November 19, 1999
CONFIDENTIAL
MedLecture.com, Inc.
C/O Bonneau & Geismar, LLC
100 Lisbon Street
Lewiston, ME 04243
Re: Rule 4(2) or Regulation D, of the Securities Act of 1933 (the "Act"),
private issuance of five million three hundred sixty-three thousand nine
hundred eighty-seven (5,363,987) common shares of OTC:BB "ACAD"
Ladies and Gentlemen:
We render herewith our opinion as to certain matters pursuant to the Plan
of Merger dated November 19, 1999 (the "Plan"), made by and among
Worldlecture.com, Inc. (the "Surviving Corporation"), a wholly-owned
subsidiary of Acadia National Health Systems, Inc., a Colorado corporation
("Acadia"), and Medlecture.com, Inc., a Maine corporation (the "Disappearing
Corporation"), involved in the Section 4(2) or Regulation D private placement
of common shares of Acadia (the "Shares"), conducted in compliance with the
Securities Act of 1933 (the "Act").
In rendering our opinion, we have examined and relied upon the following:
(a) The Restated Articles of Incorporation of Acadia, and the Articles
of Incorporation of the Surviving Corporation, filed with the State of
Colorado.
(b) The materials contained in the Articles of Merger, Plan of Merger,
Assignment Separate From Certificate and Irrevocable Stock Power, Transfer Agent
Instructions and all accompanying documents, attachment and exhibits dated
November 19, 1999 (the "Confidential Documents") concerning the placement of
the Shares;
(c) The Certificates of Good Standing of Acadia and the Surviving
Corporation dated October 26, 1999 and November 9, 1999, respectively,
attached hereto as Exhibit "A" (the "Company's Certificate").
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November 19, 1999
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The opinions expressed in subparagraphs three, four, six, seven, nine and ten
below, as to factual matters, are given in reliance upon Acadia and the
Surviving Corporation's Securities Certificates;
(d) Such other documents and instruments as we have deemed necessary in
order to enable us to render the opinions expressed herein.
For the purposes of rendering this opinion, we have assumed that no
person or entity has engaged in fraud or misrepresentation regarding the
inducement relating to, or the execution or delivery of, the documents
reviewed. Furthermore, we express no opinion as to the validity of any of the
assumptions, form, or content of any financial or statistical data contained
in the Confidential Documents. We do not assume any obligation to advise
officers, directors, their advisors or representatives of the parties to the
Plan, beyond the opinions specifically expressed herein. The terms used in
this opinion shall have the meaning ascribed to them in the Plan and other
documents relied upon in rendering our opinion. As used in paragraphs five
and nine hereof the phrase "of which we have knowledge" means that such
knowledge is based solely upon conversations with representatives of Acadia
and a review of our own files.
Based upon the foregoing assumptions, our review of the above documents
and my reliance, as to factual matters, upon the representations in Acadia and
the Surviving Corporation's Certificate, and subject to the qualifications
listed herein, we are of the opinion that:
1. Acadia, the Surviving Corporation and Acadia Merger Holding Company,
Inc. (the "Subsidiary Corporation") are duly organized and validly existing
corporations under the laws of the State of Colorado, and upon the filing of
required state documents with the appropriate authorities, are fully
authorized to transact the business in which they are engaged in accordance
with the Plan and as described in the Confidential Documents.
2. The Plan has been duly authorized, executed and delivered by Acadia
and the Surviving Corporation and is a valid and binding agreement of Acadia
and the Surviving Corporation, each having adequate authorization and having
taken all Company action necessary to authorize the indemnification provisions
contained therein; provided, however, that no opinion is rendered as to the
validity or enforceability of such indemnification provisions insofar as they
are or may be held to be violative of public policy (under either state or
federal law) against such types of provisions in the context of the offer,
offer for sale, or sale of securities.
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Medlecture.com, Inc.
November 19, 1999
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3. The Shares, when issued and sold, will be validly and legally issued
under the laws of the State of Colorado and have been registered on Form
10SB12G as prescribed by Regulation SB of the Securities Exchange Act of 1934
(the "Exchange Act"). The Shares, when issued and sold, will be fully paid
and non-assessable. As of the date of this Opinion, Acadia has issued and
outstanding 5,013,987 shares of Common Stock and 350,000 shares of Common
Stock subject to derivative issue at the discretion of the Board of Directors,
such fully diluted number of shares including those issued to Christopher O.
Werner pursuant to a Settlement Agreement dated November 19, 1999.
4. The Shares, when issued by Acadia, will conform in all material
respects to all statements concerning them contained in the Confidential
Documents and constitute one-half (½) of the issued and outstanding
shares of stock of Acadia, plus unissued shares designated for use under
employment agreements or other similar contractual agreements, whether verbal
or written, or designated for issuance to company employees, agents or third
parties.
5. The consummation of the transactions discussed in the Confidential
Documents by Acadia and the Surviving Corporation will not result in any
breach of any of the terms of, or constitute a default under, the Articles of
Incorporation or Bylaws, any mortgage, loan commitment, indenture, deed of
trust, agreement or other instrument to which Acadia or the Surviving
Corporation is a party and of which we have knowledge, or violate, insofar as
it is directed to Acadia or the Surviving Corporation, any order of any court
or any federal or state regulatory body or administrative agency having
jurisdiction over it or over its property and of which we have knowledge.
6. To the best of our knowledge, there is not in existence, pending or
threatened any action, suit or proceeding to which Acadia or the Surviving
Corporation is a party, except as set forth in the Confidential Documents,
before any court or governmental agency or body, which might, if decided
adversely, materially affect the subject matter of the Plan or the financial
condition, business or prospects of Acadia or the Surviving Corporation.
7.(a) Acadia, the Surviving Corporation and the Subsidiary Corporation
have been duly organized and are validly existing corporations formed under
the laws of the State of Colorado with full power and authority to own their
properties and conduct their business as described in the Confidential
Documents, including, but not limited to, the full power and authority to
transact business as foreign corporations in the State of Maine.
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November 19, 1999
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7.(b) The incorporation of the Subsidiary Corporation is complete, will
be funded with all of the assets of Acadia's medical billings, practice
management and r (110 Sat. 1936) (codified in
scattered sections of the United States Code, including 18, 26, 29 and 42
U.S.C.), which includes an expansion of provisions relating to fraud and
abuse, creates additional criminal offenses relating to healthcare benefit
programs, provides for forfeitures and asset freezing orders in connection
with such healthcare offenses and contains provisions for instituting greater
coordination of federal, state and local enforcement agency resources and
actions.
In recent years, the focus of healthcare legislation has been on budgetary and
related funding mechanism issues. Both the Congress and the Clinton
Administration have made proposals to reduce the rate of increase in projected
Medicare and Medicaid expenditures and to change funding mechanisms and other
aspects of both programs. In late 1995, Congress passed legislation that would
substantially reduce projected expenditure increases and would make
significant changes in the Medicare and Medicaid programs. Acadia cannot
predict the effect of pending legislation, if adopted, on its operations.
A number of states in which Acadia has operations either have adopted or are
considering the adoption of healthcare reform proposals at the state level.
Acadia cannot predict the effect of proposed state healthcare reform laws on
its operations. Additionally, certain reforms are occurring in the healthcare
market, including certain employer initiatives such as creating purchasing
cooperatives and contracting for healthcare services for employees through
managed care companies (including health maintenance organizations), and
certain provider initiatives such as risk sharing among healthcare providers
and managed care companies through 33333capitated contracts and integration
among hospitals and physicians into comprehensive delivery systems.
Consolidation of management and billing services through integrated delivery
systems may result in a decrease in demand for Acadia billing services for
particular physician practices.
EXISTING GOVERNMENT REGULATION
Existing government regulation can adversely affect Acadia's business through,
among other things, its potential to reduce the amount of reimbursement
received by Acadia's clients for healthcare services. Acadia's medical
billing activities are also governed by numerous federal and state civil and
criminal laws. In general, these laws provide for various fines, penalties,
multiple damages, assessments and sanctions for violations, including possible
exclusion from Medicare, Medicaid and certain other federal and state
healthcare programs. Submission of claims for services or procedures that are
not provided as claimed, or which otherwise violate the regulations, may lead
to civil monetary penalties, criminal fines, imprisonment and/or exclusion
from participation in Medicare, Medicaid and other federally funded healthcare
programs. Specifically, the Federal False Claims Act allows a private person
to bring suit alleging false or fraudulent Medicare or Medicaid claims or
other violations of the statute and for such person to share in any amounts
paid to the government in damages and civil penalties. Successful plaintiffs
can receive up to 30% of the total recovery from the defendant. Such qui tam
actions or "whistle blower" lawsuits have increased significantly in recent
years and have increased the risk that a company engaged in the healthcare
industry, such as Acadia and many of its customers, may become the subject of
a federal or state investigation, may ultimately be required to defend a false
claims action, may be subjected to government investigation and possible
criminal fines, may be sued by private payors and may be excluded from
Medicare, Medicaid and/or other federally funded healthcare programs as a
result of such an action. Some state laws also provide for false claims
actions, including actions initiated by a qui tam plaintiff. Any such
proceeding or investigation could have a material adverse effect upon the
Company.
The ownership and operation of hospitals is subject to comprehensive
regulation by federal and state governments which may adversely affect
hospital reimbursement. Such regulation could have an adverse effect on the
operations of hospitals in general, and consequently reduce the amount of the
Company's revenue related to potential hospital clients.
There can be no assurance that current or future government regulations or
healthcare reform measures will not have a material adverse effect upon
Acadia's business.
VOLATILITY OF STOCK PRICE
Acadia believes factors such as the Company's liquidity and financial
resources, healthcare reform measures and quarter to quarter and year to year
variations in financial results could cause the market price of Acadia Common
Stock to fluctuate substantially. Any adverse announcement with respect to
such matters or any shortfall in revenue or earnings from levels expected by
Management could have an immediate and material adverse effect on the trading
price of Acadia Common Stock in any given period. As a result, the market for
Acadia Common Stock may experience material adverse price and volume
fluctuations and an investment in the Company's Common Stock is not suitable
for any investor who is unwilling to assume the risk associated with any such
price and volume fluctuations.