exv10w1





Exhibit 10.1




STOCK PURCHASE AGREEMENT




between




SOUTHERN PLAINS ASSOCIATES II, LLC,




and




RURAL HOSPITAL ACQUISITION, L.L.C.




June 30, 2011



 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	 	 	PAGE





EXHIBITS




	 	 	 
	Exhibit A

	 	Promissory Note for Purchase of Shares
	 
	 	 
	Exhibit B

	 	Guaranty Agreement (Buyers)
	 
	 	 
	Exhibit C

	 	Guaranty Agreement (Company)






 


 









 







STOCK PURCHASE AGREEMENT




This Stock Purchase Agreement (“Agreement”) is made and entered into as of June 30, 2011, by
and between Southern Plains Associates II, LLC, an Oklahoma limited liability company (“Buyer”),
and Rural Hospital Acquisition, L.L.C., an Oklahoma limited liability company (“Seller”), with
reference to the following facts:



RECITALS




A. Seller owns all of the issued and outstanding shares of capital stock (the “Shares”) of
Southern Plains Medical Center, Inc., an Oklahoma professional corporation doing business as
Southern Plains Medical Group (the “Company”). The Company presently owns and operates a
multi-specialty medical clinic (the “Clinic”) in Chickasha, Oklahoma. The medical practice
conducted at the Clinic is referred to herein as the “Practice.”



B. Concurrently with the execution of this Agreement, an Asset Purchase Agreement dated as of
the date of this Agreement between Buyer and Company (the “Asset Purchase Agreement”) and a Real
Estate Purchase Agreement dated as of the date of this Agreement between Buyer and Southern Plains
Associates, L.L.C. (the “Real Estate Purchase Agreement”) will be executed.



C. Buyer desires to acquire, and Seller desires to transfer, all of the Shares of the Company
on the terms and subject to the conditions herein contained.



AGREEMENTS




Therefore, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:



ARTICLE I




PURCHASE AND SALE OF SHARES




1.1 Agreement to Purchase and Sell Shares. On the terms and subject to the conditions
contained in this Agreement, at the Closing (as herein defined), Buyer shall purchase from Seller,
and Seller shall sell to Buyer (the “Share Purchase”), the Shares free and clear of all options,
proxies, voting trusts, voting agreements, judgments, pledges, charges, escrows, rights of first
refusal and first offer, mortgages, indentures, claims, transfer restrictions, liens, security
interests and other encumbrances (collectively, “Claims”); together with all rights now and
hereafter attaching or accruing thereto.


 


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1.2 Purchase Price for the Shares. The consideration for the Share Purchase (the
“Purchase Price”) shall be $1,855,000 [a sum that, when added to the purchase price of the medical
records, equals $2,150,000]. At the Closing, Buyer shall pay the Purchase Price by the delivery to
Seller of a promissory note in the amount of the Purchase Price and in the form of Exhibit
A (the “Note”).



1.3 Manner of Delivery of Shares. At the Closing, Seller shall deliver to Buyer
certificates evidencing the Shares (together with all rights then or thereafter attaching thereto)
duly endorsed in blank, or accompanied by valid stock powers duly executed in blank, in proper form
for transfer.



1.4 Closing and Effective Date. The parties shall conduct the closing of the
transactions provided for herein (the “Closing”) at the offices of McAfee & Taft, 10th
Floor, Two Leadership Square, 211 North Robinson, Oklahoma City, Oklahoma 73102, contemporaneously
with the closings of the transactions contemplated by the Asset Purchase Agreement and the Real
Estate Purchase Agreement, but no later than July 15, 2011 (the “Closing Date”). The effective
date of all transactions contemplated by this Agreement, the Asset Purchase Agreement and the Real
Estate Purchase Agreement shall be June 30, 2011 (the “Effective Date”). At or before the closing
Seller and Buyer shall each take such actions and deliver the duly executed documents necessary or
appropriate to close the sale as described in this Agreement. All documents shall be reasonably
satisfactory to the legal counsel for the parties.



ARTICLE II




REPRESENTATIONS AND WARRANTIES OF SELLER




In order to induce Buyer to enter into this Agreement and to consummate the transactions
contemplated hereunder, Seller makes the following representations and warranties to Buyer:



2.1 Power and Authority; Due Authorization. Seller is a limited liability company
duly organized and legally existing in good standing under the laws of the State of Oklahoma, with
full power and authority to enter into this Agreement and to carry out the transactions and
agreements contemplated hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized by all necessary
actions of Seller and Seller’s shareholder, and no further action is necessary to authorize such
transactions or to make this Agreement and such other documents and agreements valid and binding
upon Seller in accordance with their respective terms.



2.2 Binding Obligation; Noncontravention. This Agreement has been duly executed and
delivered by Seller and is a valid and binding obligation of Seller, enforceable in accordance with
its terms. Neither the execution and delivery of this Agreement by Seller nor the consummation of
the transactions contemplated hereby will: (a) conflict with or violate any provision of the
articles of organization, operating agreement, or other constituent document of Seller or agreement
among Seller’s owners, or of any law, ordinance or regulation or any decree or order of any court
or administrative or other governmental body which is either applicable to,


 


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binding upon or
enforceable against Seller; or (b) result in a breach of,
constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify
or cancel or require any notice under, any mortgage, contract, agreement, indenture, will, trust or
other instrument which is either binding upon or enforceable against Seller or the assets and
properties of Seller, which conflict, violation, breach or default could have a material adverse
effect upon (i) the Shares or Buyer’s rights thereto or (ii) the business, financial condition,
prospects or results of operations of the Practice (a “Seller Material Adverse Effect”). Except as
described in Section 4.12 of the Disclosure Schedule, no permit, consent, approval or authorization
of, or declaration to or filing with, any regulatory or other government authority is required in
connection with the execution and delivery of this Agreement by Seller and the consummation by them
of the transactions contemplated hereby, the failure to obtain which could have a Seller Material
Adverse Effect.



2.3 Investment Bankers’ and Brokers’ Fees. As a result of any act or failure to act
by Seller or any of its officers, owners or other affiliates, no person or entity has, or as a
result of the transactions contemplated hereby will have, any right, interest or claim against or
upon Buyer or any of its affiliates for any commission, fee or other compensation as a finder,
broker or in any similar capacity.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF BUYER




In order to induce Seller to enter into this Agreement and to consummate the transactions
contemplated hereby, Buyer makes the following representations and warranties to Seller:



3.1 Power and Authority; Due Authorization. Buyer is a limited liability company duly
organized and legally existing in good standing under the laws of the State of Oklahoma, with full
power and authority to enter into this Agreement and to carry out the transactions and agreements
contemplated hereby. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby shall have been duly authorized by all
necessary action of Buyer and its members, and no further action will be necessary to authorize
such transactions or to make this Agreement and such other documents and agreements valid and
binding upon Buyer in accordance with their respective terms.



3.2 Binding Obligation; Noncontravention. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding obligation of Buyer, enforceable in accordance with
its terms. Neither the execution and delivery of this Agreement by Buyer nor the consummation of
the transactions contemplated hereby will: (a) conflict with or violate any provision of the
articles of organization or operating agreement of Buyer or of any law, ordinance, regulation or
decree or order of any court or administrative or other governmental body which is either
applicable to, binding upon or enforceable against Buyer; or (b) result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, any mortgage, contract, agreement, indenture or other instrument which
is either binding upon or enforceable against Buyer, which conflict, violation, breach or default
could have a material adverse effect upon the business, financial condition, prospects or results
of operations of Buyer (a “Buyer Material Adverse Effect”). No permit,
consent, approval or authorization of, or declaration to or filing with, any regulatory or
other government authority is required in connection with the execution and delivery of this
Agreement by Buyer and the consummation of the transactions contemplated hereby, the failure to
obtain which could have a Buyer Material Adverse Effect.


 


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3.3 Investment Bankers’ and Brokers’ Fees. As a result of any act or failure to act
by Buyer or any of its affiliates or any of their respective officers or owners, no person, firm or
corporation has, or as a result of the transactions contemplated hereby will have, any right,
interest or valid claim upon Seller or any of Seller’s owners for any commission, fee or other
compensation as a finder, broker or in any similar capacity.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY




In order to induce Buyer to enter into this Agreement and to consummate the transactions
contemplated hereunder, Seller makes the following additional representations and warranties to
Buyer:



4.1 Incorporation of the Company. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Oklahoma. The Company has all
necessary corporate power and authority to conduct its business as its business is now being
conducted. The Company has no subsidiaries and does not own, directly or indirectly, any capital
stock or other equity securities of any corporation, joint venture, partnership, limited liability
company, association or other entity, or have any direct or indirect equity interest in any
business. The Company does not conduct business in any states other than Oklahoma.



4.2 Capital Structure of the Company. The authorized capital stock of the Company
consists of 500 shares of common stock, $100.00 par value, all of which are voting common stock.
Currently, 500 shares are issued and outstanding. Other than the Shares, there are no shares of
capital stock or other securities of the Company of any other class authorized, issued or
outstanding. All of the Shares have been validly issued, are fully paid and non-assessable, and
are owned beneficially and of record by Seller. Seller owns the Shares free and clear of all
Claims. The Shares have not been issued in violation of, and are not subject to, any preemptive or
subscription rights. There are no outstanding subscriptions, options, warrants, rights (including
preemptive rights), calls, convertible securities or other agreements or commitments of any
character related to the issued or unissued capital stock (including the Shares) or other
securities of the Company. There are no voting trusts or voting agreements with respect to the
Shares which affect any stockholder’s power to exercise full voting rights with respect thereto or
to complete the transactions contemplated by this Agreement.



4.3 Corporate Records. True and complete copies of the certificate of incorporation
and all amendments thereto, the Bylaws as currently in force, all stock records, and all corporate
minute books and records of the Company, have been furnished for inspection by Buyer. Such records
accurately reflect all share transactions, the current stock ownership of the Company and contain
copies of all material resolutions of the directors and shareholders of the Company and are
complete and accurate in all material respects. The Company’s books, accounts and records
are, and have been, maintained in the Company’s usual, regular and ordinary manner, and all
material transactions to which the Company is or has been a party are properly reflected therein.


 


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4.4 Bank Accounts. Section 4.4 of the Disclosure Schedule contains a list showing:



(a) the name of each bank, safe deposit company or other financial institution in which the
Company has an account, lock box or safe deposit box together with the account numbers;



(b) the names of all persons authorized to draw thereon or to have access thereto and the
names of all persons and entities, if any, holding powers of attorney from the Company; and



(c) all instruments or agreements to which the Company is a party as an endorser, surety or
guarantor, other than checks endorsed for collection or deposit in the ordinary course of business.



4.5 Taxes. The Company has properly filed on a timely basis all Returns (as herein
defined) required to be filed with respect to Taxes (as herein defined) for any tax period covered
in whole or in part by the period from May 1, 2008 through the Closing Date. All Taxes payable by
the Company, reflected in such Returns, have been paid in full or are reserved for in full in the
Financial Statements. Since May 1, 2008, the Company has withheld and paid all Taxes or other
amounts required to have been withheld and paid in connection with amounts paid or owing to any
employee or otherwise required by the applicable taxing authorities. There is no dispute or claim
concerning any liability for Taxes of the Company claimed or raised by any taxing authority, and,
except as described in Section 4.5 of the Disclosure Schedule, there is no pending or threatened or
anticipated audits or other investigations in respect of Taxes of the Company. For purposes of
this Agreement, “Taxes” means all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease,
service, service use, capital withholding, payroll, estimated, employment, excise, severance,
stamp, occupation, premium, property (including personal property), windfall profits, customs,
duties or other taxes, fees, assessments or charges of any kind whatever, together with any
interest and any penalties, additions to tax or additional amounts with respect thereto, and
“Returns” shall mean all returns, declarations, reports, statements and other documents required to
be filed in respect of Taxes. The Company has been a C corporation within the meaning of §§1361
and 1362 of the Internal Revenue Code of 1986, as amended (the “Code”) at all relevant times during
its existence. There are no Oklahoma sales taxes imposed on a stock sale transaction such as the
transaction contemplated herein.



4.6 Compliance with Laws and Instruments. Except as set forth in Section 4.6 to the
Disclosure Schedule with respect to the Health Plans, the Retirement Plans and the Benefit Plans,
as those terms are defined in Section 4.21, to the Knowledge of the Seller (as defined below),
since May 1, 2008, (a) the business and operations of the Company have been and are being conducted
in compliance with all applicable laws, rules, regulations and licensing requirements of all
authorities, including without limitation (i) all applicable rules, regulations and licensing
requirements under federal and Oklahoma law, the violation of which, individually or in the



 


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aggregate,
could adversely affect in any material way the financial condition or operation of the Company and (ii) the federal anti-kickback laws (42 U.S.C. §§ 1320a-7a and -7b) and Stark law
(42 U.S.C. § 1395nn) and equivalent Oklahoma laws (the items described in Section 4.6 to the
Disclosure Schedule are hereinafter collectively referred to as the “Claims for Benefits”); (c)
except with respect to the Claims for Benefits, to the Knowledge of Seller, no facts have arisen
that might form the basis for a claim that any such violation exists; and (d) the Company is
authorized to receive (and has received) payments for procedures covered by CHAMPUS program and,
except for normal Oklahoma Department of State Health Services inspections (as to which there is no
outstanding uncured deficiency), neither TRICARE nor state agency has conducted or has given the
Company any notice that it intends to conduct any audit or other review of the Company’s
participation in the Medicare, Medicaid and CHAMPUS programs, and no such audit or review would
result in any material liability by the Company for any reimbursement, penalty or interest with
respect to payments received by the Company thereunder. For purposes hereof, the phrase “to the
Knowledge of the Seller” shall mean to the actual knowledge, without independent investigations, of
Steven Browning.



4.7 Financial Statements of Seller. Attached to Section 4.7 of the Disclosure
Schedule are copies of the following financial statements of the Company: (a) unaudited statements
of operations and balance sheets as of and for the years ended December 31, 2009 and 2010; (b)
unaudited statement of operations for the four month period ended on April 30, 2011 (the “Income
Statement Date”); and (c) unaudited balance sheet (the “April Balance Sheet”) as of the Income
Statement Date. Such financial statements have been prepared on a modified cash basis and,
otherwise, are in accordance with generally accepted accounting principles consistently applied
(except that such financial statements are not audited, do not include footnote disclosures and are
subject to normal year end adjustments). The Balance Sheet presents fairly the financial condition
of the Company on an accrual basis as of the Income Statement Date, and the January Balance Sheet
fairly presents the financial condition of the Company as of January 31, 2011.



4.8 Liabilities of Seller. Except for liabilities incurred in the ordinary course of
business since the Income Statement Date, the Company has no liabilities, duties or obligations of
any kind, character or description, whether accrued, absolute, contingent or otherwise that are not
reflected on the Balance Sheet.



4.9 Clinic Assets. No person or entity other than Seller has any option or right of
first refusal to purchase, occupy, lease or rent any asset owned by the Company and used or useful
in connection with the operation of the Practice (the “Clinic Assets”), other than pursuant to the
Asset Purchase Agreement and the Real Estate Purchase Agreement.



4.10 Good Title to and Condition of the Clinic Assets. The Company has good title to
all of the Clinic Assets free and clear of all liens, mortgages, pledges, security interests,
encumbrances or charges of every kind, nature and description whatsoever, except those set forth in
Section 4.10 of the Disclosure Schedule (all of which, except for the lien(s) to be released at or
prior to the Closing as specifically listed in Section 4.10 of the Disclosure Schedule), are
referred to herein as the “Permitted Liens”). The Clinic Assets constitute, in the aggregate, all
of the property necessary for the conduct of the Practice in the manner and at the utilization
levels at which the Practice is currently being conducted. The fixed assets are adequate for the
Company’s current normal utilization levels and


 


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all
fixed assets are free of defects and are in good operating condition and repair. The imaging equipment that is included in the fixed
assets is and at all times has been covered by servicing agreements with the respective
manufacturers of such equipment. The inventory consists of items of a quality and quantity usable
in the normal course of the operation of the Practice at values in the aggregate at least equal to
the values at which such items are carried on the Balance Sheet. Except as set forth in Section
4.10 of the Disclosure Schedule, upon consummation of the transactions contemplated by this
Agreement, the Company will continue to have valid title to the Clinic Assets, free and clear of
liens, encumbrances, claims and restrictions of every kind other than the Permitted Liens.



4.11 Billing Practices. The billing practices of the Company are in compliance with
all federal and state laws (including all workers’ compensation and insurance laws and regulations)
and, where applicable, all contracts with insurance companies, health maintenance organizations and
other third party payors.



4.12 Licenses and Permits of Seller. Section 4.12 of the Disclosure Schedule lists
every license or other governmental or official approval, permit or authorization applied for,
issued or given to the Company. The Company possesses all licenses and other required governmental
or official approvals, permits or authorizations for the operation of the Practice, the failure to
possess which would have a Seller Material Adverse Effect, including without limitation (a) all
licensure required to operate the Practice as a medical clinic that includes medical imaging in the
State of Oklahoma and (b) all the conditions required for participation in the Medicare, Medicaid
and CHAMPUS programs. All such licenses, approvals, permits and authorizations are in full force
and effect; Seller is in compliance with their requirements, except to the extent that any
noncompliance would not have a Seller Material Adverse Effect; and no proceeding is pending or
threatened to revoke or amend any of them. Except as set forth in Section 4.12 of the Disclosure
Schedule, no governmental consent, review or other process is required in connection with the
transfer of the Shares provided for herein or in order for the Company to continue its Practice
following the consummation of the transactions contemplated hereby.



4.13 Proprietary Rights of the Company. The Company owns or legally possesses all
right, title and interest in and to all of the Proprietary Rights and: (a) there have been no
claims made against the Company for the assertion of the invalidity, abuse, misuse or
enforceability of any such Proprietary Rights and there are no grounds for the same; (b) the
Company has not received a notice of conflict with the asserted rights of others; and (c) the
conduct of the Practice has not infringed any such rights of others.



4.14 The Company’s Relationships with its Managed Care Customers. Seller does not
know of any written or oral communication, fact, event or action which exists or has occurred
within one year prior to the date of this Agreement which would tend to indicate that any current
party with whom the Company has a managed care contract, and which accounted for over 1% of the
total net revenues of the Company for the year ended December 31, 2010 or the four month period
ended on April 30, 2010, will terminate its business relationship with the Company or substantially
reduce its utilization of the Practice.


 


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4.15 Material Contracts, Business Relationships, Employees and Insurance.



4.15.1 Attached to Section 4.15 of the Disclosure Schedule is a true and complete list of the
following (collectively, the “Material Contracts”): (a) each lien, security agreement or similar
document or instrument to which the Company is a party or by which any of its assets is bound; (b)
all managed care contracts, equipment leases, sales agency agreements, contracts with
municipalities and labor organizations, leases, supply contracts, manufacturer warranties, service
agreements, employment and consulting contracts and equipment purchase agreements to which the
Company is a party; and (c) any other agreement, contract, lease or commitment to which Company is
a party or by which it is bound. No contract, equipment lease or instrument will be considered a
Material Contract if it is involves a financial commitment for the remaining non-cancelable term of
$10,000 or less; provided, however, that any contract with any physician or other party that refers
patients to the Practice, or with Seller or any of Seller’s owners or any family member or
affiliate of Seller or any of Seller’s owners, as applicable, shall be considered a Material
Contract for purposes of this Section 4.15.1. Seller has previously delivered true and complete
copies of the Material Contracts to Buyer. The Company has complied with all of its obligations
under all the Material Contracts, and no event has occurred or set of facts exists which
constitutes a default by the Company, or which with the passage of time or the giving of notice or
both would constitute a material default by Seller as to any Material Contract, or which would
permit the other party to a Material Contract to terminate such agreement or prevent the Company
from receiving the benefits thereunder. Where applicable, to Seller’s knowledge, Section 4.15.2
of the Disclosure Schedule accurately describe the relationship of each party to the contracts,
leases and instruments listed therein to the Company, Seller, and Seller’s owners or any of their
respective family members or affiliates. Except as set forth on Section 4.10 of the Disclosure
Schedule, the Shares may be assigned and transferred to Buyer pursuant to this Agreement without
the necessity of any consents or waivers from any party to a Material Contract and without
violation of or default thereunder.



4.15.2 Except as set forth on Section 4.15.2 to the Disclosure Schedule, to Seller’s
knowledge, neither Seller nor any of Seller’s owners nor any Affiliate (as hereinafter defined) of
Seller or any of Seller’s owners has any direct or indirect interest in any customer or supplier of
the Company, in any person from whom or to whom the Company leases any property or in any other
person with whom the Company is doing business. The Company is not bound by any noncompetition
covenant or other agreement that restricts the Company from carrying on its business anywhere in
the world. As used in this Agreement, the term “Affiliate” means, with respect to a specified
person, any other person which directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.



4.15.3 All current physicians and staff providing services to the Company are employees and
consultants of the Company. Section 4.15.3 of the Disclosure Schedule sets forth a true and
complete list of all such employees and consultants and their current compensation arrangements.
Except as expressly described in Section 4.15.3 of the Disclosure Schedule, there are no accrued
but unpaid bonuses or other deferred compensation arrangements with any employees or consultants.
Seller has previously furnished Buyer with a true and complete copy (or a written description, if
oral) of each such agreement, contract or commitment that is listed in Section 4.15.3 of the
Disclosure Schedule. There has not been any default in any obligation to be performed by the
Company under any such agreement or commitment. Except as expressly described in Section 4.15.3 of
the Disclosure Schedule, there are no accrued but unpaid bonuses,
benefits, claims, or other deferred compensation arrangements with any employees or
consultants. The Company shall not have as of the Closing Date any accrued benefits for any
individual employee for paid time off in excess of 80 hours.


 


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4.15.4 The Company has insurance policies covering general liability, property damage and
medical malpractice for all acts and occurrences prior to the Effective Date. Such general
liability and medical malpractice insurance coverage has coverage limits of at least $1,000,000 per
occurrence and $3,000,000 in the aggregate and is on a claims-made basis. All such insurance
policies are now and through the Closing will be in full force and effect with no premium
arrearages. The Company is not in default with respect to any provision contained in any such
policy and has not failed to give any notice or present any claim required by the terms of any such
policy in a due and timely fashion. Section 4.15.4 of the Disclosure Schedule contains a true and
correct list of all insurance policies which are owned by the Company or which name the Company as
an insured and which pertain to the Company’s assets, the Company’s business or the employees of
the Company. Since May 1, 2008, no application for insurance with respect to any of the business
has been denied for any reason.



4.16 Litigation Involving Seller. Except as set forth in Section 4.16 of the
Disclosure Schedule, there are no actions, suits, claims, governmental investigations, arbitrations
or other legal, administrative or governmental proceedings pending or threatened against or
affecting or relating to the Company and, to the Knowledge of Seller, there is no basis for any of
the foregoing. There are no outstanding judgments, orders, decrees or stipulations issued by any
federal, state, local or foreign judicial or administrative authority in any proceeding to which
the Company is or was a party. Section 4.16 of the Disclosure Schedule contains a complete and
accurate description of the status of any matter covered thereby, and the Company carries insurance
that will adequately cover all costs, expenses and damages of each of the matters described
therein.



4.17 No Material Adverse Change. Since the Income Statement Date, there has not been
(a) any material adverse change in the properties or financial condition of the Company or (b) to
Seller’s knowledge, any threatened or prospective event or condition of any character whatsoever
which could have a Seller Material Adverse Effect.



4.18 Absence of Certain Acts or Events. Except as approved in writing by Buyer, since
the Income Statement Date, the Company has not: (a) increased the rate of compensation (including
salaries and benefits) of any of its employees (other than previously scheduled bonuses and annual
increases in accordance with the Company’s past practices); (b) sold, leased, transferred,
assigned, conveyed or otherwise removed any of its assets used in the Practice other than in the
ordinary course of business; (c) made or obligated itself to make capital expenditures relating to
the Practice where the unpaid balance as of the Effective Date will be more than $10,000; (d)
incurred any material obligations or liabilities (including any indebtedness) or entered into any
material transaction relating to the Practice, except for this Agreement and the transactions
contemplated hereby; (e) suffered any theft, damage, destruction or casualty loss relating to the
Practice in excess of $10,000; (f) entered into any transaction except in the ordinary course of
business; (g) cancelled any debt or claim or waived any right of substantial value (except as
provided for in this Agreement); or (h) entered into any material amendments to
existing Material Contracts or any new Material Contracts, other than in the ordinary course
of the operation of the Practice.


 


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4.19 Environmental Matters. The Company is in compliance with all federal, state and
local environmental laws, rules, regulations, standards and requirements, including without
limitation those respecting the generation, handling, storage and disposition of hazardous or
biomedical materials and/or waste, including without limitation the Medical Waste Tracking Act of
1988, 42 U.S.C. § 6992, et seq., and the National Institute for Occupational
Self-Safety and Health Infectious Waste Disposal Guidelines, Publication No. 88-119 of the U.S.
Department of Health and Human Services. Since May 1, 2008, the Company has not received any
written communication, whether from a governmental authority, citizen’s group, employee or
otherwise, that alleges that the Company is not in full compliance with all environmental laws,
rules, regulations, standards and requirements.



4.20 Labor Relations of Seller. The Company is not a party to or bound by any
collective bargaining agreement or any other agreement with a labor union and is not currently
negotiating with a labor union, and there has been no effort by any labor union to organize any
employees of the Business into one or more collective bargaining units. There is not pending or,
to Seller’s knowledge, threatened any labor dispute, strike or work stoppage which affects or which
may affect the Practice. No Company employee has ever petitioned for a representation election.
Neither the Company nor any agent, representative or employee of the Company has since May 1, 2008
committed any unfair labor practice as defined in the National Labor Relations Act, as amended, and
there is not now pending or, to Seller’s knowledge, threatened any charge or complaint against the
Company by or with the National Labor Relations Board or any representative thereof. Additionally,
since May 1, 2008, the Company has not received any notice that any employee of the Company has
filed with any governmental authority any claim or report asserting sexual harassment; age, racial
or disability discrimination; or any violation of OSHA or similar state laws (other than those
claims or reports that have been resolved and/or settled in full), and there has been no strike,
walkout or work stoppage involving any of the employees of the Company.




4.21 Employee Benefit Plans; ERISA; and Legal Compliance.



4.21.1 Except for the pension and/or retirement plans described on Section 4.21(a) of the
Disclosure Schedule (the “Retirement Plans”), the Company does not now maintain or participate in
and has since May 1, 2008, not maintained or participated in any pension, profit sharing or
retirement plan, nor does the Company otherwise participate in, nor has the Company ever otherwise
participated in, any multi-employer pension or retirement plan. Likewise, except for the health and
welfare plans described on Section 4.21(b) (the “Health Plans”), the Company does not now maintain
or participate in and has never maintained or participated in any health or welfare plans. Further,
Section 4.21(c) sets forth a true and complete list of each policy, contract, arrangement or
agreement (including employment agreements, change of control agreements, severance agreements,
deferred compensation, incentive compensation, and bonus arrangement of any type (including
“employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended “(“ERISA”))”, maintained by the Seller, Company, or any trade or
business, whether or not incorporated (an “ERISA Affiliate”), that together with the Company would
be deemed to be
a “single employer,” within the meaning of Section 4001(b)(1) of ERISA, or with respect to
which the Seller has or may have a liability, or which is maintained for the benefit of current or
former employers of the Company (collectively, the “Benefit Plans”).


 


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4.21.2 Buyer will not incur any obligation or liability under or relating to the Retirement
Plans, Health Plans, or Benefit Plans as a result of the transactions contemplated by this
Agreement, or otherwise, and Seller agrees to indemnify Buyer from all actions, claims, penalties,
fines, contributions, or similar payments required by law, regulatory authority, or court
proceeding to ensure that such plans are legally compliant and administered in accordance with
applicable laws and regulations. No event has occurred and no condition exists that would subject
the Company either directly or by reason of their affiliate with any member of the “Controlled
Group” to liability. Seller represents that there are no known prohibited transactions currently or
since May 1, 2008, no known fiduciary breaches currently or since May 1, 2008, and no known
reporting and disclosure violations since May 1, 2008. Other than the Claims for Benefits, there
are no pending or anticipated material claims against or otherwise involving the Retirement Plans,
Health Plans, or Benefit Plans.



4.21.3 The terms of the Retirement Plans are, and since May 1, 2008 such plans have been
administered, in compliance with the requirements of the Employer Retirement Income Security Act of
1974, as amended (“ERISA”) and (where applicable) the Internal Revenue Code of 1986, as amended
(“Code”), including, but not limited to, receipt of a favorable determination letter from the
Internal Revenue Service (the “Service”), as applicable, all reporting and disclosure requirements,
all nondiscrimination requirements, and the timely completion of all annual filings such as Form
5500. To the extent any employee benefit programs (including retirement, health, welfare, other
insurance, and similar plans) maintained by the Company for its employees are subject to ERISA, the
Code, and the Health Insurance Portability Act of 1996, as amended (“HIPAA”), such programs have
since May 1, 2008 been maintained in compliance with ERISA, the Code, and HIPAA.



4.21.4 Seller acknowledges that the Buyer does not assume sponsorship of any benefit plans in
which the Company has been participating in currently or during the last seven years, except for
the Retirement Plans listed on Section 4.21(a) of the Disclosure Schedule. Further, the Company has
ceased participation in all benefit programs of the Seller. Only common-law employees were eligible
for the Retirement Plans, Health Plans, and Benefit Plans — no leased employees, no independent
contractors, and no board members that are not also common-law employees were eligible to
participate in such plans.



4.21.5 Except as set forth on Section 4.21.5 of the Disclosure Schedule, no audit by the
Department of Labor or the Service is threatened, ongoing, or closed within the last three years.
No excise penalty taxes are outstanding for the Company or for the Seller.



4.22 Accuracy of Information Furnished by Seller. No representation, statement or
information made or furnished by Seller to Buyer, including those contained in this Agreement and
the various Schedules attached hereto and the other information and statements referred to herein
and previously furnished by Seller to Buyer pursuant hereto, contains or shall contain any untrue
statement of a material fact or omits or shall omit any material fact that is necessary to make the
representations, statements or information made or furnished by Seller not misleading.


 


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ARTICLE V

ADDITIONAL COVENANTS OF SELLER




5.1 Efforts to Satisfy Closing Conditions. Seller will use commercially reasonable
efforts to cause to be satisfied, as soon as practicable and prior to the Closing Date, all of the
conditions set forth in Articles VII and VIII to the obligations of Buyer and Seller to complete
the sale of the Shares pursuant to this Agreement.



5.2 Conduct of the Practice Pending the Closing. From and after the execution and
delivery of this Agreement and until the Closing Date, except as provided herein or with the prior
written consent of Buyer, Seller will cause the Company to conduct the Practice in the ordinary
course of business, to maintain all of the Clinic Assets in customary repair, order and condition,
reasonable wear and tear excepted, and to maintain service agreements and insurance of such types
and in such amounts upon all of the Clinic Assets as are in effect on the date of this Agreement.



5.3 Due Diligence. From the date hereof until Closing or the termination of this
Agreement as set forth in Section 11.3, Seller shall cause the Company to permit Buyer to conduct
physical inspections at the Clinic at such time or times as will not unreasonably interfere with
customary delivery of care to patients.



5.4 Notice of Material Developments. Seller will give prompt written notice to Buyer
of any material development affecting the Company, including without limitation any development
which results in the inaccuracy of any of the representations and warranties of Seller made herein.



5.5 No Disclosure. Without the prior written consent of Buyer, Seller will not, prior
to the Closing Date, disclose the existence of any term or condition of this Agreement to any
person or entity, except that such disclosure may be made (a) to any of Seller’s owners or to any
person in a business relationship with Seller or Seller’s owners to whom such disclosure is
necessary in order to satisfy any of the conditions to the consummation of the transactions
provided for in this Agreement (including Seller’s legal and financial advisors), and (b) to the
extent Seller believes in good faith that such disclosure is required by law (in which case Seller
will consult with Buyer prior to making such disclosure).



5.6 No-Shop Clause. From and after the date of the execution and delivery of this
Agreement by Seller until the earlier of Closing or the termination of this Agreement, Seller will
not, without the prior written consent of Buyer (which may be withheld at Buyer’s sole discretion),
directly or indirectly (a) offer for sale any of the Shares or any ownership interest in the
Company’s assets, (b) solicit offers to buy any Shares or any of the Company’s assets, (c) hold
discussions with any party (other than Buyer or its affiliate) looking toward such an offer or
solicitation or looking toward a merger or consolidation of the Company or (d) enter into any
letter of intent or agreement with any party (other than Buyer or its affiliate) with respect to
the sale or other disposition of any of the Shares or any assets of the Company or with respect to
any merger, consolidation or similar transaction involving Seller.


 


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5.7 Contribution to Capital. On or prior to the Closing Date, First Physicians
Capital Group, Inc. shall cause the following liabilities appearing on the Company’s Balance Sheet
to be contributed to the capital of Seller, and Seller shall contribute such liabilities to the
capital of the Company: (i) Intercompany AR/AP in the amount of ($569,719), together with any
accrued and unpaid additional principal or interest, and (ii) Note Receivable Discount in the
amount of ($281,568) (collectively, the “Excluded Liabilities”).



ARTICLE VI

ADDITIONAL COVENANTS OF BUYER




6.1 Efforts to Satisfy Closing Conditions. Buyer will use commercially reasonable
efforts to cause to be satisfied, as soon as practicable and prior to the Closing Date, all of the
conditions in this Agreement to the obligations of Seller and Buyer to complete the sale of the
Shares pursuant to this Agreement, including without limitation assisting Seller in obtaining the
consents required by Section 7.2.



6.2 No Disclosure. Without the prior written consent of Seller, Buyer will not, prior
to the Closing Date, disclose the existence of any term or condition of this Agreement to any
person or entity except that such disclosure may be made (a) to Buyer’s owners and prospective
owners, (b) to any person in a business relationship with Buyer or Buyer’s owners to whom such
disclosure is necessary in order to satisfy any of the conditions to the consummation of the
purchase of the Purchased Assets which are set forth in this Agreement (including Buyer’s legal and
financial advisors) and (c) to the extent Buyer believes in good faith that such disclosure is
required by law (in which case Buyer will consult with Seller prior to making such disclosure).



ARTICLE VII

CONDITIONS TO THE OBLIGATION OF BUYER




The obligation of Buyer to purchase the Shares shall be subject to the fulfillment at or prior
to the Closing Date of each of the following conditions:



7.1 Accuracy of Representations and Warranties and Compliance with Obligations. The
representations and warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date with the same force and effect as though made
at and as of the Closing Date. Seller shall have performed and complied with in all material
respects all of its obligations required by this Agreement to be performed or complied with at or
prior to the Closing Date. Seller shall have delivered to Buyer a certificate, dated as of the
Closing Date and signed by a duly authorized officer of Seller, certifying (a) that such
representations and warranties are true and correct in all material respects and that all such
obligations have been performed and complied with in all material respects and (b) the necessary
consent of Seller’s owners approving this Agreement and the transactions contemplated hereby has
been obtained. Seller shall also provide Buyer with any other evidence reasonably requested by
Buyer with respect to the authorization of this Agreement and the transactions contemplated hereby
by Seller.


 


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7.2 Receipt of Necessary Consents and Governmental Permits. All necessary consents,
authorizations or approvals of third parties to each of the transactions contemplated hereby shall
have been obtained and shown by written evidence reasonably satisfactory to Buyer.



7.3 No Adverse Litigation. There shall not be pending or threatened any action or
proceeding by or before any court or other governmental body which shall seek to restrain, prohibit
or invalidate the sale of the Shares to Buyer or any other transaction contemplated hereby, or
which might affect the right of Buyer to own the Shares and which, in the reasonable judgment of
Buyer, makes it inadvisable to proceed with the purchase of the Shares.



7.4 Consummation of the Purchase of Other Assets. Buyer shall consummate the
transactions contemplated by (i) the Real Estate Purchase Agreement and (ii) the Asset Purchase
Agreement.



7.5 Professional Services Agreement. The Company shall enter into a professional
services agreement, in form and substance satisfactory to Buyer, with a newly formed entity that
shall employ each of the physicians currently employed by the Company and performing services at
the Clinic (“Newco”), pursuant to which Newco shall cause its employed physicians to render
professional services on behalf of the Company’s Practice.



7.6 Management Services Agreement. Buyer and the Company shall enter into a
management services agreement, in form and substance satisfactory to Buyer, pursuant to which Buyer
shall agree to provide comprehensive management services on the Company’s behalf.



7.7 Credit Facility. Buyer shall have arranged for the consummation of a new credit
facility for the Company.



7.8 Adjustments to Balance Sheet. Seller shall have delivered evidence that the
Excluded Liabilities have been contributed to the capital of the Company.



7.9 Material Changes. Since the Income Statement Date, there shall have been no
material adverse change in the business, assets or financial condition of the Company.




7.10 Company Deliveries. The Company shall have delivered to the Buyer the following:



7.10.1 Resignations of such officers and/or directors of the Company as Buyer may designate at
least five days prior to Closing, effective as of the Closing Date, except as the Buyer shall
direct to the contrary.



7.10.2 In each Retirement Plan, Health Plan or Benefit Plan that has been terminated, Seller
shall provide copies of any actions taken related to such plan termination, including but not
limited to amendments, board resolutions, participant communications, and the IRS determination
letter upon termination and a schedule of any unpaid benefits due as a result of such plan
termination, including where the assets continue to be held in trust for such accrued assets and
liabilities.


 


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7.10.3 Resignations of the signatories of the bank and other depository accounts and safe
deposit boxes of the Company, except as the Buyer shall direct to the contrary.



7.10.4 Possession of all passbooks, keys and other data of the Company, or articles required
for access thereto and the combinations for all safes, vaults and other places of safekeeping or
storage of the Company.




7.10.5 Possession of the complete books and records relating to the business of the Company.



7.10.6 A certificate from the President or Secretary of the Company, in a form reasonably
satisfactory to the Buyer, setting forth the resolutions of the Board of Directors of the Company
authorizing all agreements, documents and instruments to be executed in connection herewith.



7.11 Legal Matters. All actions, proceedings, instruments and documents required or
incidental to carrying out this Agreement and all other related legal matters shall have been
approved by counsel for Buyer, which approval shall not be unreasonably withheld.



ARTICLE VIII

CONDITIONS TO OBLIGATION OF SELLER




The obligation of Seller to sell the Shares shall be subject to the fulfillment at or prior to
the Closing Date of each of the following conditions:



8.1 Accuracy of Representations and Warranties and Compliance with Obligations. The
representations and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date with the same force and effect as though made
at and as of the Closing Date. Buyer shall have performed and complied with all of its obligations
required by this Agreement to be performed or complied with in all material respects at or prior to
the Closing Date. Buyer shall have delivered to Seller a certificate, dated as of the Closing Date
and signed by a duly authorized officer of Buyer, certifying that such representations and
warranties are true and correct and that all such obligations have been performed and complied with
and that Buyer is duly authorized to enter into this Agreement and the transactions contemplated
thereby.



8.2 No Adverse Litigation. There shall not be pending or threatened any action or
proceeding by or before any court or other governmental body which shall seek to restrain, prohibit
or invalidate the sale of the Shares to Buyer or any other transaction contemplated hereby, and
which, in the judgment of Seller, makes it inadvisable to proceed with the transactions
contemplated hereby.



8.3 Legal Matters. All actions, proceedings, instruments and documents required or
incidental to carrying out this Agreement and all other related legal matters shall have been
approved by counsel for Seller, which approval shall not be unreasonably withheld.


 


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8.4 Consummation of the Sale of Other Assets. The transactions contemplated by (i)
the Real Estate Purchase Agreement and (ii) the Asset Purchase Agreement shall be consummated.



8.5 Promissory Note for the Purchase of Shares. The Buyer shall have executed and
delivered the Promissory Note in favor of Seller for the purchase of the Shares, substantially in
the form attached as Exhibit A.



8.6 Note for Purchased Assets. The Company shall have assigned its rights under the
note payable to be delivered in connection with the Asset Purchase Agreement to Seller.



8.7 Guaranty Agreements. Each of the members of Buyer (other than Foxborough Capital
Company, LLC) shall have executed and delivered to Seller a Guaranty Agreement substantially in the
form attached as Exhibit B and the Company shall have delivered to Seller a Guaranty Agreement
substantially in the form attached as Exhibit C.



ARTICLE IX




POST-CLOSING COVENANTS




9.1 Execution of Further Documents. From and after the Closing, upon the reasonable
request of Buyer, Seller shall perform such further acts and execute, acknowledge and deliver all
such further assignments, transfers, conveyances, powers of attorney and assurances as may be
reasonably required to convey and transfer to and vest in Buyer all right, title and interest in
the Shares, and as may be appropriate otherwise to carry out the transactions contemplated by this
Agreement.




9.2 Restrictive Covenants.



9.2.1 In order to assure that Buyer will realize the value and goodwill inherent in the
Shares, Seller and Guarantor (collectively, the “Covenantors” and, individually, as a
“Covenantor”), hereby agrees with Buyer that none of them shall:



(a) directly or indirectly, for a period of five years following the Closing Date (the
“Restricted Period”), engage anywhere within Grady County, Oklahoma or any county contiguous
thereto (collectively, the “Restricted Area”), in the development, management or ownership, direct
or indirect, of a medical practice or imaging facilities or in any other business that would be
competitive with the Practice, or acquire or retain any financial interest in any business or
entity which is engaged in any such competitive activity in the Restricted Area; provided, however,
that this Section 9.2.1 does not prohibit any Covenantor from (a) owning an interest in Physicians
Hospital in Anadarko, Oklahoma, (b) owning shares of a publicly held corporation purchased through
a broker on an established stock exchange or the Nasdaq stock market at an original cost of not
more than $50,000 or shares of a publicly held mutual fund or (c) owning an interest in a competing
facility that is a licensed hospital (but not including any competing facility that provides
imaging services to a licensed hospital “under arrangements”); or


 


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(b) during the Restricted Period, (a) influence or attempt to influence, either directly or
indirectly, any physician, supplier, health care facility, preferred provider organization, health
maintenance organization or other third party payor not to continue such person’s or entity’s
relationship with the Company, Newco or Buyer or its affiliates or (b) solicit (other than
solicitations in the form of general employment advertisements placed in newspapers or other
publications of general circulation), induce or attempt to induce any employee, independent
contractor, consultant, physician or any other person associated with the Company, Newco or Buyer
or any of its affiliates to leave the employment of, or to otherwise discontinue his, her or its
association with, the Company, Newco or Buyer or such affiliate.



(c) The Covenantors acknowledge that the rights and privileges granted to Buyer herein are of
special and unique character, which gives them a peculiar value, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and that a breach by any
Covenantor of Section 9.2.1 will cause Buyer great and irreparable injury and damage. Accordingly,
the Covenantors hereby agree that Buyer shall be entitled to remedies of injunction, specific
performance or other equitable relief to prevent a breach of Section 9.2.1. This provision shall
not be construed as a waiver of any other rights or remedies which Buyer may have for damages or
otherwise.



(d) In addition, if any Covenantor violates the non-competition covenant set forth in Section
9.2.1, Buyer shall have the right to offset its damages against payments owing under the Note.



(e) Buyer may, in its sole discretion, waive any or all of the provisions of this Section 9.2,
in whole or in part, as to any Covenantor. Any such waiver must be in writing and specifically
refer to this Section 9.2.



(f) If any provision of this Section 9.2, as applied to any party or to any circumstances, is
adjudged by a court to be invalid or unenforceable, the same will in no way affect any other
provision of this Section 9.2 or any other part of this Agreement, the application of such
provision in any other circumstances or the validity or enforceability of this Agreement. If any
such provision, or any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making such determination
will have the power to reduce the duration and/or area of such provision, and/or to delete specific
words or phrases, and in its reduced form such provision will then be enforceable and will be
enforced. Upon breach of any provision of this Section 9.2, Buyer will be entitled to injunctive
relief, since the remedy at law would be inadequate and insufficient. In addition, Buyer will be
entitled to such damages as it can show it has sustained by reason of such breach.



9.3 Record Retention. For a period of three years after the Closing, at reasonable
times and with reasonable notice, Buyer shall permit Seller (a) to have access to the Company’s
records for purposes of preparing Seller’s tax returns or defending Seller in any judicial or
administrative actions and (b) to make copies of such records at Seller’s cost and expense (subject
to any legal restrictions); provided, however, that any such access or copying shall be had or done
in such a manner so as not to interfere with the normal conduct of Buyer’s or the Company’s
business. Buyer shall maintain the records in accordance with all applicable laws and regulations
and in accordance with its internal record retention policy.


 


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9.4 Tax Matters.



9.4.1 Seller shall, at its expense, prepare or cause to be prepared and file or cause to be
filed all tax returns for the Company for all periods ending on or prior to the Closing Date which
are filed after the Closing Date. Seller shall permit Buyer to review and comment on each such Tax
Return described in the preceding sentence prior to filing.



9.4.2 Buyer, the Company and Seller shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of tax returns and any audit,
litigation or other proceeding with respect to taxes. Such cooperation shall include the retention
and (upon the other party’s request) the provision of records and information reasonably relevant
to any such audit, litigation, or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any material provided
hereunder. Buyer shall give Seller written notice of any impending audit by the Internal Revenue
Service or any state taxing authorities (“Audit”) with respect to tax years prior to the Closing
Date. Upon receipt of such notice, Seller shall have the option to intervene and respond to the
Audit. If required as a result of the Audit, Buyer shall file an amended tax return for periods
prior to the Closing Date at the expense of Seller as directed by Seller. The Company and Buyer
shall take possession of all books and records of the Company following the Closing Date. The
Company and Buyer agree (A) to retain all books and records with respect to tax matters pertinent
to the Company relating to any taxable period beginning before the Closing Date for a period of six
years after the Closing Date or until expiration of the statute of limitations (and, to the extent
notified by Buyer or Seller, any extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any taxing authority, and (B) to give
Seller reasonable written notice prior to transferring, destroying or discarding any such books and
records and, if Seller so request, the Company shall allow Seller to take possession of such books
and records.



9.4.3 Neither the Company, Buyer nor any of their successors or assigns will amend any tax
returns applicable to periods prior to the Closing Date or take any position, make any election or
adopt any method inconsistent with the positions taken, elections made or methods used which would
have an adverse effect on Seller unless such amendment, election or adoption is required by a law
enacted after the Closing Date with retroactive effect (i) that requires the Company to
retroactively make such amendment, election or adoption, and (ii) there are no other reasonable
options or alternatives available which would lessen the adverse effect on Seller, after consulting
with Seller.



9.4.4 Seller shall be liable for and shall pay and shall indemnify Buyer against all taxes
imposed on the Company for any taxable year or period ended on or prior to the Closing Date;
provided, however, Seller shall not be liable for or pay and shall not indemnify any Buyer for any
taxes up to the amount of such taxes that are accrued on the Financial Statements (if any).



9.4.5 Buyer shall be liable for and shall pay all Taxes imposed on or through the Company for
any taxable years or periods beginning after the Closing Date.


 


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9.4.6 Neither party shall take any action inconsistent with the characterization of the
transactions contemplated by this Agreement as a stock purchase for United States federal income
tax purposes under the Code on the sale of the Shares.



ARTICLE X




INDEMNIFICATION




10.1 General. From and after the Closing, the parties shall indemnify each other as
provided in this Article X. The indemnification provided by this article shall be the sole remedy
for a breach of any representations, warranties or covenants in this Agreement. As used in this
Agreement, the term “Damages” shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, or judicial proceedings or investigations, assessments, levies, losses, fines,
penalties, damages, costs and expenses, including reasonable attorneys’, accountants’,
investigators’, and experts’ fees and expenses, sustained or incurred in connection with the
defense or investigation of any such claim and shall exclude consequential damages.



10.2 Indemnification Obligations of Seller and Guarantor. Seller and Guarantor shall,
jointly and severally, defend, indemnify, save and keep harmless the Buyer and its managers,
members, employees, agents and lenders, and their respective heirs, successors and permitted
assigns of each of the foregoing (each, a “Buyer Indemnitee” and, collectively, the “Buyer
Indemnitees”), harmless against and from all Damages sustained or incurred by any Buyer Indemnitee
as a result of or arising out of or by virtue of:



10.2.1 any inaccuracy in or breach of any representation and warranty made by Seller in this
Agreement or in any closing document delivered to Buyer in connection with this Agreement;




10.2.2 any liability not specifically included in the Balance Sheet;



10.2.3 any obligations incurred in connection with Seller’s employment or termination of
employment of employees who performed services as the Company prior to the Closing, including
Claims for Benefits and liabilities for any premium contributions for Health Plans; and



10.2.4 any breach by Seller of, or failure by Seller to comply with, any of his covenants or
obligations under this Agreement (including its obligations under this Article X).



10.3 Buyer’s Indemnification Covenants. Buyer shall defend, indemnify, save and keep
harmless Seller and its successors and permitted assigns (each, a “Shareholders Indemnitee” and,
collectively, the “Shareholders Indemnitees”), forever harmless against and from all Damages
sustained or incurred by any Shareholders Indemnitee, as a result of or arising out of or by virtue
of:



10.3.1 any inaccuracy in or breach of any representation or warranty made by Buyer in this
Agreement or in any closing document delivered to the Seller in connection with this Agreement; or


 


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10.3.2 any breach by Buyer of, or failure by Buyer to comply with, any of its respective
covenants or obligations under this Agreement (including their obligations under this Article X).



10.4 Survival of Representations and Warranties. The representations and warranties
of each party contained in this Agreement or in any other document or instrument delivered pursuant
hereto shall be deemed to be continuing and shall survive the Closing and any investigations
heretofore or hereafter made by any party or its Representatives until the second anniversary of
the Closing Date (except to the extent that written notice of a claim has been provided prior
thereto describing in reasonable detail the basis for such claim, in which event the applicable
representation and warranty shall survive until the claim is resolved); provided, however, that
notwithstanding the foregoing, any representations and warranties contained in Sections 4.1, 4.2,
4.5, and 4.21, and any claims for Damages based upon any fraudulent acts or statements, shall
survive for the period of the applicable statute of limitations.



10.5 Limitations on Indemnification Obligations. The obligation of the Sellers to
indemnify and hold harmless the Buyer Indemnified Parties, on the one hand, and the Buyer to
indemnify and hold harmless the Sellers Indemnitees for their Damages pursuant to an
indemnification claim (under than under Section 10.2.3), shall only apply after such Losses exceed
One Hundred Fifty Thousand Dollars ($150,000) in the aggregate (the “Deductible”), after which, the
Buyer Indemnitees shall be entitled to recover the full amount of any and all such Damages in
excess of the Deductible. In no event shall the Seller’s indemnification obligations under this
Article X exceed One Million Dollars ($1,000,000) (the “Cap”); provided, that Damages that are
based on the fraud of Seller or on breaches of the representations of Seller in Sections 4.1 and
4.2 hereof (the “Excluded Claims”) shall not be subject to the Cap; provided, further, that the
Seller’s aggregate obligation for all Damages, including any Damages from Excluded Claims, shall
not exceed the Purchase Price. The Buyer acknowledges that it has had the opportunity to conduct
due diligence and investigation with respect to this transaction. The Buyer further acknowledges
that, to the extent the Buyer, or any of the Buyer’s advisors, agents, consultants or
representatives, by reason of such due diligence and investigation or otherwise, knew that any
representation and warranty made herein by the Seller is inaccurate or untrue, this constitutes a
release and waiver of any and all actions, claims, suits, damages or rights to indemnity, at law or
in equity, against the Seller by the Buyer arising out of breach of that specific representation
and warranty (but not with respect to every representation or warranty made within the same section
or paragraph). Nothing herein shall be deemed to limit or waive the Buyer’s rights against the
Seller arising out of any other representation and warranty made herein by the Seller.



ARTICLE XI




MISCELLANEOUS




11.1 Amendment and Modification. The parties hereto may amend, modify and supplement
this Agreement in such manner as may be agreed upon by Buyer and Seller in writing.


 


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11.2 Assignment. No party may assign its rights or obligations under this Agreement
prior to the Closing Date without the prior written consent of the other party.




11.3 Termination.



11.3.1 Anything to the contrary herein notwithstanding, this Agreement may be terminated and
the transactions contemplated hereby may be abandoned:




(a) by the mutual written consent of Buyer and Seller at any time prior to the Closing Date;



(b) by either Buyer or Seller at any time prior to the Closing Date if there shall be a
pending or threatened action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the Shares to Buyer or any other
transaction contemplated hereby, or which might affect the right of Buyer to own the Shares and
which, in the judgment of Buyer or Seller (as applicable), makes it inadvisable to proceed with the
transactions contemplated by this Agreement;



(c) by Buyer in the event of a material breach by Seller prior to Closing of any provision of
this Agreement, which breach is not remedied by Seller within 30 days after receipt of notice
thereof from Buyer;



(d) by Seller in the event of a material breach by Buyer prior to Closing of any provision of
this Agreement, which breach is not remedied by Buyer within 30 days after receipt of notice
thereof from Seller; or



(e) by either Buyer or Seller if, through no fault of or breach by the party that desires to
terminate this Agreement, the conditions precedent to the obligations of such party hereunder have
not been met or waived and the Closing has not taken place by May 31, 2011.



If this Agreement is terminated pursuant to Section 10.3.1(a) or 10.3.1(e), no party shall
have any liability for any costs, expenses, loss of anticipated profit or any further obligation
for breach of warranty or otherwise to any other party to this Agreement. Any termination of this
Agreement pursuant to Sections 10.3.1(b), 10.3.1(c), or 10.3.1(d) shall be without prejudice to any
other rights or remedies of the respective parties.



11.3.2 The risk of any loss to the assets and properties of Seller and all liability with
respect to injury and damage occurring in connection therewith shall be the sole responsibility of
Seller until the Closing is consummated.



11.4 Binding Effect; Survival; Waiver, Etc. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors, assigns, heirs and
legal representatives. All of the terms, provisions, covenants, representations, warranties and
conditions of this Agreement shall survive the Closing only to the extent set forth herein and
shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and assigns. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right to enforce the same. No
waiver by any party of any condition, or of the breach of any term, provision, covenant,
representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one
or more instances, shall be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the breach of any other term,
provision, covenant, representation or warranty. This Agreement is for the sole benefit of the
undersigned parties hereto and is not for the benefit of any third party.


 


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11.5 Entire Agreement. This Agreement and the Exhibits and Disclosure Schedule
contain the entire agreement and understanding of the parties hereto with respect to the purchase
of the Shares and the other transactions contemplated herein, and supersede all prior verbal or
written understandings, arrangements and agreements of the parties with respect to the subject
matter hereof agreement, but excluding any existing Confidentiality Agreement by and between Buyer
and Seller. Any reference herein to this Agreement shall be deemed to include the Disclosure
Schedule and Exhibits attached hereto. The parties agree that (a) they have fully informed
themselves of the terms, contents, conditions and effects of this Agreement and have consulted
legal counsel of their choice in connection with this Agreement and (b) in entering into this
Agreement, they are not relying upon any representations, promises or statements not expressly
stated in this Agreement and hereby disclaim any and all reliance upon such representations,
promises and/or statements in executing this Agreement.



11.6 Headings. The descriptive headings in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement or affect the meaning or
interpretation of this Agreement in any way.



11.7 Execution in Counterpart. Separate copies of this Agreement may be signed by the
parties hereto, with the same effect as though all of the parties had signed one copy of this
Agreement. Signatures received by facsimile or via other electronic transmission system shall be
accepted as original signatures.



11.8 Notices. All notices, requests, demands and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have been duly given
when received if delivered personally, delivered by Federal Express or other courier service, or
sent by facsimile or other electronic transmission system, as follows:




If to Seller:




First Physicians Capital Group, Inc.

9663 Santa Monica Blvd., #959

Beverly Hills, CA 90210

Attn: David Hirschhorn




Tel No.: (310) 860-2501

Fax No.: (310) 860-1854


 


22









 






with a copy to:




Duane Morris LLP

30 S. 17th St.

Philadelphia, PA 19103

Attn: C. Mitchell Goldman, Esq.




Tel No.: (215) 979-1000

Fax No.: (215) 689-2407




If to Buyer:




Foundation HealthCare Affiliates

14000 N. Portland

Oklahoma City, OK 73134

Attn: Robert M. Byers




Tel No.: (405) 608-1702

Fax No.: (405) 608-1802




with a copy to:




McAfee & Taft A Professional Corporation

211 N. Robinson Ave.

Two Leadership Square, 10th Floor

Attn: Elizabeth D Tyrrell, Esq.




Tel No.: (405) 235-9621

Fax No.: (405) 228-7417



All notices, demands or requests by personal delivery shall be effective and deemed served upon
receipt thereof. All notices, demands and requests sent by mail shall be effective and deemed
served three days after being deposited in the United States mail. All notices, demands and
requests sent by overnight delivery service shall be effective and deemed served on the day after
being deposited with such overnight delivery service. All notices, demands and requests sent by
facsimile or via other electronic transmission system shall be effective and deemed served on the
date of the facsimile or other electronic transmission confirmation.



11.9 Governing Law; Consent to Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma. Buyer and Seller each hereby
submits to the jurisdiction of any state or federal court sitting in Oklahoma County, Oklahoma in
any action or proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, and agrees that all claims in respect of the action or proceeding may be heard
and determined in any such court. Each of Buyer and Seller waives any defense of inconvenient
forum to the maintenance of any action or proceeding brought in any of said courts. Any process
against the Buyer or Seller in, or in connection with, any proceeding arising out of or relating to
this Agreement or any of the transactions contemplated
hereby may be served on them personally or by certified mail at the address set forth in
Section 10.8 with the same effect as though served on them personally.


 


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11.10 Interpretation of Agreement. The parties hereto acknowledge and agree that this
Agreement has been negotiated at arm’s length and between parties equally sophisticated and
knowledgeable in the matters dealt with in this Agreement. Accordingly, any rule of law or legal
decision that would require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is waived. The provisions of this Agreement shall be
interpreted in a reasonable manner to effect the intent of the parties as set forth in this
Agreement.



11.11 Severability. In the event that any one or more of the provisions of this
Agreement shall be held or otherwise found to be invalid, illegal or unenforceable, all other
provisions hereof shall be given effect separately there from and shall not be affected thereby.



11.12 Attorneys’ Fees. In any action at law or in equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such litigation, as determined
by the court in any final judgment or decree, shall pay the successful party or parties all costs,
expenses and reasonable attorneys’ fees incurred therein by the successful party or parties
(including without limitation such costs, expenses and fees on any appeal or in connection with any
bankruptcy proceeding), and if the successful party recovers judgment in any such action or
proceeding, the costs, expenses and attorneys’ fees shall be included in and as part of such
judgment.



11.13 Compliance. Each party shall comply with all laws, rules and regulations that
may be applicable to its respective activities and responsibilities under this Agreement. The
parties enter into this Agreement with the intent of conducting their relationship in full
compliance with applicable laws, including, but not limited to, the Medicare and Medicaid
Anti-Kickback Statute and the federal Stark Law. Neither party nor their affiliates will
intentionally conduct itself under the terms of this Agreement in a manner as to constitute a
violation of the Anti-Kickback Statute, the Stark Law or any other applicable laws. The Purchase
Price to be paid by Buyer to Seller for the purchase of the Shares hereunder has been determined
through good faith and arms-length bargaining and consistent with the fair market value opinion
provided by an independent valuation expert. No amount paid by Buyer to Seller hereunder is
intended to be a payment for referrals or other business and nothing contained in this Agreement
shall require (directly or indirectly, explicitly or implicitly) any party or its affiliates to
refer or direct any patients or other business to the other party or its affiliates. The parties
shall carry out this Agreement in accordance with the provisions of the Health Insurance
Portability and Accountability Act of 1996, and associated regulations promulgated thereunder
(“HIPAA”) and will work together cooperatively to ensure that any use and disclosure of protected
health information related to the transactions contemplated herein is in accordance with HIPAA and
other applicable law.



11.14 Time. If the last day of any time period falls on a Saturday, Sunday, or legal
holiday, then the duration of the time period shall be extended to the next succeeding day that is
not a Saturday, Sunday, or legal holiday. Time is of the essence of this Agreement.


 


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IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly
executed as of the day and year first above written.



	 	 	 	 	 
	BUYER:	SOUTHERN PLAINS ASSOCIATES II, LLC

 	 
	 	By  	 	 
	 	 	Name  	 	 
	 	 	Title  	 	 
	 
	SELLER:	 RURAL HOSPITAL ACQUISITION, L.L.C.

 	 
	 	By  	 	 
	 	 	Name  	 	 
	 	 	Title  	 	 



Signature Page to Stock Purchase Agreement



 


 









 







EXHIBIT A




PROMISSORY NOTE




(See Attached)



 


 









 







EXHIBIT B




GUARANTY AGREEMENT (BUYERS)




(See Attached)



 


 









 







EXHIBIT C




GUARANTY AGREEMENT (COMPANY)




(See Attached)