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EXHIBIT 10.1
EXECUTION COPY
PARTNERSHIP INTEREST PURCHASE AGREEMENT
BY AND AMONG
DEL MAR GENPAR, INC. AND DEL MAR ACQUISITION, INC.,
AS THE BUYERS;
SURGICAL VENTURES, INC.,
AS THE SELLER;
AND
DAVID M. KUPFER, M.D.
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PARTNERSHIP INTEREST PURCHASE AGREEMENT
TABLE OF CONTENTS
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ARTICLE I
PURCHASE AND
SALE....................................................................
2
1.1 Purchase
and Sale of the Purchased
Interests...................................................
2
1.2 Closing
Date...................................................................................
2
1.3
Consideration..................................................................................
2
1.4 Closing
Deliveries.............................................................................
3
1.5 Further
Assurances.............................................................................
4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND
KUPFER..............................
4
2.1
Organization...................................................................................
4
2.2
Authority......................................................................................
5
2.3 Formation
Documents............................................................................
5
2.4
Capitalization.................................................................................
5
2.5 Title to
Securities............................................................................
6
2.6 No
Subsidiaries................................................................................
6
2.7 Title to
Assets................................................................................
6
2.8 Condition
and Sufficiency of
Assets............................................................
7
2.9 Accounts
Receivable............................................................................
7
2.10 No
Violation...................................................................................
7
2.11 Governmental
Authorizations....................................................................
8
2.12 Financial
Statements...........................................................................
8
2.13 Absence of
Undisclosed
Liabilities.............................................................
8
2.14 Absence of
Certain
Changes.....................................................................
9
2.15
Taxes..........................................................................................
11
2.16
Litigation.....................................................................................
12
2.17 Compliance with
Laws...........................................................................
12
2.18
Licenses.......................................................................................
12
2.19
Payors.........................................................................................
12
2.20 Medical Staff
Matters..........................................................................
12
2.21 Health Care
Legal
Matters......................................................................
13
2.22 Environmental
Matters..........................................................................
15
2.23 Employee
Matters...............................................................................
16
2.24 Employee Benefit
Plans.........................................................................
16
2.25 Partnership
Contracts..........................................................................
18
2.26 Intellectual
Property..........................................................................
19
2.27 Competing
Interests............................................................................
19
2.28 No Conflict of
Interest........................................................................
19
2.29 Illegal
Payments...............................................................................
19
2.30
Insurance......................................................................................
20
2.31 Accredited
Investor; Disclosure
Materials......................................................
20
2.32 Investment
Intent..............................................................................
20
2.33 Restricted
Securities..........................................................................
21
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2.34 Full
Disclosure................................................................................
21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
BUYERS.........................................
21
3.1
Organization...................................................................................
21
3.2
Authority......................................................................................
21
3.3 No
Violation...................................................................................
22
3.4
Governmental
Authorizations....................................................................
22
3.5
Litigation.....................................................................................
22
3.6 No
Brokers.....................................................................................
22
3.7 Accredited
Investor............................................................................
22
3.8 Investment
Intent..............................................................................
22
3.9 Restricted
Securities..........................................................................
22
3.10 Full
Disclosure................................................................................
23
ARTICLE IV
COVENANTS AND
AGREEMENTS.............................................................
23
4.1 Conduct of
Business............................................................................
23
4.2 Access and
Information.........................................................................
25
4.3
Supplemental
Disclosure........................................................................
25
4.4 Assistance
with Licenses and
Filings...........................................................
25
4.5
Substitution
Guarantor.........................................................................
25
4.6
Fulfillment of Conditions by the
Sellers.......................................................
25
4.7
Fulfillment of Conditions by the
Buyers........................................................
25
4.8
Distributions in Excess of Required
Capital....................................................
26
4.9 Consent to
Transfers...........................................................................
26
4.10
Publicity......................................................................................
26
4.11
Audit..........................................................................................
26
4.12 Transaction
Costs..............................................................................
26
4.13 No-Shop
Provisions.............................................................................
27
4.14
Nondisclosure..................................................................................
27
4.15 Certain Tax
Matters............................................................................
27
4.16 Employees and
Employee
Benefits................................................................
28
4.17 Treatment of
Partnership Assets After
Closing..................................................
28
4.18 Mutual
Walk-Away...............................................................................
28
ARTICLE V
CLOSING
CONDITIONS...................................................................
29
5.1 Conditions
to Obligations of the
Buyers........................................................
29
5.2 Conditions to
Obligations of the Seller and
Kupfer.............................................
30
ARTICLE VI
INDEMNIFICATION......................................................................
31
6.1
Indemnification of the
Buyers..................................................................
31
6.2
Indemnification of the
Sellers.................................................................
33
6.3
Survival.......................................................................................
33
6.4
Notice.........................................................................................
34
6.5 Defense of
Claims..............................................................................
34
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6.6
Determination of
Losses........................................................................
35
ARTICLE VII
MISCELLANEOUS........................................................................
36
7.1
Termination....................................................................................
36
7.2
Notices........................................................................................
37
7.3 Attorneys'
Fees and
Costs......................................................................
37
7.4
Brokers........................................................................................
37
7.5
Severability...................................................................................
38
7.6
Counterparts...................................................................................
38
7.7
Interpretation.................................................................................
38
7.8
Assignment.....................................................................................
38
7.9 Entire
Agreement,
Amendment....................................................................
38
7.10 Specific
Performance, Remedies Not
Exclusive...................................................
38
7.11 GOVERNING
LAW..................................................................................
39
7.12
Drafting.......................................................................................
39
7.13
Usage..........................................................................................
39
7.14 Certain
Definitions............................................................................
39
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<PAGE>
EXECUTION COPY
PARTNERSHIP INTEREST PURCHASE AGREEMENT
This
Partnership Interest Purchase Agreement (this "Agreement") is
made
and entered into as of December 2, 2005
(the "Effective Date"), by and among Del
Mar GenPar, Inc., a Nevada corporation
("GenPar"); Del Mar Acquisition, Inc., a
Nevada corporation ("Newco" and, together
with GenPar, each individually a
"Buyer" and collectively the "Buyers");
Surgical Ventures, Inc., a California
corporation (the "Seller"); and David M.
Kupfer, M.D., an individual residing in
and licensed to practice medicine in the
State of California ("Kupfer").
RECITALS
WHEREAS,
the Seller is the legal and beneficial owner and holder of
record
of a general partnership interest in Elite
Surgical Centers, Del Mar L.P., a
California limited partnership (the
"Partnership"), having a Percentage Interest
(as defined in the Partnership Agreement
(as defined in Section 5.1(j))) of 1%
(the "GP Interest"), and is the sole
general partner named in the Partnership
Agreement;
WHEREAS,
the Seller is also the legal and beneficial owner and holder of
record of a limited partnership interest
having a Percentage Interest of 60%;
WHEREAS,
the remaining limited partnership interest in the Partnership,
having an aggregate Percentage Interest of
39%, is legally and beneficially
owned and held of record by the Persons (as
defined in Section 2.16) identified
as "Non-Selling Limited Partners" in
Schedule 2.4 to this Agreement;
WHEREAS,
the Partnership engages in the business of operating the Elite
Surgical Center Del Mar located at 12264 El
Camino Real, Suite 55, San Diego, CA
92130 (the "Business");
WHEREAS,
the Seller desires to sell to GenPar, and GenPar desires to
purchase from the Seller, the GP Interest,
on the terms and subject to the
conditions set forth in this Agreement;
WHEREAS,
the Seller also desires to sell to Newco, and Newco desires to
purchase from the Seller, a limited
partnership interest having a Percentage
Interest of 50% (the "LP Interest" and,
together with the GP Interest, the
"Purchased Interests"), on the terms and
subject to the conditions set forth in
this Agreement;
WHEREAS,
Kupfer owns 100% of the issued and outstanding stock of the
Seller and will receive substantial direct
and indirect benefits from the
transactions contemplated by this
Agreement, and the Buyers have required that
Kupfer enter into this Agreement as a
condition to the Buyers' execution hereof;
and
WHEREAS,
Kupfer owns 100% of the issued and outstanding stock of Elite
Surgical Management, Inc., a California
corporation ("Elite"), which provides
certain services to the
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Partnership, and desires to cause Elite to
sell to Surgical Center Management,
Inc., a Nevada corporation and an Affiliate
of the Buyers ("SCMI"), and SCMI
desires to purchase from Elite, the Elite
Assets (as defined in Section 1.4(g));
NOW,
THEREFORE, in consideration of the foregoing premises and the
mutual
representations, warranties, covenants and
agreements set forth herein, and
other good and valuable consideration, the
receipt and sufficiency of which is
hereby acknowledged, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1
Purchase and Sale of the Purchased Interests.
(a) Pursuant to the terms and subject to the conditions set
forth
herein,
GenPar hereby agrees to purchase from the Seller, and the
Seller
hereby
agrees to sell to GenPar, the GP Interest, for the
consideration
set forth
in Section 1.3(a).
(b) Pursuant to the terms and subject to the conditions set
forth
herein,
Newco hereby agrees to purchase from the Seller, and the Seller
hereby
agrees to sell to Newco, the LP Interest, for the consideration
set
forth in
Section 1.3(b).
1.2
Closing Date. The consummation of the sale and purchase of the
Purchased Interests (the "Closing") will
take place at the offices of Vsource,
Inc., a Delaware corporation and indirect
parent of the Buyers ("VSCE"), located
at 7855 Ivanhoe Avenue, Suite 200, La
Jolla, California 92037, at 11:00 a.m.
local time on January 31, 2006, or at such
other date, time and place as is
mutually agreed among the parties or, if
all of the conditions to the
obligations of the parties set forth in
Article V have not been satisfied or
waived by January 31, 2006, and there is no
agreement among the parties as to
another day, on the day that is two
business days following the date on which
all such conditions (other than those
conditions to be satisfied at the time of
the Closing) have been satisfied or waived
(such date being herein called the
"Closing Date"). The Closing will be
effective as of 12:01 a.m. on the Closing
Date.
1.3
Consideration.
(a) As consideration in full for the sale and purchase of the
GP
Interest,
GenPar will pay to the Seller an aggregate of $25,000 (the "GP
Purchase
Price"). The GP Purchase Price will be payable at the Closing
by
the
transfer by GenPar to the Seller of the Series A GP Shares (as
defined
below).
(b) As consideration in full for the sale and purchase of the
LP
Interest,
Newco will pay to the Seller an aggregate of $1,250,000 (the
"LP
Purchase
Price"). The LP Purchase Price will be payable at the Closing
by
the
issuance by Newco to the Seller of the Series A LP Shares and
the
Series B
Shares (each as defined below).
2
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(c) "Series A Preferred Stock" means the Series A Exchangeable
Preferred
Stock, par value $0.01 per share, of Newco, the Certificate of
Designation of which will be substantially in the form of Exhibit
A
attached
hereto;
(d) "Series A GP Shares" means the 2,500 shares of Series A
Preferred
Stock that will be issued to GenPar by Newco prior to the
Closing,
and which will be transferred to the Seller by GenPar at the
Closing as
full consideration for the sale and purchase of the GP
Interest;
(e) "Series A LP Shares" means the 29,375 shares of Series A
Preferred
Stock that will be issued to the Seller by Newco at the Closing
as partial
consideration for the sale and purchase of the LP Interest;
(f) "Series B Preferred Stock" means the Series B Exchangeable
Redeemable
Preferred Stock, par value $0.01 per share, of Newco, the
Certificate of Designation of which will be substantially in the
form of
Exhibit B
attached hereto (the "Series B Certificate of Designation");
(g) "Series B Shares" means the 19,125 shares of Series B
Preferred
Stock that
will be issued to the Seller by Newco at the Closing as partial
consideration for the sale and purchase of the LP Interest;
1.4
Closing Deliveries. At the Closing:
(a) GenPar will transfer to the Seller the Series A GP Shares,
and
will
deliver to the Seller certificates representing the Series A GP
Shares, duly
endorsed for transfer or accompanied by a stock power duly
executed
in blank, and any other documents that are necessary to
transfer
to the
Seller good title to the Series A GP Shares;
(b) Newco will issue to the Seller the Series A LP Shares and
the
Series B
Shares, and will deliver to the Seller certificates
representing
the Series
A LP Shares and the Series B Shares and any other documents
that are
necessary to transfer to the Seller good title to the Series A
LP
Shares and
the Series B Shares;
(c) the Seller will execute and deliver to the Buyers any
documents
that are
necessary to transfer to GenPar and Newco good title to the GP
Interest
and the LP Interest, respectively, including, without
limitation,
the
Assignment of GP Interest and the Assignment of LP Interest (as
defined in
Sections 5.1(m) and (n), respectively);
(d) GenPar will be admitted to the Partnership as successor
general
partner in
accordance with Section 12.19 of the Partnership Agreement;
(e) Newco will be admitted to the Partnership as a limited
partner
in
accordance with Section 12.8 of the Partnership Agreement;
(f) the Seller will transfer and deliver to GenPar the originals
or
copies of
all of the books, records, ledgers, electronic media,
proprietary information and other data and all other written or
electronic
depositories of information of and relating to the Partnership;
3
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(g) Kupfer will cause Elite to execute and deliver to SCMI any
documents
that are necessary to transfer to SCMI good title to, a valid
leasehold
interest in or a valid and enforceable right to use, as
applicable, any and all assets owned, leased or otherwise used by
Elite,
in
connection with its provision of services to the Partnership or
otherwise
(collectively, the "Elite Assets"), including, without
limitation, a Bill of Sale, substantially in the form of Exhibit
C
attached
hereto (the "Bill of Sale"), which Bill of Sale will include a
complete
and accurate listing of all of the Elite Assets; and
(h) the Buyers and the Seller will execute and deliver the
documents
required
to be delivered by each of them pursuant to Article V.
1.5
Further Assurances. At or after the Closing, and without
further
consideration, the Seller will execute and
deliver to Newco or GenPar such
further instruments of conveyance and
transfer as either of them may reasonably
request in order more effectively to convey
and transfer the GP Interest to
GenPar or the LP Interest to Newco,
respectively, or for aiding, assisting,
collecting and reducing to possession any
of the Purchased Interests and
exercising rights with respect thereto. The
parties agree to cooperate
reasonably with each other and with their
respective representatives in
connection with any steps required to be
taken as part of their respective
obligations under this Agreement before and
after the Closing, and shall (a)
furnish upon request to each other such
further information; (b) execute and
deliver to each other such other documents;
and (c) do such other acts and
things, all as any other party may
reasonably request for the purpose of
carrying out the intent of this Agreement
and the transactions contemplated
hereby, including, without limitation,
providing any information necessary to
complete as well as execute one or more
Federal Health Care Provider/Supplier
Enrollment Application CMS Form 855B.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND KUPFER
As a
material inducement to the Buyers to enter into this Agreement
and
consummate the transactions contemplated
hereby, the Seller and Kupfer, jointly
and severally, represent and warrant to the
Buyers that the statements contained
in this Article II (subject to the
disclosures contained in the Schedules
referenced herein) are true and correct as
of the Effective Date. The
disclosures in any particular Schedule
referenced herein shall qualify as
disclosures with respect to all other
Schedules referenced herein only where
specifically cross-referenced or, in the
absence of a specific cross-reference,
only where the disclosure made in any
particular Schedule referenced herein is
sufficient on its face, without reference
to attachments or underlying
documentation (excluding appendices to the
Schedules, which shall be deemed part
of the Schedules), to alert the Buyers to
the relevance of the disclosure to
such other Schedules referenced herein.
2.1
Organization. The Partnership is a limited partnership and the
Seller
is a corporation, each duly organized,
validly existing and in good standing
under the laws of the State of California,
and each has full power to own its
properties and to conduct its business as
presently conducted. The Partnership
is not qualified to do business in any
foreign jurisdiction, and no such
qualification is now required or will be
required prior to the Closing. Set
forth in Schedule 2.1 is
4
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a list of all fictitious business names
under which the Partnership operates,
all of which are registered in the County
of San Diego.
2.2
Authority. Each of the Seller and Kupfer has all requisite
power,
authority and capacity, corporate,
individual or otherwise, to execute, deliver
and perform under this Agreement and the
other agreements, certificates and
instruments to be executed by the Seller or
Kupfer in connection with or
pursuant to this Agreement (collectively,
the "Seller Documents"). The
execution, delivery and performance by the
Seller of each Seller Document to
which it is a party has been duly
authorized by all necessary action, corporate
or otherwise, on the part of the Seller.
This Agreement has been, and at the
Closing the other Seller Documents will be,
duly executed and delivered by the
Seller and Kupfer (to the extent each is a
party thereto). This Agreement is,
and, upon execution and delivery by the
Seller and Kupfer at the Closing, each
of the other Seller Documents will be, a
legal, valid and binding agreement of
the Seller and Kupfer (to the extent each
is a party thereto), enforceable
against the Seller and Kupfer in accordance
with its terms, except as such
enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting the
enforcement of creditors' rights
generally and subject to general principles
of equity (regardless of whether
enforcement is sought in a proceeding at
law or in equity).
2.3
Formation Documents. The Seller or Kupfer has delivered to the
Buyers
true, correct and complete copies of the
Partnership's certificate of limited
partnership, all partnership agreements in
effect during the last five years,
minute books and equity record books, as
applicable. Such records include
minutes or consents reflecting all actions
taken by the general partner or the
limited partners of the Partnership from
the date of organization of the
Partnership through the Effective Date.
2.4
Capitalization.
(a) Set forth in Schedule 2.4 is a complete and accurate list of
all
of the
ownership interests in the Partnership and the capital account
balances
associated therewith. The Purchased Interests have been duly
authorized
and validly issued in compliance with all applicable Laws (as
defined in
Section 2.17) and the provisions of the Partnership Agreement
or any
applicable predecessor operating agreement of the Partnership,
and
are fully
paid and nonassessable and free of preemptive rights. The
Partnership does not have any equity interests reserved for
issuance.
(b) There are no outstanding options, warrants, convertible or
exchangeable securities or other rights, agreements, arrangements
or
commitments obligating the Seller or the Partnership, directly
or
indirectly, to issue, sell, purchase, acquire or otherwise transfer
or
deliver
any equity interest in the Partnership, or any agreement,
document,
instrument or obligation convertible or exchangeable therefor.
There are
no agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any Person is or may
be
entitled
to receive any payment based on the revenues or earnings, or
calculated
in accordance therewith, of the Partnership. There are no
voting
trusts, proxies or other agreements or understandings to which
the
Seller or
the Partnership is a party or by which the Seller or the
Partnership is bound with respect to the voting of any equity
interest in
the
Partnership. Neither the GP Interest nor the LP Interest was issued
in
violation
of the
5
<PAGE>
Securities
Act of 1933, as amended (the "1933 Act"), or any applicable
state
securities Laws.
2.5 Title
to Securities. The Seller owns of record and beneficially the
Purchased Interests, free and clear of any
obligation, lien, claim, pledge,
security interest, liability, charge,
contingency or other encumbrance or claim
of any nature (a "Lien") other than as
provided in the Partnership Agreement.
Upon sale of the Purchased Interests and
delivery of certificates (or other
transfer documents included in the Seller
Documents) therefor to the Buyers
hereunder, GenPar will acquire the entire
legal and beneficial interests in the
GP Interest and Newco will acquire the
entire legal and beneficial interests in
the LP Interest, each free and clear of any
Lien and subject to no legal or
equitable restrictions of any kind other
than as provided in the Partnership
Agreement.
2.6 No
Subsidiaries. The Partnership does not have any subsidiaries or
own
any equity or debt interest or any form of
proprietary interest in any Person,
or any obligation, right or option to
acquire any such interest.
2.7 Title
to Assets.
(a) Set forth in Schedule 2.7(a) is a complete and accurate
list
(including
the street address, where applicable) of: (i) all real property
owned by
the Partnership; (ii) all real property leased by the
Partnership; (iii) each vehicle owned or leased by the Partnership;
and
(iv) each
other tangible asset owned or leased by the Partnership and
having a
book value in excess of $5,000. No tangible or intangible asset
used in or
associated with the Business is owned or leased by the Seller,
Kupfer or
any Affiliate (as defined in Section 7.14(a)) of the Seller or
Kupfer
(other than the Partnership).
(b) The Partnership has good and marketable title to all of the
assets it
purports to own and used in connection with the Business, and
owns all
of such assets free and clear of any Liens, other than Liens
set
forth in
Schedule 2.7(b), all of which will be released at or prior to
the
Closing,
and Permitted Liens (as defined in Section 7.14(e)). The
Partnership holds a valid leasehold interest in or otherwise has a
valid
and
enforceable right to use all of the assets used in connection with
the
Business
that it does not own.
(c) The real property owned or leased by the Partnership (the
"Real
Property")
is zoned for a classification that permits the continued use of
the Real
Property in the manner currently used by the Partnership.
Improvements included in the assets of the Partnership were
constructed,
and
remain, in compliance with all applicable covenants,
conditions,
restrictions and material Laws affecting the Real Property.
Final
certificates of occupancy have been issued for the improvements on
the
Real
Property permitting the existing use of such improvements. There
are
no actions
pending or, to the Knowledge of the Seller or Kupfer,
threatened
that would alter the current zoning classification of the Real
Property
or alter any applicable covenants, conditions, restrictions or
material
Laws that would adversely affect the use of the Real Property
in
the
Business. Neither the Partnership nor the Seller or Kupfer has
received
notice from any insurance company or Governmental Entity (as
defined in
Section 2.11) of any defects or inadequacies in the Real
Property
or the improvements thereon that would adversely affect the
insurability or usability of the Real Property or such improvements
or
6
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prevent
the issuance of new insurance policies thereon at rates not
materially
higher than present rates. To the Knowledge of the Seller or
Kupfer, no
fact or condition exists that would result in the
discontinuation of necessary utilities or services to the Real
Property or
the
termination of current access to and from the Real Property.
The
Seller is
not a "foreign person" as that term is defined in Section 1445
of the
Internal Revenue Code of 1986, as amended (the "Code"), and
applicable
regulations.
2.8
Condition and Sufficiency of Assets. The assets of the
Partnership,
including any assets held under leases or
licenses: (i) include all assets used
in the Business; (ii) are in good condition
and repair, ordinary wear and tear
excepted; (iii) have been properly and
regularly maintained in all material
respects; (iv) conform in all material
respects to all applicable Laws relating
to their construction, use, operation and
maintenance; and (v) constitute all
assets used by the Partnership in the
conduct of the Business.
2.9
Accounts Receivable. Set forth in Schedule 2.9 is a complete
and
accurate schedule of the accounts
receivable of the Partnership as of the
Effective Date, for dates of service
commencing on or after __________ ___, 2005
(collectively and together with all
accounts receivable of the Partnership
created after the Effective Date, the
"Accounts Receivable"). The Accounts
Receivable represent or will represent
valid obligations arising from sales
actually made or services actually
performed by the Partnership in the ordinary
course of business. Except to the extent
paid prior to the Closing Date, such
Accounts Receivable are or will be as of
the Closing Date current and
collectible net of the respective reserves
shown on the Latest Balance Sheet
(which reserves are adequate, commercially
reasonable and calculated consistent
with past practices and will not represent
a Material Adverse Effect in the
composition of such Accounts Receivable in
terms of aging). Subject to such
reserves, each of such Accounts Receivable
either has been or, to the Knowledge
of the Seller or Kupfer will be, collected
in full, without any setoff, within
60 days after the day on which it first
becomes due and payable. There is no
contest, claim, defense or right of setoff
under any agreement with any account
debtor of an Account Receivable relating to
the amount or validity of such
Account Receivable, other than returns in
the ordinary course of business and
consistent with past practices of the
Partnership or normal reductions pursuant
to contracts with the Payors (as defined in
Section 2.19) which set forth lower
reimbursement rates than the gross amount
of receivable invoiced.
2.10 No
Violation. Except as set forth in Schedule 2.10, neither the
execution or delivery of the Seller
Documents nor the consummation of the
transactions contemplated thereby,
including without limitation the sale of the
Purchased Interests to the Buyers, will, to
the Knowledge of the Seller or
Kupfer, conflict with or result in the
breach of any term or provision of,
require any consent, approval,
ratification, waiver, notification, license,
permit, order or other authorization
(including any Governmental Authorization
(as defined in Section 2.11))
(collectively, "Consents") or violate or
constitute a default under (or an event
that with notice or the lapse of time or
both would constitute a breach or default),
or result in the creation of any
Lien on the Purchased Interests or the
assets of the Partnership pursuant to, or
relieve any third party of any obligation
to the Partnership or give any third
party the right to terminate or accelerate
any obligation under, any charter
provision, bylaw, provision of the
Partnership Agreement, Partnership Contract
(as defined in Section 2.25(a)), License
(as defined in Section 2.18) or Law to
which the Seller or the Partnership is a
party or by which any assets of the
Partnership or otherwise used in the
Business is in any way bound or obligated.
7
<PAGE>
2.11
Governmental Authorizations. Except as set forth in Schedule 2.11,
to
the Knowledge of the Seller or Kupfer, no
Consent, franchise, grant,
identification or registration number,
easement, variance, exemption or
certificate issued, granted, given or
otherwise made available by or under the
authority of, or registration,
qualification, designation, declaration or filing
with, any nation, state, county, city,
town, village, district or other
jurisdiction of any nature; federal, state,
local, municipal, foreign or other
government; governmental or
quasi-governmental agency, authority, commission,
board or other body of any nature
(including any governmental branch,
department, official or entity and any
court or other tribunal); multi-national
organization or body; or body exercising,
or entitled to exercise, any
administrative, executive, judicial,
legislative, police, regulatory or taxing
authority or power of any nature
(collectively, each a "Governmental Entity"),
or required pursuant to any applicable Laws
(collectively, each a "Governmental
Authorization"), is required on the part of
the Seller or the Partnership in
connection with the sale and purchase of
the Purchased Interests or any of the
other transactions contemplated by this
Agreement.
2.12
Financial Statements. Attached as Schedule 2.12 are true and
complete
copies of (a) the unaudited balance sheet
of the Partnership (collectively, the
"Latest Balance Sheet") as of November 30,
2005 (the "Latest Balance Sheet
Date") and the related unaudited statements
of operations and cash flow of the
Partnership for the nine months then ended;
and (b) the audited balance sheets
of the Partnership as of December 31, 2003
and 2004 and the related audited
statements of operations and cash flow for
the periods then ended (collectively,
the "Financial Statements"). The Financial
Statements present fairly the
financial condition of the Partnership at
the dates specified and the results of
its operations for the periods specified
and have been prepared in accordance
with generally accepted accounting
principles, consistently applied ("GAAP")
except, with respect to the unaudited
Financial Statements, for the absence of
footnote disclosure and for changes
resulting from normal year-end adjustments
for recurring accruals (which will not be
material individually or in the
aggregate). The Financial Statements do not
contain any items of a special or
nonrecurring nature, except as expressly
stated therein. The Financial
Statements have been prepared from the
books and records of the Partnership,
which accurately and fairly reflect the
transactions of, acquisitions and
dispositions of assets by, and incurrence
of Liabilities (as defined in Section
2.13(a)) by the Partnership.
2.13
Absence of Undisclosed Liabilities.
(a) The Partnership has no direct or indirect debts, obligations
or
liabilities of any nature, whether absolute, accrued,
contingent,
liquidated
or otherwise, and whether due or to become due, asserted or
unasserted
(collectively, "Liabilities") except for: (i) Liabilities
reflected
on the Latest Balance Sheet, including any reserves (and, for
this
purpose, a Liability shall be deemed to be included in a reserve
if
it is the
type of Liability for which such reserve was established,
regardless
of whether such Liability is actually included in the reserve,
provided
that the aggregate amount of all Liabilities actually included
or
deemed to
be included in the reserve do not exceed the aggregate amount
of
the
reserve reflected on the Latest Balance Sheet, and provided
further
that if
the aggregate amount of all such Liabilities actually included
or
deemed to
be included in the reserve exceeds the aggregate amount of such
reserve,
this representation and warranty will be deemed breached only
to
the extent
of such excess); (ii) current Liabilities incurred in the
ordinary
course of business and consistent with past practices after the
Latest
Balance Sheet
8
<PAGE>
Date;
(iii) Liabilities incurred in the ordinary course of business
and
consistent
with past practices under the Partnership Contracts and under
other
agreements entered into by the Partnership in the ordinary course
of
business
that are not included within the definition of Partnership
Contracts
set forth in Section 2.25, which Liabilities are not required
by
GAAP to be
reflected in the Latest Balance Sheet; and (iv) Liabilities
disclosed
in the Schedules to this Agreement.
(b) Set forth in Schedule 2.13(b) is a complete and accurate list
of
the
principal balance of all long-term and short-term Liabilities of
the
Partnership (other than trade accounts payable incurred in the
ordinary
course of
business and consistent with past practices) as of the Latest
Balance
Sheet Date, as well as the name of the lender or creditor with
respect to
each such Liability.
(c) For purposes of this Agreement, "ordinary course"
Liabilities
include
only liabilities and obligations incurred in the normal course
of
business
of the Partnership, consistent with past practices and amounts,
and do not
include, without limitation, any Liabilities under an agreement
or
otherwise that result from any breach or default (or event that
with
notice or
lapse of time would constitute a breach or default), tort,
infringement or violation of Law by the Partnership, the Seller or
Kupfer.
2.14
Absence of Certain Changes. Since the Latest Balance Sheet
Date,
except as set forth in Schedule 2.14, there
has not been:
(a) any Material
Adverse Effect with respect to the Partnership, or
with
respect to the manner in which the Partnership conducts the
Business;
(b) any declaration, setting aside or payment of any dividends
or
distributions in respect of any equity interests in the Partnership
or any
redemption, purchase or other acquisition by the Partnership of any
of its
equity
interests, except as contemplated by this Agreement;
(c) any payment or transfer of assets (including without
limitation
any
distribution or any repayment of indebtedness) to or for the
benefit
of any
equityholder of the Partnership, other than compensation and
expense
reimbursements paid in the ordinary course of business and
consistent with past
practice;
(d) any revaluation by the Partnership of any of its assets,
including
the writing down or off of notes or Accounts Receivable and the
writing
down of the value of inventory, other than in the ordinary
course
of
business and consistent with past practice;
(e) any entry by the Partnership into any commitment or
transaction
material
to the Partnership including, without limitation, incurring or
agreeing
to incur capital expenditures or to make payments to customers
(other
than pursuant to agreements listed in Schedule 2.25(a)) in
excess
of $5,000,
individually or in the aggregate;
(f) any increase in indebtedness for borrowed money, or any
issuance
or sale of
any debt securities, or any assumption, guarantee or
endorsement of any Liability of any other Person, or any loan or
advance
to any
other Person;
9
<PAGE>
(g) any breach or default (or event that with notice or lapse
of
time would
constitute a breach or default), termination or threatened
termination under any Partnership Contract binding on the
Partnership or
to which
any asset of the Partnership is subject;
(h) any change by the Partnership in its accounting methods,
principles
or practices;
(i) any increase in the benefits under, or the establishment or
amendment
of, any bonus, insurance, severance, deferred compensation,
pension,
retirement, profit sharing or other employee benefit plan, or
any
increase
in the compensation payable or to become payable to the Seller
or
any
officers or employees of the Partnership, except for annual
merit
increases
in salaries or wages in the ordinary course of business and
consistent
with past practice;
(j) the termination of employment (whether voluntary or
involuntary)
of any
officer or key employee of the Partnership or the termination
of
employment
(whether voluntary of involuntary) of employees of the
Partnership in excess of historical attrition in personnel;
(k) any theft, condemnation or eminent domain proceeding or any
damage,
destruction or casualty loss affecting any asset used in the
Business,
whether or not covered by insurance;
(l) any sale, assignment or transfer of any asset used in the
Business,
except sales of inventory or obsolete equipment in the ordinary
course of
business and consistent with past practice;
(m) any waiver by the Partnership or any equityholder of the
Partnership of any rights related to the Business;
(n) any action other than in the ordinary course of business
and
consistent
with past practice, to pay, discharge, settle or satisfy any
claim or
Liability;
(o) any settlement or compromise of any pending or threatened
suit,
action, or
claim relevant to the transactions contemplated by this
Agreement;
(p) any issuance, sale or disposition, or agreement to issue,
sell
or
dispose, of any equity interest in the Partnership, or any
instrument
or other
agreement convertible or exchangeable for any equity interest
in
the
Partnership;
(q) any authorization, recommendation, proposal or announcement
of
an
intention to adopt a plan of complete or partial liquidation or
dissolution of the Partnership;
(r) any acquisition, or investment in the equity or debt
securities
of any
Person (including in any joint venture or similar arrangement)
by
the
Partnership;
10
<PAGE>
(s) any other transaction, agreement or commitment entered into
or
affecting
the Business or the Partnership, except in the ordinary course
of
business and consistent with past practice; or
(t) any agreement or understanding to do or resulting in any of
the
foregoing.
2.15
Taxes.
(a) The Partnership has filed or caused to be filed on a timely
basis all
Tax returns that are or were required to be filed by it. The
Partnership has timely paid all Taxes that have become due and
payable as
Taxes imposed on it,
pursuant to such Tax returns or otherwise, or
pursuant
to any assessment received by it, except such Taxes, if any, as
are being
contested in good faith and as to which adequate reserves have
been
provided in the Latest Balance Sheet.
(b) The Partnership has not requested or been granted an
extension
of time
for filing any Tax return that has not yet been filed.
(c) The charges, accruals and reserves with respect to Taxes on
the
books of the Partnership are
accurate. To the Knowledge of the Seller or
Kupfer,
there exists no proposed tax assessment against the Partnership
except as
disclosed in the Latest Balance Sheet. All Taxes that the
Partnership is or was required to withhold or collect have been
duly
withheld
or collected and, to the extent required, have been paid to the
proper
Governmental Entity.
(d) All Tax returns filed by the Partnership are true, correct,
and
complete
in all material respects.
(e) There are no outstanding agreements or waivers extending
the
statutory
period of limitation applicable to any claim for, or the period
for the
collection or assessment of, Taxes due from or with respect to
the
Partnership for any taxable period.
(f) No audit, examination or similar proceeding is pending or,
to
the
Knowledge of the Seller or Kupfer, threatened with respect to
the
Partnership or any Tax return filed by the Partnership.
(g) The Partnership has never made an election to be taxed as
an
association taxable as a corporation for federal income tax
purposes.
(h) "Tax" or "Taxes" means any and all taxes, charges, fees,
levies,
assessments, duties or other amounts payable to any federal, state,
local
or foreign
taxing authority or agency, including, without limitation: (i)
income,
franchise, profits, gross receipts, minimum, alternative
minimum,
estimated,
ad valorem, value added, sales, use, service, real or personal
property,
capital stock, license, payroll, withholding, disability,
employment, social security, workers compensation, unemployment
compensation, utility, severance, excise, stamp, windfall
profits,
transfer
and gains taxes; (ii) customs, duties, imposts, charges, levies
or other
similar assessments of any kind; and (iii) interest, penalties
and
additions to tax imposed with respect thereto.
11
<PAGE>
2.16
Litigation. Except as set forth on Schedule 2.16, there are
currently
no pending or, to the Knowledge of the
Seller or Kupfer, threatened lawsuits,
administrative proceedings, reviews or
formal or informal complaints or
investigations (collectively "Litigation"),
in each case by any individual,
corporation, partnership, Governmental
Entity or other entity (collectively, a
"Person") against or relating to the
Partnership or any equityholder, officer,
employee or agent (in their capacities as
such) of the Partnership or to which
any of the assets of the Partnership is
subject. The Partnership is not subject
to or bound by any currently existing
judgment, order, writ, injunction, decree,
ruling or charge. Neither the Seller nor
Kupfer has any reason to believe that
any such Litigation may be brought or
threatened against the Partnership. The
Seller is not a party to or subject to the
provisions of any judgment, order,
writ, injunction, decree, ruling or charge
of any court or Governmental Entity
prohibiting the execution, delivery or
performance of this Agreement or the
consummation of the transactions
contemplated hereby. There are no malpractice
claims or Liabilities against the
Partnership or the Seller and, to the
Knowledge of the Seller or Kupfer, no facts
exist that might be the basis for a
malpractice claim or Liability against the
Partnership or the Seller.
2.17
Compliance with Laws. The Partnership is currently complying with
and
has at all times complied with each
applicable federal, state, local or foreign
constitution, statute, law, code,
ordinance, decree, order, rule or regulation
of any Governmental Entity and all orders
and decrees of courts, tribunals and
arbitrators (collectively, "Laws"), in all
material respects.
2.18
Licenses. The Partnership owns, possesses or holds from each
appropriate Governmental Entity all
licenses, permits, authorizations,
approvals, quality certifications,
franchises or rights (collectively,
"Licenses") issued by any Governmental
Entity necessary to conduct the Business.
Set forth in Schedule 2.18 is a complete
and accurate list of each such License.
No loss or expiration of any such License
is pending or, to the Knowledge of the
Seller or Kupfer, threatened or reasonably
foreseeable, other than expiration in
accordance with the terms thereof of
Licenses that may be renewed in the
ordinary course of business without
lapsing. Each such License is now and as of
the Closing will be in good standing and
not subject to meritorious challenge.
2.19
Payors. Set forth in Schedule 2.19 is a complete and accurate list
of
each third-party payor or provider that is
doing or has done business with the
Partnership and accounted for 10% or more
of the revenues of the Partnership for
the year ended December 31, 2004 or for the
interim period ending on the Latest
Balance Sheet Date (collectively, the
"Payors"). None of the Payors has
threatened, or notified the Seller or
Kupfer of any intention, to terminate or
materially alter its relationship with the
Partnership, or materially alter the
amount of the business that such Payor is
presently doing with the Partnership,
and none of the Seller, Kupfer or the
Partnership has any information, or is
aware of any facts, indicating that any
Payor intends to do any of the
foregoing, either as a result of the
transactions contemplated by this Agreement
or otherwise. Except as set forth in
Schedule 2.19, there has been no change in
pricing or pricing structure (other than
ordinary course changes consistent with
past practices) with any Payor and there
has been no dispute with a Payor, in
each case since January 1, 2005.
2.20
Medical Staff Matters. Set forth in Schedule 2.20 is a list of
all
providers in good standing on the medical
staff of the Partnership. There are no
pending or, to the Knowledge of the Seller
or Kupfer, threatened disputes with
applicants, staff members or health
professional
12
<PAGE>
affiliates and all appeal periods in
respect of any medical staff member or
applicant against whom an adverse action
has been taken have expired.
2.21
Health Care Legal Matters.
(a) The Partnership has complied, and is in compliance, with
all
applicable
Laws regulating the financing, reimbursement, payment,
acquisition, construction, operation, maintenance or management of
a
health
care practice, facility, provider or payor, including, without
limitation: (i) 42 U.S.C. Sections 1320a-7, 7a and 7b, which are
commonly
referred
to as the "Federal Anti-Kickback Statute"; (ii) 42 U.S.C.
Section
1395nn,
which is commonly referred to as the "Stark Statute"; (iii) 31
U.S.C
Sections 3729-3733, which is commonly referred to as the
"Federal
False
Claims Act"; (iv) Titles XVIII and XIX of the Social Security
Act,
implementing regulations and program manuals; and (v) 42 U.S.C.
Sections
1320d-1320d-8 and 42 C.F.R. Sections 160, 162 and 164, which is
commonly
referred
to as "HIPAA" (the foregoing hereinafter collectively referred
to
as "Health
Care Laws"), applicable to the Business. The Partnership has
maintained
all records required to be maintained in connection with the
Medicare
and Medicaid programs established under Titles XVIII and XIX of
the Social
Security Act, and such other similar federal, state or local
reimbursement or governmental programs, managed care plans and any
other
private
health care insurance programs and employee assistance
programs,
as well as
any future similar programs, for which the Partnership is
eligible
(the foregoing hereinafter referred to collectively as the
"Payor
Source
Programs") as required by applicable Health Care Laws.
(b) Without limiting the foregoing, the Partnership has not,
and
neither
the Seller nor Kupfer has (with respect to the Partnership or
the
Business),
and to the Knowledge of the Seller or Kupfer none of the
Non-Selling Limited Partners has (with respect to the Partnership
or the
Business),
engaged in any activities that are prohibited under any Health
Care Laws
or any other federal or state statutes related to false or
fraudulent
claims, the regulations promulgated pursuant to such statutes,
or any
related state or local statutes or regulations, including,
without
limitation, the following:
(i) knowingly and willfully making or causing to be made any
false statement or representation of material fact in any
application for any benefit or payment;
(ii) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in
determining rights to any benefit or payment;
(iii) failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right
to
any benefit or payment on its own behalf or on behalf of
another,
with intent to fraudulently secure such benefit or payment; or
(iv) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate), directly
or
indirectly, overtly or
13
<PAGE>
covertly, in cash or in kind or offering to pay or receive such
remuneration in return for (A) referring an individual for the
furnishing or arranging for the furnishing of any item or
service
for which payment may be made in whole or in part by any Payor
Source Programs; or (B) purchasing, leasing, or ordering or
arranging for or recommending the purchasing, leasing or ordering
of
any good, facility, service or item for which payment may be made
in
whole or in part by a Payor Source Program.
(c) The Partnership has no financial relationships (whether or
not
memorialized in writing) with any physician or any immediate family
member
of any
physician in connection with the Business. For purposes of this
Section
2.21(c), the term "financial relationship" has the meaning set
forth in
the Stark Statute.
(d) The Partnership is certified for participation and
reimbursement
and
qualified as a participating provider under the Payor Source
Programs
set forth
in Schedule 2.21(d). The Partnership has current provider
numbers
and provider agreements for such Payor Source Programs as are
set
forth in
Schedule 2.21(d). There are no pending appeals, overpayment
determinations, challenges, audits, litigation, or notices of
intent to
open Payor
Source Programs' claim determinations or other reports required
to be
filed by the Partnership, except for such appeals of individual
claim
denials that occur in the ordinary course of business. None of
the
Seller,
Kupfer or the Partnership has received any notice indicating
that
the
Partnership's qualification as a participating provider may be
terminated
or withdrawn nor do any of them have any reason to believe that
such
qualification may be terminated or withdrawn. The Partnership
has
timely
filed all claims or other reports required to be filed with
respect
to the
purchase of products or services by third-party payors
(including
Payor
Source Programs), and all such claims or reports are complete
and
accurate
in all respects. The Partnership has no Liability to any
third-party payor with respect thereto, except for Liabilities
incurred in
the
ordinary course of business.
(e) With respect to the Business, neither the Seller nor
Kupfer,
nor, to
the Knowledge of the Seller or Kupfer, any officer or employee
of
the
Partnership or any other party to any contract with the
Partnership:
(i) has been convicted of or charged with any violations of
law related to Medicare, Medicaid, any other Federal Health
Care
Program (as defined in 42 U.S.C. Section 1320a-7b(f)), or any
other
Payor Source Program;
(ii) has been convicted of, charged with or investigated for
any violation of law related to fraud, theft, embezzlement,
breach
of fiduciary responsibility, financial misconduct, obstruction of
an
investigation or controlled substances;
(iii) is excluded, suspended or debarred from participation,
or is otherwise ineligible to participate, in any Payor Source
Program or has committed any violation of law which is
reasonably
expected to serve as the basis for any such exclusion,
suspension,
debarment or other ineligibility; or
14
<PAGE>
(iv) has violated or is presently in violation of any Health
Care Laws.
2.22
Environmental Matters.
(a) Except as described in Schedule 2.22: (i) the properties,
operations
and activities of the Partnership are and at all times have
been in
compliance with all applicable Environmental Laws in all
respects;
including
without limitation by having all Licenses required to be
obtained
or filed by the Partnership under any Environmental Law in
connection
with any aspect of the operation of the Business, and the
Partnership is in compliance with the terms and conditions of all
such
Licenses;
(ii) none of the Real Property contains any Hazardous Material
in amounts
exceeding the levels permitted by applicable Environmental Laws
as a
result of the Partnership's operations or activities or, to the
Knowledge
of the Seller or Kupfer, for any other reason; (iii) during the
past five
years, the Partnership has not received any notices, demand
letters or
requests for information from any Governmental Entity or other
Person
indicating that the Partnership may be in violation of, or
liable
under, any
Environmental Law, or relating to any of its current or former
assets;
(iv) except with respect to matters that have been fully
resolved
with no
continuing Liability to the Partnership, no reports have been
filed, or
are required to be filed, by (or relating to) the Partnership
concerning
any release of any Hazardous Material or the threatened or
actual
violation of any Environmental Law; (v) no Person or property
has
been
exposed to Hazardous Material, and no Hazardous Material has
been
disposed
of, released or transported, in violation of any applicable
Environmental Law to or from any Real Property or as a result of
any
activity
of the Partnership; (vi) there have been no environmental
investigations, studies, audits, tests, reviews or other
analyses
regarding
compliance or noncompliance with any Environmental Law
conducted
by or on
behalf of, or which are in the possession of, the Partnership
or
the Seller
relating to the Business or the activities of the Partnership
or any of
the Real Property that have not been delivered to the Buyers
prior to
the Effective Date; (vii) there are no underground storage
tanks
on, in or
under any of the Real Property, and no underground storage
tanks
have been
closed or removed from any of the Real Property; (viii) there
is
no
asbestos present in any of the Real Property in violation of
any
Environmental Law, (ix) neither the Partnership nor any of its
assets is
subject to
any Liabilities relating to any suit, settlement, Law, judgment
or claim
asserted or arising under any Environmental Law; (x) the
Partnership has satisfied and is currently in compliance with
all
financial
responsibility requirements applicable to its operations and
imposed by
any Governmental Entity under any Environmental Laws; and (xi)
there are
no environmental conditions either (A) existing on the
Partnership's property or (B) resulting from the Partnership's
operations
or
activities, whether past or present, that would give rise to
any
on-site or
off-site remediation obligations under any Environmental Laws.
(b) As used herein, "Environmental Law" means any applicable
Laws,
License or
agreement with any Governmental Entity relating in any manner
to
Hazardous Materials, pollution, contamination, or the protection of
the
environment enacted or in effect in any and all jurisdictions in
which the
Partnership owns property or conducts the Business.
15
<PAGE>
(c) As used herein, "Hazardous Material" means any substance
whether
solid,
liquid or gaseous that: (i) is listed, defined, classified or
regulated
as a "Hazardous Material," "hazardous material," hazardous
waste,"
extremely hazardous waste," toxic substance," "sludge,"
"pollutant," "contaminant," or is otherwise listed, defined
classified or
regulated
in similar fashion, such as dangerous, hazardous, or toxic, in
or
pursuant to any Environmental Law; or (ii) is or contains
asbestos,
radon, any
polychlorinated biphenyl, urea formaldehyde foam insulation,
explosive
or radioactive material, crude oil or any fraction thereof, or
motor fuel
or other refined or process petroleum hydrocarbons.
2.23
Employee Matters. Set forth in Schedule 2.23 is a complete and
accurate list of all current employees of
the Partnership, including date of
employment, current title and compensation,
and date and amount of last increase
in compensation. There are no written or
oral employment agreements between the
Partnership and any of its employees. All
of the Partnership's employees are
employees at will and may be terminated by
the Partnership, without prior
notice, for any reason or for no reason. In
relation to its employees, both
present and former, the Partnership has:
(a) complied with all obligations
imposed on it by all Laws relevant to the
relations between it and its employees
or any disclosed trade union; (b)
maintained adequate and suitable records
regarding the service of each of its
employees; and (c) withheld all income tax
required by the Code or by applicable state
and local Laws, and payments due for
social security contributions (including
the employer's contributions) and any
other amount required to be withheld under
any federal, state or local Laws,
from salaries, wages and bonuses paid by
the Partnership, complied with all
withholding requirements and maintained
proper records in respect of the
foregoing. The Partnership has no
collective bargaining, union or labor
agreements, contracts or other arrangements
with any group of employees, labor
union or employee representative and there
is no organization effort currently
being made or, to the Knowledge of the
Seller or Kupfer, threatened by or on
behalf of any labor union with respect to
employees of the Partnership. The
Partnership has not experienced, and, to
the Knowledge of the Seller or Kupfer,
there is no basis for, any strike, labor
trouble, work stoppage, slow down or
other interference with or impairment of
the Business.
2.24
Employee Benefit Plans.
(a) The Partnership has no "Employee Benefit Plans." The term
"Employee
Benefit Plans" means (a) any "employee benefit plan" or "plan"
within the
meaning of Section 3(3) of the Employee Retirement Income
Security
Act of 1974, as amended ("ERISA"), and (b) all plans or
policies
providing
for "fringe benefits" (including but not limited to vacation,
paid
holidays, personal leave, employee discounts, educational benefits
or
similar
programs), and each other bonus, incentive compensation,
deferred
compensation, profit sharing, stock, severance, retirement, health,
life,
disability, group insurance, employment, stock option, stock
purchase,
stock
appreciation right, performance share, supplemental
unemployment,
layoff,
consulting, or any other similar plan, agreement, policy or
understanding (whether written or oral, qualified or
nonqualified,
currently
effective or terminated), and any trust, escrow or other
agreement
related thereto, which (i) is, or has been within the past five
years,
established, maintained or contributed to by the Partnership or
any
other
corporation or trade or business under common control with the
Partnership (an "ERISA Affiliate") as determined under Section
414(b),
(c), (m)
or (o) of the Code, or with respect to which the
16
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Partnership has or may have any Liability; or (ii) provides
benefits, or
describes
policies or procedures of the Partnership or any of its
Affiliates applicable,
to any present or former officer, employee or
dependent
thereof of the Partnership, regardless of whether funded. The
term
"Employee Benefit Plans" also includes any written or oral
representations made to any present or former officer or employee
of the
Partnership by the Partnership or its Affiliates promising or
guaranteeing
any
employer payment or funding for the continuation of medical,
dental,
life or
disability coverage for any period of time beyond the end of
the
current
plan year (except to the extent of coverage required under Code
Section
4980B) or a similar provision of state law.
(b) Neither the Seller nor the Partnership is party to any
"multiple
employer
plan" or "multi-employer plan" (as described or defined in
ERISA
or the
Code).
(c) Neither the Partnership, the Seller nor any ERISA Affiliate
has
any formal
plan or commitment, whether legally binding or not, to create
any
Employee Benefit Plan that would affect any present or former
officer
or
employee of the Partnership, or any dependent or beneficiary
thereof.
(d) There is no Employee Benefit Plan that is maintained or
contributed to by the Partnership, the Seller or any ERISA
Affiliate with
respect to
which the Partnership has or may have any Liability that is or
was
subject to Part 3 of Title I of ERISA or Title IV of ERISA.
(e) The Buyers will not assume any Employee Benefit Plans of
the
Partnership or take on any Liability relating to any Employee
Benefit
Plans of
the Partnership.
(f) The Partnership does not provide, nor is it obligated to
provide,
benefits, including without limitation death, health, medical,
or
hospitalization benefits (whether or not insured), with respect to
current
or former
officers or employees of the Partnership, or their dependents
or
beneficiaries, beyond their retirement or other termination of
employment
other than
(i) coverage mandated by applicable Law; (ii) death benefits or
retirement
benefits under any "employee pension benefit plan," as that
term is
defined in Section 3(2) of ERISA; or (iii) deferred
compensation
benefits
accrued as liabilities on the books of the Partnership.
(g) No Liability under Title IV of ERISA or Section 412 of the
Code
has been
incurred (directly or indirectly) by the Partnership or any
ERISA
Affiliate
that has not been satisfied in full.
(h) Neither the Partnership nor any ERISA Affiliate maintains or
has
ever
participated in a multiple employer welfare arrangement as
described
in Section
3(40)(A) of ERISA for which the Partnership may become liable
under
ERISA.
(i) No Lien has been filed by any Person and no Lien exists by
operation
of Law or otherwise on the assets of the Partnership relating
to, or as
a result of, the operation or maintenance of any Employee
Benefit
Plan, and neither the Seller nor
17
<PAGE>
Kupfer has
any Knowledge of the existence of facts or circumstances that
would
result in the imposition of such Lien.
(j) Neither the execution and delivery of this Agreement nor
the
consummation of the transactions contemplated hereby will (i)
result in
any
payment becoming due to any officer or employee of the Partnership;
or
(ii)
result, separately or in the aggregate, in an "excess parachute
payment"
within the meaning of Section 280G of the Code.
2.25
Partnership Contracts.
(a) Schedule 2.25(a) sets forth a complete and accurate list of
each
agreement
(whether written or oral and including all amendments thereto)
relating
to the Business or to which the Partnership is a party or a
beneficiary or by which the Partnership or any of its assets is
bound
(collectively, the "Partnership Contracts"), including without
limitation
the
following: (i) all payor and provider contracts with any of the
Payors;
(ii) management or similar or related agreements; (iii)
agreements
pursuant
to which the Partnership sells or distributes any services or
products;
(iv) real property leases; (v) capital or operating leases or
conditional sales agreements relating to vehicles, equipment or
other
assets of
the Partnership; (vi) agreements evidencing, securing or
otherwise
relating to any indebtedness for borrowed money for which the
Partnership is liable; (vii) agreements pursuant to which the
Partnership
is
entitled or obligated to acquire any assets from a third Person;
(viii)
insurance
policies; (ix) employment, consulting, noncompetition,
separation, collective bargaining, union or labor agreements or
arrangements; and (x) agreements with or for the benefit of any
equityholder, manager, director, officer or employee of the
Partnership or
any
Affiliate or immediate family member thereof.
(b) The Seller has delivered to the Buyers a copy of each
written
Partnership Contract and a detailed written summary of each
oral
Partnership Contract. Except as described in Schedule 2.25(b), (i)
each
Partnership Contract is valid, binding and in full force and effect
and
enforceable in accordance with its terms, except as such
enforceability
may be
limited by applicable bankruptcy, insolvency, fraudulent
conveyance
or similar
laws affecting the enforcement of creditors' rights generally
and
subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity); (ii)
the
Partnership has performed all of its obligations that have become
due
under any
Partnership Contract to which it is a party, and there exists
no
breach or
default (or event that with notice or lapse of time would
constitute
a breach or default) on the part of the Partnership or any
other
Person under any Partnership Contract; (iii) there has been no
termination or notice of default or, to the Knowledge of the Seller
or
Kupfer,
any threatened termination under any Partnership Contract; and
(iv) to
the Knowledge of the Seller or Kupfer, no party to a
Partnership
Contract
intends to alter its relationship with the Partnership as a
result of
or in connection with the acquisition contemplated by this
Agreement.
(c) Except as set forth in Schedule 2.25(c), none of the
Partnership
Contracts
will require Consent from the Partnership's counterparty or
will
result in
a breach, termination, termination right or change in any right
or
obligation thereunder as a result
18
<PAGE>
of the
consummation of the transactions contemplated by this
Agreement.
With
respect to the Partnership Contracts identified in Schedule
2.25(c),
the Buyers
will have the right to participate in any communication with
such
counterparties in connection with obtaining the required
approval.
(d) Neither any of the Partnership Contracts nor any other
agreements, understandings or proposed transactions to which the
Seller,
Kupfer or
the Partnership is a party will cause a Material Adverse Effect
on the
Partnership's business or on the Seller's or Kupfer's ability
to
perform
their obligations under this Agreement.
2.26
Intellectual Property. The Partnership does not own, or have
any
license or use rights with respect to, any
registered and unregistered
trademarks, service marks or trade names
(except to the extent any of the
fictitious business names listed in
Schedule 2.1 may be considered to be trade
names), or registered copyrights or
patents, or applications for or licenses (to
or from the Partnership) with respect to
any of the foregoing, or any computer
software or software licenses (other than
commercial "shrink-wrap" software and
software licenses), in each case that are
used in connection with the Business.
2.27
Competing Interests. Except as set forth in Schedule 2.27,
neither
the Seller nor the Partnership, nor, to the
Knowledge of the Seller or Kupfer,
any equityholder, director, general
partner, officer, employee or agent of the
Partnership, any Affiliate of the Seller or
the Partnership or any immediate
family member of Kupfer: (a) owns, directly
or indirectly, an interest in any
Person that is a competitor, customer or
supplier of the Partnership or that
otherwise has business dealings with the
Partnership; or (b) is a party to, or
otherwise has any direct or indirect
interest opposed to the Partnership under,
any Partnership Contract or other business
relationship or arrangement (other
than investments in publicly traded equity
securities constituting less than 1%
of the outstanding securities of that
class).
2.28 No
Conflict of Interest. The Partnership is not indebted, directly
or
indirectly, to the Seller, Kupfer, any
family member of Kupfer, any Affiliate of
any of the foregoing or any of the
Partnership's equityholders, officers or
employees, in any amount whatsoever other
than in connection with expenses or
advances of expenses incurred in the
ordinary course of business and consistent
with past practices. None of the Seller,
Kupfer, any family member of Kupfer,
any Affiliate of any of the foregoing or
any of the Partnership's equityholders,
officers or employees is indebted, directly
or indirectly, to the Partnership,
nor does any of the foregoing have any
direct or indirect ownership interest in
any entity with which the Partnership has a
business relationship. The
Partnership is not a guarantor or
indemnitor of any indebtedness of any other
Person.
2.29
Illegal Payments. Neither the Partnership nor any
equityholders,
general partners, officers, employees or
agents, or any Affiliate or immediate
family member of any of the foregoing, has:
(a) used any funds of the
Partnership for contributions, gifts or
entertainment in violation of applicable
Law, or for other purposes, including
relating to political activity, in
violation of applicable Law; or (b) made
any payment for the account or benefit,
or using funds, of the Partnership in
violation of applicable Law to foreign or
domestic government officials or employees
or to foreign or domestic political
parties or campaigns or violated any
provision of the Foreign Corrupt Practices
Act of 1977, as amended.
19
<PAGE>
2.30
Insurance. The Partnership has maintained and now maintains
insurance
on the Business and all of its assets of a
type customarily insured, covering
property damage and loss of income by fire
or other casualty, as well as
adequate insurance protection against all
Liabilities, claims and risks against
which it is customary to insure, including,
without limitation, professional
liability insurance. Set forth in Schedule
2.30 is a complete and accurate list
of all policies, bonds and other forms of
insurance currently owned or held by
or on behalf of or providing insurance
coverage to the Partnership, the Business
or the assets of the Partnership, and its
officers, employees or agents, along
with a description of all claims and their
current status made under any such
policy. All such policies are issued by
insurers of recognized responsibility
and insure the Partnership, the Business
and the assets of the Partnership
against such losses and risks, and in such
amounts, as are customary in the case
of companies of established reputation
engaged in the same or similar businesses
and similarly situated. All such policies
are in full force and effect, and the
Partnership has not done or omitted to do
or suffered anything to be done which
has or might render such policies void or
voidable or that would cause or allow
any claims under any such policies to be
denied. The Partnership has not
received a notice of default under any such
policy or received written notice of
any pending or threatened termination or
cancellation, coverage limitation or
reduction, or material premium increase
with respect to any such policy. To the
Knowledge of the Seller or Kupfer, there
are no circumstances likely to give
rise to any claim under any such policies.
Neither the Seller nor Kupfer has
received any communications that would
cause the Seller or Kupfer to believe
that the Partnership will not be able to
continue to maintain such insurance
policies with the same coverage for
substantially the same premium amount.
2.31
Accredited Investor; Disclosure Materials. The Seller is an
"accredited investor" as such term is
defined in Rule 501(a) promulgated under
the 1933 Act, who by reason of its business
and financial experience has such
knowledge, sophistication and experience in
business and financial matters as to
be capable of evaluating the merits and
risks of, and could be reasonably
assumed to have the capacity to protect its
own interests in connection with, an
investment in the Series A GP Shares, the
Series A LP Shares and the Series B
Shares (collectively, the "Newco Shares")
and, having had access to or having
been furnished with all such information as
it has considered necessary, has
concluded that it is able to bear those
risks. The Seller acknowledges that (a)
it has not received, and will not receive,
any prospectus, placement memorandum
or any similar disclosure materials with
respect to the Newco Shares; (b) it has
had access to or been furnished with copies
of the most recent Annual Report on
Form 10-K and each subsequent Quarterly
Report on Form 10-Q and Current Report
on Form 8-K, in each case filed by VSCE
with the Securities and Exchange
Commission; (c) such information is the
only disclosure information that is
available or that has been or will be
provided by the Buyers in connection with
the transactions contemplated by this
Agreement; (d) such information is
sufficient for the Seller to be capable of
evaluating the merits and risks of an
investment in the Newco Shares; and (e) the
Seller has reviewed such information
and has concluded that it is able to bear
those risks.
2.32
Investment Intent. The Seller is acquiring the Newco Shares for
its
own account and not with a view to or for
sale in connection with any
distribution of any of the Newco Shares
within the meaning of Section 2(11) of
the 1933 Act.
20
<PAGE>
2.33
Restricted Securities. The Seller understands that the Newco
Shares
constitute "restricted securities" within
the meaning of Rule 144 promulgated
under the 1933 Act and may not be sold,
pledged or otherwise disposed of unless
they are subsequently registered under the
1933 Act and applicable state
securities laws or unless an exemption from
registration is available. The
Seller understands that the Newco Shares,
and any securities issued in respect
thereof or exchange therefor, may bear one
or more of the following restrictive
legends substantially in the form provided
below:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT
AN
EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED
UNDER THE SECURITIES ACT OF 1933"; and
(b) any legend required by the securities laws of any state to
the
extent such laws
are applicable to the shares represented by the
certificate so legended.
2.34 Full
Disclosure. No representation or warranty of the Seller
contained in this Agreement, and nothing
set forth herein or in the exhibits
attached hereto, or in any document
furnished or to be furnished to the Buyers
at the Closing, or in any other information
or materials delivered by the Seller
or the Partnership to the Buyers (when read
together), contains any untrue
statement of a material fact or omits to
state a material fact necessary in
order to make the statements contained
herein or therein not misleading in light
of the circumstances under which they were
made. The Seller and Kupfer have
disclosed to the Buyers all facts and
information material to the proposed
purchase of the Purchased Interests that
are known to such parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
The
Buyers, jointly and severally, represent and warrant to the
Seller
that the statements contained in this
Article III (as supplemented by the
Schedules referenced herein, if any) are
true and correct as of the Effective
Date.
3.1
Organization. Each of the Buyers is a corporation duly
organized,
validly existing and in good standing under
the laws of the State of Nevada.
3.2
Authority. Each of the Buyers has all requisite power and
authority,
corporate or otherwise, to execute, deliver
and perform under this Agreement and
the other agreements, certificates and
instruments to be executed by the Buyers
in connection with or pursuant to this
Agreement (collectively, the "Buyer
Documents"). The execution, delivery and
performance by each Buyer of each Buyer
Document to which it is a party has been
duly authorized by all necessary
action, corporate or otherwise, on the part
of such Buyer. This Agreement has
been, and at the Closing the other Buyer
Documents will be, duly executed and
delivered by each Buyer (to the extent each
is a party thereto). This Agreement
is, and, upon execution and delivery by the
Buyers at the Closing, each of the
other Buyer Documents will be, a legal,
valid and binding agreement of each
Buyer (to the
21
<PAGE>
extent each is a party thereto),
enforceable against such Buyer in accordance
with its terms, except as such
enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent
conveyance or similar laws affecting the
enforcement of creditors' rights generally
and subject to general principles of
equity (regardless of whether enforcement
is sought in a proceeding at law or in
equity).
3.3 No
Violation. The execution, delivery and performance of the Buyer
Documents by the Buyers will not conflict
with or result in the breach of any
term or provision of, or violate or
constitute a default under any charter
provision or bylaw or under any material
agreement, order or Law to which any
Buyer is a party or by which any Buyer is
in any way bound or obligated.
3.4
Governmental Authorizations. Except to the extent required in
connection with any of the Governmental
Authorizations required on the part of
the Seller or the Partnership as described
in Schedule 2.11, or as required by
any applicable securities Laws, no
Governmental Authorization is required on the
part of any Buyer in connection with the
transactions contemplated by this
Agreement.
3.5
Litigation. There are no pending or, to the Knowledge of the
Buyers,
threatened, lawsuits, administrative
proceedings, arbitrations, reviews or
formal or informal complaints or
investigations by any Person that in any manner
challenges or seeks to prevent, enjoin,
alter or materially delay any of the
transactions contemplated by this
Agreement.
3.6 No
Brokers. No Buyer has dealt with any broker or consultant with
respect to the purchase and sale of the
Purchased Interests, or with any other
Person who may claim a commission or
finder's fee arising out of this Agreement
or any of the transactions contemplated
hereby, except that the Buyers have paid
a consulting fee of $25,000 to Donald
Cook.
3.7
Accredited Investor. Each of the Buyers is an "accredited investor"
as
such term is defined in Rule 501(a)
promulgated under the 1933 Act, who by
reason of its business and financial
experience has such knowledge,
sophistication and experience in business
and financial matters as to be capable
of evaluating the merits and risks of, and
could be reasonably assumed to have
the capacity to protect its own interests
in connection with, an investment in
the Purchased Interests and, having had
access to or having been furnished with
all such information as it has considered
necessary, has concluded that it is
able to bear those risks.
3.8
Investment Intent. GenPar is acquiring the GP Interest for its
own
account and not with a view to or for sale
in connection with any distribution
of the GP Interest within the meaning of
Section 2(11) of the 1933 Act. Newco is
acquiring the LP Interest for its own
account and not with a view to or for sale
in connection with any distribution of the
LP Interest or any portion thereof
within the meaning of Section 2(11) of the
1933 Act.
3.9
Restricted Securities. The Buyers understand that the Purchased
Interests constitute "restricted
securities" within the meaning of Rule 144
promulgated under the 1933 Act and may not
be sold, pledged or otherwise
disposed of unless they are subsequently
registered
22
<PAGE>
under the 1933 Act and applicable state
securities laws or unless an exemption
from registration is available.
3.10 Full
Disclosure. No representation or warranty of the Buyers
contained in this Agreement, and nothing
set forth herein or in the exhibits
attached hereto, or in any document
furnished or to be furnished to the Seller
at the Closing, or in any other information
or materials delivered by the Buyers
to the Seller (when read together),
contains any untrue statement of a material
fact or omits to state a material fact
necessary in order to make the statements
contained herein or therein not misleading
in light of the circumstances under
which they were made.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1
Conduct of Business. Prior to the Closing, unless the Buyers
otherwise
consent in writing, the Seller will cause
the Partnership to:
(a) operate in the ordinary course of business and consistent
with
past
practices and use its commercially reasonable efforts to preserve
the
goodwill
of the Partnership and of its officers, employees, customers,
suppliers,
Governmental Bodies and others having business dealings with
the
Partnership;
(b) use its commercially reasonable efforts to preserve intact
the
business
organization of the Partnership, to keep available the services
of the
Partnership's present officers and key employees, consultants,
advisors
and managers and to maintain satisfactory relationships with
Payors,
agents, insurers, reinsurers, suppliers and other Persons
having
business
relationships with the Partnership;
(c) except as specifically contemplated by this Agreement, not
engage in
any transaction outside the ordinary course of business,
including
without limitation by making any expenditure, investment,
commitment
or distribution of assets to any of its partners or entering
into any
agreement or arrangement of any kind;
(d) maintain a level of collectible receivables acceptable to
the
Buyers in
their sole and absolute discretion;
(e) maintain cash on hand as of the Closing Date equal to at
least
$100,000
plus the Retained Expenses (as defined below) (the "Required
Capital");
the Buyers acknowledge and agree that the Seller may cause the
Partnership to distribute its cash on hand in excess of the
Required
Capital to
the Partnership's equityholders immediately prior to the
transfer
of the Purchased Interests to the Buyers as contemplated by
this
Agreement;
the "Retained Expenses" means an amount sufficient to satisfy
all
Liabilities incurred or accrued by the Partnership prior to the
Closing
Date that are (i) normal recurring expenses, incurred in the
ordinary
course of business and consistent with past practices, which
accrued
more than 30 days prior to the Closing Date; or (ii) any other
Liabilities which relate to services provided to the Partnership,
products
purchases
by the
23
<PAGE>
Partnership or any other obligation which was not incurred in the
ordinary
course of
business and consistent with past practices prior to the
Closing
Date;
(f) satisfy all of its Liabilities other than trade accounts
payable
incurred
in the ordinary course of business and consistent with past
practices
prior to the Closing, including, without limitation, the
Liabilities set
forth in Schedule 2.13(b).
(g) maintain all insurance policies and all Licenses that are
required
for the Partnership to carry on the Business;
(h) maintain all Partnership Contracts in the usual, regular
and
ordinary
manner and consistent with past practices;
(i) not approve or make any change in the list in Schedule 2.20
of
providers
in good standing on the medical staff of the Partnership, as
listed;
(j) maintain books of account and records in the usual, regular
and
ordinary
manner and consistent with past practices;
(k) not acquire by merger, consolidation or acquisition of stock
or
assets any
Person or make any investment in any other Person either by
purchase
of stock or securities, contributions to capital, property
transfer
or purchase of any amount of property or assets (other than
supplies
in the ordinary course of business and consistent with past
practice);
(l) not amend the Partnership Agreement or alter through
merger,
liquidation, reorganization, restructuring or in any other fashion
the
Partnership's structure or ownership;
(m) not authorize or make any new expenditure not permitted
under
the
current budget provided to the Buyers prior to the Effective
Date,
including
without limitation any capital lease or non-ordinary course
lease,
except in the ordinary course of business up to the amounts
contemplated by such
budget;
(n) not make any tax election, settle or compromise any Tax
Liability
or consent to the extension of time for the assessment or
collection
of any Tax;
(o) not enter into any exclusive arrangements with suppliers or
customers,
unless such arrangements are terminable by the Partnership upon
no more
than 30 days' notice, or incur or agree to incur any payments
to
customers
(other than pursuant to agreements listed in Schedule 2.25(a))
in excess
of $5,000;
(p) not enter into any noncompetition or most favored nation
agreement
that binds the Partnership;
(q) not enter into any collective bargaining agreement; and
24
<PAGE>
(r) not take or willfully omit to take any action that would
result
in a
breach (as of the Closing) of the representations and warranties
set
forth in
Section 2.14.
Notwithstanding the foregoing, the
Partnership will be permitted prior to the
Closing to make distributions to its
partners of amounts estimated to be owed by
such partners for federal and state income
Taxes relating to the income of the
Partnership through the Closing Date.
4.2 Access
and Information. Prior to the Closing, the Seller and Kupfer
will cause the Partnership to permit the
Buyers and its representatives to have
reasonable access to the Partnership's
equityholders, officers, employees,
agents, assets and properties and, prior to
and after the Closing, all relevant
books, records and documents of or relating
to the Business and the assets of
the Partnership during normal business
hours and will furnish to the Buyers such
information, financial records and other
documents relating to the Partnership,
the Business and the assets of the
Partnership as the Buyers may reasonably
request. The Seller and Kupfer will cause
the Partnership to permit the Buyers
and their representatives reasonable access
to the Partnership's accountants,
auditors, customers and suppliers for
consultation or verification of any
information obtained by the Buyers and will
use, and will cause the Partnership
to use, commercially reasonable best
efforts to cause such Persons to cooperate
with the Buyers and their representatives
in such consultations and in verifying
such information. The Seller and Kupfer
will have the right to participate in
any contact with such Persons.
4.3
Supplemental Disclosure. Prior to the Closing but as soon as
practicable after the discovery thereof,
the Seller and Kupfer will supplement
or amend each of the Schedules hereto with
respect to any matter that arises or
is discovered after the Effective Date
that, if existing or Known by the Seller
or Kupfer on the Effective Date, would have
been required to be set forth or
listed in the Schedules hereto.
4.4
Assistance with Licenses and Filings. The Seller and Kupfer
will
assist the Buyers in obtaining any
Licenses, or any consents to assignment or
change in control related thereto, that the
Buyers will require in connection
with the continued operation of the
Business after the Closing.
4.5
Substitution Guarantor. GenPar will use its commercially
reasonable
efforts to assist the Seller and Kupfer in
removing themselves from any personal
guarantees made by them with respect to the
leases identified in Schedule 4.5,
including, without limitation, by becoming
a substitution guarantor with respect
thereto.
4.6
Fulfillment of Conditions by the Sellers. The Seller and Kupfer
will
take all reasonable steps within their
power to cause to be fulfilled the
conditions precedent to the Buyers'
obligations to consummate the transactions
contemplated hereby that are dependent on
the actions of the Seller or Kupfer.
4.7
Fulfillment of Conditions by the Buyers. The Buyers will take
all
reasonable steps within their power to
cause to be fulfilled the conditions
precedent to the obligations of the Seller
and Kupfer to consummate the
transactions contemplated hereby that are
dependent on the actions of the
Buyers.
25
<PAGE>
4.8 D