<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
-----------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
SEPTEMBER 20, 1996
-----------------------
THE COMPANY DOCTOR
(Exact name of registrant as specified in its charter)
DELAWARE 1-14150 72-1234136
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
SUITE 1800
5215 NORTH O'CONNOR BOULEVARD
IRVING, TEXAS 75039
(Address of principal executive offices)
(572) 401-8300
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 1. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 20, 1996, The Physician Group, P.A. (the "Physician
Group") acquired all of the outstanding capital stock of Robert G.
Duchouquette, M.D., P.A. (the "P.A."). The Physician Group is a Texas
professional association of physicians and other medical professionals which is
affiliated with The Company Doctor (the "Company"). The P.A. owns and operates
the Beltline North Occupational Health Clinic, which constitutes the medical
practice (the "Practice") of Robert G. Duchouquette, M.D. (the "Physician").
The acquisition was completed pursuant to the terms and conditions of a Stock
Purchase Agreement and related documents and agreements dated September 20,
1996 by and among the Physician Group, the Company, the Physician and the P.A.
(the "Agreements").
Simultaneously with the execution of the Agreements, the Company and
the Physician Group entered into an addendum to their practice management
agreement pursuant to which the Company manages the various medical practices
of the Physician Group to include the Practice. In connection with the
addendum to the practice management agreement, the Company issued 63,380 shares
of Common Stock of the Company (the "Shares") to the Physician Group. As a
result of the acquisition and addendum, the Company now manages seven clinics
in the Dallas-Fort Worth area, and a total of eleven clinics located in Texas,
Louisiana and Arkansas. The Company assists the Physician Group in the
marketing and expansion of their medical practices, and has been assisting in
the marketing and management of the Practice since July 1, 1996.
Pursuant to the Agreement, the Physician Group acquired all of the
outstanding shares of capital stock of the P.A. in exchange for (i) assignment
of the 63,380 Shares, (ii) an option (the "Option") to be granted on September
20 of each year for so long as the Physician is employed by the Physician Group
as either a Staff Physician or a Regional Medical Director to purchase that
number of shares of Common Stock of the Company which has a total "market
value" (as defined below) equal to $100,000, (iii) $843,750 in cash, and (iv) a
promissory note (the "Note") in the principal amount of $843,750, all as more
fully described below.
For purposes of calculating the numbers of shares which become
purchasable under each Option each September 20, the purchase price of such
shares and the "Sale Right" described below, "market value" equals the average
closing trading price of the Common Stock during the five trading days prior to
the date of the event requiring the calculation of "market value". Each Option
is valid for a period of six years from its respective September 20 grant date.
The Note is payable by the Physician Group to the Physician, secured
by the assets and capital stock of the P.A. and is guaranteed by the Company.
The Note bears interest at the rate of 8.5% per annum, and provides for payment
of interest-only on January 31, 1997 with all unpaid principal and accrued
interest due on April 30, 1997. Upon the occurrence of an event
2
<PAGE> 3
of default under the Note, the Physician may, in lieu of exercising any other
remedies which might be available to him, rescind the sale of the P.A. In such
event, all of the stock of the P.A. would be returned to the Physician; the
Physician would return the Shares; the Option would be cancelled; the right to
demand registration of the Common Stock (as described below) would be
terminated; all employment agreements could be voided at the option of the
Physician; and the lease of the facility in which the Practice is conducted
could be terminated.
The Physician has been granted demand registration rights with
respect to the Shares. At any time before December 15, 1996, the Physician may
demand that the Company register the Shares. Upon such a demand, the Company
will use its best efforts to file and cause a registration statement to become
effective by February 28, 1997. If the Shares have not been registered by such
date, then until April 28, 1997, the Physician has the right to sell the Shares
back to the Company (the "Sale Right") for the greater of $562,500 or the
"market value" (as defined below) of the Shares. The Physician has agreed that
he will not sell, assign, burden, pledge or encumber more than 1\12 of the
Shares during any month for the period of one year, and that no sales of the
Shares may be made prior to the earlier of registration of such Shares or
February 29, 1997.
The Physician has entered into a standard physician employment
agreement with the Physician Group to perform as a Staff Physician for standard
compensation rates. In addition, the Physician has entered into a standard
Regional Medical Director employment agreement to serve as Regional Medical
Director of the Practice.
The Company and the Physician Group entered into a lease for the
facilities in which the Practice is located. The facilities are owned by a
limited partnership of which the Physician and his spouse are the General
Partners. The lease provides for a ten year term commencing on October 1,
1996, and provides for monthly rent of $8,000, adjusted annually by the most
recently calculated CPI for the previous twelve months.
The closing of the transactions contemplated by the Agreement was
consummated on September 20, 1996, to be effective as of July 1, 1996.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
3
<PAGE> 4
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) It is impracticable to provide the required financial
statements relative to the Practice at this time. In accordance with Item
7(a)(1), the Registrant will file the required financial statements as an
amendment to this Form 8-K as soon as practicable, but not later than 60 days
after this report on Form 8-K must be filed.
(b) It is impracticable to provide the required pro forma
financial information relative to the Practice and the Registrant at this time.
In accordance with Item 7(b)(2), the Registrant will file the required
financial statements as an amendment to this Form 8-K as soon as practicable,
but not later than 60 days after this report on Form 8-K must be filed.
(c) The following exhibits are furnished herewith in accordance
with the provisions of Item 601 of Regulation S-K:
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
2.10 Stock Purchase Agreement by and among Robert G.
Duchouquette, M.D., P.A., Robert G. Duchouquette,
M.D. and The Physician Group, P.A., including
Form of Note, Pledge Agreement and Security
Agreement 2
2.11 Stock Option Agreement by and between Robert G.
Duchouquette, M.D. and the Company 2
2.12 Registration Rights Agreement by and between
Robert G Duchouquette, M.D. and the Company 2
10.3.7 Commercial Real Estate Lease by and between
Quad Corners Investments, Ltd. and the Company 10
ITEM 8. CHANGE OF FISCAL YEAR
Not applicable.
4
<PAGE> 5
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.
THE COMPANY DOCTOR
Date: October 3, 1996 By: /s/ Fred G. Parrish
----------------------------------------
Fred G. Parrish, Chief Operating Officer
5
<PAGE> 6
EXHIBIT INDEX
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
2.10 Stock Purchase Agreement by and among Robert G.
Duchouquette, M.D., P.A., Robert G. Duchouquette,
M.D. and The Physician Group, P.A., including
Form of Note, Pledge Agreement and Security
Agreement 2
2.11 Stock Option Agreement by and between Robert G.
Duchouquette, M.D. and the Company 2
2.12 Registration Rights Agreement by and between
Robert G Duchouquette, M.D. and the Company 2
10.3.7 Commercial Real Estate Lease by and between
Quad Corners Investments, Ltd. and the Company 10
<PAGE> 1
EXHIBIT 2.10
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into September 20, 1996, to be effective on and after July 1, 1996, by and
among ROBERT G. DUCHOUQUETTE, M.D., P.A., a Texas professional association
("Duchouquette P.A."), ROBERT G. DUCHOUQUETTE, M.D., an individual resident of
Dallas, Texas ("Seller"), and THE PHYSICIAN GROUP, P.A., a Texas professional
association ("Purchaser").
Seller desires to sell, and Purchaser desires to purchase, all of the
one thousand (1,000) outstanding shares of capital stock, $0.10 par value, of
Duchouquette P.A. ("Stock");
To facilitate the transactions contemplated by this Agreement,
Purchaser and Duchouquette P.A. entered into an Escrow Agreement on August 19,
1996 with American Title Company, 6029 Beltline Road, Suite 200, Dallas, Texas
75240 ("Escrow Agent"), pursuant to which Purchaser deposited $843,750.00
("Escrowed Funds") with the Escrow Agent;
On September 5, 1996, Purchaser and Seller entered into an Amended and
Restated Escrow Agreement with American Title Company which amended the
original agreement to the extent that Seller was substituted as a party to the
agreement in the place of Duchouquette P.A., a copy of which is attached as
Exhibit 1 (the "Escrow Agreement") and
Purchaser and Seller desire to set forth certain representations,
warranties, and covenants made by each to the other as a condition to the
execution, delivery, and performance of this Agreement, and to set forth
certain additional agreements relating to the transactions contemplated hereby.
In consideration of the mutual representations, warranties, and
covenants contained herein, and on the terms and subject to the conditions
herein set forth, the parties agree as follows:
1. Purchase and Sale. On the terms and subject to the conditions
set forth herein, Seller hereby sells, assigns, transfers, and delivers to
Purchaser, and Purchaser hereby purchases from Seller, all of the Stock, free
and clear of any liens, liabilities, security interests, claims, and
encumbrances. The purchase and sale of the Stock is made in exchange for and
in consideration of (i) the payment of the Purchase Price (as defined in
Section 3) and (ii) the execution and delivery of the Additional Agreements
(as described in Section 4).
2. Delivery of Stock and Conveyance Documents. Seller has taken
all steps necessary to transfer all right, title, and interest in and to the
Stock to Purchaser, free and clear of all liens, liabilities, security
interests, claims, and encumbrances of any nature whatsoever. Seller herewith
delivers to Purchaser (i) a Certificate representing the Stock, duly endorsed
for transfer or accompanied by duly executed stock powers, and (ii) such other
duly executed transfer and release documents which Purchaser has reasonably
requested to evidence the sale and transfer of the Stock by Seller to Purchaser
free and clear of any liens, liabilities, security interests, claims, and
encumbrances of any nature whatsoever.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 1
<PAGE> 2
3. Purchase Price. As consideration in part for the transactions
contemplated hereby and as a condition to Closing, Purchaser herewith pays and
delivers to Seller the following consideration (in the aggregate, the "Purchase
Price"):
(a) Cash in the total amount $843,750.00, which shall be
effected by Purchaser and Duchouquette giving written notice to the Escrow
Agent immediately after this Agreement is closed to pay the Escrowed Funds to
Duchouquette pursuant to the terms of the Escrow Agreement;
(b) Secured Promissory Note in the form of Exhibit 2
attached hereto (the "Note") in the principal amount of $843,750.00, payable on
April 30, 1997 with interest at the rate of 8.5% per annum and secured by a
Stock Pledge Agreement and a Security Agreement in the form of the attached
Exhibit 3 and Exhibit 4; and
(c) 63,380 shares of unregistered Common Stock of The
Company Doctor ("TCD"), a Delaware corporation ("TCD Shares") with the actual
delivery of the TCD Shares to Seller to be effected in accordance with the
Assignment of Right to Receive Stock (herein so called) to be executed by
Purchaser and Seller at the same time this Agreement is executed in the form of
Exhibit 5 attached hereto.
4. Additional Agreements. As consideration in part for the
transactions contemplated hereby and as a condition to Closing:
(a) Building Lease. Purchaser and Seller shall, at the
same time as this Agreement is executed, execute and enter into a lease in the
form of Exhibit 6 attached hereto for certain real property located at 3604
Beltline Road, Dallas, Texas 75234 (the "Lease").
(b) Employment Agreements with Seller. Purchaser and
Seller shall, at the same time as this Agreement is executed, execute:
(1) a Physician Employment Agreement between
Purchaser and Seller in the form of the attached Exhibit 7, and
(2) a Regional Medical Director Employment
Agreement between Purchaser and Seller in the form of the attached
Exhibit 8.
(c) Employment Agreement with Dr. Gleim. Purchaser
specifically agrees to honor and continue in force Duchouquette P.A.'s
Employment Agreement with Gregory P. Gleim, M.D., a copy of which is attached
as Exhibit 9.
(d) Stock Option Agreement. Purchaser shall, at the same
time as this Agreement is executed, cause TCD to execute and deliver to Seller
the Stock Option Agreement in the form of
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 2
<PAGE> 3
the attached Exhibit 10 which grants Seller annual stock options to acquire
$100,000 of TCD Common Stock during Seller's employment by Purchaser, either as
a "Staff Physician" or a "Regional Medical Director."
(e) Registration Rights Agreement. Purchaser shall, at
the same time as this Agreement is executed, cause TCD to execute and deliver
to Seller the Registration Rights Agreement in the form of the attached Exhibit
11 whereby upon Seller's written request made to TCD at any time after Closing
and before December 15, 1996, TCD shall file a registration statement under the
Securities Act of 1933, as amended, relating to, and shall cause to be
effective, the registration of the TCD Shares under the Securities Act not
later than February 28, 1997.
5. Closing. The transactions contemplated hereby will be
consummated at a Closing to be held at the same time as the execution of this
Agreement (the "Closing").
6. Documents to be Delivered at Closing. At Closing, the parties
shall execute and deliver, or cause to be executed and delivered, in addition
to this Agreement, the following:
(a) the stock certificate and conveyance documents
contemplated by Section 2;
(b) the Note (see Exhibit 2);
(c) the Stock Pledge Agreement (see Exhibit 3);
(d) the Security Agreement (see Exhibit 4);
(e) the Assignment of Right to Receive Stock (see Exhibit
5);
(f) the Lease (see Exhibit 6);
(g) Seller's Physician Employment Agreement (see Exhibit
7);
(h Seller's Regional Medical Director Employment
Agreement (see Exhibit 8);
(i) the Dr. Gleim's Employment Agreement (see Exhibit 9);
(j) the Stock Option Agreement (see Exhibit 10);
(k) the Registration Rights Agreement (see Exhibit 11);
and
(l) the investment letter (see Exhibit 12).
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 3
<PAGE> 4
7. Effective Date. Subject to the terms and conditions set out
in this Agreement, the consummation of the transactions referred to above shall
be effective as of 12:01 a.m. on July 1, 1996.
8. Representations and Warranties of Duchouquette P.A. and
Seller. Duchouquette P.A. and Seller hereby jointly and severally represent
and warrant to Purchaser as follows:
(a) Status. Duchouquette P.A. is a professional
association duly organized, validly existing, and in good standing under the
laws of the State of Texas.
(b) Authority. Duchouquette P.A. has all necessary power
and authority under applicable law and its Articles of Incorporation and Bylaws
to execute, deliver, and perform this Agreement and to own or lease its
properties and to carry on its business as presently conducted. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors and shareholders of Duchouquette P.A., and no other corporate
proceedings on the part of Duchouquette P.A. are necessary for Duchouquette
P.A. to enter into this Agreement or to consummate the transactions
contemplated hereby.
(c) Enforceability. This Agreement constitutes a legal,
valid, and binding obligation of Seller and Duchouquette P.A., enforceable
against Seller and Duchouquette P.A. in accordance with its terms, except to
the extent that enforcement is affected by laws pertaining to bankruptcy,
reorganization, insolvency, or creditors' rights or by the availability of
injunctive relief, specific performance, and other equitable remedies.
(d) Stock. The authorized capital stock of Duchouquette
P.A. consists of one million (1,000,000) shares, $0.10 par value, of which one
thousand (1,000) shares are issued and outstanding. All such issued and
outstanding Stock is duly authorized, validly issued, and nonassessable. All
of the Stock is owned of record and beneficially by Seller. None of the Stock
was issued or will be transferred under this Agreement in violation of any
preemptive, preferential, or other rights of any Person (as defined in Section
8(u)).
(e) Stock Rights. Seller is the true and lawful owner,
of record and beneficially, of the Stock; none of the Stock is subject to any
outstanding options, warrants, calls, or similar rights of any other person to
acquire the same; none of the Stock is subject to any restrictions on transfer
thereof; and Seller has the full power and authority to convey, and will convey
to Purchaser at Closing, good and marketable title to the Stock, free and clear
of any liens, liabilities, security interests, claims, or encumbrances.
(f) No Consents Required. There is no requirement
applicable to Duchouquette P.A. or Seller to make any filing with, or to give
any notice to or obtain any permit, authorization, consent, or approval of, any
governmental or regulatory authority as a condition to the lawful consummation
by Duchouquette P.A. and Seller of the transactions contemplated by this
Agreement (except as may be contemplated by the last sentence of Section
8(k)(4)).
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 4
<PAGE> 5
(g) Corporate Minutes. Duchouquette P.A. has delivered
or made available to Purchaser complete and accurate copies of the minutes of
all its directors and shareholders meetings, and all actions by written consent
of the directors and shareholders, of Duchouquette P.A. since its inception
(collectively, the "Minutes"). The Minutes represent all corporate actions
taken by Duchouquette P.A.
(h) Taxes. With respect to Taxes (as defined below):
(1) All returns and reports of, or relating to,
any foreign, federal, state, or local Tax that are required to be
filed for, by, or on behalf of, or with respect to, Duchouquette P.A.
or Seller, including, but not limited to, those relating to the
income, business, operations, or assets of Duchouquette P.A. or
Seller, have been timely filed with the appropriate foreign, federal,
state, and local authorities, have been properly and accurately
compiled and completed, and reflect all Tax liabilities of
Duchouquette P.A. and Seller for the periods covered thereby.
(2) All Taxes due and payable by Seller and
Duchouquette P.A. as of the Closing Date have been paid.
(3) Seller and Duchouquette P.A. have no unpaid
liability for Taxes of any nature whatsoever.
(4) For purposes of this Agreement, "Taxes"
(collectively) or "Tax" (singly) shall mean all taxes, charges, fees,
levies, or other assessments of whatever kind or nature, including,
without limitation, all net income, gross income, gross receipts,
sales, use, value-added, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, excise, estimated,
severance, stamp, net worth, environmental, occupance, or property
taxes, custom duties, fees, assessments, or charges of any kind
whatsoever (together with any interest and any penalties, additions to
tax, or additional amounts) imposed by any taxing authority (domestic
or foreign) upon, or payable by, Duchouquette P.A. or Seller.
(i) Financial Statements. To the best knowledge of
Seller and Duchouquette P.A., all financial statements provided by Duchouquette
P.A. to Purchaser are complete and accurate in all respects, having been
prepared in accordance with the cash method of accounting applied on a
consistent basis throughout the periods indicated, and present fairly and
accurately the financial condition and results of operations of Duchouquette
P.A. and the Practice as of the date and for the periods indicated thereon.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 5
<PAGE> 6
(j) Liabilities.
(1) Since July 1, 1996 there has not been any
material adverse change in the condition, financial or otherwise, of
the private practice of medicine conducted by Duchouquette P.A. and
Seller (the "Practice") or in the assets and liabilities of
Duchouquette P.A. nor has there been any other occurrence, event, or
condition that has adversely affected, or can reasonably be expected
to affect adversely, the ability of Seller or Duchouquette P.A. to
conduct his or its professional practice as currently conducted.
(2) Duchouquette P.A. has paid the debts of the
Practice in the usual and ordinary course of its business since July
1, 1996.
(3) There are no liabilities, debts, or
obligations of Duchouquette P.A. whatsoever, accrued, fixed,
contingent, or otherwise (known or unknown and asserted or
unasserted), existing on the date hereof which in the aggregate exceed
$20,000, including any future payments due on any liabilities, debts
or obligations.
(4) Duchouquette P.A. is not liable upon or with
respect to, or obligated in any other way to provide funds in respect
of, or to guarantee or assume in any manner, any Liability of any
Person.
(k) Contracts.
(1) A true and complete list of all of the
contracts, agreements, leases, licenses, plans, arrangements, or
commitments, written or oral, and otherwise as are necessary or
helpful to the Practice (including all amendments, supplements, and
modifications thereto) to which Seller or Duchouquette P.A. is a party
or is otherwise bound is set forth on Schedule 8(k) (the "Contracts").
(2) All of the Contracts are valid, binding, and
in full force and effect in accordance with their terms and conditions
and there is no existing default thereunder or breach thereof (whether
declared or undeclared) by Seller or Duchouquette P.A., or by any
other party to the Contracts, or any conditions which, with the
passage of time or the giving of notice or both, might constitute such
a default by Seller or Duchouquette P.A., or, to the best knowledge of
Seller or Duchouquette P.A. by any other party to the Contracts.
(3) True, correct, and complete copies of all the
Contracts as currently in force have been delivered by Seller or
Duchouquette P.A. to Purchaser.
(4) Except as provided in Schedule 8(k), all of
the Contracts may be assigned to Purchaser without the approval or
consent of any Person, or, if such approval or consent is required, it
has been obtained by Seller or Duchouquette P.A. and delivered to
Purchaser at or prior to the Closing.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 6
<PAGE> 7
(l) Employees. A true and complete list of the names of
each employee of Duchouquette P.A., as well as their job titles, hire dates,
and current hourly compensation paid by Duchouquette P.A. to each of them in
connection with the Practice is set forth on Schedule 8(l). Other than as
provided in the Employee Manual of Duchouquette P.A. and wage increases in the
ordinary course of business, since July 1, 1996 neither Duchouquette P.A. nor
Seller have made any commitment or agreement to increase the wages or modify
the conditions or terms of employment of any of the employees of Duchouquette
P.A.
(m) Employee Benefits.
(1) A true, complete, and correct list of all
employee benefit plans as defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not subject to ERISA, and any other severance, termination, change
of control, stock based, or group insurance plan which Duchouquette
P.A. currently maintains, or has ever maintained, with respect to any
of its current or former employees is set forth in Schedule 8(m)
(collectively the "Plans").
(2) Each of the Plans is being, and has been,
maintained, operated, and administered in all material respects in
accordance with its respective terms and all applicable laws,
including, but not limited to, ERISA and the Internal Revenue Code of
1986, as amended (the "Code"), and no material liability or obligation
has been incurred (and is unsatisfied) or is expected to be incurred
by Duchouquette P.A. (either directly or indirectly, including as a
result of an indemnification obligation) under, or pursuant to, any
applicable law, including titles I and IV of ERISA and the penalty,
excise tax, or joint and several liability provisions of the Code
relating to employee benefit plans.
(3) Each Plan intended to be qualified under
section 401(a) of the Code, and the trust (if any) forming a part
thereof, has received a favorable determination letter from the
Internal Revenue Service ("IRS") as to its qualification under the
Code and to the effect that each such trust is exempt from taxation
under section 501(a) of the Code and to the best knowledge of
Duchouquette P.A. and Seller all amendments necessary to maintain the
qualification of such Plans have been made within the time allowed by
the Code and ERISA and, to the best knowledge of Duchouquette P.A. and
Seller, no event has occurred or condition exists which could
adversely affect such determination.
(4) With respect to each Plan which is an
"employee welfare benefit plan," as defined in section 3(1) of ERISA,
to the best knowledge of Duchouquette P.A. and Seller (i) no such plan
is unfunded or funded through a "welfare benefit fund," as defined in
section 419 of the Code, (ii) each such plan which is a "group health
plan," as defined in section 5000(b)(1) of the Code, is in compliance
in all material respects with the applicable requirements of section
4980B of the Code, (iii) no such plan provides retiree medical
benefits to former employees of Duchouquette P.A. or any related
entity, and (iv) there are no unpaid or overdue insurance premiums
required to be paid with respect to such plan.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 7
<PAGE> 8
(5) There are no actions, suits, or claims, other
than routine claims for benefits, pending or, to the best knowledge of
Duchouquette P.A. or Seller, threatened with respect to any of the
Plans or against any trustee, fiduciary, or administrator of the
Plans.
(6) There are no investigations or audits of any
Plan by any governmental authority currently pending and there have
been no such investigations or audits that have been concluded that
resulted in any liability of Duchouquette P.A. that have not been
fully discharged, and no Plan has been submitted to the IRS under the
voluntary compliance resolution or closing agreement programs.
(n) Employment Laws.
(1) To their best knowledge, Duchouquette P.A.
and Seller are in compliance in all material respects with all
applicable laws relating to employment and employment practices,
including, without limitation, wages, workplace safety, equal
employment opportunity, and nondiscrimination ("Employment Laws").
(2) Neither Duchouquette P.A. nor Seller has
received any notice of noncompliance or violation of any Employment
Law that is pending or unresolved and no action is pending, or to the
best knowledge of Duchouquette P.A. and Seller, threatened before the
National Labor Relations Board, the Equal Opportunity Commission, the
U.S. Department of Labor, or any other foreign, federal, state, or
local governmental authority or court relating to employment matters
or any Employment Law.
(3) There is no pending or, to the best knowledge
of Duchouquette P.A. and Seller, threatened arbitration, suit,
litigation, or proceeding, against Duchouquette P.A., Seller, or any
current or former director, shareholder, officer, or supervisory
employee of Duchouquette P.A., alleging wrongful termination, racial,
religious, sexual, or age discrimination, improper post-termination
conduct, or breach of conduct or covenant of employment.
(o) Environmental Laws.
(1) To their best knowledge, Duchouquette P.A.
and Seller are in compliance in all material respects with all
applicable Environmental Laws, which compliance includes, but is not
limited to, the possession by Duchouquette P.A. or Seller of all
material permits and other governmental authorizations required under
applicable Environmental Laws, and material compliance with the terms
and conditions thereof.
(2) For purposes of this Agreement,
"Environmental Laws" means all federal, state, local, and foreign laws
and regulations relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface
water, ground water, land surface, or subsurface strata), including,
without limitation, laws
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 8
<PAGE> 9
and regulations relating to emissions, discharges, releases, or
threatened releases of, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of, chemicals, pollutants, contaminants, wastes, toxic
substances, petroleum products, or any other substance that is
otherwise a danger to health, reproduction, or the environment.
(p) Assets and Properties.
(1) Duchouquette P.A. owns or has the sole right
to use (pursuant to a valid lease or license disclosed on Schedule
8(p)) all operating assets and properties necessary for Seller and
Duchouquette P.A. to carry on the Practice in the manner presently
conducted by Seller and Duchouquette P.A. (collectively, the
"Assets").
(2) Duchouquette P.A. has good and marketable
title to all the Assets, and title to the Assets is free and clear of
all mortgages, liens, pledges, conditional sales agreements, charges,
easements, covenants, assessments, options, restrictions, and other
encumbrances of any nature whatsoever.
(3) The Assets are in good operating condition
and repair, normal wear and tear excepted (except as identified by
seller to Purchaser in writing on Schedule 8(p)), and are capable of
being used for their intended purpose in the Practice as now
conducted.
(4) The Assets include all existing warranties
and service contracts with respect to any of the Assets to the extent
they are capable of being assigned to Purchaser.
(5) To the best knowledge of Duchouquette P.A.
and Seller, all the Assets and their present use conforms to all
applicable Governmental Requirements, and no notice of any violation
of any such Governmental Requirements relating to the Assets or their
use has been received by Seller.
(6) Duchouquette P.A. does not own any real
property.
(q) No Material Changes. Except as set forth in Schedule
8(q), since July 1, 1996, Duchouquette P.A. has not:
(1) sold, leased, optioned, or transferred any
material portion of the assets of Duchouquette P.A. or the Practice;
(2) suffered any material loss, or material
interruption in use, of any material asset or property (whether or not
covered by insurance), on account of fire, flood, riot, strike, or
other hazard or act of God;
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 9
<PAGE> 10
(3) made any material change in the conduct or
nature of its business or operations;
(4) waived any material rights arising out of the
conduct of, or with respect to, its business or operations;
(5) made or committed to make any capital
expenditures in an amount in excess of $10,000.00;
(6) declared or paid any dividend or other
distributions with respect to its capital shares or redeemed,
repurchased, or otherwise acquired any of its own capital shares;
(7) made any material increase in the rate or
terms of compensation payable by Duchouquette P.A. to, or any increase
in the rate or terms of, any Plan or other bonus, insurance, pension,
or employee benefit plan on behalf of any director, officer, or key
employee of Duchouquette P.A.;
(8) made any change in accounting methods,
principles, or practices, except as required by generally accepted
accounting principles;
(9) suffered any creation, occurrence, or
assumption of any material indebtedness for money borrowed other than
in the form of accounts payable for goods and services in the ordinary
course of business;
(10) assumed, guaranteed, or incurred any
liability for the obligations of any other person or suffered the
subjecting of any property or assets of Duchouquette P.A. to mortgage,
lien, pledge, or other encumbrance other than purchase money security
interests or liens for taxes yet due and payable in the ordinary
course of business;
(11) without limitation by the enumeration of any
of the foregoing, entered into any material transaction (including
borrowing, leasing, or capital financing or any lease of real
property) other than in the ordinary course of business;
(12) incurred any material liabilities other than
in the ordinary course of business;
(13) suffered or been threatened with any adverse
change which has had or could have a material adverse effect on
Duchouquette P.A.; or
(14) agreed to do any of the foregoing.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 10
<PAGE> 11
(r) Compliance with Laws Generally.
(1) Without limiting the provisions of Sections
8(n) and 8(o), to the best knowledge of Duchouquette P.A. and Seller,
they are in compliance in all material respects with each Governmental
Requirement.
(2) As used herein, "Governmental Requirement"
shall mean any and all laws (including, but not limited to, applicable
common law principles), statutes, ordinances, codes, rules,
regulations, interpretations, guidelines, directions, orders,
judgments, writs, injunctions, procedures, decrees, decisions, or
similar items or pronouncements, promulgated, issued, passed, or
enacted by any Governmental Authority.
(3) As used herein, "Governmental Authority"
shall mean any and all federal, Texas, or local governments,
governmental institutions, public authorities, and other governmental
entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments,
boards, bureaus, commissions, agencies, courts, administrations, and
panels, and any divisions or instrumentalities thereof, whether
permanent or ad hoc and whether now or hereafter constituted and/or
existing).
(4) As used herein, "Governmental Requirement"
shall specifically include applicable provisions of the federal Social
Security Act (including the federal Medicare and Medicaid Anti-Fraud
and Abuse Amendments [42 U.S.C. Section 1320a-7, 7a, and 7b] and the
federal Physician Anti-Self Referral Law [42 U.S.C. Section
1395nn]), the Texas Medical Practice Act (Article 4495b of the Texas
Revised Civil Statutes), and the Texas Illegal Remuneration Law (Texas
Health and Safety Code Section 161.091), which are sometimes
collectively referred to herein as "Health Laws").
(s) Nature of Practice. Seller conducts the Practice as
an employee of Duchouquette P.A.
(t) Licensure. Seller is duly authorized, qualified, and
appropriately licensed under all applicable Governmental Requirements to
practice medicine at the location and in the manner as now conducted.
(u) Competing Interests.
(1) Neither Seller nor any Associate (defined
below) of Seller (i) owns, directly or indirectly, any equity interest
in, or is a director, officer or employee of, or consultant to, any
entity which is a competitor, supplier or customer of Seller, or a
competitor, supplier or customer of Purchaser or an Affiliate of
Purchaser (excepting, in all cases, for ownership, if any, of less
than or equal to five percent (5%) by value of the outstanding capital
stock of any corporation the capital stock of which is traded on a
nationally recognized securities exchange); or (ii) owns, directly or
indirectly, in whole
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 11
<PAGE> 12
or in part, any property, asset, or right which is associated with the
Assets or the Practice or which Seller is presently operating or using
in connection with, or the use of which is necessary for or material
to, the Practice.
(2) For purposes of this Agreement, the term
"Associate" shall mean with respect to an individual (i) the spouse,
parents or children of the individual and his/her spouse, (ii) any
trust in which the individual or any person described in clause (i)
above has an interest or any trustee of such a trust, and (iii) any
Affiliate of the individual.
(3) For purposes of this Agreement, the term
"Associate" shall mean with respect to a Person other than an
individual, any Person that is an Affiliate of such Person, and any
director or officer of such Person and any Associate of any director
or officer.
(4) For purposes of this Agreement, the term
"Affiliate" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, such Person, as interpreted under Rule 405 of
Regulation C of the Securities Act of 1933.
(5) For purposes of this Agreement, the term
"Person" means an individual or a corporation, limited liability
company, partnership, trust, estate, unincorporated organization,
association, or other entity.
(6) Financial Relationships. Neither Seller nor
any immediate family member of Seller has a "financial relationship"
with any entity providing "designated health services," as such terms
are used in the Stark Bill.
(v) Effect of Agreement. The execution, delivery, and
performance of this Agreement by Seller and Duchouquette P.A. and the
consummation by Seller and Duchouquette P.A. of the transactions contemplated
hereby will not:
(1) Result in any breach of any of the terms or
conditions of, constitute a default under, accelerate the performance
of any obligation required under, or give any right of termination or
cancellation under any mortgage, note, deed of trust, contract,
agreement, lease, license, or other instrument or obligation
(including the Contracts) to which Seller or Duchouquette P.A. is now
a party or by which Seller or Duchouquette P.A. may be bound or
affected; or
(2) Relieve any Person of any obligation (whether
contractual or otherwise) or enable any Person to terminate any such
obligation or any right or benefit enjoyed by Seller or Duchouquette
P.A. or to exercise any right under any agreement); or
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 12
<PAGE> 13
(3) Adversely affect the business relationships
of patients or contracted third party payors of the Practice.
(w) Intellectual Property. The Practice as now conducted
by Duchouquette P.A. does not require the use of or consist of any rights under
any patents, inventions, trademarks, trade names, brand names, or copyrights.
Duchouquette P.A. has not transferred, encumbered, or licensed to any Person
any rights to own or use any portion of any intellectual property relating to
the Practice.
(x) Suits, Actions, and Claims. Except as set forth in
Schedule 8(x) to this Agreement, there are no suits, actions, claims (including
workers compensation claims), inquiries, or investigations by any Person, or
any legal, administrative, or arbitration proceedings in which Seller or
Duchouquette P.A. is engaged or which are pending or threatened against or
affecting Seller, Duchouquette P.A., or its employees, or to which Seller,
Duchouquette P.A., or any of its employees is or might become a party, or which
question the validity or legality of the transactions contemplated hereby.
Without limiting the foregoing, there is to the best knowledge of Seller and
Duchouquette P.A. no present or potential claim against Seller, Duchouquette
P.A., or its employees related to the Practice.
(y) Insurance Policies. A list of all insurance policies
related to the Practice specifying the insurer, the amount of coverage, the
type of insurance, and the policy number maintained by Seller or Duchouquette
P.A. is set forth on Schedule 8(y). To the best knowledge of Duchouquette
P.A. and Seller, there are no special circumstances with respect to these
policies or the Practice that would lead to any liability under such insurance
policies being avoided by the insurers issuing such policies or the premiums
thereunder being increased. All professional liability policies are "claims
made" policies, and all insurance policies are in full force and effect, with
all premiums due thereon to date fully paid.
(z) Licenses and Permits, Compliance with Governmental
Requirements.
(1) Except for individual medical professional
licenses, a true and complete list of all licenses and permits
necessary for the conduct of the Practice is set forth on Schedule
8(z) (the "Licenses and Permits").
(2) Duchouquette P.A. holds all such Licenses and
Permits and they are validly issued and in full force and effect.
(3) True and correct copies of all the Licenses
and Permits were delivered to Purchaser prior to Closing.
(4) No violations are or have been recorded in
respect of such Licenses or Permits and no proceeding is pending or,
to the best knowledge of Seller and Duchouquette P.A., threatened
seeking the revocation or limitation of any of such Licenses or
Permits.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 13
<PAGE> 14
(5) All such Licenses and Permits that are
subject to transfer are included in the Assets.
(aa) Accounts Receivable. All notes and accounts
receivable of Duchouquette P.A. and the Practice reflected on the Financial
Statements or that have arisen since the date thereof ("Accounts Receivable")
have arisen in the ordinary course of business. A true, correct, and complete
aging of the Accounts Receivable of Duchouquette P.A. as of the most recent
practicable date is set forth on Schedule 8(aa).
(ab) Records. The books, records (including patient
medical records), and other such items kept by Duchouquette P.A. with respect
to its assets and the Practice have been kept properly and to the best
knowledge of Duchouquette P.A. and Seller contain records of all matters
required to be included therein by any Governmental Requirement and by
generally accepted community and professional standards, and such books and
records are true, accurate, and complete.
(ac) Deposits. Duchouquette P.A. does not now hold any
deposits or prepayments by third parties with respect to any of the assets of
the Practice which are not reflected as liabilities in the Financial
Statements.
(ad) Telephone Numbers. All telephone and facsimile
numbers used by Duchouquette P.A. in connection with the Practice are valid and
in good working order, and may be transferred to Purchaser.
(ae) Workmen's Compensation Data. All data set forth in
the most recent workmen's compensation report of Duchouquette P.A. has been
provided to Purchaser and is true, correct, and complete as of the date
thereof.
(af) Brokers or Finders. Seller and Duchouquette
P.A., as well as the latter's officers and agents have incurred no obligation
or liability, contingent or otherwise, for brokerage or finders' fees or
agents' commissions or other similar payment in connection with this Agreement
and will indemnify and hold Purchaser harmless from any such payment alleged to
be due by or through Seller and Duchouquette P.A. as a result of the action of
Seller or Duchouquette P.A. or the latter's officers or agents.
(ag) No Untrue Statements. The statements,
representations, and warranties of Seller and Duchouquette P.A. set forth in
this Agreement and the Schedules hereto and in all other documents and
information furnished to Purchaser and its representatives in connection
herewith do not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements, representations, and
warranties made not misleading.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 14
<PAGE> 15
9. Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller as follows:
(a) Status. Purchaser is a professional association duly
organized, validly existing, and in good standing under the laws of the State
of Texas.
(b) Authority. Purchaser has all necessary power and
authority under applicable law and its Articles of Incorporation and Bylaws to
execute, deliver, and perform this Agreement and to own or lease its properties
and to carry on its business as presently conducted. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Purchaser and no other corporate proceedings on the part of
Purchaser are necessary for Purchaser to authorize this Agreement or to
consummate the transactions contemplated hereby.
(c) Enforceability. This Agreement constitutes a legal,
valid, and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except to the extent that enforcement is affected by
laws pertaining to bankruptcy, reorganization, insolvency, or creditors' rights
or by the availability of injunctive relief, specific performance, and other
equitable remedies.
(d) No Consents Required. There is no requirement
applicable to Purchaser to make any filing with, or to give any notice to or
obtain any permit, authorization, consent, or approval of, any governmental or
regulatory authority as a condition to the lawful consummation by Purchaser of
the transactions contemplated by this Agreement.
(e) Suits, Actions, and Claims. There are no suits,
actions, inquiries, or investigations by any Person, or any legal,
administrative, or arbitration proceedings in which Purchaser is engaged or
which are pending or threatened against or affecting Purchaser, or to which
Purchaser is or might become a party, which question the validity or legality
of the transactions contemplated by this Agreement.
(f) Investment Intent. Purchaser is acquiring the
Stock for its own account and not with a view to the distribution of the Stock
within the meaning of Section 2(11) of the Securities Act of 1933.
(g) Brokers or Finders. Purchaser and its officers
and agents have incurred no obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with this Agreement and will indemnify and hold Seller harmless
from any such payment alleged to be due by or through Purchaser as a result of
the action of Purchaser or its officers or agents.
(h) TCD Shares. The TCD Shares which will be issued to
Seller in accordance with Section 3(c) and the Assignment of Right to Receive
Stock (see the attached Exhibit 3) will, upon issuance to Seller, be duly
authorized, validly issued, and nonassessable. The transfer of
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 15
<PAGE> 16
the TCD Shares to Seller will not violate any preemptive, preferential, or
other rights of any Person (as defined in Section 8(u)).
(i) No Untrue Statements. The statements,
representations, and warranties of Purchaser set forth in this Agreement and
the Schedules hereto and in all other documents and information furnished to
Seller and his representatives in connection herewith do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements, representations, and warranties made not misleading.
10. Covenants of Seller. Seller hereby covenants and agrees as
follows:
(a) Seller is subject to, and agrees to be bound by, the
provisions, restrictions, conditions, obligations, and/or requirements
contained in the investment letter from Seller to Purchaser, a copy of which is
attached as Exhibit 10.
(b) For a period of one year beginning on the earlier of
the date of Registration or February 28, 1997, Seller shall not sell, assign,
transfer, deliver, burden, pledge, or encumber in any one month more than one-
twelfth (1/12th) of the TCD Shares.
(c) Seller agrees to keep his current professional
liability insurance policy with Texas Medical Liability Trust, a copy of which
is attached as Exhibit 11, in effect. The parties acknowledge that the
professional liability insurance policy attached as Exhibit 11 is being
assumed by Purchaser contemporaneously with the execution and delivery of this
Agreement. Purchaser agrees that in the event it determines after Closing that
a new professional liability insurance policy is appropriate for the
Purchaser's protection, Seller and Purchaser shall share equally in the cost of
securing any necessary tail coverage for Seller.
(d) As a condition to Closing, Seller shall have
delivered to Purchaser an assignment of contract rights in form and substance
satisfactory to Purchaser, assigning to Purchaser all rights of Duchouquette
P.A. and physicians employed by it, as applicable, under managed care contracts
and each managed care company shall have consented to such assignment, all as
and to the extent required (if at all) under such managed care contracts.
11. Covenants of Purchaser. Purchaser hereby covenants and agrees
as follows:
(a) All of the artwork displayed throughout the offices
and clinic of Duchouquette P.A., as well as the desk, credenza, office chair
and other office furniture presently located in Seller's office at the clinic
of Duchouquette P.A. are the personal property of Seller and may be removed by
Seller at any time at his option.
(b) Purchaser will cause the current refurbishing of the
offices and clinic of Duchouquette P.A., which includes painting the interior
of the offices and clinic and installing
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 16
<PAGE> 17
new carpet throughout the offices and clinic, to be completed at no cost to
Seller on or before April 30, 1997.
(c) All of Seller's legal fees and other costs related to
(i) the negotiation and execution of this Agreement and the related documents
and (ii) the transactions contemplated by this Agreement shall be paid by
Duchouquette P.A., either prior to Closing and within five business days after
Closing.
(d) This section and the covenants and agreements of the
Purchaser made in subsections (a), (b) and (c) of this section shall survive
the Closing and the consummation of the transactions contemplated in this
Agreement.
12. Indemnification and Remedies.
(a) Survival. Subject to the limitations set out in this
section, the representations and warranties set forth in Sections 8 and 9 shall
survive the Closing and the consummation of the transactions contemplated in
this Agreement.
(b) Indemnification By Seller. Seller shall, and hereby
does, indemnify and hold harmless Purchaser, its Affiliates (as defined in
Section 8(u)) and officers, trustees, directors, shareholders, employees,
agents, representatives, and consultants (collectively, the "Purchaser
Indemnitees") at all times from and after the date of this Agreement, from and
against any and all penalties, demands, damages, punitive damages, losses
(excluding lost profits), liabilities, suits, costs, costs of any settlement or
judgment, claims of any and every kind whatsoever, recovery, repayment or
refund of amounts received with respect to any claim for payment under the
Medicare, CHAMPUS or Medicaid programs (including without limitation interest
and penalties thereon), remediation costs, and expenses (including, without
limitation, reasonable attorneys' fees) (collectively "Damages") of or to any
of the Purchaser Indemnitees, which may now or in the future be paid, incurred,
or suffered by or asserted by any Person against any of the Purchaser
Indemnitees resulting or arising from or incurred in connection with any one or
more of the following ("Proceeding"):
(1) any liability or claim for liability related
to any lawsuit (whether in contract, in tort, or otherwise, and
whether or not successful) or threatened lawsuit or claim involving
Seller, the Stock, or the Practice including, but not limited to, any
liability or claim for liability that arises in connection with any
fraud, intentional misconduct, or professional negligence, based on
any act, omission, event, or occurrence occurring or alleged to have
occurred on or prior to the Closing;
(2) any liability or claim for liability (whether
in contract, in tort, or otherwise, and whether or not successful)
related to any liens, obligations, or encumbrances of any nature
whatsoever impressed against or in any way related to the Stock or the
Practice;
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 17
<PAGE> 18
(3) any liability or claim for liability (whether
in contract, in tort, or otherwise, and whether or not successful)
related to Taxes of Seller or Duchouquette P.A.;
(4) any misrepresentation, breach of warranty set
forth in Section 8, or nonfulfillment of any covenant or agreement on
the part of Seller or Duchouquette P.A. under this Agreement, or any
misrepresentation in or omission from any list, Schedule, certificate,
or other instrument furnished to Purchaser by Seller pursuant to the
terms of this Agreement; and
(5) any liability or claim for liability under
any Plan offered by Seller, including any liability or claim for
liability resulting from Seller's failure to continue such Plans.
(c) Time Limitation on Seller's Indemnification. Seller
shall have no liability for indemnification or otherwise with respect to any
representation or warranty set out in Section 8 unless, on or before June 30,
1998, Purchaser notifies Seller in writing of a claim specifying the factual
basis of that claim in reasonable detail to the extent then known by Purchaser.
(d) Dollar Limitation on Seller's Indemnification.
Seller shall have no liability for indemnification or otherwise with respect to
the matters described in subsection (b) of this section until the total Damages
with respect to such matters exceeds $10,000, and then only for the amount by
which the Damages exceed $10,000.
(e) Knowledge and Intentional Breach by Seller. The
limitations set out in subsections (c) and (d) of this section will not apply
to any breach of Seller's representations and warranties set forth in Section 8
knowingly made by him or any intentional breach by Seller of any covenant or
obligation contained in this Agreement.
(f) Indemnification By Purchaser. Purchaser shall, and
hereby does, indemnify and hold harmless Seller, and his personal
representatives, heirs, and successors (collectively, the "Seller Indemnitees")
at all times from and after the date of this Agreement, from and against any
and all Damages which may now or in the future be paid, incurred, or suffered
by, or asserted by any Person against any of the Seller Indemnitees resulting
or arising from or incurred in connection with any one or more of the following
("Proceeding"):
(1) any liability or claim for liability (whether
in contract, in tort, or otherwise and whether or not successful)
related in any way to the operation of the Practice to the extent such
liability arises in connection with any action, omission, or event
(other than actions or omissions of Seller) occurring after the
Closing; and
(2) any misrepresentation, breach of warranty set
forth in Section 9, or nonfulfillment of any covenant or agreement on
the part of Purchaser under this Agreement, or any misrepresentation
in or omission from any list, Schedule, certificate,
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 18
<PAGE> 19
or other instrument furnished to Seller by Purchaser pursuant to the
terms of this Agreement.
(g) Time Limitations on Purchaser's Indemnification.
Purchaser shall have no liability (for indemnification or otherwise) with
respect to any representation or warranty unless, on or before June 30, 1998,
Seller notifies Purchaser in writing of a claim specifying the factual basis of
that claim in reasonable detail to the extent then known by Seller.
(h) Dollar Limitation on Purchaser's Indemnification.
Purchaser shall have no liability for indemnification or otherwise with respect
to the matters described in subsection (f) of this section until the total
Damages with respect to such matters exceeds $25,000.00, and then only for the
amount by which the Damages exceed $25,000.00.
(i) Limitation as to Tax Liability. Notwithstanding
anything herein to the contrary, Purchaser shall not indemnify any of the
Seller Indemnitees for any Tax liability, legal fees, or other Damages incurred
by the Seller Indemnitees as a result of a challenge of the federal or state
tax effects or consequences of this Agreement or any of the transactions
contemplated herein.
(j) Knowledge and Intentional Breach by Purchaser. The
limitations set out in subsections (g) and (h) of this section will not apply
to any breach of Purcher's representations and warranties set forth in Section
9 knowingly made by it or any intentional breach by Purchaser of any covenant
or obligation contained in this Agreement.
(k) Procedure for Indemnification from Third Party
Claims. For purposes of this section, the term "Indemnifying Party" or
"Indemnified Party" shall mean any one of the Seller Indemnitees or the
Purchaser Indemnitees, as the case may be.
(1) Promptly after receipt by an Indemnified
Party of notice of the commencement of any Proceeding against him, her
or it, the Indemnified Party will, if a claim is to be made against
another Indemnifying Party pursuant to this section, give written
notice to the Indemnifying Party of the commencement of the claim
specifying the factual basis of that claim in reasonable detail to the
extent then known by the Indemnified Party.
(2) Failure by an Indemnified Party to notify
the Indemnifying Party in writing will not relieve the Indemnifying
Party of any liability that he, she or it may have to any Indemnified
Party, except to the extent the Indemnifying Party demonstrates that
the defense of such action is prejudiced by the Indemnifying Party's
failure to give notice.
(3) If any Proceeding referred to in this section
is brought against an Indemnified Party and he, she or it gives
written notice to the Indemnifying Party of the commencement of the
Proceeding, the Indemnifying Party will, unless the claim involves
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 19
<PAGE> 20
Taxes, be entitled to participate in the Proceeding and, to the extent
he, she or it wishes, to assume the defense of the Proceeding with
counsel satisfactory to the Indemnified Party.
(4) Subsection (3) of this section shall not
apply if (i) the Indemnifying Party is also a party to the Proceeding
and the Indemnified Party determines in good faith that joint
representation would be inappropriate, or (ii) the Indemnifying Party
fails to provide reasonable assurance to the Indemnified Party of his,
her or its financial capacity to defend the Proceeding and provide
indemnification with respect to such Proceeding.
(5) After the Indemnified Party receives written
notice from the Indemnified Party of the latter's election to assume
the defense of the Proceeding, the Indemnifying Party will not, as
long as it diligently conducts such defense, be liable to the
Indemnified Party under this section for any fees of other counsel or
any other expenses with respect to the defense of the Proceeding, in
each case subsequently incurred by the Indemnified Party in connection
with the defense of the Proceeding, other than reasonable costs of
investigation.
(6) If the Indemnifying Party assumes the defense
of a Proceeding, (i) it will be conclusively established for purposes
of this Agreement that the claims made in that Proceeding are within
the scope of and subject to indemnification; (ii) no compromise or
settlement of such claims may be effected by the Indemnifying Party
without the Indemnified Party's consent unless there is no finding or
admission of any violation of legal requirements or any violation of
the rights of any Person and no effect on any other claims that may be
made against the Indemnified Party, and the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party; and
(iii) the Indemnified Party will have no liability with respect to any
compromise or settlement of such claims effected without its consent.
(7) If written notice is given to an Indemnifying
Party of the commencement of any Proceeding and the Indemnifying Party
does not, within ten (10) days after the Indemnified Party's notice is
given, give written notice to the Indemnified Party of his, her or its
election to assume the defense of the Proceeding, the Indemnifying
Party will be bound by any determination made in the Proceeding or any
compromise or settlement effected by the Indemnified Party.
(8) Notwithstanding the foregoing, if an
Indemnified Party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect him, her or it
other than as a result of monetary damages for which he, she or it
would be entitled to indemnification under this Agreement, the
Indemnified Party may, by written notice to the Indemnifying Party,
assume the exclusive right to defend, compromise, or settle the
Proceeding, but the Indemnifying Party will not be bound by any
determination of a Proceeding so defended or any compromise or
settlement effected without its written consent (which may not be
unreasonably withheld).
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 20
<PAGE> 21
(l) Procedure for Indemnification from Other Claims. A
claim for indemnification for any matter not involving a third-party claim may
be asserted by written notice to the party from whom indemnification is sought.
13. Employment of Duchouquette P.A. Employees.
(1) After the Closing and continuing through
April 30, 1997, Purchaser shall cause Duchouquette P.A. to continue
the employment of all the employees of Duchouquette, P.A. who are not
parties to written employment agreements (the "Non-Contract
Employees") at no less than the same compensation paid by Duchouquette
P.A. immediately prior to Closing and shall not (i) discharge or
otherwise terminate such employees or (ii) relocate them from their
present place of employment at 3604 Beltline Road, Dallas, Texas
without the written consent of Seller, which consent will not be
unreasonably withheld.
(2) After Closing and continuing through April
30, 1997, Purchaser shall not change the compensation of any
Non-Contract Employee without the written consent of Seller, which
consent will not be unreasonably withheld.
(3) It is acknowledged by Duchouquette P.A.,
Seller and Purchaser that the employees of Duchouquette P.A. which are
subject to written agreements are being hired as provided in Section
4(b),
(4) The Non-Contract Employees are not to be
considered as third party beneficiaries of this section.
14. Further Assurances. Consistent with the terms and conditions
hereof, each party hereto will execute and deliver such instruments,
certificates, and other documents and take such other action as any other party
hereto may reasonably require in order to carry out this Agreement and the
transactions contemplated hereby.
15. Assignment of Contracts.
(1) Notwithstanding any other provision of this
Agreement, nothing in this Agreement or any related document shall be
construed as an attempt to assign (i) any Contract which, as a matter
of law or by its terms, is nonassignable without the consent of the
other parties thereto unless such consent has been given, or (ii) any
contract or claim as to which all of the remedies for the enforcement
thereof enjoyed by Seller would not, as a matter of law or by its
terms, pass to Purchaser as an incident of the transfers and
assignments to be made under this Agreement.
(2) In order, however, that the full value of
every contract and claim of the character described in clauses (i) and
(ii) of subsection (1) immediately above and all claims and demands on
such contracts may be realized for the benefit of Purchaser,
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 21
<PAGE> 22
Seller, at the request and under the direction of Purchaser, shall
take all such reasonable action and do or cause to be done all such
reasonable things as will, in the opinion of Purchaser, be necessary
or proper in order that the obligations of Seller under such contracts
may be performed in such manner that the value of such contract will
be preserved and will inure to the benefit of Purchaser, and for, and
to facilitate, the collection of the moneys due and payable and to
become due and payable thereunder to Purchaser in and under every such
contract and claim.
(3) Seller shall promptly pay over to Purchaser
all moneys collected by or paid to it in respect of every such
contract, claim or demand.
(4) Nothing in this section shall relieve Seller
of the obligation to obtain any consents required for the transfer of
the Assets and all rights thereunder to Purchaser, nor relieve Seller
from any liability to Purchaser for failure to obtain such consents.
16. Miscellaneous.
(a) Entire Agreement. This Agreement and the other
agreements expressly contemplated herein supersede any and all other
agreements, either oral or written, between the parties hereto with respect to
the subject matter hereof and contain all of the covenants, agreements,
representations, and warranties between the parties with respect thereto.
(b) Modification and Waiver. No change or modification
of this Agreement shall be valid or binding upon the parties hereto unless such
change or modification shall be in writing and signed by all the parties
hereto. No waiver of any term or condition of this Agreement shall be
enforceable unless it shall be in writing signed by the party against which or
whom it is sought to charged. The waiver by either party of a breach of any
provision of this Agreement by any other shall not operate or be construed as a
waiver of any subsequent breach by such other party.
(c) Notices. Any notices, consents, demands, requests,
approvals, and other communications to be given under this Agreement by any
party to the other shall be deemed to have been duly given if given in writing
and personally delivered, sent by courier, sent by telegram, telex, or
telecopy, or sent by mail, registered or certified, postage prepaid with return
receipt requested, at the address specified beside each party's signature at
the end of this Agreement. Notices delivered personally or by telegram, telex,
or telecopy shall be deemed communicated as of actual receipt; mailed notices
shall be deemed communicated as of 10:00 a.m. on the third business day after
mailing. Any party may change its or his address for notice hereunder by
giving notice of such change in the manner provided in this Section.
(d) Governing Law. The laws of the State of Texas shall
govern the validity or enforceability and the interpretation or construction of
all provisions of this Agreement and all issues hereunder.
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 22
<PAGE> 23
(e) Agreement Subject to State and Federal Law. The
parties to this Agreement recognize that this Agreement at all times is subject
to applicable state, local and federal law, including but not limited to the
Health Laws. The parties further recognize that this Agreement shall be
subject to amendments of such laws and regulations and to new legislation. Any
provisions of law that invalidate, or otherwise are inconsistent with the terms
of this Agreement, or that would cause any of the parties to be in violation of
any of such laws, shall be deemed to have superseded the terms of this
Agreement; provided however, that the parties shall exercise their best efforts
to accommodate the terms and intent of this Agreement to the greatest extent
possible consistent with the requirements of applicable laws and regulations.
(f) Corporate Practice of Medicine. Nothing contained
herein is intended to (a) constitute the use of a medical license for the
practice of medicine by anyone other than a licensed physician; (b) aid any
corporation to practice medicine when in fact such corporation is not
authorized to practice medicine; or (c) constitute any other arrangement in
violation of the Texas Medical Practice Act (Tex. Rev. Civ. Stat. Ann. art.
4495b).
(g) Fraud and Abuse Law and Texas Health & Safety Code.
The parties enter into this Agreement with the intent of conducting their
relationship in full compliance with applicable state, local and federal law,
including the Health Laws. Notwithstanding any unanticipated effect of any of
the provisions herein, no party to this Agreement will intentionally conduct
itself under the terms of this Agreement in a manner to constitute a violation
of the Health Laws.
(h) Referral Policy. Nothing contained in this Agreement
shall require (directly or indirectly, explicitly or implicitly) either party
to refer or direct any patients to the other party or its or his Affiliates as
a precondition to receiving the benefits set forth herein or in establishing
the valuation of the Practice.
(i) Severability. If any provision of this Agreement is
held to be illegal, invalid, or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision never comprised a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid, or unenforceable provision
or by its severance here from. Furthermore, in lieu of such illegal, invalid,
or unenforceable provision, there shall be added automatically as part of this
Agreement, a provision as similar in its terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable.
(j) Language; Captions; References. Whenever the context
requires, references in this Agreement to the singular number shall include the
plural, the plural number shall include the singular, and words denoting gender
shall include the masculine, feminine, and neuter. Section headings in this
Agreement are for convenience of reference only and shall not be considered in
construing or interpreting this Agreement. "Hereof," "hereto," "herein," and
words of similar import used in this Agreement shall be deemed references to
this Agreement as a
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 23
<PAGE> 24
whole, and not to any particular Section, paragraph, or other provision of this
Agreement unless the context specifically indicates to the contrary. Any
reference to a particular "Section" shall be construed as referring to the
indicated Section of this Agreement unless the context indicates to the
contrary. Whenever the term "including" is used herein, it shall mean
including without limitation.
(k) Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
shall constitute one and the same document. Faxed signatures to this Agreement
will be binding and enforceable without the requirement that the manually
executed signature page be delivered.
(l) Costs. Subject to Section 11(c), the parties hereto
shall pay all of their own expenses relating to the negotiation, documentation,
and closing of the transactions contemplated by this Agreement, including
(without limitation) the fees and expenses of their respective counsel,
accountants, and financial advisors. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which the prevailing party may
be entitled.
(m) Assignment. No party to this Agreement may assign
this Agreement without the prior, express, and written consent of the other
party hereto, which consent may be withheld in such other party's sole
discretion.
(n) Binding Effect. This Agreement shall be binding upon
the parties hereto, together with their respective personal representatives,
heirs, successors, and permitted assigns.
(o) No Third Party Beneficiaries. This Agreement does
not create, and shall not be construed as creating, any right enforceable by
any person not a party to this Agreement.
The parties hereto have caused this Agreement to be executed as of the
Effective Date.
/s/ Robert G. Duchouquette, M.D.
------------------------------------------
Robert G. Duchouquette, M.D., Individually
4435 Laren Lane
Dallas, Texas 75244
(972) 408-8300
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 24
<PAGE> 25
Robert G. Duchouquette, M.D., P.A.
By: /s/ Robert G. Duchouquette, M.D.
------------------------------------------
Robert G. Duchouquette, M.D., President
3604 Beltline Road
Dallas, Texas 75234
The Physician Group, P.A.
By: /s/ Donald F. Angle, M.D.
------------------------------------------
Donald F. Angle, President
5215 North O'Connor Blvd., Suite 1800
Irving, Texas 75039
(972) 401-8300
STOCK PURCHASE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 25
<PAGE> 26
SECURED PROMISSORY NOTE
$843,750.00 Dallas, Texas September 20, 1996
FOR VALUE RECEIVED, the undersigned, THE PHYSICIAN GROUP, P.A., a
Texas professional association ("Maker"), hereby promises to pay to the order
of ROBERT G. DUCHOUQUETTE, M.D. ("Payee"), in lawful money of the United States
of America, the principal sum of Eight Hundred Forty Three Thousand Seven
Hundred Fifty Dollars ($843,750.00) plus interest as set forth below.
1. Both principal and interest, if any, shall be payable in
accordance with the terms of this Note at such location in Dallas County, Texas
or such other place as the legal holder of this Note may from time to time
designate in writing.
2. Interest on the principal amount of this Note remaining unpaid
from time to time shall accrue at a per annum rate equal to eight and one-half
percent (8.5%). Interest shall be calculated on the basis of a year of 365 or
366 days, as applicable, and charged for the actual number of days elapsed.
3. The interest on, and principal of, this Note shall be due and
payable in the following manner:
a. All unpaid interest accrued from the date of this
Note through January 31, 1997, shall be due and payable on January 31, 1997;
b. All unpaid interest accrued from February 1, 1997
through April 30, 1997, shall be due and payable on April 30, 1997; and
c. All unpaid principal shall be due and payable on
April 30, 1997.
4. Time is of the essence in the payment of this Note. Upon the
occurrence of any Event of Default (as defined below), the holder may, at his
option, declare the entire unpaid balance of the principal on this Note,
together with accrued and unpaid interest thereon and all other sums due from
Maker hereunder, to be immediately due and payable, without notice, notice
hereby being expressly waived, and/or pursue any and all other rights and
remedies under this Note or any agreement securing this Note, or at law or in
equity.
SECURED PROMISSORY NOTE
PHYSICIAN GROUP/DUCHOUQUETTE 1
<PAGE> 27
5. Each of the following events shall constitute an "Event of
Default" as that term is used in this Note:
a. Failure of Maker to timely pay any installment of
principal or interest, or any other amount due, under this Note or any
agreement securing this Note, and such default shall continue for a period of
ten Business Days after the giving of written notice by the holder of this Note
to Maker of such event;
b. Failure of Maker to promptly and timely perform any
of the terms, agreements, or covenants contained in this Note or in any
agreement securing this Note, other than those relating to the obligation of
Maker to pay money to the holder hereof, and such default shall continue for a
period of thirty Business Days after the giving of written notice by the holder
of this Note to Maker of such event;
c. Dissolution or liquidation of Maker;
d. Dissolution or liquidation of the undersigned
guarantor, The Company Doctor ("TCD"); or
e. Maker or TCD:
(1) Makes a general assignment for the benefit of
creditors;
(2) Is declared insolvent in any state insolvency
proceeding;
(3) Becomes the subject of an order for relief under
Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. Section 101
et. seq., or successor statute (the "Bankruptcy Code");
(4) Becomes a voluntary debtor in a case under
Chapter 11 of the Bankruptcy Code and fails to achieve confirmation of
a plan of reorganization within 180 calendar days;
(5) Becomes an involuntary debtor in a case under
either Chapter 7 or 11 of the Bankruptcy Code and fails to achieve a
dismissal of the case within 90 calendar days, or, with respect to a
Chapter 11 case in which an order for relief is entered prior to the
expiration of 90 calendar days, fails to achieve confirmation of a
plan of reorganization within 180 calendar days of the commencement of
the involuntary case;
(6) Consents to or is subjected to the appointment
of a trustee, receiver or liquidator with respect to all or
substantially all of Maker's or TCD's properties, as the case may be,
and, where such appointment was contested by Maker or TCD, as the case
may be, there has been a failure to vacate such appointment within 90
calendar days of appointment; or
SECURED PROMISSORY NOTE
PHYSICIAN GROUP/DUCHOUQUETTE 2
<PAGE> 28
(7) A judgement for the payment of money shall be
outstanding against the Maker or TCD, as the case may be, the payment
of which could have a material adverse effect on the business or
financial condition of Maker or TCD, and such judgment shall remain
unstayed and in effect and unpaid for more than 30 calendar days.
6. All sums which become past due according to the terms of this
Note shall bear interest from maturity until paid at the rate of 18% per annum.
7. If any payment of principal or interest on this Note is due on
a day which is not a Business Day, the payment shall be due on the next
succeeding Business Day, and the extension of time shall be taken into account
in calculating the amount of interest payable pursuant to this Note. "Business
Day," means any day other than a Saturday, Sunday or legal holiday in the State
of Texas.
8. The indebtedness evidenced by this Note may be prepaid in
whole or in part at any time prior to maturity without premium or penalty. Any
optional prepayment shall be applied first to accrued but unpaid interest
hereon, with the remainder of such prepayment being applied to the reduction of
principal.
9. Maker and all endorsers, sureties and guarantors of this Note
severally waive demand, presentment for payment, protest, notice of dishonor,
notice of nonpayment, notice of intention to accelerate, notice of
acceleration, notice of protest and any and all lack of diligence or delay in
collection or the filing of suit on this Note which may occur, and agree to all
extensions, partial payments and substitutions of any security, before or after
maturity, without prejudice to the holder of this Note.
10. This Note is secured by that certain Pledge Agreement ("Pledge
Agreement") of even date herewith, executed and delivered by Maker to Payee.
Reference is hereby made to the Pledge Agreement for a description of certain
rights, limitations of rights, obligations and duties of the parties and for a
description of the nature and extent of the security provided by the Pledge
Agreement and the rights of the parties thereto in respect of such security.
11. This Note is also secured by that certain Security Agreement
("Security Agreement") of even date herewith, executed and delivered by Robert
G. Duchouquette, M.D., P.A. to Payee, granting to Payee a security interest in
all of the assets of Robert G. Duchouquette, M.D., P.A., as more fully
described in the Security Agreement. Reference is hereby made to the Security
Agreement for a description of certain rights, limitation on rights,
obligations and duties of the parties to it and the nature and extent of the
security.
12. All agreements between Maker and the holder of this Note,
whether now existing or hereafter arising and whether written or oral, are
hereby expressly limited so that in no contingency or event whatsoever, shall
the amount paid, or agreed to be paid, to the holder of this Note for the use,
forbearance, or detention of the funds advanced pursuant to this Note, or
otherwise, or for the payment or performance of any covenant or obligation
contained in this
SECURED PROMISSORY NOTE
PHYSICIAN GROUP/DUCHOUQUETTE 3
<PAGE> 29
Note or document or instrument evidencing, securing, or pertaining to this
Note, exceed the maximum amount permissible under applicable law.
13. If from any circumstances whatsoever fulfillment of any
provision of this Note or of any other document or instrument described in this
Note, at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstances the holder of this Note shall ever receive
anything of value deemed interest by applicable law, which would exceed
interest at the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance of
this Note or on account of any other principal indebtedness of Maker to the
holder of this Note, and not to the payment of interest, or if such excessive
interest exceeds the unpaid principal balance of this Note and such other
indebtedness, such excess shall be refunded to Maker.
14. All sums paid, or agreed to be paid, by Maker for the use,
forbearance, or detention of the indebtedness of Maker to the holder of this
Note shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full term of such indebtedness until
payment in full so that the actual rate of interest on account of such
indebtedness is uniform throughout the term thereof.
15. The terms and provisions of paragraphs 12, 13 and 14 of this
Note shall control and supersede every other provision of all agreements
between Maker and the holder of this Note.
16. In the event any one or more of the provisions contained in
this Note shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision of this Note, and this Note shall be construed as if
such invalid, illegal or unenforceable provision had never been contained in
this Note.
17. This Note and all the covenants, promises, and agreements
contained herein shall be binding upon and inure to the benefit of the
respective legal and personal representatives, devisees, heirs, successors, and
assigns of Maker and the holder of this Note.
18. Maker represents and warrants to the holder of this Note that
the loan evidenced hereby is a "contract under which credit is extended for
business, commercial investment, or other similar purpose," and is not a loan
for "personal, family, household, or agricultural use," within the meaning of
applicable Texas statutes.
19. As used in this Note, the word "holder" means the Payee(s) or
other endorsee(s) of this Note who is in possession of it, or the bearer(s) of
this Note, if this Note is at the time payable to the bearer(s).
SECURED PROMISSORY NOTE
PHYSICIAN GROUP/DUCHOUQUETTE 4
<PAGE> 30
20. THIS NOTE IS EXECUTED AND DELIVERED IN TEXAS AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
THIS NOTE IS PERFORMABLE IN DALLAS COUNTY, TEXAS, AND VENUE IN ANY LITIGATION
PURSUANT TO THIS NOTE SHALL BE IN DALLAS COUNTY, TEXAS.
21. In the event that one or more Events of Default shall occur,
and in the event that thereafter this Note is placed in the hands of an
attorney for collection, or in the event that this Note is collected in whole
or in part through legal proceedings of any nature, the Maker and all
endorsers, sureties and guarantors of this Note jointly and severally agree
there shall be added to the unpaid principal balance of this Note all
reasonable costs of collection, including but not limited to reasonable
attorneys' fees and all reasonable expenses incurred in connection with the
foreclosure of the lien of the Pledge Agreement by the holder hereof, on
account of such collection, whether or not suit is filed.
22. The rights and remedies of Payee granted Payee pursuant to
this Note shall be cumulative and not alternative.
23. Neither the failure nor any delay in exercising any right,
power or privilege and no single or partial exercise of any such right, power
or privilege by Payee shall preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege.
24. To the maximum extent permitted by applicable law, (i) no
claim or right of Payee arising out of this Note can be discharged by Payee, in
whole or in part, by a renunciation or waiver of the claim or right unless in
writing, signed by Payee; (ii) no waiver that may be given by Payee will be
acceptable except in the specific instance for which it is given; and (iii) no
notice to or demand on Maker will be deemed to be a waiver of any obligation of
Maker or of the right of Payee to take further action without notice or demand
as provided in this Note.
EXECUTED as of the day and year first above written.
The Physician Group, P.A., Maker
By:
----------------------------------------
Donald F. Angle, M.D., President
5215 North O'Connor Blvd., Suite 1800
Irving, Texas 75039
(972) 401-8300
SECURED PROMISSORY NOTE
PHYSICIAN GROUP/DUCHOUQUETTE 5
<PAGE> 31
To induce Payee to accept this Note, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby unconditionally guarantees to Payee that the principal of,
and interest on, and fees and expenses provided in (including, without
limitation, attorneys' fees), this Note will be promptly paid when due in
accordance with its terms.
THE COMPANY DOCTOR
By:
-----------------------------------------
Ken Aiken, Vice President
5215 North O'Connor Blvd., Suite 1800
Irving, Texas 75039
(971) 401-8300
SECURED PROMISSORY NOTE
PHYSICIAN GROUP/DUCHOUQUETTE 6
<PAGE> 32
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Agreement"), is made and entered
into on September 20, 1996, by THE PHYSICIAN GROUP, P.A., a Texas professional
association ("Pledgor") and ROBERT G. DUCHOUQUETTE, M.D. ("Pledgee").
In consideration of the mutual covenants and agreements set forth
below, and intending to be legally bound by this Agreement, the parties agree
as follows:
1. Pursuant to that one certain Stock Purchase Agreement (the
"Stock Purchase Agreement") entered into on September 20, 1996, by Pledgor,
Pledgee and ROBERT G. DUCHOUQUETTE, M.D., P.A., a Texas professional
association ("Duchouquette P.A."), Pledgor acquired 1,000 shares of the issued
and outstanding capital stock, par value $0.10 per share, of Duchouquette P.A.
(the "Pledged Stock") which represents all of the issued and outstanding shares
of stock of Duchouquette P.A.
2. As consideration for the Pledged Stock acquired by Pledgor
pursuant to the Stock Purchase Agreement, Pledgor:
(a) Paid Pledgee $843,750.00 (the "Cash Consideration");
(b) Executed and delivered that one certain Secured
Promissory Note dated September 20, 1996 in the principal amount of
$843,750.00 (the "Note") to Pledgee (a copy of the Note is attached as Exhibit
1); and
(c) Caused certain shares of unregistered common stock of
The Company Doctor, a Delaware corporation, ("TCD") valued at $562,500.00 to be
delivered to Pledgee (the "TCD Shares").
3. As an inducement to Pledgee to accept the Note as part of the
consideration for the Pledged Stock and as additional security for the prompt
satisfaction of all the terms and conditions of the Note, Pledgor hereby
executes this Agreement and pledges the Pledged Stock to Pledgee and grants
Pledgee a lien on and security interest in the Pledged Stock.
4. In order to perfect Pledgee's security interest in the Pledged
Stock, as provided in Texas UCC Sec. 9.115(d)(1), and insure Pledgee's
priority over any other security interest or claim in or to the Pledged Stock,
as provided in Texas UCC Sec. 9.115(e)(1), Pledgor herewith delivers a
certificate evidencing the Pledged Stock to Pledgee effectively indorsed in
blank. A copy of the certificate evidencing the Pledged Stock is attached as
Exhibit 2.
STOCK PLEDGE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 1
<PAGE> 33
5. For purposes of this Agreement, the term "Event of Default"
shall have the same meaning as assigned to that term in paragraph 5 of the
Note.
6. At any time after the occurrence and during the continuation
of an Event of Default Pledgee, at his option, may have any or all of the
Pledged Stock registered on the books of the association in his name or that of
his nominee, and Pledgor hereby covenants that, upon Pledgee's written request
to Pledgor, Pledgor will cause Duchouquette P.A. to effect such registration
on the books of the association.
7. Upon the occurrence of an Event of Default, Pledgee shall
either exercise the remedies normally available to a secured party under the
Texas Uniform Commercial Code or exercise the following remedies:
(a) Retain all of the Cash Consideration and all payments
of principal and interest previously paid to him by Pledgor pursuant to the
Note;
(b) Have the right to require that Pledgor convey the
Pledged Stock and the medical practice then being conducted by Duchouquette
P.A. to Pledgee or such Professional Association as Pledgee may elect free and
clear of any and all liabilities or obligations of any type, upon (i)
forgiveness of the remaining unpaid principal balance of the Note and delivery
to Pledgor of a full and complete written release thereof, (ii) transfer and
return the TCD Shares then held by Pledgee to Pledgor, free and clear of all
liens, liabilities, security interests, claims, and encumbrances, (iii) written
release of the Non-Qualified Stock Option Agreement entered into pursuant to
Section 4(d) of the Stock Purchase Agreement, (iv) written release of the
Registration Rights Agreement entered into pursuant to Section 4(e) of the
Stock Purchase Agreement, (v) written termination of the Security Agreement and
security interest granted thereby, which was entered into pursuant to Section
3(b) of the Stock Purchase Agreement, (vi) written release by Gregory P.
Gleim, M.D. of the obligations of Pledgor under Section 4(c) of the Stock
Purchase Agreement, and (vii) written release by Pledgee of the obligations of
Pledgor under Section 13 of the Stock Purchase Agreement (relating to
employees).
(c) Have the right to terminate any employment agreements
made as a condition of the Stock Purchase Agreement thereby voiding any
restrictive covenants contained in the Stock Purchase Agreement and the
employment agreements.
8. Immediately and without further notice, upon the occurrence of
an Event of Default, whether or not the Pledged Stock has been registered in
the name of Pledgee or his nominee, Pledgee or his nominee shall have, with
respect to the Pledged Stock, the right to exercise all voting rights as to all
of the Pledged Stock and to, all other corporate rights and all conversion,
exchange, subscription or other rights, privileges or options pertaining
thereto as if he were the absolute owner of the Pledged Stock. However,
Pledgee shall have no duty to exercise any of the aforesaid rights, privileges
or options and shall not be responsible for any failure to do so or delay in so
doing.
STOCK PLEDGE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 2
<PAGE> 34
9. Notwithstanding anything contained in this Agreement or in the
Note to the contrary, unless and until an Event of Default shall occur.
(i) Pledgor shall be entitled to receive all cash
dividends paid to Pledgor in respect of or attributable to the Pledged Stock.
(ii) Pledgor shall have the right to vote and give
consents with respect to all of the Pledged Stock and to consent to, ratify, or
waive notice of any and all meetings; provided that such right shall in no case
be exercised for any purpose contrary to, or in violation of, any of the terms
or their provisions of this Agreement or the Note.
10. Pledgor represents and warrants that:
(a) It has, and has duly exercised, all requisite power
and authority to enter into this Agreement, to pledge the Pledged Stock for the
purposes described above, and to carry out the transactions contemplated by
this Agreement;
(b) It is the legal and beneficial owner of all of the
Pledged Stock;
(c) The shares of the Pledged Stock constitute all of the
issued and outstanding shares of Duchouquette P.A.;
(d) All of the shares of the Pledged Stock are owned by
Pledgor free of any pledge, mortgage, hypothecation, lien, charge, encumbrance
or security interest in such shares or the proceeds thereof, except for that
granted pursuant to this Agreement;
(e) The execution and delivery of this Agreement, and
the performance of its terms, will not result in any violation of any provision
of Pledgor's certificate of incorporation or by-laws, or violate or constitute
a default under the terms of any agreement, indenture or other instrument,
license, judgment, decree, order, law, statute, ordinance or other governmental
rule or regulation, applicable to Pledgor or any of its property; and
(f) Upon delivery of the Pledged Stock to Pledgee or its
agent, this Agreement shall create a valid first lien upon and perfected
security interest in the Pledged Stock and the proceeds thereof, subject to no
prior security interest, lien, charge or encumbrance, or agreement purporting
to grant to any third party a security interest in the property or assets of
Pledgor which would include the Pledged Stock.
11. Pledgor hereby covenants that, until all of the Note has been
satisfied in full, it will not:
(a) Sell, convey, or otherwise dispose of any of the
Pledged Stock or any interest therein, including any type of merger or other
corporate consolidation, or create, incur,
STOCK PLEDGE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 3
<PAGE> 35
or permit to exist any pledge, mortgage, lien, charge, encumbrance or any
security interest whatsoever in or with respect to any of the Pledged Stock or
the proceeds thereof, other than that created hereby; or
(b) Consent to or approve the issuance of any additional
shares of any class of capital stock in Duchouquette P.A. or any securities
convertible voluntarily by the holder thereof or automatically upon the
occurrence or nonoccurrence of any event or condition into, or exchangeable
for, any such shares; or any warrants, options, rights, or other commitments
entitling any person to purchase or otherwise acquire any such shares.
12. Pledgor warrants and will, at its own expense, defend
Pledgee's right, title, special property and security interest in and to the
Pledged Stock against the claims of any person, firm, corporation or other
entity (other than claimants by, through or under Pledgee).
13. Pledgor will promptly deliver to Pledgee all written notices,
and will promptly give Pledgee written notice of any other notices, received by
it with respect to Pledged Stock, and Pledgee will promptly give like notice to
Pledgor of any such notices received by it or its nominee.
14. Pledgor shall at any time, and from time to time, upon the
written request of Pledgee, execute and deliver such further documents and take
such further action as Pledgee may reasonably request to effect the purposes of
this Agreement, including, without limitation, delivering to Pledgee upon the
occurrence of an Event of Default irrevocable proxies with respect to the
Pledged Stock in form satisfactory to Pledgee. Until receipt thereof, this
Agreement shall constitute Pledgor's proxy to Pledgee or its nominee to vote
all shares of Pledged Stock then registered in Pledgor's name.
15. Upon the satisfaction in full of all obligations and the
satisfaction of all additional costs and expenses of Pledgee as provided in
this Agreement, this Agreement shall terminate and Pledgee shall deliver to
Pledgor, such of the Pledged Stock as shall not have been sold or otherwise
applied pursuant to this Agreement.
16. Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Stock while held pursuant to this Agreement, Pledgee
shall have no duty or liability to preserve rights pertaining to the Pledged
Stock and shall be relieved of all responsibility for the Pledged Stock upon
surrendering it or tendering surrender of it to Pledgor.
17. No course of dealing between Pledgor and Pledgee, nor any
failure to exercise, nor any delay in exercising, any right, power or privilege
of Pledgee granted by this Agreement or by the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege granted by this Agreement or the Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
STOCK PLEDGE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 4
<PAGE> 36
18. Except as provided in Section 7 hereof, the rights and
remedies provided in this Agreement and in the Note and in all other
agreements, instruments, and documents delivered pursuant to or in connection
with the Note, are cumulative and are in addition to and not exclusive of any
rights or remedies provided by law, including, but without limitation, the
rights and remedies of a secured party under the Texas Uniform Commercial Code.
19. The provisions of this Agreement are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision or part thereof in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction or any
other clause or provision in this Agreement in any jurisdiction.
20. This Agreement supersedes any and all other agreements, either
oral or written, between the Pledgor and Pledgee with respect to the subject
matter of this Agreement and contains all of the covenants and agreements
between them with respect to this Agreement.
21. Any notices, consents, demands, requests, approvals, and other
communications to be given under this Agreement by any party to the other shall
be deemed to have been duly given if given in writing and personally delivered,
sent by telegram, telex, or telecopy, or sent by mail, registered or certified,
postage prepaid with return receipt requested, at the address specified beside
each party's signature at the end of this Agreement. Notices delivered
personally or by telegram, telex, or telecopy shall be deemed communicated as
of actual receipt; mailed notices shall be deemed communicated as of 10:00 a.m.
on the third business day after mailing. Any party may change its or his
address for notice hereunder by giving notice of such change in the manner
provided in this paragraph.
22. No change or modification of this Agreement shall be valid or
binding upon the Pledgor or Pledgee unless such change or modification shall be
in writing and signed by both of them. No waiver of any term or condition of
this Agreement shall be enforceable unless it shall be in writing signed by the
party against which or whom it is sought to charged. The waiver by either
party of a breach of any provision of this Agreement by the other shall not
operate or be construed as a waiver of any subsequent breach by such other
party.
23. This Agreement, and the rights and obligations of the parties
to it, shall be governed by and construed in accordance with the laws of the
State of Texas and shall be performable in Dallas County, Texas. Venue of any
litigation arising pursuant to this Agreement shall be in a court of competent
jurisdiction in Dallas County, Texas.
24. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs, and necessary disbursements in addition
to any other relief to which he or it may be entitled.
25. Neither Pledgor nor Pledgee may assign this Agreement without
the prior written consent of the other party, which consent may be withheld in
its or his sole discretion.
STOCK PLEDGE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 5
<PAGE> 37
26. This Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of Pledgor and Pledgee.
27. This Agreement may be executed in counterparts, each of which
shall constitute an original, but all of which shall constitute one and the
same document.
The parties hereto have duly executed this Agreement as of the date
and year first above written.
The Physician Group, P.A., Pledgor
5215 North O'Connor Blvd., Suite 1800
Irving, Texas 75039
By:
-------------------------------------
Donald F. Angle, M.D., President
Robert G. Duchouquette, M.D., Pledgee
4435 Laren Lane
Dallas, Texas 75244
----------------------------------------
Robert G. Duchouquette, M.D.
STOCK PLEDGE AGREEMENT
DUCHOUQUETTE/PHYSICIAN GROUP 6
<PAGE> 38
SECURITY AGREEMENT
This Security Agreement (this "Agreement") is made and entered into
effective as of September 20, 1996, by and between, ROBERT G. DUCHOUQUETTE,
M.D., P.A., a Texas professional association, ("Grantor"), and ROBERT G.
DUCHOUQUETTE, M.D., an individual resident of Texas ("Secured Party").
Pursuant to that one certain Stock Purchase Agreement (the "Stock
Purchase Agreement") entered into on September 20, 1996, by Grantor, Secured
Party and The Physician Group, P.A., a Texas professional association
("Physician Group"), Physician Group acquired 1,000 shares of the issued and
outstanding capital stock, par value $0.10 per share, of Grantor (the
"Duchouquette P.A. Stock") which represents all of the issued and outstanding
shares of stock of Duchouquette P.A.
As part of the consideration for the Duchouquette P.A. Stock acquired
by Physician Group pursuant to the Stock Purchase Agreement, Physician Group
executed and delivered that one certain Secured Promissory Note dated September
20, 1996 in the principal amount of $843,750.00 (the "Note") to Secured Party
(a copy of the Note is attached as Exhibit 1).
As an additional inducement to Secured Party to accept the Note as
part of the consideration for the Duchouquette P.A. Stock and as additional
security for the prompt satisfaction of all the terms and conditions of the
Note, Physician Group executed a Pledge Agreement of even date herewith (the
"Pledge Agreement") and pledged the Duchouquette P.A. Stock to Secured Party
and granted Secured Party a lien on and security interest in the Duchouquette
P.A. Stock (a copy of the Pledge Agreement is attached as Exhibit 2).
As a result of Physician Group's execution and delivery of the Note to
Secured Party, Physician Group is indebted to Secured Party in the principal
amount of Eight Hundred Forty Three Thousand Seven Hundred Fifty Dollars
($843,750.00) pursuant to Note.
It is a condition to acceptance by Secured Party of the Note that
Physician Group, as the new sole shareholder of Grantor, cause Grantor grant a
security interest to Secured Party in all of the assets and property of Grantor
(Duchouquette P.A.).
In consideration of the foregoing recitals and the mutual covenants
and obligations of the parties set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Defined Terms. Unless otherwise defined herein, the following
terms shall have the following meanings:
(a) "Collateral" has the meaning assigned in Section 2 of
this Agreement.
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 1
<PAGE> 39
(b) "Employment Agreements" has the meaning assigned in
the Stock Purchase Agreement.
(c) "Event of Default" has the same meaning as assigned
to that term in paragraph 5 of the Note.
(d) "Lien" means with respect to any asset, mortgage,
pledge, charge, security interest, or encumbrance of any kind in respect of
such asset, including (without limitation) the rights of a lessor under any
lease of property, real or personal, which would be capitalized on a balance
sheet of the lessee prepared as of such date in accordance with generally
accepted accounting principles (in this definition, a "Capital Lease") to the
asset which is the subject of such Capital Lease. For purposes of this
Agreement, a person or entity shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, Capital Lease or other title
retention agreement relating to such asset.
(e) "Loan Documents" means the Note, the Pledge
Agreement, this Agreement, and all other agreements and instruments relating to
the indebtedness evidenced thereby.
(f) "Maximum Lawful Rate" means the maximum rate (or, if
the context so permits or requires, an amount calculated at such rate) of
interest which, at the time in question would not cause the interest charged on
the loan evidenced by the Loan Documents at such time to exceed the maximum
amount which Secured Party would be allowed to contract for, charge, take,
reserve, or receive under applicable law after taking into account, to the
extent required by applicable law, any and all relevant payments or charges
under the Loan Documents.
(g) "Obligations" means all present and future
indebtedness, obligations, and liabilities, and all renewals and extensions
thereof, or any part thereof, of Grantor to Secured Party arising pursuant to
the Loan Documents, and all interest accrued thereon and reasonable costs,
expenses, and attorneys' fees incurred in the enforcement or collection
thereof.
(h) "Proceeds" means all "Proceeds" as such term is
defined in Section 9.306(a) of the UCC.
(i) "UCC" means the Uniform Commercial Code as from time
to time in effect in the State of Texas.
2. The Collateral. The Collateral of this Security Agreement is
all of the assets and property of Grantor, including, but not necessarily
limited to, the following (collectively the "Collateral"):
(a) All furniture and equipment, whether now owned or
hereafter acquired, including, but not limited to fixtures, furnishings and
machinery;
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 2
<PAGE> 40
(b) All present and future attachments, accessories,
replacements and proceeds of the equipment, furnishings and machinery described
in clause (a) of this paragraph;
(c) All receivables, whether now existing or hereafter
acquired;
(d) All inventory of every nature, description or type
whatsoever in which Grantor now has, or hereafter acquires an interest;
(e) All accounts, contract rights, general intangibles,
chattel paper, and proceeds arising from or by virtue of, or from the sale or
other disposition of or collections with respect to, all or any part of the
property or other rights described in the foregoing clauses (a), (b), (c) or
(d) above; and
(f) All the patient records and other related information
of the medical practice carried on by Secured Party at 3604 Beltline Road,
Dallas, Texas 75234.
The Collateral covered by this Security Agreement also includes the
proceeds of any and all property described above, including, but not limited to
(i) any and all proceeds of any insurance, causes and rights of action,
settlements thereof, judicial and arbitration judgments and awards, indemnity,
warranty or guaranty payable to Grantor from time to time with respect to any
of the Collateral, (ii) any and all payments (in any form whatsoever) made or
due and payable to Grantor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental department, commission, board,
bureau, authority, agency or body (domestic or foreign), and (iii) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
3. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration, or otherwise) of the Obligations, Grantor hereby
assigns, mortgages, pledges, and hypothecates to Secured Party, and hereby
grants to Secured Party a continuing first and prior lien and security
interest, in the Collateral."
4. Representations and Warranties. Grantor hereby represents and
warrants that:
(a) Location of Tangible Property. The Assets of Grantor
are kept and will continue to be kept at its place of business, which is
located at 3604 Beltline Road, Dallas, Texas 75234.
(b) Chief Executive Office. Grantor's chief executive
office is located at 5215 North O'Connor Blvd., Suite 1800, Irving, Texas
75039.
(c) Power and Authority; Authorization. Grantor has the
power and authority and the legal right to execute and deliver, to perform its
obligations under, and to grant the Liens
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 3
<PAGE> 41
and security interests in the Collateral pursuant to, this Agreement and has
taken all necessary association action to authorize its execution, delivery,
and performance of, and grant of the Liens and security interests in the
Collateral pursuant to, this Agreement.
5. Covenants. Grantor covenants and agrees with Secured Party
that from and after the date of this Agreement and until the Obligations are
paid in full:
(a) Further Documentation. At any time and from time to
time, upon the written request of Secured Party, Grantor will promptly and duly
execute and deliver such further assignments, certificates, supplemental
writings, instruments, and documents and take such further action as Secured
Party may reasonably request for the purpose of obtaining or preserving the
full benefits of this Agreement and of the rights and powers granted in this
Agreement, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens and security interests evidenced by this
Agreement. A carbon, photographic, or other reproduction of this Agreement
shall be sufficient as a financing statement for filing in any jurisdiction.
(b) Right of Inspection. Secured Party and his
representatives shall also have the right upon reasonable notice and during
normal business hours to enter into and upon any premises where any of the
Collateral is located for the purpose of inspecting the same, observing its use
or otherwise protecting his interests in the Collateral. Grantor shall pay the
costs incurred by Secured Party in connection with any such exercise of his
rights pursuant to this subsection.
(c) Changes in Locations, Name, etc. Grantor will not
(i) change the location of its chief executive office from that specified in
Section 4(b), (ii) permit any of the Collateral to be kept at a location other
than those specified in Section 4(a), or (iii) change its name, identity, or
corporate structure to such an extent that any financing statement filed by
Secured Party in connection with this Agreement would become seriously
misleading, unless it shall give prior written notice as soon as practicable
thereof and prior to effecting any such change take such steps as Secured Party
may deem necessary or advisable to continue the perfection and priority of the
security interest granted pursuant to this Agreement.
(d) Sale, Lease, etc. Grantor will not, without written
consent of Secured Party, sell, contract to sell, lease, encumber or dispose of
the Collateral, or any interest in it, other than in the ordinary course of
business, until this Security Agreement and the Obligations have been fully
satisfied.
(e) Maintenance of Collateral. Grantor will keep the
Collateral in good condition and free from liens and other security interests
other than those granted by the Loan Documents to Secured Party, will not
encumber the Collateral or permit it to be affixed to real or personal property
without the prior written consent of Secured Party and will not use the
Collateral illegally.
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 4
<PAGE> 42
(f) Insurance. Grantor or any affiliate will insure the
Collateral against such casualties and in such amounts as Secured Party may
from time to time reasonably require. All insurance policies shall be written
for the benefit of Grantor and Secured Party as their interests may appear, and
copies of such policies shall be furnished to Secured Party at its request.
All policies of insurance shall provide at least ten (10) days' prior written
notice of cancellation to Secured Party.
(g) Taxes. Grantor will pay promptly when due all taxes
and assessments upon the Collateral.
(h) Records. Grantor will, at all times, maintain
accurate books and records with respect to the Collateral.
(i) Material Adverse Changes. Grantor will notify the
Secured Party of any material adverse change occurring in or to the Collateral
or in any fact or circumstance warranted or represented by Grantor in this
Security Agreement or furnished to the Secured Party, or if any Event of
Default occurs, prior to or immediately following the occurrence of the latter.
6. Remedies.
(a) If an Event of Default shall occur, Secured Party may
exercise, in addition to all other rights and remedies granted to it in this
Agreement and in the other Loan Documents, all rights and remedies of a secured
party under the UCC.
(b) Without limiting the generality of the foregoing, or
any other right available to Secured Party pursuant to this Agreement, Secured
Party, without demand of performance or other demand, presentment, protest,
advertisement, or notice of any kind (except any notice required by law or by
any of the Loan Documents) to or upon Grantor or any other party (all and each
of which demands, offenses, advertisements, and notices are hereby waived,
except as provided for in the Loan Documents), may in such circumstances
forthwith collect, receive, appropriate, and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or otherwise dispose of, and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels
at public or private sale or sales, at any exchange, broker's board or office
of Secured Party or elsewhere.
(c) Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold.
(d) Grantor further agrees, at Secured Party's request,
to assemble, or cause the assembly of, the Collateral and make it available to
Secured Party at Grantor's premises.
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 5
<PAGE> 43
(e) If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least ten (10) days before such sale or other
disposition.
7. Rights Cumulative. All rights and remedies granted to the
Secured Party by this Agreement are cumulative of each other and of every other
right or remedy which the Secured Party may otherwise have at law or in equity
or under any other contract or other writing for the enforcement of the
Security Interests granted in this Agreement or in the payment of the Note or
the Obligations, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
8. Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable, this Agreement
shall be construed and enforced as if such illegal, invalid, or unenforceable
provision had never comprised a part thereof, and the remaining provisions
thereof shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance therefrom so
as to achieve the original intent of Grantor and Secured Party. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision there shall be
added automatically as part of this Agreement a provision as similar in terms
to such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
9. Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
10. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; except that Grantor may not assign or
otherwise transfer any of its rights under this Agreement.
11. Limitation on Interest.
(a) Regardless of any provision contained in this
Agreement or in the other Loan Documents, Secured Party shall never be entitled
to receive, collect, or apply, as interest on the loan evidenced thereby, any
amount in excess of the Maximum Lawful Rate, and in the event Secured Party
ever receives, collects, or applies as interest any such excess, such amount
which would be deemed excessive interest shall be deemed a partial prepayment
of principal and treated hereunder as such; and if the loan is paid in full,
any remaining excess shall promptly be paid to Grantor.
(b) In determining whether or not the interest paid or
payable under any specific contingency exceeds the Maximum Lawful Rate, Grantor
and Secured Party shall, to the extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 6
<PAGE> 44
and (iii) amortize, prorate, allocate, and spread, in equal parts, the total
amount of the interest throughout the entire contemplated term of the Note, so
that the interest rate is the Maximum Lawful Rate throughout the entire term of
the Note.
(c) If the unpaid principal balance of the Note is paid
and performed in full prior to the end of the full contemplated term thereof,
and if the interest received for the actual period of existence thereof exceeds
the Maximum Lawful Rate, Secured Party shall refund to Grantor the amount of
such excess and, in such event, Secured Party shall not be subject to any
penalties provided by any laws for contracting for, charging, taking,
reserving, or receiving interest in excess of the Maximum Lawful Rate.
12. Applicable Law. THIS AGREEMENT IS BEING EXECUTED AND
DELIVERED, AND IS INTENDED TO BE PERFORMED, IN THE STATE OF TEXAS AND THE
INTERNAL LAWS (BUT NOT THE CONFLICTS OF LAWS RULES) OF SUCH STATE SHALL GOVERN
THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF THIS AGREEMENT,
EXCEPT TO THE EXTENT FEDERAL LAWS OTHERWISE GOVERN THE VALIDITY, CONSTRUCTION,
ENFORCEMENT, AND INTERPRETATION OF ALL OR ANY PART OF THIS AGREEMENT.
13. Jurisdiction. Grantor CONSENTS AND AGREES TO THE JURISDICTION
OF ANY STATE COURT SITTING IN DALLAS COUNTY, STATE OF TEXAS, AND TO THE
JURISDICTION OF ANY FEDERAL COURT SITTING IN THE NORTHERN DISTRICT OF TEXAS,
AND WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO
ANY ACTION INSTITUTED THEREIN, AND AGREES THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN SECURED PARTY, ON THE ONE HAND, AND Grantor, ON THE OTHER
HAND, OR THE CONDUCT OF ANY PARTY IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
14. Notices. Any notices, consents, demands, requests, approvals,
and other communications to be given under this Agreement by any party to the
others shall be deemed to have been duly given if given in writing and
personally delivered, sent by courier, sent by telegram or telecopy, or sent by
mail, registered or certified, postage prepaid with return receipt requested,
at the address specified beside each party's signature at the end of this
Agreement. Notices delivered personally or by courier, telegram, or telecopy
shall be deemed communicated as of actual receipt; mailed notices shall be
deemed communicated as of 10:00 a.m. on the third business day after mailing.
Any party may change its address for notice hereunder by giving notice of such
change in the manner provided in this Section.
15. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which shall constitute
one and the same document. Faxed signatures to this Agreement will be binding
and enforceable without the requirement that the manually executed signature
page be delivered.
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 7
<PAGE> 45
16. No Waiver. No course of dealing between Secured Party and
Grantor, nor any failure to exercise, nor any delay in exercising on the part
of Secured Party any right hereunder or under the Loan Documents shall operate
as a waiver hereof or thereof; nor shall any single or partial exercise of any
right hereunder or thereunder preclude any other or further exercise thereof or
the exercise of any other right.
17. Amendments and Modifications. This Agreement shall be
modified or amended only in a written document, signed by Secured Party and
Grantor.
18. FINAL AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
COLLECTIVELY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
19. Termination. Upon the satisfaction in full of all obligations
and the satisfaction of all additional costs and expenses of Secured Party as
provided in this Agreement, this Agreement shall terminate and Secured Party
shall deliver to Grantor such of the Collateral as shall not have been sold or
otherwise applied pursuant to this Agreement.
20. Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which, for all purposes, is to be deemed an
original, and all of which collectively constitute one agreement, but in making
proof of this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
Grantor has caused this Agreement to be duly executed and delivered as
of the date first above written.
ROBERT G. DUCHOUQUETTE, M.D., P.A. - GRANTOR:
By:
----------------------------------------------
The Physician Group, P.A. - Sole Shareholder
Donald F. Angle, M.D., President
5215 North O'Connor Blvd., Suite 1800
Irving, Texas 75039
(972) 401-8300
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 8
<PAGE> 46
ROBERT G. DUCHOUQUETTE, M.D.- SECURED PARTY:
----------------------------------------------
Robert G. Duchouquette, M.D., Individually
4435 Laren Lane
Dallas, Texas 75244
(972) 239-8766
SECURITY AGREEMENT
PHYSICIAN GROUP\R.G. DUCHOUQUETTE, M.D. 9
<PAGE> 1
EXHIBIT 2.11
NON QUALIFIED
STOCK OPTION AGREEMENT
This Non Qualified Stock Option Agreement (this "Agreement") is
entered into on September 20, 1996, by THE COMPANY DOCTOR, a Delaware
corporation, ("Grantor") and ROBERT G. DUCHOUQUETTE, M.D. ("Holder").
On September 20, 1996, Holder and The Physician Group, P.A., a Texas
professional association ("Angle P.A.") entered into that one certain Stock
Purchase Agreement (the "Stock Purchase Agreement") whereby Angle P.A. acquired
1,000 shares of the issued and outstanding capital stock, par value $0.10 per
share, of Robert G. Duchouquette, M.D. P.A. ("Duchouquette P.A."), which
represented all of the issued and outstanding shares of stock of Duchouquette
P.A. (the "Duchouquette P.A. Stock").
Angle P.A. is a party to a Practice Management, Consulting, and Clinic
Services Agreement (the "Practice Management Agreement") with Grantor, dated
November 11, 1995.
Angle P.A. and Grantor have entered into an amendment to the Practice
Management Agreement pursuant to which, among other things, Grantor has granted
to Angle P.A. the right to receive shares of Common Stock of Grantor and
Grantor has agreed to issue options to purchase additional shares of its Common
Stock to Holder, as an inducement to Holder to enter into the Stock Purchase
Agreement with Angle P.A.
In compliance with the provisions of Section 4(d) of the Stock
Purchase Agreement, Angle P.A. also caused Grantor to sign and enter into that
one certain Registration Rights Agreement (the "Registration Rights Agreement")
and deliver it to Duchouquette as part of the consideration for the
Duchouquette Stock acquired by Angle P.A.
In consideration of the foregoing recitals and the mutual covenants
and obligations of the parties set forth in this Agreement, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. GRANT OF OPTION.
(a) As an inducement to Holder to enter into the
employment of Angle P.A., pursuant to a Physician Employment Agreement
("Physician Agreement") and a Regional Medical Director Employment Agreement
("Director Agreement"), both between Angle P.A. and Holder and both dated
September 20, 1996, Grantor hereby grants to Holder contingent options (each of
which is referred to as an "Option") to purchase shares of Common Stock, $0.01
par value ("Stock") of Grantor, subject to the terms and conditions of this
agreement.
STOCK OPTION AGREEMENT
R.G. DUCHOUQUETTE, M.D. 1
<PAGE> 2
(b) Holder is hereby granted an option to purchase a
number of shares of stock equal to the Annual Option Amount (defined below).
(c) If Holder is then employed by Angle P.A. under either
his Physician Agreement or his Director Agreement, Holder shall be granted an
Option to purchase a number of shares of Stock equal to the Annual Option
Amount (defined below) once per year, on the anniversary of the date of this
Agreement (the "Option Date").
(d) As used herein, the "Option Shares" shall mean the
shares referred to in subsections (b) and (c) of this section.
(e) Notwithstanding any other provision of this
Agreement, if on any Option Date Holder is not employed by Angle P.A. under
either his Physician Agreement or his Director Agreement, Holder shall not be
granted, and shall not have, an option to purchase any shares relating to that
Option Date or any subsequent Option Date and (except as to shares of Stock
which Holder has previously become entitled to purchase by an Option granted
while Holder was so employed on a prior Option Date) this Agreement shall
terminate and be of no further effect.
(f) As used herein, the "Annual Option Amount" shall mean
that number of shares of Stock which equals $100,000 divided by the average of
the closing trading price on NASDAQ of a share of Stock for the five most
recent trading days before the Option Date.
(g) If on any Option Date shares of Stock are not listed
on NASDAQ, but are listed on another exchange, then the closing price on that
exchange shall be utilized in determining the Annual Option Amount for that
year.
(h) If on any Option Date shares of Stock are not listed
on NASDAQ or any other exchange, then the Annual Option Amount shall equal
$100,000 divided by the fair market value of a share of Stock on the business
day immediately preceding the Option Date, as determined by the Board of
Directors of Grantor in its discretion.
(i) The shares of stock which Holder has the right to
purchase pursuant to the Options granted under subsection (b) and (c) of this
section are herein referred to as the "Option Shares".
2. PURCHASE PRICE.
(a) The price per share payable by Holder to Grantor upon
the exercise of an Option (the "Option Price") shall be the average of the
closing trading price on NASDAQ of a share of Stock for the five most recent
days before the date of the grant of the Option under Section 1(b) or (c).
STOCK OPTION AGREEMENT
R.G. DUCHOUQUETTE, M.D. 2
<PAGE> 3
(b) If on such determination date shares of Stock are not
listed on NASDAQ, but are listed on another exchange, then the closing price on
that exchange shall be utilized in determining the Option Price.
(c) If on such determination date shares of Stock are not
listed on NASDAQ or any other exchange, then the Option Price shall be the fair
market value of a share of Stock on the business day immediately preceding the
Option Date, as determined by the Board of Directors of Grantor in its
discretion.
(d) The Option Price shall be payable in cash or by
certified or cashier's check or in shares of Stock held by Holder..
3. EXERCISE.
(a) Holder may purchase any number of the "Option Shares"
in multiples of 1,000 shares at any time during the Option Term (defined
below) by delivering to Grantor (i) written notice of Holder's election to
exercise the Option and of the number of Option Shares to be purchased pursuant
thereto, (ii) payment of the Option Price for such Option Shares, and (iii)
documentation in form reasonably satisfactory to Grantor to ensure compliance
with any state or federal law then in effect, including (without limitation) an
investment letter in the form of that attached hereto as Exhibit 1.
(b) Upon Holder's compliance with subsection (a) of this
section, Grantor shall promptly deliver, or cause to be delivered by its
transfer agent, to Holder certificates representing the Option Shares then
purchased.
(c) Holder need not exercise his Option and purchase
Option Shares earned on different Option Dates at the same time.
(d) As used herein, the "Option Term" as to any Option
Shares shall mean the period beginning on the date of the grant of the Option
under Sections 1(b) or (c) and ending on the sixth (6th) anniversary of such
Option Date.
4. RIGHTS AS STOCKHOLDER. Holder shall have no rights as a
stockholder with respect to any Option Shares, until the delivery of a
certificate or certificates to him representing such shares. Except as
provided in Paragraph 5, no adjustments shall be made for dividends or other
rights for which the record date is prior to the issuance of such certificate
or certificates.
5. CAPITAL ADJUSTMENTS. The Option Shares shall be subject to
such adjustments as are appropriate to reflect any stock dividend, stock split,
share combination, exchange of shares, recapitalization, merger, consolidation,
separation, liquidation, or the like, of Grantor.
6. ASSIGNABILITY. Neither this Agreement nor any right created
hereby shall be assignable by either party.
STOCK OPTION AGREEMENT
R.G. DUCHOUQUETTE, M.D. 3
<PAGE> 4
7. HOLDER ACKNOWLEDGMENTS. Holder acknowledges and agrees that
no shares of Stock issued to him upon exercise of the Option granted hereby
will be registered under state or federal securities laws. Holder further
acknowledges and agrees that the Option granted hereby is not a qualified
incentive stock option for federal income tax purposes.
8. MISCELLANEOUS.
(a) Notices. Any notices, consents, demands, requests,
approvals, and other communications to be given under this Agreement by any
party to the other shall be deemed to have been duly given if given in writing
and personally delivered, sent by courier, sent by telegram, telex, or
telecopy, or sent by mail, registered or certified, postage prepaid with return
receipt requested, at the address specified beside each party's signature at
the end of this Agreement. Notices delivered personally or by telegram, telex,
or telecopy shall be deemed communicated as of actual receipt; mailed notices
shall be deemed communicated as of 10:00 a.m. on the third business day after
mailing. Any party may change its or his address for notice hereunder by
giving notice of such change in the manner provided in this Section.
(b) Entire Agreement. This Agreement supersedes any and
all other agreements, either oral or written, between the parties hereto with
respect to the subject matter hereof and contains all of the covenants and
agreements between the parties with respect thereto.
(c) Modification and Waiver. No change or modification
of this Agreement shall be valid or binding upon the parties hereto unless such
change or modification shall be in writing and signed by all the parties
hereto. No waiver of any term or condition of this Agreement shall be
enforceable unless it shall be in writing signed by the party against which or
whom it is sought to charged. The waiver by either party of a breach of any
provision of this Agreement by the other shall not operate or be construed as a
waiver of any subsequent breach by such other party.
(d) Governing Law. This Agreement, and the rights and
obligations of the parties hereto, shall be governed by and construed in
accordance with the laws of the State of Texas and shall be performable in
Dallas County, Texas. Venue of any litigation arising hereunder shall be in a
court of competent jurisdiction in Dallas County, Texas.
(e) Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which
shall constitute one and the same document.
(f) Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief to which he or it may be
entitled.
STOCK OPTION AGREEMENT
R.G. DUCHOUQUETTE, M.D. 4
<PAGE> 5
(g) Assignment. Neither party may assign this Agreement
without the prior written consent of the other party hereto, which consent may
be withheld in its or his sole discretion.
(i) Binding Effect. This Agreement shall be binding upon
the parties hereto, together with their respective personal representatives,
heirs, successors, and permitted assigns.
The parties hereto have duly executed this Agreement as of the date
first above written.
The Company Doctor
By: /s/ Ken Aiken
----------------------------------------
Ken Aiken, Vice President
5215 North O'Connor Blvd, Suite 1800
Irving, Texas 75039
(972) 401-8300
/s/ Robert G. Duchouquette, M.D.
---------------------------------------------
Robert G. Duchouquette, M.D.
4435 Laren Lane
Dallas, Texas 75244
(972) 239-8766
STOCK OPTION AGREEMENT
R.G. DUCHOUQUETTE, M.D. 5
<PAGE> 1
EXHIBIT 2.12
THE COMPANY DOCTOR
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is entered into
as of September 20, 1996, by ROBERT G. DUCHOUQUETTE, M.D., an individual,
("Duchouquette") and THE COMPANY DOCTOR, a Delaware corporation, ("TCD").
Pursuant to that one certain Stock Purchase Agreement (the "Stock
Purchase Agreement") entered into on September 20, 1996, by Duchouquette, The
Physician Group, P.A. ("Group") and Robert G. Duchouquette, M.D., P.A., a Texas
professional association ("Duchouquette P.A."), Group acquired 1,000 shares of
the issued and outstanding capital stock, par value $0.10 per share, of
Duchouquette P.A., which represents all of the issued and outstanding shares of
stock of Duchouquette P.A. (the "Duchouquette Stock").
As part of the consideration for the Duchouquette Stock acquired by
Group, pursuant to the Stock Purchase Agreement, Group caused 63,380 shares of
unregistered Common Stock, par value $0.01 per share, of TCD to be delivered to
Duchouquette (the "TCD Shares").
Pursuant to the provisions of Section 4(e) of the Stock Purchase
Agreement, Group agreed to cause TCD to execute and deliver this Agreement to
Duchouquette whereby upon Duchouquette's written request made to TCD at any
time after the Closing of the Stock Purchase Agreement and before December 15,
1996, TCD shall file a registration statement under the Securities Act relating
to, and shall cause to be effective, the registration of the TCD Shares under
the Securities Act not later than February 28, 1997.
The execution of this Agreement was a condition to the Closing of the
Stock Purchase Agreement and the transactions contemplated by it.
In consideration of the mutual covenants and agreements set forth in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound by this Agreement, agree as follows:
1. DEFINITIONS. The following terms shall have the following
respective meanings for purposes of this Agreement:
"Commission" shall mean the United States Securities and
Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect from time to time.
"Registration Date" shall mean, with respect to each registration of
Registrable Securities hereunder (or any portion thereof), the date or dates on
which the registration statement including
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 1
<PAGE> 2
such Registrable Securities shall have become effective under the Securities
Act; provided, however, that if any Registrable Securities are included in a
"shelf" registration statement under Rule 415 under the Securities Act, the
"Registration Date" shall mean the date on which the final prospectus covering
such Registrable Securities (or any portion thereof) is transmitted for filing
with the Commission pursuant to Rule 424(b) under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect from time to time.
2. AGREEMENT TO REGISTER TCD SHARES. Pursuant to the provisions
of Section 4(d) of the Stock Purchase Agreement, TCD hereby agrees that
Duchouquette may make a written request to TCD (the "Registration Request") at
any time after the Closing of the Stock Purchase Agreement and before December
15, 1996, to register the TCD Shares then held by him pursuant to (i) the
Securities Act and (ii) the securities or "blue sky" laws of any jurisdiction
designated by him (the "Registration").
3. AGREED EFFECTIVE DATE OF THE REGISTRATION. TCD hereby further
agrees to cause the Registration to be effective not later than February 28,
1997, provided the Registration Request is not withdrawn by Duchouquette prior
to the effective date of the Registration.
4. RIGHT TO "PUT" THE TCD SHARES TO TCD.
(a) If TCD fails to cause the Registration to be
effective by February 28, 1997, Duchouquette shall have the right to rescind
the transfer of the TCD Shares made to him by TCD, pursuant to the Stock
Purchase Agreement, and "put" the TCD Shares back to TCD by requiring TCD to
purchase the TCD Shares from him (the "Put").
(b) The Put shall be exercisable by Duchouquette giving
written notice to TCD, subsequent to February 28, 1997, but prior to April 28,
1997, that he is rescinding the transfer of the TCD Shares and putting them
back to TCD (the "Rescission Notice").
(c) Within 21 calendar days of its receipt of the
Rescission Notice, TCD shall pay Duchouquette the greater of (i) $562,500.00 or
(ii) the fair market value of the TCD Shares.
(d) For purposes of this section, the fair market value
of the TCD Shares shall be equal to the number of TCD Shares then held by
Duchouquette multiplied by the average NASDAQ closing price of the Common Stock
of TCD for the five trading days immediately after TCD's receipt of the
Rescission Notice.
(e) Upon TCD's tender of the payment for the TCD Shares
to him, Duchouquette shall immediately transfer and deliver the TCD Shares,
endorsed in blank, to TCD free and clear of any liens, liabilities, security
interests, claims or encumbrances.
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 2
<PAGE> 3
5. REGISTRATION PROCEDURES. Whenever TCD is required by this
Agreement to effect the registration of any of the TCD Shares, TCD will,
subject to Section 3, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission the requisite
registration statement with respect to the TCD Shares and use its best efforts
to cause the registration statement to become and remain effective for a period
of time required for the disposition of the TCD Shares by Duchouquette.
(b) Prepare and file with the Commission such amendments
and supplements to the registration statement and the prospectus used in
connection therewith as may be necessary to keep the registration statement
effective and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the sale or other disposition of the TCD Shares
covered by the registration statement until the earlier of such time as all of
the TCD Shares have been disposed of by Duchouquette.
(c) As soon as available, furnish to Duchouquette the
number of copies of the applicable registration statement and of each amendment
or supplement to it, and of each prospectus (including each preliminary
prospectus or summary prospectus) and such other documents, as Duchouquette may
reasonably request.
(d) Use its best efforts to register or qualify the TCD
Shares covered by such registration statement under the securities or blue sky
laws of up to twelve (12) jurisdictions within the United States as
Duchouquette shall request and do such other reasonable acts and things as may
be required of it to enable Duchouquette to consummate the disposition in the
jurisdictions of the TCD Shares included in such registration statement.
(e) TCD shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it is
not then qualified or to file any general consent to service of process.
(f) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, but no later than 18
months after the Registration Date, an earnings statement which shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
(g) It shall be a condition precedent to the obligation
of TCD to take any action pursuant to this Agreement in respect of the TCD
Shares which are to be registered that Duchouquette shall furnish to TCD such
information regarding the securities held by him and the intended method of
disposition thereof as TCD shall reasonably request and as shall be required in
connection with such registration by TCD.
6. EXPENSES. All expenses incident to performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees (including all filing fees
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 3
<PAGE> 4
incident to filing with the National Association of Securities Dealers, Inc.),
listing fees and expenses, printing expenses, fees and disbursements of counsel
and accountants for TCD, expenses of any audits incident to or required by any
such registration and expenses of complying with the securities or blue sky
laws of any jurisdictions, shall be paid by TCD, provided, that TCD shall not
be liable for the fees and disbursements of counsel for Duchouquette or any
transfer taxes, fees, discounts or commissions in respect of the TCD Shares
sold by Duchouquette.
7. INDEMNIFICATION.
(a) In the event of any registration of any TCD Shares
under the Securities Act pursuant to this Agreement, TCD shall indemnify and
hold harmless Duchouquette against any losses, claims, damages or liabilities,
joint or several, to which Duchouquette may become subject under the Securities
Act or any other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon:
(1) any alleged untrue statement of any material fact
contained, as of the Registration Date, in any Registration Statement
under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or
(2) any alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(b) TCD shall reimburse Duchouquette for any legal or any
other expenses reasonably incurred by Duchouquette in connection with
investigating or defending any such loss, claim, damage, liability or action
described in subsection (a) of this section.
(c) TCD shall not be liable in any case described in
subsection (a) of this section to the extent that any such loss, claim, damage
or liability arises out of or is based upon any alleged untrue statement or
alleged omission made in such Registration Statement, preliminary prospectus,
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to TCD by Duchouquette specifically for use
therein or (in the case of any registration if TCD is not a party to the
underwriting agreement) so furnished for such purpose by any underwriter.
(d) This indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Duchouquette and shall
survive the transfer of the TCD Shares by Duchouquette.
(e) In the event of any registration of any TCD Shares
under the Securities Act pursuant to this Agreement, Duchouquette agrees to
indemnify and hold harmless TCD and its directors and officers and each other
person, if any, who controls TCD within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to which
TCD
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 4
<PAGE> 5
or any such director or officer or any such person may become subject under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon information provided in writing to TCD by Duchouquette
for use in connection with such registration and which is contained, on the
Registration Date, in any Registration Statement under which TCD Shares were
registered under the Securities Act at the request of Duchouquette, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto.
8. MISCELLANEOUS.
(a) No Inconsistent Agreements. TCD has not and will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to Duchouquette in this Agreement.
(b) Attorney's Fees. In any action or proceeding brought
to enforce any provision of this Agreement or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recovery reasonable attorney's fees in addition to any other available remedy.
(c) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waiver or consents to departure from the provisions hereof
may not be given unless in writing signed by TCD and Duchouquette.
(d) Notices. Any notices, consents, demands, requests,
approvals, and other communications to be given under this Agreement by any
party to the other shall be deemed to have been duly given if given in writing
and personally delivered, sent by telegram, telex, or telecopy, or sent by
mail, registered or certified, postage prepaid with return receipt requested,
at the address specified beside each party's signature at the end of this
Agreement. Notices delivered personally or by telegram, telex, or telecopy
shall be deemed communicated as of actual receipt; mailed notices shall be
deemed communicated as of 10:00 a.m. on the third business day after mailing.
Any party may change its or his address for notice hereunder by giving notice
of such change in the manner provided in this paragraph.
(e) Applicable Law. THIS AGREEMENT IS BEING EXECUTED AND
DELIVERED, AND IS INTENDED TO BE PERFORMED, IN THE STATE OF TEXAS AND THE LAWS
OF TEXAS SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND
INTERPRETATION OF THIS AGREEMENT, EXCEPT TO THE EXTENT FEDERAL LAWS OTHERWISE
GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION OF ALL OR
ANY PART OF THIS AGREEMENT.
(f) Jurisdiction. THE PARTIES CONSENT AND AGREE TO THE
JURISDICTION OF ANY STATE COURT SITTING IN DALLAS COUNTY, STATE OF
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 5
<PAGE> 6
TEXAS, AND TO THE JURISDICTION OF ANY FEDERAL COURT SITTING IN THE NORTHERN
DISTRICT OF TEXAS, AND WAIVE ANY OBJECTION BASED ON VENUE OR FORUM NON
CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND AGREE THAT ANY
DISPUTE CONCERNING THE RELATIONSHIP BETWEEN DUCHOUQUETTE, ON THE ONE HAND, AND
TCD, ON THE OTHER HAND, OR THE CONDUCT OF ANY PARTY IN CONNECTION WITH THIS
AGREEMENT OR OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
(g) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
(j) Entire Agreement. This Agreement represents the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof.
(k) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
TCD and Duchouquette have duly executed and delivered this Agreement
as of the date first above written.
THE COMPANY DOCTOR
By: /s/ Ken Aiken
----------------------------------------
Ken Aiken, Vice President
5215 North O'Connor Blvd, Suite 1800
Irving, Texas 75039
(972) 401-8300
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 6
<PAGE> 7
/s/ Robert G. Duchouquette, M.D.
--------------------------------
Robert G. Duchouquette, M.D.
4435 Laren Lane
Dallas, Texas 75244
(972) 239-8766
REGISTRATION RIGHTS AGREEMENT
R.G. DUCHOUQUETTE, M.D. 7
<PAGE> 1
EXHIBIT 10.3.7
COMMERCIAL REAL ESTATE LEASE
This lease is entered into as of the first day of October 1, 1996, by and
between the Landlord and the Tenant hereinafter named, superseding all previous
leases.
ARTICLE I, 1.1
(a) "Landlord": Quad Corners Investments,
Ltd., a Texas Limited
Partnership.
(b) Landlord's address: 4435 Laren Lane, Dallas,
Texas, 75244
(c) "Tenant": The Company Doctor, a
Delaware Corporation. The
Physician Group, P.A., a
Texas Professional
Association.
(d) Tenants' address: 5215 North O'Connor Blvd.,
Suite 1800, Irving, Texas
75039
(e) Tenant's Trade Name: The Company Doctor
(f) "Demised Premises":... in the City of
Farmers Branch, County of
Dallas, State of Texas, and
being 3604 Belt Line Road;
Lot 1, Block 7, Brookhaven
Business Park, Phase 2.
(g) Lease Term: Commencing on the first day of
October, 1996, except as may
be modified by exhibits
attached to this lease (the
"Commencement Date") and
continuing for ten (10) years
and no months.
(h) Minimum guaranteed rental: Eight Thousand
Dollars ($ 8,000.00) per
month, payable in advance,
adjusted annually by the most
recently calculated CPI for
the previous twelve months.
(i) Prepaid rental: Sixteen Thousand Dollars
($16,000.00), being the first
and last months of the lease
term.
(j) Security deposit: Five Thousand Dollars
($5,000), being a deposit by
Tenant to Landlord as
security for the performance
of Tenant's obligations under
this lease. If Landlord
applies any part of the
deposit to cure any default
of Tenant, Tenant shall on
demand, deposit the amount so
applied so that Landlord
shall have a full deposit on
hand at all times during the
term of this lease.
(k) Permitted use: Medical practice.
1
<PAGE> 2
1.2 Each of the foregoing definitions and basic provisions shall
be construed in conjunction with and limited by the references thereto in the
other provisions of this lease.
ARTICLE II. 2.1 In consideration of the obligation of Tenant
to pay rent as herein provided and in consideration of the other terms,
covenants and conditions hereof, Landlord hereby demises and leases to Tenant,
and Tenant hereby takes from Landlord, the Demised Premises as described in
Section I.1 (f), TO HAVE AND TO HOLD said premises for the lease term specified
in Section 1.1 (g), all upon the terms and conditions set forth in this lease.
Landlord further agrees that if Tenant shall perform all of the covenants and
agreements herein required to be performed by Tenant. Tenant shall, subject to
the terms of this lease, at all times during the continuance of this lease have
peaceful and quiet possession of the Demised Premises.
ARTICLE III. 3.1 By occupying the Demised Premises, Tenant
shall be deemed to have accepted the same and to have acknowledged that the
same comply fully with Landlord's covenants and obligations hereunder.
3.2 If this lease is executed before the Demised Premises become
vacant, if any present tenant or occupant of the premises holds over, and
Landlord cannot acquire possession of the Demised Premises prior to the
Commencement Date of this lease, as above defined, Landlord shall not be deemed
to be in default hereinunder, and Tenant agrees to accept possession of the
Demised Premises at such time as Landlord is able to tender the same. Landlord
hereby waives the payment of rent covering any period prior to tender of
possession to Tenant hereinunder.
3.3 Landlord and Tenant each agree that at the request of either
they will execute and deliver a short form lease in recordable form containing
the basic provisions of this agreement, acknowledging that Tenant has accepted
possession and reciting the exact Commencement Date and termination date of
this lease.
ARTICLE IV. 4.1 Rental shall accrue hereunder from the
Commencement Date, and shall be payable to Landlord at the address specified in
Section 1.1 (b) above.
4.2 Tenant shall pay to Landlord minimum guaranteed rental in
monthly installments in the amounts specified in Section 1.1 above. The first
such monthly installment shall be due and payable on or before the Commencement
Date, and subsequent installments shall be due and payable on or before the
first day of each succeeding calendar month during the hereby demised term;
provided that if the Commencement Date is a date other than the first day of a
calendar month, there shall be due and payable on or before such date as
minimum guaranteed rental for the balance of such calendar month a sum equal to
that proportion of the rent specified for the first full calendar month as
herein provided, which the number of days from the Commencement Date to the end
of the calendar month during which the Commencement Date shall fall bears to
the total number of days in such month.
2
<PAGE> 3
4.3 It is understood that the minimum guaranteed rental is payable
on or before the first day of the month (in accordance with Section 4.2 above).
In the event any rental is not received within ten (10) days after its due date
for any reason whatsoever, it is agreed that the amount thus due shall bear
interest at the maximum contractual rate which could legally be charged in the
event of a loan of such rental to Tenant in the state where the Demised
Premises are located (but in no event to exceed 1.5% per month), such interest
to accrue continuously on any unpaid balance due to Landlord by Tenant during
the period commencing with the aforesaid due date and terminating with the
date on which Tenant makes full payment of all amounts owing to Landlord at the
time of said payment. Any such increase shall be payable as additional rent
hereunder and shall be payable immediately on demand.
4.4 If Tenant fails in two (2) consecutive months to make rental
payments within ten (10) days after due, Landlord in order to reduce its
administrative costs, may require, by giving written notice to Tenant (and in
addition to any interest accruing pursuant to Section 4.3 above, as well as any
other rights and remedies accruing pursuant to Article XVII or Article XVIII
below, or any other term, provision of covenant of this lease), that minimum
guaranteed rentals are to be paid quarterly in advance instead of monthly and
that all future rental payments are to be made on or before the due date by
cash, cashier's check, or money order, and that the delivery of Tenant's
personal or corporate check will no longer constitute a payment of rental as
provided in this lease. Any acceptance of a monthly rental payment or of a
personal or corporate check thereafter by Landlord shall not be construed as a
subsequent waiver of said rights.
ARTICLE V. 5.1 The Demised Premises may be used only for the
purpose or purposes specified in Section 1.1 (k) above, and for no other
purposes without the prior written consent of Landlord. Tenant shall not at any
time leave the Demised Premises vacant, but shall in good faith continuously
throughout the term of this lease conduct and carry on in the entire Demised
Premises the type of business for which the Demised Premises are leased.
5.2 Tenant shall not, without Landlord's prior written consent,
keep anything within the premises or on the property or use the premises for
any purpose which increases the insurance premium cost or invalidates any
insurance policy carried on the Demised Premises. All property kept, stored or
maintained within the premises by Tenant shall be at Tenant's sole risk.
5.3 Tenant shall take good care of the Demised Premises and keep
the same free from waste at all times. Tenant shall keep the Demised Premises,
parking lot and sidewalks of the premises in good repair, as well as neat,
clean and free from dirt or rubbish at all times, and shall store all trash and
garbage at Tenant's expense. Tenant will arrange for regular pickup of such
trash and garbage at Tenant's expense. Tenant shall also maintain the lawn and
landscaped areas of the property, including the existing sprinkler system, at
Tenant's expense. Should Tenant fail to comply with the above maintenance
within ten (10) days after written notice delivered to Tenant by Landlord,
Landlord may at its option make such maintenance without liability to Tenant
for any loss or damage which may result to its stock or business by reason of
such maintenance; and Tenant shall pay to Landlord upon demand, as additional
rent hereunder, the cost of such maintenance, plus interest at the maximum
contractual rate which could legally be charged in the event of a loan of such
payment to Tenant in the
3
<PAGE> 4
state where the Demised Premises are located (but in no event to exceed 1.5%
per month), such interest to accrue continuously from the date of payment by
Landlord until repayment by Tenant. At the expiration of this lease, Tenant
shall surrender the Demised Premises in good condition, excepting reasonable
wear and tear and losses required to be restored by Landlord in Section 6.1,
Article XIV and Article XV of this lease.
5.4 Tenant shall procure at its sole expense any permits and
licenses required for the transaction of business in the Demised Premises and
otherwise comply with all applicable laws, ordinances, and governmental
regulations.
ARTICLE VI. 6.1 Landlord shall keep the foundation, the
exterior walls, (except plate glass windows, doors, door closure devices and
other exterior openings; window and door frames, molding, locks and hardware;
lighting, heating, air conditioning, plumbing, and other electrical, mechanical
and electromotive installation, equipment and fixtures; signs, placards,
decorations or advertising and media of any type; and interior painting or
other treatment of exterior walls) and roof of the Demised Premises in good
repair. Landlord, however, shall not be required to make any repairs occasioned
by the act or negligence of Tenant, its agents, employees, subtenants,
licensees and the provisions of the previous sentence are expressly recognized
to be subject to the provisions of Article XIV. In the event that the Demised
Premises should become in need of repairs required to be made by Landlord
hereunder, Tenant shall give immediate written notice thereof to Landlord; and
Landlord shall not be responsible in any way for failure to make any such
repairs until a reasonable time shall have elapsed after receipt by Landlord of
such written notice.
6.2 Tenant shall keep the Demised Premises in good, clean and
habitable condition and shall at its sole cost and expense keep the premises
free of insects, rodents vermin and other pests and make all needed repairs and
replacements, including replacement of cracked or broken glass, except for
repairs and replacements required to be made by landlord under the provisions
of Section 6.1, Article XIV and Article XV. Without limiting the coverage of
the previous sentence, it is understood that Tenant's responsibilities therein
include the repair and replacement of all lighting, heating, air conditioning,
plumbing and other electrical mechanical and electromotive installation,
equipment and fixtures and also include all utility repairs in ducts, conduits,
pipes and wiring and any sewer stoppage located in, under and above the Demised
Premises. If any repairs required to be made by Tenant hereunder are not made
within ten (10) days after written notice delivered to Tenant by Landlord,
Landlord may at its option make such repairs without liability to Tenant for
any loss or damage which may result to its stock or business by reason of such
repairs; and Tenant shall pay to Landlord upon demand, as additional rent
hereunder, the cost of such repairs plus interest at the maximum contractual
rate which could legally be charged in the event of a loan of such payment to
Tenant in the state where the Demised Premises are located (but in no event to
exceed 1.5% per month), such interest to accrue continuously from the date of
payment by Landlord until repayment by Tenant. At the expiration of this lease,
Tenant shall surrender the Demised Premises in good condition, excepting
reasonable wear and tear and losses required to be restored by Landlord in
Section 6.1, Article XIV and Article XV of this lease.
6.3 Fixtures and appliances, including the tub whirlpool and
kitchen appliances not owned by the P.A. will be included in the lease of the
Demised Premises and shall
4
<PAGE> 5
remain on the premises. Personal property on the premises, such as artwork
throughout the Demised Premises are not included in this lease and can be
removed by the Landlord at their discretion.
ARTICLE VII. 7.1 Tenant shall not make any alterations,
additions or improvements to the Demised premises without the prior written
consent of Landlord, except for the installation of unattached, movable trade
fixtures which may be installed without drilling, cutting or otherwise defacing
the premises. All alterations, additions, improvements and fixtures (other than
Tenant's unattached, readily movable furniture and office equipment) which may
be made or installed by either party upon the Demised Premises shall remain
upon and be surrendered with the premises and become the property of Landlord
at the termination of this lease, unless Landlord requests their removal in
which event Tenant shall remove the same and restore the premises to their
original condition at Tenant's expense.
7.2 All construction work done by Tenant within the Demised
Premises shall be performed in a good and workmanlike manner, in compliance
with all governmental requirements. Tenant agrees to indemnify Landlord and
hold Landlord harmless against any loss, liability or damage resulting from
such work, and Tenant shall, if requested by Landlord, furnish bond or other
security satisfactory to Landlord against any such loss, liability or damage.
ARTICLE VIII. 8.1. Landlord shall have the right to enter upon
the Demised Premises at any time for the purpose of inspecting the same, or of
making repairs to the Demised Premises, or of showing the Demised Premises to
prospective purchasers, lessees or lenders.
8.2. Tenant will permit Landlord to place and maintain "For Rent"
or "For Lease" signs on the Demised Premises during the last ninety days of the
lease term, it being understood that such signs shall in no way affect Tenant's
obligations pursuant to any provisions of this lease.
ARTICLE IX. 9.1 Tenant shall not, without Landlord's prior
written consent (a) make any changes to the building front or (b) install any
exterior lighting, decorations, paintings, awnings, or the like excepting only
dignified displays of customary type. All signs shall be subject to the prior
written approval of Landlord as to construction, method of attachment, size,
shape, height, lighting, and general appearance. All signs shall be kept in
good condition.
ARTICLE X. 10.1 Landlord shall not be liable for any
interruption whatsoever in utility services not furnished by him, nor for
interruptions in utility services furnished by him which are due to fire,
accident, strike, acts of God or other causes beyond the control of Landlord or
in order to make alterations, repairs or improvements.
ARTICLE XI. 11.1 Tenant agrees to transfer all utilities,
including water, electricity, natural gas, sewerage service, and telephone
service within three days of the signing of this contract. Tenant shall
promptly pay all charges for electricity, water, gas, telephone service,
sewerage service and other utilities furnished to the Demised Premises.
Landlord may if it so elects, furnish one or more utility services to Tenant,
and in such event, Tenant shall purchase the use of such services as are
tendered by
5
<PAGE> 6
Landlord, and shall pay on demand as additional rental the rates established
therefore by Landlord which shall not exceed the rates which would be charged
for the same services if purchased directly by the local public utility
companies. Landlord may at any time discontinue furnishing such service without
obligation to Tenant other than to connect Demised Premises to the public
utility.
ARTICLE XII. 12.1 Landlord shall not be liable to Tenant or to
Tenant's employees, agents, or visitors, or to any other person whomsoever, for
any injury to person or damage to property on or about the Demised Premises
including grounds outside of building, caused by the negligence or misconduct
of Tenant, its employees, subtenants, licensees or of any other person entering
the building under express or implied invitation of Tenant, or arising out of
the use of the premises by Tenant and the conduct of its business therein, or
arising out of any breach or default by Tenant in the performance of its
obligations hereunder; and Tenant hereby agrees to indemnify Landlord and hold
Landlord harmless from any loss, expense or claims arising out of such damage
or injury.
12.2. Tenant shall procure and maintain throughout the term of this
lease a policy or policies of insurance, at its sole cost and expense, insuring
both Landlord and Tenant against all claims, demands or actions arising out of
or in connection with Tenant's use or occupancy of the Demised Premises, or by
the condition of Demised Premises, the limits of such policy or policies to be
in an amount not less than One Million Dollars ($1,000,000) in respect of
injuries to or death of any one person, and in an amount not less than One
Million Dollars ($1,000,000) in respect of any one accident or disaster, and in
an amount not less than Nine Hundred Fifty Five Thousand Dollars ($955,000) in
respect of property damage or destruction, and to be written by insurance
companies satisfactory to Landlord. Tenant shall obtain a written obligation on
the part of each insurance company to notify Landlord at least ten (10) days
prior to cancellation of such insurance. Such policies or duly executed
certificates of insurance shall be promptly delivered to Landlord and renewals
thereof as required shall be delivered to Landlord at least thirty (30) days
prior to the expiration of the respective policy terms. If tenant should fail
to comply with the foregoing requirements relating to insurance, Landlord may
obtain such insurance and Tenant shall pay to Landlord on demand as additional
rent hereunder the premium cost thereof plus interest at the maximum
contractual rate (but in no event to exceed 1.5% per month) from the date of
payment by Landlord until repaid by Tenant.
ARTICLE XIII. 13.1 Landlord and Landlord's agents and
employees shall not be liable to Tenant for any injury to person or damage to
property caused by the Demised Premises or any portions of the property
becoming out of repair or by defect or failure of any structural element of the
Demised Premises or of any equipment, pipes or wiring, or broken glass, or by
the backing up of drains, or by gas, water, steam, electricity or oil leaking,
escaping or flowing into the Demised Premises (except where due to Landlord's
willful failure to make repairs required to be made hereunder, after the
expiration of a reasonable time after written notice to Landlord of the need
for such repairs), nor shall Landlord be liable to Tenant for any loss or
damage that may be occasioned by or through the acts or omissions of other
tenants of the property or of any other persons whomsoever, excepting only duly
authorized employees and agents of Landlord.
6
<PAGE> 7
ARTICLE XIV. 14.1 Tenant shall give immediate written notice
to Landlord of any damage caused to the Demised Premises by fire or other
casualty.
14.2 In the event that the Demised Premises shall be damaged or
destroyed by fire or other casualty insurable under standard fire and extended
coverage insurance and Landlord does not elect to terminate this lease as
hereinafter provided, Landlord shall proceed with reasonable diligence and at
its sole cost and expense to rebuild and repair the Demised Premises. In the
event (a) the building in which the Demised Premises are located shall be
destroyed or substantially damaged by casualty not covered by Landlord's
insurance or (b) such building shall be destroyed or rendered untenantable to
an extent in excess of fifty (50) per cent of the floor area by a casualty
covered by Landlord's insurance, or (c) the holder of a mortgage, deed of trust
or other lien on the Demised Premises at the time of the casualty elects,
pursuant to such mortgage, deed of trust or other lien, to require the use of
all or part of Landlord's insurance proceeds in satisfaction of all or part of
the indebtedness secured by the mortgage, deed of trust or other lien, then
Landlord may elect either to terminate this lease or to proceed to rebuild and
repair the Demised Premises. Landlord shall give written notice to Tenant of
such election within sixty (60) days after the occurrence of such casualty and
if it elects to rebuild and repair shall proceed to do so with reasonable
diligence and at its sole cost and expense.
14.3 Landlord's obligation to rebuild and repair under this Article
XIV shall in any event be limited to restoring (a) the Demised Premises to
substantially the condition in which the same existed prior to such casualty,
exclusive of any alterations, additions improvements, fixtures and equipment
installed by Tenant, or (b) Landlord's work to substantially the same condition
in which the same existed prior to the casualty, as the case may be. Tenant
agrees that promptly after completion of such work by Landlord, Tenant will
proceed with reasonable diligence and at Tenant's sole cost and expense to
restore, repair and replace all alterations additions, improvements, fixtures,
signs, and equipment installed by Tenant or, if an Exhibit C is attached
hereto, all items of Tenant's Work as described in Exhibit C as the case may
be.
14.4 Tenant agrees that during any period of reconstruction or
repair of the Demised Premises it will continue the operation of its business
within the Demised Premises to the extent practicable. During the period from
the occurrence of the casualty until Landlord's repairs are completed, the
minimum guaranteed rental shall be reduced to such extent as may be fair and
reasonable under the circumstances; however, there shall be no abatement of
other charges provided for herein.
14.5 If more than thirty (30) percent of the floor area of the
Demised Premises should be taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or by
private purchase in lieu thereof, this lease shall terminate and the rent shall
be abated during the unexpired portion of this lease, effective on the date
physical possession is taken by the condemning authority.
14.6 If less than thirty (30) per cent of the floor area of the
Demised Premises should be taken as aforesaid, this lease shall not terminate;
however, the minimum guaranteed rental (but not percentage rental) payable
hereinunder during the unexpired portion of this lease shall be reduced in
proportion to the current utilized area taken, effective on
7
<PAGE> 8
the date physical possession is taken be the condemning authority. Following
such partial taking, Landlord shall make all necessary repairs or alterations
to the remaining premises or, if an Exhibit B is attached hereto, all necessary
repairs or alterations within the scope of Landlord's Work as described in
Exhibit B, as the case may be, required to make the remaining portions of the
Demised Premises an architectural whole.
14.7 All compensation awarded for any taking (or the proceeds of
private sale in lieu thereof) of the demised premises, shall be the property of
Landlord, and Tenant hereby assigns its interests in any such award to
Landlord; provided, however, Landlord shall have no interest in any award made
to Tenant for Tenant's moving and relocation expenses or for the loss of
Tenant's fixtures and other tangible personal property if a separate award for
such items are made to Tenant.
ARTICLE XV. 15.1 Tenant shall not assign or in any manner
transfer this lease or any estate or interest therein, or sublet the Demised
Premises or any part thereof, or grant any license, concession or other right
of occupancy of any portion of the Demised Premises without the prior written
consent of Landlord. Consent by Landlord to one or more assignments or
sublettings shall not operate as a waiver of Landlord's rights as to any
subsequent assignments and sublettings.
15.2 If tenant is a corporation and if at any time during the
primary term of this lease or any renewal or extension thereof, the person or
persons who own a majority of either the outstanding voting shares or all
outstanding shares of capital stock of Tenant at the time of execution of this
lease cease to own a majority of such shares (except as the result of transfers
by devise or descent), the loss of a majority of such shares shall be deemed as
assignment of this lease by Tenant and therefore subject in all respects to the
provisions of Section 15.1 above. The previous sentence shall not apply,
however, if at the time of the execution of this lease the outstanding voting
shares of capital stock of Tenant are listed on a recognized security exchange
or over-the-counter market.
15.3 Notwithstanding any assignment or subletting, Tenet and any
guarantor of Tenant's obligations under this lease shall at all times remain
fully responsible and liable for the payment of the rent herein specified and
for compliance with all of its other obligations under this lease (even if
future assignments and sublettings occur subsequent to the assignments or
sublettings by Tenant, and regardless of whether or not Tenant's approval has
been obtained for such future assignments and sublettings). Moreover, in the
event that the rental due and payable by a sublessee (or a combination of the
rental payable under such sublease plus any bonus or other consideration
therefor or incident thereto) exceeds the rental payable under this lease, or
if with respect to a permitted assignment, permitted license or other transfer
by Tenant permitted by Landlord, the consideration payable to Tenant by the
assignee, licensee or other transferee exceeds the rental payable under this
lease, then Tenant shall be bound obligated to pay Landlord all such excess
rental and other excess consideration within ten (10) days following receipt
thereof by Tenant from such sublessee, assignee, licensee or other transferee,
as the case may be. Finally, in any event of assignment or subletting it is
understood and agreed that all rentals paid to Tenant by an assignee or
sublessee shall be received by Tenant in trust for Landlord, to be forwarded
immediately to Landlord without offset or reduction of any kind; and upon
election by Landlord such rentals shall be paid directly to Landlord as
specified in
8
<PAGE> 9
Section 4.1 of this lease (to be applied as a credit and offset to Tenant's
rental obligations).
15.4 Tenant shall not mortgage, pledge or otherwise encumber its
interest in this lease or in the Demised Premises.
15.5 In the event of the transfer and assignment by Landlord of its
interest in this lease and in the building containing the Demised Premises to a
person expressly assuming Landlord's obligations under this lease, Landlord
shall thereby be released from any further obligations hereunder, and Tenant
agrees to look solely to such successor in interest of the Landlord for
performance of such obligations. Any security given by Tenant to secure
performance of Tenant's obligations hereunder may be assigned and transferred by
Landlord to such successor in interest, and Landlord shall thereby be
discharged of any further obligation relating thereto.
ARTICLE XVI 16.1 Tenant shall be liable for all taxes levied
against personal property and trade fixtures placed by Tenant in the Demised
Premises. If any such taxes are levied against Landlord or Landlord's property
and if Landlord elects to pay the same or if the assessed value of Landlord's
property is increased by inclusion of personal property and trade fixtures
placed by Tenant in the Demised Premises and Landlord elects to pay the taxes
based on such increase, Tenant shall pay to Landlord upon demand that part of
such taxes from which Tenant is primarily liable hereunder.
16.2 Except as provided in Sections 16.1 and 16.3, Landlord shall
pay or cause to be paid all general real estate taxes, general and special
assessments and other governmental charges (hereinafter collectively referred
to as "the general taxes") levied against the Demised Premises for each real
estate tax year; provided, however, Tenant shall pay to Landlord, upon demand,
and in addition to the rentals and other charges prescribed in this lease, all
of the general taxes attributable to the Demised Premises. The payments to be
made by Tenant shall be monthly payments of that portion for the total real
estate tax year in which this lease commences or terminates and shall bear the
same ratio to the payment which would be required to be made for the full tax
year as the number of days of such tax year included within the lease term
bears to a full tax year, divided into equal monthly installments. Such monthly
installments will be based upon the total real estate taxes paid for the
previous year and will be due and payable at the first of each month, as is
each minimal guaranteed lease payment. Any increase in the annual tax over the
previous year's total tax will be added to the December tax payment to be paid
by Tenant.
16.3 If at any time during the primary term of this lease or any
renewal or extension thereof a tax or excise on rents, or other tax however
described (except any franchise, estate, inheritance, capital stock, income or
excess profits tax imposed upon Landlord) is levied or assessed against
Landlord by any lawful taxing authority on account of Landlord's interest in
this lease or the rents or other charges reserved hereunder, as a substitute in
whole or in part, or in addition to the general taxes described in Section 16.2
above. Tenant agrees to pay to Landlord upon demand, and in addition to the
rentals and other charges prescribed in this lease, the amount of such tax or
excise. In the event any such tax or excise is levied or assessed directly
against Tenant, then Tenant shall be responsible for and shall pay the same at
such times and in such manner as the taxing authority shall require.
9
<PAGE> 10
16.4 The premiums for any fire and extended coverage insurance
maintained by Landlord covering the Demised Premises (thereinafter referred to
as the "insurance premiums") shall be paid by Landlord; provided however,
Tenant shall pay to Landlord upon demand, and in addition to the rental and
other charges prescribed in this lease, all of the insurance premiums
attributable to the Demised Premises. The payment to be made by Tenant for the
insurance term in which this lease commences or terminated shall bear the same
ratio to the payment which would be required to be paid for the full insurance
term as the number of days of such term within the term of this lease bears to
the full insurance term.
16.5 If at any time during the primary term of this lease or any
renewal or extension thereof, Landlord has reason to believe that at some time
within the immediately succeeding twelve-month period Tenant will owe Landlord
a payment pursuant to one or more of the preceding sections of this Article
XVI, Landlord may direct that Tenant prepay monthly a pro rata portion of the
prospective future payment (i.e., the prospective future payment divided by the
number of months before the prospective future payment will be due). Tenant
agrees that any such prepayment directed by Landlord shall be due and payable
monthly on the same day that minimum guaranteed rental is due.
ARTICLE XVII. 17.1 The following events shall be deemed to be
events of default by Tenant under this lease:
(1) Tenant shall fail to pay any installment of rent or any other
obligation hereunder involving the payment of money and such failure shall
continue for a period of ten (10) days after the date due.
(2) Tenant shall fail to comply with any term, provision or
covenant of this lease, other than as described in subsection (1) above, and
shall not cure such failure within fifteen (15) days after written notice
thereof to Tenant.
(3) Tenant or any guarantor of Tenant's obligations under this
lease shall become insolvent, or shall make a transfer in fraud of creditors,
or shall make an assignment for the benefit of creditors.
(4) Tenant or any guarantor of Tenant's obligations under this
lease shall file a petition under any section or chapter of the National
Bankruptcy Act, as amended, or under any similar law or statute of the United
States or any State thereof; or Tenant or any guarantor of Tenant's obligations
under this lease shall be adjudged bankrupt or insolvent in proceedings filed
against Tenant or any guarantor of Tenant's obligations under this lease
thereunder.
(5) A receiver or Trustee shall be appointed for the Demised
Premises or for all or substantially all of the assets of Tenant or any
guarantor of Tenant's obligations under this lease.
(6) Tenant shall desert or vacate or shall commence to desert or
vacate the Demised Premises or any substantial portion of the Demised Premises
or shall remove or attempt to remove, without the prior written consent of
Landlord, all or a substantial value of Tenant's goods, wares, equipment,
fixtures, furniture, or other personal property.
(7) Tenant shall do or permit to be done anything which creates a
lien upon the premises.
(8) Tenant defaults on that one certain Registration Rights
Agreement entered into on September 19, 1996, by The Company Doctor and Robert
G. Duchouquette, M.D.
10
<PAGE> 11
(9) Tenant defaults on that one certain Secured Promissory Note
dated September 19, 1996, in the principal amount of Eight Hundred Forty Three
Thousand Seven Hundred Fifty Dollars ($843,750.00), wherein The Physician
Group, P.A., (AKA Donald F. Angle, M.D., P.A.) is the maker, Robert G.
Duchouquette, M.D. is the Payee, and The Company Doctor is a Guarantor of the
Note.
Upon the occurrence of any such events of default, Landlord shall have the
option to pursue either of the following alternative remedies:
A. Without any notice or demand whatsoever, Landlord may take any
one or more of the actions permissible at law to insure performance by Tenant
or Tenant's covenants and obligations under this lease. In this regard, it is
agreed that if Tenant deserts or vacates the Demised Premises, Landlord may
enter upon and take possession of such premises in order to protect them from
deterioration and continue to demand from Tenant the monthly rentals and other
charges provided in this lease, without any obligation to relet; but that if
Landlord does, at its sole discretion, elect to relet the Demised Premises,
such action by Landlord shall not be deemed as an acceptance of Tenant's
surrender of the Demised Premises unless Landlord expressly notifies Tenant of
such acceptance in writing pursuant to subsection B of this Section 17.1,
Tenant hereby acknowledging that Landlord shall otherwise be reletting as
Tenant's agent and Tenant furthermore hereby agreeing to pay to Landlord on
demand any deficiency that may arise between the monthly rental and other
charges provided in this lease and that actually collected by Landlord. It is
further agreed in this regard that in the event of any default described in
subsection (2) of this Section 17.1, Landlord shall have the right to enter
upon the Demised Premises by force if necessary without being liable for
prosecution or any claim for damages therefor, and do whatever tenant is
obligated to do under the terms of this lease; and Tenant agrees to reimburse
Landlord on demand for any expenses which Landlord may incur in thus effecting
compliance with Tenant's obligations under this lease, and Tenant further
agrees that Landlord shall not be liable for any damages resulting to the
Tenant from such actions.
B. Landlord may terminate this lease by written notice to Tenant,
in which event Tenant shall immediately surrender the Demised Premises to
Landlord, and If Tenant fails to do so, Landlord may, without prejudice to any
other remedy which Landlord may have for possession or arrearages in rent
(including any interest which may have accrued pursuant to Section 4.3 of this
lease), enter upon and take possession of the Demised Premises and expel or
remove Tenant and any other person who may be occupying said premises or any
part thereof, by force if necessary, without being liable for prosecution or
any claim for damage therefor. Tenant hereby waives any statutory requirement
of prior written notice for filing eviction or damage suits for nonpayment of
rent. In addition, Tenant agrees to pay to Landlord on demand the amount of all
loss and damage which Landlord may suffer by reason of any termination effected
pursuant to this subsection B, said loss and damage to be determined by either
of the following alternative measures of damages:
(i) Until Landlord is able, through reasonable efforts,
the nature of which efforts shall be at the sole discretion of
Landlord, to relet the Demised Premises, Tenant shall pay to Landlord
on or before the first day of each calendar month, the monthly rentals
and other charges provided in this lease. After the Demise
11
<PAGE> 12
Premises have been relet by Landlord, Tenant shall pay to Landlord on
the 20th day of each calendar month, the difference between the
monthly rentals and other charges provided in this lease for the
preceding calendar month and that actually collected by Landlord for
such month. If it is necessary for Landlord to bring suit in order to
collect any deficiency Landlord shall have a right to allow such
deficiencies to accumulate and to bring an action on several or all of
the accrued deficiencies at one time. Any such suit shall not
prejudice in any way the right of Landlord to bring a similar action
for any subsequent deficiency or deficiencies. Any amount collected by
Landlord from subsequent tenants for any calendar month, in excess of
the monthly rentals and other charges provided in this lease, shall be
credited to Tenant in reduction of Tenant's liability for any calendar
month for which the amount collected by Landlord will be less than the
monthly rentals and other charges provided in this lease; but Tenant
shall have no right to such excess other than the above described
credit.
(ii) When Landlord desires, Landlord may demand a final
settlement. Upon demand for a final settlement, Landlord shall have a
right to, and Tenant hereby agrees to pay, the difference between the
total of all monthly rentals and other charges provided in this lease
for the remainder of the term and the reasonable rental value of the
Demised Premises for such period, such difference to be discounted to
present value at a rate equal to the rate of interest which is allowed
by law, in the State designated by Section XXIV, 24.7 of this lease.
If Landlord elects to exercise the remedy prescribed in subsection A above,
this election shall in no way prejudice Landlord's right at any time thereafter
to cancel said election in favor of the remedy prescribed in subsection B
above, provided that at the time of such cancellation, Tenant is still in
default. Similarly, if Landlord elects to compute damages in the manner
prescribed by subsection B(i) above, this election shall in no way prejudice
Landlord's right at any time thereafter to demand a final settlement in
accordance with subsection B(ii) above. Pursuant of any of the above remedies
shall not preclude pursuit of any other remedies prescribed in other sections
of this lease and any other remedies provided by law. Forbearance by Landlord
to enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default.
17.2 It is expressly agreed that in determining "the monthly
rentals and other charges provided in the lease", as that term is used
throughout subsection A and B or Section 17.1 above, there shall be added to
the minimum guaranteed rental (as in Section 1.1 (h) of this lease), the
charges for taxes and insurance (as specified in Article XVI of this lease).
17.3 It is further agreed that, in addition to payments required
pursuant to subsections A and B of Sections 17.1 above, Tenant shall compensate
Landlord for all expenses incurred by Landlord in repossession (including among
other expense, any increase in insurance premiums caused by the vacancy of the
Demised Premises), all expenses incurred by Landlord in reletting (including
among other expenses, repairs, remodeling, replacements, advertisements and
brokerage fees), all concessions granted to a new tenant upon reletting
(including among other concessions, renewal options), all losses incurred by
Landlord as a direct or indirect result of Tenant's default
12
<PAGE> 13
(including among other losses any adverse reaction by Landlord's mortgagee or
by other tenants or potential tenants) and a reasonable allowance for
Landlord's administrative efforts, salaries and overhead attributable directly
or indirectly to Tenant's default and Landlord's pursuing the rights and
remedies provided herein and under applicable law.
17.4 Landlord may restrain or enjoin any breach or threatened
breach of any covenant, duty or obligation of Tenant herein contained without
the necessity of proving the inadequacy of any legal remedy or irreparable harm.
The remedies of Landlord hereunder shall be deemed cumulative and not exclusive
of each other.
17.5 If on account of any breach or default by Tenant in its
obligations hereunder, Landlord shall employ an attorney to present, enforce or
defend any of Landlord's rights or remedies hereunder, Tenant agrees to pay any
reasonable attorney's fees incurred by Landlord in such connection.
17.6 Landlord hereby acknowledges receipt from Tenant of the sum
stated in Section 1.1(1) above, to be applied to installments of rent as
specified in such Section. Landlord further acknowledges receipt from Tenant of
the sum stated in Section 1.1(j) above to be held by Landlord without interest
as security for the performance by Tenant of Tenant's covenants and obligations
under this lease, it being expressly understood that such deposit may be
commingled with Landlord's other funds and is not an advance payment of rental
or a measure of Landlord's damages in case of default by Tenant. Upon the
occurrence of any event of default by Tenant, Landlord may, from time to time,
without prejudice to any other remedy provided herein or provided by law, use
such fund to the extent necessary to make good any arrears of rentals and any
other damage, injury, expense or liability caused to Landlord by such event of
default, and Tenant shall pay to Landlord on demand the amount so applied in
order to restore the security deposit to its original amount. If tenant is not
then in default hereunder, any remaining balance of such deposit shall be
returned by Landlord to Tenant upon termination of this lease (subject to the
provisions of Section 15.5 above).
ARTICLE XVIII. 18.1 In addition to the statutory Landlord's
lien, Landlord shall have at all times a valid security interest to secure
payment of all rentals and other sums of money becoming due hereunder from
Tenant, and to secure payment of any damages or loss which Landlord may suffer
by reason of the breach by Tenant of any covenant, agreement or condition
contained herein, upon all goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Tenant presently, or which may
hereafter by situated on the Demised Premises, and all proceeds therefrom, and
such property shall not be removed without the consent of Landlord until all
arrearages in rent as well as any and all other sums of money then due to
Landlord or to become due to Landlord hereunder shall first have been paid and
discharged and all the covenants, agreements and conditions hereof have been
fully complied with and performed by Tenant. Upon the occurrence of an event of
default by Tenant, Landlord may, in addition to any other remedies provided
herein, enter upon the Demised Premises and take possession of any and all
goods, wares, equipment, fixtures, furniture, improvements and other personal
property of Tenant situated on the premises, without liability for trespass or
conversion, and sell the same at public or private sale, with or without having
such property at the sale, after giving Tenant reasonable notice of the time
and place of any public sale or of the time after which any
13
<PAGE> 14
private sale is to be made, at which sale the Landlord or its assigns may
purchase unless otherwise prohibited by law. Unless otherwise provided by law,
and without intending to exclude any other manner of giving Tenant reasonable
notice, the requirement of reasonable notice shall be met if such notice is
given in the manner prescribed in this lease at least seven (7) days before the
time of sale. Any sale made pursuant to the provision of this paragraph shall
be deemed to have been a public sale conducted in commercially reasonable
manner if held in the above-described premises or where the property is located
after the time, place and method of sale and a general description of the types
of property to be sold have been advertised in a daily newspaper published in
the county in which the property is located, for five (5) consecutive days
before the date of the sale. The proceeds from any such disposition, less any
and all expenses connected with the taking of possession, holding and selling
of the property (including reasonable attorney's fees and legal expenses),
shall be applied as a credit against the indebtedness secured by the security
interest granted in this paragraph. Any surplus shall be paid to Tenant or as
otherwise required by law; the Tenant shall pay any deficiencies forthwith.
Upon request by Landlord, Tenant agrees to execute and deliver to Landlord a
financing statement in form sufficient to perfect the security interest of
Landlord in the aforementioned property and proceeds thereof under the
provision of the Uniform Commercial Code (or corresponding state statute or
statutes) in force in the State in which the property is located, as well as
any other state the laws of which Landlord may at any time consider to be
applicable.
ARTICLE XIX. 19.1 In the event Tenant remains in possession of
the Demised Premises after the expiration of this lease and without the
execution of a new lease, it shall be deemed to be occupying said premises as a
tenant from month to month at a rental equal to the rental (including any
percentage rental) herein provided, plus fifty (50) per cent of such amount and
otherwise subject to all the conditions, provisions and obligations of this
lease insofar as the same are applicable to a month to month tenancy.
ARTICLE XX. 20.1 Tenant accepts this lease subject and
subordinate to any mortgage, deed of trust or other lien presently existing or
hereafter placed upon the Demised Premises, and to any renewals and extensions
thereof. Tenant agrees that any such mortgagee shall have the right at any
time to subordinate such mortgage, deed of trust or other lien to this lease;
provided, however, notwithstanding that this lease may be (or made to be)
superior to mortgage, deed of trust or other lien, the provisions of mortgage,
deed of trust or other lien relative to the rights of the mortgagee, with
respect to proceeds arising from an eminent domain taking (including a
voluntary conveyance by Landlord) and/or arising from insurance payable by
reason of damage to or destruction of the Demised Premises shall be prior and
superior to any contrary provisions contained in this instrument with respect
to the payment of usage thereof. Landlord is hereby irrevocably vested with
full power and authority to subordinate this lease to any mortgage, deed of
trust or other lien hereafter placed upon the Demised Premises and Tenant
agrees upon demand to execute such further instruments subordinating this lease
as Landlord may request; provided, however, that upon Tenant's written request
and notice to Landlord, Landlord shall use good faith efforts to obtain from
any such mortgagee, a written agreement that the rights of Tenant shall remain
in full force and effect during the term of this lease so long as Tenant shall
continue to recognize and perform all of the covenants and conditions of this
lease.
14
<PAGE> 15
20.2 At any time when the holder of an outstanding mortgage, deed
of trust or other lien covering Landlord's interest in the Demised Premises has
given Tenant written notice of its interest in this lease, Tenant may not
exercise any remedies for default by Landlord hereunder unless and until the
holder of the indebtedness secured by such mortgage, deed of trust or other
lien shall have received written notice of such default and a reasonable time
for curing such default shall thereafter have elapsed.
ARTICLE XXI. 21.1 Whenever any notice is required or permitted
hereunder such notice shall be in writing. Any notice or document required or
permitted to be delivered hereunder shall be deemed to be delivered when
actually received by the designated addressee or, if earlier and regardless of
whether actually received or not, when deposited in the United States Mail,
postage prepaid, Certified Mail, Return Receipt Requested, addressed to the
parties hereto at the respective addresses set out in Section 1.1 above (or at
Landlord's option, to Tenant at the Demised Premises), or at such other
addresses as they have theretofore specified by written notice.
21.2 If and when included within the term "Landlord", as used in
this instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such notice
specifying some individual at some specific address for the receipt of notices
and payments to the Landlord; if and when included within the term "Tenant" as
used in this instrument, there are more than one person, firm or corporation,
all shall jointly arrange among themselves for their joint execution of such
notice specifying some individual at some specific address for the receipt of
notices and payments to Tenant. All parties included within the terms
"Landlord" and "Tenant", respectively, shall be bound by notices and payments
given in accordance with the provisions of this Article to the same effect as
if each had received such notice or payment.
ARTICLE XXII. 22.1 Landlord and Tenant acknowledge that there
are in effect federal, state, county and municipal laws, orders, rules,
directives and regulations (collectively referred to hereinafter as the
"Regulations") and that additional Regulations may hereafter be enacted or go
into effect, relating to or affecting the Demised Premises and concerning the
impact on the environment of construction, land use, maintenance and operation
of structures, and conduct of business. Subject to the express rights granted
to Tenant under the terms of this lease, Tenant will not cause, or permit to be
caused, any act or practice by negligence, omission, or otherwise, that would
adversely affect the environment, or do anything or permit anything to be done
that would violate any of said laws, regulations, or guidelines. Moreover,
Tenant shall have no claim against Landlord by reason of any changes Landlord
may make in the Demised Premises pursuant to said Regulations or any charges
imposed upon customers or other invitees pursuant to same.
22.2 If by reason of any federal, state, county or municipal law,
order, rule, directive or regulation (collectively referred to hereinafter as
the "Regulations"), the payment to, or collection by, Landlord of any rental or
other charge (collectively referred to hereinafter as "Lease Payments") payable
by Tenant to Landlord pursuant to the provisions of this lease is in excess of
the amount (the "Maximum Charge") permitted therefore by the Regulations, then
Tenant during the period (the "Freeze Period") when the Regulations shall be in
for force and effect shall not be required to pay, nor shall
15
<PAGE> 16
Landlord be permitted to collect any sum in excess of the Maximum Charge. Upon
the earlier of (i) the expiration of the Freeze Period, or (ii) the issuance of
a final order or judgment of a court of competent jurisdiction declaring the
Regulations to be invalid or not applicable to the provisions of this lease,
Tenant, to the extent not then proscribed by law, and commencing with the first
day of the month immediately following, shall pay to Landlord, as additional
rental, in equal monthly installments during the balance of the term of this
lease, a sum equal to the cumulative difference between the Maximum Charges and
the Lease Payments during the Freeze Period. If any provisions of this
section, or the application thereof, shall to any extent be declared to be
invalid and unenforceable, the same, shall not be deemed to affect any of the
other provisions of this section or of this lease, all of which shall be deemed
valid and enforceable to the fullest extent permitted by law.
ARTICLE XXIII. 23.1 Nothing herein contained shall be deemed
or construed by the parties hereto, nor by any third party, as creating the
relationship of principal and agent or of partnership or of joint venture
between the parties hereto, it being understood and agreed that neither the
method of computation of rent, nor any other provision contained herein, nor
any acts of the parties hereto, shall be deemed to create any relationship
between the parties hereto other than the relationship of landlord and tenant.
23.2 Tenant shall not for any reason withhold or reduce Tenant's
required payments of rentals and other charges provided in this lease, it being
agreed that the obligation of Landlord hereunder are independent of Tenant's
obligations except as may be otherwise expressly provided. In this regard it is
specifically understood and agreed that in the event Landlord commences any
proceedings against Tenant for nonpayment of rentals or any other sum due and
payable by Tenant hereunder, Tenant will not interpose any counter-claim or
other claim against Landlord of whatever nature or description in any such
proceedings; and in the event that Tenant stipulate and agree that, in addition
to any other lawful remedy of Landlord, upon motion of Landlord, such
counter-claim or other claim asserted by Tenant shall be severed out of the
proceedings instituted by Landlord and the proceedings instituted by Landlord
may proceed to final judgment separately and apart from and without
consolidation with or reference to the status of such counter-claim or any
other claim asserted by Tenant.
23.3 Except as may be otherwise herein provided, in all
circumstances under this lease where prior consent or permission of one party
("first party"), whether it be Landlord or Tenant, is required before the other
party ("second party") is authorized to take any particular type of action, the
matter of whether to grant such consent or permission shall be within the sole
and exclusive judgment and discretion of the first party; and it shall not
constitute any nature of breach by the first party hereunder or any defense to
the performance of any covenant, duty or obligation of the second party
hereunder that the first party delayed or withheld the granting of such consent
or permission, whether or not the delay or withholding of such consent or
permission was, in the opinion of the second party, prudent or reasonable or
based on good cause.
23.4 One or more waivers of any covenant, term or condition of this
lease by either party shall not be construed as a waiver of a subsequent breach
of the same covenant, term or condition. The consent or approval by either
party to or of any act by the other
16
<PAGE> 17
party requiring such consent or approval shall not be deemed to waive or render
unnecessary consent to or approval of any subsequent similar act.
23.5 Whenever a period of time is herein prescribed for action to
be taken by Landlord, Landlord shall not be liable or responsible for, and
there shall be excluded from the computation of any such period of time, any
delays due to strikes, dots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the reasonable control of Landlord.
23.6 Tenant agrees that it will from time to time upon request by
Landlord execute and deliver to Landlord a statement in recordable form
certifying that this lease is unmodified and in full force and effect (or if
there have been modifications, that the same is in full force and effect as so
modified).
23.7 The laws of the State in which the Demised Premises are
located shall govern the interpretation, validity, performance and enforcement
of this lease. If any provision of this lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this lease shall not be affected thereby. Venue for any action under this
lease shall be the county in which rentals are due pursuant to section 4.1 and
Section 1.1 of this lease.
23.8 The captions used herein are for convenience only and do not
limit or amplify the provisions hereof.
23.9 Whenever herein the singular number is used, the same shall
include the plural, and words of any gender shall include each other gender.
23.10 The terms, provisions and covenants contained in this lease
shall apply to, inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors in interest and legal representatives
except as otherwise herein expressly provided.
23.11 This lease contains the entire lease agreement between the
parties, and no agreement shall be effective to change, modify, or terminate
this lease in whole or in part unless such is in writing and duly signed by
the party against whom enforcement of such change, modification or termination
is sought. Tenant hereby acknowledges that it is not relying on any
representation or promise of Landlord or of Agent, except as may be expressly
sent forth in this lease.
(THIS SPACE INTENTIONALLY LEFT BLANK, SIGNATURES ARE ON NEXT PAGE.)
17
<PAGE> 18
EXECUTED as of the date hereinabove stated.
QUAD CORNERS INVESTMENTS, Ltd.
By
-----------------------------------
- ----------------------------------- Bertha Rose Duchouquette,
Attest or Witness General Partner
Date:
--------------------------------
By
-----------------------------------
- ----------------------------------- Robert G. Duchouquette,
Attest or Witness General Partner
Date:
--------------------------------
THE COMPANY DOCTOR
By: /s/ ROBERT K. AIKEN
-----------------------------------
- ----------------------------------- Robert K. Aiken, Vice President
Attest or Witness for Business Development
Date: 20 Sep 1996
--------------------------------
THE PHYSICIAN GROUP, P.A.
By:
-----------------------------------
- ----------------------------------- Donald F. Angle, M.D., President
Attest or Witness
Date:
--------------------------------
18
