................................................54
Section 10.20 Severability...........................................54
Section 10.21 Specific Performance...................................54
Section 10.22 Successors.............................................54
Section 10.23 Survivability..........................................54
Section 10.24 Waiver.................................................55
SIGNATURE PAGE..............................................................56
<PAGE>
INDEX OF EXHIBITS
Exhibit Description
EXHIBIT A Articles of Amendment
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EXHIBIT B Description of Current Hospital Contracts
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EXHIBIT C Subcontract
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EXHIBIT D Asset Disposition Memorandum
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EXHIBIT E Hospital Consent
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EXHIBIT F Legal Opinion - Target's Counsel
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EXHIBIT G Disposition of Employee Benefit Plans
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EXHIBIT H Legal Opinion - Parent's Counsel
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EXHIBIT I Target Lease Amendment
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EXHIBIT J Non-Compete Service Areas
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INDEX OF SCHEDULES
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Schedule Description
Schedule 2.10 Allocation of the Merger Consideration
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Schedule 5.2(d) Target Shares
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Schedule 5.2(f) Subsidiaries
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Schedule 5.2(g) Hospital Contracts
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Schedule 5.2(h) Physician Contracts
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Schedule 5.2(i) Other Contracts
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Schedule 5.2(j) Contract Exceptions
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Schedule 5.2(k) Consents
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Schedule 5.2(n) Permits
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Schedule 5.2(p) Financial Statements
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Schedule 5.2(q) Change Exceptions
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Schedule 5.2(s) Exceptions to Title
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Schedule 5.2(t) Material Liabilities
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Schedule 5.2(v) Permitted Liens
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Schedule 5.2(w) Litigation and Claims
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Schedule 5.2(x) Audited Tax Returns
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Schedule 5.2(y) Insurance Policies
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Schedule 5.2(z) Employee Benefit Plans
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Schedule 5.2(aa) Labor Relations
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Schedule 6.13 Company Directors and Officers
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Schedule 7.1(b) Permitted Activities
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Schedule 10.6(a) Potential Hospital Contracts
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<PAGE>
INDEX OF DEFINED TERMS
Defined Terms Page
Act..........................................................................2
Adjusted Net Income.........................................................49
Affiliate...................................................................49
Agreement....................................................................1
Alternate Certified Public Accountants......................................49
Applicable Law..............................................................49
Articles of Amendment........................................................2
Business Day................................................................49
Certificate of Amendment.....................................................2
Certified Public Accountants................................................49
Claim.......................................................................49
Closing Date.................................................................2
Closing Date Balance Sheet...................................................1
Closing Date Cash............................................................1
Closing Date Shares..........................................................3
Code........................................................................49
Commission...................................................................9
Company......................................................................1
Company Indemnitees.........................................................40
Competitor..................................................................38
Confidential Information....................................................50
Consents....................................................................23
Contract....................................................................50
Contract Retention Payment...................................................3
Control.....................................................................49
Conversion...................................................................2
Covenant Not to Compete.....................................................38
Current Hospital Contract....................................................3
Decreasing Adjustment........................................................6
Demand Registration Rights Election..........................................9
Demand Registration Statement................................................9
Demand Shares................................................................9
Document....................................................................50
Effective Date...............................................................2
Emergency Department Services...............................................50
Employee Benefit Plans......................................................28
Environmental Law...........................................................50
ERISA.......................................................................27
ERISA Pension Plans.........................................................28
ERISA Welfare Plans.........................................................27
Final Balance Sheet..........................................................5
<PAGE>
Financial Statements........................................................23
Hospital Consents...........................................................13
Hospital Contracts..........................................................21
Hospitals...................................................................21
HSR Act.....................................................................18
Incentive Earnout Payment....................................................4
Increasing Adjustment........................................................6
Indemnitee..................................................................42
Indemnitor..................................................................42
Insurance Policies..........................................................27
Joint Tax Claim.............................................................47
Law Affecting Creditors' Rights.............................................50
Lawsuit.....................................................................50
Lien........................................................................50
Material Adverse Change.....................................................50
Material of Environmental Concern...........................................51
Measurement Year.............................................................3
Medical Subcontract.........................................................13
Most Recent Balance Sheet...................................................23
National Market System.......................................................3
Non-Compete Period..........................................................51
Non-Disclosure Obligation...................................................39
Non-ERISA Plans.............................................................28
Other Contracts.............................................................22
Parent.......................................................................1
Parent Shares................................................................1
Parent Tax Claim............................................................47
Payment Agent................................................................2
Performance Payment..........................................................4
Permits.....................................................................23
Permitted Liens.............................................................25
Person......................................................................51
Physician Contracts.........................................................21
Physician Stockholder Employment Agreements.................................13
Physicians..................................................................21
Piggyback Registration Rights Election.......................................8
Piggyback Registration Statement.............................................8
Registerable Securities......................................................8
Registration Period..........................................................8
Regulatory Filings..........................................................19
Sale.........................................................................1
Sale Consideration...........................................................1
Securities Act...............................................................3
Service Corporation.........................................................17
Share Value..................................................................3
Stockholder Registration Statement...........................................9
<PAGE>
Stockholder Representative...................................................4
Stockholders.................................................................1
Stockholders Tax Claim......................................................47
Subsidiaries................................................................21
Subsidiary..................................................................51
Target.......................................................................1
Target Common Shares........................................................20
Target Indemnitees..........................................................42
Target Lease Amendment......................................................37
Target Preferred Shares.....................................................20
Target Shares................................................................1
Tax.........................................................................51
Tax Dispute.................................................................47
Tax Return..................................................................51
Transfer.....................................................................7
Wagner Litigation...........................................................14
x
DA961020.121
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of April 1,
1996, is among EmCare Holdings Inc., a Delaware corporation (the "Parent"),
EmCare, Inc., a Delaware corporation (the "Company"), Medical Emergency Service
Associates (MESA), S.C., an Illinois professional service corporation (such
professional service corporation, as converted to a business corporation as
hereinafter provided is herein called the "Target"), and the shareholders of the
Target (the "Stockholders").
RECITALS
WHEREAS, the Target has entered into the Hospital Contracts with the
Hospitals to provide Emergency Department Services to them;
WHEREAS, the Target has also employed or engaged the Physicians to provide
medical services in connection with the Hospital Contracts;
WHEREAS, the Company is an Affiliate of the Parent, which through its
Affiliates provides certain Emergency Department Services and other health care
related services;
WHEREAS, the Target desires to convert to a business corporation; and
WHEREAS, the Company desires to acquire, and the Stockholders desire to
transfer, all of the capital stock of the Target.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
I. CONVERSION AND PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale of the Shares. Subject to the terms and
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Stockholders agree to sell to the Parent and the
Company, and the Parent and the Company agree to purchase from the Stockholders,
all of the shares of capital stock of the Target (the "Target Shares"), free and
clear of all Liens (the "Sale"), for an aggregate purchase price as follows: (a)
$9,305,000 increased, or decreased if such amount is negative, by the amount of
shareholders' equity reflected on the balance sheet for the Target as of the
Closing Date prepared by the Target for closing in accordance with generally
accepted accounting principles (the "Closing Date Balance Sheet") (the "Closing
Date Cash"), as adjusted by any Increasing Adjustment or Decreasing Adjustment,
(b) the aggregate number of shares of the Parent's common stock, par value $.01
per share (the "Parent Shares") determined under Section 2.3, (c) the Contract
<PAGE>
Retention Payments, if any, (d) the Performance Payments, if any, and (e) the
Incentive Earnout Payments, if any (collectively, the "Sale Consideration"). To
the extent the consideration for the Sale is furnished by Parent, Parent shall
be treated as acquiring a pro rata portion of the Target Shares and contributing
such Target Shares to the Company as additional paid in surplus immediately
after consummation of the Sale.
Section 1.2 Conversion. Immediately prior to the consummation of the Sale,
the Target shall convert into a corporation as defined in and subject to the
Illinois Business Corporation Act (the "Act") (the "Conversion") in a
transaction intended to qualify as a reorganization within the definition of
Section 368(a)(1)(F) of the Code. The Conversion shall be consummated upon (i)
the filing of the Articles of Amendment in the form of EXHIBIT A (the "Articles
of Amendment") with the Illinois Secretary of State, and (ii) the issuance of a
certificate of amendment by the Illinois Secretary of State (the "Certificate of
Amendment").
Section 1.3 Effective Date. The Sale shall be consummated upon satisfaction
of the conditions set forth herein on April 30, 1996 (the "Closing Date"), to be
effective as of April 1, 1996 (the "Effective Date").
Section 1.4 No Transfers of Target Shares. On the Closing Date, the stock
transfer books of the Target shall be closed and the Target shall not record any
further transfer of Target Shares outstanding prior to the Closing Date.
II. PAYMENT FOR THE TARGET SHARES
Section 2.1 Payment Agent. The Stockholders hereby designate Mazzeffi &
Company as the payment agent (the "Payment Agent") under this Agreement. Prior
to the Closing Date, the Target and the Stockholders shall cause the Payment
Agent to notify the Parent and the Company in writing of the bank account of the
Payment Agent to which the Parent and the Company should make any payments
pursuant to this Agreement. For all purposes of this Agreement, any payment of
money or delivery of Parent Shares or other consideration to the Payment Agent
shall be paid solely for the benefit of, and shall be deemed to have been
properly delivered to, the Stockholders and any other Person owning any equity
rights in the Target prior to the Closing Date. The Parent and the Company shall
not have any responsibility with respect to any further distribution of such
amounts, Parent Shares, or other consideration to the Stockholders or any other
Person or the proportion of any such amounts, Parent Shares, or other
consideration that the Payment Agent distributes to any Stockholder or other
Person.
Section 2.2 Delivery of Closing Date Cash and Closing Date Shares. On the
Closing Date, the Parent shall deliver to the Payment Agent the Closing Date
Cash. Parent shall deliver one-third (rounded up or down to the nearest whole
number) of the Closing Date Shares to the Payment Agent on the first anniversary
of the Closing Date, one-third (rounded up or down to the nearest whole number)
of the Closing Date Shares to the Payment Agent on the second anniversary of the
Closing Date and the balance of the Closing Date Shares on the third anniversary
of the Closing Date. If the number of Closing Date Shares delivered on the first
or second anniversary of the Closing Date would require the Payment Agent to
make an unequal distribution to the Stockholders or distribute fractional
shares, the Payment Agent may request that the Parent deliver to the Payment
Agent additional Closing Date Shares in an amount equal to the number of Closing
Date Shares required to avoid the distribution of fractional shares; provided
that such amount shall not exceed 50 shares. Upon such request, the Parent shall
deliver such additional Closing Date Shares. The Parent shall deliver
<PAGE>
certificates for the Parent Shares that are part of the Sale Consideration in
the names of such Stockholders and other Persons and in such denominations as
the Payment Agent shall designate in writing to the Parent, provided that if the
Payment Agent designates any Person other than a Stockholder to receive Parent
Shares, the Parent shall not be required to issue such Parent Shares until it
receives documentation satisfactory to it that the issuance of Parent Shares to
such Person is consistent with this Agreement and exempt from registration under
the Securities Act of 1933, as amended (the "Securities Act") and the securities
laws of any applicable state or other jurisdiction. Moreover, any such Person
must agree to the restrictions on the transfer of such Parent Shares set forth
in this Agreement.
Section 2.3 Determination of Number of Parent Shares. The number of Parent
Shares that shall constitute part of the Sale Consideration (herein called the
"Closing Date Shares") shall be the number (rounded up or down to the nearest
whole number) of Parent Shares equal to the quotient of (a) $1,500,000, divided
by (b) the Share Value. The term "Share Value" shall mean the average of the
closing prices of the Parent Shares on the National Market System of the
Automated Quotation System of the National Association of Securities Dealers,
Inc. (the "National Market System") for the 15 trading days immediately
preceding the date of execution of this Agreement as published in the Wall
Street Journal (Southwest Edition), absent manifest error.
Section 2.4 Delivery of Target Share Certificates. On the Closing Date,
each Stockholder shall deliver the certificates evidencing his or her Target
Shares to the Company, duly endorsed for transfer or accompanied by duly
executed stock powers.
Section 2.5 Contract Retention Payments. If on the last day of any
Measurement Year each Current Hospital Contract is still in effect as described
below, then the Parent shall pay the Payment Agent $325,000 (a "Contract
Retention Payment") within 30 days after the end of such Measurement Year. The
term "Measurement Year" shall mean each of three consecutive twelve month
periods, the first of which begins on the first day of the month immediately
after the Closing Date. For a Current Hospital Contract to be in effect at the
end of a Measurement Year for purposes of this Section 2.5, at such time: (a)
such contract must be in effect or, if not in effect, such contract shall have
been terminated by the Hospital solely as a result of default by the Company or
the Company shall have elected not to renew such contract upon its expiration,
(b) no party to such contract or bound by it, other than the Target, shall be in
material default under such contract, and (c) no party to such contract or bound
by it, shall have given notice to terminate such contract or possess any right
to terminate such contract because of the occurrence or nonoccurrence of any
event that could give rise to a breach or default by any party other than the
Target. The term "Current Hospital Contract" shall mean the contracts described
on EXHIBIT B.
<PAGE>
Section 2.6 Performance Payments. If the Adjusted Net Income for any
Measurement Year is greater than $1,600,000, the Parent shall pay a Performance
Payment to the Payment Agent on or before 120 days after the end of such
Measurement Year. If a disagreement exists concerning the calculation of the
Adjusted Net Income, however, the Parent shall not be required to pay the amount
of any corresponding Performance Payment to the extent of the amount in
disagreement until resolution of such disagreement pursuant to Section 2.8. The
term "Performance Payment" with respect to a Measurement Year shall mean the
lesser of (i) $400,000 and (ii) the amount by which Adjusted Net Income for such
Measurement Year exceeds $1,600,000. The Parent shall pay to the Payment Agent
on the seventh anniversary of the Closing Date an amount equal to $1,200,000
less the aggregate amount of Performance Payments made pursuant to this Section
2.6.
Section 2.7 Incentive Earnout Payments. If the Adjusted Net Income for
either the second Measurement Year or the third Measurement Year is greater than
$2,000,000 the Parent shall pay an Incentive Earnout Payment on or before 120
days after the end of each such Measurement Year. If a disagreement exists
concerning calculation of the Adjusted Net Income, however, the Parent shall not
be required to pay the amount of any corresponding Incentive Earnout Payment to
the extent of the amount in disagreement until resolution of such dispute
according to Section 2.8. The term "Incentive Earnout Payment" with respect to
the second Measurement Year and third Measurement Year shall mean the lesser of
(i) $1,000,000, and (ii) one-half (1/2) of the amount by which Adjusted Net
Income for such Measurement Year exceeds $2,000,000.
Section 2.8 Calculation of the Adjusted Net Income. The Parent shall
prepare the calculation of the Adjusted Net Income for each Measurement Year and
then deliver such calculation to Mazzeffi & Company (the "Stockholder
Representative") within 60 days after the end of such Measurement Year. For all
purposes of this Agreement, any notice or other communication delivered to the
Stockholder Representative shall be deemed to have been properly delivered to
the Stockholders. Unless the Stockholder Representative notifies the Parent
within 45 days after the delivery of such calculation that the Stockholders
disagree with it and specifies in such notice the reasons for such disagreement,
the Stockholders shall be deemed to have accepted such calculation and it shall
be final and binding on them for all purposes. The Stockholder Representative
shall have reasonable access to the books and records of the Target to enable
the Stockholder Representative to determine whether to disagree with the
Parent's calculation.
(a) Disagreement With the Calculation. If the Stockholder Representative
properly delivers a notice to the Parent with respect to the Stockholders'
disagreement with the Parent's calculation of the Adjusted Net Income then the
Parent and the Stockholder Representative shall promptly begin to negotiate in
good faith in an attempt to resolve such disagreement. Any resolution of such
disagreement that the Parent and the Stockholder Representative reach shall be
final and binding on the Stockholders. If the Parent and the Stockholder
Representative fail to resolve such disagreement through negotiation on or
before thirty (30) days after the delivery by the Stockholder Representative of
the Stockholders' disagreement regarding the calculation of Adjusted Net Income
to the Parent, then the Parent shall engage the Certified Public Accountants to
render a report that the Parent's calculation of such Adjusted Net Income fairly
presents the Adjusted Net Income for such Measurement Year, provided that if the
<PAGE>
Stockholder Representative objects to the engagement of the Certified Public
Accountants, the Parent shall instead engage the Alternate Certified Public
Accountants, which shall then be deemed to be the Certified Public Accountants
for purposes of this Section 2.8. The Parent shall make any adjustments to the
Adjusted Net Income calculation necessary to enable the Certified Public
Accountants to render such a report, and such revised calculation shall be the
calculation on which any Performance Payment or Incentive Earnout Payment is
based. Promptly after the Certified Public Accountants issue their report, the
Parent shall deliver such report to the Stockholder Representative along with
any revised calculation of the Adjusted Net Income for such Measurement Year.
(b) Fees of the Certified Public Accountants. The Parent shall pay the fees
and expenses of the Certified Public Accountants for rendering their report on
the calculation of the Adjusted Net Income, provided that if the Parent is not
required to revise its calculation in connection with such report, the Parent
may deduct such fees and expenses from any Performance Payment or Incentive
Earnout Payment owed. If the Parent does not owe a Performance Payment or
Incentive Earnout Payment or such fees and expenses exceed such payment, the
Parent may demand such fees and expenses or excess from the Stockholder
Representative. For purposes of this Agreement, any demand for payment made upon
the Stockholder Representative shall be deemed to be a demand upon each
Stockholder, who shall be jointly and severally liable with respect to the
amount of the demand. Promptly after the delivery of such a demand, the
Stockholders shall cause the payment to the Parent of the amount demanded. The
Stockholder Representative in its capacity as the Stockholder Representative,
however, shall not be personally liable with respect to any such demand.
Section 2.9 Final Balance Sheet. As soon as reasonably practical but in no
event later than 90 days after the Closing Date, the Parent shall cause the
Target to prepare a balance sheet for the Target as of the Closing Date in
accordance with generally accepted accounting principles applied on a basis
consistent with the principles that the Target used to prepare the Closing Date
Balance Sheet (the "Final Balance Sheet"). Promptly after preparation of the
Final Balance Sheet, the Parent shall deliver it to the Stockholder
Representative. Unless the Stockholder Representative notifies the Parent within
45 days after receipt of the Final Balance Sheet that the Stockholders disagree
with the Final Balance Sheet and specifies in such notice the reasons for such
disagreement, the Stockholders shall be deemed to have accepted such Final
Balance Sheet and it shall be final and binding on them for all purposes. The
Stockholder Representative shall have reasonable access to the books and records
of the Target to enable the Stockholder Representative to determine whether to
disagree with the Final Balance Sheet.
(a) Final Balance Sheet Liabilities. The Final Balance Sheet shall
reflect any liability for (i) self-insured retention, (ii) the purchase of
a medical malpractice insurance policy covering an unlimited extended
reporting period from the Effective Date, (iii) any fees and expenses of
lawyers and other professional advisers that the Target engaged in
connection with the Sale, and (iv) any income taxes of the Target for the
period ending on the Closing Date. The Final Balance Sheet shall also
reflect any liabilities (if any) arising from the conversion of the Target
to the accrual basis of accounting.
(b) Disagreement With the Final Balance Sheet. If the Stockholder
Representative timely and properly delivers a notice to the Parent with
respect to the Stockholders' disagreement with the Final Balance Sheet, the
Parent and the Stockholder Representative shall promptly begin to negotiate
in good faith in an attempt to resolve such disagreement. Any resolution of
such disagreement that the Parent and the Stockholder Representative reach
<PAGE>
shall be final and binding on the Stockholders. If the Parent and the
Stockholder Representative fail to resolve such disagreement through
negotiation on or before thirty (30) days after the delivery of such notice
by the Stockholder Representative, then the Parent shall engage the
Certified Public Accountants to render a report that the Final Balance
Sheet fairly presents the financial position of the Target as of the
Closing Date in accordance with generally accepted accounting principles
applied on a basis consistent with the principles that the Target used to
prepare the Most Recent Balance Sheet, and in accordance with this
Agreement, provided that if the Stockholder Representative objects to the
engagement of the Certified Public Accountants, the Parent shall instead
engage the Alternate Certified Public Accountants, which shall then be
deemed to be the Certified Public Accountants for purposes of this Section
2.9. The Parent shall cause the Target to make any revisions to the Final
Balance Sheet necessary to enable the Certified Public Accountants or the
Alternate Certified Public Accountants as the case may be, to render such a
report, and such revised balance sheet shall be the balance sheet on which
any Increasing Adjustment or Decreasing Adjustment is based. Promptly after
the Certified Public Accountants render their report, the Parent shall
deliver it to the Stockholder Representative, along with the Final Balance
Sheet, as revised if necessary.
(c) Fees of the Certified Public Accountants. The Parent shall pay the
fees and expenses of the Certified Public Accountants or the Alternate
Certified Public Accountants as the case may be, for rendering their report
on the Final Balance Sheet, provided that if the Target is not required to
revise the Final Balance Sheet in connection with such report, the
Stockholders shall be obligated to pay such fees and expenses within ten
(10) days after demand by the Parent.
(d) Adjustment to Closing Date Cash. If the shareholders' equity of
the Target shown on the Final Balance Sheet is more than the shareholders'
equity shown on the Closing Date Balance Sheet, then the Closing Date Cash
shall be increased by the excess of such equity over that shown on the
Closing Date Balance Sheet (the "Increasing Adjustment"). The Parent shall
pay and deliver the Increasing Adjustment to the Payment Agent promptly
after the Final Balance Sheet becomes final and binding under this
Agreement. If the shareholders' equity of the Target shown on the Final
Balance Sheet is less than the shareholders' equity shown on the Closing
Date Balance Sheet, then the Closing Date Cash shall be decreased by the
excess of the equity shown on the Closing Date Balance Sheet over such
equity (the "Decreasing Adjustment"). The Stockholders, jointly and
severally, shall be obligated to pay such Decreasing Adjustment to the
Parent within ten (10) days after demand by the Parent.
Section 2.10 Allocation of the Sale Consideration. The consideration paid
to the Stockholders pursuant to this Agreement shall be allocated to the Target
Shares and the Covenant Not to Compete as set forth on Schedule 2.10 for all
purposes, including the filing of any Tax returns.
Section 2.11 Withholding. When making any payments pursuant to this
Agreement or delivering the Parent Shares that are part of the Sale
Consideration, the Parent may withhold such amounts that any Applicable Law
<PAGE>
requires them to withhold. Alternatively, the Parent may enter into an agreement
with the Payment Agent under which the Payment Agent shall properly withhold and
report any such amounts on behalf of the Parent.
Section 2.12 Restriction on the Transfer of the Parent Shares. The
Stockholders may not directly or indirectly (including by operation of law)
assign, bequeath, divide, encumber, hypothecate, mortgage, pledge, sell, or
otherwise transfer or dispose of (collectively, "Transfer") any of the Parent
Shares delivered to them pursuant to this Agreement unless such Transfer is
pursuant to an effective registration statement under the Securities Act and the
securities laws of any applicable state or other jurisdiction, or such Transfer
is exempt from registration under such laws. If a Stockholder dies, however, the
administrator or executor of such Stockholder's estate may take possession of
such Stockholder's Parent Shares and then distribute them to such Stockholder's
legatees or heirs, provided that such distribution is exempt from registration
under such securities laws. Each stock certificate representing Parent Shares
delivered to the Stockholders pursuant to this Agreement and any subsequent
stock certificates deriving from such certificates shall bear the following
legends:
THE ISSUANCE OF THE SHARES OF COMMON STOCK REPRESENTED
BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
THESE SHARES MAY NOT BE TRANSFERRED UNLESS SUCH TRANSFER IS
REGISTERED UNDER THE SECURITIES ACT AND THE SECURITIES LAWS
OF ANY APPLICABLE STATE OR OTHER JURISDICTION, OR SUCH
TRANSFER IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS.
THE TRANSFER OF THESE SHARES IS ALSO RESTRICTED UNDER A
STOCK PURCHASE AGREEMENT, DATED AS OF APRIL 1, 1996, AMONG
EMCARE HOLDINGS INC. (THE "COMPANY"), EMCARE ACQUISITION,
INC., MEDICAL EMERGENCY SERVICE ASSOCIATES (MESA), S.C., AND
ITS STOCKHOLDERS. A COPY OF THIS AGREEMENT IS ON FILE AT THE
COMPANY'S PRINCIPAL OFFICE.
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 151(f) OF
THE DELAWARE GENERAL CORPORATION LAW, THE COMPANY WILL
FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH
CLASS OF STOCK OR SERIES THEREOF OF THE COMPANY AND THE
QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS.
Section 2.13 Lack of Marketability. The Stockholders acknowledge
that:
(a) No Registration. Based upon the representations and warranties
of the Target and each Stockholder set forth in this Agreement, the Parent
has not registered the issuance of the Parent Shares delivered pursuant to
this Agreement under: (i) the Securities Act, based upon the exemption
from registration set forth in Section 4(2) of such act and Regulation D
promulgated under such act, (ii) the Illinois Securities Law of 1953,
based upon the exemption set forth in Section 4G of such act, (iii) the
Delaware Securities Act, based upon the exemption set forth in Section
7309(b)(9) of such act, or (iv) the securities laws of any other state or
jurisdiction.
<PAGE>
(b) No Transfer. The Stockholders must hold the Closing Date Shares
indefinitely until the Transfer of such shares is registered under the
Securities Act and the securities laws of any applicable state or other
jurisdiction, or such Transfer is exempt from registration under such
laws.
(c) Limited Registration Rights. Except as set forth in ARTICLE III,
the Parent is under no obligation to register any Stockholder's transfer
of his or her Parent Shares under the Securities Act or the securities
laws of any state or other jurisdiction.
III. REGISTRATION RIGHTS
Section 3.1 Piggyback Registration Rights. If within the period beginning
on the Closing Date and ending on the day immediately preceding the second
anniversary of the Closing Date (the "Registration Period"), the Parent files a
registration statement under the Securities Act to register the issuance of any
Parent Shares or transfer of any Parent Shares by any existing shareholder of
the Parent, each Stockholder may elect to have his or her transfer of the Parent
Shares delivered to him or her pursuant to this Agreement and any shares issued
in exchange or replacement of such shares (collectively, the "Registerable
Securities") included in such registration statement as provided in this ARTICLE
III provided that this election shall be inapplicable with respect to any
registration statement filed in connection with any merger or acquisition,
exchange offer, employee benefit plan or sale of shares solely by the Parent.
Moreover, this election shall be inapplicable to any Registerable Securities,
the transfer or contemplated transfer of which has been previously included by
the Parent in an effective registration statement under the Securities Act, or
the transfer of which may be made at such time under the safe harbor provisions
of Rule 144 under the Securities Act.
(a) Piggyback Registration Rights Election. If the Parent desires to
file a registration statement described in this Section 3.1 (a "Piggyback
Registration Statement") during the Registration Period, the Parent shall
notify the Stockholder Representative of its intention to file such a
registration statement at least 20 days before such filing. As promptly as
possible, but in no event later than 15 days after the Parent delivers
such a notification to the Stockholder Representative, the Stockholder
Representative may deliver a written notice to the Parent demanding that
the Parent include the transfer of each Stockholder's Registerable
Securities described in such notice in the Piggyback Registration
Statement (the "Piggyback Registration Rights Election").
(b) Underwriter's Cutback. If the Piggyback Registration Statement
involves an underwritten offering and the underwriters believe that the
Stockholders' requested inclusion of Registerable Securities in the
Piggyback Registration Statement along with any other Parent Shares or
other securities could adversely affect the success of the offering, then
the number of such Registerable Securities shall be decreased to the
extent that the underwriters deem necessary or advisable given the then
current market conditions. Any such decrease shall decrease each electing
Stockholder's number of Registerable Securities that he or she requested
the Parent to include in the Piggyback Registration Statement on a pro
rata basis.
<PAGE>
Section 3.2 Demand Registration Rights. At any time during the
Registration Period after the first anniversary of the Closing Date, the
Stockholder Representative may deliver one notice to the Parent, with a copy to
each Stockholder, demanding that the Parent register the transfer of each
Stockholder's Registerable Securities described in such notice (the "Demand
Registration Rights Election"). The term "Demand Shares" means the number of
Registerable Securities held by the Stockholders minus any Registerable
Securities which may be transferred under the safe harbor provisions of Rule 144
of the Securities Act, calculated and determined as of the date of filing of the
Demand Registration Statement. The Demand Registration Rights Election must
request the registration of the transfer of Parent Shares in an amount equal to
at least 90% of the total number of Closing Date Shares delivered on the first
anniversary of the Closing Date. A Demand Registration Rights Election
requesting the registration of the transfer of a lesser number shall be
ineffective.
(a) Demand Registration Statement. Promptly after receiving a Demand
Registration Rights Election, the Parent shall prepare and file with the
Securities and Exchange Commission (the "Commission") a registration
statement registering the transfer of such Registerable Securities (the
"Demand Registration Statement" and collectively with any Piggyback
Registration Statements, a "Stockholder Registration Statement") and shall
use reasonable efforts to cause the Commission to declare the Demand
Registration Statement effective. Unless the Parent otherwise consents,
the distribution of the Registerable Securities pursuant to the Demand
Registration Statement shall be effected through investment bankers
selected by the Parent. The Parent shall maintain the effectiveness of the
Demand Registration Statement until the completion of the offering and any
subsequent period required under the Securities Act.
(b) Delay in Filing the Demand Registration Statement.
Notwithstanding anything to the contrary in this Section 3.2 however, the
Parent may delay filing the Demand Registration Statement or request the
Commission not to declare such registration statement effective if (i) the
Parent has completed an underwritten offering of its securities within the
preceding four months, or (ii) the Parent's board of directors determines
in the exercise of its reasonable and good faith judgment, on the advice
of an investment banker selected by the Parent, that filing such a
registration statement would adversely interfere with the Parent's
offering of securities or acquisition of another company. If the Parent
delays filing a Demand Registration Statement because the Parent's board
of directors makes the foregoing determination, the Parent shall promptly
give the Stockholder Representative written notice of such determination
along with a written statement of the general reasons for the postponement
and the approximate period of the delay. The Parent shall file or request
the Commission to declare effective the delayed Demand Registration
Statement as soon as the reason for the delay no longer exists.
(c) Ineffective Demand Registration Statement. If the Commission
fails to declare a Demand Registration Statement effective other than
because of the Stockholder Representative's request to withdraw such
registration statement or an issue involving a Stockholder, then the
Demand Registration Rights Election with respect to such Demand
Registration Statement shall not count as the one demand registration
right of the Stockholders under this Agreement.
Section 3.3 Preparation of a Stockholder Registration Statement. Each
Stockholder electing to transfer his or her Registerable Securities pursuant to
a Stockholder Registration Statement shall provide such information to the
Parent in connection with the Parent's preparation of the Stockholder
Registration Statement and enter into such customary agreements in connection
with the Stockholder Registration Statement as the Parent may request. The
Parent shall deliver a copy of each Stockholder Registration Statement and any
amendments or supplements to such Stockholder Registration Statement to the
<PAGE>
Stockholder Representative before filing them with the Commission and provide
the Stockholders a reasonable opportunity to comment on such documents.
Section 3.4 Underwritten Offerings. If a Stockholder Registration
Statement involves an underwritten offering, the Stockholders must accept the
terms of the underwriting as agreed upon between the Parent and the underwriters
that the Parent has selected and enter into the underwriting agreement;
provided, that, in the case of a Demand Registration Statement, the terms of
such underwriting agreement are customary. Each Stockholder shall also be
subject to any Transfer restrictions or conditions with respect to the
Registerable Securities that he or she possesses that the underwriters consider
necessary or advisable in such underwriters' business judgment. If requested by
the underwriters, the Parent shall also enter into the underwriting agreement
upon customary terms and conditions.
Section 3.5 Blue Sky Registrations. In connection with a Stockholder
Registration Statement, the Parent shall use reasonable efforts to register and
qualify the transfer of the respective Registerable Securities under the
securities laws of any states or other jurisdictions within the continental
United States of America that the Stockholder Representative designates in the
Piggyback Registration Rights Election or the Demand Registration Rights
Election, respectively, provided that the Parent shall not be required to
register or qualify to transact business in any such state or jurisdiction in
connection with any such registration or qualification or subject itself to
taxation by any such state or jurisdiction.
Section 3.6 Expenses. The Parent shall pay all costs, fees, and expenses
incurred in connection with the preparation and filing of a Stockholder
Registration Statement, provided that each Stockholder shall pay his or her own
accounting and legal fees and expenses and shall bear any underwriter's or
broker's discount or commission and any transfer Taxes attributable to the
transfer of his or her Registerable Securities.
Section 3.7 Indemnification. With respect to each Stockholder Registration
Statement:
(a) Indemnification by the Stockholders. Each Stockholder shall
indemnify and hold harmless the Parent, each of the Parent's Affiliates,
agents, directors, employees, and officers, each Person who controls the
Parent within the meaning of the Securities Act, and each underwriter and
investment banker that the Parent has engaged in connection with a
Stockholder Registration Statement against any Claims made against the
Parent or any such Person with respect to any untrue statement or alleged
material untrue statement concerning such Stockholder contained in a
Stockholder Registration Statement or any omission or alleged material
omission from a Stockholder Registration Statement concerning such
Stockholder of a material fact required to be stated in such registration
statement or necessary to make the statements in such registration
statement not misleading, provided that the Stockholders shall not have
any indemnity obligation for Claims directly or indirectly related or
arising with respect to any such untrue statement, alleged material untrue
statement, omission, or alleged material omission unless either made or
omitted in reasonable reliance upon written information furnished to the
Parent by a Stockholder (including the description of the plan of
distribution provided for inclusion in such Stockholder Registration
Statement). For purposes of this Section 3.8, a Stockholder Registration
Statement shall include any preliminary or final prospectus contained in a
Stockholder Registration Statement and any amendments or supplements to a
Stockholder Registration Statement. If any Stockholder becomes aware of
any material misstatement or omission in a Stockholder Registration
Statement, such Stockholder shall immediately notify the Parent of such
misstatement or omission. The indemnity obligation of each Stockholder
under this Section 3.8(a) shall be limited to an amount equal to the
proceeds that such Stockholder received from the sale of his or her
Registerable Securities pursuant to the respective Stockholder
Registration Statement.
<PAGE>
(b) Indemnification by the Parent. The Parent shall indemnify and
hold harmless each Stockholder and other Person registering the transfer
of Registerable Securities pursuant to this ARTICLE III against any Claims
made against such Person with respect to any untrue statement or alleged
material untrue statement contained in a Stockholder Registration
Statement, or any omission or alleged material omission from a Stockholder
Registration Statement of a material fact required to be stated in such
registration statement or necessary to make the statements in such
registration statement not misleading, provided that the Parent shall not
have any indemnity obligation for Claims directly or indirectly related or
arising with respect to any untrue statement, alleged material untrue
statement, omission, or alleged material omission made or omitted in
reliance upon written information furnished to the Parent by such a
Stockholder or other Person (including the description of the plan of
distribution provided for inclusion in such Stockholder Registration
Statement). If the Parent becomes aware of any material misstatement or
omission with respect to a Stockholder Registration Statement, the Parent
shall immediately notify the Stockholder Representative of such
misstatement or omission.
(c) Other Agreements. This indemnification obligation shall be
in addition to any customary agreements required under Section 3.4.
Section 3.8 Copies of the Prospectus. The Parent shall provide the
Stockholder Representative with a reasonable number of copies of (a) the
preliminary prospectus with respect to any Stockholder Registration Statement,
if the Parent and the Stockholder Representative agree to distribute such
preliminary prospectus, (b) the final prospectus with respect to any Stockholder
Registration Statement, and (c) the amendments and supplements to any such final
prospectus, if any.
Section 3.9 Legal Opinions and Comfort Letters. If in connection with any
Stockholder Registration Statement the Parent obtains a legal opinion or comfort
letter for the benefit of any underwriters participating in the distribution of
the Registerable Securities, the Parent shall use reasonable efforts to cause
the law firm or certified public accounting firm rendering such opinion or
comfort letter, respectively, to deliver copies of such opinion or comfort
letter to the Stockholder Representative and permit the Stockholders to rely
upon them.
Section 3.10 Registration Rights Nontransferable. The registration rights
set forth in this ARTICLE III are personal to each Stockholder and his or her
heirs, legal representative or court ordered transferee and nontransferable to
any other party.
IV. CLOSING
Section 4.1 Consummation of the Conversion and Sale. The Target shall
properly execute and file the Articles of Amendment with the Illinois Secretary
of State and shall pay any filing fees required with respect to such filing on
or before the Closing Date, provided that the conditions to the Sale set forth
in Sections 4.2 and 4.3 have been satisfied or waived. Immediately after the
consummation of the Conversion, the delivery and payment for the Target Shares
shall take place as set forth herein, provided that: (i) the Conversion has been
consummated and (ii) the conditions to the Sale set forth in Sections 4.2 and
4.3 have been satisfied or waived. The closing of the Sale shall occur on such
day at the offices of Gibson, Dunn & Crutcher, 1717 Main Street, Suite 5400,
Dallas, Texas 75201, commencing at 10:00 a.m., or at such other place and time
as the parties to this Agreement shall agree.
Section 4.2 Conditions to the Parent's and the Company's Obligation to
Consummate the Sale. The Parent's and the Company's obligation to consummate the
Sale shall be subject to the satisfaction on or prior to the Closing Date of the
following conditions, which the Parent and the Company may waive:
<PAGE>
(a) Representations and Warranties. The representations and warranties
of the Target or any Stockholder set forth in this Agreement shall have
been correct and complete in all material aspects as of the date of this
Agreement and shall be correct and complete in all material aspects as of
the Closing Date, other than the representation and warranty in Section
5.2(f) and (g) to the extent affected by the transactions described on
EXHIBIT D, as though made as of such time.
(b) Covenants. The Target and each Stockholder shall have performed
all agreements, covenants, and obligations that such Person is required to
perform under this Agreement prior to the Closing Date.
(c) Medical Services Subcontract and Assignment of Physician
Contracts. The Parent and the Company shall have received an original
subcontract in the form of EXHIBIT C to this Agreement, executed and
delivered by the Service Corporation, under which the Service Corporation
shall have agreed to perform all medical services under the Hospital
Contracts (the "Medical Subcontract"). The Parent and the Company shall
have also received an original assignment, in form and substance acceptable
to them, executed and delivered by the Target and the Service Corporation,
under which the Target assigns the Physician Contracts to the Service
Corporation.
(d) Transfer of Miscellaneous Assets. The Parent and the Company shall
have received evidence satisfactory to them that certain assets of the
Target shall have been disposed of in accordance with EXHIBIT D to this
Agreement.
(e) Closing Certificate. The Target shall have delivered to the Parent
and the Company a certificate, signed by an officer of the Target
acceptable to the Parent and the Company, confirming the satisfaction of
the conditions set forth in Sections 4.2(a) and (b).
(f) Consents. The Target shall have received and delivered to the
Parent and the Company all Consents, in form and substance satisfactory to
them, and shall have given all notices required to be given to any Person
prior to the consummation of the Sale, including a consent from each
Hospital, in substantially the form of EXHIBIT E (collectively, the
"Hospital Consents"). The Parent and the Company shall also have received a
consent to the Sale and this Agreement from Texas Commerce Bank National
Association under its loan agreement with the Parent and certain of the
Parent's subsidiaries.
(g) Addendum to Physician Stockholder Employment Agreements. The
Target shall have delivered to the Parent, the Company, and the Service
Corporation an addendum to the existing employment agreements with the
Stockholders (the "Physician Stockholder Employment Agreements") in form
and substance satisfactory to the Parent, the Company, the Service
Corporation and the Stockholders duly executed by each Stockholder.
(h) Target Lease Amendment. The Target shall have delivered to the
Parent and the Company a copy of the Target Lease Amendment executed by the
lessor.
(i) No Material Adverse Change. The Target shall not have undergone
any Material Adverse Change since the date of execution of this Agreement.
(j) Legal Opinion. The Parent and the Company shall have received a
legal opinion opining as to the matters set forth in EXHIBIT F from Burke,
Warren & MacKay, P.C., or such other law firm that is acceptable to them.
(k) Target Secretary's Certificate. The Target shall have delivered to
the Parent and the Company a Secretary's Certificate, in form and substance
satisfactory to them, which shall include:
(i) Charter. A copy of the Target's articles of incorporation and
<PAGE>
either the Certificate of Amendment or a file-stamped copy of the
Articles of Amendment, each certified by the Illinois Secretary of
State not more than five days before the Closing Date.
(ii) By-laws. A copy of the Target's by-laws.
(iii) Good Standing Certificate. A certificate from the Illinois
Secretary of State, dated as of the Closing Date or a reasonable
number of days before such date, stating that the Target is in
existence and good standing under the laws of the State of Illinois.
(iv) Resolutions. A copy of the resolutions that the Target's
board of directors adopted approving the execution, delivery, and
performance of this Agreement.
(v) Incumbency Certificate. An incumbency certificate setting
forth the names, offices, and signatures of the Target's officers who
execute any documents on behalf of the Target in connection with the
Sale.
(l) Wagner Litigation. The Target and the Stockholders shall have
delivered evidence satisfactory to the Parent and the Company that any and
all liability of the Target arising out of or in any way related to the
litigation described and defined in Schedule 5.2(y) (the "Wagner
Litigation") has been discharged or released in full.
(m) Release of Kirchoff Guaranty. The Target and the Stockholders
shall have delivered evidence satisfactory to the Parent and the Company
that as of the Closing Date the Target is not obligated with respect to,
and its assets are not subject to, any obligations of Kirchoff Limited
Partnership.
(n) Due Diligence. The investigation of the Target by the Parent,
the Company, and their advisors and representatives shall not have caused
them to become aware of any facts or circumstances relating to the
Target's assets, business, cash flows, financial condition, operations, or
prospects that the Parent and the Company believe make their proceeding
with the consummation of the Sale inadvisable.
(o) Books and Records. The Target and the Stockholders shall have
delivered to the Parent and the Company the books and records of the
Target, including the minute books, stock books and seal of the Target.
(p) Resignations. The Target and the Stockholders shall have
delivered the written resignations of all directors and officers of the
Target.
(q) Employee Benefit Plans. The Target and the Stockholders shall
have delivered evidence satisfactory to the Parent and the Company that
the Employee Benefit Plans have been frozen with respect to future
contributions. The Parent and the Company intend to further dispose of the
Employee Benefit Plans as set forth on EXHIBIT G.
(r) Former Stockholder Obligations. The Target and the
Stockholders shall have delivered evidence satisfactory to the Parent and
the Company that the Target has satisfied in full in cash all obligations
owed to former stockholders of the Target.
(s) Agreement with Payment Agent. The Target and the Stockholders
shall have delivered an agreement among the Payment Agent, the
Stockholders, the Parent and the Company pursuant to which the Payment
Agent and the Stockholders shall agree that the Payment Agent will hold in
escrow and will not distribute to the Stockholders any Parent Shares or
any Sale Consideration delivered after the Closing Date until such time as
a complete release shall have been delivered by Dr. Michael Victor in
connection with the matter described on Section 5.2(w) to the sole
<PAGE>
satisfaction of the Parent and the Company, or such other time as the
Parent and the Company may agree.
(t) Other. The Target and the Stockholders shall have delivered to
the Parent and the Company such other certificates, documents, and
instruments as the Parent or the Company may reasonably request in
connection with the Sale.
Section 4.3 Conditions to the Target's and the Stockholders' Obligation to
Consummate the Sale. The Target's and the Stockholders' obligation to consummate
the Sale shall be subject to the satisfaction on or prior to the Closing Date of
the following conditions, which the Target may waive:
(a) Representations and Warranties. The representations and warranties
of the Parent and the Company set forth in this Agreement shall have been
correct and complete as of the date of this Agreement and shall be correct
and complete as of the Closing Date as though made as of such time.
(b) Covenants. The Parent and the Company shall have performed all
agreements, covenants, and obligations that they are required to perform
under this Agreement prior to the Closing Date.
(c) Closing Certificate. The Parent and the Company shall have
delivered to the Target and the Stockholders a certificate, signed by an
officer of each of them acceptable to the Target, confirming the
satisfaction of the conditions set forth in Sections 4.3(a) and (b).
(d) No Material Adverse Change. The Parent shall not have undergone
any Material Adverse Change since the date of execution of this Agreement.
(e) Legal Opinion. The Target and the Stockholders shall have received
a legal opinion opining as to the matters set forth in EXHIBIT H from
Gibson, Dunn & Crutcher, or such other law firm that is acceptable to them.
(f) Parent Secretary's Certificate. The Parent shall have delivered to
the Target and the Stockholders a Secretary's Certificate, in form and
substance satisfactory to the Target and the Stockholders, which shall
include:
(i) Charter. A copy of the Parent's certificate of incorporation
certified by the Delaware Secretary of State not more than five days
before the Closing Date.
(ii) By-laws. A copy of the Parent's by-laws.
(iii) Good Standing Certificate. A long-form certificate from the
Delaware Secretary of State, dated as of the Closing Date or a
reasonable number of days before such date, stating that the Parent is
in existence and good standing under the laws of the State of Delaware
and describing each document comprising the Parent's certificate of
incorporation.
(iv) Resolutions. A copy of the resolutions that the Parent's
board of directors adopted approving the Parent's execution, delivery,
and performance of this Agreement.
(v) Incumbency Certificate. An incumbency certificate setting
forth the names, offices, and signatures of the Parent's officers who
execute any documents on behalf of the Parent in connection with the
Sale.
<PAGE>
(g) Company Secretary's Certificate. The Company shall have delivered
to the Target and the Stockholders a Secretary's Certificate, in form and
substance satisfactory to the Target and the Stockholders, which shall
include:
(i) Charter. A copy of the Company's certificate of
incorporation certified by the Delaware Secretary of State not
more than five days before the Closing Date.
(ii) By-laws. A copy of the Company's by-laws.
(iii) Good Standing Certificate. A long-form certificate
from the Delaware Secretary of State, dated as of the Closing
Date or a reasonable number of days before such date, stating
that the Company is in existence and good standing under the laws
of the State of Delaware and describing each document comprising
the Company's certificate of incorporation.
(iv) Resolutions. A copy of the resolutions that the
Company's board of directors adopted approving the Sale and the
Company's execution, delivery, and performance of this Agreement.
(v) Incumbency Certificate. An incumbency certificate
setting forth the names, offices, and signatures of the Company's
officers who execute any documents on behalf of the Company in
connection with the Sale.
(h) Service Corporation Secretary's Certificate. MESA EmCare, S.C.,
an Illinois service corporation (the "Service Corporation"), shall deliver
to the Target and the Stockholders a Secretary's Certificate, in form and
substance satisfactory to the Target and the Stockholders, which shall
include:
(i) Charter. A copy of the Service Corporation's articles of
incorporation certified by the Illinois Secretary of State not
more than five days before the Closing Date.
(ii) By-laws. A copy of the Service Corporation's by- laws.
(iii) Good Standing Certificate. A certificate from the
Illinois Secretary of State, as of the Closing Date or a
reasonable number of days before such date, stating that the
Service Corporation is in existence and in good standing under
the laws of the State of Illinois.
(iv) Resolutions. A copy of the resolutions that the Service
Corporation's board of directors adopted approving the execution,
delivery and performance of the Medical Subcontract and the
addendums to the Physician Stockholder Employment Agreements and
the Service Corporation's performance of the Physician Contracts
and the medical services under the Hospital Contracts.
(v) Incumbency Certificate. An incumbency certificate
setting forth the names, offices, and signatures of the Service
Corporation's officers who execute any addendum to any Physician
Stockholder Employment Agreement or other documents on behalf of
the Service Corporation in connection with the Sale.
(i) Addendum to Physician Stockholder Employment Agreements. The
Service Corporation shall have delivered to each Stockholder an addendum
to the Physician Stockholder Employment Agreement for such Stockholder,
executed by the Service Corporation.
(j) Other. The Parent and the Company shall have delivered to the
Target and the Stockholders such other certificates, documents, and
instruments as the Target may reasonably request in connection with the
Sale.
<PAGE>
V. REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Parent and the Company.
The Parent and the Company, jointly and severally, represent and warrant, as of
the date of execution hereof, to the Target and the Stockholders as follows:
(a) Organization of the Parent. The Parent is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware.
(b) Organization of the Company. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Delaware.
(c) Power and Authority of the Parent. The Parent possesses full
corporate power and authority to execute, deliver, and perform this
Agreement and all transactions contemplated herein to be performed by the
Parent, without obtaining any approval, authorization, consent, or waiver
or giving any notice, other than the approval of its board of directors and
of Texas Commerce Bank National Association under its loan agreement with
the Parent and certain of the Parent's subsidiaries, which it has properly
obtained. The Parent also possesses the corporate power and authority to
own its properties and carry on its business as presently conducted.
(d) Power and Authority of the Company. The Company possesses the full
corporate power and authority to execute, deliver, and perform this
Agreement and all transactions contemplated herein to be performed by the
Company, without obtaining any approval, authorization, consent, or waiver
or giving any notice, other than the approval of its board of directors and
sole stockholder and of Texas Commerce Bank National Association under its
loan agreement with the Parent and certain of the Parent's subsidiaries,
which it has properly obtained. The Company was formed to effect the
acquisition of the Target, does not own any material assets, and has not
conducted any significant business.
(e) Execution, Delivery, and Enforceability. The Parent and the
Company have each duly authorized, executed, and delivered this Agreement,
and this Agreement constitutes a valid, legal, and binding obligation of
each of them, enforceable against each of them in accordance with its
terms, subject to any Law Affecting Creditors' Rights.
(f) Consents. There are no approvals, consents, or notices required to
be obtained or given by the Parent or the Company before consummation of
the Sale, other than any immaterial approvals, consents, and notices
customarily obtained after consummation of transactions similar to the
Sale, except for the consent of Texas Commerce Bank National Association
under its loan agreement with the Parent and certain of the Parent's
subsidiaries. Moreover, the execution and delivery of this Agreement by the
Parent and the Company and their consummation of the Sale do not require
any approval, consent, filing, registration, or other action by or with any
governmental entity. For purposes of the representations and warranties
contained in this Section 5.1, however, the Parent and the Company have
based their determination that no filing is required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act") in part upon the representation and warranty of the Target and the
Stockholders set forth in this Agreement concerning the value of the
Target's assets and the Target's net sales.
(g) Conflicts. Subject to the receipt of the consent from Texas
Commerce Bank National Association, neither the Parent's nor the Company's
execution, delivery, or performance of this Agreement or the transactions
contemplated herein to be performed by the Company will conflict with,
constitute a breach or violation of, result in a Lien against, or give rise
to any default or right of acceleration, cancellation, or termination with
<PAGE>
respect to any Document or any Applicable Law to which such Person is a
party or by which any of such Person's assets are bound (or give rise to an
event that with notice, lapse of time, or both, would result in such a
conflict, breach, violation, Lien, default, or right), including but not
limited to the certificate of incorporation and the by-laws of the Parent
and the certificate of incorporation and the by-laws of the Company.
(h) Permits. The Parent and the Company possess all material
authorizations, certificates, franchises, licenses, and permits necessary
for the lawful conduct of their business.
(i) Regulatory Filings. The financial statements and other information
set forth in the Parent's Registration Statement No. 33-81830 as declared
effective by the Commission, and all other filings by Parent with the
Commission (the "Regulatory Filings") are accurate in all material respects
and do not contain any untrue statements of material facts or omit to state
any material facts required to be stated in the Regulatory Filings that are
necessary to make the statements in the Regulatory Filings not misleading.
(j) Issuance of the Parent Shares. Upon the Parent's delivery to the
Payment Agent in accordance with this Agreement of the Closing Date Shares,
such Closing Date Shares shall be validly issued, fully paid, and
nonassessable, and not issued in violation of any preemptive rights.
(k) No Broker. Neither the Parent nor the Company has any obligation
or liability to any broker, finder, or other person for any broker or
similar services with respect to the Sale.
(l) Compliance With Applicable Laws. The Parent's and the Company's
execution, delivery, and performance of this Agreement will not violate any
Applicable Laws. Moreover, no Lawsuit by or before any court or other
governmental entity exists, or to the knowledge of the Parent or the
Company is threatened, that would prohibit the Parent or the Company from
consummating the Sale or seek damages with respect to the Sale.
(m) Funding of the Acquisition. The Parent possesses adequate cash
reserves and financing commitments to fund the Closing Date Cash payable
upon the consummation of the Sale.
(n) Disclosure. The Parent and the Company have fully provided the
Target and the Stockholders with all information that the Target or the
Stockholders requested when deciding whether to enter into this Agreement.
No representation or warranty of the Parent or the Company contained in
this Agreement contains any untrue statement or omits to state a fact
necessary the make the statements in such representation and warranty not
misleading.
Section 5.2 Representations and Warranties of the Target and the
Stockholders. The Target and the Stockholders, jointly and severally, represent
and warrant, as of the date of execution hereof, to the Parent and the Company
as follows:
(a) Organization of the Target. The Target is a service corporation
duly organized, validly existing, and in good standing under the laws of
the State of Illinois. The Target is not required to qualify to transact
business as a foreign corporation in any jurisdiction, except where the
failure to qualify could not have a material adverse effect upon the
Target.
(b) Power and Authority of the Target. The Target possesses the
requisite corporate power and authority to execute, deliver, and perform
this Agreement, without obtaining any approval, authorization, consent, or
waiver or giving any notice, other than the approval of its board of
directors and the Stockholders, which it has properly obtained. The Target
also possesses the requisite corporate power and authority to own its
properties and carry on its business as presently conducted.
<PAGE>
(c) Execution, Delivery, and Enforceability. The Target has duly
authorized, executed, and delivered this Agreement, and this Agreement
constitutes a valid, legal, and binding obligation of the Target,
enforceable against the Target in accordance with its terms, subject to any
Law Affecting Creditors' Rights.
(d) Target Shares. The record and beneficial ownership of the Target
Shares are described on Schedule 5.2(d). The Target Shares constitute all
of the authorized securities of the Target, the Stockholders own all of the
outstanding Target Shares, and all Stockholders are signatories to this
Agreement. The Target Shares are comprised of (i) 100,000 authorized shares
of Common Stock, par value $10.00 per share (the "Target Common Shares"),
of which 3,000 shares are outstanding, and (ii) 10,000 authorized shares of
Preferred Stock, par value $100.00 per share (the "Target Preferred
Shares"), of which 1,650 shares are outstanding. All of the outstanding
Target Shares have been validly authorized and issued, are fully paid and
nonassessable, and were not issued in violation of any preemptive rights or
Applicable Law. There are no preemptive rights with respect to the Target
Shares. The Stockholders have good, valid and indefeasible title to the
Target Shares and no Liens exist with respect to any Target Shares. As a
result of the transactions contemplated hereby, record and beneficial
ownership of the Target Shares will be transferred to the Company, free and
clear of all Liens of any kind.
(e) No Other Securities. The Target does not have outstanding: (i) any
securities other than the Target Shares, (ii) any options, warrants, or
other rights to purchase any Target securities, or (iii) any commitment to
issue or purchase any securities, including any Target Shares, options,
warrants, or other securities.
(f) Subsidiaries. Except as described on Schedule 5.2(f), the Target
does not directly or indirectly own or hold any interest in any Person,
including any equity securities or partnership interests. All
representations and warranties of the Target and the Stockholders set forth
in this Section 5.2 applicable to the Target's assets, business, cash
flows, financial condition, operating results, and prospects apply to the
Target on a consolidated basis with the Persons described on Schedule
5.2(f) (the "Subsidiaries").
(i) Organization of the Subsidiaries. Each Subsidiary is a
corporation or a partnership duly organized, validly existing, and in
good standing under the laws of the state of its jurisdiction as shown
on Schedule 5.2(f). Each Subsidiary is not required to qualify to
transact business as a foreign corporation in any jurisdiction, except
where the failure to qualify could not have a material adverse effect
upon such Subsidiary.
(ii) Power and Authority. Each Subsidiary possesses the requisite
power and authority to own its properties and carry on its business as
presently conducted.
(iii) Subsidiary Securities. The Target owns all of the
outstanding equity securities or partnership interests of each
Subsidiary free and clear of any Liens, except the Permitted Liens.
All of the outstanding equity securities and partnership interests of
each Subsidiary have been validly issued, are fully paid and
nonassessable, and were not issued in violation of any preemptive
rights or Applicable Law. No Subsidiary has any outstanding: (A)
options, warrants, or other rights to purchase any Subsidiary
securities, or (B) commitment to issue any securities, including any
options, warrants, or other securities.
(g) Hospital Contracts. All Documents to which the Target is a party
(or entered into on behalf of the Target) pursuant to which the Target
provides Emergency Department Services or other services to any hospitals
<PAGE>
(the "Hospitals") are listed on Schedule 5.2(g) (the "Hospital Contracts").
No Document exists with respect to any Hospital Contract pursuant to which
the Target has subcontracted to another Person any of the Target's
obligations under any Hospital Contract, except for the delegation of the
performance of medical services pursuant to the Physician Contracts. Except
as described on Schedule 5.2(g) and Schedule 7.1(b), no Stockholder has
entered into any Document in his or her individual capacity or on behalf of
any Person other than the Target to provide Emergency Department Services
or other services to any hospital or other health care facility.
(h) Physician Contracts. All Documents to which the Target is a party
(or entered into on behalf of the Target) pursuant to which the Target has
employed or engaged physicians (the "Physicians") to render services with
respect to the Hospital Contracts or otherwise (including the Physician
Stockholder Employment Agreements) are listed on Schedule 5.2(h)
(collectively, the "Physician Contracts") and the hourly rates for the
physicians party to the Physician Contracts are set forth on Schedule
5.2(h).
(i) Other Contracts. Except for the Hospital Contracts and the
Physician Contracts, all material Documents to which the Target is a party
(or entered into on behalf of the Target), including any Documents
affecting the Target Shares, or any material Documents affecting the
Target, regardless of whether the Target is a party to such Documents, are
listed on Schedule 5.2(i) (collectively with the other Documents described
on Schedule 5.2(i) the "Other Contracts").
(j) Contracts Generally. Except as described on Schedule 5.2(j):
(i) Valid and Binding. Each Contract is valid, binding, and in
full force and effect. To the knowledge of the Target or any
Stockholder, no Contract has been amended or supplemented in any way
except as described in the description of such Contract and no party
to any Contract has assigned any of its rights or delegated any of
its duties under such Contract except for the delegation of the
performance of Medical Services under the Hospital Contracts
pursuant to the Physician Contracts.
(ii) No Breach or Default. No material breach or default
exists under any Contract, and to the knowledge of the Target or any
Stockholder, no event has occurred with respect to any Contract that
with the lapse of time or action or inaction by any party to such
Contract could result in a material breach or a default under such
Contract.
(iii) Enforceable by the Target After the Sale. Following the
Sale, all of the Target's rights under each Contract shall remain
intact and inure to the Target, as owned by the Company, and such
Contract will be enforceable by the Target or its assignee after the
Sale in accordance with such Contract's terms, subject to any Laws
Affecting Creditors' Rights.
(iv) No Amounts Owed. The Target does not owe more than $5,000
with respect to any Contract, except amounts owed in the ordinary
course of business consistent with the Target's past practices and
the terms of such Contract.
(v) No Liens. The Target's rights under each Contract are
free and clear of any Lien, other than the Permitted Liens.
(vi) No Burdensome Contracts. No Contract or any other
Document: (A) requires the Target to make purchases or pay for
services in excess of the requirements of its business as presently
conducted, (B) guarantees any obligation of another Person or
provides any type of indemnification by the Target, or (C) restricts
the ability of the Target, any Stockholder, or any Physician to
<PAGE>
compete.
(k) Consents. All approvals, consents, and notices, required to be
obtained or given by or on behalf of the Target before consummation of the
Sale, including a Hospital Consent from each Hospital, are described on
Schedule 5.2(k) (collectively, the "Consents").
(l) No HSR Filing Required. The Sale is exempt from the notification
and waiting requirements under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, because the Target and the Stockholders expect
that the aggregate consideration for the Target Shares pursuant to this
Agreement will be less than $15,000,000, the Target had total assets as of
December 31, 1995 of less than $25,000,000, and the Target had net sales
during the year ended December 31, 1995 of less than $25,000,000, as
required under 16 C.F.R. ss. 802.20(b). Moreover, except for the Consents,
the execution and delivery of this Agreement by the Target and the
Stockholders and the consummation of the Sale do not require any approval,
consent, filing, registration, or other action by any governmental entity.
(m) Conflicts. Subject to receipt of the Consents, the Target's
execution, delivery, or performance of this Agreement will not conflict
with, constitute a breach or violation of, result in a Lien against, or
give rise to any default or right of acceleration, cancellation, or
termination with respect to any Document to which the Target is a party or
by which the Target's assets are bound (or give rise to an event that with
notice, lapse of time, or both, would result in such a conflict, breach,
violation, Lien, default, or right), including the articles of
incorporation and the bylaws of the Target.
(n) Permits. The Target possesses all authorizations, certificates,
franchises, licenses, and permits necessary for the lawful conduct of its
business (collectively, the "Permits"), each of which is listed on
Schedule 5.2(n).
(o) Compliance with Applicable Laws. The Target has complied with
all Applicable Laws that might have a material adverse affect on the
Target if not complied with and the Target's execution, delivery, and
performance of this Agreement will not violate any Applicable Laws.
Moreover, no Lawsuit by or before any court or other governmental entity
exists or is pending or to the knowledge of the Target or any Stockholder
is threatened that would prohibit the Target or the Stockholders from
consummating the Sale or seek damages with respect to the Sale.
(p) Financial Statements. The Target has prepared the financial
statements and related notes and schedules attached hereto as Schedule
5.2(p) (the "Financial Statements") from its books and records using
generally accepted accounting principles applied on a basis consistent
with the Target's past practices. The Financial Statements present fairly
the financial position, results of operations, and cash flows of the
Target as of the date and for the periods covered by such Financial
Statements. The Target owns all of the assets described in the most recent
balance sheet that is part of the Financial Statements (the "Most Recent
Balance Sheet") and does not have any liabilities other than the
liabilities described in such balance sheet, the notes to the Financial
Statements and the Schedules to this Agreement and liabilities incurred
since the date of that balance sheet in the ordinary course of the
Target's business consistent with its past practices.
(q) Absence of Certain Changes. Except as disclosed in Schedule
5.2(q), since the date of the Most Recent Balance Sheet, there have not
been: (i) any transactions in which the Target has engaged that were not
in the ordinary course of the Target's business and consistent with its
past practices, (ii) any Material Adverse Changes with respect to the
Target, (iii) any issuance, purchase, redemption or other transaction
affecting any Target Shares or other equity securities or rights in the
<PAGE>
Target, (iv) any declaration or payment of any dividends by the Target or
the making of any other distributions or transfers by the Target to any
Stockholders other than normal salary or other compensation in the
ordinary course of business, (v) any disposition, or commitment to dispose
of, any significant assets of the Target, (vi) any assumption, creation,
guarantee, or incurrence of any indebtedness by the Target, whether
absolute or contingent, other than indebtedness incurred by the Target in
the ordinary course of its business consistent with past practices, (vii)
any material amendments, modifications, or terminations of any Documents
to which the Target is or was a party or by which any of the Target's
assets are or were bound or any new Documents entered into by the Target
that are material, (viii) any changes in the accounting principles that
the Target uses when maintaining its accounting records or presenting its
financial statements or other alteration in the manner of keeping its
accounts, books, or records, (ix) any hiring, terminating, or changing of
any of the Target's directors, officers, or employees having senior or
supervisory positions, (x) any increase in the compensation that the
Target pays to any Person, or any commitment to make any such increase, or
(xi) any making, changing, or forgiving of any loan between the Target and
any of its Affiliates, directors, employees, Physicians, officers, related
parties, or Stockholders.
(r) Accounts Receivable. The accounts and notes receivable reflected
on the Most Recent Balance Sheet and all accounts and notes receivable of
the Target arising after the date of such balance sheet, other than
accounts and notes receivable collected since then in the ordinary course
of the Target's business consistent with its past practices: (i) arose
from bona fide transactions by the Target in the ordinary course of its
business consistent with its past practices, (ii) represent bona fide
indebtedness of the respective debtors, (iii) are collectible in fall
subject to any reserve for doubtful accounts included in the Target's
books and records, and (iv) are not, to the knowledge of the Target or any
Stockholder, subject to any defense or offset.
(s) Tangible Property. Subject to the Permitted Liens, the Target
has good and marketable title to all the real and personal property
reflected in the Most Recent Balance Sheet and all real and personal
property that it has acquired since the date of such balance sheet, other
than such real and personal property that the Target has disposed of since
then in the ordinary course of its business consistent with its past
practices and other than as described on Schedule 5.2(s). All of the
Target's tangible assets that are material to its business are in good
operating condition.
(t) No Undisclosed Liabilities. The assets and business of the
Target are not subject to any liabilities, obligations, or other Claims of
any nature, absolute or contingent, or any facts that could give rise to
any liabilities, obligations, or other Claims that could materially
adversely affect the assets, business, cash flows, financial condition,
prospects, or operations of the Target, except as disclosed in the
Financial Statements or incurred since the date of the Most Recent Balance
Sheet and disclosed on Schedule 5.2(t).
(u) Related Party Indebtedness. Other than normal compensation owed
under the Physician Contracts, the Target does not owe any amounts to any
of its Affiliates, directors, employees, officers, physicians, related
parties, or Stockholders. Moreover, no such Persons owe any amounts to the
Target.
(v) Permitted Liens. The Target has good and marketable title to each
of its assets, free and clear of any Lien, other than the Liens listed on
Schedule 5.2(v) (collectively, the "Permitted Liens").
(w) Litigation and Claims. Except as described on Schedule 5.2(w),
no Lawsuit is pending or to the knowledge of Target or any Stockholder is
threatened against or affecting: (i) the Target, (ii) any Stockholder (but
<PAGE>
only with respect to Lawsuits affecting the Stockholder in its capacity as
a Stockholder), (iii) any Physician, including the Stockholders, (but only
with respect to Lawsuits involving the provision of Emergency Department
Services or the practice of medicine), (iv) any Contract, or (v) the
execution, delivery, or performance of this Agreement. Any and all acts,
conditions, circumstances, events, or incidences that might result in a
Claim against the Target, any Stockholder or any Physician with respect to
the provision of Emergency Department Services or the practice of medicine
that could have a material adverse effect upon the assets, business,
financial condition or operations of the Target are also described in
Schedule 5.2(w). The Target reasonably believes that Insurance Policies
adequately cover any liabilities that may arise with respect to the items
described on Schedule 5.2(w).
(x) Taxes. Except as provided on Schedule 5.2(x):
(i) Tax Returns and Extensions. Each of the Target and its
Subsidiaries has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all material
respects. All Taxes owed by any of the Target and its Subsidiaries
(whether or not shown on any Tax Return) have been paid. None of the
Target and its Subsidiaries currently is the beneficiary of any
extension of time within which to file any Tax Return. No claim has
ever been made to the knowledge of the Stockholders or the Target by
an authority in a jurisdiction where any of the Target and its
Subsidiaries does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no Liens on any of the assets
of any of the Target and its Subsidiaries that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) No Additional Withholding. Each of the Target and its
Subsidiaries has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other
third party.
(iii) No Audits. No director or officer (or employee responsible
for Tax matters) of any of the Target and its Subsidiaries expects any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any
Tax Liability of any of the Target and its Subsidiaries either (A)
claimed or raised by any authority in writing or (B) as to which any
of the Stockholders and the directors and officers (and employees
responsible for Tax matters) of the Target and its Subsidiaries has
knowledge based upon personal contact with any agent of such
authority. Schedule 5.2(x) indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Target has delivered to the Parent and the
Company correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies assessed against
or agreed to by any of the Target and its Subsidiaries since January
1, 1990.
(iv) No Waiver of Limitations Period. None of the Target and its
Subsidiaries has waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency. (v) Miscellaneous. None of the Target and its Subsidiaries
has filed a consent under Code Section 341(f) concerning collapsible
corporations. None of the Target and its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Code Section 280G. None
of the Target and its Subsidiaries has been a United States real
property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
<PAGE>
897(c)(1)(A)(ii). Each of the Target and its Subsidiaries has
disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Code Section 6662. None of
the Target and its Subsidiaries is a party to any Tax allocation or
sharing agreement. None of the Target and its Subsidiaries (A) has
been a member of an Affiliated Group filing a consolidated federal
income Tax Return (other than a group the common parent of which was
the Target) or (B) to the knowledge of the Target or its Subsidiaries,
has any liability for the Taxes of any Person (other than any of the
Target and its Subsidiaries) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(vi) Tax Attributes. Schedule 5.2(x) sets forth the following
information with respect to the Target as of the most recent
practicable date (as well as on an estimated pro forma basis as of the
Closing Date giving effect to the consummation of the transactions
contemplated hereby): (A) the basis of the Target in its assets; and
(B) the amount of any net operating loss, net capital loss, unused
investment or other credit, unused foreign tax, or excess charitable
contribution allocable to the Target.
(vii) Tax Liability. The unpaid Taxes of the Target and its
Subsidiaries as of February 29, 1996 do not exceed the reserve for Tax
liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on
the face of the balance sheet dated as of February 29, 1996 provided
to the Parent and the Company on April 18, 1996 (rather than in any
notes thereto).
(viii)No Tax Liens. No Tax liens exist with respect to any assets
of the Target.
(y) Insurance. All insurance policies in effect that provide any
type of insurance coverage for the Target with respect to its business,
casualties, errors and omissions, general business liabilities, or medical
malpractice are described on Schedule 5.2(y) (collectively, the "Insurance
Policies"). The Target has not received any notice from any insurance
carrier of any intention to discontinue any Insurance Policy or to
discontinue or decrease any insurance coverage under any Insurance Policy.
(z) Employee Benefit Plans.
(i) ERISA Welfare Plans. All employee welfare benefit plans, as
defined in Section 3(l) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), established or maintained by or on
behalf of the Target or any of its Affiliates, or with respect to
which the Target or any of its Affiliates has contributed, is required
to contribute, or may have any liability, are listed on Schedule
5.2(z) (the "ERISA Welfare Plans"). Such ERISA Welfare Plans do not
provide for any retiree coverage.
(ii) ERISA Pension Plans. All employee pension benefit plans, as
defined in Section 3(2) of ERISA, established or maintained by or on
behalf of the Target or any of its Affiliates, or with respect to
which the Target or any of its Affiliates has contributed, is required
to contribute, or may have any liability, are listed on Schedule
5.2(z) (the "ERISA Pension Plans"). No ERISA Pension Plan has incurred
any "accumulated funding deficiency" or "waived funding deficiency"
within the meaning of Section 302 of ERISA or Section 412 of the Code
and the Target has never sought to obtain any variance from the
minimum funding standards pursuant to Section 412(d) of the Code. The
funding method used in connection with each ERISA Pension Plan meets
the requirements of ERISA and the Code and the actuarial assumptions
<PAGE>
used in connection with each such plan are reasonable, given the
experience of such ERISA Pension Plan and reasonable expectations.
(iii) Non-ERISA Plans. All bonus, deferred compensation,
executive compensation, fringe benefit, incentive, severance, stock
option, or other non-ERISA plans that the Target or any of its
Affiliates maintains, or with respect to which the Target or any of
its Affiliates has any liability or obligation, are listed on Schedule
5.2(z) (the "Non-ERISA Plans," and collectively with the ERISA Welfare
Plans and the ERISA Pension Plans, the "Employee Benefit Plans").
(iv) Delivery of Documents. The Target has delivered to the
Parent and the Company correct and complete copies of (1) each
Employee Benefit Plan, including all amendments to such plan, and all
summary plan descriptions and other summaries of such plan, (2) each
trust agreement, annuity or insurance contract, or other funding
instrument pertaining to each Employee Benefit Plan, (3) the most
recent determination letter issued by the IRS with respect to each
Employee Benefit Plan that is intended to be tax-qualified and a copy
of any pending applications for such IRS letters, (4) the three most
recent actuarial valuation reports for each Employee Benefit Plan for
which an actuarial valuation report has been prepared, (5) the two
most recent annual reports (IRS Form 5500 Series), including all
schedules to such reports, and plan audits, if applicable, filed with
respect to each Employee Benefit Plan, and (6) all relevant schedules
concerning the administrative costs, benefit payments, claims
experience, financial information, and insurance premiums for each
Employee Benefit Plan.
(v) Amendments. Each Employee Benefit Plan can be amended or
terminated at any time without approval from any Person, without
advance notice (except for any notice required under ERISA Section
204(h) with respect to the money purchase or target benefit plan), and
without any liability other than for benefits accrued prior to, or as
required to be vested pursuant to, such amendment or termination.
(vi) Joint & Several Liability. With respect to each Employee
Benefit Plan and any other similar arrangement or plan either
currently or previously terminated, maintained, or contributed to by
any entity which either is currently or was previously under common
control with the Target as determined under Code Section 414, no event
has occurred and no condition exists that after the Sale could subject
the Parent or the Target, directly or indirectly, to any liability
(including liability under any indemnification agreement) under
Section 412, 4971, 4975, or 4980B of the Code or Section 502, 601 or
606 of ERISA other than a liability which would not have a material
adverse effect upon the assets, business, financial condition,
prospects or operations of the Parent, the Company or the Target.
(vii) Claims for Benefits. All benefits due under each Employee
Benefit Plan have been timely paid and there is no material Lawsuit or
Claim, other than routine uncontested claims for benefits, pending, or
to the knowledge of the Target or any Stockholder threatened, against
any Employee Benefit Plan or the fiduciaries of any such plan or
otherwise involving or pertaining to any such plan. Moreover, to the
knowledge of the Target or any Subsidiary, no basis exists for any
such Lawsuit or Claim.
(viii)Compliance with Plan and Applicable Law. The Target has
administered and documented each Employee Benefit Plan in compliance
with such plan's terms and Applicable Law in all material respects.
Each Employee Benefit Plan and any related trust agreement, annuity or
insurance contract, or other funding instrument currently complies,
and has complied in the past, in all material respects, both as to
form and operation, with the terms of such plan and related documents
and with all Applicable Law, including ERISA and the Code, as well as
<PAGE>
the provisions of any applicable Documents.
(ix) Contributions. All contributions and payments to or with
respect to each Employee Benefit Plan have been timely made and the
Target has made adequate provision for reserves to satisfy
contributions and payments that have not been made because they are
not yet due under the terms of such Employee Benefit Plan or related
Document, or Applicable Law.
(x) No Change in Control Triggers. No Employee Benefit Plan
provides for any accelerated payments, deemed satisfaction of goals or
conditions, new or increased benefits, or vesting conditioned in whole
or in part upon a change in control of the Target or any of its
Affiliates or any plant closing.
(xi) No Benefits Increases. No agreement, commitment, or
obligation exists to increase any benefits under any Employee Benefit
Plan or to adopt any new Employee Benefit Plan.
(xii) No Pension Plans. Neither the Target nor any of its
Affiliates maintains, participates in, contributes to, or has any
obligation to contribute to any defined benefit plan, multiemployer
plan, multiple employer plan, or, except for any frozen or terminated
money purchase plan and target benefit plan, any plan subject to the
minimum funding provisions of the Code or the minimum funding or
termination insurance provisions of ERISA, or has had any obligation
with respect to such a plan during the five years immediately
preceding the date of this Agreement (except for said money purchase
or target benefit plan).
(xiii)No Audits or Prohibited Transactions. No audit or
investigation by any governmental authority is pending, or to the
knowledge of the Target or any Stockholder threatened, regarding any
Employee Benefit Plan, and no party dealing with any Employee Benefit
Plan has engaged in any prohibited transactions (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or any breach of
fiduciary duty.
(xiv) No Unfunded Benefits. No Employee Benefit Plan has any
unfunded benefits that are not fully reflected in the Most Recent
Balance Sheet.
(xv) Tax Qualified Plans. Each Employee Benefit Plan that is
intended to be a tax-qualified plan is so qualified, in both form and
operation, has received one or more IRS determination letters to such
effect, and no facts exist that could cause the qualified status of
such Employee Benefit Plan to be adversely affected.
(aa) Labor Relations.
(i) No Employment Agreements. Except for the Physician Contracts,
or as otherwise described on Schedule 5.2(aa), no employment
agreements exist between the Target and any of its employees or
Stockholders.
(ii) No Loans. No loans or loan agreements exist between the
Target and any employee or independent contractor of the Target.
(iii) No Collective Bargaining Agreements. No collective
bargaining agreements applicable to any employee or independent
contractor of the Target exist. Moreover, no Person has requested any
such agreement and no discussions or negotiations have occurred with
respect to any such agreement.
(iv) No Strikes. No strikes, work stoppages, work slowdowns,
sick-outs, lock-outs, or any threats of the foregoing with respect to
<PAGE>
any employees or independent contractors of the Target have occurred
or are threatened.
(v) No Labor Law Violations. No charges of discrimination, unfair
labor practices, or violations of fair employment, wage payment, or
health and safety laws are pending or to the knowledge of the Target
or any Stockholder are threatened before any court or other
governmental entity concerning any employees or independent
contractors of the Target, and no basis exists for any such charge.
(bb) Environmental Matters. The Target has complied with all
Environmental Laws and, to the knowledge of the Target or any
Stockholders, has never been named as a potentially responsible party
under any Environmental Laws. Moreover, the Target is not subject to
any liability (absolute, contingent, or otherwise) in connection with
any release or threatened release of any Material of Environmental
Concern into the environment or subject to any reclamation or
remediation requirements under any Environmental Laws.
(cc) Licenses to Practice Medicine. Each Stockholder and each
Physician is licensed to practice medicine in each jurisdiction where
he or she currently practices medicine.
(dd) No Broker. Neither the Target nor any Stockholder has any
obligation or liability to any broker, finder, or other Person for any
broker or similar services with respect to the Sale.
(ee) Absence of Certain Business Practices. Neither the Target,
any Stockholder, nor any Affiliate of either of them has directly or
indirectly given or agreed to give any gift or similar benefit to any
Hospital employee or representative, government employee, or other
Person who was or is in a possible position to help or hinder the
Target, which gift or benefit: (i) might subject any Person to damages
or penalties in a civil or criminal proceeding, (ii) might have a
material adverse affect on the Target if not given, or (iii) might
have a material adverse affect on the Target if not continued.
(ff) Solvency. The Sale will not constitute a fraudulent transfer
or conveyance with respect to the Target.
(gg) Disclosure. The Target and the Stockholders are unaware of
any material facts concerning the Target that they have not disclosed
to the Parent and the Company in this Agreement or in writing pursuant
to this Agreement and the Target and the Stockholders have fully
provided the Parent and the Company with all information that the
Parent or the Company requested when deciding whether to enter into
this Agreement. Moreover, no representation or warranty of the Target
and the Stockholders contained in this Agreement contains any untrue
statement or omits to state a fact necessary to make the statements in
such representation and warranty not misleading.
(hh) No Corporate Practice. No Stockholder has received notice
from any governmental authority, from its counsel, or from any other
of its advisors that any Party to this Agreement could be precluded
from receiving the benefits of this Agreement as a result of the
structure of the transaction contemplated by this Agreement. Each
Stockholder accordingly agrees that such Stockholder will not, in an
attempt to void or nullify this Agreement or any other agreement
executed in connection herewith or any relationship involving Parent
or any Stockholder, sue, claim, aver, allege or assert that this
Agreement or any such relationship violates any law, rule or
regulation relating to the corporate practice of medicine.
Section 5.3 Representations and Warranties of Each Stockholder. Each
Stockholder represents and warrants, as of the date of execution hereof, to the
Parent and the Company as follows:
<PAGE>
(a) Legal Capacity. Such Stockholder possesses the legal capacity
to execute, deliver and perform this Agreement, without obtaining any
approval, authorization, consent, or waiver or giving any notice.
(b) Execution, Delivery, and Enforceability. Such Stockholder has
duly executed and delivered this Agreement, and this Agreement
constitutes a valid, legal, and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with
its terms, subject to any Law Affecting Creditors' Rights.
(c) Target Shares. No Liens exist with respect to the Target
Shares that such Stockholder owns.
(d) Conflicts. Such Stockholder's execution, delivery, and
performance of this Agreement will not conflict with, constitute a
breach or violation of, result in a Lien against, or give rise to any
default or right of acceleration, cancellation, or termination with
respect to any Document to which such Stockholder is a party or by
which any of such Stockholder's assets are bound (or give rise to an
event that with notice, lapse or time, or both, would result in such a
conflict, breach, violation, Lien, default, or right).
(e) Compliance With Applicable Laws. Such Stockholder has
complied with all Applicable Laws material to the practice of medicine
and such Stockholder's execution, delivery, and performance of this
Agreement will not violate any Applicable Laws. Moreover, no Lawsuit
by or before any court or other governmental entity exists or to the
knowledge of such Stockholder is threatened, that would prohibit the
Target or such Stockholder from consummating the Sale or seeking
damages with respect to the Sale.
(f) No Disciplinary Proceedings. Such Stockholder is not
currently subject to any professional disciplinary proceeding or
action with respect to the provision of Emergency Department Services
or the practice of medicine whatsoever and has not been subject to any
such proceeding or action in the past.
(g) Sophisticated Investor.
(i) Accredited Investor. Such Stockholder is an "accredited
investor" as defined in Rule 501(a) under the Securities Act.
(ii) Investment Purpose. Such Stockholder is acquiring the
Parent Shares delivered pursuant to this Agreement for investment
purposes and not with a view to making a distribution of such
shares.
(iii) Investment Experience. Such Stockholder has sufficient
knowledge and experience to enable him or her to evaluate the
merits and risks of an investment in the Parent Shares.
(iv) Financial Disclosure. Such Stockholder has received all
of the financial and other information of the Parent that such
Stockholder considers necessary to evaluate an investment in the
Parent Shares.
(v) Ability to Bear Loss. Such Stockholder has the ability
to bear any loss with respect to his or her investment in the
Parent Shares.
(vi) Residency. Such Stockholder is a bona fide resident of
the State of Illinois.
(h) Covenant Not to Compete. The Covenant Not to Compete is not
unduly burdensome to such Stockholder and such Stockholder is willing and
<PAGE>
able to compete outside the parameters of the Covenant Not to Compete.
Except for the Covenant Not to Compete and the Physician Stockholder
Employment Agreements, no Document in any way restricts the ability of
such Stockholder to compete whatsoever.
VI. COVENANTS
Section 6.1 Best Efforts to Consummate the Sale. Each of the parties to
this Agreement shall use its best efforts to take, or cause to be taken, all
actions necessary, proper, or advisable to consummate the Sale in accordance
with and subject to the terms of this Agreement.
Section 6.2 Access to the Target. From the date of this Agreement through
the Closing Date, the Target shall permit the Parent, the Company, and their
advisors and representatives access to the Target's assets and business,
including the Target's books and records. Moreover, during this period the
Target shall cause its officers, employees, advisors, and representatives to
furnish promptly to the Parent, the Company, and their advisors and
representatives, at the sole cost and expense of the Parent and the Company,
such financial and operating information as such Persons may reasonably request,
including copies of any requested documents.
Section 6.3 Operation of the Target Pending the Sale. From the date of
this Agreement through the Closing Date, and except as otherwise set forth in
Exhibit D, the Target shall, and the Stockholders shall cause the Target to:
(a) Representations and Warranties. Use reasonable efforts to
operate and maintain its assets and business in such a manner so that the
representations and warranties of the Target and the Stockholders set
forth in this Agreement shall continue to be correct and complete in all
material respects at all times prior to the Closing Date as if made on and
as of such times.
(b) Operate the Business in the Ordinary Course. Except as is
otherwise provided for in this Agreement, operate its business in the
ordinary course consistent with past practices and this Agreement and in
compliance with all Applicable Laws material to its business and assets;
(c) Maintain Goodwill. Preserve intact its business and the goodwill
of the Hospitals, the Physicians, the Target's employees, and any other
Person having business relations with it;
(d) No Material Adverse Change. Not cause or suffer to exist any
Material Adverse Change to it;
(e) No Transaction in Target Shares. Refrain from issuing, purchasing,
redeeming, or otherwise affecting any Target Shares, any other equity
securities of the Target, or any right to acquire any equity securities
from the Target;
(f) No Dividends. Refrain from declaring or paying any dividends or
otherwise making any distributions or transfers to any Stockholders in
their capacities as Stockholders;
(g) Maintain Assets. Maintain its tangible assets in good order and
repair;
(h) Disposition of Assets. Refrain from disposing of, or committing to
dispose of, any assets, other than the sales of assets involving $10,000 or
less in any one transaction or series of related transactions, and other
than as contemplated by Section 4.2(d);
(i) Borrow Money. Refrain from assuming, creating, guaranteeing, or
incurring any indebtedness, whether absolute or contingent, other than
indebtedness incurred in the ordinary course of its business consistent
<PAGE>
with past practices;
(j) Make Payments. Promptly pay when due all liabilities and
obligations of every kind and nature incurred by it;
(k) Pay Taxes. Timely and accurately file all required Tax returns and
reports and timely pay all Taxes owed with respect to such returns and
reports;
(l) No Liens. Refrain from granting any Liens;
(m) No Changes to Contracts. Refrain from amending, modifying, or
terminating any of its Contracts or other Documents except as contemplated
by this Agreement, including the Target's articles of incorporation and
by-laws, or entering into any new Document that is material;
(n) Perform Obligations. Punctually perform all obligations under each
Contract and each of its other Documents, and keep each of them in full
force and effect, free from any right of cancellation, forfeiture, or
termination;
(o) Insurance Coverage. Continue in effect all Insurance Policies;
(p) No Changes in Accounting Principles. Refrain from changing the
accounting principles used when maintaining its accounting records or
presenting its financial statements, or otherwise altering the manner of
keeping its accounts, books, or records, except for converting its
accounting basis to the accrual method;
(q) Change Key Employees. Refrain from hiring, terminating, or
changing any of its directors, officers, or employees having senior or
supervisory positions;
(r) Compensation. Except as may be specifically agreed to in writing
by the Parent, refrain from increasing or promising to increase any
compensation or benefits that the Target pays to any Person, including any
formula upon which any compensation or benefits are based;
(s) Employee Benefit Plans. Make full and timely payment of all
amounts required under each Employee Benefit Plan;
(t) Loans to Affiliates. Refrain from making, changing, or forgiving
any loan between the Target and any of its Affiliates, directors,
employees, Physicians, officers, related parties, or Stockholders; and
(u) No Agreements Concerning the Foregoing. Refrain from entering into
any agreement to take any of the actions described in the foregoing clauses
(a) through (t) of this Section 6.3.
Section 6.4 Changes to the Information Disclosed on the Schedules. From the
date of this Agreement through the Closing Date:
(a) Information on the Schedules. The Target and the Stockholders
shall promptly notify the Parent and the Company of any changes to the
information disclosed on any schedule to this Agreement, including changes
occurring after the date of this Agreement (although such disclosure shall
not in any way amend or supplement any schedule).
(b) Representations, Warranties, and Covenants. Each party to this
Agreement shall notify each other Party to this Agreement of any
condition, circumstance, fact, or other information that may cause the
representations and warranties of such Party contained in this Agreement
to be incorrect or incomplete at any time prior to the Closing Date as if
made on and as of any such time or cause such Party to be unable to
perform its covenants contained in this Agreement that it is required to
perform on or before the Closing Date. Such Party shall then use
<PAGE>
reasonable efforts to prevent or promptly cure any such breach.
Section 6.5 Satisfaction of the Closing Conditions. The Target and the
Stockholders shall use their best efforts to cause the conditions set forth in
Section 4.2 to be satisfied, including the delivery to the Parent and the
Company of all of the Consents. The Parent and the Company shall use their best
efforts to cause the conditions set forth in Section 4.3 to be satisfied as
promptly as possible.
Section 6.6 NASD Filing. At least 15 days before the Closing Date, or such
later date as is permitted by the National Association of Securities Dealers,
the Parent shall list the Parent Shares to be delivered pursuant to this
Agreement on the National Market System. The Parent shall pay any fee required
with respect to such listing.
Section 6.7 Form 8-K Financial Statements. The Target and the Stockholders
acknowledge that within 15 days after the Closing Date, the Parent must file a
Form 8-K with the Commission disclosing the Sale. With the Form 8-K or within 60
days after the filing of the Form 8-K, the Parent must file with the Commission:
(a) the audited financial statements of the Target for the year ended December
31, 1995, (b) the interim financial statements of the Target for the period
beginning on January 1, 1996 and ending on the Effective Date if required under
Rule 3-05 of Regulation S-X of the Commission, (c) the pro forma balance sheet
of the Parent as of December 31, 1995, prepared as if the Sale had occurred on
that date, and (d) the pro forma statements of operations of the Parent for the
fiscal year ended December 31, 1995, and the interim period beginning on January
1, 1996 and ending on the Effective Date if required under Rule 3-05 prepared as
if the Sale occurred as of the beginning of such periods. The Target's financial
statements for the year ended December 31, 1995, are included as part of the
Financial Statements described in Schedule 5.2(p). From the date of this
Agreement until the Closing Date, the Target shall provide the Certified Public
Accountants access to the Target's books and records, personnel, and premises
for the purpose of auditing the Target's financial statements for the year ended
December 31, 1995. The Company shall pay the fees and expenses of the Certified
Public Accountants for performing such audit, which shall not be reflected as a
liability of the Target on the Final Balance Sheet. The Target and the
Stockholders shall cooperate with the Parent and the Certified Public
Accountants in connection with such audit and the preparation of the pro forma
financial statements.
Section 6.8 Employee Notices. The Target and the Stockholders shall use
their best efforts to amend each employment agreement between the Target and any
of its employees so that the amended terms of such agreement are acceptable to
the Parent and the Company, which efforts shall include, if requested by the
Company, causing the Target and each Physician to enter into a new Physician
Contract, in form and substance satisfactory to the Parent and the Company. The
Target and the Stockholders shall also be solely responsible for any notice or
other requirements or liabilities under any Worker Adjustment and Retraining
Notification Act or similar state law implicated by this Agreement or the Sale
or required under any Employee Benefit Plan.
Section 6.9 No Transfer of Target Shares. From the date of this Agreement,
no Stockholder shall transfer any of his or her Target Shares. Moreover, each
Stockholder shall use its best efforts to support this Agreement and the Sale.
Section 6.10 Public Announcements. The Target and the Stockholders shall
not issue any press release or make any public statement concerning this
Agreement or the Sale without obtaining the prior consent of the Parent and the
Company. The Target and the Stockholders acknowledge that the Parent may issue
such press releases concerning this Agreement and the Sale as it considers
appropriate and may make any filings that the Parent considers advisable or
necessary under the Securities Act, the Securities Exchange Act of 1934, as
amended, or the rules applicable to the National Market System. Notwithstanding
anything herein to the contrary, before issuing any press release concerning
this Agreement or the Sale, the Parent shall consult with the Target concerning
the substance of such press release.
<PAGE>
Section 6.11 No Shopping. Unless and until this Agreement is terminated
pursuant to Article IX, neither the Target, any Stockholder, or any Affiliate of
either of them shall directly or indirectly encourage, solicit, initiate, or
participate in any discussions or negotiations with any Person other than the
Parent and the Company concerning any merger, sale of substantially all assets,
business combination, sale of shares of capital stock, or similar transaction
involving the Target, or directly or indirectly disclose any Confidential
Information to any Person other than the Parent, the Company, and their advisors
and representatives. If the Target or any Stockholder receives an offer or
inquiry with respect to any of the foregoing types of transactions, such Person
shall promptly inform the Parent and the Company of such offer or inquiry.
Section 6.12 Target Lease. Upon the execution and delivery of this
Agreement, the Target shall enter into an amendment to the Lease Agreement
between Kirchoff Limited Partnership and the Target with respect to the premises
that the Target leases at 4215 Kirchoff Road, Rolling Meadows, Illinois, in the
form of EXHIBIT I (the "Target Lease Amendment").
Section 6.13 Target Directors and Officers Following the Sale. Promptly
after consummation of the Sale, the Parent and the Company shall cause the
election of the individuals listed on Schedule 6.13 to the offices of the Target
designated on such schedule, provided that this Section 6.13 shall not: (a)
confer upon any such individual the right to continued employment by the Target
following the Sale, or (b) affect in any way the Target's right to terminate
such individual's employment or remove him or her from office.
Section 6.14 Pending Negotiations and Execution of Hospital Contracts. The
Target and the Stockholders hereby represent, warrant and covenant that (a) the
Hospital Contract between the Target and Northwest Community Hospital is
currently under renegotiation, that new terms for such Hospital Contract will be
agreed upon within 30 days after the Closing Date, and that the financial terms
of such contract shall be consistent with the presentation of such contract in
the pro forma financial information delivered to the Parent on April 2, 1996,
(b) the Hospital Contract between the Target and St. Elizabeth Hospital shall be
executed within 30 days after the Closing Date.
VII. COVENANTS NOT TO COMPETE OR DISCLOSE CONFIDENTIAL
INFORMATION
Section 7.1 Covenant Not to Compete. Each Stockholder covenants (the
"Covenant Not to Compete") that, without the prior written consent of the Target
after the Sale, during the Non-Compete Period such Stockholder will not directly
or indirectly:
(a) Solicit Hospitals and Physicians. Either on his or her own account
or for any other Person, solicit, induce, attempt to induce, interfere
with, or endeavor to cause: (i) any Hospital to modify, amend, terminate,
or otherwise alter its Hospital Contract; (ii) any Physician to modify,
amend, terminate, or otherwise alter his or her Physician Contract; or
(iii) any other physician engaged by the Service Corporation or any other
Affiliate of the Parent to terminate his or her arrangement with such
Affiliate;
(b) Provide Emergency Department Services. Except for the activities
described on Schedule 7.1(b), own, manage, operate, engage in, serve as an
advisor or consultant for, control, or otherwise participate in or be
involved as a partner, guarantor, or other holder of an interest in, any
Person providing Emergency Department Services in any place within the
defined Service Areas for any Hospital as set forth on EXHIBIT J;
(c) Assist Competitors. Make any statement or perform any act intended
to advance an interest of any existing or prospective competitor of the
Parent or any of its Affiliates (a "Competitor"), or encourage any other
Person to make any such statement or to perform any such act; and
<PAGE>
(d) Send Clients to Competitors. Make any statement or perform any act
intended to cause any existing or potential client of the Parent or any of
its Affiliates to use the services or purchase the products of any
Competitor.
Notwithstanding any provision herein to the contrary, if any Hospital Contract
with any Hospital terminates for any reason other than default by the Hospital
thereunder, then, nothing herein shall prohibit any Stockholder from engaging in
the activities otherwise prohibited under Section 7.1(b) at such Hospital or
within the Service Areas described in Section 7.1(b). The covenants agreed to in
this Section 7.1 shall be in addition to, and not a limitation of, any covenants
agreed to by any Stockholder in another contract.
Section 7.2 Indirect Competition. For purposes of this Agreement, a
Stockholder shall be deemed to be indirectly competing against the Parent and
its Affiliates if the Stockholder or any of his or her Affiliates owns a
beneficial interest in any Person who provides Emergency Department Services to
any Hospital or any Affiliate of any Hospital at any Service Area described in
Section 7.1(b). The ownership restriction contained in this Section 7.2 shall
not apply to ownership as a passive investor of less than a two percent (2%)
interest in the outstanding equity securities of any publicly held corporation
listed on a national securities exchange or association.
Section 7.3 No Disclosure of Confidential Information. Each of the Target
and the Stockholders, jointly and severally, covenant (the "Non-Disclosure
Obligation") that they will not disclose any Confidential Information at any
time to any Person other than the Parent, the Company, and their advisors and
representatives; provided that with respect to any such disclosure by any
Stockholder, each Stockholder covenants only with respect to his or her own
disclosures. This Section 7.3, however, shall not preclude the Target or any
Stockholder from:
(a) Advisors. Disclosing information to its accountants, lawyers, and
other professional advisors, provided that the Target and the Stockholders
shall be deemed to have breached this Section 7.3 if any such accountant,
lawyer, or other professional advisor discloses such information to any
other Person;
(b) Public Information. Disclosing information generally available to
the public other than by breach of this Section 7.3;
(c) Required by Law. Disclosing information required by law or court
order after promptly notifying the Parent and the Company of the
requirement to disclose such information; or
(d) Tax Returns. Disclosing information required in any Tax report or
return.
Section 7.4 Reasonableness. The Stockholders acknowledge that the terms of
the Covenant Not to Compete and the Non-Disclosure Obligation are reasonable in
all respects and necessary to permit the Parent and the Company to realize the
benefits of the Sale.
Section 7.5 Judicial Enforcement. Any breach or violation of the Covenant
Not to Compete or the Non-Disclosure Obligation shall entitle the Parent or the
Company to an injunction restraining any further or continued breach or
violation. Such right to an injunction shall be in addition to and cumulative of
(and not in lieu of) any other remedies to which the Parent and the Company are
entitled because of such breach or violation. If a court of competent
jurisdiction determines that the Covenant Not to Compete or the Non-Disclosure
Obligation are partially or wholly inoperative, invalid, or unenforceable in a
particular case because of their duration, geographical scope, restricted
activity, or any other parameter, such court may reform such duration,
geographical scope, restricted activity, or other parameter with respect to such
case to permit enforcement of such reformed Covenant Not to Compete or reformed
<PAGE>
Non-Disclosure Obligation to the greatest extent allowable.
Section 7.6 Condition to Payments. Notwithstanding anything else to the
contrary in this Agreement, a condition to the obligation of the Parent to make
any Contract Retention Payment, Performance Payment or Incentive Earnout Payment
to the Payment Agent with respect to the amount allocable to each Stockholder
shall be that such Stockholder has not violated the Covenant Not to Compete or
the Non-Disclosure Obligation.
VIII. INDEMNIFICATION
Section 8.1 Indemnification of the Parent and the Company. The
Stockholders, jointly and severally, shall indemnify, defend, reimburse, and
hold the Parent, the Company, and each of their Affiliates (including the
Target, after the Sale), together with each of their agents, directors,
employees, officers, and stockholders (collectively, the "Company Indemnitees")
harmless from any and all Claims (other than Claims indemnified pursuant to
Section 8.7) directly or indirectly related or arising with respect to:
(a) Breaches. Any breach of any representation, warranty, covenant, or
agreement of the Target or any Stockholder set forth in this Agreement;
provided that with respect to representations and warranties of each
Stockholder set forth in Section 5.3, each Stockholder shall only be liable
with respect to any breach of his or her own representations and
warranties;
(b) Failure to Perform. Any failure duly to perform or observe any
term, provision, covenant, or agreement to be performed or observed by the
Target or any Stockholder set forth in this Agreement;
(c) Medical Malpractice Claim. Any medical malpractice or similar
claims against the Target, any Stockholder, or any Physician with respect
to any activity, condition, circumstance, event, or incident existing or
occurring on or before the Closing Date;
(d) Physicians. Any performance or non-performance of services on or
before the Closing Date by any physician employed or engaged by or on the
behalf of the Target; provided that with respect to performance or
non-performance of services by any Stockholder, each Stockholder shall only
be liable with respect to his or her own performance or non-performance of
services;
(e) Medicare and Medicaid Audits. Any audits or billings under
Medicare, Medicaid, CHAMPUS, or with respect to any third party payor
arising in connection with any Hospital Contract or the Target's business
for any period on or before the Closing Date; provided that with respect to
any audits or billings arising in connection with the actions of any
Stockholder, each Stockholder shall only be liable with respect to his or
her own actions; provided; further, that the Stockholders' aggregate
indemnity obligation with respect to this paragraph (e) shall not exceed
$1,000,000;
(f) Violation of Applicable Law. Any violation of any Applicable Law
by the Target, any Stockholder, or any Physician occurring prior to the
Closing Date; provided that with respect to any violation by any
Stockholder, each Stockholder shall only be liable with respect to his or
her own violations;
(g) Employees. Any activity, condition, circumstance, event, or
incident existing or occurring on or before the Closing Date with respect
to any employee of the Target; provided that with respect to any activity,
condition, circumstance, event, or incident with respect to any
Stockholder, each Stockholder shall only be liable with respect to his or
her own activities, conditions, circumstances, events, or incidents;
<PAGE>
(h) Employee Claims. Any arbitrations, claims, demands, grievances,
withdrawal liabilities, or charges of any nature whatsoever made by any
employees of the Target, bargaining agents, Physicians, or governmental
entities arising from any activity, condition, circumstance, or incident
existing or occurring on or before the Closing Date or by virtue of the
Sale;
(i) Environmental Laws. Any actual or threatened violation of any
Environmental Laws or remedial obligations arising under any Environmental
Laws in connection with any activity, condition, circumstance, event, or
incident existing or occurring on or before the Closing Date that relates
in any way to the Target or any Hospital Contract;
(j) Employee Benefit Plans. Any activity, condition, circumstance,
event or incident existing or occurring before the Closing Date with
respect to the administration of any Employee Benefit Plan or the
investment of any assets of any Employee Benefit Plan. This indemnity shall
override and supersede any indemnity provided by the Target to the plan
administrator or plan trustee or any other fiduciary of any Employee
Benefit Plan of the Target, whether contained in the plan document, the
Target's bylaws or otherwise. The Stockholders further agree to pay the
necessary premiums to maintain the Target's fiduciary liability insurance
covering any acts or omissions of its employees, shareholders or directors
as plan fiduciaries for a period of one year following the Closing Date; or
(k) Stockholder Claims. Any condition, circumstances, event, or
incident existing or occurring on or before the Closing Date with respect
to any former stockholder of the Target, or any Claims made by any such
former stockholder against the Target.
The Stockholders' aggregate indemnity obligation with respect to Section 8.1
(a)-(j) shall not exceed $4,000,000; provided, further, that each Stockholder's
indemnity obligation with respect to this Section 8.1 shall not exceed one-third
of the total amount of cash consideration received by such Stockholder pursuant
to the Sale, plus one-third of the value, as of the Closing Date, of the Parent
Shares received by such Stockholder pursuant to the Sale.
Section 8.2 Indemnification of the Target and the Stockholders. The Parent
and the Company shall, jointly and severally, indemnify, defend, reimburse, and
hold the Stockholders and their Affiliates and agents (collectively, the "Target
Indemnitees") harmless from any and all Claims (other than Claims indemnified
pursuant to Section 8.7) directly or indirectly related or arising with respect
to:
(a) Breaches. Any breach of any representation, warranty, covenant, or
agreement of the Parent or the Company set forth in this Agreement;
(b) Failure to Perform. Any failure duly to perform or observe any
term, provision, covenant, or agreement to be performed or observed by the
Parent or the Company set forth in this Agreement; or
(c) Contracts. Any liability or obligation with respect to any
Contract arising after the Closing Date.
Section 8.3 Indemnification Procedure. The indemnification obligations
under this Agreement (other than indemnification obligations arising under
Section 8.7) shall be subject to the following procedures:
(a) Defense of a Claim. Within five days after receiving notice of
any Claim that may give rise to an indemnification obligation under this
Agreement, the party in receipt of such notice shall give each other party
to this Agreement written notice of such Claim, together with a copy of
all documents relating to such Claim that such party possesses, and the
party or parties responsible for providing indemnification (the
"Indemnitor") shall immediately undertake the defense of such Claim by
representatives of its own choosing, provided that with respect to any
<PAGE>
Claim involving medical malpractice, the Parent may undertake the primary
defense of such Claim through representatives of its own choosing if any
Stockholder or Physician named in such Claim has not elected to undertake
the primary defense of such Claim.
(b) Participation of the Indemnitee. If within 10 days after
delivering notice of a Claim to the Indemnitor (or, if earlier, prior to
five days before an answer or other pleading must be served to prevent
judgment by default in favor of the Person asserting the Claim), the
Indemnitor has not begun to defend against such Claim, the party or
parties entitled to indemnification (the "Indemnitee") shall have the
right to defend, compromise, or settle such Claim on behalf of, and for
the account and risk of, the Indemnitor. Notwithstanding whether the
Indemnitor commences at anytime to defend against a Claim, the Indemnitee
shall have the right to participate in such defense by representatives of
its own choosing; provided, however, that if the Indemnitor commences to
defend against a Claim, such participation shall be at the sole cost and
expense of the Indemnitee.
(c) Settlement of Claims. An Indemnitor shall have the right, at its
own cost and expense, to compromise or settle any Claim, provided that an
Indemnitor shall not compromise or settle any Claim or consent to the
entry of any judgment if such compromise, settlement, or judgment does not
include an unconditional release by the Person asserting the Claim of each
Indemnitee from all liability with respect to such Claim.
(d) Cooperation. In connection with any indemnity obligation,
each Indemnitee shall cooperate with all reasonable requests of the
Indemnitor.
Section 8.4 Negligence. The indemnity obligation under this Agreement
shall be applicable whether or not negligence of the Person entitled to
indemnification is alleged or proven.
Section 8.5 Non-Exclusivity of Remedies. The indemnity rights provided in
this ARTICLE VIII shall not be the exclusive remedy available to the parties to
this Agreement.
Section 8.6 Insurance. With respect to any events occurring on or before
the Closing Date for which the Parent, the Company and the Target are entitled
to indemnification, the Parent, the Company and the Target shall be entitled to
the benefits of any applicable Insurance Policy to the extent permitted by the
respective insurance company.
Section 8.7 Tax Indemnification.
(a) Stockholders Liability for Taxes. The Stockholders shall be
liable for and shall indemnify the Parent and its Affiliates (including
the Target and its Subsidiaries after the Sale) for Claims asserted
directly against, resulting directly to, imposed directly upon or incurred
or suffered directly by Parent and its Affiliates as a result of or
arising from all Taxes (including, without limitation, any obligation to
contribute to the payment of a tax determined on a consolidated, combined
or unitary basis with respect to a group of corporations that includes or
included the Target or any of the Subsidiaries) imposed on the Target or
any of the Subsidiaries or for which the Target or any of the Subsidiaries
may otherwise be liable (i) for any Tax period that ends on or before the
Closing Date, (ii) for any Tax period beginning before and ending after
the Closing Date, but only with respect to the portion of such Taxes that
relates to the portion of the Tax period ending on and including the
Effective Date, or (iii) primarily attributable to a breach by the
Stockholders of their obligations under this Agreement, in each case only
to the extent such Taxes are not reflected in the reserve for Tax
liability (rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) shown on the face
of the Final Balance Sheet. For the avoidance of doubt, the Stockholder's
<PAGE>
liability under this Section 8.7(a) shall extend to any Claims of the
Parent or the Target for expenses incurred in responding to an
examination, audit, administrative or court proceeding, or other procedure
in which a Tax authority seeks to propose adjustment, that if pursued
successfully, would give rise to a liability for Taxes for which the
Parent would have a Claim under this Section 8.7(a), even if no Tax is
ultimately payable as a result of such examination, audit, administrative
or court proceeding, or other procedure. The Stockholders shall be
entitled to any refund of Taxes (and applicable interest) of the Target or
the Subsidiaries received with respect to periods for which the
Stockholders were liable under this Section 8.7(a), provided that the
Stockholders shall not be entitled to any refund to the extent such refund
is generated using loss carrybacks from taxable periods (or portions
thereof) beginning after the Closing Date. For purposes of this Section,
in the case of any taxes that are not imposed on a periodic basis and are
payable for a Tax period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Tax
period ending on the Closing Date shall (x) in the case of any taxes other
than Taxes based upon or related to income or receipts, be deemed to be
the amount of such tax for the entire Tax period multiplied by a fraction
the numerator of which is the number of days in the Tax period ending on
the Closing Date and the denominator of which is the number of days in the
entire Tax period, and (y) in the case of any Tax based upon or related to
income or receipts (including franchise taxes to the extent based upon
income, receipts or earned surplus), be deemed equal to the amount which
would be payable if the relevant Tax period ended on the Closing Date.
(b) Parent's Liability for Taxes. The Parent shall be liable for and
shall indemnify the Stockholders for Claims asserted directly against,
resulting directly to, imposed directly upon or incurred or suffered
directly by the Stockholders as a result of or arising from the Taxes of
the Target or its Subsidiaries for any Tax period that begins after the
Closing Date and, with respect to any Tax period beginning before and
ending after the Closing Date, the portion of such Taxes that relates to
the portion of the Tax period beginning after the Closing Date. For the
avoidance of doubt, the Parent's liability under this Section 8.7(b) shall
extend to any Claims of the Stockholders for expenses incurred in
responding to an examination, audit, administrative or court proceeding,
or other procedure in which a Tax authority seeks to propose an
adjustment, that if pursued successfully, would give rise to a liability
for Taxes for which the Stockholders would have a Claim under this Section
8.7(b), even if no Tax is ultimately payable as a result of such
examination, audit, administrative or court proceeding, or other
procedure. The Parent shall be entitled to any refund of Taxes (and
applicable interest) of the Target and its Subsidiaries received other
than refunds of Taxes to which the Stockholders are entitled under Section
8.7(b).
(c) Survival. The indemnity provided for in this Section 8.7 shall
be separate and independent of any other indemnity provision contained
herein and anything in this Agreement to the contrary notwithstanding,
shall survive until the expiration of the applicable statutes of
limitation, including extensions or waivers thereof referred to above.
IX. TERMINATION
Section 9.1 Termination of this Agreement. The Parent, the Company, and
the Target may abandon or terminate this Agreement under the circumstances set
forth below at any time prior to the Closing Date, without the approval of their
respective boards of directors, members, or stockholders:
(a) Consent. The Parent, the Company, and the Target may agree
in writing to abandon or terminate this Agreement.
(b) Breach by the Target or the Stockholders. The Parent and the
<PAGE>
Company may abandon or terminate this Agreement by written notice to the
Target if: (i) the representations and warranties of the Target or any
Stockholder set forth in this Agreement were incorrect or incomplete, in
any material respect, as of the date of execution of this Agreement or
will be incorrect or incomplete on the Closing Date as though made as of
such dates, or (ii) the Target or any Stockholder fails to perform timely
the covenants and obligations that it is required to perform under this
Agreement.
(c) Breach by the Parent or the Company. The Target may abandon or
terminate this Agreement by written notice to the Parent and the Company
if: (i) the representations and warranties of the Parent or the Company
set forth in this Agreement were incorrect or incomplete as of the date of
execution of this Agreement or will be incorrect or incomplete on the
Closing Date as though made as of such dates, or (ii) the Parent or the
Company fail to perform promptly the covenants and obligations that it is
required to perform under this Agreement.
(d) Outside Date. The Parent, the Company, or the Target may abandon
or terminate this Agreement by written notice to the other parties to this
Agreement if the Closing Date has not occurred on or before May 1, 1996.
Section 9.2 Effect of Termination. If this Agreement is abandoned or
terminated pursuant to Section 9.1(a) or (d), no party to this Agreement shall
possess any right against any other party to this Agreement because of such
termination. If any of the parties to this Agreement abandon or terminate this
Agreement other than pursuant to Section 9.1(a) or (d), however, then each party
to this Agreement may pursue any and all remedies that such party may have under
this Agreement or at law or in equity with respect to this Agreement and such
abandonment or termination.
Section 9.3 Disclosure of this Agreement. If this Agreement is abandoned
or terminated for any reason, the Target and the Stockholders shall not disclose
to any Person (a) the contents of the negotiations among the Parent, the
Company, the Target, and the Stockholders concerning this Agreement or the Sale,
or (b) the terms of this Agreement.
X. GENERAL
Section 10.1 Amendment. No amendment or modification of any of the
provisions of this Agreement shall be effective unless in writing and signed by
all of the parties to this Agreement.
Section 10.2 Attorneys' Fees. If any Lawsuit is commenced to enforce any
provision of this Agreement, the prevailing party to such Lawsuit may receive as
part of any award, judgment, decision, or other resolution of such Lawsuit its
costs and attorneys' fees as determined by the person or body making such award,
judgment, decision, or resolution. Should any claim under this Agreement be
settled before the commencement of a Lawsuit, the parties in such settlement
shall be entitled to include as part of their alleged damages the attorneys'
fees incurred in connection with such claim.
Section 10.3 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original agreement, but all
of which shall constitute one and the same agreement. Any party to this
Agreement may execute and deliver this Agreement by an executed signature page
transmitted by a facsimile machine, provided that such party promptly thereafter
delivers an originally executed signature page. Any failure to deliver such an
originally executed signature page after delivering an executed signature page
transmitted by a facsimile machine, however, shall not affect the validity,
legality, or enforceability of this Agreement.
Section 10.4 Cumulative Remedies. Any remedy conferred under this
Agreement is not exclusive of any other remedy, and each such remedy shall be
cumulative and in addition to each other remedy: (a) conferred under this
<PAGE>
Agreement, and (b) existing now or hereafter at law or in equity, whether by
statute or otherwise. Moreover, any election of one or more remedies by a party
to this Agreement shall not constitute a waiver of any other available remedies.
Section 10.5 Tax Matters. The following provisions shall govern the
allocation of responsibility as between the Target and the Stockholders for
certain tax matters following the Effective Date:
(a) Tax Periods Ending On or Before the Closing Date. The
Stockholders shall prepare or cause to be prepared and file or cause to be
filed all Tax Returns for the Target and its Subsidiaries for all periods
ending on or prior to the Closing Date. The Stockholders shall permit the
Company to review and comment on each such Tax Return described in the
preceding sentence prior to filing. The Stockholders shall pay all Taxes
due with respect to such Tax Returns; provided, however, that the Parent
shall reimburse the Stockholders for Taxes of the Target and its
Subsidiaries paid after the Closing Date with respect to such periods
within fifteen (15) days after payment by the Stockholders of such Taxes
to the extent such Taxes are reflected in the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the face of the Final
Balance Sheet.
(b) Parent. The Parent shall cause the Target and its Subsidiaries
to prepare and timely file with the appropriate authorities all Tax
Returns required to be filed for the Target and its Subsidiaries for Tax
periods ending after the Closing Date and to pay all Taxes due with
respect to such Tax Returns, provided that the Stockholders shall
reimburse the Parent (in accordance with the procedures set forth in
Section 10.5) for any amount owed by the Stockholders pursuant to Section
8.7 with respect to the Tax periods covered by such Tax Returns.
(c) Cooperation on Tax Matters. The Parent, the Target and its
Subsidiaries and the Stockholders shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
filing of Tax Returns pursuant to this Section and any audit, litigation
or other proceeding with respect to Taxes. Such cooperation shall include,
without limitation, the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any
such audit, litigation or other proceeding and making employees available
on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Stockholders agree (A)
to retain all books and records with respect to Tax matters pertinent to
the Target and its Subsidiaries relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations
(and, to the extent notified by the Parent, the Company or Target, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and
(B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if
the other party so requests, the Stockholders shall allow the other party
to take possession of such books and records.
(d) Tax Consents.
(i) If any taxing authority proposes any adjustment which
could, if pursued successfully, give rise to a claim for
indemnification against the Stockholders by the Parent or its
Affiliates under Section 8.7(a) (a "Stockholders Tax Claim"), a
Claim for indemnification against the Parent by the Stockholders
under Section 8.7(b) (a "Parent Tax Claim"), or both a Stockholders
Tax Claim and a Parent Tax Claim (a "Joint Tax Claim"), then the
party hereto first receiving notice of such proposed adjustment (a
"Tax Dispute") shall promptly notify the other party hereto in
writing of such Tax Dispute.
<PAGE>
(ii) In case of a Parent Tax Claim, the Parent shall have the
right, at its sole cost and expense, to control the defense,
prosecution, settlement or compromise of the Tax Dispute underlying
such Parent Tax Claim; provided, however, that the Parent will not,
without the Stockholders' prior written consent (which consent shall
not be unreasonably withheld or delayed), enter into any settlement
or compromise of such Tax Dispute.
(iii) In the case of a Stockholders Tax Claim, the
Stockholders shall have the right, at its sole cost and expense, to
control the defense, prosecution, settlement or compromise of the
Tax Dispute underlying such Stockholders Tax Claim; provided,
however, that the Stockholders will not, without the Parent's prior
written consent (which consent shall not be unreasonably withheld or
delayed), enter into any settlement or compromise of such Tax
Dispute.
(iv) In the case of a Joint Tax Claim, the Parent and the
Stockholders shall first attempt to separate such Joint Tax Claim
into two, one involving the Parent Tax Claim portion thereof (which
shall be subject to the provisions of Section 10.5(d)(ii)) and the
other involving the Stockholders Tax Claim portion thereof (which
shall be subject to the provisions of Section 10.5(d)(iii)). If the
Parent and the Stockholders are not successful in accomplishing such
separation, the Parent and the Stockholders shall consult and
cooperate in good faith with each other in controlling such audit,
examination, investigation, or administrative, court or other
proceeding, shall not compromise or settle such Joint Tax Claim
without the other's prior written consent (which consent shall not
be unreasonably withheld or delayed), and shall share the costs and
expenses associated with such Joint Tax Claim on such equitable
basis as the parties shall mutually agree. If the Parent and the
Stockholders cannot agree with respect to any matter involving any
Joint Tax Claim, the Parent and the Stockholders shall jointly
engage independent tax counsel that is mutually acceptable to the
Parent and the Stockholders to make its decision with respect to
such matter, which decision shall be final and binding on the Parent
and the Stockholders. The Parent shall bear and pay one-half of the
fees and other costs charged by such counsel and the Stockholders
shall bear and pay one-half of the fees and other costs charged by
such counsel.
(v) The party hereto that controls the Tax Dispute under the
provisions of Section 10.5(d)(ii), 10.5(d)(iii) or 10.5(d)(iv) shall
keep the other party hereto informed of all events and developments
relating to such Tax Dispute, and the other party hereto, or its
authorized representatives, shall be entitled, at its own expense,
to attend (but not control) all conferences, meetings and
proceedings relating to such Tax Dispute.
(vi) Failure to notify a party hereto of a Tax Dispute shall
not relieve such party of any liability which it may have under this
Section 10.5 except and only to the extent of any damages, including
without limitation any material prejudice to such party's right to
contest any claim giving rise to indemnity herein, to such party
caused by such failure.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with the Sale pursuant to this Agreement
shall be paid by the Stockholders when due, and the Stockholders will, at
their own expense, file all necessary Tax Returns and other documentation
with respect to all such transfer, documentary, sales, use, stamp,
registration and other Taxes and fees, and, if required by applicable law,
the Parent, the Company and the Target will, and will cause its Affiliates
to, join in the execution of any such Tax Returns and other documentation.
<PAGE>
Section 10.6 Definitions. Capitalized terms not otherwise defined in this
Agreement shall have the meanings set forth below:
(a) Adjusted Net Income. The term "Adjusted Net Income" shall mean
the net income of the Target derived from the Current Hospital Contracts
(and, with respect to Adjusted Net Income computed for the purpose of
determining Incentive Earnout Payments pursuant to Section 2.7 only, any
potential hospital contract described on Schedule 10.6(a)) determined
under generally accepted accounting principles applied on a basis
consistent with the Target's past practices, before any deduction for the
amortization of any goodwill or other intangible asset recognized in
connection with the Sale, any interest expense, and any income tax benefit
or expense. When determining the Adjusted Net Income, only direct overhead
attributable to the Hospital Contracts shall be deducted. Moreover, if the
Target assigns or otherwise transfers any Hospital Contract to another
Affiliate of the Parent, the Adjusted Net Income shall continue to be
determined as if the Target still held such contract.
(b) Affiliate. The term "Affiliate" with respect to a Person shall
mean any other Person that directly or indirectly controls, is controlled
by, or is under common control with such Person. The term "control" shall
mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such person or
entity, whether through the ownership of voting securities, by contract,
or otherwise.
(c) Alternate Certified Public Accountants. The term "Alternate
Certified Public Accountants" shall mean the firm of Deloitte & Touche.
(d) Applicable Law. The term "Applicable Law" shall mean any
applicable decree, injunction, judgment, law, order, ordinance,
regulation, rule, statute, or writ of any federal, state, local, or
foreign governmental entity (or any agency, department, or political
subdivision of any governmental entity), including any such law relating
to: (i) providing Emergency Department Services or otherwise relating to
any hospital or other health care facility, (ii) practicing medicine, or
(iii) providing any product or service with respect to any of the
activities described in clauses (i) or (ii) of this Section 10.6(d).
(e) Business Day. The term "Business Day" shall mean a day that
is not a Sunday, Saturday, or holiday when banks in the State of Illinois
are required or permitted to be closed.
(f) Certified Public Accountants. The term "Certified Public
Accountants" shall mean the firm of Ernst & Young LLP.
(g) Code. The term "Code" shall mean the Internal Revenue Code of
1986, as amended by any successor provision of Applicable Law.
(h) Claim. The term "Claim" shall mean any action, assessment, cause
of action, charge, claim, counterclaim, defense, demand, expense, fine,
interest, inquiry, investigation, judgment, legal action, litigation,
liability joint or several), obligation, payment, penalty, proceeding, or
suit (including reasonable fees and expenses of attorneys, accountants,
other professional advisors, and expert witnesses and costs of
investigation and preparation) of any kind or nature whatsoever.
(i) Confidential Information. The term "Confidential Information"
shall mean information concerning: (i) the Target's assets, cash flows,
business, financial condition, operations, or prospects, (ii) the Hospital
Contracts and the Physician Contracts, (iii) the contents of the
negotiations among the Parent, the Company, the Target, and the
Stockholders concerning this Agreement and the Sale, and (iv) the terms of
this Agreement.
<PAGE>
(j) Contract. The term "Contract" shall mean any Hospital
Contract, Physician Contract, or Other Contract.
(k) Document. The term "Document" with respect to any Person shall
mean any agreement, authorization, commitment, contract, decree, deed of
trust, franchise, instrument, judgment, lease, license, mortgage, order,
permit, or other document or obligation to which such Person is a party or
by which such Person's assets are bound.
(l) Emergency Department Services. The term "Emergency Department
Services" shall mean all services required in connection with the
operation of an emergency department of a health care facility, including
but not limited to the staffing and scheduling of continuous 24-hour
emergency physician coverage, the establishment of a schedule of usual and
customary fees and the administration of such schedule, the maintenance of
medical records that adequately reflect the quality of care rendered and
instructions given to patients, and maintaining within such emergency
department the standards of professional practice as set forth in the
medical staff bylaws, rules, and regulations of the health care facility
and in accordance with the ethical and professional standards of the Joint
Commission on Accreditation of Health care Organizations.
(m) Environmental Law. The term "Environmental Law" shall mean any
applicable federal, state, local, or foreign regulation, rule, or statute
relating to an environmental, health, industrial hygiene, pollution, or
safety matter, including the Comprehensive Environmental Response,
Compensation and Liability Act.
(n) Law Affecting Creditors' Rights. The term "Law Affecting
Creditors' Rights" shall mean any bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium, or other law affecting
the enforcement of creditors' rights generally, including any general
principles of equity.
(o) Lawsuit. The term "Lawsuit" shall mean any action, charge,
claim, counterclaim, decree, injunction, inquiry, investigation, legal
action, litigation, order, proceeding, suit, or writ.
(p) Lien. The term "Lien" shall mean any charge, claim, equity,
judgment, lease, liability, license, lien, mortgage, pledge, restriction,
security interest, Tax lien, option, right of first refusal, right to
acquire, restrictions (whether on issuance, voting, sale, transfer,
disposition or otherwise) or encumbrance of any kind.
(q) Material Adverse Change. The term "Material Adverse Change" with
respect to any Person shall mean that such Person has: (i) undergone a
material adverse change with respect to its assets, cash flows, business,
financial condition, operations, or prospects, (ii) breached or defaulted
under a material Document to which it is a party or by which any of its
assets are bound, (iii) become a party to a Lawsuit that could have a
significant and detrimental effect upon it, or (iv) combined, split, or
otherwise reclassified its capital stock or other equity interests.
(r) Material of Environmental Concern. The term "Material of
Environmental Concern" shall mean any contaminate, substance, or waste
that is designated, listed, or regulated as hazardous or toxic under any
Environmental Law or subject to remedial obligations under any
Environmental Law.
(s) Non-Compete Period. The term "Non-Compete Period" with respect
to any Stockholder shall mean the period beginning on the Closing Date and
ending on the later of (i) the third (3rd) anniversary of the Closing
Date; provided that if during any period any Stockholder is in breach or
violation of the Covenant Not to Compete, the Non-Compete Period shall be
extended by a period equal to the period of such breach or violation.
<PAGE>
(t) Person. The term "Person" shall mean an association, business
trust, corporation, estate, general partnership, governmental entity (or
any agency, department, or political subdivision of a governmental
entity), individual, joint stock company, joint venture, limited liability
company, limited partnership, professional association, professional
corporation, trust, or any other organization or entity.
(u) Subsidiary. The term "Subsidiary" shall mean each Person
described on Schedule 5.2(f) and any corporation or other entity that has
at any time within the five (5) year period preceding the Effective Date
joined in the filing of a consolidated federal income tax return with the
Target.
(v) Tax. The term "Tax" shall mean any federal, state, local,
foreign, or other ad valorem, customs, documentary, duty, employment,
excise, franchise, gross income, gross receipts, lease, license, net
income, payroll, premium, profits, property, occupation, sales, service,
service use, stamp, severance, transaction privilege, transfer, use, or
withholding tax or other assessment, charge, fee, impost, levy, or tax of
any kind whatever, together with any related interest and penalties.
(w) Tax Return. The term "Tax Return" shall mean any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
Section 10.7 Entire Agreement. This Agreement constitutes the entire
agreement and understanding among the parties to this Agreement and supersedes
all prior agreements and understandings, both written and oral, with respect to
the subject matter contained in this Agreement.
Section 10.8 Expenses. Each party to this Agreement shall bear its own
accounting and legal fees and other costs and expenses with respect to the
negotiation and preparation of this Agreement and the consummation of the Sale.
The Stockholders shall bear any Tax imposed in connection with the issuance of
the Parent Shares to them pursuant to this Agreement.
Section 10.9 Further Assurances. Each party to this Agreement covenants
that it will execute and deliver to the other parties to this Agreement such
certificates, documents, and instruments, and do such acts, as may be required
to carry out the intent and purposes of this Agreement.
Section 10.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED ACCORDING TO, AND GOVERNED BY, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER THE APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW OF THE STATE OF DELAWARE EXCEPT FOR THOSE
PROVISIONS OF THE ILLINOIS ACT WHICH ARE APPLICABLE SOLELY TO THE SALE OF STOCK
OF A DOMESTIC ILLINOIS CORPORATION, AS SET FORTH HEREIN, WHICH SHALL BE GOVERNED
BY THE ILLINOIS ACT.
Section 10.11 Headings. Article and section headings are used in this
Agreement only as a matter of convenience, are not a part of this Agreement, and
shall not have any effect upon the construction or interpretation of this
Agreement.
Section 10.12 No Assignment. No party to this Agreement may assign its
benefits or delegate its duties under this Agreement without the prior written
consent of each other party to this Agreement, provided that the Company and the
Target (after the Sale) may assign their respective rights and delegate their
respective duties under this Agreement to another Affiliate of the Parent
without obtaining the consent of any other party to this Agreement, and,
notwithstanding any provision herein to the contrary, nothing herein shall
prohibit, affect or otherwise impair the ability of the Target to transfer all
or any part of the assets of the Target subsequent to the Effective Date. If the
Company or the Target assigns its rights and delegates its duties to another
Affiliate of the Parent, then the Company or the Target, as the case may be,
<PAGE>
shall be released from all of its obligations under this Agreement and such
Affiliate shall be responsible for such obligations.
Section 10.13 No Third-Party Beneficiaries. Except with respect to the
Company Indemnitees, the Target Indemnitees, and any permitted assignees, this
Agreement is solely for the benefit of the parties to this Agreement and no
other Person shall have any right, interest, or claim under this Agreement.
Section 10.14 Notices. All notices and other communications in connection
with this Agreement shall be in writing and deemed to have been received on the
day of delivery if delivered by hand, overnight express, regular mail, or
facsimile transmission, or three days after the date of posting if mailed by
registered or certified mail, postage prepaid, return receipt requested,
addressed to each party at its address set forth below (or to such other address
to which such party has notified each other party in accordance with this
Section 10.14 to send such notices or communications):
Parent: EmCare Holdings Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Attn: Mr. William F. Miller III
Telephone No. (214) 712-2000
Facsimile No. (214) 712-2041
Company: EmCare Acquisition, Inc.
1717 Main Street, Suite 5200
Dallas, Texas 75201
Attn: Mr. William F. Miller III
Telephone No. (214) 712-2000
Facsimile No. (214) 712-2041
Target: Medical Emergency Service Associates,
(MESA), S.C.
4215 Kirchoff Road
Rolling Meadows, Illinois 60008
Attn: Telephone No.
Facsimile No.
Payment Agent: Mazzeffi & Company
1435 South Roselle Road
Schaumburg, Illinois 60193
Attn: Lawrence J. Mazzeffi
Telephone No. (708) 980-5610
Facsimile No. (708) 980-9054
Stockholder Representative: Mazzeffi & Company
1435 South Roselle Road
Schaumburg, Illinois 60193
Attn: Lawrence J. Mazzeffi
Telephone No. (708) 980-5610
Facsimile No. (708) 980-9054
Section 10.15 Performance on Business Days. If any event or the expiration
of any period provided for in this Agreement is scheduled to occur or expire on
a day that is not a Business Day, such event shall occur or such period shall
expire on the next succeeding day that is a Business Day.
Section l0.16 Plural and Singular Words. Whenever the plural of a word is
used in this Agreement, that word shall, if appropriate, include the singular of
that word. Whenever the singular of a word is used in this Agreement that word
shall, if appropriate, include the plural of that word.
Section 10.17 Pronouns. Whenever a pronoun of a particular gender is used
in this Agreement, that pronoun shall, if appropriate, also refer to the other
gender and the neuter. Whenever a neuter pronoun is used in this Agreement, that
pronoun shall, if appropriate, also refer to the masculine and feminine gender.
<PAGE>
Section 10.18 Schedules. All references in this Agreement to Schedules
shall mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of this Agreement for all
purposes. A disclosure of an item in a Schedule or under a heading in a Schedule
corresponding to a particular Section or Subsection of this Agreement, or a
separate disclosure item within such a Section or Subsection, shall not be a
disclosure under: (a) any other Schedule, (b) any other Section or Subsection of
this Agreement, or separate disclosure item within such a Section or Subsection,
or (c) any other disclosure item of such Schedule. The Target has delivered to
the Parent and the Company a correct and complete copy of each Document or other
item described on each schedule to this Agreement.
Section 10.19 Set-Off. The Parent, the Company and the Target (after the
Sale) may set-off any amounts that any Stockholder owes to any of them (whether
because of the breach of any representation, warranty, or covenant contained in
this Agreement, any liability arising under Section 8.7, or otherwise) against
any amounts that the Parent, the Company or the Target (after the Sale) owes to
any Stockholder (including amounts owed in the form of Parent Shares to be
delivered to the Payment Agent after the Closing Date).
Section 10.20 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability (but shall
be construed and given effect to the extent possible), without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 10.21 Specific Performance. The parties to this Agreement
acknowledge that the benefits that they will each derive from the Sale are
unique and irreplaceable. Accordingly, if any party to this Agreement improperly
abandons or terminates this Agreement, the other parties to this Agreement shall
be entitled to seek an order from a court of competent jurisdiction requiring
such party to perform this Agreement and consummate the Sale.
Section 10.22 Successors. This Agreement shall be binding upon and shall
inure to the benefit of each party to this Agreement and its heirs, legal
representatives, permitted assigns, and successors, provided that this Section
10.22 shall not permit the assignment or other transfer of this Agreement,
whether by operation of law or otherwise, if such assignment of other transfer
is not otherwise permitted under this Agreement.
Section 10.23 Survivability. The agreements, covenants, indemnity
obligations, representations and warranties, and other terms of this Agreement
applicable to each party to this Agreement other than the Target shall survive
the Sale. Any agreements, covenants, indemnity obligations, representations and
warranties, and other terms of this Agreement applicable to the Target shall
expire upon consummation of the Sale, and following the Sale any such provisions
for which the Target and the Stockholders were jointly and severally responsible
shall be the joint and several responsibility of the Stockholders only.
Section 10.24 Waiver. No provision of this Agreement shall be considered
waived unless such waiver is in writing and signed by each party to this
Agreement that benefits from the enforcement of such provision. No waiver of any
provision in this Agreement, however, shall be deemed a waiver of a subsequent
breach of such provision (or right arising under such provision) or a waiver of
a similar provision. Moreover, a waiver of any breach or a failure to enforce
any term or condition of this Agreement shall not in any way affect, limit, or
waive a party's rights under this Agreement at any time to enforce strict
compliance thereafter with every term and condition of this Agreement.
[SIGNATURES INTENTIONALLY APPEAR ON THE NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, each party hereto has executed and delivered this
Agreement as of the date first written above.
PARENT:
Date: April 30, 1996 EMCARE HOLDINGS INC.
By: /s/ William F. Miller, III
--------------------------
Name: William F. Miller, III
Title: President
COMPANY:
Date: April 30, 1996 EMCARE, INC.
By: /s/ Leonard M. Riggs, Jr., M.D.
-------------------------------
Name: Leonard M. Riggs, Jr., M.D.
Title: Chairman
TARGET:
Date: April 30, 1996 MEDICAL EMERGENCY SERVICE
ASSOCIATES (MESA), S.C.
By: /s/ George M. Gallant, M.D.
---------------------------
Name: George M. Gallant, M.D.
Title: President
STOCKHOLDERS:
Date: April 30, 1996 /s/ EUFEMIO BELTRAN, M.D
------------------------
EUFEMIO BELTRAN, M.D.
Date: April 30, 1996 /s/ SCOTT BETZELOS, M.D.
------------------------
SCOTT BETZELOS, M.D.
Date: April 30, 1996 /s/ BRUCE BRANTMAN, M.D.
------------------------
BRUCE BRANTMAN, M.D.
<PAGE>
Date: April 30, 1996 /s/ MARK DEMUS, M.D.
------------------------
MARK DEMUS, M.D.
Date: April 30, 1996 /s/ MICHAEL FRUMKIN, M.D.
------------------------
MICHAEL FRUMKIN, M.D.
Date: April 30, 1996 /s/ GEORGE M. GALLANT, M.D.
----------------------------
GEORGE M. GALLANT, M.D.
Date: April 30, 1996 /s/ SUSAN GOULD, M.D.
------------------------
SUSAN GOULD, M.D.
Date: April 30, 1996 /s/ OSCAR HABHAB, M.D.
------------------------
OSCAR HABHAB, M.D.
Date: April 30, 1996 /s/ BASAVARAJ HARALENNE, M.D.
------------------------------
BASAVARAJ HARALENNE, M.D.
Date: April 30, 1996 /s/ ROMULO HERNANDEZ, M.D.
----------------------------
ROMULO HERNANDEZ, M.D.
Date: April 30, 1996 /s/ ANTHONY HORWITZ, M.D.
---------------------------
ANTHONY HORWITZ, M.D.
Date: April 30, 1996 /s/ ALEX JABLONOWSKI, M.D.
---------------------------
ALEX JABLONOWSKI, M.D.
Date: April 30, 1996 /s/ ARTURO MENESES, M.D.
--------------------------
ARTURO MENESES, M.D.
Date: April 30, 1996 /s/ PHILIP K. NEWMAN, M.D.
----------------------------
PHILIP K. NEWMAN, M.D.
<PAGE>
Date: April 30, 1996 /s/ JOLANTA PECKUS, M.D.
--------------------------
JOLANTA PECKUS, M.D.
Date: April 30, 1996 /s/ THOMAS J. PEETERS, M.D.
----------------------------
THOMAS J. PEETERS, M.D.
Date: April 30, 1996 /s/ NANCY RYAN, M.D.
------------------------
NANCY RYAN, M.D.
Date: April 30, 1996 /s/ ANIL SHAH, M.D.
------------------------
ANIL SHAH, M.D.
Date: April 30, 1996 /s/ LYMAN TIEMAN, M.D.
------------------------
LYMAN TIEMAN, M.D.
Date: April 30, 1996 /s/ STANLEY M. ZYDLO, JR., M.D.
---------------------------------
STANLEY M. ZYDLO, JR., M.D.
<PAGE>
EXHIBITS "A" THROUGH "J" AND SCHEDULES "2.10" THROUGH "10.6(a)" HAVE
BEEN INTENTIONALLY OMITTED
