ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of April
1, 1997, by and between BONE, MUSCLE AND JOINT, INC., a Delaware corporation
(the "Buyer"), and TRI-CITY ORTHOPAEDIC SURGERY MEDICAL GROUP, INC., a
California professional corporation (the "Seller").
A. The Seller is engaged in the business (the "Subject Business") of
providing orthopedic medical and surgical services and related medical and
ancillary services to patients.
B. The Buyer is engaged in the business of providing management,
administrative, financial, marketing, information technology, and related
services to professional medical organizations.
C. Concurrently herewith, the Seller and the Buyer are entering into a
Management Services Agreement (the "Management Services Agreement"), pursuant to
which the Buyer will furnish to the Seller management, administrative, and
related services.
D. The Seller desires to sell, transfer, convey and
assign to the Buyer, and the Buyer
desires to purchase from the Seller, certain of the assets,
properties, interests in properties and
rights of the Seller used in the Subject Business upon the terms
and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereby agree as follows:
1. Transfer of Purchased Assets, Assumption of Liabilities and Related
Matters.
1.1 Transfer of Assets. On the terms and subject to the conditions of this
Agreement, at the Closing (as hereinafter defined), the Seller shall sell,
transfer, convey and assign to the Buyer, and the Buyer shall purchase, assume,
and accept from the Seller, the following assets, properties, interests in
properties and rights of the Seller (the "Purchased
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Assets"), as the same shall exist immediately prior to the Closing, free and
clear of all Claims (as defined below) (except Permitted Liens (as defined
below)):
(a) the medical equipment owned by the Seller and listed on
Schedule
1.1(a);
(b) the furniture, furnishings, trade fixtures, and office
equipment owned by the Seller and listed on Schedule 1.1(b);
(c) the Seller's rights and interests under any equipment leases
identified on Schedule 1.1(c), subject to the Buyer's assumption of the
obligations accruing thereunder as provided in Section 1.3;
(d) the supplies described on Schedule 1.1(d);
(e) the accounts receivable described on Schedule 1.1(e) (the
"Accounts Receivable");
(f) the Seller's rights and interests under the office leases
identified in Schedule 1.1(f), subject to the Buyer's assumption of the
obligations accruing thereunder as provided in Section 1.3;
(g) the deposits identified on Schedule 1.1(g); and
(h) any additional items identified on Schedule 1.1(h).
1.2 Assets Not Being Transferred. All assets, properties, interests in
properties, and rights of the Seller not expressly identified in Section 1.1 or
the schedules referenced therein (the "Excluded Assets") are expressly excluded
from the assets of the Seller being sold, assigned, or otherwise transferred to
the Buyer. Without limiting the generality of the foregoing, the initial
contributions made by the Seller (and/or by any of the physicians who are
members of the medical group operated by the Seller) to Cooperative of American
Physicians, Inc./Mutual Protection Trust in respect of professional liability
coverage are Excluded Assets, and any refunds in respect of such contributions
shall be the property of the Seller (and/or of such physicians).
1.3 Liabilities Being Assumed. Except as otherwise provided herein and
subject to the terms and conditions of this Agreement, simultaneously with the
sale, transfer,
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conveyance and assignment to the Buyer of the Purchased Assets, the Buyer shall
assume, and hereby agrees to pay when due, those liabilities accruing after the
Closing Date under any equipment leases identified in Schedule 1.1(c) and under
any office lease identified in Schedule 1.1(f) (the "Assumed Obligations").
1.4 Liabilities Not Being Assumed. The Buyer is not assuming any
liabilities or obligations of the Seller (fixed or contingent, known or unknown,
matured or unmatured) whatsoever other than the Assumed Obligations. For
convenience of reference, all liabilities and obligations of the Seller not
being assumed by the Buyer are collectively referred to as the "Excluded
Obligations."
1.5 Instruments of Conveyance and Transfer, Etc. At the Closing, the
Seller shall deliver (or cause to be delivered) to the Buyer such deeds, bills
of sale, endorsements, assignments and other good and sufficient instruments of
sale, transfer, conveyance and assignment as shall be necessary to sell,
transfer, convey and assign to the Buyer, in accordance with the terms hereof,
title to the Purchased Assets, free and clear of all Claims (except Permitted
Liens), including, without limitation, the items identified in Section 5.2
hereof. Simultaneously therewith, the Seller shall take all steps as may be
reasonably required to put the Buyer in possession and operating control of the
Purchased Assets.
1.6 Right of Endorsement, Etc. Effective upon the Closing, the Seller
hereby constitutes and appoints the Buyer, its successors and assigns, the true
and lawful attorney-in-fact of the Seller with full power of substitution, in
the name of the Buyer, or the name of the Seller, on behalf of and for the
benefit of the Buyer, to collect all accounts receivable assigned to the Buyer
as provided herein, to endorse, without recourse, checks, notes and other
instruments received in payment of such accounts receivable in the name of the
Seller, and to institute and prosecute, in the name of the Seller or otherwise,
all proceedings which the Buyer may deem proper in order to assert or enforce
any claim, right or title of any kind in or to the Purchased
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Assets (other than the Accounts Receivable), to defend and compromise any and
all actions, suits or proceedings in respect of any of the Purchased Assets
(other than the Accounts Receivable) and to do all such acts and things in
relation thereto as the Buyer may deem advisable. The foregoing powers are
coupled with an interest and shall be irrevocable by the Seller, directly or
indirectly, whether by the dissolution of the Seller or in any manner or for any
reason.
1.7 Further Assurances. The Seller shall pay or cause to be paid to
the Buyer promptly any amounts which shall be received by the Seller after the
Closing which constitute Purchased Assets, including all amounts paid to the
Seller on account of the Accounts Receivable. The Seller shall, at any time and
from time to time after the Closing, upon the reasonable request of the Buyer,
execute, acknowledge, deliver and file, or cause to be done, executed,
acknowledged, delivered or filed, all such further acts, transfers, conveyances,
assignments or assurances as may reasonably be required for better selling,
transferring, conveying, assigning and assuring to the Buyer, or for aiding and
assisting in the collection of or reducing to possession by the Buyer, any of
the assets, properties, interests in properties or rights being purchased by the
Buyer hereunder. Any expenses incurred in connection with the foregoing shall be
borne equally by the Buyer and the Seller.
2. Purchase Price; Allocation.
2.1 Purchase Price; Payment. The purchase price (the "Purchase Price")
to be paid for the Purchased Assets shall consist of the following:
(a) the sum of Seventy-Nine Thousand Four Hundred Ninety Dollars
($79,490.00 ); and
(b) the sum of Five Hundred Nineteen Thousand Dollars ($519,000)
(the "A/R Initial Payment Amount"), subject to adjustment in accordance with
Section 2.3.
2.2 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets in a statement (the "Statement of
Allocation") reflecting the allocation set
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forth in Schedule 2.2 attached hereto. The A/R Initial Payment Amount
represents the parties' best estimate, as of the date of this Agreement, of the
total collectible amount of the accounts receivable assigned under this
Agreement. The parties shall complete their respective tax returns for the
period which includes the Closing Date in a manner that is consistent with the
Statement of Allocation.
2.3 Accounts Receivable Payment. The portion of the Purchase Price
specified in Section 2.1(b) is subject to adjustment as follows:
(a) Within fifteen (15) days after the date which occurs one year
after the date hereof (the "Determination Date"), the Buyer shall furnish to the
Seller a statement setting forth the amount of collections received by the Buyer
in payment of the Accounts Receivable as of the Determination Date (the "A/R
Collections"), including detail of write-offs of any of the Accounts Receivable,
the remaining outstanding balances of the Accounts Receivable, and any other
detail relating thereto as the Seller may reasonably request. If the amount of
A/R Collections exceeds the A/R Initial Payment Amount, the Buyer shall promptly
pay to the Seller an amount equal to the amount of such excess. If the A/R
Initial Payment Amount exceeds the amount of the A/R Collections, the Seller
shall promptly pay to the Buyer an amount equal to such excess.
(b) Commencing with the month next following the month in which
the Determination Date occurred, the Buyer shall pay to the Seller on a monthly
basis, within fifteen (15) days after the end of each month, an amount equal to
the actual amount of collections received by the Buyer during the prior month in
respect of any of the then-outstanding Accounts Receivable, such payments to
continue until the Accounts Receivable have been collected in full or agreed by
the parties to be written off. It is the intention of the parties that an amount
equal to any and all payments received by the Buyer in respect of the Accounts
Receivable be paid by the Buyer to the Seller.
(c) All payments by patients and third party payors shall be
accounted for on a first-in-first-out basis unless any such payment is
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identified as a payment in respect of a particular invoice or otherwise is
designated as payment of a particular invoice or for a particular service.
3. Representations and Warranties.
3.1 Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer, as of the date hereof, as follows:
(a) Organization; Good Standing; Qualification and Power. The
Seller is a professional medical corporation duly organized, validly existing
and in good standing under the laws of the State of California and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and as proposed to be conducted, to
enter into this Agreement and the Xxxx of Sale, to perform its obligations
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. The Seller has delivered to the Buyer a true and correct copy of
its Articles of Incorporation and Bylaws, as in effect on the date hereof.
(b) Authority. The execution, delivery and performance of this
Agreement and the Xxxx of Sale and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action on the part of the Seller. This Agreement and the
Xxxx of Sale have been duly and validly executed and delivered by the Seller and
constitute legal, valid and binding obligations of the Seller enforceable in
accordance with their respective terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally. Neither the execution, delivery or
performance by the Seller of this Agreement or the Xxxx of Sale, nor the
consummation by the Seller of the transactions contemplated hereby or thereby,
nor compliance by the Seller with any provision hereof or thereof will (i)
conflict with or result in a breach of any provision of the Articles of
Incorporation or Bylaws of the Seller, (ii) cause a default (with due notice,
lapse of time or
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both), or give rise to any right of termination, cancellation
or acceleration, under any of the terms, conditions or provisions of any note,
bond, lease, mortgage, indenture, license or other instrument, obligation or
agreement to which the Seller is a party or by which it or any of its respective
properties or assets may be bound or (iii) violate any law, statute, rule or
regulation or order, writ, judgment, injunction or decree of any court,
administrative agency or governmental body applicable to the Seller or any of
its respective properties or assets. No permit, authorization, consent or
approval of or by, or any notification of or filing with, any person
(governmental or private) is required in connection with the execution, delivery
or performance by the Seller of this Agreement or the consummation of the
transactions contemplated hereby.
(c) Title to Assets, Properties, Interests in Properties and
Rights and
Related Matters.
(i) The Seller has good and valid title to all of the
Purchased Assets, free and clear of all security interests, judgments, liens,
pledges, claims, charges, escrows, encumbrances, easements, options, rights of
first refusal, rights of first offer, mortgages, indentures, security agreements
or other agreements, arrangements, contracts, commitments, understandings or
obligations, whether written or oral and whether or not relating in any way to
credit or the borrowing of money (collectively, "Claims"), of any kind or
character, except for (i) those Claims set forth on Schedule 3.1(c) and (ii)
Permitted Liens.
(ii) There does not exist any condition which materially
interferes with the economic value or use (consistent with the Seller's past
practice) of any tangible personal property included in the Purchased Assets and
such property is in good operating condition and repair, reasonable wear and
tear excepted.
(iii) The Seller has the complete and unrestricted power and
the unqualified right to sell, transfer, convey and assign the Purchased Assets,
and this Agreement and the Xxxx of Sale are sufficient to sell, transfer, convey
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and assign to the Buyer all right, title and interest of the Seller in and to
the Purchased Assets, free and clear of all Claims (other than Permitted Liens)
and to vest in the Buyer good and valid title thereto.
(iv) As used in this Agreement, "Permitted Liens" shall mean
(i) any lien for current taxes not yet due and payable, and (ii) liens of
carriers, warehousemen, mechanics and materialmen created in the ordinary course
of the Subject Business for amounts not yet due and payable which do not
materially detract from the value or impair the use of any property or assets.
(d) Litigation. Except as set forth on Schedule 3.1(d), there are
no (i) actions, suits, claims, investigations or legal or administrative or
arbitration proceedings pending or, to the best knowledge of the Seller,
threatened against the Seller, against any shareholder of the Seller, or in
connection with the Subject Business, or against the Purchased Assets or the
Subject Business, whether at law or in equity, or before or by any Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality or (ii) judgments, decrees, injunctions or orders of
any court, governmental department, commission, agency, instrumentality or
arbitrator against the Seller or affecting the Purchased Assets or the Subject
Business. The Seller has delivered to the Buyer all documents and correspondence
relating to matters referred to in said Schedule 3.1(d).
(e) Compliance; Governmental Authorizations. The Seller has
complied in all material respects with all applicable Federal, state, local or
foreign laws, ordinances, regulations and orders. The Seller has all Federal,
state, local and foreign governmental licenses and permits necessary in the
conduct of the Subject Business the lack of which would have a material adverse
effect on the Buyer's ability to operate the Subject Business after the Closing
on substantially the same basis as presently operated, such licenses and permits
are in full force and effect, no violations are or have been recorded in respect
of any thereof and
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no proceeding is pending or threatened to revoke or limit any thereof. None of
such licenses and permits shall be affected in any material respect by the
transactions contemplated hereby.
(f) Disclosure. Neither this Agreement (including the Exhibits
and Schedules attached hereto) nor any other document, certificate or written
statement furnished to the Buyer by or on behalf of the Seller in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading.
3.2 Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller, as of the date hereof, as follows:
(a) Organization, Good Standing and Power. The Buyer (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (ii) has all requisite corporate power and authority
to own, lease and operate its properties, to carry on its business as now being
conducted, to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby, and (iii) is
duly qualified and in good standing to do business in all jurisdictions in which
the failure to be so qualified and in good standing to do business could
reasonably be expected to have a material adverse effect on the business,
assets, operations, results of operations or affairs of the Buyer.
(b) Authority. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement has been duly and validly executed and delivered by the
Buyer and constitutes the valid and binding obligation of the Buyer, enforceable
in accordance with its terms except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally. Neither the execution, delivery or performance by
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the Buyer of this Agreement, nor the consummation by the Buyer of the
transactions contemplated hereby, nor compliance by the Buyer with any provision
hereof, will (i) conflict with or result in a breach of any provisions of the
Certificate of Incorporation or By-laws of the Buyer, (ii) cause a default (with
due notice, lapse of time or both), or give rise to any right of termination,
cancellation or acceleration, under any of the terms, conditions or provisions
of any material note, bond, lease, mortgage, indenture, license or other
instrument, obligation or agreement to which the Buyer is a party or by which it
or any of its properties or assets is or may be bound or (iii) violate any law,
statute, rule or regulation or order, writ, judgment, injunction or decree of
any court, administrative agency or governmental body applicable to the Buyer or
any of its properties or assets. No permit, authorization, consent or approval
of or by, or any notification of or filing with, any person (governmental or
private) is required in connection with the execution, delivery or performance
by the Buyer of this Agreement or the consummation by the Buyer of the
transactions contemplated hereby.
4. Conditions of Closing.
4.1 Conditions of Each Party's Obligations. The obligations of the
Seller to sell the Purchased Assets, and of the Buyer to purchase the Purchased
Assets, are subject to the satisfaction of the following conditions unless
waived in writing (to the extent such conditions can be waived) by the Seller
and the Buyer:
(a) Approvals. All authorizations, consents, orders or approvals
of, or declarations or filings with, or expiration of waiting periods imposed
by, any governmental agency or authority necessary for the consummation of the
transactions contemplated hereby shall have been filed, occurred or been
obtained.
(b) Legal Action. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation of
transactions contemplated hereby shall have been issued by any Federal or state
court and remain in effect. Each party agrees to use its best efforts to have
any such injunction or order lifted.
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(c) Legislation. No Federal, state, local or foreign statute,
rule or regulation shall have been enacted which prohibits, restricts or delays
the consummation of the transactions contemplated by this Agreement or any of
the conditions to the consummation of such transactions.
(d) Related Agreements. Each of the related agreements identified
in Section 4.4 hereof (collectively, the "Related Agreements") shall have been
fully executed and delivered prior to or at the Closing by all of the parties
required to execute and deliver such agreements.
4.2 Conditions of Obligations of the Buyer. The obligation of the
Buyer to purchase the Purchased Assets is subject to the satisfaction of the
following conditions unless waived in writing (to the extent such conditions can
be waived) by the Buyer:
(a) Representations and Warranties. The representations and
warranties of the Seller set forth in Section 3.1 shall in each case be true and
correct in all material respects as of the date of this Agreement and as of the
Closing as though made at and as of the Closing.
(b) Performance of Obligations. The Seller shall have performed
all obligations required to be performed by it under this Agreement prior to and
at the Closing.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement by the Seller and the
consummation of the transactions contemplated hereby and thereby shall have been
duly and validly taken by the Seller and the Seller shall have full power and
right to consummate the transactions contemplated hereby and thereby.
(d) Consents and Approvals. The Seller shall have delivered to
the Buyer duly executed copies of (i) consents to the assignment of any office
leases and equipment leases listed on Schedules 1.1(c) and 1.1(f) and (ii) all
other approvals, if any, required by this Agreement or the Schedules, in each
case in form and substance satisfactory to the Buyer and counsel to the Buyer.
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(e) Government Consents, Authorizations, Etc. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
Federal, state, local or foreign governmental commission, board or other
regulatory body which are required for or in connection with the execution and
delivery by the Seller of this Agreement and the consummation by the Seller of
the transactions contemplated hereby shall have been obtained or made.
4.3 Conditions of Obligations of the Seller. The obligation of the
Seller to sell the Purchased Assets to the Buyer is subject to the satisfaction
of the following conditions unless waived in writing (to the extent such
conditions can be waived) by the Seller:
(a) Representations and Warranties. The representations and
warranties of the Buyer set forth in Section 3.2 shall in each case be true and
correct in all material respects as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing.
(b) Performance of Obligations. The Buyer shall have performed
all obligations required to be performed by it under this Agreement prior to and
at the Closing.
(c) Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement by the Buyer and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken by the Buyer.
(d) Consents and Approvals. The Seller shall have received duly
executed copies of (i) consents to the assignment of any office leases and
equipment leases listed on Schedules 1.1(c) and 1.1(f) and (ii) all other
approvals, if any, required by this Agreement or the Schedules, in each case in
form and substance satisfactory to the Seller and counsel to the Seller.
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(e) Government Consents, Authorizations, Etc. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
Federal, state, local or foreign governmental commission, board or other
regulatory body which are required for or in connection with the execution and
delivery by the Buyer of this Agreement and the consummation by the Buyer of the
transactions contemplated hereby shall have been obtained or made.
4.4 Related Agreements. The Related Agreements referred to in this
Agreement consist of the following, all of which are entered into as of the date
hereof:
(a) the Management Services Agreement, entered into by and
between the parties hereto;
(b) the Stockholder Non-Competition Agreement, entered into by
and between the Seller, the Buyer, and the Eligible Parties;
(c) the Restricted Stock Agreement, entered into by and between
the Buyer and the Eligible Parties;
(d) an Assignment of Office Lease and an Office Sublease,
together with Consent of Landlord, relating to each of the medical offices
identified in Schedule 1.1(f), entered into by and between the parties hereto;
(e) the Medical Equipment Master Lease, entered into by and
between the parties hereto;
(f) the Asset Purchase Agreement entered into by and between
Tri-City Orthopaedic Building Partners and the Buyer (the "Building Partners
APA"); and
(g) the Asset Purchase Agreement entered into by and between
Xxxxxxx X. Xxxx, M.D., Inc. and the Buyer (the "Xx. Xxxx APA").
5. Closing.
5.1 Closing Date. The closing (the "Closing") for the consummation of
the transactions contemplated by this Agreement shall be deemed to have taken
place at 12:01 a.m. on April 1, 1997 (the "Closing Date"), irrespective of the
actual date(s) and time(s) that all of the documents required hereunder are
executed and delivered.
5.2 Closing Transactions. At the Closing, the parties shall take the
actions and deliver the documents identified in this Section 5.2. The Closing
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shall not be deemed to have taken place, and the transactions contemplated by
this Agreement shall not be deemed to have been consummated, unless all of the
closing transactions identified in this Section 5.2 have been completed or
waived in writing by the parties.
(a) Each of the parties shall deliver to the other a fully
executed copy of the Management Services Agreement;
(b) Each of the parties shall deliver to the other a fully
executed copy of the Stockholder Non-Competition Agreement;
(c) Each of the parties shall deliver to the other a fully
executed copy of the Restricted Stock Agreement;
(d) Each of the parties shall deliver to the other a fully
executed Assignment of Office Lease, Office Sublease, and Consent of Landlord
relating to the premises identified in Schedule 1.1(f);
(e) Each of the parties shall deliver to the other a fully
executed copy of the Medical Equipment Master Lease;
(f) The Seller shall deliver to the Buyer a copy of a corporate
resolution authorizing the transactions contemplated hereby, accompanied by a
certificate executed by the Seller's corporate secretary stating that such
resolution has been duly adopted by the corporation's Board of Directors and
approved by the corporation's shareholders;
(g) The Seller shall deliver to the Buyer an executed copy of the
Xxxx of Sale;
(h) The transactions required to be consummated concurrently
herewith, as described in Section 5.3 hereof, shall be closed as required by the
agreements identified in Section 5.3; and
(i) The Buyer shall deliver to the Seller a corporate check, or
evidence of Buyer's instructions to wire immediately available funds for credit
to Seller's bank account, for the Purchase Price as specified in Sections 2.1(a)
and 2.1(b) hereof and for the Additional Consideration specified in Schedule
III, Section C, of the Management Services Agreement.
5.3 Concurrent Closings. Concurrent with the Closing
hereunder --
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(a) The parties to the Building Partners APA shall deliver to
each other a fully executed copy of the Building Partners APA and shall take all
other actions required thereunder to close the transactions contemplated
thereby; and
(b) The parties to the Xx. Xxxx APA shall deliver to each other a
fully executed copy of the Xx. Xxxx APA and shall take all other actions
required thereunder to close the transactions contemplated thereby.
5.4 Post-Closing Obligations. Within fifteen (15) days after the
Closing Date, the Buyer shall deliver to the Seller stock certificates issued in
the names of the Eligible Parties as required by the Restricted Stock Agreement.
6. Indemnification.
6.1 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Affiliate", as to any person, means any other person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with such person.
(b) "Buyer Indemnification Event" shall mean the following:
(i) (A) the untruth, inaccuracy or breach of any
representation or warranty of the Seller contained in this Agreement, any
Schedule or Exhibit attached hereto or any certificate delivered by the Seller
in connection herewith (or any facts or circumstances constituting any such
untruth, inaccuracy or breach) or (B) the breach of any agreement or covenant of
the Seller contained in this Agreement;
(ii) the assertion against the Buyer or any Buyer
Indemnified Person of any liability or obligation arising from, relating to, or
in any way connected with the operation of the Subject Business prior to the
Closing;
(iii) the assertion against the Buyer or any Buyer
Indemnified Person of any Excluded Obligation; and
(iv) any non-compliance by the Seller with the "bulk sales
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laws" of California to the extent that such laws may be applicable to the
transactions contemplated hereby.
(c) "Buyer Indemnified Persons" shall mean and include the Buyer
and its officers, directors, and employees.
(d) "Indemnified Persons" shall mean the Buyer Indemnified
Persons or the Seller Indemnified Persons, as the case may be.
(e) "Indemnifying Person" shall mean the Buyer or the Seller.
(f) "Losses" shall mean any and all losses, claims, damages,
liabilities, expenses (including reasonable attorneys' and accountants' fees),
assessments, tax deficiencies and taxes (including interest or penalties
thereon) sustained, suffered or incurred by any Indemnified Person arising from
any matter which is the subject of indemnification under Section 6.2.
(g) "Seller Indemnification Event" shall mean (i) the untruth,
inaccuracy or breach of any representation or warranty of the Buyer contained in
this Agreement, any Schedule or Exhibit attached hereto or any certificate
delivered by the Buyer in connection herewith (or any facts or circumstances
constituting any such untruth, inaccuracy or breach) or (ii) the breach of any
agreement or covenant of the Buyer contained in this Agreement.
(h) "Seller Indemnified Persons" shall mean and include the
Seller and its officers, directors, and employees.
6.2 Indemnification Generally.
(a) Buyer Indemnification. The Seller shall indemnify, defend and
hold harmless the Buyer Indemnified Persons, and each of them, from and against
any and all Losses resulting from Buyer Indemnification Events.
(b) Seller Indemnification. The Buyer shall indemnify, defend and
hold harmless the Seller Indemnified Persons, and each of them, from and against
any and all Losses resulting from Seller Indemnification Events.
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6.3 Assertion of Claims. No claim, demand, suit or cause of action
shall be brought under Section 6.2 unless the Indemnified Persons, or any of
them, give the Indemnifying Person written notice of the existence of any such
claim, demand, suit or cause of action, stating with particularity the nature
and basis of said claim, and the amount thereof, to the extent known, and
providing to the extent reasonably available all written documentation relating
thereto. Such written notice shall be delivered to the Indemnifying Person as
soon as practicable upon receipt of actual knowledge of such claim, demand, suit
or cause of action; provided, however, that the failure to provide such written
notice shall not affect the Indemnified Persons' right to indemnification
hereunder if failure to provide such written notice does not materially
adversely affect the Indemnifying Person. Upon the giving of such written notice
as aforesaid, the Indemnified Persons, or any of them, shall have the right to
commence legal proceedings subsequent to the applicable survival date, if any,
for the enforcement of their rights under Section 6.2.
6.4 Notice and Defense of Third Party Claims.
(a) In the event any action, suit or proceeding is brought by a
third party against an Indemnified Person, with respect to which an Indemnifying
Person may have liability under Section 6.2, the action, suit or proceeding
shall, upon the written agreement of the Indemnifying Person that it is
obligated with respect to such action, suit or proceeding, be defended
(including all proceedings on appeal or for review which counsel for the
defendant shall deem appropriate) and, unless otherwise provided below,
controlled by such Indemnifying Person. The Indemnified Persons shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Persons,
unless (i) the employment of such counsel shall have been authorized in writing
by the Indemnifying Person in connection with the defense of such action, suit
or proceeding, (ii) the Indemnifying Person shall fail actively and diligently
to defend such action, suit or proceeding,
-17-
(iii) the Indemnified Persons shall have reasonably concluded that such action,
suit or proceeding involves to a significant extent matters beyond the scope of
the indemnity agreement contained in Section 6.2 or (iv) the Indemnified Persons
shall have reasonably concluded that there may be one or more legal or equitable
defenses available to the Indemnified Persons which are different from or
additional to those available to the Indemnifying Person, in any of which events
the Indemnifying Person shall not have the right to direct the defense of such
action, suit or proceeding on behalf of the Indemnified Persons and that portion
of any fees and expenses of counsel related to matters covered by the indemnity
agreement and contained in Section 6.2 shall be borne by the Indemnifying
Person. The Indemnified Persons shall be kept fully informed of such action,
suit or proceeding at all stages thereof whether or not they are so represented.
The Indemnifying Person shall make available to the Indemnified Persons and
their attorneys and accountants all books and records of the Indemnifying Person
relating to such action, suit or proceeding and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(b) The Indemnifying Person shall not make any settlement of any
action, suit or proceeding without the written consent of the Indemnified
Persons, which consent shall not be unreasonably withheld; provided, however,
that in the event the Indemnified Persons refuse to consent to a settlement
acceptable to the Indemnifying Person which is capable of settlement by the
payment of money only and the Indemnifying Persons shall demonstrate to the
reasonable satisfaction of the Indemnified Persons their ability to pay such
amount, the Indemnifying Person may pay the amount of the proposed settlement to
the Indemnified Persons and shall thereupon be released from any further
liability with respect to such action, suit or proceeding.
6.5 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Seller contained in Section 3.1 and the
representations and warranties of the Buyer contained in Section 3.2 shall
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survive the Closing and shall terminate forty-five (45) days following the first
anniversary of the Closing Date; provided, however, that the representations and
warranties of the Seller set forth in Sections 3.1(a), 3.1(b), 3.1(c) and
3.1(e), and the representations and warranties of the Buyer set forth in
Sections 3.2(a) and 3.2(b), shall survive the Closing and remain in full force
and effect until the expiration of the statute of limitations, if any,
applicable to the matters set forth therein (and indefinitely if none).
7. Non-Competition. The parties hereby acknowledge that they have entered
into an agreement regarding non-competition, as set forth in Section 15 of the
Management Services Agreement (identified at Recital C hereof).
8. Repurchase of Assets.
The Purchased Assets, except for the Accounts Receivable, are subject
to repurchase by the Seller from the Buyer upon termination of the Management
Services Agreement in accordance with Section 13.5 of the Management Services
Agreement.
9. Amendment, Modification and Waiver.
This Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each of the parties. The waiver
by one party of the performance of any covenant, condition or promise shall not
invalidate this Agreement, nor shall it be considered as a waiver by such party
of any other covenant, condition or promise. The delay in pursuing any remedy or
in insisting upon full performance for any breach or failure of any covenant,
condition or promise shall not prevent a party from later pursuing any remedies
or insisting upon full performance for the same or any similar breach or
failure.
10. Miscellaneous.
10.1 Transfer Taxes, Etc. The Seller and the Buyer shall each pay
one-half (1/2) of all sales, use and excise taxes and all registration,
recording or transfer taxes which may be payable in connection with the
transactions contemplated by this Agreement.
-19-
10.2 Entire Agreement. This Agreement (including the recitals hereof
and the Schedules and the Exhibits attached hereto), together with the related
agreements referenced herein, contains the entire agreement between the parties
hereto with respect to the transactions contemplated hereby and supersedes all
prior agreements, representations, warranties and understandings, either oral or
written, between the parties with respect thereto.
10.3 Descriptive Headings. Descriptive headings are for convenience
only and shall not control or affect the meaning or construction of any
provisions of this Agreement.
10.4 Notices. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by telecopier (if an addressee has set forth a telecopy
number below), sent by nationally-recognized overnight courier or sent by
certified mail, postage prepaid, return receipt requested, addressed as follows:
if to the Buyer, to:
Bone, Muscle and Joint, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000X
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Bone, Muscle and Joint, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, Vice President, Western Region
Facsimile: (000) 000-0000
and to:
Xxxxxxx and Xxxxxx Law Corporation
1900 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Seller, to:
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Tri-City Orthopaedic Surgery
Medical Group, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered if
personally delivered or sent by telecopier, (ii) on the Business Day after
dispatch if sent by nationally-recognized, overnight courier and (iii) on the
fifth Business Day after dispatch, if sent by mail. As used herein, "Business
Day" means a day that is not a Saturday, Sunday or a day on which banking
institutions in California are not required to be open.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
10.6 Bulk Sales Compliance. The Buyer hereby waives compliance by the
Seller with the provisions of the "bulk sales laws" of any state which may be
applicable to the transactions contemplated hereby; provided, however, that the
Seller shall indemnify the Buyer in connection with such noncompliance to the
extent provided in Article 6 hereof.
10.7 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
California without giving effect to the laws and principles thereof, or of any
other jurisdiction, which would direct the application of the laws of another
jurisdiction. The parties to this Agreement agree that jurisdiction and venue in
any action brought by any party hereto pursuant to this Agreement shall
exclusively lie in any federal or state court located in the State of
California. By execution and delivery of this Agreement, the parties hereto
irrevocably submit to the jurisdiction of such courts for themselves and in
-21-
respect of their property with respect to such action. The parties hereto
irrevocably agree that venue would be proper in such court, and hereby waive any
objection that such court is an improper or inconvenient forum for the
resolution of such action. The parties hereto shall act in good faith and shall
refrain from taking any actions to circumvent or frustrate the provisions of
this Agreement.
10.8 Attorneys' Fees. In the event of any dispute or controversy
arising out of or relating to this Agreement, the prevailing party shall be
entitled to recover from the other party all costs and expenses, including
attorneys' fees and accountants' fees, incurred in connection with such dispute
or controversy.
10.9 Benefits of Agreement. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns. Anything contained herein to the
contrary notwithstanding, this Agreement shall not be assignable by any party
without the consent of the other parties hereto, and any purported assignment
without such consent shall be null and void.
10.10 Pronouns. As used herein, all pronouns shall include the
masculine, feminine, neuter, singular and plural thereof whenever the context
and facts require such construction.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf effective as of the day and year first above written.
BONE, MUSCLE AND JOINT, INC.
("Buyer")
By:__/s/ Xxxxxx Xxxxxx, M.D.___________________
Xxxxxx Xxxxxx, M.D., President
and Chief Executive Officer
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TRI-CITY ORTHOPAEDIC SURGERY
MEDICAL GROUP, INC.
("Seller")
By:__/s/ Xxxxx X. Xxxx, M.D.__________________
Xxxxx X. Xxxx, M.D., President
Schedule 1.1(a)
MEDICAL EQUIPMENT
See following pages -- only the items identified by
a circled number 2 are "Medical Equipment"
Schedule 1.1(b)
FURNITURE, FURNISHINGS, TRADE FIXTURES, AND OFFICE
EQUIPMENT
See Schedule 1.1(a) -- all items identified by a circled number 1
Schedule 1.1(c)
EQUIPMENT LEASES
None.
Schedule 1.1(d)
SUPPLIES
All of the medical supplies, office supplies, postage, and printed
materials owned by the Medical Group and located on the premises of the Medical
Group's offices at 12:01 a.m. on the Closing Date hereunder.
Schedule 1.1(e)
ACCOUNTS RECEIVABLE
All of the accounts receivable of the Medical Group the payment of which
would constitute "Collections" as defined in Section 5.3(d)(ii) of the
Management Services Agreement, determined as of 12:01 a.m. of the Closing Date
hereunder.
Schedule 1.1(f)
OFFICE LEASES
Lease of office space located at 0000 Xxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx
00000, between Tri-City Orthopaedic Building Partners, as landlord, and the
Medical Group, as tenant.
Schedule 1.1(g)
DEPOSITS
None.
Schedule 1.1(h)
ADDITIONAL ITEMS
None.
Schedule 2.2
ALLOCATION OF PURCHASE PRICE
Medical Equipment $ 2,800
Furniture, Furnishings, Trade $ 64,190
Fixtures, and Office Equipment
Supplies $ 12,500
One Hundred Percent (100%) of the $ 519,000
---------
estimated collectible amount
of Accounts Receivable
TOTAL: $ 598,490
Schedule 3.1(c)
CLAIMS
None.
Schedule 3.1(d)
LITIGATION
See Management Services Agreement, Schedule 6.8
Exhibit A
XXXX OF SALE
Tri-City Orthopaedic Surgery Medical Group, Inc., a California professional
corporation (the "Seller"), hereby sells, conveys, transfers, assigns and
delivers to Bone, Muscle and Joint, Inc., a Delaware corporation (the "Buyer"),
the following assets, properties, interests in properties and rights of the
Seller:
(a) the medical equipment owned by the Seller and listed on Schedule
1.1(a) of that certain Asset Purchase Agreement between the Seller and the Buyer
entered into as of the date hereof (the "Asset Purchase Agreement");
(b) the furniture, furnishings, trade fixtures, and office equipment
owned by the Seller and listed on Schedule 1.1(b) of the Asset Purchase
Agreement;
(c) the Seller's rights and interests under any equipment leases
identified on Schedule 1.1(c) of the Asset Purchase Agreement, subject to the
Buyer's assumption of the obligations accruing thereunder from and after the
date hereof;
(d) the supplies described on Schedule 1.1(d) of the Asset Purchase
Agreement;
(e) the accounts receivable described on Schedule 1.1(e) of the Asset
Purchase Agreement;
(f) the Seller's rights and interests under the office leases
identified in Schedule 1.1(f) of the Asset Purchase Agreement, subject to the
Buyer's assumption of the obligations accruing thereunder from and after the
date hereof;
(g) the deposits identified on Schedule 1.1(g) of the Asset Purchase
Agreement; and
(h) any additional items identified on Schedule 1.1(h) of the Asset
Purchase Agreement.
All assets, properties, interests in properties, and rights of the Seller not
expressly identified above or in the schedules referenced in the Asset Purchase
Agreement are expressly excluded from the assets of the Seller being sold,
assigned, or otherwise transferred to the Buyer.
To the extent there is a conflict between the terms and provisions of this
Xxxx of Sale and the Asset Purchase Agreement, the terms and provisions of the
Asset Purchase Agreement shall govern.
IN WITNESS WHEREOF, the Seller has executed this instrument, by its duly
authorized officer, effective as of April 1, 1997.
TRI-CITY ORTHOPAEDIC SURGERY
MEDICAL GROUP, INC.
By:__/s/ Xxxxx X. Xxxx, M.D.___________________
Xxxxx X. Xxxx, M.D., President
ASSET PURCHASE AGREEMENT
BETWEEN
BONE, MUSCLE AND JOINT, INC.
AND
TRI-CITY ORTHOPAEDIC SURGERY MEDICAL GROUP, INC.
Effective as of April 1, 1997
TABLE OF CONTENTS
-----------------
Article Page
------- ----
1. Transfer of Purchased Assets, Assumption of Liabilities and
Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Transfer of Assets. . . . . . . . . . . . . . . . . . . . . 1
1.2 Assets Not Being Transferred. . . . . . . . . . . . . . . . 2
1.3 Liabilities Being Assumed . . . . . . . . . . . . . . . . . 3
1.4 Liabilities Not Being Assumed . . . . . . . . . . . . . . . 3
1.5 Instruments of Conveyance and Transfer, Etc.. . . . . . . . 3
1.6 Right of Endorsement, Etc.. . . . . . . . . . . . . . . . . 3
1.7 Further Assurances. . . . . . . . . . . . . . . . . . . . . 4
2. Purchase Price; Allocation . . . . . . . . . . . . . . . . . . . 4
2.1 Purchase Price; Payment . . . . . . . . . . . . . . . . . . 4
2.2 Allocation of Purchase Price. . . . . . . . . . . . . . . . 4
2.3 Accounts Receivable Payment . . . . . . . . . . . . . . . . 5
3. Representations and Warranties . . . . . . . . . . . . . . . . . 6
3.1 Representations and Warranties of the Seller. . . . . . . . 6
3.2 Representations and Warranties of the Buyer . . . . . . . . 8
4. Conditions of Closing. . . . . . . . . . . . . . . . . . . . . .10
4.1 Conditions of Each Party's Obligations. . . . . . . . . . .10
4.2 Conditions of Obligations of the Buyer. . . . . . . . . . .10
4.3 Conditions of Obligations of the Seller . . . . . . . . . .11
4.4 Related Agreements. . . . . . . . . . . . . . . . . . . . .12
5. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
5.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . .13
5.2 Closing Transactions. . . . . . . . . . . . . . . . . . . .13
5.3 Concurrent Closings . . . . . . . . . . . . . . . . . . . .14
5.4 Post-Closing Obligations. . . . . . . . . . . . . . . . . .14
6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .15
6.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . .15
6.2 Indemnification Generally . . . . . . . . . . . . . . . . .16
6.3 Assertion of Claims . . . . . . . . . . . . . . . . . . . .16
6.4 Notice and Defense of Third Party Claims. . . . . . . . . .17
6.5 Survival of Representations, Warranties and Covenants . . .18
7. Non-Competition. . . . . . . . . . . . . . . . . . . . . . . . .18
8. Repurchase of Assets . . . . . . . . . . . . . . . . . . . . . .19
9. Amendment, Modification and Waiver . . . . . . . . . . . . . . .19
10. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . .19
10.1 Transfer Taxes, Etc.. . . . . . . . . . . . . . . . . . . .19
10.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . .19
10.3 Descriptive Headings. . . . . . . . . . . . . . . . . . . .19
10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .19
10.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . .21
10.6 Bulk Sales Compliance . . . . . . . . . . . . . . . . . . .21
10.7 Governing Law; Jurisdiction . . . . . . . . . . . . . . . .21
10.8 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . .21
10.9 Benefits of Agreement . . . . . . . . . . . . . . . . . . .22
10.10 Pronouns . . . . . . . . . . . . . . . . . . . . . . . . 22
SCHEDULES
---------
1.1(a) - Medical Equipment
1.1(b) - Furniture, Furnishings, Trade Fixtures, and
Office Equipment
1.1(c) - Equipment Leases
1.1(d) - Supplies
1.1(e) - Accounts Receivable
1.1(f) - Office Leases
1.1(g) - Deposits
1.1(h) - Additional Items
2.2 - Allocation of Purchase Price
3.1(c) - Claims
3.1(d) - Litigation
EXHIBITS
--------
Exhibit A - Xxxx of Sale
Definitions
The following terms which may appear in more than one Section of this
Agreement are defined at the following pages:
Term Page
---- ----
A/R Collections. . . . . . . . . . . . . . . . . . . . . . . . . .5
A/R Initial Payment Amount . . . . . . . . . . . . . . . . . . . .4
Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . . .2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Assumed Obligations. . . . . . . . . . . . . . . . . . . . . . . .3
Building Partners APA. . . . . . . . . . . . . . . . . . . . . . 13
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Buyer Indemnification Event. . . . . . . . . . . . . . . . . . . 15
Buyer Indemnified Persons. . . . . . . . . . . . . . . . . . . . 15
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Determination Date . . . . . . . . . . . . . . . . . . . . . . . .5
Xx. Xxxx APA . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . .2
Excluded Obligations . . . . . . . . . . . . . . . . . . . . . . .3
Indemnified Persons. . . . . . . . . . . . . . . . . . . . . . . 15
Indemnifying Person. . . . . . . . . . . . . . . . . . . . . . . 16
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Management Services Agreement. . . . . . . . . . . . . . . . . . .1
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . .7
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . .4
Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . .2
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . 10
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Seller Indemnification Event . . . . . . . . . . . . . . . . . . 16
Seller Indemnified Persons . . . . . . . . . . . . . . . . . . . 16
Statement of Allocation. . . . . . . . . . . . . . . . . . . . . .4
Subject Business . . . . . . . . . . . . . . . . . . . . . . . . .1
