AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT TO ASSET PURCHASE AGREEMENT ("Amendment") is made as of
April 23, 1998, by and among U.S. PHYSICIANS, Inc. ("USP"), the corporations
which are signatories hereto (other than USP) ("Selling PC") and Xxxx X.
Xxxxxxxxxx, M.D. ("Physician").
BACKGROUND
A. USP, Selling PC and Physician are parties to an Asset Purchase
Agreement with Rider, dated February 12, 1998 (the "Purchase Agreement").
B. USP, Selling PC and Physician desire to amend the Purchase Agreement
as indicated herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein, the parties, intending to be legally bound hereby,
agree as follows:
1. Subparagraph 2(e) of the Purchase Agreement is hereby amended in its
entirety to read as follows:
(e) at Closing, USP shall issue to Physician and each Selling P.C. one
or more stock certificates (the "Stock Certificates") representing in
the aggregate a number of shares of USP common stock as determined by
Schedule 2(e)-1 hereto (the "USP Shares"). If (i) the product of the
number of USP Shares issued to Physician and the Selling PCs multiplied
by the price per share to the public of USP common stock sold in the
initial public offering of the Common Stock of USP (the "IPO") is less
than $3,450,000, and (ii) on the second anniversary date of the IPO,
the product of the number of USP Shares originally issued to Physician
and the Selling PCs, as adjusted as provided below, multiplied by the
"Two-Year Share Price," as defined below (such product is referred to
herein as the "Two-Year Market Value"), does not equal or exceed
$3,450,000, as adjusted as provided below (such dollar amount is
referred to herein as the "Value Guarantee"), then the shareholders of
USP listed on Schedule 2(e)-2 hereto (collectively, the "Transferring
Shareholders"), in the ratio indicated on Schedule 2(e)-2 hereto (the
"Guarantee Ratio"), shall, within ten (10) days thereafter, transfer to
Physician and/or Selling PCs a total number of shares of USP common
stock equal to (x) the Value Guarantee minus the Two-Year Market Value,
divided by (y) the Two-Year Share Price. Any shares of USP common stock
transferred under the immediately preceding sentence will be deemed
"USP Shares" for all purposes hereunder. Notwithstanding the foregoing,
in no case will any Transferring Shareholder be required to transfer to
Physician and the Selling PCs and to all other physicians and entities
for the benefit of whom such Transferring Shareholder is agreeing to
the arrangement described herein, an aggregate number of shares in
excess of the number of shares of USP common
stock owned of record by such Transferring Shareholder as of the date
of Closing of the IPO. The parties acknowledge that the obligations of
the Transferring Shareholders hereunder are several but not joint.
As used herein, "Two-Year Share Price" means the average closing price
of USP's common stock for the ten (10) consecutive business days
immediately preceding the second anniversary date of the IPO. The
agreement of the Transferring Shareholders to the terms contained
herein is evidenced by the Share Agreement that has been executed by
the Transferring Shareholders, a copy of which has been delivered to
Physician.
References to USP Shares shall be based on the capitalization of USP at
the time of the closing of the IPO and accordingly is on a "post-split
basis," reflecting any forward or reverse stock split (by stock
dividend or otherwise) that may be effected between the date hereof and
the closing of the IPO. References to USP Shares will be deemed
adjusted by any forward or reverse stock splits (by stock dividend or
otherwise) that occur following the closing of the IPO.
The obligations of the Transferring Shareholders under this
subparagraph 2(e) shall terminate automatically if, at any time prior
to the second anniversary date of the IPO, the average closing price of
USP's common stock for any ten (10) consecutive business days, when
multiplied by the number of USP Shares originally issued to Physician
and the Selling PCs, equals at least $3,450,000.
Subject to the limitations on transfer contained in Paragraph 17 of the
Rider, Physician and the Selling PCs may freely transfer the USP Shares
prior to the second anniversary date of the IPO; provided, however
that, on and after any transfer(s) the Two Year Market Value shall be
calculated by using the USP Shares that are held by Physician and the
Selling PCs immediately following all transfers (rather than the number
of USP Shares originally issued to Physician and the Selling PCs) and
the Value Guarantee shall be adjusted so that it equals the product of
3,450,000 multiplied by a fraction, the numerator of which is the
number of USP Shares originally issued to Physician and the Selling PCs
that remain held by Physician and the Selling PCs immediately following
all transfers and the denominator of which is the number of USP Shares
originally issued to Physician and the Selling PCs.
2. The parties hereby agree that the language indicated on Schedule A
hereto will be deemed added to the Notes issued to Physician and the Selling PCs
at the time of Closing under the Purchase Agreement. Physician and the Selling
PCs agree that, at any time requested by USP, they will promptly return to USP
each existing Note, and any amendments thereto, marked "cancelled," and accept
in return therefor a revised Note that includes the language indicated on
Schedule A hereto but that is otherwise identical to the existing Note and any
amendments thereto.
3. The last sentence of subparagraph 15(a) of the Rider to Purchase
Agreement is hereby amended in its entirety to read as follows: "In the event
the Closing has not occurred on or prior to June 15, 1998, Physician shall have
the right, at any time thereafter, to present to USP a bona fide offer from an
unaffiliated third party to purchase the Practices; upon any such presentation
of an offer, USP shall, within 15 days after receipt of such offer, either agree
to match the terms of such offer, or notify Physician and each Selling PC that
USP is terminating this Agreement. In any case, if Closing has not occurred on
or prior to September 30, 1998, either USP or Physician may terminate this
Agreement, upon 15 days prior written notice to the other party, at any time
thereafter.
4. Physician and the Selling PCs confirm that each continues to be an
"accredited investor" as defined in the Securities Act of 1933, as amended, and
has been given the opportunity: (a) to examine USP's Registration Statement on
Form S-1, as amended, as filed with the Securities and Exchange Commission, and
such other documents as each of them may deem relevant, and (b) to ask such
questions and obtain such information concerning USP as each of them deem
relevant.
5. Physician and the Selling PCs agree: (a) to maintain the
confidentiality of all confidential information provided to them by USP in
connection with this Amendment, and (b) not to use such information for any
purpose, including without limitation trading in the securities of USP, other
than evaluating whether to enter into this Amendment.
6. The parties hereby ratify and reaffirm the Purchase Agreement in all
other respects.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
U.S. PHYSICIANS, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------
/s/ Xxxx X. Xxxxxxxxxx
----------------------------
Xxxx X. Xxxxxxxxxx
LAWRENCEVILLE NEUROLOGY
ASSOCIATES, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
XXXXXXXX NEURODIAGNOSTIC
ASSOCIATES, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
CENTER FOR STROKE
PREVENTION, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
NEUROLOGY ASSOCIATES OF
XXXXXX COUNTY, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
OPEN MRI, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
NEW BRUNSWICK DIAGNOSTIC
ASSOCIATES, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
CHERRY HILL DIAGNOSTIC ASSOCIATES, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
BRICK DIAGNOSTIC
ASSOCIATES, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
NEUROLOGY PAIN CENTER, P.A.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
XXXX XXXXXXXXXX, M.D.
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------
President
SCHEDULE 2(e)-1
The percentage of the Value Guarantee that will be issued to Selling PC, or
Physicians, as applicable, in the form of shares of USP, will vary according to
the multiple of projected earnings at which USP is priced in the IPO. For
example: If the IPO multiple is 16 times projected earnings, 100% of the Value
Guarantee will be delivered at the IPO. If the IPO multiple is 15 times
projected earnings, 63.5% of the Value Guarantee will be delivered at the IPO.
If the IPO multiple is 14 times projected earnings, 50% of the Value Guarantee
will be delivered at the IPO. If the IPO multiple is 13 times projected
earnings, 37.5% of the Value Guarantee will be delivered at the IPO.
SCHEDULE 2(e)-2
TRANSFERRING SHAREHOLDERS GUARANTEE RATIO(1)
Xxxxxx X. Xxxxx 30.33%
NEPA Venture Fund II, L.P. 19.27%
Edison Venture Fund III, L.P. 30.64%
Keystone Venture IV, L.P. 10.98%
Dominion Fund V, a Delaware Limited Partnership 8.78%
(1) This Guarantee Ratio applies to all USP shares owned of record by such
Transferring Shareholders, except the shares of USP common stock resulting
from the conversion of the Series D Convertible Preferred Stock held by the
foregoing.
If the shares represented by the above have been fully transferred pursuant
to the Value Guarantee, then, if required to meet the Value Guarantee,
Transferring Shareholders will transfer, pro rata, the shares of common
stock held by the foregoing resulting from the conversion of the shares of
Series D Convertible Preferred Stock.
SCHEDULE A
5. Subordination. Amounts owing under this Note (including, without
limitation, principal, interest, fees, charges, expenses and other amounts) are
expressly made subordinate and junior in right of payment to the prior payment
in full in cash and cash equivalents (and termination of commitments) of all
Senior Bank Debt to the extent and in the manner provided herein. Prior to (i)
the occurrence of an Insolvency Proceeding or (ii) notice from the Bank Agent of
the occurrence of an event of default under the Senior Bank Debt, the Company
may make payment, and the holder hereof may receive, principal (including
voluntary prepayments), interest and other amounts owing under this Note. After
(i) the occurrence of an Insolvency Proceeding or (ii) notice from the Bank
Agent of the occurrence of an event of default under the Senior Bank Debt, then
unless the Insolvency Proceeding shall have been dismissed or the event of
default shall have been remedied or waived, as appropriate,
(A) no payment shall be made, direct or indirect, on or in respect of
this Note and the holder of this Note shall not exercise any remedies under
this Note,
(B) any payment or other amounts payable on or in respect of this Note
shall be paid directly to the Bank Agent for application to the Senior Bank
Debt, and
(C) if, notwithstanding the foregoing provisions, the holder of this
Note shall receive payment on or in respect of this Note in contravention
of the provisions hereof, such amounts shall be received and held in trust
for the benefit of the Senior Bank Debt and will be promptly paid over to
the Bank Agent for application to the Senior Bank Debt,
until the Senior Bank Debt shall first have been paid in full in cash or cash
equivalents.
As used herein:
"Company Credit Agreement" means that Credit Agreement dated as of
____, 19___, among the Company, the Lenders identified therein and
NationsBank, N.A., as Administrative Agent, as amended, modified and
supplemented.
"Bank Agent" means the Agent under the Company Credit Agreement, being
initially NationsBank, N.A.
"Insolvency Proceeding" means any bankruptcy or insolvency proceeding,
or any receivership, liquidation, arrangement, reorganization or other
similar case or proceeding in connection therewith, in respect of the
Company or its creditors, as such, or its assets, or any liquidation,
dissolution or other winding up of the Company, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or any
assignment for the benefit of creditors.
"Senior Bank Debt" means (i) all principal (including reimbursement
obligations owing in respect of letters of credit) of and interest on the
loans and other obligations, and all other amounts (including guaranty
obligations, fees, indemnities, charges, expenses and other monetary
obligations) owing from time to time by the Company to the Bank Agent or
any Lender under the Company Credit Agreement or any other Credit Document
referenced therein, each as amended, modified or supplemented from time to
time, (ii) all obligations (including guaranty obligations) owing from time
to time in respect of any refinancing, refunding, renewal or restructuring
of all or any portion of the principal (including reimbursement obligations
owing in respect of letters of credit) owing under, interest owing thereon
or other amounts relating to the Company Credit Agreement or any other
Credit Document referenced therein, as amended, modified or supplemented,
(iii) all obligations of the Company to a Lender or an affiliate of a
Lender under the Company Credit Agreement under an interest rate protection
agreement or foreign currency protection agreement permitted under the
Company Credit Agreement, and (iv) without limiting the foregoing, all
interest accruing subsequent to the commencement of an Insolvency
Proceeding.