<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):
August 15, 1996
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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
IRVING, TEXAS 75039
(Address of principal executive offices)
(817) 277-0000
(Registrant's telephone number, including area code)
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ITEM 1. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The Company Doctor (the "Company") and Donald F. Angle, M.D., P.A., a
Texas professional association of physicians and other medical professionals
(the "Physician Group") have entered into Asset Purchase Agreements (the
"Agreements") to acquire the sole proprietorship (the "Practice") of C.A. Riser,
M.D. (the "Physician"), a doctor practicing occupational and family care
medicine in Baytown, Texas, a suburb of Houston. 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. 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 early May. The Company expects to install
its management information system in the newly acquired facility as soon as
practicable.
Pursuant to the Agreements, the Physician Group has acquired the
medical practice assets and certain goodwill and the Company has acquired
certain accounts receivable, equipment, supplies and goodwill of the Practice in
exchange for (i) 33,334 shares of the Company's Common Stock to be issued within
15 days of closing, (ii) an additional number of shares of Common Stock to be
issued on February 28, 1997 which are valued (based on the closing price of the
stock on February 27, 1997) at $350,000, (iii) $300,000 in cash, and (iv) a
secured promissory note in the principal amount of $750,000. The note bears
interest at the rate of 9.5% per annum and provides for monthly payments of
$10,000 with the balance due on April 15, 1997.
The Physician has been granted registration rights with respect to the
shares of Common Stock. The Physician has agreed that he will not sell more
than 1\12 of the total shares issued in the transaction during any month. 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 the standard Regional
Medical Director employment agreement to serve as Regional Medical Director of
the Practice.
The closing of the transactions contemplated by the Agreements were
consummated on August 15, 1996, effective as of May 9, 1996.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
2
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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:
<TABLE>
<CAPTION>
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
<S> <C> <C>
2.3 Asset Purchase Agreement by and between C.A. Riser, M.D.
and The Company Doctor, including Security Agreement 2
2.4 Asset Purchase Agreement by and between C.A. Riser, M.D.
and Donald F. Angle, M.D., P.A., including Secured Promissory
Note and Security Agreement 2
</TABLE>
ITEM 8. CHANGE OF FISCAL YEAR
Not applicable.
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: August 29, 1996 By: /s/ FRED G. PARRISH
----------------------------------------
Fred G. Parrish, Chief Operating Officer
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.3 Asset Purchase Agreement by and between C.A. Riser, M.D.
and The Company Doctor, including Security Agreement
2.4 Asset Purchase Agreement by and between C.A. Riser, M.D.
and Donald F. Angle, M.D., P.A., including Secured
Promissory Note and Security Agreement
</TABLE>
<PAGE> 1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into effective as of May 9, 1996, by and between C.A. RISER, M.D., an
individual resident of Texas ("Seller"), and THE COMPANY DOCTOR, a Delaware
corporation ("Purchaser").
WHEREAS, Seller is a physician engaged in the business of providing
medical-related services (the "Business");
WHEREAS, Purchaser desires to acquire from Seller and Seller desires
to transfer to Purchaser, certain properties, assets, and rights of Seller
related to the Business, and to assume certain specified liabilities of Seller,
all upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, and covenants herein contained, the parties agree as follows:
1. Purchase and Sale. On the terms and subject to the conditions
set forth herein, Seller agrees to and does hereby sell and deliver to
Purchaser, and Purchaser agrees to and does hereby purchase from Seller, except
for the Excluded Assets (herein so called) listed in Exhibit A1 and the Angle
Assets (herein so called) listed in Exhibit A2 that Donald F. Angle, M.D.,
P.A., a Texas professional association ("Angle P.A."), is purchasing from
Seller, all of the properties, assets, and rights of Seller related to the
Business (the "Assets"). The parties hereby agree that the Assets consist of
every property, asset, and right of Seller related to the Business not
specifically identified in Exhibit A1 and Exhibit A2.
2. Purchase Price. In exchange for the Assets, Purchaser shall
pay the following consideration (in the aggregate, the "Purchase Price"):
a. Shares of Common Stock, $0.01 par value, of Purchaser
(the "TCD Stock") equal to the sum of:
(1) 33,334 shares of TCD Stock (which equals
$350,000.00 divided by the average of the closing trading
price on NASDAQ of a share of TCD Stock for the five most
recent trading days prior to May 9, 1996), which Purchaser
shall issue to Seller within fifteen (15) days after the
Closing Date (as defined herein); and
(2) $350,000.00 divided by the closing trading
price on NASDAQ of a share of TCD Stock on February 27, 1997,
which Purchaser shall issue to Seller by March 15, 1997.
Asset Purchase Agreement Page -1-
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Such aggregate number of shares set forth and calculated in Section
2(a)(1) and Section 2(a)(2) of this Agreement being referred to
hereinafter as the "TCD Shares;"
b. Upon Seller's written request at any time after the
date hereof and before February 6, 1997, Purchaser shall file a
registration statement under the Securities Act of 1933, as amended
(the "Securities Act") relating to, and shall use its best efforts to
cause to be effective, the registration under the Securities Act of
the TCD Shares not later than February 28, 1997 (the "Registration").
If Purchaser fails to timely cause the Registration, Seller shall have
the right, exercisable by Seller giving written notice to Purchaser
subsequent to February 28, 1997, but prior to April 28, 1997, to
rescind the transfer of the TCD Shares, in which event (i) Seller
shall return the TCD Shares to Purchaser and (ii) Purchaser shall pay
to Seller within 30 days after Purchaser receives Seller's notice of
rescission of the transfer of the TCD Shares the greater of (1)
$700,000, or (2) the market value of the TCD Shares which would have
been registered pursuant to Sections 2(a)(1) and 2(a)(2), calculated
based upon the NASDAQ closing price of the TCD Stock as of February
27, 1997 (the "Rescission Amount"). Failure by the Purchaser to
timely cause the Registration of the TCD Shares and to timely pay to
Seller the Rescission Amount shall constitute an Event of Default for
purposes of that certain Security Agreement between Purchaser and
Seller, dated effective May 9, 1996, and shall constitute an Event of
Default for purposes of that certain Security Agreement between Angle
P.A. and Seller, dated effective May 9, 1996; and
c. Purchaser hereby assumes and agrees to pay and
perform the liabilities of Seller set forth in Exhibit B (the "Assumed
Liabilities"). Purchaser does not assume any Liabilities of Seller
other than the Assumed Liabilities and Seller recognizes that Seller
shall remain responsible for all of its Liabilities, other than the
Assumed Liabilities. Seller specifically acknowledges that it will
remain liable and responsible for the Liabilities on Exhibit C (the
"Retained Liabilities"). Purchaser hereby agrees to indemnify,
defend, and hold Seller harmless from and against each and every
demand, claim, loss (including, without limitation, any diminution in
value), liability, item of damage, cost and expense (including,
without limitation, the reasonable fees, disbursements and expenses of
attorneys) of any kind whatsoever asserted against, imposed upon, or
incurred by Seller by reason of or resulting from the Assumed
Liabilities on or after the Effective Date.
3. Closing. The transactions contemplated hereby will be
consummated at a Closing (herein so called) to be held on August 15,
Asset Purchase Agreement Page -2-
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1996, at such time and place as the parties agree. The date on which Closing
occurs is referred to herein as the "Closing Date." At Closing, the parties
shall execute and deliver, or cause to happen, the following:
a. Seller shall deliver to Purchaser a bill of sale (in
a form acceptable to Purchaser) evidencing the sale, delivery,
transfer, and assignment to Purchaser of good and marketable title to
the Assets, free and clear of all liens, liabilities, claims, and
encumbrances, except those listed in Exhibit B; and
b. Each party to this Agreement shall perform any and
all further acts and execute and deliver any and all documents and
instruments that may be reasonably necessary to carry out the
provisions of this Agreement.
4. Representations and Warranties of Seller. Seller represents
and warrants that the following are true and correct as of the Effective Date,
and will be true and correct on the Closing Date:
a. Citizenship. Seller is a citizen or lawful,
permanent resident of the United States and has never been convicted
of a felony or a crime of moral turpitude;
b. Licensure. Seller is a physician currently licensed
to practice medicine by, and in good standing with, the Texas State
Board of Medical Examiners;
c. Liabilities. As of the Closing Date there are no
liabilities or obligations whatsoever of Seller relating in any way to
the Business or the Assets whatsoever, accrued, fixed, contingent or
otherwise, known or which should be known, and asserted or unasserted
(collectively, the "Liabilities" and singly, a "Liability"), except
for the Assumed Liabilities and the Retained Liabilities. Except as
set forth in Exhibit B and Exhibit C, Seller 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, corporation, limited liability company, association,
partnership, joint venture, trust or other entity. The Liabilities
which are to be retained by Seller and which are not to be transferred
to, or assumed by, Purchaser are the Retained Liabilities. Seller
knows of no basis for the assertion of any Liability of any nature or
in any amount other than those set forth in Exhibit B and Exhibit C;
d. Disclosure. Seller is a sophisticated investor,
skilled and knowledgeable in securities matters. In making a
Asset Purchase Agreement Page -3-
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decision to enter into this Agreement, Seller has had access to all
information that he considers necessary or advisable to make a
decision concerning his acquisition of the TCD Shares and has had an
opportunity to ask questions of representatives of The Company Doctor
concerning such information and to review the files and records of The
Company Doctor. In particular, and without limiting the generality of
the foregoing, Seller has analyzed, or has had an opportunity to
analyze, and is familiar with the business operations and financial
condition and results of The Company Doctor, and has reviewed its
financial statements and other information publicly available with
respect to The Company Doctor, including (without limitation) its most
recent Prospectus as filed with the SEC;
e. Contracts and Commitments with Third Parties. There
is set forth on Exhibit D a list of all outstanding contracts and
agreements, whether or not in writing, which relate to the Business or
the Assets, including, but not limited to, insurance policies, to
which Seller is a party or to which any of the Assets are subject;
f. Title to the Assets. Except for those Assets listed
in Exhibit D which require third party consent to transfer, Seller has
good and marketable title to the Assets free and clear of any pledges,
liens, encumbrances, security interests, equities, charges, and
restrictions of any nature whatsoever;
g. Litigation. Except for those lawsuits listed in
Exhibit G, there is no claim, litigation, action, suit, or proceeding,
administrative or judicial, pending or, to Seller's knowledge,
threatened against Seller relating to the Business, or involving the
Assets, at law or in equity, before any federal, state, local, or
foreign court, or regulatory agency, or other governmental authority,
including, without limitation, any unfair labor practice or grievance
proceedings or otherwise;
h. Assets. Except for the Excluded Assets and the Angle
Assets, the Assets include all the assets used by Seller to operate
the Business in the same manner as the Business was operated by Seller
prior to the Closing Date;
i. Taxes. As of the date hereof, all returns and
reports of or relating to any foreign, federal, state, or local tax
that are required to be filed on or before the Closing Date for, by,
on behalf of, or with respect to Seller and the Business, including,
but not limited to, those relating to the income, business,
operations, or Assets of the Business, have been or will be timely
filed with the appropriate foreign, federal, state, and local
authorities on or before the Closing Date;
Asset Purchase Agreement Page -4-
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j. Employee and Labor Matters and Plans.
(1) As of the date hereof, except for the
Simplified Employee Pension Plan which will be terminated
prior to closing, the Business has no pension or welfare plans
as defined in Sections 3(1) and 3(2) of ERISA, or any other
pension plans, welfare plans, profit-sharing plans, deferred
compensation plans, consultant plans, bonus plans, or
arrangements or any other similar plans, agreements, and
arrangements for the benefit of directors, officers, or
employees or former employees (or beneficiaries thereof) of
the Business;
(2) Neither the Business nor any plan as defined
in Section 3(2) of ERISA previously maintained by it
(collectively, the "Plans" and singly, a "Plan") has incurred
any liability to the Pension Benefit Guaranty Corporation or
excise tax to the IRS with respect to any Plan, and the
Business has not incurred any liability under Section 4201 of
ERISA for a complete or partial withdrawal from, or has any
obligation to contribute to, a multi-employee Plan. No Plan,
if any, previously maintained by the Business will result in
any tax on or material liability of the Business. No
accumulated funding deficiency (within the meaning of Section
412 of the Code), whether waived or unwaived, exists with
respect to any Plan or any Plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B)
of the Code) in which the Business is or was a member;
(3) There are no claims pending or, to the
knowledge of the Seller, threatened, involving any pension or
welfare Plans or any other matter relating to employment by a
current or former employee (or beneficiary thereof) of the
Business;
k. Restriction on Sale of the TCD Shares. As
acknowledged in the investor letter from Seller to Purchaser, dated
effective May 9, 1996, Seller is prohibited from offering for sale,
selling, or otherwise transferring any of the TCD Shares prior to
Registration of such shares. Furthermore, for a period of one year
beginning on 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;
l. Compliance with Laws. To the best of Seller's
knowledge after reasonable inquiry, the Business has been operated in
compliance with all applicable laws;
Asset Purchase Agreement Page -5-
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m. Breach of Agreements. To the best of Seller's
knowledge after reasonable inquiry, this Agreement does not breach any
agreement to which Seller is a party or which covers the Assets;
n. Survival of Representations and Warranties. The
representations and warranties set forth in this Section 4 of this
Agreement shall survive the consummation of the transactions
contemplated in this Agreement.
5. Representations and Warranties of Purchaser. Purchaser
represents and warrants that the following are true and correct as of the
Effective Date, and will be true and correct on the Closing Date:
a. Organization of Purchaser. Purchaser is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware;
b. Authorization of Purchaser. Purchaser has full power
and authority to enter into this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby;
c. Survival of Representations and Warranties. The
representations and warranties set forth in this Section 5 of this
Agreement shall survive the consummation of the transactions
contemplated in this Agreement;
d. Qualified to do Business. Purchaser is duly
qualified to do business as a foreign corporation in Texas.
6. Indemnity by Seller. Seller hereby agrees to indemnify,
defend, and hold Purchaser harmless from and against each and every demand,
claim, loss (including, without limitation, any diminution in value),
Liability, item of damages, cost and expense (including, without limitation,
the reasonable fees, disbursements and expenses of attorneys) of any kind
whatsoever asserted against, imposed upon, or incurred by Purchaser by reason
of or resulting from (a) a breach of any representation or warranty of Seller
in or made pursuant to this Agreement and (b) those Retained Liabilities.
7. Effective Date. The parties to this Agreement hereby
understand and agree that the Effective Date (herein so called) of the purchase
and sale of the Assets shall be May 9, 1996 and that such date may be different
than the Closing Date.
8. Miscellaneous.
a. Entire Agreement. This Agreement and the other
agreements expressly contemplated herein supersede any and all
Asset Purchase Agreement Page -6-
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other agreements, either oral or written, between the parties hereto
with respect to the subject matter hereof and contain all of the
covenants and agreements 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. 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. This Agreement shall be performable in Harris County,
Texas. Venue of any litigation arising hereunder shall be in a court
of competent jurisdiction in Harris County, Texas;
d. 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;
e. Costs. 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;
f. Assignment. Neither party 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;
g. Binding Effect. This Agreement shall be binding upon
the parties hereto, together with their respective personal
representatives, heirs, successors, and permitted assigns;
Asset Purchase Agreement Page -7-
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h. 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;
i. Simplified Employee Pension Plan. Seller shall take
all action necessary to terminate his Simplified Employee Pension Plan
and distribute all assets thereof to participants prior to Closing,
and such actions shall be a condition precedent the Closing.
Asset Purchase Agreement Page -8-
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER
------
/s/ C.A. Riser, M.D.
--------------------
C.A. RISER, M.D.
PURCHASER
THE COMPANY DOCTOR
By: /s/ Robert K. Aiken
-----------------------------------
Name: Robert K. Aiken
----------------------------------
Title: Vice President
---------------------------------
Asset Purchase Agreement Page -9-
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SECURITY AGREEMENT
This Security Agreement (this "Agreement") is made and entered into
effective as of May 9, 1996, by and between THE COMPANY DOCTOR, a Delaware
corporation ("Grantor"), and C.A. RISER, M.D., an individual resident of Texas
("Lender").
WHEREAS, Lender has, among other things, loaned Seven Hundred Fifty
Thousand and no/100 Dollars ($750,000.00) to Donald F. Angle, M.D., P.A., a
Texas professional Association ("Angle P.A."), pursuant to that certain Secured
Promissory Note by Angle P.A. in favor of Lender, dated effective May 9, 1996
(the "Promissory Note"), a copy of which is attached as Exhibit A; and
WHEREAS, Grantor has guaranteed the Promissory Note upon a
determination that the timely payment by Angle P.A. of the Promissory Note is
necessary and convenient to the conduct, promotion, and attainment of the
business of Grantor; and
WHEREAS, Grantor has agreed in that certain Asset Purchase Agreement
between Lender and Grantor, dated effective May 9, 1996 (the "TCD Asset
Purchase Agreement"), to timely register the TCD Shares (as herein defined) and
has further agreed to pay to Lender a specified sum of money in the event
Grantor fails to timely register the TCD Shares; and
WHEREAS, it is a condition to acceptance by Lender of the Promissory
Note and the TCD Asset Purchase Agreement that Grantor grant a security
interest in and pledge as security for its guaranty of the Promissory Note and
agreement to timely register the TCD Shares, and all other agreements and
instruments relating to the indebtedness evidenced thereby (such instruments
and agreements, together with this Agreement, are referred to herein
collectively as the "Loan Documents") all of the Assets (as defined herein)
purchased by Grantor from Lender for consideration consisting in part of the
Promissory Note and the TCD Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and obligations of the parties set forth herein, 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:
"Accounts" has the meaning assigned in Section 9.106 of the
UCC.
Security Agreement Page -1-
<PAGE> 11
"Angle P.A. Asset Purchase Agreement" means that certain Asset
Purchase Agreement between Angle P.A. and Lender, dated effective May
9, 1996.
"Angle P.A. Security Agreement" means that certain Security
Agreement between Angle P.A. and Lender, dated effective May 9, 1996.
"Assets" has the meaning assigned in the TCD Asset Purchase
Agreement.
"Collateral" has the meaning assigned in Section 2 of this
Agreement.
"Equipment" has the meaning assigned in Section 9.109(2) of
the UCC.
"Event of Default" means (i) the failure, refusal, or neglect
of Grantor to perform or comply with any of its covenants,
obligations, or agreements hereunder, (ii) the occurrence of a default
or an Event of Default under or as defined in the Promissory Note or
in any other Loan Document, (iii) the failure of Grantor to timely
cause the Registration of the TCD Shares and to timely pay to Lender
the Rescission Amount, and/or (iv) the failure of Angle P.A. to
perform its duties or to comply with its obligations in Section 2(b)
of the Angle P.A. Asset Purchase Agreement.
"Fixtures" has the meaning assigned in Section 9.313(a)(1) of
the UCC.
"General Intangibles" has the meaning assigned in Section
9.106 of the UCC.
"Inventory" has the meaning assigned in Section 9.109(4) of
the UCC.
"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.
Security Agreement Page -2-
<PAGE> 12
"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 Lender 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.
"Obligations" means all present and future indebtedness,
obligations, and liabilities, and all renewals and extensions thereof,
or any part thereof, of Grantor to Lender 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.
"Proceeds" means all "Proceeds" as such term is defined in
Section 9.306(a) of the UCC.
"Registration" has the meaning assigned in the TCD Asset
Purchase Agreement.
"Rescission Amount" has the meaning assigned in the TCD Asset
Purchase Agreement.
"TCD Shares" has the meaning assigned in the TCD Asset
Purchase Agreement.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the State of Texas.
2. 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, but subject to the
limitations of Section 5 hereof, Grantor hereby assigns, mortgages, pledges,
and hypothecates to Lender, and hereby grants to Lender a continuing first and
prior lien and security interest, in all of the Assets (collectively, the
"Collateral"), which may consist of:
a. all Equipment;
b. all Inventory;
c. all Accounts;
d. all Fixtures;
e. all General Intangibles; and
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<PAGE> 13
f. to the extent not otherwise included, all accessions
to, substitutions for and all replacements, betterments, Proceeds, and
products of any and all of the foregoing.
3. Representations and Warranties. Grantor hereby represents and
warrants that:
a. Location of Tangible Property. The Inventory and
Equipment are kept at Grantor's place of business which is located at
4308 Garth Road, Baytown, Texas 77521.
b. Chief Executive Office. Grantor's chief executive
office is located at 5215 N. O'Connor Blvd, Suite 1800, Irving, Texas
75039.
c. Power and Authority; Authorization. Grantor has the
corporate power and authority and the legal right to execute and
deliver, to perform its obligations under, and to grant the Liens and
security interests in the Collateral pursuant to, this Agreement and
has taken all necessary corporate action to authorize its execution,
delivery, and performance of, and grant of the Liens and security
interests in the Collateral pursuant to, this Agreement.
4. Covenants. Grantor covenants and agrees with Lender that,
from and after the date of this Agreement until the Obligations are paid in
full:
a. Further Documentation; Pledge of Instruments. At any
time and from time to time, upon the written request of Lender, and at
the sole expense of Grantor, Grantor will promptly and duly execute
and deliver such further assignments, certificates, supplemental
writings, instruments, and documents and take such further action as
Lender may reasonably request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and
powers herein granted, 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 hereby. 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. Lender and its representatives
shall at all times 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 its interests therein.
Grantor shall pay the costs
Security Agreement Page -4-
<PAGE> 14
incurred by Lender in connection with any such exercise of its rights
pursuant to this Section 4(b).
c. Maintenance of Insurance. Grantor will maintain
insurance at all times with respect to all tangible Collateral
insuring against risks of fire (including so-called extended
coverage), theft, and other risks as Grantor may deem appropriate,
containing such terms, in such form and amounts, and written by such
companies as may be determined by Grantor.
d. Changes in Locations, Name, etc. Grantor will not
(i) change the location of its chief executive office from that
specified in Section 3(b), (ii) permit any of the Collateral to be
kept at a location other than those specified in Section 3(a), or
(iii) change its name, identity, or corporate structure to such an
extent that any financing statement filed by Lender 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 Lender may deem necessary
or advisable to continue the perfection and priority of the security
interest granted pursuant hereto.
5. Remedies. If an Event of Default shall occur, Lender shall
notify Grantor in writing of the Event of Default and Grantor shall have thirty
(30) days from receipt of notice to cure the Event of Default. In the event
Grantor does not cure the Event of Default within thirty (30) days of notice,
Grantor shall transfer and deliver possession of the Assets to Lender against
Lender's transfer and delivery of the TCD Shares to Grantor (duly endorsed for
transfer accompanied by duly executed stock powers) and Lender's agreement in
writing to assume and pay or perform in full all liabilities relating to the
Assets transferred and delivered to Lender pursuant to this Section 5 of this
Agreement. Furthermore, it is the express intent of the parties that the
remedies provided for in this Section 5 of this Agreement and the remedies
provided for in Section 5 of the Angle P.A. Security Agreement are Lender's
sole remedies in the event of an uncured Event of Default.
6. 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 Lender. 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,
Security Agreement Page -5-
<PAGE> 15
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.
7. 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.
8. Exclusive Remedies. The rights and remedies provided in
Section 5 of this Agreement and in Section 5 of the Angle P.A. Security
Agreement shall be Lender's exclusive remedies in the event of an uncured Event
of Default.
9. 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.
10. Limitation on Interest. Regardless of any provision contained
in this Agreement or in the other Loan Documents, Lender 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
Lender 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. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the Maximum Lawful Rate, Grantor and Lender shall, to the
extent permitted under applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread, in equal parts, the total amount of the interest
throughout the entire contemplated term of the Promissory Note, so that the
interest rate is the Maximum Lawful Rate throughout the entire term of the
Promissory Note; provided, however, that if the unpaid principal balance
thereof 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, Lender shall refund to Grantor the
amount of such excess and, in such event, Lender 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.
11. Applicable Law; Jurisdiction. 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,
Security Agreement Page -6-
<PAGE> 16
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. GRANTOR CONSENTS AND
AGREES TO THE JURISDICTION OF ANY STATE COURT SITTING IN THE COUNTY OF HARRIS,
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 LENDER, 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.
12. 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.
13. 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.
14. No Waiver. No course of dealing between Lender and Grantor,
nor any failure to exercise, nor any delay in exercising on the part of Lender
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.
15. Amendments and Modifications. This Agreement shall be
modified or amended only in a written document, signed by Lender and Grantor.
16. 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.
Security Agreement Page -7-
<PAGE> 17
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly
executed and delivered as of the date first above written.
Grantor:
Address: THE COMPANY DOCTOR
By:
- ------------------------------------ ------------------------------------
Name:
- ------------------------------------ ----------------------------------
Attn: Title:
------------------------------ ---------------------------------
Telecopy:
---------------------------
Lender:
Address:
- ------------------------------------ ---------------------------------------
C.A. RISER, M.D.
- ------------------------------------
Telecopy:
---------------------------
Security Agreement Page -8-
<PAGE> 1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made and entered
into effective as of May 9, 1996, by and between C.A. RISER, M.D., an
individual resident of Texas ("Seller"), and DONALD F. ANGLE, M.D., P.A., a
Texas professional association ("Purchaser").
WHEREAS, Seller is a physician engaged in the business of providing
medical-related services (the "Business");
WHEREAS, Purchaser desires to acquire from Seller and Seller desires
to transfer to Purchaser, certain properties, assets, and rights of Seller
related to the Business, and to assume certain specified liabilities of Seller,
all upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, and covenants herein contained, the parties agree as follows:
1. Purchase and Sale. On the terms and subject to the conditions
set forth herein, Seller agrees to and does hereby sell and deliver to
Purchaser, and Purchaser agrees to and does hereby purchase from Seller, all of
the properties, assets, and rights of Seller related to the Business listed in
Exhibit A (the "Assets"). The parties agree that the Purchaser is not
purchasing from Seller any property, asset, or right of Seller not identified
in Exhibit A.
2. Purchase Price. In exchange for the Assets, Purchaser shall
pay the following consideration (in the aggregate, the "Purchase Price"):
a. Cash in the amount of $300,000.00;
b. Secured Promissory Note (herein so called) in the
amount of $750,000 and in the form of Exhibit B attached hereto; and
c. Purchaser hereby assumes and agrees to pay and
perform the liabilities of Seller set forth in Exhibit D (the "Assumed
Liabilities"). Purchaser does not assume any Liabilities of Seller
other than the Assumed Liabilities and Seller recognizes that Seller
shall remain responsible for all of its Liabilities, other than the
Assumed Liabilities. Seller specifically acknowledges that it will
remain liable and responsible for the Liabilities on Exhibit E (the
"Retained Liabilities"). Purchaser hereby agrees to indemnify,
defend, and hold Seller harmless from and against each and every
demand, claim, loss (including, without
Asset Purchase Agreement Page -1-
<PAGE> 2
limitation, any diminution in value), liability, item of damage, cost
and expense (including, without limitation, the reasonable fees,
disbursements and expenses of attorneys) of any kind whatsoever
asserted against, imposed upon, or incurred by Seller by reason of or
resulting from the Assumed Liabilities on or after the Effective Date.
3. Closing. The transactions contemplated hereby will be
consummated at a Closing (herein so called) to be held on August 15, 1996,
at such time and place as the parties agree. The date on which Closing occurs
is referred to herein as the "Closing Date." At Closing, the parties shall
execute and deliver, or cause to happen, the following:
a. Purchaser shall pay to Seller the cash portion of the
Purchase Price and shall execute and deliver to Seller a Secured
Promissory Note in the form of Exhibit B attached hereto against
delivery by Seller of a bill of sale (in a form acceptable to
Purchaser) evidencing the sale, delivery, transfer, and assignment to
Purchaser of good and marketable title to the Assets, free and clear
of all liens, liabilities, claims, and encumbrances, except those
listed in Exhibit D;
b. Purchaser and Seller shall execute and deliver the
Employment Agreements (as defined in Section 4 of this Agreement);
c. Each party to this Agreement shall perform any and
all further acts and execute and deliver any and all documents and
instruments that may be reasonably necessary to carry out the
provisions of this Agreement.
4. Employment Agreements. Purchaser agrees to employ Seller
pursuant to the Employment Agreements (herein so called) in the form of Exhibit
C1 and Exhibit C2 attached hereto. Such employment will be solely pursuant to
the terms of the Employment Agreements, and nothing in this Agreement shall
constitute a separate employment agreement or define any terms of Seller's
employment by Purchaser.
5. Representations and Warranties of Seller. Seller represents
and warrants that the following are true and correct as of the Effective Date,
and will be true and correct on the Closing Date:
a. Citizenship. Seller is a citizen or lawful,
permanent resident of the United States and has never been convicted
of a felony or a crime of moral turpitude;
Asset Purchase Agreement Page -2-
<PAGE> 3
b. Licensure. Seller is a physician currently licensed
to practice medicine by, and in good standing with, the Texas State
Board of Medical Examiners;
c. Liabilities. As of the Closing Date there are no
liabilities or obligations whatsoever of Seller relating in any way to
the Business or the Assets whatsoever, accrued, fixed, contingent or
otherwise, known or which should be known, and asserted or unasserted
(collectively, the "Liabilities" and singly, a "Liability"), except
for the Assumed Liabilities and the Retained Liabilities. Except as
set forth in Exhibit D and Exhibit E, Seller 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, corporation, limited liability company, association,
partnership, joint venture, trust or other entity. The Liabilities
which are to be retained by Seller and which are not to be transferred
to, or assumed by, Purchaser are the Retained Liabilities. Seller
knows of no basis for the assertion of any Liability of any nature or
in any amount other than those set forth in Exhibit D and Exhibit E;
d. Contracts and Commitments with Third Parties. There
is set forth on Exhibit F a list of all outstanding contracts and
agreements, whether or not in writing, which relate to the Business or
the Assets, including, but not limited to, insurance policies, to
which Seller is a party or to which any of the Assets are subject;
e. Title to the Assets. Except for those Assets listed
in Exhibit F which require third party consent to transfer, Seller has
good and marketable title to the Assets free and clear of any pledges,
liens, encumbrances, security interests, equities, charges, and
restrictions of any nature whatsoever;
f. Litigation. Except as listed in Exhibit G, there is
no claim, litigation, action, suit, or proceeding, administrative or
judicial, pending or, to Seller's knowledge, threatened against
Seller relating to the Business, or involving the Assets, at law or
in equity, before any federal, state, local, or foreign court, or
regulatory agency, or other governmental authority, including,
without limitation, any unfair labor practice or grievance
proceedings or otherwise;
g. Assets. The Assets include all patient charts and
medical records used by Seller to operate the Business in the same
manner as the Business was operated by Seller prior to the Closing
Date, and all Medicare and Medicaid receivables associated with the
operation of the Business prior to the Closing Date;
Asset Purchase Agreement Page -3-
<PAGE> 4
h. Taxes. As of the date hereof, all returns and
reports of or relating to any foreign, federal, state, or local tax
that are required to be filed on or before the Closing Date for, by,
on behalf of, or with respect to Seller and the Business, including,
but not limited to, those relating to the income, business,
operations, or Assets of the Business, have been or will be timely
filed with the appropriate foreign, federal, state, and local
authorities on or before the Closing Date;
i. Employee and Labor Matters and Plans.
(1) As of the date hereof, except for the
Simplified Employee Pension Plan which will be terminated
prior to closing, the Business has no pension or welfare plans
as defined in Sections 3(1) and 3(2) of ERISA, or any other
pension plans, welfare plans, profit-sharing plans, deferred
compensation plans, consultant plans, bonus plans, or
arrangements or any other similar plans, agreements, and
arrangements for the benefit of directors, officers, or
employees or former employees (or beneficiaries thereof) of
the Business;
(2) Neither the Business nor any plan as defined
in Section 3(2) of ERISA previously maintained by it
(collectively, the "Plans" and singly, a "Plan") has incurred
any liability to the Pension Benefit Guaranty Corporation or
excise tax to the IRS with respect to any Plan, and the
Business has not incurred any liability under Section 4201 of
ERISA for a complete or partial withdrawal from, or has any
obligation to contribute to, a multi-employee Plan. No Plan,
if any, previously maintained by the Business will result in
any tax on or material liability of the Business. No
accumulated funding deficiency (within the meaning of Section
412 of the Code), whether waived or unwaived, exists with
respect to any Plan or any Plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B)
of the Code) in which the Business is or was a member;
(3) There are no claims pending or, to the
knowledge of the Seller, threatened, involving any pension or
welfare Plans or any other matter relating to employment by a
current or former employee (or beneficiary thereof) of the
Business.
j. Compliance with Laws. To the best of Seller's
knowledge after reasonable inquiry, the Business has been operated in
compliance with all applicable laws;
Asset Purchase Agreement Page -4-
<PAGE> 5
k. Breach of Agreements. To the best of Seller's
knowledge after reasonable inquiry, this Agreement does not breach any
agreement to which Seller is a party or which covers the Assets;
l. Survival of Representations and Warranties. The
representations and warranties set forth in this Section 5 of this
Agreement shall survive the consummation of the transactions
contemplated in this Agreement.
6. Representations and Warranties of Purchaser. Purchaser
represents and warrants that the following are true and correct as of the
Effective Date, and will be true and correct on the Closing Date:
a. Organization of Purchaser. Purchaser is a
professional association duly organized, validly existing, and in good
standing under the laws of the State of Texas;
b. Authorization of Purchaser. Purchaser has full power
and authority to enter into this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby;
c. Survival of Representations and Warranties. The
representations and warranties set forth in this Section 6 of this
Agreement shall survive the consummation of the transactions
contemplated in this Agreement.
7. Indemnity by Seller. Seller hereby agrees to indemnify,
defend, and hold Purchaser harmless from and against each and every demand,
claim, loss (including, without limitation, any diminution in value),
Liability, item of damages, cost and expense (including, without limitation,
the reasonable fees, disbursements and expenses of attorneys) of any kind
whatsoever asserted against, imposed upon, or incurred by Purchaser by reason
of or resulting from (a) a breach of any representation or warranty of Seller
in or made pursuant to this Agreement and (b) those Retained Liabilities.
8. Effective Date. The parties to this Agreement hereby
understand and agree that the Effective Date (herein so called) of the purchase
and sale of the Assets shall be May 9, 1996 and that such date may be different
than the Closing Date.
9. 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
Asset Purchase Agreement Page -5-
<PAGE> 6
all of the covenants and agreements 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. 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. This Agreement shall be performable in Harris County,
Texas. Venue of any litigation arising hereunder shall be in a court
of competent jurisdiction in Harris County, Texas;
d. 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;
e. Costs. 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;
f. Assignment. Neither party 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;
g. Binding Effect. This Agreement shall be binding upon
the parties hereto, together with their respective personal
representatives, heirs, successors, and permitted assigns;
Asset Purchase Agreement Page -6-
<PAGE> 7
h. 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;
i. Simplified Employee Pension Plan. Seller shall take
all action necessary to terminate his Simplified Employee Pension Plan
and distribute all assets thereof to participants prior to Closing,
and such actions shall be a condition precedent the Closing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SELLER
------
/s/ C. A. Riser, M.D.
--------------------------------------
C.A. RISER, M.D.
PURCHASER
---------
DONALD F. ANGLE, M.D., P.A.
By: /s/ Donald F. Angle, M.D.
-----------------------------------
Name: Donald F. Angle, M.D.
---------------------------------
Title: President
--------------------------------
Asset Purchase Agreement Page -7-
<PAGE> 8
EXHIBIT B
SECURED PROMISSORY NOTE
$750,000.00 Dallas, Texas May ___, 1996
FOR VALUE RECEIVED, the undersigned, DONALD F. ANGLE, M.D., P.A., a
Texas professional association ("Maker"), promises to pay to the order of C.A.
RISER, M.D. ("Payee"), at such place as the holder hereof may designate from
time to time, in lawful money of the United States of America, the principal
sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) plus interest as set
forth below.
Interest on the principal amount of this Secured Promissory Note
remaining unpaid from time to time shall accrue at a per annum rate equal to
nine and one-half percent (9.5%).
The interest on and principal of this Secured Promissory Note shall be
due and payable in Seven (7) equal monthly installments of principal and
interest in the amount of Ten Thousand Dollars ($10,000.00) each plus accrued
interest, beginning September 15, 1996, and continuing on the 15th day of each
month thereafter through March 15, 1997, and a final payment of all unpaid
principal and accrued and unpaid interest on April 15, 1997.
Time is of the essence in the payment of this Secured Promissory Note.
Upon the occurrence of any default on this Secured Promissory Note, then the
holder of this Secured Promissory Note shall be entitled only to those remedies
contained in that certain Security Agreement between Maker and Payee, dated
effective May 9, 1996 (the "Security Agreement") and to those remedies
contained in that certain Security Agreement between The Company Doctor and
Payee, dated effective May 9, 1996 (the "TCD Security Agreement"). Maker shall
have no personal liability to make any payment on this Secured Promissory Note.
The indebtedness evidenced hereby 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.
All agreements between Maker and the holder hereof, 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 hereof for the use, forbearance, or
detention of the funds advanced pursuant to this Secured Promissory Note, or
otherwise, or for the payment or performance of any covenant or obligation
contained herein or document or instrument evidencing, securing, or pertaining
to this Secured Promissory Note, exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provision hereof or of any other
<PAGE> 9
document or instrument described herein, 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 hereof 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 Secured Promissory Note or on account of
any other principal indebtedness of Maker to the holder hereof, and not to the
payment of interest, or if such excessive interest exceeds the unpaid principal
balance of this Secured Promissory Note and such other indebtedness, such
excess shall be refunded to Maker. 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 Secured Promissory 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. The terms and provisions of this paragraph shall control and
supersede every other provision of all agreements between Maker and the holder
hereof.
The invalidity, or unenforceability in particular circumstances, of
any provision of this Secured Promissory Note shall not extend beyond such
provision or such circumstances and no other provision of this instrument shall
be affected thereby.
This Secured Promissory 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 hereof.
Maker represents and warrants to the holder of this Secured Promissory
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.
As used in this Secured Promissory Note, the word "holder" shall mean
the Payee(s) or other endorsee(s) of this Secured Promissory Note who is in
possession of it, or the bearer(s) of said Secured Promissory Note, if this
Secured Promissory Note is at the time payable to the bearer(s).
THIS SECURED PROMISSORY 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 SECURED PROMISSORY NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS,
AND VENUE IN ANY LITIGATION PURSUANT TO THIS SECURED PROMISSORY NOTE SHALL BE
IN HARRIS COUNTY, TEXAS.
<PAGE> 10
EXECUTED as of the day and year first above written.
MAKER:
DONALD F. ANGLE, M.D., P.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
To induce Payee to accept this Secured Promissory Note, and for good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the undersigned hereby unconditionally guarantees to Payee and/or
other endorsee(s) that the principal of, and interest on, and fees and expenses
provided in (including, without limitation, attorneys' fees), this Secured
Promissory Note will be promptly paid when due in accordance with its terms;
provided, however, Payee and/or other endorsee(s) shall only have the rights to
pursue its remedies against the undersigned under the TCD Security Agreement.
THE COMPANY DOCTOR
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 11
SECURITY AGREEMENT
This Security Agreement (this "Agreement") is made and entered into
effective as of May 9, 1996, by and between DONALD F. ANGLE, M.D., P.A., a
Texas professional association (hereinafter referred to as "Grantor" or "Angle
P.A."), and C.A. RISER, M.D., an individual resident of Texas ("Lender").
WHEREAS, Lender has, among other things, loaned Seven Hundred Fifty
Thousand and no/100 Dollars ($750,000.00) to Grantor, pursuant to that certain
Secured Promissory Note by Grantor in favor of Lender, dated effective May 9,
1996 (the "Promissory Note"), a copy of which is attached as Exhibit A; and
WHEREAS, it is a condition to acceptance by Lender of the Promissory Note
that Angle P.A. grant a security interest in and pledge as security for its
obligations under the Promissory Note, and all other agreements and instruments
relating to the indebtedness evidenced thereby (such instruments and
agreements, together with this Agreement, are referred to herein collectively
as the "Loan Documents") all of the Assets (as defined herein) purchased by
Grantor from Lender for consideration consisting in part of the Promissory
Note.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and obligations of the parties set forth herein, 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:
"Accounts" has the meaning assigned in Section 9.106 of the UCC.
"Angle P.A. Asset Purchase Agreement" means that certain Asset
Purchase Agreement by and between Lender and Grantor, dated effective May
9, 1996.
"Assets" has the meaning assigned in the Angle P.A. Asset Purchase
Agreement.
"Collateral" has the meaning assigned in Section 2 of this
Agreement.
"Equipment" has the meaning assigned in Section 9.109(2) of the
UCC.
"Employment Agreements" has the meaning assigned in the Angle P.A.
Asset Purchase Agreement.
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"Event of Default" means (i) the failure, refusal, or neglect of
Grantor to perform or comply with any of its covenants, obligations, or
agreements hereunder, (ii) the occurrence of a default or an Event of
Default under or as defined in the Promissory Note, any other Loan
Document, or the failure of The Company Doctor, a Delaware corporation,
to make timely payment pursuant to its guaranty under the Promissory
Note, (iii) the failure of TCD to timely cause the Registration of the
TCD Shares and to timely pay to Lender the Rescission Amount, and/or (iv)
the failure of Grantor to perform its duties or to comply with its
obligations in Section 2(b) of the Angle P.A. Asset Purchase Agreement.
"Fixtures" has the meaning assigned in Section 9.313(a)(1) of the
UCC.
"General Intangibles" has the meaning assigned in Section 9.106 of
the UCC.
"Inventory" has the meaning assigned in Section 9.109(4) of the
UCC.
"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.
"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 Lender 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.
"Obligations" means all present and future indebtedness,
obligations, and liabilities, and all renewals and extensions thereof, or
any part thereof, of Grantor to Lender arising pursuant to the Loan
Documents, and all interest accrued
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thereon and reasonable costs, expenses, and attorneys' fees incurred in
the enforcement or collection thereof.
"Proceeds" means all "Proceeds" as such term is defined in Section
9.306(a) of the UCC.
"Registration" has the meaning assigned in the TCD Asset Purchase
Agreement.
"Rescission Amount" has the meaning assigned in the TCD Asset
Purchase Agreement.
"TCD Asset Purchase Agreement" means that certain Asset Purchase
Agreement between TCD and Lender, dated effective May 9, 1996.
"TCD Security Agreement" means that certain Security Agreement
between TCD and Lender, dated effective May 9, 1996.
"TCD Shares" has the meaning assigned in the TCD Asset Purchase
Agreement.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of Texas.
2. 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, but subject to the
limitations of Section 5 hereof, Grantor hereby assigns, mortgages, pledges,
and hypothecates to Lender, and hereby grants to Lender a continuing first and
prior lien and security interest, in all of the Assets (collectively, the
"Collateral"), which may consist of:
a. all Equipment;
b. all Inventory;
c. all Accounts;
d. all Fixtures;
e. all General Intangibles; and
f. to the extent not otherwise included, all accessions to,
substitutions for and all replacements, betterments, Proceeds, and
products of any and all of the foregoing.
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3. Representations and Warranties. Grantor hereby represents and
warrants that:
a. Location of Tangible Property. The Inventory and Equipment
are kept at Grantor's place of business which is located at 4308 Garth
Road, Baytown, Texas 77521.
b. Chief Executive Office. Grantor's chief executive office is
located at 5215 N. O'Connor Blvd, Suite 1800, Irving, Texas 75039.
c. Power and Authority; Authorization. Grantor has the
corporate power and authority and the legal right to execute and deliver,
to perform its obligations under, and to grant the Liens and security
interests in the Collateral pursuant to, this Agreement and has taken all
necessary corporate action to authorize its execution, delivery, and
performance of, and grant of the Liens and security interests in the
Collateral pursuant to, this Agreement.
4. Covenants. Grantor covenants and agrees with Lender that, from and
after the date of this Agreement until the Obligations are paid in full:
a. Further Documentation; Pledge of Instruments. At any time
and from time to time, upon the written request of Lender, and at the
sole expense of Grantor, Grantor will promptly and duly execute and
deliver such further assignments, certificates, supplemental writings,
instruments, and documents and take such further action as Lender may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
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 hereby. 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. Lender and its representatives shall at
all times 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 its interests therein. Grantor shall pay
the costs incurred by Lender in connection with any such exercise of its
rights pursuant to this Section 4(b).
c. Maintenance of Insurance. Grantor will maintain insurance at
all times with respect to all tangible Collateral
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<PAGE> 15
insuring against risks of fire (including so-called extended coverage),
theft, and other risks as Grantor may deem appropriate, containing such
terms, in such form and amounts, and written by such companies as may be
determined by Grantor.
d. Changes in Locations, Name, etc. Grantor will not (i) change
the location of its chief executive office from that specified in Section
3(b), (ii) permit any of the Collateral to be kept at a location other
than those specified in Section 3(a), or (iii) change its name, identity,
or corporate structure to such an extent that any financing statement
filed by Lender 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 Lender may deem necessary or advisable to continue the
perfection and priority of the security interest granted pursuant hereto.
5. Remedies. If an Event of Default shall occur, Lender shall notify
Grantor in writing of the Event of Default and Grantor shall have thirty (30)
days from receipt of notice to cure the Event of Default. In the event Grantor
does not cure the Event of Default within thirty (30) days of notice:
a. Grantor shall transfer and deliver possession of the Assets
to Lender against Lender's agreement in writing to assume and pay or
perform in full all liabilities relating to the Assets transferred and
delivered to Lender pursuant to this Section 5 of this Agreement;
b. Lender shall keep all monies paid by Grantor pursuant to the
Angle P.A. Asset Purchase Agreement and the Promissory Note;
c. The Employment Agreements, copies of which are set forth in
Exhibit B and Exhibit C, shall be voided ab initio, except that wages
earned by Lender pursuant to such Employment Agreements through the date
of the Event of Default shall remain due and owing from Grantor to
Lender; and
d. The Promissory Note, and any covenants, warranties,
representations, and obligations made thereunder or in the Angle P.A.
Asset Purchase Agreement, which relate to the Promissory Note, by
Grantor, Lender, and any other entity, shall be terminated immediately
with no further liability on the part of Grantor, Lender, or any other
entity under the Promissory Note.
It is the express intent of the parties that the remedies provided for in this
Section 5 of this Agreement and the remedies provided
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for in Section 5 of the TCD Security Agreement are Lender's sole remedies in
the event of an uncured Event of Default.
6. 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 Lender. 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.
7. 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.
8. Exclusive Remedies. The rights and remedies provided in Section 5
of this Agreement and in Section 5 of the TCD Security Agreement shall be
Lender's exclusive remedies in the event of an uncured Event of Default.
9. 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.
10. Limitation on Interest. Regardless of any provision contained in
this Agreement or in the other Loan Documents, Lender 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 Lender 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. In determining whether or
not the interest paid or payable under any specific contingency exceeds the
Maximum Lawful Rate, Grantor and Lender shall, to the extent permitted under
applicable law, (a) characterize any non-principal payment as an expense, fee,
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread, in equal
parts, the total amount of the interest throughout the entire contemplated term
of the Promissory Note, so that the
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interest rate is the Maximum Lawful Rate throughout the entire term of the
Promissory Note; provided, however, that if the unpaid principal balance
thereof 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, Lender shall refund to Grantor the
amount of such excess and, in such event, Lender 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.
11. Applicable Law; Jurisdiction. 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. GRANTOR
CONSENTS AND AGREES TO THE JURISDICTION OF ANY STATE COURT SITTING IN THE
COUNTY OF HARRIS, 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 LENDER, 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.
12. 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.
13. 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.
14. No Waiver. No course of dealing between Lender and Grantor, nor
any failure to exercise, nor any delay in exercising
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on the part of Lender 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.
15. Amendments and Modifications. This Agreement shall be modified or
amended only in a written document, signed by Lender and Grantor.
16. 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.
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
to be effective as of the date first above written.
Grantor:
Address: DONALD F. ANGLE, M.D., P.A.
By:
- ---------------------------------- ----------------------------------
Name:
- ---------------------------------- --------------------------------
Attn: Title:
----------------------------- -------------------------------
Telecopy:
-------------------------
Lender:
Address:
- ---------------------------------- -------------------------------------
C.A. RISER, M.D.
- ----------------------------------
Telecopy:
-------------------------
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