<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 28, 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
IRVING, TEXAS 75039
(Address of principal executive offices)
(214) 401-8300
(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 an Asset Purchase Agreement and Stock
Purchase Agreement, respectively (collectively, the "Agreements") to acquire
the Northside Family Medical Clinic Professional Association, the medical
practice (the "Practice") of J.W. Czewski, D.O. (the "Physician"). As a result
of this acquisition in Fort Worth, Texas, the Company now manages six clinics
in the Dallas-Fort Worth area, and a total of ten clinics located in Texas,
Louisiana and Arkansas. 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
August 21, 1996.
Pursuant to the Agreements, the Physician Group has acquired all of
the outstanding shares of capital stock of the Practice and the Company has
acquired certain assets, primarily equipment, of the Practice in exchange for
(i) 41,026 shares of the Company's Common Stock to be issued within 15 days of
closing (the "Initial Shares"), (ii) 7,179 shares of Common Stock to be issued
after May 28, 1997, but no later than June 12, 1997 (the "Later Shares"), (iii)
$300,000 in cash, and (iv) a promissory note in the principal amount of
$200,000 secured by the assets and capital stock acquired. The note bears
interest at the rate of 9.5% per annum and provides for monthly payments of
approximately $12,000 for a period of eighteen months commencing September 15,
1996. Should the Company or the Physician Group default under the note or
their respective security agreements, the Physician may, in lieu of exercising
his remedies as holder of the note as a secured party under the security
agreements, elect to rescind the sale of the Practice and related contracts. In
such event, the Physician Group and the Company would be required to return to
the Physician all of the stock of the Practice and all of the assets acquired;
the Physician would be entitled to retain 1/12th of the shares of Common Stock
of the Company for every one month after the closing date during which the
Physician was employed by the Physician Group and all cash paid at closing or
pursuant to the note prior to the event of default; the employment agreements
would be void from the closing of the rescission; and the Company would have no
obligation to register the Common Stock retained by the Physician.
The Physician has been granted demand registration rights with respect
to the shares of Common Stock. If the Physician requests, before December 15,
1996, with respect to the Initial Shares and before May 28, 1997 with respect
to the Later Shares, that the Company register such
2
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Initial and/or Later Shares, the Company will file a registration statement and
shall cause it to become effective not later than February 28, 1997 with
respect to the Initial Shares and not later than March 1, 1997 with respect to
the Later Shares. The Physician has agreed that he will not sell, assign,
burden, pledge or encumber more than 1\12 of the Initial Shares or the Later
Shares during any month, and that no sales of the Initial Shares may be made
prior to the earlier of registration of such Initial Shares or February 29,
1997 and no sales of the Later Shares may be made prior to registration of such
Later Shares or May 28, 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. Should the Physician cease to be
employed under either of such employment agreements prior to May 28, 1997, the
Later Shares will not be issued and all provisions of the Agreements relating
to the Later Shares will be void.
The closing of the transactions contemplated by the Agreements was
consummated on August 28, 1996, effective as of August 21, 1996.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 5. OTHER EVENTS
Not applicable.
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.
3
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(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>
2.8 Asset Purchase Agreement by and among Northside
Family Medical Clinic Professional Association,
J.W. Czewski, D.O., and The Company Doctor,
including Security Agreement 2
2.9 Stock Purchase Agreement by and among Northside
Family Medical Clinic Professional Association,
J.W. Czewski, D.O., and Donald F. Angle, M.D., P.A.,
including Secured Promissory Note, Pledge and
Security Agreement and Rescission 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: September 12, 1996 By: /s/ Fred G. Parrish
-----------------------------------------
Fred G. Parrish, Chief Operating Officer
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Reg. S-K
Exhibit No. Description Item No.
- ----------- ----------- --------
<S> <C> <C>
2.8 Asset Purchase Agreement by and among Northside
Family Medical Clinic Professional Association,
J.W. Czewski, D.O., and The Company Doctor,
including Security Agreement 2
2.9 Stock Purchase Agreement by and among Northside
Family Medical Clinic Professional Association,
J.W. Czewski, D.O., and Donald F. Angle, M.D., P.A.,
including Secured Promissory Note, Pledge and
Security Agreement and Rescission Agreement 2
</TABLE>
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EXHIBIT 2.8
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into August 21, 1996, to be effective from and after August 21, 1996 (the
"Effective Date"), by and among NORTHSIDE FAMILY MEDICAL CLINIC PROFESSIONAL
ASSOCIATION, a Texas professional association ("Seller"), J. W. CZEWSKI, D.O.,
an individual resident of Texas ("Czewski"), and THE COMPANY DOCTOR, a Delaware
corporation ("Purchaser").
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
certain of the assets of the private practice of medicine conducted by Seller
(the "Practice");
WHEREAS, 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.
NOW, THEREFORE, 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 hereby 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, assign, transfer, and
deliver to Purchaser, and Purchaser agrees to and does hereby purchase from
Seller, those of the assets of the Practice identified on Schedule 1 to this
Agreement (collectively, the "Assets"), free and clear of any liens,
liabilities, security interests, claims, and encumbrances. The purchase and
sale of the Assets is made in consideration for the Purchase Price (as
hereinafter defined), payable as set forth in Section 3.
2. Delivery of Assets and Conveyance Documents. Seller has taken
all steps necessary to transfer all right, title, and interest in and to the
Assets to Purchaser, free and clear of all liens, liabilities, security
interests, claims, and encumbrances of any nature whatsoever. Seller has
delivered to Purchaser (a) a duly executed Bill of Sale in the form of that
attached as Exhibit A, and (b) such other duly executed transfer and release
documents which Purchaser has reasonably requested to evidence the sale and
transfer of the Assets by Seller to Purchaser free and clear of any liens,
liabilities, security interests, claims, and encumbrances of any nature
whatsoever.
3. Purchase Price. In exchange for the Assets, Purchaser shall
pay to Seller the following consideration (in the aggregate, the "Purchase
Price"):
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(a) The right to receive 41,026 shares of unregistered
Common Stock, $0.01 par value, of Purchaser (the "Initial TCD Shares");
certificates representing such shares will be delivered to Seller within
fifteen (15) days after Closing; and
(b) The right to receive an additional 7,179 shares of
unregistered Common Stock, $0.01 par value, of Purchaser (the "Later TCD
Shares"); which shares will be issued, and certificates representing such
shares will be delivered, to Seller within fifteen (15) days after the date
which is nine (9) months after the Closing.
4. Rights to TCD Shares. Effective as of 12:02 a.m., August 21,
1996, Seller shall distribute to Czewski, pursuant to the Assignment of Right
to Receive Stock in the form of that attached as Exhibit B hereto, the rights
to receive the Initial TCD Shares and the Later TCD Shares given to Seller in
accordance with Sections 3(a) and 3(b).
5. Transfer Taxes. Seller hereby agrees to pay and discharge,
and to indemnify and hold Purchaser harmless from and against any liability,
obligation, claim, assessment, or deficiency for any and all sales, use,
transfer, or other similar taxes (and any and all interest, penalties,
additions to tax and fines thereon or related thereto) resulting or arising
from or incurred in connection with the consummation of the transactions
contemplated by this Agreement.
6. Registration of TCD Shares. Upon Czewski's written request at
any time after the Effective Date and before December 15, 1996, Purchaser shall
file a registration statement under the Securities Act of 1933, as amended (the
"Securities Act") relating to, and shall cause to be effective, the
registration under the Securities Act of the Initial TCD Shares not later than
February 28, 1997 (the "Initial Registration"). Upon Czewski's written request
at any time after the Closing and before May 28, 1997, Purchaser shall file a
registration statement under the Securities Act relating to, and shall cause to
be effective, the registration under the Securities Act of the Later TCD Shares
not later than May 1, 1997 (the "Later Registration").
7. Closing. The transactions contemplated hereby will be
consummated at a Closing (herein so called) to be held on the date of execution
of this Agreement, 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,
each party to this Agreement shall perform any and all acts and execute and
deliver any and all documents and instruments that may be reasonably necessary
to carry out the provisions of this Agreement. In particular, and without
limiting the generality of the foregoing,
Asset Purchase Agreement Page -2-
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at Closing the parties shall execute and deliver, or cause to be executed and
delivered, in addition to this Agreement, the following:
(a) the Bill of Sale and any other conveyance documents
contemplated by Section 2;
(b) the Assignment of Right to Receive Stock in
accordance with Section 4; and
(c) the investment letter required by Section 11(a).
Subject to the terms and conditions herein contained, the consummation of the
transactions referred to above (other than the Assignment of Right to Receive
Stock) shall be effective as of 12:01 a.m. on August 21, 1996.
8. Representations and Warranties of Seller. As an inducement to
Purchaser to enter into this Agreement, Seller and Czewski hereby jointly and
severally represent and warrant to Purchaser as follows:
(a) Enforceability. This Agreement constitutes a legal,
valid, and binding obligation of Seller, enforceable against Seller 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).
(b) Asset Rights. Seller is the true and lawful owner,
legally and beneficially, of the Assets, free and clear of all liens, security
interests, claims, and encumbrances of any nature whatsoever. Upon
consummation of the transactions contemplated hereby, Purchaser will own and be
entitled to use the Assets free and clear of all liens, security interests,
claims, and encumbrances of any nature whatsoever. The tangible assets of
Seller are in good operating condition, order, and repair, subject to ordinary
wear and tear, and have been maintained in accordance with standard industry
practice; are capable of being used in the Practice as presently being
conducted without the present need for repair or replacement excepting in the
ordinary course of business; and conform in all respects with all applicable
legal requirements.
(c) No Consents Required. There is no requirement
applicable to 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 Seller of the
transactions contemplated by this Agreement (except as may be contemplated by
the last sentence of Section 8(f)).
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(d) 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, Seller, including,
but not limited to, those relating to the income, business,
operations, or assets of 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 Seller for the periods covered thereby; and
(2) All Taxes due and payable by Seller as of the
Closing Date have been paid, and Seller have no unpaid liability for
Taxes of any nature whatsoever.
(3) 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, Seller.
(e) Financial Statements; Liabilities. All financial
statements provided by Seller to Purchaser are complete and accurate in all
respects, having been prepared in accordance with the income tax 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 Seller and the Practice as of the date and for the periods indicated
thereon. There are no liabilities, debts, or obligations of Seller whatsoever,
accrued, fixed, contingent, or otherwise (known or unknown and asserted or
unasserted), existing on the date hereof (collectively, the "Liabilities" and
singly, a "Liability"), except for those Liabilities set forth in Schedule
8(e). Except as set forth in Schedule 8(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. Seller knows
of no basis for the assertion of any Liability of any nature or in any amount
against him or the Practice other than those set forth in Schedule 8(e). The
aggregate amount of Liabilities of Seller does not exceed $40,000 (including
any future payments due on any Liability). Since August 1, 1996 there has not
been any material adverse change in the condition (financial or otherwise) of
Seller or in
Asset Purchase Agreement Page -4-
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the assets and liabilities of Seller, and Seller has paid its debts in the
usual and ordinary course of business since such date, 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 to conduct
its professional practice as currently conducted.
(f) Consents. Schedule 8(f) to this Agreement sets forth
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 Seller or the Practice (including all amendments,
supplements, and modifications thereto) to which Seller is a party or is
otherwise bound (the "Contracts"). 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 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, to the best knowledge of Seller,
by any other party to the Contracts. True, correct, and complete copies of all
the Contracts as currently in force have been delivered by Seller to Purchaser.
Except as provided in Schedule 8(f), 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 and delivered to
Purchaser at or prior to the Closing.
(g) Employees. Schedule 8(g) to this Agreement sets
forth a true and complete list of the names of, job titles, hire dates, and
current hourly compensation paid by Seller to each employee of Seller. Other
than wage increases in the ordinary course of business, since August 1, 1996
Seller has not made any commitment or agreement to increase the wages or modify
the conditions or terms of employment of any of its employees.
(h) Employee Benefits. Set forth in Schedule 8(h) is 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
Seller currently maintains, or has ever maintained, with respect to any of its
current or former employees (collectively the "Plans"). 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 Seller (either directly
or indirectly, including as a result of an indemnification
Asset Purchase Agreement Page -5-
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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. 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 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
knowledge of Seller, no event has occurred or condition exists which could
adversely affect such determination. With respect to each Plan which is an
"employee welfare benefit plan," as defined in section 3(1) of ERISA, (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 Seller or
any related entity, and (iv) there are no unpaid or overdue insurance premiums
required to be paid with respect to such plan. There are no actions, suits, or
claims, other than routine claims for benefits, pending or, to the knowledge of
Seller, threatened with respect to any of the Plans or against any trustee,
fiduciary, or administrator of the Plans. 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 Seller that have not been fully discharged, and no
Plan has been submitted to the IRS under the voluntary compliance resolution or
closing agreement programs.
(i) Employment Laws. Seller is 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").
Seller has not received any notice of noncompliance or violation of any
Employment Law that is pending or unresolved; no action is pending, or to the
best knowledge of 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; and there is no pending or, to the
best knowledge of Seller, threatened arbitration, suit, litigation, or
proceeding, against Seller or any current or former director, shareholder,
officer, or supervisory employee of Seller, alleging wrongful termination,
racial, religious, sexual, or age discrimination, improper post- termination
conduct, or breach of conduct or covenant of employment.
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(j) Environmental Laws. Seller is in compliance in all
material respects with all applicable Environmental Laws (as defined below),
which compliance includes, but is not limited to, the possession by Seller of
all material permits and other governmental authorizations required under
applicable Environmental Laws, and material compliance with the terms and
conditions thereof. 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 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.
(k) Assets and Properties. Seller owns or has the sole
right to use (pursuant to a valid lease or license disclosed on Schedule 8(k))
all operating assets and properties necessary for Seller to carry on the
Practice in the manner presently conducted by Seller. Seller has good and
marketable title to all its assets, and title to all its 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. The equipment and other tangible assets of Seller and
the tangible property leased by Seller under leases are in good operating
condition and repair, normal wear and tear excepted (except as identified to
Purchaser by Seller in writing on Schedule 8(k)), and are capable of being used
for their intended purpose in the Practice as now conducted. All equipment and
other tangible assets owned by Seller and the tangible property leased by Seller
under leases, and, to the best knowledge of Seller, the present use of all such
items, conforms to all applicable Governmental Requirements (as defined herein),
and no notice of any violation of any such Governmental Requirements relating to
such Assets or their use has been received by Seller. Seller does not own any
real property.
(l) No Material Changes. Except as set forth in Schedule
8(l), since August 1, 1996, Seller has not:
(1) sold, leased, optioned, or transferred any
material portion of its assets;
(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;
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(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
expenditure in an amount in excess of $5,000;
(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 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 Seller;
(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 Seller 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
Seller; or
(14) agreed to do any of the foregoing.
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(m) Compliance with Laws Generally. Without limiting the
provisions of Sections 8(i) and 8(j), Seller is in compliance in all material
respects with each Governmental Requirement. 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 (which 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). "Governmental Requirement"
specifically includes 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 ("Stark Bill")), 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").
(n) Nature of Practice. Czewski conducts the Practice as
an employee of Seller.
(o) Licensure. Czewski 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.
(p) Competing Interests and Financial Relationships.
(1) Competing Interests. Neither Seller nor any
Associate (defined below) of Seller: (a) 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 (b) owns, directly or indirectly, in whole 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
Asset Purchase Agreement Page -9-
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necessary for or material to, the Practice. For purposes of this
Agreement, the term "Associate" shall mean: (i) with respect to an
individual: (1) the spouse, parents or children of the individual and
his/her spouse, (2) any trust in which the individual or any person
described in clause (1) above has an interest or any trustee of such a
trust, and (3) any Affiliate of the individual; (ii) 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; 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; and "Person" means an individual or a
corporation, limited liability company, partnership, trust, estate,
unincorporated organization, association, or other entity.
(2) 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.
(q) Effect of Agreement. The execution, delivery, and
performance of this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby will not (i) 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 is now a party or by which Seller may be bound or affected; or
(ii) 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 to exercise any right under any agreement). Seller is not
aware (but by so affirming is not making a guarantee of any continuing
relationships) of any reason why the business relationships of patients or
contracted third party payors of the Practice will be adversely affected by the
execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(r) Intellectual Property. The Practice as now conducted
by Seller does not require the use of or consist of any rights under any
patents, inventions, trademarks, trade names, brand names, or copyrights.
Seller 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.
Asset Purchase Agreement Page -10-
<PAGE> 11
(s) Suits, Actions, and Claims. Except as set forth in
Schedule 8(s) 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 is
engaged or which are pending or threatened against or affecting Seller or its
employees, or to which Seller 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 no present or potential claim against Seller or its
employees related to the Practice.
(t) Insurance Policies. Schedule 8(t) to this Agreement
contains a list of all insurance policies (specifying the insurer, the amount
of coverage, the type of insurance, and the policy number) maintained by Seller
related to the Practice. There are no special circumstances with respect to
such policies or the Practice that lead to any liability under such insurance
policies being avoided by the insurers issuing such policies or, to the best
knowledge of Seller, the premiums thereunder being increased. All professional
liability policies are [OCCURRENCE BASED] policies, and all insurance policies
are in full force and effect, with all premiums due thereon to date fully paid.
(u) Licenses and Permits, Compliance with Governmental
Requirements. Except for individual medical professional licenses, Schedule
8(u) to this Agreement sets forth a true and complete list of all licenses and
permits necessary for the conduct of the Practice. Seller has all such
licenses and permits validly issued and all such licenses and permits are in
full force and effect. True and correct copies of all such licenses and
permits have been delivered to Purchaser prior to Closing. 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, threatened seeking the
revocation or limitation of any of such licenses or permits. All such licenses
and permits that are subject to transfer are included in the Assets.
(v) Accounts Receivable. All notes and accounts
receivable of Seller and the Practice that are reflected on the Financial
Statements or that have arisen since the date thereof ("Accounts Receivable")
have arisen in the ordinary course of business. Schedule 8(v) sets forth a
true, correct, and complete aging of the Accounts Receivable of Seller as of
the most recent practicable date.
(w) Records. The books, records (including patient
medical records), and other such items kept by Seller with respect to its
assets and the Practice have been kept properly and contain records of all
matters required to be included therein by any Governmental Requirement and by
generally accepted community and
Asset Purchase Agreement Page -11-
<PAGE> 12
professional standards, and such books and records are true, accurate, and
complete.
(x) Deposits. Seller 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.
(y) Telephone Numbers. All telephone and facsimile
numbers used by Seller in connection with the Practice are valid and in good
working order, and may be transferred to Purchaser.
(z) Workmen's Compensation Data. All data set forth in
the most recent workmen's compensation report of Seller has been provided to
Purchaser and is true, correct, and complete as of the date thereof.
(aa) No Untrue Statements. The statements,
representations, and warranties of Seller 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.
(ab) Survival. The representations and warranties set
forth in this Section 8 shall survive the consummation of the transactions
contemplated in this Agreement.
9. Representations and Warranties of Purchaser. Purchaser
represents and warrants Seller as follows:
(a) Purchaser is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Purchaser has all necessary power and authority under
applicable law and its Certificate of Incorporation and By-Laws to own or lease
its properties and to carry on its business as presently conducted.
10. Covenants of Seller. Seller hereby covenants and agrees as
follows:
(a) Seller agrees to keep in effect its current
professional liability insurance policy with National Union Fire Insurance a
copy of which is set forth in Schedule 10(a) attached hereto. The parties
acknowledge that the professional liability insurance policy set forth on
Schedule 10(a) is being assumed by Purchaser contemporaneously with the
execution and delivery of this
Asset Purchase Agreement Page -12-
<PAGE> 13
Agreement. Purchaser agrees that in the event it determines after the date
hereof that a new professional liability insurance policy is appropriate for
the Purchaser's protection, Seller will be responsible for securing any
necessary tail coverage.
(b) 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 Seller 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 Czewski.
(a) Czewski is subject to, and agrees to be bound by, the
provisions, restrictions, conditions, obligations, and/or requirements
contained in the investment letter from Czewski to Purchaser, dated August 21,
1996.
(b) Czewski shall, as a condition to receipt of the Later
TCD Shares, execute and deliver to, and be bound by, the provisions,
restrictions, conditions, obligations, and/or requirements of an investment
letter identical in substance to the one delivered by Czewski to Purchaser,
dated August 21, 1996.
(c) For a period of one year beginning on the earlier of
the date of Initial Registration or February 28, 1997, Czewski shall not sell,
assign, transfer, deliver, burden, pledge, or encumber in any one month more
than one-twelfth (1/12th) of the Initial TCD Shares.
(d) For a period of one year beginning on the earlier of
the date of Later Registration or May 28, 1997, Czewski shall not sell,
assign, transfer, deliver, burden, pledge, or encumber in any one month more
than one-twelfth (1/12th) of the Later TCD Shares.
12. Indemnity.
(a) By Czewski. Czewski shall, and hereby does,
indemnify and hold harmless Purchaser, its Affiliates (as defined in Section
8(p)) 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
Asset Purchase Agreement Page -13-
<PAGE> 14
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:
(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, its assets 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 Date;
(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 Assets or
the Practice;
(3) any liability or claim for liability (whether
in contract, in tort, or otherwise, and whether or not successful)
related to Taxes of Seller;
(4) any misrepresentation, breach of warranty, or
nonfulfillment of any covenant or agreement on the part of Seller or
Czewski under this Agreement, or any misrepresentation in or omission
from any list, Schedule, certificate, or other instrument furnished or
to be furnished to Purchaser by Seller or Czewski 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.
(b) By Purchaser. Purchaser shall, and hereby does,
indemnify and hold harmless Czewski, and his personal representatives, heirs,
and successors (collectively, the "Czewski 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 Czewski Indemnitees resulting or arising from or
incurred in connection with any one or more of the following:
Asset Purchase Agreement Page -14-
<PAGE> 15
(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 Date; and
(2) any misrepresentation, breach of warranty, 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, or other instrument furnished or to be
furnished to Seller or Czewski by Purchaser pursuant to the terms of
this Agreement.
Notwithstanding anything herein to the contrary, Purchaser shall not
indemnify any of the Czewski Indemnitees for any Tax liability, legal fees, or
other Damages incurred by the Czewski Indemnitees as a result of a challenge of
the Tax effects or consequences of this Agreement or any of the transactions
contemplated herein.
13. 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.
14. Assignment of Contracts. 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. In order, however,
that the full value of every contract and claim of the character described in
clauses (i) and (ii) above and all claims and demands on such contracts may be
realized for the benefit of Purchaser, 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.
Seller shall promptly pay over to Purchaser all moneys collected by or paid to
it in respect of every such contract, claim or demand. Nothing in this Section
14 shall
Asset Purchase Agreement Page -15-
<PAGE> 16
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.
15. 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) 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.
(d) Agreement Subject to State and Federal Law. The
parties 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.
(e) 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).
Asset Purchase Agreement Page -16-
<PAGE> 17
(f) 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.
(g) 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.
(h) 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 herefrom. 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.
(i) 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 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.
(j) 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
Asset Purchase Agreement Page -17-
<PAGE> 18
without the requirement that the manually executed signature page be delivered.
(k) 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.
(l) 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.
(m) Binding Effect. This Agreement shall be binding upon
the parties hereto, together with their respective personal representatives,
heirs, successors, and permitted assigns.
(n) 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the Effective Date.
/s/ J. W. Czewski, D.O.
-------------------------
J. W. CZEWSKI, D.O.
NORTHSIDE FAMILY MEDICAL CLINIC
PROFESSIONAL ASSOCIATION
a Texas professional association
By: /s/ J.W. Czewski, D.O.
------------------------
J. W. Czewski, D.O.,
President
Asset Purchase Agreement Page -18-
<PAGE> 19
THE COMPANY DOCTOR
a Delaware corporation
By: /s/ R.K. Aiken
----------------
Name: R.K. Aiken
--------------
Title: Vice President
----------------
Asset Purchase Agreement Page -19-
<PAGE> 20
SECURITY AGREEMENT
This Security Agreement (this "Agreement") is made and entered into
effective as of August 21, 1996, by and between THE COMPANY DOCTOR, a Delaware
corporation ("Debtor"), and J. W. CZEWSKI, D.O., an individual resident of
Texas ("Secured Party").
WHEREAS, Debtor is indebted to Secured Party for Two Hundred Thousand
Dollars ($200,000.00) pursuant to that certain Promissory Note executed by
Debtor and payable to Secured Party, with an effective date of August 21, 1996
(the "Note"), a copy of which is attached as Exhibit A; and
WHEREAS, it is a condition to acceptance by Secured Party of the Note
that Debtor grant a security interest to Secured Party in the assets listed in
Exhibit B (the "Assets").
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.
"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 the failure, refusal, or neglect of
Debtor to perform or comply with any of its covenants, obligations, or
agreements hereunder and/or the occurrence of a default or an Event of
Default under or as defined in any of the Loan Documents.
"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.
Security Agreement Page-1-
<PAGE> 21
"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.
"Loan Documents" means the Note, this Agreement, and all other
agreements and instruments relating to the indebtedness evidenced
thereby, but does not mean that certain Rescission Agreement by and
among Secured Party, Donald F. Angle, M.D., P.A., a Texas professional
association, and Northside Family Medical Clinic Professional
Association, a Texas professional association.
"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.
"Obligations" means all present and future indebtedness,
obligations, and liabilities, and all renewals and extensions thereof,
or any part thereof, of Debtor 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.
"Proceeds" means all "proceeds" as such term is defined in
Section 9.306(a) of the UCC.
"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, Debtor hereby assigns, mortgages, pledges, and
hypothecates to Secured Party, and hereby grants to Secured Party a continuing
Security Agreement Page-2-
<PAGE> 22
first and prior lien and security interest, in all of the Assets (collectively,
the "Collateral"), which may consist of:
a. Equipment;
b. Inventory;
c. Accounts;
d. Fixtures;
e. General Intangibles; and
f. to the extent not otherwise included, accessions to,
substitutions for and replacements, betterments, Proceeds, and
products of the foregoing.
3. Representations and Warranties. Debtor hereby represents and
warrants that:
a. Location of Tangible Property. The Inventory and
Equipment are kept at Debtor's place of business which is located at
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________.
b. Chief Executive Office. Debtor's chief executive
office is located at 5215 N. O'Connor Blvd, Suite 1800, Irving, Texas
75039.
c. Power and Authority; Authorization. Debtor has the
association 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 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.
4. Covenants. Debtor covenants and agrees with Secured Party
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 Secured Party,
Debtor 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 herein granted,
including,
Security Agreement Page-3-
<PAGE> 23
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. Secured Party and its
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 its interests therein.
Debtor shall pay the costs incurred by Secured Party in connection
with any such exercise of its rights pursuant to this Section 4(b).
c. Maintenance of Insurance. Debtor 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 Debtor may deem appropriate,
containing such terms, in such form and amounts, and written by such
companies as may be determined by Debtor.
d. Changes in Locations, Name, etc. Debtor 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 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 hereto.
5. Remedies. 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. Without limiting the generality of the foregoing,
or any other right available to Secured Party hereunder, 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
Security Agreement Page-4-
<PAGE> 24
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. 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. 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. 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.
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 Debtor 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.
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. Cumulative Remedies. Except as provided in the Note, the
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law or in any of the other Loan Documents.
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 Debtor 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, 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,
Security Agreement Page-5-
<PAGE> 25
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 Debtor. In determining whether or not the
interest paid or payable under any specific contingency exceeds the Maximum
Lawful Rate, Debtor and Secured Party 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 Note, so that the interest rate is the Maximum Lawful Rate throughout
the entire term of the 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, Secured Party shall
refund to Debtor 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.
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. DEBTOR 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 DEBTOR, 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
Security Agreement Page-6-
<PAGE> 26
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 Secured Party and
Debtor, 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.
15. Amendments and Modifications. This Agreement shall be
modified or amended only in a written document, signed by Secured Party and
Debtor.
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.
[THIS SPACE INTENTIONALLY BLANK, SIGNATURES ARE ON FOLLOWING PAGE.]
Security Agreement Page-7-
<PAGE> 27
IN WITNESS WHEREOF, Debtor has caused this Agreement to be duly
executed and delivered as of the date first above written.
Debtor:
Address: THE COMPANY DOCTOR
By: /s/ R.K. Aiken
- ------------------------------- ------------------------------------
Name: R.K. Aiken
- ------------------------------- -------------------------------
Attn: Title: Vice President
------------------------- ------------------------------
Telecopy:
----------------------
Secured Party:
Address:
/s/ J.W. Czewski, D.O.
- ------------------------------- ------------------------------------
J. W. CZEWSKI, D.O.
- -------------------------------
Attn:
--------------------------
Telecopy:
----------------------
Security Agreement Page-8-
<PAGE> 1
EXHIBIT 2.9
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered
into August 21, 1996, to be effective from and after August 21, 1996 (the
"Effective Date"), by and among NORTHSIDE FAMILY MEDICAL CLINIC PROFESSIONAL
ASSOCIATION, a Texas professional association ("Northside"), J. W. CZEWSKI,
D.O., an individual resident of Dallas, Texas ("Seller"), and DONALD F. ANGLE.,
M.D., P.A., a Texas professional association ("Purchaser").
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
all of the 1,000 outstanding shares of capital stock, $1.00 par value, of
Northside ("Stock"); and
WHEREAS, 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.
NOW, THEREFORE, 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 hereby 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, assign, transfer, and
deliver to Purchaser, and Purchaser agrees to and does hereby purchase from
Seller, all of the shares of Stock, free and clear of any liens, liabilities,
security interests, claims, and encumbrances. The purchase and sale of the
Stock is made in consideration for the Purchase Price (as hereinafter defined),
payable as set forth in Section 3.
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 has
delivered to Purchaser (a) Certificates representing all of the Stock, duly
endorsed for transfer or accompanied by duly executed stock powers, and (b)
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.
3. Purchase Price. In exchange for the Stock, Purchaser shall
pay to Seller the following consideration (in the aggregate, the "Purchase
Price"):
Stock Purchase Agreement Page -1-
<PAGE> 2
(a) Cash in the total amount of $300,000, which has been
placed into escrow with Coleman & Powell, L.L.P. ("Escrow Agent") and which is
being held and will be paid out pursuant to the terms of the Escrow Agreement
in the form of Exhibit A attached hereto (the "Escrow Agreement"); and
(b) Promissory Note in the form of Exhibit B attached
hereto (the "Note") in the amount of $200,000, payable in eighteen monthly
installments.
4. Other Agreements.
(a) Building Lease. Purchaser and Seller hereby agree
that as consideration in part for the transactions contemplated hereby
Purchaser and Seller shall, as a condition to Closing, execute a lease in the
form of Exhibit C attached hereto for certain real property located at 301 West
Central Avenue, Fort Worth, Texas 76106 (the "Lease").
(b) Employment Agreements. Purchaser and Seller hereby
agree that as consideration in part for the transactions contemplated hereby
Purchaser and Seller shall, as a condition to Closing, execute or cause to be
executed: (i) a Physician Employment Agreement in the form of Exhibit D
attached hereto between Purchaser and Seller; and (ii) a Regional Medical
Director Employment Agreement in the form of Exhibit E attached hereto between
Seller and Purchaser.
5. Transfer Taxes. Seller hereby agrees to pay and discharge,
and to indemnify and hold Purchaser harmless from and against any liability,
obligation, claim, assessment, or deficiency for any and all sales, use,
transfer, or other similar taxes (and any and all interest, penalties,
additions to tax and fines thereon or related thereto) resulting or arising
from or incurred in connection with the consummation of the transactions
contemplated by this Agreement.
6. Closing. The transactions contemplated hereby will be
consummated at a Closing (herein so called) to be held on the date of execution
of this Agreement, 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,
each party to this Agreement shall perform any and all acts and execute and
deliver any and all documents and instruments that may be reasonably necessary
to carry out the provisions of this Agreement. In particular, and without
limiting the generality of the foregoing, at Closing the parties shall execute
and deliver, or cause to be executed and delivered, in addition to this
Agreement, the following:
Stock Purchase Agreement Page -2-
<PAGE> 3
(a) the Note;
(b) the Stock certificates and conveyance documents
contemplated by Section 2;
(c) the Lease;
(d) the Physician Employment Agreement for Seller; and
(e) the Regional Medical Director Employment Agreement
for Seller.
Subject to the terms and conditions herein contained, the consummation of the
transactions referred to above shall be effective as of 12:03 a.m. on August
21, 1996.
7. Representations and Warranties of Northside and Seller.
Northside and Seller hereby jointly and severally represent and warrant to
Purchaser as follows:
(a) Status; Authority; Enforceability. Northside is a
professional association duly organized, validly existing, and in good standing
under the laws of the State of Texas. Northside has all necessary power and
authority under applicable law and its Articles of Association 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 Northside, and no other corporate proceedings on
the part of Northside are necessary for Northside to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement
constitutes a legal, valid, and binding obligation of Northside, enforceable
against Northside 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).
(b) Stock. The authorized capital stock of Northside
consists of _____________________ shares, $1.00 par value, of which 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 7(r) hereof).
Stock Purchase Agreement Page -3-
<PAGE> 4
(c) 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.
(d) No Consents Required. There is no requirement
applicable to Northside 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 Northside and Seller of the transactions contemplated by this Agreement
(except as may be contemplated by the last sentence of Section 7(h)).
(e) Corporate Minutes. Northside has delivered 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 Northside since its inception (collectively, the "Minutes").
The Minutes represent all association actions taken by Northside.
(f) 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, Northside or
Seller, including, but not limited to, those relating to the income,
business, operations, or assets of Northside 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 Northside and Seller for the
periods covered thereby; and
(2) All Taxes due and payable by Seller and
Northside as of the Closing Date have been paid, and Seller and
Northside have no unpaid liability for Taxes of any nature whatsoever.
(3) 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
Stock Purchase Agreement Page -4-
<PAGE> 5
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, Northside or Seller.
(g) Financial Statements; Liabilities. All financial
statements provided by Northside to Purchaser are complete and accurate in all
respects, having been prepared in accordance with the income tax 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 Northside and the Practice (as defined below in this subsection) as of the
date and for the periods indicated thereon. There are no liabilities, debts,
or obligations of Northside whatsoever, accrued, fixed, contingent, or
otherwise (known or unknown and asserted or unasserted), existing on the date
hereof (collectively, the "Liabilities" and singly, a "Liability"), except for
those Liabilities set forth in Schedule 7(g). Except as set forth in Schedule
7(g), Northside 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. Neither Seller nor Northside knows of any
basis for the assertion of any Liability of any nature or in any amount against
Northside other than those set forth in Schedule 7(g). The aggregate amount of
Liabilities of Northside does not exceed $40,000 (including any future payments
due on any Liability). Since August 1,1996 there has not been any material
adverse change in the condition (financial or otherwise) of the private
practice of medicine conducted by Northside and Seller (the "Practice") or in
the assets and liabilities of Northside, and Northside has paid the debts of
the Practice in the usual and ordinary course of business since such date, 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
Northside to conduct his professional practice as currently conducted.
(h) Consents. Schedule 7(h) to this Agreement sets forth
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 Northside is a party or is
otherwise bound (the "Contracts"). 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 Northside, 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
Stock Purchase Agreement Page -5-
<PAGE> 6
default by Seller or Northside, or, to the best knowledge of Seller or
Northside by any other party to the Contracts. True, correct, and complete
copies of all the Contracts as currently in force have been delivered by Seller
or Northside to Purchaser. Except as provided in Schedule 7(h), 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 Northside and delivered to Purchaser at or prior to the Closing.
(i) Employees. Schedule 7(i) to this Agreement sets
forth a true and complete list of the names of, job titles, hire dates, and
current compensation paid by Northside to each employee of Northside [in
connection with the Practice]. Other than wage increases in the ordinary
course of business, since August 1, 1996 Seller has not made any commitment or
agreement to increase the wages or modify the conditions or terms of employment
of any of the employees of Northside [used in connection with the Practice].
(j) Employee Benefits. Set forth in Schedule 7(j) is 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
Northside currently maintains, or has ever maintained, with respect to any of
its current or former employees (collectively the "Plans"). 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 Northside (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. 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 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
knowledge of Northside and Seller, no event has occurred or condition exists
which could adversely affect such determination. With respect to each Plan
which is an "employee welfare benefit plan," as defined in section 3(1) of
ERISA, (i) no such plan is unfunded or funded through a "welfare benefit fund,"
as defined in section 419 of the Code, (ii)
Stock Purchase Agreement Page -6-
<PAGE> 7
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 Northside or any
related entity, and (iv) there are no unpaid or overdue insurance premiums
required to be paid with respect to such plan. There are no actions, suits, or
claims, other than routine claims for benefits, pending or, to the knowledge of
Northside or Seller, threatened with respect to any of the Plans or against any
trustee, fiduciary, or administrator of the Plans. 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 Northside that have not been fully discharged, and
no Plan has been submitted to the IRS under the voluntary compliance resolution
or closing agreement programs.
(k) Employment Laws. Northside 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"). Neither Northside nor Seller has received any notice of
noncompliance or violation of any Employment Law that is pending or unresolved;
no action is pending, or to the best knowledge of Northside 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; and there is no pending or, to the best knowledge of Northside
and Seller, threatened arbitration, suit, litigation, or proceeding, against
Northside, Seller, or any current or former director, shareholder, officer, or
supervisory employee of Northside, alleging wrongful termination, racial,
religious, sexual, or age discrimination, improper post-termination conduct, or
breach of contract or covenant of employment.
(l) Environmental Laws. Northside and the Practice are
in compliance in all material respects with all applicable Environmental Laws
(as defined below), which compliance includes, but is not limited to, the
possession by Northside or Seller of all material permits and other
governmental authorizations required under applicable Environmental Laws, and
material compliance with the terms and conditions thereof. 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 and regulations relating to emissions, discharges, releases,
or threatened releases
Stock Purchase Agreement Page -7-
<PAGE> 8
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.
(m) Assets and Properties. Northside owns or has the sole
right to use (pursuant to a valid lease or license disclosed on Schedule 7(m))
all operating assets and properties necessary for Seller and Northside to carry
on the Practice in the manner presently conducted by Seller and Northside
(collectively, the "Assets"). Seller 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. The equipment and other tangible properties included within the
Assets and the tangible property leased by Seller under leases included in the
Assets are in good operating condition and repair, normal wear and tear
excepted (except as identified to Purchaser by Seller in writing on Schedule
7(m)), and are capable of being used for their intended purpose in the Practice
as now conducted. The Assets include all existing warranties and service
contracts with respect to any of the Assets to the extent the same are capable
of being assigned to Purchaser. All equipment and other tangible properties
included within the Assets and the tangible property leased by Seller under
leases included within the Assets, and, to the best knowledge of Seller and
Northside, the present use of all such items, conforms to all applicable
Governmental Requirements (as defined herein), and no notice of any violation
of any such Governmental Requirements relating to such Assets or their use has
been received by Seller. Northside does not own any real property.
(n) No Material Changes. Except as set forth in Schedule
7(n), since August 1, 1996, Seller has not caused Northside to do any of the
following, and Northside has not:
(1) sold, leased, optioned, or transferred any
material portion of the assets of Northside 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;
(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;
Stock Purchase Agreement Page -8-
<PAGE> 9
(5) made or committed to make any capital
expenditure in an amount in excess of $5,000;
(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 Northside 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 Northside;
(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 Northside 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
Northside or the Practice; or
(14) agreed to do any of the foregoing.
(o) Compliance with Laws Generally. Without limiting the
provisions of Sections 7(k) and 7(l), Northside and Seller are in compliance in
all material respects with each Governmental Requirement. As used herein,
"Governmental Requirement" shall mean any and all laws (including, but not
limited to, applicable common
Stock Purchase Agreement Page -9-
<PAGE> 10
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 (which
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). "Governmental Requirement" specifically includes 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 ("Stark Bill")), 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").
(p) Nature of Practice. Seller conducts the Practice as
an employee of Northside.
(q) 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.
(r) Competing Interests and Financial Relationships.
(1) Competing Interests. Neither Seller nor any
Associate (defined below) of Seller: (a) 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 (b) owns, directly or indirectly, in whole 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. For purposes of this Agreement, the term "Associate"
shall mean: (i) with respect to an individual: (1) the spouse,
parents or children of the individual and his/her spouse, (2) any
trust in which the
Stock Purchase Agreement Page -10-
<PAGE> 11
individual or any person described in clause (1) above has an interest
or any trustee of such a trust, and (3) any Affiliate of the
individual; (ii) 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;
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; and "Person" means an individual or a corporation, limited
liability company, partnership, trust, estate, unincorporated
organization, association, or other entity.
(2) 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.
(s) Effect of Agreement. The execution, delivery, and
performance of this Agreement by Seller and Northside and the consummation by
Seller and Northside of the transactions contemplated hereby will not (i)
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 Northside is now a party or by
which Seller or Northside may be bound or affected; or (ii) 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
Northside or to exercise any right under any agreement). Neither Seller nor
Northside is aware (but by so affirming is not making a guarantee of any
continuing relationships) of any reason why the business relationships of
patients or contracted third party payors of the Practice will be adversely
affected by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(t) Intellectual Property. The Practice as now conducted
by Seller does not require the use of or consist of any rights under any
patents, inventions, trademarks, trade names, brand names, or copyrights.
Seller 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.
(u) Suits, Actions, and Claims. Except as set forth in
Schedule 7(u) to this Agreement, there are no suits, actions, claims (including
workers compensation claims), inquiries, or
Stock Purchase Agreement Page -11-
<PAGE> 12
investigations by any Person, or any legal, administrative, or arbitration
proceedings in which Seller or Northside is engaged or which are pending or
threatened against or affecting Seller, Northside, or its employees, or to
which Seller, Northside, 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 Northside no present or potential claim against Seller, Northside,
or its employees related to the Practice.
(v) Insurance Policies. Schedule 7(v) to this Agreement
contains a list of all insurance policies (specifying the insurer, the amount
of coverage, the type of insurance, and the policy number) maintained by Seller
or Northside related to the Practice. There are no special circumstances with
respect to such policies or the Practice that lead to any liability under such
insurance policies being avoided by the insurers issuing such policies or, to
the best knowledge of Seller and Northside, the premiums thereunder being
increased. All professional liability policies are [OCCURRENCE BASED]
policies, and all insurance policies are in full force and effect, with all
premiums due thereon to date fully paid.
(w) Licenses and Permits, Compliance with Governmental
Requirements. Except for individual medical professional licenses, Schedule
7(w) to this Agreement sets forth a true and complete list of all licenses and
permits necessary for the conduct of the Practice. Northside has all such
licenses and permits validly issued and all such licenses and permits are in
full force and effect. True and correct copies of all such licenses and
permits have been delivered to Purchaser prior to Closing. 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 Northside, threatened
seeking the revocation or limitation of any of such licenses or permits. All
such licenses and permits that are subject to transfer are included in the
Assets.
(x) Accounts Receivable. All notes and accounts
receivable of Northside and the Practice that are reflected on the Financial
Statements or that have arisen since the date thereof ("Accounts Receivable")
have arisen in the ordinary course of business. Schedule 7(x) sets forth a
true, correct, and complete aging of the Accounts Receivable of Seller and
Northside as of the most recent practicable date.
(y) Records. The books, records (including patient
medical records), and other such items kept by Seller and Northside with
respect to its assets and the Practice have been kept properly and contain
records of all matters required to be included therein by any Governmental
Requirement and by generally accepted community
Stock Purchase Agreement Page -12-
<PAGE> 13
and professional standards, and such books and records are true, accurate, and
complete.
(z) Deposits. Seller 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.
(aa) Telephone Numbers. All telephone and facsimile
numbers used by Seller and Northside in connection with the Practice are valid
and in good working order, and may be transferred to Purchaser.
(ab) Workmen's Compensation Data. All data set forth in
the most recent workmen's compensation report of Northside has been provided to
Purchaser and is true, correct, and complete as of the date thereof.
(ac) No Untrue Statements. The statements,
representations, and warranties of Seller and Northside 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.
(ad) Survival. The representations and warranties set
forth in this Section 7 shall survive the consummation of the transactions
contemplated in this Agreement.
8. Representations and Warranties of Purchaser. Purchaser
represents and warrants to Northside and Seller as follows:
(a) Purchaser is a professional association duly
organized, validly existing, and in good standing under the laws of the State
of Texas.
(b) Purchaser has all necessary power and authority under
applicable law and its Articles of Association and Bylaws to own or lease its
properties and to carry on its business as presently conducted.
9. Covenants of Seller. Seller hereby covenants and agrees as
follows:
(a) Seller agrees to keep in effect his current
professional liability insurance policy with National Union Fire Insurance a
copy of which is set forth in Schedule 10(c) attached hereto. The parties
acknowledge that the professional liability
Stock Purchase Agreement Page -13-
<PAGE> 14
insurance policy set forth on Schedule 10(c) is being assumed by Purchaser
contemporaneously with the execution and delivery of this Agreement. Purchaser
agrees that in the event it determines after the date hereof that a new
professional liability insurance policy is appropriate for the Purchaser's
protection, Seller will be responsible for securing any necessary tail
coverage.
(b) 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 Northside,
Seller, and any other physicians employed by Northside, 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.
10. Indemnity.
(a) By Seller. Seller shall, and hereby does, indemnify
and hold harmless Purchaser, its Affiliates (as defined in Section 7(r)) 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:
(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, the assets of Northside, 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 Date;
(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
Stock Purchase Agreement Page -14-
<PAGE> 15
of any nature whatsoever impressed against or in any way related to
the Stock, the assets of Northside, or the Practice;
(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 Northside;
(4) any misrepresentation, breach of warranty, or
nonfulfillment of any covenant or agreement on the part of Seller or
Northside under this Agreement, or any misrepresentation in or
omission from any list, Schedule, certificate, or other instrument
furnished or to be furnished to Purchaser by Seller or Northside
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.
(b) 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:
(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 Date; and
(2) any misrepresentation, breach of warranty, 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, or other instrument furnished or to be
furnished to Seller by Purchaser pursuant to the terms of this
Agreement.
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 Tax effects or
Stock Purchase Agreement Page -15-
<PAGE> 16
consequences of this Agreement or any of the transactions contemplated herein.
11. 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.
12. Assignment of Contracts. Notwithstanding any other provision
of this Agreement (except Section 9(b)), 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 Northside or the Practice 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. In order, however, that the full value of every
contract and claim of the character described in clauses (i) and (ii) above and
all claims and demands on such contracts may be realized for the benefit of
Purchaser, 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 Northside or the Practice 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. Seller
shall promptly pay over to Purchaser all moneys collected by or paid to it in
respect of every such contract, claim or demand. Nothing in this Section 14
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.
13. 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
Stock Purchase Agreement Page -16-
<PAGE> 17
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.
(d) Agreement Subject to State and Federal Law. The
parties 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.
(e) 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).
(f) 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.
(g) 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.
Stock Purchase Agreement Page -17-
<PAGE> 18
(h) 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 herefrom. 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.
(i) 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 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.
(j) 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.
(k) 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.
Stock Purchase Agreement Page -18-
<PAGE> 19
(l) 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.
(m) Binding Effect. This Agreement shall be binding upon
the parties hereto, together with their respective personal representatives,
heirs, successors, and permitted assigns.
(n) 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the Effective Date.
/s/ J. W. Czewski, D.O.
----------------------------------------
J. W. CZEWSKI, D.O.
NORTHSIDE FAMILY MEDICAL CLINIC
PROFESSIONAL ASSOCIATION
a Texas professional association
By: /s/ J.W. Czewski, D.O.
-------------------------------------
J. W. Czewski, D.O.,
President
DONALD F. ANGLE, M.D., P.A.
a Texas professional association
By: /s/ Donald F. Angle, M.D.
-------------------------------------
Donald F. Angle, President
Stock Purchase Agreement Page -19-
<PAGE> 20
PROMISSORY NOTE
$200,000.00 Dallas, Texas August 21, 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 J. W.
CZEWSKI, D.O. ("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 Two Hundred Thousand Dollars ($200,000.00) plus interest as set forth
below.
Interest on the principal amount of this 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 Note shall be due and payable
in eighteen (18) equal monthly installments of principal and interest in the
amount of Eleven Thousand Nine Hundred Sixty Five Dollars and Forty Five Cents
($11,905.45) each, plus accrued interest, beginning September 15, 1996, and
continuing on the fifteenth (15th) day of each month thereafter.
Upon the occurrence of any Event of Default (as hereinafter defined),
then the holder of this Note may either (i) 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, or (ii) pursue any and all remedies under
that certain Rescission Agreement by and among Maker, Payee, and Northside
Family Medical Clinic Professional Association, a Texas professional
association. Each of the following shall constitute an "Event of Default" (as
that term is used herein):
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 (10) calendar days after the giving of notice by the
holder hereof 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 (30) calendar days after
the giving of notice by the holder hereof to Maker of such event;
c. Dissolution or liquidation of Maker; or
Promissory Note Page -1-
<PAGE> 21
d. Maker (i) makes a general assignment for the benefit
of creditors; (ii) is declared insolvent in any state insolvency
proceeding; (iii) 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"); (iv) 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 one
hundred eighty (180) days; (v) 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 ninety (90) days, or, with
respect to a Chapter 11 case in which an order for relief is entered
prior to the expiration of ninety (90) days, fails to achieve
confirmation of a plan of reorganization within one hundred eighty
(180) days of the commencement of the involuntary case; or (vi)
consents to or is subjected to the appointment of a trustee, receiver,
or liquidator with respect to all or substantially all of Maker's
properties, and, where such appointment was contested by Maker, there
has been a failure to vacate such appointment within ninety (90) days
of appointment.
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 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 Note, exceed
the maximum amount permissible under applicable law. If from any circumstances
whatsoever fulfillment of any provision hereof or of any other 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 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 Note and such other
indebtedness, such excess shall be refunded to
Promissory Note Page -2-
<PAGE> 22
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 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 Note shall not extend beyond such provision or such
circumstances and no other provision of this instrument shall be affected
thereby.
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 hereof.
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.
As used in this Note, the word "holder" shall mean the Payee(s) or
other endorsee(s) of this Note who is in possession of it, or the bearer(s) of
said Note, if this Note is at the time payable to the bearer(s).
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.
EXECUTED as of the day and year first above written.
MAKER:
DONALD F. ANGLE, M.D., P.A.,
a Texas professional association
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Promissory Note Page -3-
<PAGE> 23
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,
a Delaware corporation
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Promissory Note Page -4-
<PAGE> 24
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (this "Agreement") is made and
entered into effective August 21, 1996, by and between DONALD F. ANGLE, M.D.,
P.A. ("Debtor") and J. W. CZEWSKI, D.O., an individual resident of Texas
("Secured Party").
WHEREAS, Debtor is indebted to Secured Party for Two Hundred Thousand
Dollars ($200,000.00) pursuant to that certain Promissory Note executed by
Debtor and payable to Secured Party, with an effective date of August 21, 1996
(the "Note"), a copy of which is attached as Exhibit A; and
WHEREAS, it is a condition to acceptance by Secured Party of the Note
that Debtor, as the holder of all the capital stock of Northside Family Medical
Clinic Professional Association, a Texas professional association
("Northside"), grant a security interest in and pledge as security for its
obligations under the Note, and all other agreements and instruments relating
to the indebtedness evidenced thereby (excluding that certain Rescission
Agreement by and among Debtor, Secured Party, and Northside (such inclusive
instruments and agreements, together with this Agreement, are referred to
herein collectively as the "Loan Documents") all of Debtor's capital stock of
Northside, all as more particularly described herein.
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:
"Event of Default" means the failure, refusal, or neglect of
Debtor to perform or comply with any of its covenants, obligations, or
agreements hereunder, or the occurrence of a default or an Event of
Default under and as defined in any of the Loan Documents.
"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
Pledge and Security Agreement Page -1-
<PAGE> 25
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 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.
"Obligations" means all present and future indebtedness,
obligations, and liabilities, and all renewals and extensions thereof,
or any part thereof, of Debtor to Secured Party arising pursuant to
the Loan Documents or otherwise, and all interest accrued thereon and
costs, expenses, and attorneys' fees incurred in the enforcement or
collection thereof, regardless of whether such indebtedness,
obligations, and liabilities are direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several.
"Pledged Shares" means (a) all of the issued and outstanding
shares of capital stock of Northside now owned or hereafter acquired
by Debtor and all warrants, options, convertible securities, or other
rights to acquire shares of capital stock of Northside now owned or
hereafter acquired by Debtor, including, without limitation the
shares, options, warrants, and other rights described on Schedule 1
hereto; (b) any and all proceeds or other sums arising from or by
virtue of, and all dividends and distributions (cash or otherwise)
payable and/or distributable with respect to, all or any of the
shares, warrants, options, convertible securities, and other rights
described in clause (a) preceding; and (c) all cash, securities,
dividends, and other property at any time and from time to time
receivable or otherwise distributed in respect of or in exchange for
any or all of the shares described in clause (a) preceding and any
other property substituted or exchanged therefor. Debtor and Secured
Party agree that the Pledged Shares constitute Investment Property, as
that term is defined in the UCC.
"Proceeds" means all "proceeds" as such term is defined in
Section 9.306(a) of the UCC.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the State of Texas.
Pledge and Security Agreement Page -2-
<PAGE> 26
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, Debtor 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 all of the following property wherever located and now owned or at any time
hereafter acquired by Debtor or in which Debtor now has or at any time in the
future may acquire any right, title, or interest (collectively, the
"Collateral"), subject to no prior Liens:
(1) all Pledged Shares; and
(2) to the extent not otherwise included, all Proceeds
and products of any and all of the Pledged Shares.
3. Representations and Warranties. Debtor hereby represents and
warrants that:
(a) Chief Executive Office. Debtor's chief executive
office is located at 5215 N. O'Connor Blvd, Suite 1800, Irving, Texas 75039.
(b) Power and Authority; Authorization. Debtor has the
association 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
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.
4. Covenants. Debtor covenants and agrees with Secured Party
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 Secured Party, and at
the sole expense of Debtor, Debtor 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 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. Debtor also hereby authorize Secured Party to file
any such financing or continuation statement without the signature of Debtor to
the extent permitted by applicable law. A carbon, photographic, or other
reproduction of this Agreement shall
Pledge and Security Agreement Page -3-
<PAGE> 27
be sufficient as a financing statement for filing in any jurisdiction.
(b) Compliance with Laws. Debtor will comply with all
laws applicable to the Collateral or any part thereof.
(c) Changes in Locations, Name, etc. Debtor will not (i)
change the location of its chief executive office from that specified in
Section 3(a) or (ii) change its name or identity to such an extent that any
financing statement filed by Secured Party in connection with this Agreement
would become seriously misleading, unless they 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 hereto.
5. Performance by Secured Party of Debtor's Obligations. If
Debtor fails to perform or comply with any of its agreements contained herein
and Secured Party, as provided for by the terms of this Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the expenses of Secured Party incurred in connection with such
performance or compliance, together with interest thereon at the Maximum Lawful
Rate, shall be payable by Debtor to Secured Party on demand and shall
constitute Obligations secured hereby.
6. Proceeds. Upon request of Secured Party, and at all times
following the occurrence of an Event of Default (a) all Proceeds received by
Debtor consisting of cash, checks and other non-cash items shall be held by
Debtor in trust for Secured Party, segregated from other funds of Debtor and
shall, forthwith upon receipt by Debtor be turned over to Secured Party in the
exact form received by Debtor (duly endorsed by Debtor to Secured Party, if
required), and (b) any and all such Proceeds received by Secured Party (whether
from Debtor or otherwise) may, in the sole discretion of Secured Party, be held
by Secured Party as collateral security for, and/or then or at any time
thereafter may be applied by Secured Party against, the Obligations (whether
matured or unmatured), such application to be in such order as Secured Party
shall elect. Any balance of such Proceeds remaining after the Obligations
shall have been paid in full shall be paid over to Debtor or to whomsoever may
be lawfully entitled to receive the same.
7. Remedies. 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. Without limiting the generality of the foregoing,
or any other right available to Secured Party hereunder, Secured Party, without
demand
Pledge and Security Agreement Page -4-
<PAGE> 28
of performance or other demand, presentment, protest, advertisement, or notice
of any kind (except any notice required by law referred to below) to or upon
Debtor or any other party (all and each of which demands, offenses,
advertisements, and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate, and realize upon the Collateral, or
any part thereof, and/or may forthwith sell, 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 upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. 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, free of any right or equity of redemption of Debtor,
which right or equity is hereby waived and released. Debtor further agrees, at
Secured Party's request, to assemble, or cause the assembly of, the Collateral
and make it available to Secured Party at places which Secured Party shall
reasonably select, whether at Debtor's premises or elsewhere. Secured Party
shall apply the net Proceeds of any such collection, recovery, receipt,
appropriation, realization, or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of Secured Party hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in
part of the Obligations, in any manner it sees fit which is permitted by
applicable law, and only after such application and after the payment by
Secured Party of any other amount required by any provision of law, need
Secured Party account for the surplus, if any, to Debtor. To the extent
permitted by applicable law, Debtor waives all claims, damages, and demands it
may acquire against Secured Party arising out of the exercise by them of any
rights hereunder. 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 five (5) days before such sale or other disposition.
Debtor shall remain liable for any deficiency if the Proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the fees and disbursements of any attorneys employed by Secured Party to
collect such deficiency.
8. Certain Rights of Parties Applicable to Pledged Shares Before
and After the Occurrence of an Event of Default.
(a) Exercising Shareholder Rights Prior to an Event of
Default. Notwithstanding anything contained in this Agreement or
Pledge and Security Agreement Page -5-
<PAGE> 29
in any other Loan Document to the contrary, unless and until an Event of
Default shall occur,
(i) Debtor shall be entitled to receive all cash
dividends paid to Debtor in respect of or attributable to the
Pledged Shares. Notwithstanding the foregoing, Secured Party
shall be entitled to receive, whether or not an Event of
Default has occurred, (A) any and all other distributions,
including, but not limited to, stock dividends or
distributions in property made on or with respect to the
Pledged Shares and any Proceeds of Pledged Shares, whether
resulting from subdivision, combination, or reclassification
of the outstanding capital stock of any issuer thereof or a
result of any merger, consolidation, acquisition, or other
exchange of assets (whether or not permitted by the Loan
Documents), or to which any issuer is a party, and (B) all
sums paid on any Pledged Shares upon liquidation or
dissolution or reduction of capital, repurchase, retirement,
or redemption. All such sums, dividends, distributions,
proceeds, or other property described in clauses (A) and (B)
preceding shall, if received by any entity other than Secured
Party, be held in trust for the benefit of Secured Party and
shall forthwith be delivered to Secured Party (accompanied by
proper instruments of assignment and/or stock and/or bond
powers executed by Debtor in accordance with Secured Party's
instructions) to be held subject to the terms of this
Agreement. Any cash proceeds of the Pledged Shares, other
than cash dividends which Debtor is then permitted to receive
and retain hereunder, which come into the possession of
Secured Party shall continue to be collateral security for all
of the Obligations and shall not constitute payment thereof
until applied as provided elsewhere herein.
(ii) Debtor shall have the right to vote and give
consents with respect to all of the Pledged Shares 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
the provisions of this Agreement or any of the other Loan
Documents.
(b) Exercising Shareholder Rights After the Occurrence of
an Event of Default. Notwithstanding anything contained in this Agreement or
in any other Loan Document to the contrary, upon the occurrence and during the
continuance of an Event of Default, Secured Party, without the consent of
Debtor, may:
(i) At any time vote or consent in respect of any
of the Pledged Shares and authorize any Pledged Shares to
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<PAGE> 30
be voted and such consents to be given, ratify and waive
notice of any and all meetings, and take such other action as
shall seem desirable to Secured Party, in its discretion, to
protect or further the interests of Secured Party in respect
of any of the Pledged Shares as though it were the outright
owner thereof, and, Debtor hereby irrevocably constitutes and
appoints Secured Party its sole proxy and attorney-in-fact,
with full power of substitution to vote and act with respect
to any and all Pledged Shares standing in the name of Debtor
or with respect to which Debtor is entitled to vote and act.
The proxy and power of attorney herein granted are coupled
with interests, are irrevocable, and shall continue throughout
the term of this Agreement.
(ii) In respect of any Pledged Shares, join in and
become a party to any plan of recapitalization,
reorganization, or readjustment (whether voluntary or
involuntary) as shall seem desirable to Secured Party in
respect of any such Pledged Shares, and deposit any such
Pledged Shares under any such plan; make any exchange,
substitution, cancellation, or surrender of such Pledged
Shares required by any such plan and take such action with
respect to any such Pledged Shares as may be required by any
such plan or for the accomplishment thereof; and no such
disposition, exchange, substitution, cancellation, or
surrender shall be deemed to constitute a release of Pledged
Shares from the Lien of this Agreement;
(iii) Receive all payments of whatever kind made
upon or with respect to any Pledged Shares; and
(iv) Transfer into its name, or into the name or
names of its nominee or nominees, all or any of the Pledged
Shares.
(c) Provisions Applicable to Unregistered Securities. In
connection with any sale of the Pledged Shares pursuant to Section 7 hereof,
Secured Party is authorized, but not obligated, to limit prospective purchasers
to the extent deemed necessary or desirable by Secured Party to render such
sale exempt from the registration requirements of the Securities Act of 1933,
as amended, and any applicable state securities laws, and no sale so made in
good faith by Secured Party shall be deemed not to be "commercially reasonable"
because so made.
9. Secured Party's Responsibility With Respect to Collateral.
Secured Party shall not have any duty to fix or preserve rights against prior
parties to the Collateral, and shall never be liable for failure to use
diligence to collect any amount
Pledge and Security Agreement Page -7-
<PAGE> 31
payable with respect to the Collateral, or any part thereof, but shall be
liable only to account to Debtor any amount Secured Party may actually collect
or receive thereon. Secured Party's sole duty with respect to the custody,
safekeeping, and physical preservation of the Collateral in its possession,
under Section 9.207 of the UCC or otherwise, shall be to deal with it in the
same manner as Secured Party deals with similar property for its own account.
Neither Secured Party, nor any of its directors, officers, employees, or agents
shall be liable for failure to demand, collect, or realize upon all or any part
of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of Debtor or
otherwise.
10. Waiver of Certain Rights. To the full extent that it may
lawfully so agree, Debtor agrees that it will not at any time plead, claim, or
take the benefit of any appraisement, valuation, stay, extension, moratorium,
or redemption law nor or hereafter in force in order to prevent or delay the
enforcement of this Agreement, or the absolute sale of all or any part of the
Collateral or the possession thereof by any purchaser at any sale hereunder,
and Debtor hereby waives the benefit of all such laws to the extent they
lawfully may.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
12. Performance at Debtor's Expense. The cost and expense of
performing or complying with any and all of the Obligations shall be borne
solely by Debtor, and no portion of such cost and expense shall be, in any way
and to any extent, credited against any installment on or portion of the
Obligations.
13. Survival. Each and all of the Obligations and each and all of
Debtor's representations and warranties hereunder shall survive the execution
and delivery of this Agreement, and shall continue in full force and effect
until the Obligations shall have been paid in full.
14. 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 Debtor and Secured Party. Furthermore, in
lieu of such illegal, invalid, or unenforceable provision there shall be added
automatically as
Pledge and Security Agreement Page -8-
<PAGE> 32
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.
15. 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.
16. Cumulative Remedies. Except as provided in the Note, the
rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by law or in any of the other Loan Documents.
17. 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 Debtor may not assign or
otherwise transfer any of their rights under this Agreement.
18. Limitation on Interest. 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 Debtor. In determining
whether or not the interest paid or payable under any specific contingency
exceeds the Maximum Lawful Rate, Debtor and Secured Party shall, to the extent
permitted under applicable law, (a) characterize any nonprincipal 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 Notes, so that the interest rate is the Maximum Lawful
Rate throughout the entire term of the Notes; 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, Secured
Party shall refund to Debtor 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.
19. 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
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<PAGE> 33
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. DEBTOR CONSENT AND AGREE TO THE JURISDICTION OF
ANY STATE COURT SITTING IN THE COUNTY OF DALLAS, STATE OF 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 SECURED PARTY, ON THE ONE HAND, AND DEBTOR, 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.
20. 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.
21. Multiple 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.
22. No Waiver. No course of dealing between Secured Party and
Debtor, nor any failure to exercise, nor any delay in exercising on the part of
Secured Party of 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.
23. Amendments and Modifications. This Agreement shall be
modified or amended only in a written document, signed by Secured Party and
Debtor.
24. 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,
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<PAGE> 34
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, Debtor have caused this Agreement to be duly
executed and delivered as of the date first above written.
/s/ J.W. Czewski, D.O.
-------------------------------------
J. W. CZEWSKI, D.O.
DONALD F. ANGLE, M.D., P.A.
a Texas professional association
By: /s/ Donald F. Angle, M.D.
---- -----------------------------
Donald F. Angle, President
Pledge and Security Agreement Page -11-
<PAGE> 35
RESCISSION AGREEMENT
THIS RESCISSION AGREEMENT (this "Agreement") is made and entered into
August 21, 1996, to be effective from and after August 21, 1996, by and among
NORTHSIDE FAMILY MEDICAL CLINIC PROFESSIONAL ASSOCIATION, a Texas professional
association ("Northside"), J. W. CZEWSKI, D.O., an individual resident of
Dallas, Texas ("Czewski"), and DONALD F. ANGLE., M.D., P.A., a Texas
professional association ("Angle P.A.").
WHEREAS, Northside has sold to The Company Doctor, a Delaware
corporation ("TCD"), certain of its assets (the "Assets"), in consideration of
the issuance to Northside of shares of TCD Common Stock, $0.01 par value, to be
issued within 15 days after closing and of additional shares of TCD Common
Stock, $0.01 par value, to be issued in the future (collectively, the "TCD
Shares"); and
WHEREAS, Czewski has sold to Angle P.A. all the capital stock of
Northside (the "Northside Stock"), in consideration of cash and the Note (as
defined herein);
WHEREAS, the Note is secured by the grant of a security interest by
Angle P.A. in the Northside Stock pursuant to the Stock Pledge Agreement (as
defined herein) and by the grant of a security interest by TCD of the Assets
pursuant to the Security Agreement (as defined herein);
WHEREAS, the Note, the Stock Pledge Agreement, and the Security
Agreement permit Czewski, as the holder of the Note and as the secured party,
to exercise the kinds of remedies normally available to a secured lender under
the Uniform Commercial Code; and
WHEREAS, the parties desire to permit Czewski, at his option, to
rescind the sale transactions and related contracts in lieu of exercising his
rights under the Note, the Stock Pledge Agreement, and the Security Agreement,
on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, 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 hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, the following
terms shall have the following meanings:
"Asset Purchase Agreement" means that certain Asset Purchase
Agreement between TCD and Northside, with an effective date of August
21, 1996.
Rescission Agreement Page -1-
<PAGE> 36
"Closing Date" has the meaning assigned in the Asset Purchase
Agreement.
"Collateral" has the meaning assigned in the Security
Agreement.
"Employment Agreements" has the meaning assigned in the Stock
Purchase Agreement.
"Event of Default" has the meaning assigned in the Loan
Documents.
"Loan Documents" means the Note, the Stock Pledge Agreement,
and/or the Security Agreement.
"Note" means that certain Promissory Note executed by Angle
P.A. and payable to Czewski in the amount of Two Hundred Thousand
Dollars ($200,000), with an effective date of August 21, 1996.
"Security Agreement" means that certain Security Agreement
between TCD and Czewski, with an effective date of August 21, 1996.
"Stock Pledge Agreement" means that certain Pledge and
Security Agreement between Angle P.A. and Czewski, with an effective
date of August 21, 1996.
"Stock Purchase Agreement" means that certain Stock Purchase
Agreement between Angle P.A. and Czewski, with an effective date of
August 21, 1996.
2. Rescission Election. Upon an Event of Default under the Loan
Documents, Czewski may, at his option, elect not to exercise his remedies as
the holder of the Note and as the secured party under the Stock Pledge
Agreement and Security Agreement. Such election shall be made by delivering
written notice to Angle P.A. and TCD of election to rescind within ____ days
after the Event of Default.
3. Effect of Rescission. Upon notice of election to rescind in
accordance with Section 2, the following shall occur at a closing within ten
(10) days after such notice is given:
a. Czewski shall deliver to Angle P.A. the Note, marked
cancelled, and thereafter Angle P.A. and TCD (in its capacity as guarantor)
shall have no further liability on the Note;
b. Angle P.A. shall transfer and deliver to Czewski, free and
clear of all liens, claims, and encumbrances, all of the Northside Stock;
Rescission Agreement Page -2-
<PAGE> 37
c. TCD shall transfer and deliver to whichever of Czewski or
Northside is designated by Czewski all the assets which constitute the
Collateral, which are listed on Exhibit B to the Security Agreement, free and
clear of all liens, claims, and encumbrances;
d. The Stock Pledge Agreement and the Security Agreement shall be
void and of no further force and effect from and after the date of closing of
the transactions contemplated by this Agreement;
e. Czewski shall be entitled to retain one-twelfth (1/12th) of
the TCD Shares for every one month after the Closing Date during which he was
employed by Angle P.A. under either one or both of the Employment Agreements.
At the closing Czewski shall deliver to TCD certificates representing all the
number of TCD Shares which Czewski is not entitled under this Section 3(e) to
retain, duly executed for transfer to TCD or accompanied by stock powers duly
executed for transfer to TCD;
f. TCD shall have no obligation with respect to registration of
any of the TCD Shares which is retained by Czewski in accordance with Section
3(e); and
g. The Employment Agreements shall be void and of no further
force and effect from and after the date of closing of the transactions
contemplated by this Agreement.
h. Czewski shall be entitled to retain all cash paid to him by
Angle P.A. for the Northside Stock and to retain all monies paid to him
pursuant to the Note prior to the date of the Event of Default;
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the Effective Date.
/s/ J. W. Czewski, D.O.
-------------------------
J. W. CZEWSKI, D.O.
NORTHSIDE FAMILY MEDICAL CLINIC
PROFESSIONAL ASSOCIATION
a Texas professional association
By: /s/ J.W. Czewski, D.O.
------------------------
J. W. Czewski, D.O.,
President
DONALD F. ANGLE, M.D., P.A.
a Texas professional association
By: /s/ Donald F. Angle, M.D.
---------------------------
Donald F. Angle, President
Rescission Agreement Page -3-
