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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into and
executed as of May 30, 1996, by and among (i) PEDIATRIX MEDICAL GROUP OF TEXAS,
P.A., a Texas professional association ("Buyer"), (ii) WEST TEXAS NEONATAL
ASSOCIATES, a Texas general partnership ("Partnership"), and (iii) the
professional association and the individual physicians whose names are set
forth in Exhibit A hereto (individually, "Partner" and collectively,
"Partners"), with respect to the following facts:
A. Luis A. Ayo, M.D. and Roy Caviglia, M.D. entered into one
certain partnership agreement dated January 15, 1986, a copy of which is
attached hereto as Exhibit B.
B. Thereafter, Luis A. Ayo, M.D., P.A., a Texas professional
association ("Ayo P.A.") was admitted as a partner of the partnership created
according to that certain partnership agreement dated January 15, 1986, a copy
of which is attached hereto as Exhibit B.
C. The Partners have operated their business in accordance with a
partnership agreement dated January 15, 1986, a copy of which is attached
hereto as Exhibit B.
D. The Partnership and Partners (collectively "Sellers") are the
record and beneficial owners of all of the assets ("Purchased Assets") utilized
in, or with regard to, Sellers' Business (as hereinafter defined).
E. Buyer desires to purchase from Sellers, and Sellers desire to
sell to Buyer, the Purchased Assets.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein (the adequacy of which is hereby mutually
acknowledged by the Parties), the Parties hereto hereby agree as follows:
1.0 DEFINITIONS
1.1 DEFINITIONS - For purposes of the Agreement, the words and
terms listed below shall have the following respective meanings:
a. "Agreement" means this agreement for purchase and sale of
Purchased Assets, together with all exhibits and schedules
referenced herein or attached hereto.
b. "Authority" means any federal, state or local regulatory
governmental agency, commission, bureau or authority.
c. "Business" means the medical practice, and all related
enterprises, presently carried on by the Sellers.
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d. "Closing" means the consummation of the sale to, and the
purchase by, Buyer of the Purchased Assets by the transfer and
delivery of documents of title thereto and the payment of the
Purchase Price therefor.
e. "Closing Date" means May 30, 1996, or such other date as the
Parties may mutually agree. Unless the parties otherwise
agree in writing, the Closing shall be deemed effective as of
12:01 a.m. (local time) on May 30, 1996.
f. "Code" means the Internal Revenue Code of 1986, as amended.
g. "Financial Statements" means the unaudited financial
statements of Sellers for the periods ended December 31, 1993,
1994 and 1995, consisting of balance sheets and income
statements, copies of which are attached hereto as Schedule
1.1(g).
h. "Latest Balance Sheet Date" means December 31, 1995.
i. "Parties" means the Sellers and Buyer, collectively, and
"Party" means any one of them.
j. "Person" means any individual, corporation, professional
association, partnership, trustee or trust, unincorporated
association or other entity.
k. "Preclosing Period" means any tax period (including without
limitation partial periods) that end on or prior to the
Closing Date.
l. "Purchase Price" means that amount to be paid by the Buyer to
the Sellers for the Purchased Assets as set forth in Section
2.4 below.
m. "Purchased Assets" means the assets to be sold to Buyer.
2.0 PURCHASE AND SALE
2.1 PURCHASE AND SALE OF PURCHASED ASSETS - At and upon the
Closing, the Sellers shall sell, transfer and deliver the Purchased Assets,
free and clear of all encumbrances and liens except as permitted herein, to
Buyer, and Buyer shall purchase, acquire and accept the Purchased Assets from
the Sellers, including, without limitation, the following:
a. All tangible and intangible personal property of every kind
and description owned by Sellers and used or associated with
the Business as of the date hereof or the Closing Date,
including without limitation goodwill associated with the
Business, going concern value associated with the Business,
copyrights, patents and applications relating to the business,
trade names (including without limitation the name "West Texas
Neonatal Associates" and derivatives thereof), and those other
Purchased Assets identified on Schedule 2.1(a);
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b. All inventories and supplies used in, associated with or
relating to the Business wherever located;
c. All trade secrets, goodwill and all other rights and documents
owned, required for or incident to the performance of the
Business, including without limitation all patient records,
and all Sellers' books and records incident thereto; and
d. All transferable contracts, purchase orders, service
agreements, and other agreements attributable to, associated
with or related to the Business (all of such contracts, rights
or licenses being more particularly described in Schedule
2.1(d)).
2.2 EXCLUDED ASSETS - Notwithstanding anything in this Agreement
to the contrary, Buyer shall not purchase or receive or be under any obligation
with respect to any assets, equipment or contracts which are set forth in
Schedule 2.2 and which shall not constitute Purchased Assets hereunder.
Furthermore, Buyer shall not be under any obligation or duty to hire or make an
offer to hire any employee of Sellers, except as provided in Section 4.1(f).
2.3 NO ASSUMPTION OF LIABILITIES - Except as otherwise provided
herein, Buyer shall not assume or become obligated in any manner whatsoever
with respect to any obligations or liabilities, contractual or otherwise, of
Sellers or in connection with the transactions contemplated by this Agreement,
except with respect to performance under any assumed liabilities listed on
Schedule 2.3 hereto (the "Assumed Liabilities"), any (if any) Assumed
Liabilities to be only with regard to same as they shall accrue after the
Closing Date. Assumption by Buyer of the Assumed Liabilities shall in no way
expand the rights or remedies of third parties against Buyer as compared to the
rights and remedies which such parties would have had against Sellers had this
Agreement not been consummated.
2.4 PURCHASE PRICE - The Purchase Price for the Purchased Assets
shall be $5,250,000.00 payable to the Partnership or its designees, subject to
any written holdback or other written agreements which are executed and
delivered by the parties at or about the time of Closing. At and upon the
Closing, Buyer shall deliver the Purchase Price (subject to any written
holdback or other written agreements which are executed and delivered by the
parties at or about the time of Closing) to Sellers by means of a cashier's or
certified check.
2.5 ALLOCATION OF PURCHASE PRICE - Sellers and Buyer hereby agree
as to that allocation of the Purchase Price to the Purchased Assets, which
allocation is shown on Schedule 2.5. Pursuant to Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the applicable treasury
regulations thereto, Sellers and Buyer, for purposes of complying with the
requirements of Section 1060 of the Code, including, without limitation, the
filing of Form 8594, shall include in all filings to be made with the Internal
Revenue Service allocations of the Purchase Price among the Purchased Assets in
a manner which is consistent with the allocations herein agreed.
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2.6 CLOSING - The Closing shall take place on the Closing Date and
shall be held at the offices of Scott, Hulse, Marshall, Feuille, Finger &
Thurmond, P.C., Texas Commerce Bank Building, 10th Floor, El Paso, Texas 79901,
at 11:00 a.m., M.D.T.
2.7 DELIVERY BY SELLERS - At and upon the Closing, Sellers shall
deliver or shall cause to be delivered to Buyer the following:
a. The Purchased Assets, by bill of sale and/or other applicable
documents of transfer, each with warranty of title, free and
clear of all liens and encumbrances.
b. The Sellers' books.
c. The written consent of the spouses of the Partners to the sale
of the Purchased Assets to Buyer.
d. The agreements, documents and instruments described in this
Agreement.
2.8 DELIVERY BY BUYER - At and upon the Closing, Buyer shall
deliver or cause to be delivered to the Partnership a check or wire transfer in
the amount of each of the Purchase Price.
2.9 DELIVERY OF OTHER DOCUMENTS - Such documents as evidence the
satisfaction of any condition precedent shall have been delivered prior to or
at the Closing. Each Party shall, at the Closing, deliver to the other Parties
an acknowledgement of receipt of such documents upon request by any Party.
3.0 REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLERS - Sellers hereby,
jointly and severally, represent and warrant to Buyer that each of the
following representations and warranties are true as of the date of the
Agreement, and unless otherwise set forth herein, as of the Closing.
a. Enforceability of Obligations - This Agreement will, upon
Closing, constitute a valid and binding obligation of Sellers,
enforceable against them in accordance with its terms.
b. No Liens - The Purchased Assets are free and clear of any
liens, charges, encumbrances or rights of others (other than
the rights of Buyer hereunder) and no Person (other than Buyer
hereunder) has any agreement, option or any rights capable of
becoming an agreement or option for the acquisition of the
Purchased Assets.
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c. Licenses, Registrations and Compliance - Each Partner and the
Partnership have obtained the appropriate licenses and are
qualified to do business in Texas and no other jurisdiction.
To the best of their knowledge, after due inquiry, Sellers are
not in violation of any applicable laws, regulations, orders,
rules, decrees or ordinances pertaining to the Business.
d. Organization and Valid Existence - Partnership is a general
partnership organized under the Texas Uniform Partnership Act,
and has all necessary power, authority and capacity to enter
into this Agreement and carry out its obligations hereunder,
to own and lease its property and Purchased Assets (including,
without limitation, the property and Purchased Assets shown in
the Financial Statements), and to carry on the Business as
presently conducted by it. The execution and delivery of this
Agreement has been duly authorized by all necessary action of
Partnership; and the sale of the Purchased Assets and the
consummation of the transaction described herein shall be duly
authorized by all necessary action of Partnership on or prior
to the Closing.
e. Capitalization - All the currently issued and outstanding
partnership interests in and to Partnership have been duly and
validly issued and are outstanding as fully paid interests in
the capital of Partnership.
f. Other Restrictions on Partnership Assets - There are no
outstanding warrants, options, rights of first refusal,
preemptory rights, agreements for purchase and sale, or other
contract rights accorded any third party by which such third
party may acquire the Purchased Assets or any other interests
of the Partnership, or which restrict the ability of the
Sellers to sell or transfer the Purchased Assets to Buyer.
g. Financial Statements - To the best information of Sellers, the
Financial Statements fairly represent the financial condition
and assets and liabilities of the Sellers as of December 31,
1993, 1994, and 1995.
h. Absence of Undisclosed Liabilities - Except to the extent
reflected or reserved against in the Financial Statements
(including without limitation the notes thereto) or incurred
subsequent to the date thereof and disclosed in Schedule
3.1(h), or except as incurred in the ordinary and usual course
of the Business of Sellers, Sellers have no outstanding
indebtedness or any liabilities or obligations (whether
accrued, absolute, contingent or otherwise) of a nature
customarily reflected or reserved against in a balance sheet
(including without limitation the notes thereto) prepared in
accordance with the Sellers' income tax basis of accounting.
i. Managed Care Contracts - The contracts of Sellers for the
provision of managed care services at Closing are set out in
Schedule 3.1(i). Except as otherwise shown upon Schedule
3.1(i). such contracts are in full force and effect and are
transferable to Buyer without need for any consent from any
third party.
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j. Tax Matters - Sellers are responsible for filing all federal,
state and local income, franchise, sales or use, property,
payroll, SUTA and FUTA, and other tax returns or reports
required by any law or regulation to be filed, and except as
specifically set forth in Schedule 3.1(j) hereto, Sellers have
duly and timely filed all such federal, state and local
income, franchise, sales or use, property, payroll, SUTA and
FUTA, and other tax returns or reports required by any law or
regulation to be filed, and have duly paid all taxes,
including without limitation payroll taxes and deposits,
assessments and reassessments, and all other taxes, duties,
charges, penalties, interest and fines due and payable by
Sellers on or before the date hereof. Sellers shall permit
Buyer to review and comment on any such tax returns for the
Preclosing Period. Sellers will not take any position on any
such tax returns for the Preclosing Period which would
adversely affect Sellers after the Closing.
The last three (3) calendar years' federal and state income
tax returns of Sellers, provided to Buyer under Section 4.1(j)
hereof, are true and accurate copies of those filed with the
necessary governmental authorities. Sellers hereby agree to
provide Buyer with copies of tax returns and supporting
documentation for the tax years 1993, 1994, and 1995.
Except as specifically set forth in Schedule 3.1(j) hereto,
Sellers have not received from any federal, state or local
taxing authority any assessment, reassessment or notice of
underpayment of any taxes or other penalty or charges and no
such notice is reasonably expected, and no consents extending
or waiving the limitation of time for reassessment of any
taxes, duties, charges, penalties, interest or fines, or any
statutes of limitations related thereto have been filed with
respect to Sellers for any fiscal year except as set forth in
Schedule 3.1(j), no tax return of Sellers has been audited
since January 1, 1990.
There is no misrepresentation attributable to neglect,
carelessness, willful default or fraud contained in any tax
return of Sellers previously filed.
The provision made for current and deferred taxes included in
the Financial Statements is sufficient for the payment of all
accrued and unpaid federal, state and local income, franchise,
capital, sales or use, property, payroll, SUTA and FUTA, and
other taxes, assessments and reassessments, duties, charges,
penalties, interest and fines payable by Sellers (whether or
not disputed), for the period ended the date thereof and for
all periods prior thereto.
k. Absence of Changes - Other than as disclosed on any schedule
or exhibit hereto, since the Latest Balance Sheet Date there
has not been:
(i) any material change in the condition or operations of
the Business, Purchased Assets or financial condition
of Sellers other than changes in
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the ordinary and normal course of business (none of
which has been materially adverse); or
(ii) any damage, destruction or loss, or other event,
development or condition of any character (whether or
not covered by insurance) materially and adversely
affecting the Business, Purchased Assets, properties
or future prospects of Sellers.
l. Absence of Unusual Transactions - Since the Latest Balance
Sheet Date, Sellers have not:
(i) transferred, assigned, sold or otherwise disposed of
any of the Purchased Assets shown in the Financial
Statements or cancelled any debts or claims, except
in each case in the ordinary and usual course of
business;
(ii) incurred or assumed any obligation or liability
(fixed or contingent), except those listed in
Schedule 3.1(h) hereto and except unsecured current
obligations and liabilities incurred in the ordinary
and normal course of business;
(iii) issued or sold any Partnership interests or any
warrants, bonds, debentures or other securities of
the Partnership, or issued, granted or delivered any
right, option or other commitment for the issuance of
any such or other securities;
(iv) discharged or satisfied any lien or encumbrance, or
paid any obligation or liability (fixed or
contingent) other than liabilities included in the
Financial Statements and liabilities incurred since
the date thereof in the ordinary and normal course of
business;
(v) undertaken any action or transaction, or suffered any
circumstance or situation, having an adverse effect
on Partnership equity other than in the ordinary
course of business;
(vi) declared or made any payment of any distribution in
respect of any Partnership interest or purchased or
redeemed any such Partnership interest or effected
any subdivision, consolidation or reclassification of
any such interests;
(vii) suffered any operating loss or any extraordinary
loss, or waived any rights of substantial value, or
entered into any commitment or transaction not in the
ordinary and usual course of business where such
loss, rights, commitment or transaction is or would
have a material effect on Sellers;
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(viii) except as required hereunder, amended or changed or
taken any action to amend or change the Partnership
Agreement;
(ix) made any general wage or salary increases in respect
of personnel which they employ, other than increases
in the ordinary and normal course of business; and
except as disclosed in Schedule 3.1(l) hereto, paid
any bonuses to personnel;
(x) except as disclosed in Schedule 3.1(h) hereto,
mortgaged, pledged, subjected to lien, granted a
security interest in, or otherwise encumbered any of
their Purchased Assets or property, whether tangible
or intangible;
(xi) except with Buyer's prior written consent, made any
single capital expenditure in excess of $1,000; or
(xii) authorized or agreed or otherwise become committed to
do any of the foregoing.
m. Title to Properties - Except as disclosed in the Financial
Statements or in Schedule 3.1(m) hereto, Sellers have good and
marketable title to all their Purchased Assets, real and
personal including, without limitation, those reflected in the
Financial Statements or acquired since the date of the
Financial Statements free and clear of all mortgages, pledges,
liens, encumbrances or charges of any kind of character.
n. Leased Equipment - Schedule 3.1(n) hereto contains a complete
list of all personal property and fixtures in the possession
or custody of Sellers that are leased, with the details of
such leases.
o. Leases of Real Property - Sellers are not a party to or bound
by any leases of real property other than those set forth in
Schedule 3.1(n) hereto, and all interests held by Sellers as
lessee under such leases are free and clear of any and all
liens, charges and encumbrances of any nature and kind
whatsoever, and all rental and other payments payable by
Sellers pursuant to such leases have been duly paid. Such
leases are in full force and effect without amendment thereto
and Sellers are not otherwise in default in meeting their
obligations contained in any such lease.
p. Real Property - Except as set forth in Schedule 3.1(p) hereto,
Sellers do not own any real property.
q. Contracts to Purchase - Except as set forth in Schedule 3.1(q)
hereto, Sellers are not a party to any contract to purchase
any goods and/or services with a value in excess of $2,000 per
year.
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r. Employment Contracts - Except as described in Schedule 3.1(r),
Sellers do not have any written employment contracts, pension,
deferred profit sharing, retirement, employee benefit or other
similar agreements or plans nor did they have any such plan or
agreement in the past, nor do they have any written contracts
of employment with any employees or any oral contracts of
employment which are not terminable on the giving of
reasonable notice in accordance with applicable law.
s. Material Contracts - Except as set forth in Exhibits and
Schedules hereto, Sellers are not a party to or bound by any
material contract or commitment whether oral or written.
t. Retirement and Welfare Benefit Plans - Except as set forth in
Schedule 3.1(t) hereto: (i) Sellers do not now maintain or
contribute to any qualified or non-qualified retirement plan
or program; and (ii) Sellers have not, from and after January
15, 1986, maintained or contributed to any qualified or non-
qualified retirement plan or program. Sellers do not have any
obligation to provide health or other welfare benefits to
former, retired or terminated employees, except as
specifically required under Section 4980B of the Code.
u. Absence of Guarantees - Except as specifically described in
Schedule 3.1(u) hereto, Sellers have not given or agreed to
give, nor are they a party to or bound by, any guaranty of
indebtedness or other obligations of third parties, nor are
the Sellers otherwise responsible for, or contingently
responsible for, any such indebtedness or other obligation.
v. Absence of Conflicting Agreements - Sellers are not a party
to, bound or affected by or subject to any indenture,
mortgage, lease, agreement, instrument, Partnership Agreement
provision, statute, regulation, order, judgment, decree or law
which would be violated, contravened, breached by or under
which default would occur, as a result of the execution and
delivery of this Agreement or the consummation of any of the
transactions provided for herein.
w. Litigation - Except as disclosed in Schedule 3.1(w) hereto,
there is no suit, action, litigation, arbitration proceeding,
governmental proceeding, administrative hearing, including
without limitation appeals and applications for review,
pending or threatened against or relating to Sellers or
affecting their properties or Business. Except as disclosed
in Schedule 3.1(w) hereto, there is not presently outstanding
against Sellers any adverse judgment, decree, injunction, rule
or order of any court, governmental department, commission,
agency, instrumentality or arbitrator. Within the period of
five (5) years prior to date of this Agreement, Sellers have
had no allegations, claims or litigation with regard to
alleged errors and omissions related to Sellers' practice of
medicine or the Business.
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x. Employees, etc. - Set forth in Schedule 3.1(x) hereto are the
names and titles of all personnel employed or engaged by
Sellers, including without limitation rates of remuneration,
positions held and date of commencement of employment. Also
set forth in Schedule 3.1(x) hereto is a complete list of all
independent contractors, subcontractors, and agents which are
presently engaged by Sellers that cannot be terminated by
Sellers on thirty (30) days notice or less.
y. Bank Accounts, etc. - Set forth in Schedule 3.1(y) hereto are
the names of each bank or other depository in which Sellers
maintain any bank account, trust account or safety deposit
box, the account numbers for each, and the names of all
persons authorized to draw thereon or who have access thereto.
z. Insurance - Sellers currently have in force the policies of
insurance set out in Schedule 3.1(z). All such policies of
insurance are in full force and effect and Sellers are not in
default, whether as to the payment of premium or otherwise,
under the terms of any such policy. Such policies can be
cancelled without penalty.
aa. Absence of Uninsured Liabilities - Except as described in
Schedule 3.1(aa) hereto, Sellers have no outstanding
liabilities, nor are they subject of any outstanding claims,
which liabilities or claims are normally covered by insurance
policies but which liabilities or claims are not covered by
insurance.
bb. Copies of Agreements, etc. - True, correct and complete copies
of all mortgages, leases, agreements, instruments and other
documents listed in the schedules and exhibits hereto to this
Agreement, and of the policies of insurance referred to in
Section 3.1(bb), either have been delivered to Buyer or will
be delivered prior to Closing.
cc. Sellers Records - Sellers have delivered, or will deliver at
Closing, copies of the records of Sellers to Buyer.
dd. Books of Account - The books and records of account of Sellers
fairly and correctly disclose in all material respects and in
accordance with the income tax basis of accounting,
consistently applied, the financial position of Sellers as of
the date hereof and all material financial transactions of
Sellers have been accurately recorded in such books and
records.
ee. Approvals - There are no approvals, consents or waivers
required to be obtained or applications required to be filed
with governmental authorities or any other Person whatsoever,
including without limitation pursuant to any leases or
contracts containing prohibitions or consent provisions to the
transactions described herein in order to permit the
transactions contemplated herein or to preserve the Business
and/or Purchased Assets of Sellers.
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ff. Compliance with Environmental Laws - Except as disclosed in
Schedule 3.1(ff) hereto, with regard to the Business, Sellers
are in compliance with and have always been in compliance with
all, and do not violate, and have not violated any applicable
federal, state, municipal or local laws, regulations, orders,
certificates of approval, licenses, permits, governmental
decrees, ordinances or any and all other legislation or
regulatory instruments with respect to environmental, health
or safety matters (collectively, "Environmental Laws") and,
for greater certainty, and without limiting the generality of
the foregoing:
(i) Sellers have operated at all times and have received,
handled, used, stored, treated, shipped and disposed
at all times of all contaminants in compliance with
all Environmental Laws from, out of and off the real
property leased by them or under their control or the
control of their agents or employees.
(ii) No orders, directions or notices have been issued
pursuant to any Environmental Laws to Sellers, except
as disclosed in Schedule 3.1(ff)(ii) hereto, copies
of which shall be delivered to the Buyer at least
thirty (30) days prior to Closing.
(iii) Sellers have not conducted any environmental audits
except as disclosed in Schedule 3.1(ff)(ii) (for the
purposes hereof "environmental audits" means any
evaluations, assessments, studies or tests performed
relating to environmental matters, including without
limitation any results of soil, ground water, air or
water quality samples and any associated reports);
correct and complete copies of such environmental
audits shall be delivered to Buyer at least thirty
(30) days prior to Closing.
(iv) Sellers are in compliance with all orders,
directions, notices, certificates of approval,
certificates, licenses and permits which have been
issued to them and hold all certificates of approval,
certificates, licenses and permits or other approvals
which they are required to hold pursuant to
Environmental Laws. Correct and complete copies of
all said orders, directions, notices, certificates
and approval, certificates, licenses and permits
shall be delivered to the Buyer at least thirty (30)
days prior to Closing.
(v) Sellers have not received any written notice nor does
they have any knowledge after due investigation and
inquiry of any facts which could give rise to any
notice that they are a "Potentially Responsible
Party" for a waste disposal site pursuant to the
Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. 9601 et seq.
or any other similar federal, state or local laws, as
same may be amended or supplemented from time to
time.
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(vi) Sellers have not failed to report to the proper
governmental authority the occurrence of any event
which is required to be so reported by any
Environmental Laws and Sellers have has provided or
shall, prior to Closing, provide Buyer with correct
and complete copies of all such reports and all
correspondence relating thereto.
gg. Compliance - Sellers are not in violation of any laws,
regulations, decrees or ordinances applicable to the Business
including without limitation any laws, regulations, decrees or
ordinances pertaining to: Medicare and Medicaid; the Texas
Anti-Remuneration Statute (Tex. Health and Safety Code Section
161.091); and/or the Stark Anti-Referral Provisions (Omnibus
Reconciliation Act of 1993; Social Security Act Section 1877;
42 U.S.C. Section 1395nn).
hh. Ayo P.A. - Ayo P.A. is a professional association, duly
organized and existing under the laws of the State of Texas,
with good and marketable title to all its assets, real and
personal, free and clear of all mortgages, pledges, liens,
encumbrances or charges of any kind or character.
ii. Ayo P.A. Shareholders, Directors, and Officers - The sole
shareholder, director, and officer of Ayo P.A. is Luis Ayo,
M.D. By his execution and delivery of this Agreement, Luis
Ayo, M.D. consents to this Agreement, and all actions related
to or contemplated by this Agreement, in Luis Ayo, M.D.'s
individual capacity and in his capacities as shareholder,
director, and officers of Ayo P.A.
jj. Full Disclosure - None of the foregoing representations,
warranties and statements of fact contains any untrue
statement of material fact or omits to state any material fact
necessary to make any such statement or representation not
misleading to Buyer.
3.2 REPRESENTATIONS AND WARRANTIES OF BUYER - Buyer hereby
represents and warrants to Sellers that each of the following representations
and warranties are true as of the date of this Agreement, and unless otherwise
set forth herein, as of Closing.
a. Enforceability of Obligations - This Agreement will, upon
Closing, constitute a valid and binding obligation of Buyer
enforceable against it in accordance with its terms.
b. Organization and Valid Existence - Buyer is a professional
association duly organized, validly existing and in good
standing under the laws of the State of Texas, and has all
necessary power, authority and capacity to enter into this
Agreement and carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereunder shall be duly
authorized or ratified by all necessary action on the part of
Buyer on or prior to the Closing.
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c. Absence of Conflicting Agreements - To the best actual
knowledge of Buyer, Buyer is not a party to, bound or affected
by or subject to any indenture, mortgage, lease, agreement,
instrument, charter or bylaw provision, statute, regulation,
order, judgment, decree or law which would be violated,
contravened or breached by, or under which any default would
occur, as a result of the execution and delivery of this
Agreement or the consummation of any of the transactions
described herein.
d. Litigation - There is no suit, action, litigation, arbitration
proceeding or governmental proceeding, including without
limitation appeals and applications for review, pending or, to
the best of the knowledge, information and belief (after due
inquiry) of Buyer, threatened against or involving Buyer, or
any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality
or arbitrator which, in any such case, might adversely affect
the ability of Buyer to enter into this Agreement or to
consummate the transactions described herein.
3.3 NO BROKER - Each of the Parties represents and warrants to the
other Parties that all negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on between them directly and
without the intervention of any other party in such manner as to give rise to
any valid claims against any of the Parties for a brokerage commission,
finder's fee or other like payment.
3.4 NON-WAIVER - No investigations made by or on behalf of Buyer
at any time shall have the effect of waiving, diminishing the scope of or
otherwise affecting any representation or warranty or covenant made by Sellers
herein or pursuant hereto.
3.5 NATURE AND SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS - All statements contained in any certificate or other instrument
delivered by or on behalf of a Party pursuant to or in connection with the
transactions described in this Agreement shall be deemed to be made by such
Party hereunder. All representations, warranties, covenants and agreements
contained herein on the part of each of the Parties shall survive the Closing,
the execution and delivery hereunder of bills of sale or security transfer
instruments and other documents of title to the Purchased Assets and payment of
all consideration therefor.
4.0 CONDITIONS PRECEDENT TO THE PERFORMANCE OF THE OBLIGATIONS OF BUYER
AND OF SELLERS
4.1 BUYER'S CONDITIONS - The obligation of Buyer to complete the
purchase of the Purchased Assets hereunder shall be subject to the satisfaction
of or compliance with in all material respects, at or before the Closing, each
of the following conditions precedent (each of which is hereby acknowledged to
be inserted for the exclusive benefit of Buyer and may be waived by it in whole
or in part).
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a. Truth and Accuracy of Representation of Sellers at the Closing
- All of the representations and warranties of Sellers made in
or pursuant to this Agreement including, without limitation,
the representations and warranties made by Sellers set forth
in Sections 3.1 and 3.3 hereof, shall be true and correct as
at the Closing and with the same effect as if made at and as
of the Closing (except as such representations and warranties
may be affected by the occurrence of events or transactions
expressly contemplated and permitted hereby or by transactions
in the ordinary and normal course of business), and Buyer
shall have received a certificate from the Sellers confirming,
to the correctness of the representations and warranties of
Sellers contained herein.
b. Performance of Obligations - Sellers shall have performed or
complied with, in all respects, all of their obligations,
covenants and agreements hereunder.
c. Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the purchase and
sale hereunder of the Purchased Assets and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by Sellers of their obligations under
this Agreement shall be satisfactory to Buyer and Buyer's
legal counsel, and Buyer shall have received copies of all
such documentation or other evidence as it may reasonably
request in order to establish the consummation of the
transactions described herein and the taking of all
proceedings in connection therewith in compliance with these
conditions, in form (as to certification and otherwise) and
substance satisfactory to Buyer and Buyer's legal counsel.
d. Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of any Persons or
governmental authorities (or registrations, declarations,
filings or recordings with any such authorities) required in
connection with (i) the completion of any of the transactions
described in this Agreement, (ii) the execution of the
Agreement, (iii) the Closing or (iv) the performance of any of
the terms and conditions hereof (collectively, the
"Approvals"), shall have been obtained on or before the
Closing.
Sellers shall have obtained and delivered by Closing to Buyer
written consents, in form and substance satisfactory to Buyer,
to the transaction described herein which are required
pursuant to the real property leases set forth in Schedule
3.1(o) (and any other contracts where approval or consent is
required) including, without limitation, such acknowledgements
and confirmations of good standing form the lessors under such
real property leases as may be reasonably requested by Buyer.
e. Employees of Buyer - There shall have been delivered to Buyer
on or before the Closing the resignations of such persons as
Buyer shall direct who are presently employees and/or agents
of Sellers from such positions and duly executed
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comprehensive releases from each such person of all their
respective claims against the Sellers, except for any claims
for current or future consideration or remuneration payable
under any written agreement with Sellers and disclosed to
Buyer.
f. Other Agreements and Documents - The following agreements and
documents shall have been executed, certified and/or approved,
as applicable, and copies thereof delivered to Buyer on or
before the Closing.
(i) The employment agreements between Buyer and (i) the
Partners, and (ii) the non-Partner physicians
described in Schedule 4.1(f)(ii) hereto, the forms of
which are attached hereto as Schedule 4.1(f)(i); and
(ii) The written consents of the spouses of Partners as
set forth in Section 2.7(e) hereto.
g. Limit on Capital Expenditures - Buyer shall be satisfied that
the Sellers have not, since the date hereof, incurred any
capital expenditures in excess of $1,000, in the aggregate
without the prior written approval of Buyer.
h. No Damage - No substantial damage by fire or other hazard to
the Purchased Assets of Sellers shall have occurred from the
date hereof to the Closing which is not adequately insured
against.
i. Litigation - At and upon the Closing, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions described in this
Agreement or otherwise claiming that such consummation is
improper.
j. Tax Returns - Buyer shall have received the 1993, 1994 and
1995 calendar years' tax returns of Sellers.
k. Financial - Buyer shall be satisfied with the accuracy and
sufficiency of the Financial Statements and all other
financial records of Sellers.
l. Board Approval - Buyer shall have received the approval and
authorization of its Board of Directors to enter into this
Agreement.
4.2 SELLERS' CONDITIONS - The obligations of Sellers to complete
the sale of the Purchased Assets hereunder shall be subject to the satisfaction
of or compliance with, at or before the Closing, each of the following
conditions precedent (each of which is hereby acknowledged to be inserted for
the exclusive benefit of Sellers and may be waived by them in whole or in
part).
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a. Truth and Accuracy of Representations of Buyer at Closing -
All of the representations and warranties of Buyer made in or
pursuant to this Agreement including, without limitation, the
representations and warranties made by Buyer and set forth in
Sections 3.2 and 3.3 hereof, shall be true and correct as at
the Closing and with the same effect as if made at and as of
the Closing, and Sellers shall have received a certificate
from Buyer confirming, to the best of its knowledge,
information and belief, the truth and correctness of the
representations and warranties of Buyer contained herein.
b. Performance of Obligations - Buyer shall have performed or
complied with, in all material respects, all of its
obligations, covenants and agreements hereunder.
c. Receipt of Closing Documentation - All documentation relating
to the due authorization and completion of the purchase and
sale hereunder of the Purchased Assets and all actions and
proceedings taken on or prior to the Closing in connection
with the performance by Buyer of its obligations under this
Agreement shall be satisfactory to Sellers' counsel, and
Sellers shall have received copies of all such documentation
or other evidence as they may reasonably request in order to
establish the consummation of the transactions described
herein and the taking of all corporate proceedings in
connection therewith in compliance with these conditions, in
form (as to certification and otherwise) and substance
reasonably satisfactory to Sellers' counsel.
d. Litigation - At and upon the Closing, there shall be no
litigation, governmental investigation or proceeding pending
or threatened for the purpose of enjoining or preventing the
consummation of any of the transactions described in this
Agreement or otherwise claiming that such consummation is
improper.
5.0 OTHER COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS PRIOR TO CLOSING - During the period from
the date of this Agreement to the Closing, Sellers will do the following:
a. Conduct Business in Ordinary Course - Except as otherwise
contemplated or permitted by this Agreement, preserve all
their goodwill and patient relations and conduct the Business
in the ordinary and normal course thereof and not, without the
prior written consent of Buyer, enter into any transaction
which if effected before the date of this Agreement would
constitute a material breach of the representations,
warranties or agreements contained herein.
b. Continue Insurance - Continue in force all existing policies
of insurance presently maintained by Sellers.
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c. Perform Obligations - Comply with all laws affecting the
operation of the Business and to pay all required taxes.
d. Prevent Certain Changes - Not, without the prior written
consent of Buyer, take any of the actions, do any of the
things or perform any of the acts described in paragraphs (i)
to (xii) inclusive of Section 3.1 (l).
5.2 ACCESS FOR INVESTIGATION - Sellers shall permit Buyer and its
employees, agents, counsels and accountants or other representatives, without
interference in the ordinary conduct of the Business of Sellers and at Buyer's
sole cost and expense, to have free and unrestricted access prior to the
Closing during normal business hours to the premises and to all the books,
accounts, records and other data of Sellers (including, without limitation, all
partnership, accounting and tax records of Sellers) and to the properties and
Purchased Assets of Sellers and to furnish with respect to the business,
properties and Purchased Assets of Sellers as Buyer shall from time to time
reasonably request to enable confirmation of the matters warranted in Section
3.1 hereof. Without limiting the generality of the foregoing, it is agreed
that the accounting representatives of Buyer shall be afforded ample
opportunity to make a full investigation of all aspects of the financial
affairs of Sellers. Until the Closing, and in the event of the termination of
this Agreement without consummation of the transactions described herein, Buyer
will keep confidential any information (unless readily available from public or
published information or sources) obtained from Sellers. If this Agreement is
so terminated, promptly after such termination, all documents, work papers and
other written material obtained from any Person in connection with this
Agreement and not theretofore made public (including, without limitation, all
copies thereof), shall be returned to the Person which provided such material.
5.3 ACTIONS TO SATISFY CLOSING CONDITIONS - Each of the Parties
hereby agrees to take all such reasonable actions as are within their
respective control, and to use their best efforts to cause other actions to be
taken which are not within their control, so as to ensure compliance with any
conditions set forth in Section 4 hereof which are for the benefit of any other
Party.
5.4 DISCUSSIONS, ETC. - From the date hereof, until the Closing or
until this transaction terminates, Sellers will not engage in any discussions
or negotiations with any third party regarding the sale of any of the Purchased
Assets.
6.0 INDEMNIFICATION AND PRIOR ACTS INSURANCE
Excepting only the obligation of Sellers to provide the insurance
coverage provided pursuant to Section 6.5 herein which obligation to provide
such insurance coverage shall be absolute and without regard to any Minimum
Aggregate Claims Amount (as hereinafter defined), NOTWITHSTANDING ANY OTHER
PROVISION CONTAINED IN SECTIONS 6.1, 6.2, 6.3, OR 6.4, Sellers shall only be
liable to indemnify Buyer in the event that all Claims (as defined in this
Section 6) exceed, in the aggregate, the sum of FIFTY THOUSAND AND NO/100THS
DOLLARS ($50,000.00), which amount shall be referred to as the "Minimum
Aggregate Claims Amount". In the event that the aggregate Claims, on a
cumulative basis, shall
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exceed the Minimum Aggregate Claims Amount, Sellers shall be liable for the
entire amount of all aggregate Claims (including, but not limited to, the
Minimum Aggregate Claims Amount).
6.1 TAX INDEMNITY - Except as set forth in Schedule 3.1(j) hereto,
Sellers will be responsible for the payment of, and will indemnify Buyer for,
all unpaid or reassessed taxes including, without limitation, federal, state
and local income, franchise, sales or use, property, payroll, SUTA and FUTA
taxes, and any duties, charges, penalties, interest and fines, if any, not
recorded as liabilities on the Financial Statements but which are applicable to
any period prior to Closing.
6.2 SELLERS' INDEMNITY - Sellers, jointly and severally, hereby
indemnify and save harmless Buyer from and against any claims, demands,
actions, causes of action, damage, loss, costs, liability or expense ("Claims")
which may be brought against Buyer and/or which it may suffer or incur as a
result of, in respect of, or arising out of the acts, omissions or other
conduct of Sellers occurring or arising prior to Closing, with respect to the
operation of the Business, the practice of medicine, and/or the ownership of
the Partnership interests.
6.3 BUYER'S INDEMNITY - Buyer hereby indemnifies and saves
harmless Sellers from and against any claims, demands, actions, causes of
action, damage, loss, costs, liability or expense ("Claims") which may be
brought against Sellers (or any of Sellers) and/or which Sellers (or any of
Sellers) may suffer or incur as a result of, in respect of, or arising out of
the acts, omissions or other conduct of Buyer occurring or arising without
fault of Sellers and subsequent to Closing, with respect to Buyer's ownership,
operation of the Business, or practice of medicine.
6.4 MUTUAL INDEMNITY - Sellers, jointly and severally, hereby
covenant and agree with Buyer, and Buyer hereby covenants and agrees with
Sellers, (the Party or Parties so covenanting and agreeing to indemnify another
Party hereinafter referred to as the "Indemnified Party") to indemnify and save
harmless the Indemnified Party, effective as and from the Closing, from and
against any Claims which may be brought against the Indemnified Party and/or
which it may suffer or incur as a result of, in respect of, or arising out of
any material non-fulfillment of any covenant or agreement on the part of the
Indemnifying Party under this Agreement or any incorrectness in or breach of
any representation or warranty of the Indemnifying Party contained herein or in
any certificate or other document furnished by the indemnifying Party pursuant
hereto. The foregoing obligation of indemnification in respect of such Claims
shall be subject to the requirement that the Indemnifying Party shall, in
respect of any Claim made by any third party, be notified forthwith by the
Indemnified Party of all material particulars thereof and be afforded at least
thirty (30) days, at its sole cost and expense, to resist, defend and
compromise the same.
6.5 PRIOR ACTS INSURANCE - Sellers shall, at Sellers' sole cost
and expense, purchase and maintain "prior acts" errors and omissions
malpractice insurance, insuring with regard to errors and omissions of Sellers
which shall have occurred upon or prior to Closing hereunder, listing Sellers
and Buyers as insureds, with coverage limits in amounts not less than
$1,000,000
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per occurrence and $3,000,000 in the annual aggregate, and providing coverage
for not less than twenty (20) years.
7. JEOPARDY
Notwithstanding anything to the contrary contained herein, if the
performance by any Party hereto of any term, covenant, condition or provision
of this Agreement should violate any statute, ordinance, or be otherwise deemed
illegal by any governmental body or agency (collectively, "Jeopardy Event"),
then the Parties shall use their best efforts to meet forthwith and attempt to
renegotiate this Agreement to remove or negate the effect of the Jeopardy
Event. Without limitation on the foregoing, if, and to the extent that, any
provisions of this Agreement shall conflict with any then applicable law,
regulations, and other authorities (including, by way of example only and
without limitation, those applicable provisions of the Omnibus Budget
Reconciliation Act of 1993 ["Stark II"]), the provisions of such applicable
law, regulations, and other authorities shall govern and control, and this
Agreement shall be reformed by the Parties to best comport with the purposes
and intentions hereof, while being, in all things, consistent with such then
applicable law, regulations, and authorities.
8. ARBITRATION
In the event of any dispute between or among the Parties to this
Agreement, the Parties agree to submit the dispute to binding arbitration
before a three-member panel (unless the parties jointly agree to a single
arbitrator), with Sellers (as a group) and Buyer each selecting one member of
the panel within ten (10) days of the demand for arbitration, and the third
member selected by the consent of the other two members within ten (10) days of
the selection of the first two arbitrators. Such arbitration shall be governed
by the provisions of the Texas General Arbitration Act, Tex. Civ. Prac. & Rem.
Code Ann. Section 171.001 et seq. Each member shall be a person not currently
or previously affiliated with the party making the selection (or relative of
any such past or current affiliate) and shall either be an attorney at law or
an individual with reasonable knowledge of the medical business and/or
integrated healthcare delivery systems; provided, however, that at least one of
the arbitrators shall be an attorney at law. Such arbitration shall be
conducted in accordance with the rules and procedure then in effect of the
American Arbitration Association in El Paso County, Texas. The arbitration
shall be commenced as soon as reasonably possible and a written decision shall
be rendered within thirty (30) days thereof. The arbitrators' decision shall
be final, binding and enforceable in a court of competent jurisdiction. Any
such arbitration shall be treated as confidential by all Parties thereto,
except as otherwise provided by law or as otherwise necessary to enforce any
judgment or order issued by the arbitrators. Notwithstanding the foregoing,
because time is of the essence of this Agreement, the parties specifically
reserve the right to seek a judicial temporary restraining order, preliminary
injunction or other short term equitable relief if necessary to prevent
irreparable harm, and grant the arbitrator the right to make a final
determination of the Parties' rights. The cost of the arbitrator shall be
shared by the Parties, except that the prevailing Party shall be entitled to
reimbursement thereof from the Party which did not prevail.
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9. CONFIDENTIALITY
In connection with entering into this Agreement, Sellers are fully
aware of all terms, conditions and covenants of this Agreement and in
connection with their performance of their respective obligations hereunder,
Sellers may become aware of or come into possession of proprietary, or
otherwise confidential information concerning Buyer or affiliates of Buyer
including, without limitation, reports, policies and procedures, marketing or
financial information or other information related to the business or services
of Buyer or affiliated entities of Buyer (collectively, "Confidential
Information"). As additional consideration for and as a condition of Buyer
entering into this Agreement, and except as otherwise agreed by all the
parties, Sellers, jointly and severally, agree to treat all Confidential
Information as confidential and secret as required, and to the fullest extent
permissible under applicable law, and shall not disclose any Confidential
Information to any person, except to the extent absolutely required for proper
performance of Sellers' obligations hereunder or under applicable law.
10.0 MISCELLANEOUS
10.1 PUBLIC NOTICES - All public notices to third parties and all
other publicity concerning the transactions contemplated by this Agreement
shall be jointly planned and coordinated by the Parties and no Party shall act
unilaterally in this regard without the prior approval of the Parties.
10.2 EXPENSES - The expenses incurred by each Party hereto in
connection with this Agreement and the transactions described herein shall be
borne by such Party, except as otherwise specifically provided in this
Agreement.
10.3 TIME - Time shall be of the essence hereof.
10.4 NOTICES - All notices, requests, offers, demands or other
communications (collectively, "Notice") given to or by the Parties under this
Agreement shall be in writing and shall be deemed to have been duly given on
the date of service if personally served on the Party to whom Notice is to be
given, or seventy-two (72) hours after mailing by United States mail first
class, registered or certified mail, postage prepaid, addressed to the Party to
whom Notice is to be given, to:
(1) Buyer at:
Pediatrix Medical Group of Texas, P.A.
c/o Pediatrix Medical Group, Inc.
1455 Northpark Drive
Fort Lauderdale, Florida 33326
and, with a copy to:
Scott, Hulse, Marshall, Feuille,
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Finger & Thurmond, P.C.
11th Floor
Texas Commerce Bank Building
El Paso, Texas 79901
Attention: G. Russell Hill, Esq.;
(2) Sellers at:
West Texas Neonatal Associates
1280 Hawkins, Suite 202
El Paso, Texas 79925
and
Luis A. Ayo, M.D.
Luia A. Ayo, M.D., P.A.
1280 Hawkins, Suite 202
El Paso, Texas 79925
Roy Caviglia, M.D.
1280 Hawkins, Suite 202
El Paso, Texas 79925;
and, with a copy to:
Mounce & Galatzan
8th Floor
Texas Commerce Bank Building
El Paso, Texas 79901
Attention: Merton Goldman, Esq.;
or at such other address provided by Notice.
10.5 ASSIGNMENT - Neither this Agreement nor any rights or
obligations hereunder may be assigned by any Party hereto without the prior
written consent of all other Parties, in their sole discretion.
10.6 FURTHER ASSURANCES - The Parties hereto shall with reasonable
diligence do all such things and provide all such reasonable assurances as may
be required to consummate the transactions described herein, and each Party
shall provide such further documents or instruments required by any other Party
as may be reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions, whether before or after the Closing.
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10.7 HEADINGS - The descriptive headings of the several paragraphs
of this Agreement are inserted for convenience only, are not part of this
Agreement and do not in any way limit or amplify the terms or provisions of
this Agreement.
10.8 INTEGRATION - This Agreement and any schedules and exhibits
referenced herein constitute the entire agreement between the parties with
respect to the subject matter contained herein and supersedes all agreements,
representations and understandings of the parties with respect to such subject
matter made or entered into prior to the date of this Agreement.
10.9 NO THIRD PARTY BENEFICIARIES - This Agreement is entered into
solely for the benefit of the parties hereto and no term, provision or covenant
hereunder shall confer or be deemed to confer in a benefit on any third party.
10.10 MODIFICATION AND WAIVER - No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by all
parties hereto. No waiver of any provision of this Agreement shall constitute,
or be deemed to constitute, a waiver of any other provision, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
10.11 GOVERNING LAW - This Agreement shall be governed by and
interpreted under Texas law.
10.12 ATTORNEY'S FEES - In the event any action at law or in equity
or other proceeding is brought to interpret or enforce this Agreement, or in
connection with any provision of this Agreement, the prevailing party shall be
entitled to its reasonable attorney's fees and other costs reasonably incurred
in such action or proceeding.
10.13 GENDER - Unless the context otherwise requires, the singular
includes the plural and vice versa, and the masculine, feminine and neuter
include each other.
10.14 SEVERABILITY - If any provision of this Agreement is invalid
or contravenes Texas law, such provision shall be deemed not to be a part of
this Agreement and shall not affect the validity or enforceability of its
remaining provisions.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
BUYER: PEDIATRIX MEDICAL GROUP OF TEXAS, P.A.
a Texas professional association
By: /s/ Stephen Haskins
---------------------------------
Its: President
---------------------------------
PARTNERSHIP: "WEST TEXAS NEONATAL ASSOCIATES"
LUIS A. AYO, M.D., P.A., Partner By: /s/ Luis A. Ayo
---------------------------------
By: /s/ LUIS A. AYO, M.D. Luis A. Ayo, M.D., Partner
---------------------------
LUIS A. AYO, M.D. By: /s/ Roy Caviglia
Sole Shareholder, Sole ---------------------------------
Director, President Roy Caviglia, M.D., Partner
PARTNERS:
/s/ LUIS A. AYO, M.D.
-----------------------------------------
LUIS A. AYO, M.D.
/s/ ROY CAVIGLIA, M.D.
-----------------------------------------
ROY CAVIGLIA, M.D.
LUIS A. AYO, M.D., P.A.
By: /s/ LUIS A. AYO, M.D.
--------------------------------
LUIS A. AYO, M.D.
Sole Shareholder, Sole
Director, President
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