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EXHIBIT 2.10
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
dated as of
June 27, 1997
by and among
AMERICAN PHYSICIAN PARTNERS, INC.
(a Delaware corporation),
[AMERICAN PHYSICIAN PARTNERS SUBSIDIARY, INC.]
(a California corporation),
and
PACIFIC IMAGING CONSULTANTS, A MEDICAL GROUP, INC.
(a California professional medical corporation)
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TABLE OF CONTENTS
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Rules Of Interpretation . . . . . . . . . . . . . . 6
ARTICLE II The Merger . . . . . . . . . . . . . . . . . . . . 6
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . 6
Section 2.2 The Closing . . . . . . . . . . . . . . . . . . . . 6
Section 2.3 Effective Time . . . . . . . . . . . . . . . . . . 6
Section 2.4 Certificate of Incorporation of Surviving
Corporation . . . . . . . . . . . . . . . . . . . . 7
Section 2.5 Bylaws of Surviving Corporation . . . . . . . . . . 7
Section 2.6 Directors of the Surviving Corporation . . . . . . 7
Section 2.7 Officers of the Surviving Corporation . . . . . . . 7
Section 2.8 Conversion of Company Common Stock . . . . . . . . 7
Section 2.9 Exchange of Certificates Representing Shares
of the Company Common Stock . . . . . . . . . . . . 7
Section 2.10 Fractional Shares . . . . . . . . . . . . . . . . . 8
ARTICLE III Representations and Warranties of the Company . . . 8
Section 3.1 Organization and Good Standing; Qualification . . . 8
Section 3.2 Authorization and Validity . . . . . . . . . . . . 8
Section 3.3 Governmental Authorization . . . . . . . . . . . . 9
Section 3.4 Capitalization . . . . . . . . . . . . . . . . . . 9
Section 3.5 Transactions in Capital Stock . . . . . . . . . . . 9
Section 3.6 Continuity of Business Enterprise . . . . . . . . . 9
Section 3.7 Subsidiaries and Investments . . . . . . . . . . . 9
Section 3.8 Absence of Conflicting Agreements or
Required Consents . . . . . . . . . . . . . . . . . 9
Section 3.9 Intentionally omitted . . . . . . . . . . . . . . . 10
Section 3.10 Absence of Changes . . . . . . . . . . . . . . . . 10
Section 3.11 No Undisclosed Liabilities . . . . . . . . . . . . 11
Section 3.12 Litigation and Claims . . . . . . . . . . . . . . . 11
Section 3.13 No Violation of Law . . . . . . . . . . . . . . . . 11
Section 3.14 Lease Agreements . . . . . . . . . . . . . . . . . 11
Section 3.15 Real and Personal Property . . . . . . . . . . . . 12
Section 3.16 Indebtedness for Borrowed Money . . . . . . . . . . 12
Section 3.17 Contracts and Commitments . . . . . . . . . . . . . 12
Section 3.18 Employee Matters . . . . . . . . . . . . . . . . . 13
Section 3.19 Labor Relations . . . . . . . . . . . . . . . . . . 13
Section 3.20 Employee Benefit Plans . . . . . . . . . . . . . . 14
Section 3.21 Environmental Matters . . . . . . . . . . . . . . . 15
Section 3.22 Filing Reports . . . . . . . . . . . . . . . . . . 16
Section 3.23 Insurance Policies . . . . . . . . . . . . . . . . 16
Section 3.24 Accounts Receivable; Payors . . . . . . . . . . . . 17
Section 3.25 Accounts Payable; Suppliers . . . . . . . . . . . . 17
Section 3.26 Inventory . . . . . . . . . . . . . . . . . . . . . 18
Section 3.27 Licenses, Authorization and Provider Programs . . . 18
Section 3.28 Inspections and Investigations . . . . . . . . . . 19
Section 3.29 Proprietary Rights and Information . . . . . . . . 19
Section 3.30 Taxes . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.31 Related Party Arrangements . . . . . . . . . . . . 20
Section 3.32 Banking Relations . . . . . . . . . . . . . . . . . 21
Section 3.33 Fraud and Abuse and Self Referral . . . . . . . . . 21
Section 3.34 Restrictions on Business Activities . . . . . . . . 21
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Section 3.35 Agreements in Full Force and Effect . . . . . . . . 21
Section 3.36 Statements True and Correct . . . . . . . . . . . . 21
Section 3.37 Disclosure Schedules . . . . . . . . . . . . . . . 21
Section 3.38 Finders' Fees . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV Representations and Warranties of APP . . . . . . . 22
Section 4.1 Organization and Good Standing; Qualification . . . 22
Section 4.2 Authorization and Validity. . . . . . . . . . . . . 22
Section 4.3 Governmental Authorization . . . . . . . . . . . . 22
Section 4.4 Capitalization . . . . . . . . . . . . . . . . . . 22
Section 4.5 Subsidiaries and Investments . . . . . . . . . . . 23
Section 4.6 Absence of Conflicting Agreements or
Required Consents . . . . . . . . . . . . . . . . . 23
Section 4.7 Absence of Changes . . . . . . . . . . . . . . . . 23
Section 4.8 No Undisclosed Liabilities . . . . . . . . . . . . 23
Section 4.9 Litigation and Claims . . . . . . . . . . . . . . . 23
Section 4.10 No Violation of Law . . . . . . . . . . . . . . . . 23
Section 4.11 Employee Matters . . . . . . . . . . . . . . . . . 24
Section 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.13 Related Party Arrangements . . . . . . . . . . . . 25
Section 4.14 Statements True and Correct . . . . . . . . . . . . 25
Section 4.15 Schedules . . . . . . . . . . . . . . . . . . . . . 25
Section 4.16 Finder's Fees . . . . . . . . . . . . . . . . . . . 25
Section 4.17 Agreements in Full Force and Effect . . . . . . . . 25
ARTICLE V Closing Date Representations and Warranties
of the Company . . . . . . . . . . . . . . . . . . 25
Section 5.1 Organization and Good Standing; Qualification . . . 25
Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . 25
Section 5.3 Corporate Records . . . . . . . . . . . . . . . . . 26
Section 5.4 Authorization and Validity . . . . . . . . . . . . 26
Section 5.5 No Violation . . . . . . . . . . . . . . . . . . . 26
Section 5.6 No Business, Agreements, Assets or Liabilities . . 26
Section 5.7 Compliance with Laws . . . . . . . . . . . . . . . 26
ARTICLE VI Closing Date Representations and Warranties
Regarding . . . . . . . . . . . . . . . . . . . . 26
Section 6.1 Authorization and Validity. . . . . . . . . . . . . 26
Section 6.2 No Violation . . . . . . . . . . . . . . . . . . . 27
Section 6.3 No Business, Agreements, Assets or Liabilities . . 27
ARTICLE VII Covenants of the Company . . . . . . . . . . . . . 27
Section 7.1 Conduct of The Company . . . . . . . . . . . . . . 27
Section 7.2 Title to Assets; Indebtedness . . . . . . . . . . . 28
Section 7.3 Access . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.4 Acquisition Proposals . . . . . . . . . . . . . . . 29
Section 7.5 Compliance With Obligations . . . . . . . . . . . . 29
Section 7.6 Notice of Certain Events . . . . . . . . . . . . . 29
Section 7.7 Intentionally omitted . . . . . . . . . . . . . . . 30
Section 7.8 Stockholders' Consent . . . . . . . . . . . . . . . 30
Section 7.9 Obligations of Company and Stockholders . . . . . . 30
Section 7.10 Funding of Accrued Employee Benefits . . . . . . . 30
Section 7.11 Accounting and Tax Matters . . . . . . . . . . . . 30
Section 7.12 Spin-Off Transaction . . . . . . . . . . . . . . . 30
ARTICLE VIII Covenants of APP . . . . . . . . . . . . . . . . . 31
Section 8.1 Consummation of Agreement . . . . . . . . . . . . . 31
Section 8.2 Requirements to Effect the Merger and
Acquisitions . . . . . . . . . . . . . . . . . . . 31
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Section 8.3 Access . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.4 Notification of Certain Matters . . . . . . . . . . 31
Section 8.5 Qualified Retirement Plans. . . . . . . . . . . . . 31
ARTICLE IX Covenants of APP, APP Sub and the Company . . . . . 32
Section 9.1 Filings; Other Action . . . . . . . . . . . . . . . 32
Section 9.2 Amendments of Disclosure Schedules . . . . . . . . 32
Section 9.3 Actions Contrary to Stated Intent . . . . . . . . . 33
Section 9.4 Public Announcements . . . . . . . . . . . . . . . 33
Section 9.5 Expenses . . . . . . . . . . . . . . . . . . . . . 33
Section 9.6 Patient Confidentiality . . . . . . . . . . . . . . 33
Section 9.7 Registration Statements. . . . . . . . . . . . . . 33
ARTICLE X Conditions Precedent of APP . . . . . . . . . . . . 33
Section 10.1 Representations and Warranties . . . . . . . . . . 33
Section 10.2 Covenants . . . . . . . . . . . . . . . . . . . . . 33
Section 10.3 Legal Opinion . . . . . . . . . . . . . . . . . . . 33
Section 10.4 Proceedings . . . . . . . . . . . . . . . . . . . . 33
Section 10.5 No Material Adverse Effect . . . . . . . . . . . . 34
Section 10.6 Government Approvals and Required Consents . . . . 34
Section 10.7 Securities Approvals . . . . . . . . . . . . . . . 34
Section 10.8 Closing Deliveries . . . . . . . . . . . . . . . . 34
Section 10.9 Closing of Initial Public Offering . . . . . . . . 34
Section 10.10 Closing of Related Acquisitions . . . . . . . . . . 34
Section 10.11 Dissenter's Rights . . . . . . . . . . . . . . . . 34
Section 10.12 Stockholder Representation Letter;
Indemnification Agreement . . . . . . . . . . . . . 34
Section 10.13 Transfer of Assets . . . . . . . . . . . . . . . . 34
ARTICLE XI Conditions Precedent of the Company . . . . . . . . 34
Section 11.1 Representations and Warranties . . . . . . . . . . 35
Section 11.2 Covenants . . . . . . . . . . . . . . . . . . . . . 35
Section 11.3 Legal Opinions . . . . . . . . . . . . . . . . . . 35
Section 11.4 Proceedings . . . . . . . . . . . . . . . . . . . . 35
Section 11.5 Government Approvals and Required Consents . . . . 35
Section 11.6 "Blue Sky" Approvals; Nasdaq Listing . . . . . . . 35
Section 11.7 Closing of Initial Public Offering . . . . . . . . 35
Section 11.8 Closing Deliveries . . . . . . . . . . . . . . . . 35
Section 11.9 No Material Adverse Effect . . . . . . . . . . . . 35
Section 11.10 Service Agreement Analysis . . . . . . . . . . . . 35
Section 11.11 Tax Opinion . . . . . . . . . . . . . . . . . . . . 35
ARTICLE XII Closing Deliveries . . . . . . . . . . . . . . . . 35
Section 12.1 Deliveries of the Company . . . . . . . . . . . . . 35
Section 12.2 Deliveries of APP. . . . . . . . . . . . . . . . . 37
ARTICLE XIII Post Closing Matters . . . . . . . . . . . . . . . 38
Section 13.1 Further Instruments of Transfer . . . . . . . . . . 38
Section 13.2 Merger Tax Covenant . . . . . . . . . . . . . . . . 38
Section 13.3 Current Public Information . . . . . . . . . . . . 38
ARTICLE XIV Remedies . . . . . . . . . . . . . . . . . . . . . 38
Section 14.1 Indemnification by the Company . . . . . . . . . . 38
Section 14.2 Indemnification by APP and APP Sub . . . . . . . . 39
Section 14.3 Conditions of Indemnification . . . . . . . . . . . 39
Section 14.4 Costs, Expenses and Legal Fees . . . . . . . . . . 41
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Section 14.5 Tax Benefits; Insurance Proceeds . . . . . . . . . 42
ARTICLE XV Termination . . . . . . . . . . . . . . . . . . . . 42
Section 15.1 Termination . . . . . . . . . . . . . . . . . . . . 42
Section 15.2 Effect of Termination . . . . . . . . . . . . . . . 42
ARTICLE XVI Nondisclosure of Confidential Information . . . . . 42
Section 16.1 Non-Disclosure Covenant . . . . . . . . . . . . . . 42
Section 16.2 Damages . . . . . . . . . . . . . . . . . . . . . . 43
Section 16.3 Survival . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XVII Miscellaneous . . . . . . . . . . . . . . . . . . . 43
Section 17.1 Amendment; Waivers . . . . . . . . . . . . . . . . 43
Section 17.2 Assignment . . . . . . . . . . . . . . . . . . . . 43
Section 17.3 Parties in Interest; No Third Party
Beneficiaries . . . . . . . . . . . . . . . . . . . 43
Section 17.4 Entire Agreement . . . . . . . . . . . . . . . . . 43
Section 17.5 Severability . . . . . . . . . . . . . . . . . . . 44
Section 17.6 Survival of Representations, Warranties
and Covenants . . . . . . . . . . . . . . . . . . . 44
Section 17.7 Governing Law . . . . . . . . . . . . . . . . . . . 44
Section 17.8 Captions . . . . . . . . . . . . . . . . . . . . . 44
Section 17.9 Gender and Number . . . . . . . . . . . . . . . . . 44
Section 17.10 Intentionally omitted. . . . . . . . . . . . . . . 44
Section 17.11 Confidentiality; Publicity and Disclosures . . . . 44
Section 17.12 Notice . . . . . . . . . . . . . . . . . . . . . . 45
Section 17.13 No Waiver; Remedies . . . . . . . . . . . . . . . . 45
Section 17.14 Counterparts . . . . . . . . . . . . . . . . . . . 45
Section 17.15 Defined Terms . . . . . . . . . . . . . . . . . . . 45
EXHIBITS
Exhibit A - List of Target Companies . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Merger Consideration . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Stockholder Representation Letter . . . . . . . . . . . . . . . . C-1
Exhibit D - Indemnification Agreement . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E - Physician Employment Agreement . . . . . . . . . . . . . . . . . E-1
Exhibit F - Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . F-1
Exhibit G - Stockholder Release . . . . . . . . . . . . . . . . . . . . . . . G-1
Exhibit 1.1 - List of Stockholders
Exhibit 2.6 - List of Directors
Exhibit 2.7 - List of Officers
Exhibit 10.3 - Legal Opinion (Company Counsel)
Exhibit 11.3 - Legal Opinion (APP Counsel)
Exhibit 11.11 - Tax Opinion
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This Agreement and Plan of Reorganization and Merger (this
"Agreement"), dated as of June __, 1997, is by and among AMERICAN PHYSICIAN
PARTNERS, INC., a Delaware corporation ("APP"), [AMERICAN PHYSICIAN PARTNERS
SUBSIDIARY, INC.], a California corporation and a wholly-owned subsidiary of
APP ("APP Sub"), and PACIFIC IMAGING CONSULTANTS, A MEDICAL GROUP, INC., a
California professional medical corporation (the "Company").
RECITALS
A. The Company owns and operates a professional medical practice
specializing in radiology. All of the shares of the common stock of the
Company (the "Company Common Stock") are owned beneficially and of record by
the Stockholders.
B. APP Sub is engaged in the business of owning, operating and
acquiring the assets of, and managing the non-medical aspects of, radiology
practices and diagnostic imaging centers.
C. Pursuant to this Agreement, APP, APP Sub, and the Company
intend that APP Sub be merged with and into the Company, and that the Company
be the sole surviving corporation (sometimes referred to hereinafter as the
"Surviving Corporation"), and APP Sub be the disappearing corporation
(sometimes referred to hereinafter as the "Disappearing Corporation").
D. APP, APP Sub and the Company have each determined to engage in
the transactions contemplated hereby, pursuant to which (i) APP Sub will merge
with and into the Company upon the terms and conditions set forth herein and in
accordance with the laws of the State of California, (ii) the outstanding
shares of the Company Common Stock shall be converted at such time into cash
and shares of common stock, par value $.0001 per share, of APP (the "APP Common
Stock") as set forth herein, and (iii) the Company shall become a wholly-owned
subsidiary of APP.
E. Prior to the Merger, the Company intends to transfer certain
of its assets most of which relate solely to the practice of medicine to a
newly formed professional medical corporation ("NewCo") in exchange for all of
the capital stock of NewCo and to thereafter distribute such NewCo stock to the
Stockholders (the "Spin-Off Transaction").
F. APP and APP Subsidiaries have entered into, or intend to enter
into, an Agreement and Plan of Reorganization and Merger or other acquisition
agreements (collectively, the "Other Agreements") similar to this Agreement
with interest holders (together with the Stockholders, the "Target Interest
Holders") of each of the entities listed on Exhibit A (together with the
Company, the "Target Companies").
G. The parties intend for the transaction contemplated by this
Agreement along with the transactions contemplated by the Other Agreements to
qualify as a tax-free exchange within the meaning of Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
promulgated thereunder.
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AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
"Affiliate" with respect to any person shall mean a person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"APP" shall have the meaning set forth in the preamble to this
Agreement.
"APP Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
"APP Group" shall mean APP, APP Sub, NewCo and each of their
Affiliates.
"APP Sub" shall have the meaning set forth in the preamble to this
Agreement.
"APP Subsidiaries" shall have the meaning set forth in Section 4.5.
"Best knowledge" or "to the knowledge of" and similar phrases shall
mean (i) in the case of a natural person, the particular fact was known, or not
known, as the context requires, to such person after reasonable investigation
and inquiry by such person, and (ii) in the case of an entity, the particular
fact was known, or not known, as the context requires, to any of the
Stockholders listed on Exhibit 1.1, director or executive officer of such
entity after reasonable investigation and inquiry by the executive officers of
such entity; provided, however, that to the extent any of the representations,
warranties and statements of the Company made specifically in Section 3.21 is
expressly qualified to the knowledge or best knowledge of the Company, it shall
mean the knowledge of any of the Stockholders listed on Exhibit 1.1, director
or executive officer of the Company actually possesses without the necessity of
any special inquiry as to the matters which are the subject thereof.
"Claim Notice" shall have the meaning set forth in Section 14.3(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"Code" shall have the meaning set forth in the recitals to this
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Company Audited Financial Statements" shall mean the audited
consolidated balance sheet of the Company as of December 31, 1996 and the
related statements of income, stockholders' equity and statements of cash flows
of the Company and its Subsidiaries for the year ended December 31, 1996.
"Company Common Stock" shall have the meaning set forth in the
recitals to this Agreement.
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"Company Current Balance Sheet" shall mean the unaudited consolidated
balance sheet of Company and its Subsidiaries as of March 31, 1997.
"Company Current Financial Statements" shall mean the Company Current
Balance Sheet and the related statements of income, stockholders' equity and
statements of cash flows of Company and the Company Subsidiaries for the _____
(__) month period then ended.
"Company Financial Statements" shall mean collectively the Company
Audited Financial Statements and the Company Current Financial Statements.
"Company Right" shall mean all arrangements, calls, commitments,
agreements, options, rights to subscribe to, scrips, understandings, warrants,
or other binding obligations of any character whatsoever relating to or
securities or rights convertible into or exchangeable for, shares of Company
Common Stock, or by which the Company is or may be bound to issue additional
shares of Company Common Stock or other Company Rights.
"Company Subsidiaries" shall have the meaning set forth in Section
3.7.
"Confidential Information" shall mean all trade secrets and other
confidential and/or proprietary information of the particular person,
including, but not limited to, information derived from reports, processes,
data, know-how, software programs, improvements, inventions, strategies,
compensation structures, reports, investigations, research, work in progress,
codes, marketing and sales programs and plans, financial projections, cost
summaries, formulae, contract analyses, financial information, forecasts,
confidential filings with any state or federal agency, and all other
confidential concepts, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of such person by its
employees, officers, directors, agents, representatives, or consultants.
"Controlled Group" shall have the meaning set forth in Section
3.20(g).
"Damages" shall have the meaning set forth in Section 14.1.
"Disappearing Corporation" shall have the meaning set forth in the
recitals to this Agreement.
"Disclosure Schedules" shall mean the schedules attached hereto as of
the date hereof or otherwise delivered by any party hereto pursuant to the
terms hereof, as such may be amended or supplemented from time to time pursuant
to the provisions hereof.
"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date that the Registration Statement
is declared effective by the SEC.
"Effective Time" shall have the meaning set forth in Section 2.3.
"Election Period" shall have the meaning set forth in Section 14.3(a).
"Employee Benefit Plans" shall have the meaning set forth in Section
3.20(a).
"Encumbrance" shall mean any charge, claim, community property
interest, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
"Environmental Laws" shall have the meaning set forth in Section
3.21(e).
"ERISA" shall have the meaning set forth in Section 3.18.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Form S-1" shall mean the Form S-1 Registration Statement filed with
the SEC by APP pursuant to the Securities Act in connection with its Initial
Public Offering.
"Form S-4" shall mean the Form S-4 Registration Statement filed with
the SEC by APP pursuant to the Securities Act in connection with the offering
of APP Common Stock as consideration under the Merger and other mergers
contemplated by the Other Agreements.
"Founding Company" shall mean a Target Company that is either a party
to this Agreement or an Other Agreement that has not been terminated prior to
Closing.
"FTC" shall mean the United States Federal Trade Commission.
"Indemnified Party" shall have the meaning set forth in Section
14.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
14.3(a).
"Indemnity Notice" shall have the meaning set forth in Section
14.3(d).
"Initial Public Offering" shall mean the initial underwritten public
offering of APP Common Stock contemplated by the Form S-1.
"Initial Public Offering Price" shall mean the price per share of APP
Common Stock received by APP before underwriting commissions, discounts or
other fees in connection with its Initial Public Offering.
"Insurance Policies" shall have the meaning set forth in Section 3.23.
"IRS" shall mean the Internal Revenue Service.
"Lease Agreements" shall have the meaning set forth in Section 3.14.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations, condition (financial or otherwise),
liabilities or results of operations of the Person or Persons being referred
to, taken as a whole (including its consolidated subsidiaries, if any), in
consideration of all relevant facts and circumstances.
"Medical Waste" shall mean (i) pathological waste, (ii) blood, (iii)
sharps, (iv) wastes from surgery or autopsy, (v) dialysis waste, including
contaminated disposable equipment and supplies, (vi) cultures and stocks of
infectious agents and associated biological agents, (vii) contaminated animals,
(viii) isolation wastes, (ix) contaminated equipment, (x) laboratory waste,
(xi) any substance, pollutant, material, or contaminant listed or regulated
under any Medical Waste Law, and (xii) other biological waste and discarded
materials contaminated with or exposed to blood, excretion, or secretions from
human beings or animals.
"Medical Waste Laws" shall mean the following, including regulations
promulgated and orders issued thereunder, as in effect on the date hereof and
the Closing Date: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA Sections 2501 et seq., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA Sections 1401 et
seq., (iv) The Occupational Safety and Health Act, 29 USCA Sections 651 et seq.,
(v) the United States Department of Health and Human Services, National
Institute for Occupational Safety and Health, Infectious Waste Disposal
Guidelines, Publication No. 88-119, and (vi) any other federal, state, regional,
county, municipal, or other local laws, regulations, and ordinances insofar as
they are applicable to any of the Company's assets or operations and purport to
regulate Medical Waste or impose requirements related to Medical Waste.
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"Merger" shall have the meaning set forth in Section 2.1.
"Merger Consideration" shall have the meaning set forth in Section
2.8(a).
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
Sections 6992, et seq.
"NewCo" shall have the meaning set forth in the recitals to this
Agreement.
"NewCo Common Stock" shall mean the common stock[, $_____ par value
per share,] of NewCo.
"New Qualified Plan" shall have the meaning set forth in Section 8.5.
"Ordinary course of business" shall mean the usual and customary way
in which the particular entity has conducted its business in the past.
"Other Agreements" shall have the meaning set forth in the recitals to
this Agreement.
"Payors" shall mean any and all private or governmental Persons,
obligated by contract or by law to render payment to the Company or NewCo in
consideration of the performance of professional medical or technical services
including, but not limited to, Medicare and Medicaid Programs (as defined in
Section 3.27(a)), insurance companies, health maintenance organizations,
preferred provider organizations, independent practice associations, hospitals,
hospital systems, integrated delivery systems and CHAMPUS.
"Person" shall mean any natural person, corporation, partnership,
joint venture, limited liability company, association, group, organization or
other entity.
"Physician Employee" shall mean each radiologist employed by the
Company or NewCo, as the case may be.
"Physician Employment Agreements" shall have the meaning set forth in
Section 10.14.
"Registration Statements" shall mean the Form S-1 and the Form S-4.
"Regulated Activity" shall have the meaning set forth in Section
3.21(e).
"Related Acquisitions" shall mean, collectively, the Merger and the
mergers and acquisitions of each Founding Company and its related entities and
assets contemplated by the Other Agreements.
"Reorganization" shall have the meaning set forth in Section 13.2.
"Schedules" shall mean the schedules attached hereto as of the date
hereof or otherwise delivered by any party hereto pursuant to the terms hereof,
as such may be amended or supplemented from time to time pursuant to the
provisions hereof.
"Security Agreement" shall have the meaning set forth in the Service
Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Service Agreement" shall have the meaning set forth in Section
12.1(j).
"Spin-Off Transaction" shall have the meaning set forth in the
recitals to this Agreement.
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"Stockholders" shall mean the stockholders of the Company immediately
prior to the Effective Time.
"Stockholder Release" shall have the meaning set forth in Section
12.1(m).
"Surviving Corporation" shall have the meaning set forth in the
recitals to this Agreement.
"Target Companies" shall have the meaning set forth in the recitals to
this Agreement.
"Target Interest Holders" shall have the meaning set forth in the
recitals to this Agreement.
"Tax Returns" shall include all federal, state, local or foreign
income, excise, corporate, franchise, property, sales, use, payroll,
withholding, provider, environmental, duties, value added and other tax returns
(including information returns).
"Third Party Claim" shall have the meaning set forth in Section
14.3(a).
Section 1.2 Rules Of Interpretation. The definitions set forth
in Section 1.1 shall be equally applicable to both the singular and the plural
forms of the terms therein defined and shall cover both genders.
Unless otherwise indicated, "herein," "hereby," "hereunder," "hereof,"
"hereinabove," "hereinafter" and other equivalent words refer to this Agreement
and not solely to the particular Article, Section or subdivision hereof in
which such word is used.
Unless otherwise indicated, reference herein to an Article number
(e.g., Article IV) or a Section number (e.g., Section 6.2) shall be construed
to be a reference to the designated Article number or Section number of this
Agreement.
ARTICLE II
The Merger
Section 2.1 The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, APP Sub shall be merged with and into
the Company in accordance with this Agreement and the separate corporate
existence of the Disappearing Corporation shall thereupon cease (the "Merger").
The Company shall be the Surviving Corporation in the Merger and shall continue
to be governed by the laws of the State of California, and the separate
corporate existence of the Company with all its rights, privileges, powers,
immunities, purposes and franchises shall continue unaffected by the Merger,
except as set forth herein. The Surviving Corporation may, at any time
concurrent with and/or after the Effective Time, take any action in the name of
or on behalf of the Disappearing Corporation in order to effectuate the
transactions contemplated by this Agreement.
Section 2.2 The Closing. The closing (the "Closing") shall take
place at 10:00 a.m., local time, at the offices of APP located at 2301
NationsBank Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ on the day on which the
transactions contemplated by the Initial Public Offering are consummated. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
Section 2.3 Effective Time. If all the conditions to the Merger
set forth in Articles XI and XII shall have been fulfilled or waived in
accordance herewith and this Agreement shall not have been terminated in
accordance with Article XVI, the parties hereto shall cause to be properly
executed and filed on the Closing Date, Certificates of Merger meeting the
requirements of Section 1103 of the California General Corporation Law. The
Merger shall become effective at the time of the filing of such documents with
the Secretary of State of the State of California, in accordance with such law
or at such later time which the parties hereto have theretofore agreed upon and
designated in such filings as the effective time of the Merger (the "Effective
Time").
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Section 2.4 Certificate of Incorporation of Surviving
Corporation. Effective at the Effective Time, the Article of Incorporation of
the Company in effect immediately prior to the Effective Time shall be amended
and restated in a manner satisfactory to APP. The Article of Incorporation,
as so amended and restated, shall be the Article of Incorporation of the
Surviving Corporation.
Section 2.5 Bylaws of Surviving Corporation. The Bylaws of APP
Sub in effect immediately prior to the Effective Time shall be the Bylaws of
the Surviving Corporation without any amendment or modification as a result of
the Merger, until duly amended in accordance with applicable laws.
Section 2.6 Directors of the Surviving Corporation. The persons
who are directors of the Company immediately prior to the Effective Time shall
submit a written resignation in form and substance acceptable to APP, effective
as of the Effective Time. The directors of the Surviving Corporation following
the Effective Time shall be set forth in Exhibit 2.6.
Section 2.7 Officers of the Surviving Corporation. The persons
who are officers of the Company immediately prior to the Effective Time shall
submit a written resignation in form and substance acceptable to APP, effective
as of the Effective Time. The officers of the Surviving Corporation following
the Effective Time shall be set forth in Exhibit 2.7.
Section 2.8 Conversion of Company Common Stock. The manner of
converting shares of Company Common Stock in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company Common Stock issued and
outstanding at the Effective Time (excluding shares held by APP pursuant to
Section 2.8(d) hereof) shall cease to be outstanding and shall be cancelled and
retired and shall cease to exist, and each holder of a certificate or
certificates representing any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive, without interest, (i) cash and (ii)
validly issued, fully paid and nonassessable shares of APP Common Stock, all as
determined in accordance with the provisions of Exhibit B attached hereto (the
"Merger Consideration").
(b) Each share of Company Common Stock held in the
Company's treasury, if any, at the Effective Time, by virtue of the Merger,
shall be cancelled and retired without payment of any consideration therefor
and shall cease to exist.
(c) Each Company Right outstanding at the Effective Time
shall be terminated and cancelled, without payment of any consideration
therefor, and shall cease to exist.
(d) Each share of common stock of APP Sub issued and
outstanding at the Effective Time shall be converted to one share of Company
Common Stock.
(e) At the Effective Time, each share of APP Common Stock
issued and outstanding as of the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, continue unchanged
and remain outstanding as a validly issued, fully paid and nonassessable share
of APP Common Stock.
Section 2.9 Exchange of Certificates Representing Shares of the
Company Common Stock.
(a) At or after the Effective Time and at the Closing (i)
the Stockholders, as holders of a certificate or certificates representing
shares of the Company's Common Stock, shall upon surrender of each certificate
or certificates (or completion of appropriate affidavit of lost certificate and
indemnity) receive such allocation of Merger Consideration as determined in
accordance with the provisions of Exhibit B attached hereto; and (ii) until
each certificate or certificates representing Company Common Stock have been
surrendered by the Stockholders, the certificates for Company Common Stock
shall, for all purposes, represent solely the right to receive Merger
Consideration as determined in accordance with the provisions of Exhibit B
attached hereto and Section 2.10 hereof, if applicable. At the Effective Time,
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each share of Company Common Stock converted into Merger Consideration shall by
virtue of the Merger and without any action on the part of the holders thereof,
cease to be outstanding, be cancelled and returned and all shares of APP Common
Stock issuable to the Stockholders in the Merger as part of the Merger
Consideration shall be deemed for all purposes to have been issued by APP at
the Effective Time.
(b) Each Stockholder shall deliver to APP at the Closing
the certificates representing Company Common Stock owned by him, her or it,
duly endorsed in blank by the Stockholder, or accompanied by duly executed
stock powers in blank, and with all necessary transfer tax and other revenue
stamps, acquired at the Stockholder's expense, affixed and cancelled. Each
Stockholder agrees to cure any deficiencies with respect to the endorsement of
the certificates or other documents of conveyance with respect to such Company
Common Stock or with respect to the stock powers accompanying any Company
Common Stock. Upon such delivery (or completion of appropriate affidavit of
lost certificate and indemnity), each Stockholder shall receive in exchange
therefor the Merger Consideration pursuant to Exhibit B and Section 2.10
hereof, if applicable.
Section 2.10 Fractional Shares. Notwithstanding any other
provision herein, no fractional shares of APP Common Stock will be issued and
any Stockholder otherwise entitled to receive a fractional share of APP Common
Stock as part of the Merger Consideration hereunder shall receive a cash
payment in lieu thereof reflecting such Stockholder's proportionate interest in
a share of APP Common Stock multiplied by the Initial Public Offering Price.
ARTICLE III
Representations and Warranties of the Company
As an inducement to APP and APP Sub to enter into this Agreement and
to consummate the Merger and except as set forth in the Disclosure Schedules
attached hereto and incorporated herein by this reference, the Company
represents and warrants to APP and APP Sub both as of the date hereof and as of
the Effective Time as follows:
Section 3.1 Organization and Good Standing; Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of its state of incorporation, with all requisite corporate
power and authority to own, operate and lease its assets and properties and to
carry on its business as currently conducted. The Company and each Company
Subsidiary is in good standing in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where such failure to be so qualified or in
good standing would not have a Material Adverse Effect on the Company. Copies
of the articles or certificates of incorporation and all amendments thereto of
the Company and each Company Subsidiary and the bylaws of the Company and each
Company Subsidiary, as amended, and copies of the corporate minutes of the
Company, all of which have been or will be made available to APP for review,
are true and complete as in effect on the date of this Agreement and, in the
case of the corporate minutes, accurately reflect all material proceedings of
the Stockholders and directors of the Company (and all committees thereof).
The stock record books of the Company, which have been or will be made
available to APP for review, contain true, complete and accurate records of the
stock ownership of record of the Company and the transfer record of the shares
of its capital stock.
Section 3.2 Authorization and Validity. The Company has all
requisite corporate power to enter into this Agreement and all other agreements
entered into in connection with the transactions contemplated hereby and to
consummate the transactions contemplated hereby. The execution, delivery and,
subject to approval of this Agreement and the Merger by the Stockholders,
performance by the Company of this Agreement and the agreements contemplated
herein, and the consummation by the Company of the transactions contemplated
hereby and thereby are within the Company's respective corporate powers and
have been duly authorized by all necessary action on the part of the Company's
Board of Directors. Subject to the approval of this Agreement and the Merger
by the Stockholders, this Agreement has been duly executed by the Company, and
this Agreement and all other agreements and
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obligations entered into and undertaken in connection with the transactions
contemplated hereby to which the Company is a party constitute, or upon
execution will constitute, valid and binding agreements of the Company,
enforceable against it in accordance with their respective terms, except as
enforceability may be limited by bankruptcy or other laws affecting the
enforcement of creditors' rights generally, or by general equity principles, or
by public policy.
Section 3.3 Governmental Authorization. Other than complying
with the provisions of the applicable state corporate laws regarding the
approval of the Merger and the filing of the Certificates of Merger (as
contemplated by Section 2.3) and any other required documents related to the
Merger, and other than consents, filings or notifications required to be made
or obtained solely by APP or APP Sub (including, without limitation, in
connection with the Initial Public Offering, Form S-4 or any ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
filing to be made by APP, if any), the execution, delivery and performance by
the Company of this Agreement and the agreements provided for herein, and the
consummation of the transactions contemplated hereby and thereby by the Company
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority.
Section 3.4 Capitalization. The authorized capital stock of the
Company consists of [_____] shares of the Company Common Stock, of which 11,000
shares are issued and outstanding. The Stockholders collectively are and will
be immediately prior to the Effective Time the record and beneficial owners of
all the issued and outstanding Company Common Stock, free and clear of all
Encumbrances, in the respective amounts set forth in the Disclosure Schedules.
Each outstanding share of Company Common Stock has been legally and validly
issued and is fully paid and nonassessable, and was issued pursuant to a valid
exemption from registration under (i) the Securities Act of 1933, as amended,
and (ii) all applicable state securities laws. No shares of Company Common
Stock are owned by the Company in treasury. No shares of Company Common Stock
have been issued or disposed of in violation of any preemptive rights, rights
of first refusal or similar rights of any of the Stockholders. Other than
Company Common Stock, the Company has no securities, bonds, debentures, notes
or other obligations the holders of which have the right to vote (or are
convertible into or exercisable for securities having the right to vote) with
the Stockholders on any matter.
Section 3.5 Transactions in Capital Stock. There exist no
Company Rights. The Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of its equity securities or any
interests therein or to pay any dividend or make any distribution in respect
thereof. Neither the equity structure of the Company nor the relative
ownership of shares among any of its Stockholders has been altered or changed
in contemplation of the Merger within the two (2) years preceding the date of
this Agreement.
Section 3.6 Continuity of Business Enterprise. There has not
been any sale, distribution or spin-off of significant assets of the Company or
any of its Affiliates other than in the ordinary course of business within the
(2) two years preceding the date of this Agreement.
Section 3.7 Subsidiaries and Investments. The Company does not
own, directly or indirectly, any capital stock or other equity, ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity (each a "Company Subsidiary").
Section 3.8 Absence of Conflicting Agreements or Required
Consents. Subject to approval of this Agreement and the Merger by the
Stockholders of the Company, the execution, delivery and performance by the
Company of this Agreement and any other documents contemplated hereby (with or
without the giving of notice, the lapse of time, or both): (i) do not require
the consent of any governmental or regulatory body or authority or any other
third party except for such consents, for which the failure to obtain would not
result in a Material Adverse Effect on the Company; (ii) will not conflict with
or result in a violation of any provision of the Company's articles or
certificate of incorporation or bylaws, (iii) will not conflict with, result in
a violation of, or constitute a default under any law, rule, ordinance,
regulation or any ruling, decree, determination, award, judgment, order or
injunction of any court or governmental instrumentality which is applicable to
the Company or by which the Company or its properties are subject or bound;
(iv) will not conflict with, constitute grounds for termination of, result
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in a breach of, constitute a default under, require any notice under, or
accelerate or modify, or permit any person to accelerate or modify, any
performance required by the terms of any agreement, instrument, license or
permit, to which the Company is a party or by which the Company or any of its
properties are subject or bound except for such conflict, termination, breach
or default, the occurrence of which would not result in a Material Adverse
Effect on the Company; and (v) except as contemplated by this Agreement, will
not create any Encumbrance or restriction upon the Company Common Stock or any
of the assets or properties of the Company.
Section 3.9 Intentionally omitted.
Section 3.10 Absence of Changes. Except as permitted or
contemplated by this Agreement, since March 31, 1997, the Company has conducted
its business only in the ordinary course and has not:
(a) suffered any change or changes in its working
capital, condition (financial or otherwise), assets, liabilities, reserves,
business or operations (whether or not covered by insurance) that individually
or in the aggregate has had or could reasonably be expected to have a Material
Adverse Effect on the Company;
(b) paid, discharged or satisfied any material liability,
other than the payment, discharge or satisfaction of liabilities in the
ordinary course of business;
(c) written off as uncollectible any receivable, except
for write-offs in the ordinary course of business;
(d) except in the ordinary course of business and
consistent with past practice, cancelled or compromised any debts or waived or
permitted to lapse any claims or rights or sold, transferred or otherwise
disposed of any of its properties or assets;
(e) entered into any commitment or transaction not in the
ordinary course of business that is material to the Company, taken as a whole,
or made any capital expenditure or commitment in excess of $25,000;
(f) made any change in any method of accounting or
accounting practice, credit practices, collection policies, or payment
policies;
(g) except in the ordinary course of business consistent
with past practice, incurred any liabilities or obligations (absolute, accrued
or contingent) in excess of $10,000 individually or $25,000 in the aggregate;
(h) mortgaged, pledged, subjected or agreed to subject,
any of its assets, tangible or intangible, to any claim or Encumbrance, except
for liens for current personal property taxes not yet due and payable,
mechanics, landlords, materialmen, and other statutory liens, purchase money
security interests, sale-leaseback interests granted and all other Encumbrances
granted in similar transactions;
(i) sold, redeemed, acquired or otherwise transferred any
equity or other interest in itself;
(j) increased any salaries, wages or any employee
benefits for any employee of the Company, except in the ordinary course of
business and consistent with past practice;
(k) hired, committed to hire or terminated any employee
except in the ordinary course of business;
(l) declared, set aside or made any payments, dividends
or other distributions to any Stockholder or any other holder of capital stock
of the Company (except as expressly contemplated herein); or
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(m) agreed, whether in writing or otherwise, to take any
action described in this Section 3.10.
Section 3.11 No Undisclosed Liabilities. To the best of its
knowledge, the Company does not have any liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, asserted or
unasserted except for liabilities or obligations reflected or reserved against
in the Company's Current Balance Sheet.
Section 3.12 Litigation and Claims. There are no claims,
lawsuits, actions, arbitrations, administrative or other proceedings,
governmental investigations or inquiries pending or, to the knowledge of the
Company, threatened against, or affecting the Company, any Company Subsidiary,
any Stockholder, the Physician Employees or any other licensed professional or
other individual affiliated with the Company affecting or that would reasonably
be likely to affect the Company Common Stock or the operations, business
condition, (financial or otherwise), or results of operations of the Company
which (i) if successful, may, individually or in the aggregate, have a Material
Adverse Effect on the Company or (ii) could adversely affect the ability of the
Company or any Company Subsidiary to effect the transactions contemplated
hereby, and to the knowledge of the Company there is no basis for any such
action or any state of facts or occurrence of any event which would reasonably
be likely to give rise to the foregoing. There are no unsatisfied judgments
against the Company or any Company Subsidiary or any licensed professional or
other individual affiliated with the Company or any Company Subsidiary relating
to services provided on behalf of the Company or any Company Subsidiary or any
consent decrees to which any of the foregoing is subject. Each of the matters,
if any, set forth in this Section 3.12 is fully covered by policies of
insurance of the Company or any Company Subsidiary as in effect on the date
hereof.
Section 3.13 No Violation of Law. Neither the Company nor any
Company Subsidiary has been, nor shall be as of the Effective Time (by virtue
of any action, omission to act, contract to which it is a party or any
occurrence or state of facts whatsoever), in violation of any applicable local,
state or federal law, ordinance, regulation, order, injunction or decree, or
any other requirement of any governmental body, agency, authority or court
binding on it, or relating to its properties, assets or business or its
advertising, sales or pricing practices, except for violations which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company.
Section 3.14 Lease Agreements. The Disclosure Schedules contain a
true, accurate and complete list of all the lease agreements and license
agreements to which the Company or any Company Subsidiary is a party and
pursuant to which the Company or any Company Subsidiary leases (whether as
lessor or lessee) or licenses (whether as licensor or licensee) any real or
personal property related to the operation of its business and which requires
payments in excess of $12,000 per year (the "Lease Agreements"). The Company
has delivered to APP true and complete copies of all of the Lease Agreements.
Each Lease Agreement is valid, effective and in full force in accordance with
its terms, and there is not under any such lease (i) any existing or claimed
material default by the Company or any Company Subsidiary (as applicable) or
event of material default or event which with notice or lapse of time, or both,
would constitute a material default by the Company or any Company Subsidiary
(as applicable) and, individually or in the aggregate, may reasonably result in
a Material Adverse Effect on the Company, or, (ii) to the knowledge of the
Company, any existing material default by any other party under any of the
Lease Agreements or any event of material default or event which with notice or
lapse of time, or both, would constitute a material default by any such party.
To the knowledge of the Company, there is no pending or threatened reassessment
of any property covered by the Lease Agreements. The Company or any Company
Subsidiary will use reasonable good faith efforts to obtain, prior to the
Effective Time, the consent of each landlord or lessor whose consent is
required to the assignment of the Lease Agreements and will use reasonable good
faith efforts to deliver to APP or APP Sub in writing such consents as are
necessary to effect a valid and binding transfer or assignment of the Company's
or any Company Subsidiary's rights thereunder. The Company has a good, clear,
valid and enforceable leasehold interest under each of the Lease Agreements.
The Lease Agreements comply with the exceptions to ownership interests and
compensation arrangements set out in 42 U.S.C. Section 1395nn, 42 C.F.R.
Section 1001.952, and any similar applicable state law safe harbor or other
exemption provisions.
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Section 3.15 Real and Personal Property.
(a) Neither the Company nor any Company Subsidiary owns
any interest (other than the Lease Agreements) in real property.
(b) The Company and any Company Subsidiary (i) has good
title to all of its properties and assets (real, personal and mixed, tangible
and intangible) and any rights or interests therein which it purports to own
including, without limitation, all the property and assets reflected in the
Company Current Financial Statements; and (ii) owns such rights, interests,
assets and property free and clear of all Encumbrances, title defects or
objections (except for taxes not yet due and payable). The personal property
presently used in connection with the operation of the business of the Company
and the Company Subsidiaries constitutes the necessary personal property assets
to continue operation of the Company and any Company Subsidiary.
Section 3.16 Indebtedness for Borrowed Money. Except for trade
payables incurred in the ordinary course of business, the Company does not have
any direct or indirect indebtedness for borrowed money, including indebtedness
by way of lease-purchase arrangements or guarantees, and is not obligated in
any manner (actual or contingent) to assume or guarantee any indebtedness or
obligation of another Person.
Section 3.17 Contracts and Commitments.
(a) The Disclosure Schedules contain a true, accurate and
complete list, and the Company has delivered to APP true and complete copies,
of each contract, agreement and other instrument requiring the Company to make
future payments of $10,000 in any fiscal year or $25,000 in the aggregate
(other than insurance contracts identified in Section 3.23 or Lease Agreements
identified in Section 3.14) to which the Company is a party or by which it or
any of its properties or assets are bound including, without limitation, (i)
prior to the Spin-Off Transaction, all agreements between the Company, on the
one hand, and any Payor, government entity, provider, hospital, health
maintenance organization, other managed care organization or other third-party
provider, on the other hand, then in effect relating to the provision of
medical, diagnostic imaging or consulting services, treatments, patient
referrals or other similar activities, (ii) all indentures, mortgages, notes,
loan or credit agreements and other agreements and obligations relating to the
borrowing of money or to the direct or indirect guarantee or assumption of
obligations of third parties requiring the Company to make, or setting forth
conditions under which the Company would be required to make, aggregate future
payments in excess of $10,000 in any fiscal year or $25,000 in the aggregate,
(iii) all agreements for capital improvements or acquisitions involving an
amount of $75,000 in any fiscal year or $75,000 in the aggregate, (iv) all
agreements containing a covenant limiting the freedom of the Company (or any
provider employee of the Company) to compete in any line of business with any
person or entity or in any geographic area or (v) all written contracts and
commitments providing for future payments by the Company in excess of $10,000
in any fiscal year or $25,000 in the aggregate and that are not cancelable by
providing notice of sixty (60) days or less. All such contracts, agreements or
other instruments are in full force and effect, there has been no threatened
cancellation thereof, there are no outstanding disputes thereunder, each is
with unrelated third parties and was entered into on an arms-length basis and,
assuming the receipt of the appropriate consents, all will continue to be
binding in accordance with their terms after consummation of the transaction
contemplated herein; there are no contracts, agreements or other instruments to
which the Company is a party or is bound (other than physician employment
contracts and insurance policies) which could either singularly or in the
aggregate have a Material Adverse Effect on the value to APP or APP Sub of the
assets and properties to be acquired by APP or APP Sub from the Company, or
which could inhibit or prevent the Company from transferring to or vesting in
APP or APP Sub good and sufficient title to the assets and properties to be
acquired by APP or APP Sub and the Surviving Corporation except where the
failure to transfer would not have a Material Adverse Effect on APP or APP Sub.
In every instance where consent is necessary, the Company shall, on or before
the Closing Date, use reasonable good faith efforts to obtain and deliver to
APP or APP Sub in writing, effective as of the Closing Date, such consents as
are necessary to enable the Surviving Corporation to enjoy all of the rights
now enjoyed by the Company under such contracts. Any and all such consents
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shall be in a form reasonably acceptable to APP and shall contain an
acknowledgment by the consenting party that the Company has fully complied with
and is not in default under any provision of the particular contract or
agreement. Notwithstanding the foregoing, the Company shall not transfer to
APP or APP Sub any contracts or agreements relating to the provision of
professional medical services or other such agreements and contracts that APP
consents to in writing to be transferred to NewCo in the Spin-off Transaction.
No contract with a health care provider or Payor has been materially amended or
terminated within the last twelve (12) months.
(b) The Company (i) has not received notice of any plan
or intention of any other party to exercise any right to cancel or terminate
any contract, agreement or instrument required to be disclosed pursuant to
Section 3.17(a), and to the knowledge of the Company there are no fact(s) that
would justify the exercise of such a right; and (ii) does not currently
contemplate, or have reason to believe any other Person currently contemplates,
any amendment or change to any such contract, agreement or instrument.
Section 3.18 Employee Matters. The Company is not currently a
party to any employment contract (except for oral employment agreements which
are terminable at will), consulting or collective bargaining contracts,
deferred compensation, pension plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended, and all rules and
regulations from time to time promulgated thereunder ("ERISA")), profit
sharing, bonus, stock option, stock purchase or other nonqualified benefit or
compensation commitments, benefit plans, arrangements or plans (whether written
or oral), including all welfare plans (as defined in Section 3(1) of ERISA) of
or pertaining to the Company and any of its present or former employees, or any
predecessors in interest. As of April 30, 1997, the Company employed a
collective total of [___] part-time and [____] full-time employees. The
Disclosure Schedules list each employee of, or consultant to, the Company who
received combined salary, benefits (other than those offered generally to all
other employees) and bonuses for 1996 in excess of $50,000 or who is expected
to receive combined salary, benefits (other than those offered generally to all
other employees) and bonuses in 1997 in excess of $50,000. The Company is not
delinquent in payment to any of its employees or Physician Employees for wages,
salaries, bonuses or other direct compensation for any services performed for
it to the date hereof or amounts required to be reimbursed to such employees.
Upon termination of employment of any employee or Physician Employee, no
severance or other payments will become due and the Company has no policy, past
practice or plan of paying severance on termination of employment.
Section 3.19 Labor Relations.
(a) To the knowledge of the Company, the Company is in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages and hours,
occupational safety and health, and is not engaged in any unfair labor practice
within the meaning of Section 8 of the National Labor Relations Act;
(b) To the knowledge of the Company, there is no unfair
labor practice, charge or complaint or any other employment- related matter
against or involving the Company pending or threatened before the National
Labor Relations Board or any federal, state or local agency, authority or
court;
(c) To the knowledge of the Company, there are no
charges, investigations, administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin, the making of workers' compensation claims, sexual
preference, handicap or veteran status) pending or threatened before the Equal
Employment Opportunity Commission or any federal, state or local agency or
court against the Company. There have been no governmental audits of the equal
employment opportunity practices of the Company and, to the knowledge of the
Company, no basis for any such audit exists which, if conducted would result in
a Material Adverse Effect on the Company;
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(d) The Company is in material compliance with the
Immigration Reform and Control Act of 1986, as amended, and all applicable
regulations promulgated thereunder; and
(e) To the knowledge of the Company, there are no
inquiries, investigations or monitoring activities of any licensed, registered,
or certified professional personnel employed or retained by, credentialed or
privileged, or otherwise affiliated with the Company pending or threatened by
any state professional board or agency charged with regulating the professional
activities of health care practitioners.
Section 3.20 Employee Benefit Plans.
(a) Identification. The Disclosure Schedules contain a
complete and accurate list of all employee benefit plans (within the meaning of
Section 3(3) of ERISA) sponsored by the Company or to which the Company
contributes on behalf of its employees and all employee benefit plans
previously sponsored or contributed to on behalf of its employees within the
three years preceding the date hereof (the "Employee Benefit Plans"). The
Company has provided to APP copies of all plan documents (as they may have been
amended to the date hereof), determination letters, pending determination
letter applications, trust instruments, insurance contracts or policies related
to an Employee Benefit Plan, administrative services contracts, annual reports,
actuarial valuations, summary plan descriptions, summaries of material
modifications, administrative forms and other documents that constitute a part
of or are incident to the administration of the Employee Benefit Plans. In
addition, the Company has provided or made available to APP a written
description of all existing practices engaged in by the Company that constitute
Employee Benefit Plans. Subject to the requirements of ERISA, each of the
Employee Benefit Plans can be terminated or amended at will by the Company
without any further liability or obligation on the part of such entity to make
further contributions or payments in connection therewith following such
termination. No unwritten amendment exists with respect to any Employee
Benefit Plan.
(b) Administration. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect.
(c) Examinations. The Company has not received any
notice that any Employee Benefit Plan is currently the subject of an audit,
investigation, enforcement action or other similar proceeding conducted by any
state or federal agency or authority.
(d) Prohibited Transactions. No prohibited transactions
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) have
occurred with respect to any Employee Benefit Plan. There has been no breach
of any duty under ERISA or applicable law (including, without limitation, any
health care contractor requirements or any other tax law requirements, or
conditions to favorable tax treatment, applicable to such plan), which would be
reasonably likely to result, directly or indirectly, (including through any
obligation of indemnification or contribution), in any taxes, penalties or
other liability to APP or any of its Affiliates.
(e) Claims and Litigation. No pending or, to the
Company's knowledge, threatened, claims, suits or other proceedings exist with
respect to any Employee Benefit Plan other than normal benefit claims filed by
participants or beneficiaries.
(f) Qualification. The Company has received a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) or
501(c)(9) of the Code and/or tax-exempt within the meaning of Section 501(a) of
the Code and, to the best knowledge of the Company and each Stockholder, has
been continually qualified under the applicable Section of the Code since the
effective date of such Employee Benefit Plan. No proceedings exist or, to the
Company's knowledge, have been threatened that could result in the revocation
of any such favorable determination letter or ruling.
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(g) Funding Status. No accumulated funding deficiency
(within the meaning of Section 412 of the Code), whether waived or unwaived,
exists with respect to any Employee Benefit Plan or any plan sponsored by any
member of a controlled group (within the meaning of Section 412(n)(6)(B) of the
Code) in which the Company is a member (a "Controlled Group"). With respect to
each Employee Benefit Plan subject to Title IV of ERISA, the assets of each
such plan are at least equal in value to the present value of accrued benefits
determined on an ongoing basis as of the date hereof. With respect to each
Employee Benefit Plan described in Section 501(c)(9) of the Code, the assets of
each such plan are at least equal in value to the present value of accrued
benefits, based upon the most recent actuarial valuation as of a date no more
than ninety (90) days prior to the date hereof. The Disclosure Schedules
contain a complete and accurate statement of all actuarial assumptions applied
to determine the present value of accrued benefits under all Employee Benefit
Plans subject to actuarial assumptions.
(h) Excise Taxes. Neither the Company nor any member of
a Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
(i) Multiemployer Plans. Neither the Company nor any
member of a Controlled Group is or ever has been obligated to contribute to a
multiemployer plan within the meaning of Section 3(37) of ERISA or any other
Employee Benefit Plan which has been subject to Title IV of ERISA or Section
412 of the Code.
(j) PBGC. No facts or circumstances are known to the
Company that would result in the imposition of liability against APP, APP Sub
or any of its Affiliates by the Pension Benefit Guaranty Corporation ("PBGC")
as a result of any act or omission by the Company or any member of a Controlled
Group. No reportable event (within the meaning of Section 4043 of ERISA) for
which the notice requirement has not been waived has occurred with respect to
any Employee Benefit Plan subject to the requirements of Title IV of ERISA.
(k) Retirees. The Company has no obligation or
commitment to provide medical, dental or life insurance benefits to or on
behalf of any of its employees who may retire or any of its former employees
who have retired except as may be required pursuant to the continuation of
coverage provisions of Section 4980B of the Code and the applicable provisions
of ERISA.
(l) Other Compensation Arrangements. Neither the Company
nor, to the Company's knowledge, any Stockholder or Physician Employee is a
party to any compensation or debt arrangement with any Person relating to the
provision of health care related services other than arrangements with the
Company.
Section 3.21 Environmental Matters.
(a) Neither the Company nor any Company Subsidiary has,
within the five (5) years preceding the date hereof, through the Effective
Time, received from any federal, state or local governmental body, agency,
authority or entity, or any other Person, any written notice, demand, citation,
summons, complaint or order or any notice of any penalty, lien or assessment,
and to the knowledge of the Company no investigation or review is pending by
any governmental entity, with respect to any (i) alleged violation by the
Company of any Environmental Law (as defined in subsection (e) below) (ii)
alleged failure by the Company to have any environmental permit, certificate,
license, approval, registration or authorization required pursuant to any
Environmental Law in connection with the conduct of its business; or (iii)
alleged illegal Regulated Activity (as defined in subsection (e) below) by the
Company.
(b) Neither the Company nor any Company Subsidiary has
used, transported, disposed of or arranged for the disposal of (as those terms
are defined in and construed under the Comprehensive Environmental Response,
Compensation and Liability Act) any Hazardous Substance (as defined herein)
that would be reasonably likely to give rise to any Environmental Liabilities
(as defined in subsection (e) below) for the Company under any applicable
Environmental Law that had, or would
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reasonably be likely to have, a Material Adverse Effect on the Company.
Neither the Company nor any Company Subsidiary has engaged in any activity or
failed to undertake any activity which action or failure to act has given, or
would reasonably be likely to give, rise to any Environmental Liabilities or
enforcement action by any federal, state or local regulatory agency or
authority, or has resulted, or would reasonably be likely to result, in any
fine or penalty imposed pursuant to any Environmental Law. The Disclosure
Schedules disclose any known presence of asbestos in or on the Company's or any
Company Subsidiary's owned or leased premises. To the knowledge of the
Company, there is no friable asbestos in or on the Company's or any Company
Subsidiary's owned or leased premises.
(c) To the knowledge of the Company, no soil or water in
or under any assets currently or formerly held for use or sale by the Company
or any Company Subsidiary is or has been contaminated by any Hazardous
Substance while such assets or premises were owned, leased, operated or
managed, directly or indirectly by the Company or any Company Subsidiary, where
such contamination had, or would be reasonably likely to have, a Material
Adverse Effect on the Company.
(d) There have been no environmental audits and other
similar reports which have been prepared by, for or, to the knowledge of the
Company, concerning the Company or any Company Subsidiary within the five (5)
years preceding the date hereof through the Effective Time with respect to any
real property now or previously owned or leased by the Company, any Company
Subsidiary or any of its predecessors, true and complete copies of which have
been provided to APP.
(e) For the purposes of this Section 3.21, the following
terms have the following meanings:
"Environmental Laws" shall mean any federal, state or local
laws, ordinances, codes, regulations, rules, policies and orders
(including without limitation, Medical Waste Laws) that are intended
to assure the protection of the environment, or that classify,
regulate, call for the remediation of, require reporting with respect
to, or list or define air, water, groundwater, solid waste, hazardous,
toxic, or radioactive substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees,
workers or other persons, including the public in each case as in
effect on the date hereof.
"Environmental Liabilities" shall mean all liabilities of the
Company or any Company Subsidiary, whether contingent or fixed, which
(i) have arisen, or would reasonably be likely to arise, under
Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the date hereof or the Effective Time.
"Hazardous Substances" shall mean any toxic or hazardous
substances, material or waste, including Medical Waste, or any
pollutant or contaminant, or infectious or radioactive substance or
material, including without limitation, those substances, materials
and wastes defined in or regulated under any Environmental Laws.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any
Hazardous Substances.
Section 3.22 Filing Reports. All returns, reports, plans and
filings of any kind or nature necessary to be filed by the Company with any
governmental agency or authority have been properly completed and timely filed
in compliance with all applicable requirements, except where failure to so file
would not have a Material Adverse Effect on the Company.
Section 3.23 Insurance Policies. The Disclosure Schedules list
and briefly describe the Company's policies of insurance to which the Company
or any Company Subsidiary is a party or under which the Company or any Company
Subsidiary, officer or director thereof is or has been covered at any time
during the last five (5) years preceding the date of this Agreement relating to
the business of the Company or any Company Subsidiary (the "Insurance
Policies"). All of the Insurance Policies are valid, outstanding and
enforceable policies, except as may be limited by applicable bankruptcy,
insolvency or
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similar laws affecting creditors' rights generally or the availability of
equitable remedies and all premiums with respect thereto which are due and
payable are currently paid. All Insurance Policies currently maintained by the
Company or any Company Subsidiary ("Current Policies") taken together, (i)
provide adequate insurance coverage for the assets, properties and operations
of the Company and its Affiliates for all risks normally insured against by a
Person carrying on a substantially similar business or businesses as the
Company and its Affiliates, (ii) are sufficient for compliance with legal and
contractual requirements to which the Company or any of its Affiliates is a
party or by which any of them may be bound, and (iii) shall be maintained in
force (including the payment of all premiums and compliance with their terms)
without interruption up to and including the Closing Date. True, complete and
correct copies of all Insurance Policies have been provided to APP. Neither
the Company nor any Company Subsidiary nor any officer or director thereof has
received any notice or other written communication from any issuer of any
Current Policy cancelling such policy, materially increasing any deductibles or
retained amounts thereunder, or materially increasing the annual or other
premiums payable thereunder and, to the knowledge of the Company, no such
cancellation or increase of deductibles, retainages or premiums is threatened.
There are no outstanding claims, settlements or premiums owed against any
Insurance Policy, and all required notices have been given and all known
potential or actual claims under any Insurance Policy have been presented in
due and timely fashion. Within the five (5) years preceding the Agreement,
neither the Company nor any Company Subsidiary has filed a written application
for any professional liability insurance coverage which has been denied by an
insurance agency or carrier. The Disclosure Schedules also set forth a list of
all claims under any Insurance Policy in excess of $10,000 per occurrence filed
by the Company or any Company Subsidiary during the immediately preceding
three-year period. Each Physician Employee has, at all times while a Physician
Employee, maintained or been covered by professional malpractice insurance in
such types and amounts as are customary for such a physician practicing the
same type of medicine in the same geographic area.
Section 3.24 Accounts Receivable; Payors.
(a) The Disclosure Schedules set forth a list and aging
of all accounts receivable of the Company as of March 31, 1997, which list is
complete, true and accurate in all material respects. All such accounts
receivable arose in the ordinary course of business and have not been
previously written off as bad debts and, are, to the extent still uncollected,
to the knowledge of the Company collectible in the ordinary course of business,
net of reserves for doubtful and uncollectible accounts shown in the Company
Financial Statements or on the accounting records of the Company (which
reserves are calculated consistent with generally accepted accounting
principles and past practice).
(b) The Disclosure Schedules set forth (i) a true,
correct and complete list of the names and addresses of each Payor of the
Company as of such date, which accounted for more than 5% of the revenues of
the Company in the fiscal year ended December 31, 1996, or which is reasonably
expected to account for more than 5% of the revenues of the Company for the
fiscal year to end December 31, 1997, and (ii) a single line item listing for
all private-pay patients in the aggregate of the Company. The Company has
satisfactory relations with such Payors set forth in (i) above and none of such
Payors has notified the Company that it intends to discontinue its relationship
with the Company or to deny any payments due from, or any claims for payment
submitted to any such party.
Section 3.25 Accounts Payable; Suppliers.
(a) The Disclosure Schedules set forth a true and
complete (i) list of the accounts payable of the Company as of March 31, 1997,
and (ii) list of each individual indebtedness owed by the Company of $5,000 or
more, setting forth the payee and the amount of indebtedness.
(b) The Disclosure Schedules set forth a true, correct
and complete list of the names and addresses of each of the providers/suppliers
of products or services to the Company (including, without limitation all
non-Physician Employee providers of care to patients) which accounted for a
dollar volume of purchases paid for by the Company in excess of $25,000 for the
fiscal year ended December 31, 1996, or which is reasonably expected to account
for a dollar volume of purchases paid for by the Company in excess of $25,000
for the fiscal year to end December 31, 1997.
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Section 3.26 Inventory. All items of inventory on the Company
Current Balance Sheet contained in the Company Financial Statements consisted,
and all such items on hand on the date of this Agreement consist, and all such
items on hand at the Effective Time will consist, net of all applicable
reserves with respect thereto (calculated consistent with past practice), of
items of a quality and a quantity usable and saleable in the ordinary course of
the Company's business and conform to generally accepted standards in the
industry of which the Company is a part. The value of the inventories
reflected on the Company Current Balance Sheet contained in the Company
Financial Statements are net of adequate reserves for damaged, excess, and
unusable items. Purchase commitments of the Company for inventory are not
materially in excess of normal requirements, and none of such purchase
commitments are at prices in excess of prevailing market prices at the time of
such purchase commitment.
Section 3.27 Licenses, Authorization and Provider Programs.
(a) The Company, and each Physician Employee and other
licensed employee or independent contractor of the Company (i) is the holder of
all valid licenses, approvals, orders, consents, permits, registrations,
qualifications and other rights and authorizations required by law, ordinance,
regulation or ruling of any governmental regulatory authority necessary to
operate its business or practice his or her specialty and (ii) is eligible to
participate in and to receive reimbursement under Titles XVIII and XIX of the
Social Security Act (the "Medicare and Medicaid Programs") and any other
programs funded in whole or in part by federal, state or local entities for
which the Company is eligible and which are listed in the Disclosure Schedules
("Governmental Programs"). The Company, the Stockholders, and each Physician
Employee has a current provider number for such Governmental Programs and with
such private non-governmental programs (including without limitation any
private insurance program) under which the Company is presently receiving
payments directly or indirectly from any Payor for patient care provided by
such Physician Employee, licensed employee or independent contractor (such
non-governmental programs herein referred to as "Private Programs"). A true,
correct and complete list of such licenses, permits and other authorizations
(including, but not limited to verification of Medicare and Medicaid provider
numbers and participating physician contracts under 1842(h) of the Social
Security Act), and provider agreements, is set forth in the Disclosure
Schedules, true, complete and correct copies of which have been provided to
APP. No violation, default, order or deficiency exists with respect to any of
the items listed in the Disclosure Schedules except for such violations,
defaults, orders or deficiencies which would not be reasonably likely to have a
Material Adverse Effect on the Company, and there is no action pending or to
the Company's knowledge recommended by any state or federal agencies having
jurisdiction over the items listed in the Disclosure Schedules, either to
revoke, withdraw or suspend any material license or to terminate the
participation of the Company in any Governmental Program or Private Program,
and no event has occurred which, with or without notice or lapse of time, or
both, would constitute grounds for a violation, order or deficiency with
respect to any of the items listed in the Disclosure Schedules to revoke,
withdraw or suspend any material license to operate its business as is
presently being conducted by it. To the knowledge of the Company, there has
been no decision not to renew any existing agreement with any provider or Payor
relating to the Company's business as presently being conducted by it. Neither
the Company nor any Physician Employee (i) has had his/her/its professional
license, Drug Enforcement Agency number, Medicare/Medicaid provider status or
staff privileges at any hospital or diagnostic imaging center suspended,
relinquished, terminated or revoked (including orders that have been entered by
any such entities but stayed), (ii) has been reprimanded in writing, sentenced,
or disciplined by any licensing board, state agency, regulatory body or
authority, hospital, Payor or specialty board (including orders that have been
entered by any such entities but stayed), or (iii) is the subject of an initial
or final determination by any federal or state authority that could result in
any demand or reimbursement under the Medicare, Medicaid or Government Programs
or any exclusion or which monetary penalty under federal or state law or (iv)
has had a final judgment or settlement entered against him/her/it in connection
with a malpractice or similar action.
(b) The Company is not required, or for the 72-month
period prior to the Effective Time was not required, to file any cost reports
or other reports with any Governmental Program or Private Program.
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Section 3.28 Inspections and Investigations. Neither the right of
the Company, or any Physician Employee, nor the right of any licensed
professional or other individual affiliated with the Company to receive
reimbursements pursuant to any Governmental Program or Private Program has been
terminated or otherwise materially and adversely affected as a result of any
investigation or action whether by any federal or state governmental regulatory
authority or other third party. No Physician Employee, licensed professional
or other individual affiliated with the business has, during the past three (3)
years prior to the Effective Time, had their professional license or staff
privileges limited, suspended or revoked by any governmental regulatory
authority or agency, hospital, integrated delivery system, trade association,
professional review organization, accrediting organization or certifying agency
(including orders that have been entered by any such entities but stayed).
True, correct and complete copies of all reports, correspondence, notices and
other documents relating to any matter described or referenced in this Section
3.28 have been provided to APP.
Section 3.29 Proprietary Rights and Information.
(a) Set forth in the Disclosure Schedules is a complete
and accurate list and summary description of the following: (i) all trademarks
(registered and unregistered), trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, currently owned in whole or part, or used by the Company or any
Company Subsidiary, (ii) all patents and applications therefor and inventions
and discoveries that may be patentable currently owned, in whole or in part, or
used by the Company or any Company Subsidiary, (iii) all licenses, royalties,
and assignments thereof to which the Company or any Company Subsidiary are a
party (iv) all copyrights (for published and unpublished works) currently owned
in whole or part, or used by the Company or any Company Subsidiary and (v)
other similar agreements relating to the foregoing to which the Company or any
Company Subsidiary is a party (including expiration date if applicable)
(collectively, the "Proprietary Rights").
(b) The Disclosure Schedules contain a complete and
accurate list and summary description of all agreements relating to technology,
trade secrets, know-how or processes that the Company is licensed or authorized
to use by others (other than technology, know-how or processes generally
available to other health care providers) or which it licenses or authorizes
others to use, true, correct and complete copies of which have been provided to
APP. There are no outstanding and, to the Company's knowledge, any threatened
disputes or disagreements with respect to any such agreement.
(c) The Company owns or has the legal right to use the
Proprietary Rights without conflicting with, infringing or violating the rights
of any other Person. No consent of any person will be required for the use
thereof by APP upon consummation of the transactions contemplated hereby and
the Proprietary Rights are freely transferable. To the knowledge of the
Company, no claim has been asserted by any person to the ownership of or for
infringement by the Company of any Proprietary Right of any other Person, and
neither the Company nor any Stockholder is aware of any valid basis for any
such claim. To the best knowledge of the Company, no proceedings have been
threatened which challenge the Proprietary Rights of the Company. The Company
has the right to use, free and clear of any adverse claims or rights of others,
all trade secrets, customer lists and proprietary information required for the
performance and marketing of all medical services.
Section 3.30 Taxes.
(a) Filing of Tax Returns. The Company has duly and
timely filed (in accordance with any extensions duly granted by the appropriate
governmental agency, if applicable) with the appropriate governmental agencies
all Tax Returns and reports required to be filed with the United States or any
state or any political subdivision thereof or any foreign jurisdiction. All
such Tax Returns or reports are complete and accurate in all material respects
and properly reflect the taxes of the Company for the periods covered thereby.
(b) Payment of Taxes. Except for such items as the
Company may be disputing in good faith by proceedings in compliance with
applicable law, which are described in the Disclosure
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Schedules, (i) the Company has paid all taxes, penalties, assessments and
interest that have become due with respect to any Tax Returns that it has filed
and has properly accrued on its books and records in accordance with generally
accepted accounting principles for all of the same that have not yet become due
and payable and (ii) the Company is not delinquent in the payment of any tax,
assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments
or Audits. The Company has not received any notice that any tax deficiency or
delinquency has been asserted against the Company and to the best knowledge of
the Company, there is no threat of such assertion. There is no unpaid
assessment, proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of the Company that could reasonably be likely to
be asserted by any taxing authority. There is no taxing authority audit of the
Company pending, or to the actual knowledge of the Company, threatened within
the last five (5) years, and the results of any completed audits are properly
reflected in the Company Financial Statements. The Company has not violated
any applicable federal, state, local or foreign tax law. There are no security
interests or liens on any assets of the Company or any Company Subsidiary which
have resulted from any failure to pay (or alleged failure to pay) taxes.
(d) No Extension of Limitation Period. The Company has
not granted an extension to any taxing authority of the statute of limitation
period during which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies
required to be withheld by the Company and paid to governmental agencies for
all income, social security, unemployment insurance, sales, excise, use, and
other taxes have been collected or withheld and paid to the respective
governmental agencies.
(f) Foreign Person. Neither the Company nor any
Stockholder is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code and Treasury Regulations Section 1.1445-2.
(g) Safe Harbor Lease. None of the properties or assets
of the Company constitutes property that the Company, APP, APP Sub or any
Affiliate of APP, will be required to treat as being owned by another person
pursuant to the "Safe Harbor Lease" provisions of Section 168(f)(8) of the Code
prior to repeal by the Tax Equity and Fiscal Responsibility Act of 1982.
(h) Tax Exempt Entity. None of the assets or properties
of the Company are subject to a lease to a "tax exempt entity" as such term is
defined in Section 168(h)(2) of the Code.
(i) Collapsible Corporation. The Company has not at any
time consented to have the provisions of Section 341(f)(2) of the Code apply to
it.
(j) Boycotts. The Company has not at any time
participated in or cooperated with any international boycott as defined in
Section 999 of the Code.
(k) Parachute Payments. No payment required or
contemplated to be made by the Company will be characterized as an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code.
(l) S Corporation. The Company has not made an election
to be taxed as an "S" corporation under Section 1362(a) of the Code.
(m) Personal Holding Companies. The Company is not or
has not been a personal holding company within the meaning of Section 542 of
the Code.
Section 3.31 Related Party Arrangements. The Disclosure Schedules
set forth a description of any interest held, directly or indirectly, by any
officer, director or other Affiliate of the Company in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the
Company's
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business and any arrangement or agreement with any such person concerning the
provision of goods or services or other matters pertaining to the Company's
business. There is no commitment to, and no income reflected in the Company
Financial Statements that has been derived from, an Affiliate, and following
the Closing the Company shall not have any obligation of any kind or
designation to any such Affiliate.
Section 3.32 Banking Relations. Set forth in the Disclosure
Schedules is a complete and accurate list of all borrowing and investing
arrangements that the Company has with any bank or other financial institution,
indicating with respect to each relationship the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the Person or Persons authorized in respect thereof.
Section 3.33 Fraud and Abuse and Self Referral. Neither the
Company nor any Company Subsidiary has engaged and, to the knowledge of the
Company, neither the Company's officers and directors nor the Physician
Employees or other Persons and entities providing professional services for or
on behalf of the Company have engaged, in any activities which are prohibited
under 42 U.S.C. Sections 1320a 7, 7a or 7b or 42 U.S.C. Section 1395nn (subject
to the exceptions or safe harbor provisions set forth in such legislation), or
the regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations, or which are prohibited by applicable rules of
professional conduct or 18 U.S.C. Sections 24, 287, 371, 664, 669, 1001, 1027,
1035, 1341, 1343, 1347, 1518, 1954, 1956(c)(7)(F) and 3486.
Section 3.34 Restrictions on Business Activities. There is no
material agreement, judgment, injunction, order or decree binding upon the
Company, any Company Subsidiary or officer, director or key employee of the
Company or Company Subsidiary, which has or reasonably could be expected to
have the effect of prohibiting or materially impairing the current medical
practice of the Company or any Company Subsidiary or the continuation of that
medical practice in the future by NewCo, any acquisition of property by the
Company, any Company Subsidiary or the conduct of business by the Company or
any Company Subsidiary.
Section 3.35 Agreements in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referred to, or required to be
referred to, in the Company's Disclosure Schedules delivered hereunder are
valid and binding, and are in full force and effect and are enforceable in
accordance with their terms, except to the extent that the validity or
enforceability thereof may be limited by bankruptcy or other laws affecting the
enforcement of creditors' rights generally, or by general equity principles, or
by public policy. There is no pending or, to the knowledge of the Company,
threatened bankruptcy, insolvency or similar proceeding with respect to any
other party to such agreements, and no event has occurred which (whether with
or without notice, lapse of time or the happening or occurrence of any other
event) would constitute a default thereunder by the Company or any other party
thereto. No contract with a Physician Employee has been terminated in the last
twelve (12) months.
Section 3.36 Statements True and Correct. No representation or
warranty made herein by the Company or any Stockholder, nor any statement,
certificate, information, exhibit or instrument to be furnished by the Company
or any Stockholder to APP, APP Sub or any of their respective representatives
pursuant to this Agreement, contains or will contain as of the Effective Time
any untrue statement of material fact or omits or will omit to state a material
fact necessary to make the statements contained herein and therein not
misleading.
Section 3.37 Disclosure Schedules. All Disclosure Schedules
required by Article III hereof and attached hereto are true, correct and
complete in all material respects as of the date of this Agreement.
Section 3.38 Finders' Fees. No investment banker, broker, finder
or other intermediary has been retained by or is authorized to act on behalf of
any of the Stockholders or the Company who is entitled to any fee or commission
upon consummation of the transactions contemplated by this Agreement or
referred to herein.
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ARTICLE IV
Representations and Warranties of APP
As inducement to the Company and the Stockholders to enter into this
Agreement and to consummate the Merger, and except as set forth in the
Disclosure Schedules attached hereto and incorporated herein by this reference,
APP represents and warrants to the Company and the Stockholders both as of the
date hereof and as of the Effective Time as follows:
Section 4.1 Organization and Good Standing; Qualification. APP
is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware, with all requisite corporate power and
authority to own, operate and lease its assets and properties and to carry on
its business as currently conducted. APP is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where such failure to be so
qualified or in good standing would not have a Material Adverse Effect on APP.
Copies of the certificate of incorporation and all amendments thereto of APP
and the bylaws of APP, as amended, and copies of the corporate minutes of APP
regarding the Merger and the transactions contemplated hereby, all of which
have been or will be made available to the Company for review, are true,
correct and complete as in effect on the date of this Agreement and accurately
reflect all material proceedings of the stockholders and directors of APP (and
all committees thereof) regarding the Merger and the transactions contemplated
hereby. The stock record books of APP, which have been or will be made
available to the Company for review, contain true, complete and accurate
records of the stock ownership of APP and the transfer of the shares of its
capital stock.
Section 4.2 Authorization and Validity. APP has all requisite
corporate power to execute and deliver this Agreement and the Other Agreements
and to consummate the Merger and the transactions contemplated hereby. The
execution, delivery and performance by APP of this Agreement and the agreements
provided for herein, including the Other Agreements and the consummation by APP
of the transactions contemplated hereby and thereby are within APP's corporate
powers and have been duly authorized by all necessary action on the part of
APP's Board of Directors. This Agreement has and the Other Agreements have
been duly executed by APP. This Agreement and all other agreements and
obligations entered into and undertaken in connection with the Merger and the
transactions contemplated hereby to which APP is a party constitute, or upon
execution will constitute, valid and binding agreements of APP, enforceable
against it in accordance with their respective terms, except as may be limited
by bankruptcy or other laws affecting creditors' rights generally, or by
general equity principles, or by public policy.
Section 4.3 Governmental Authorization. Other than complying
with the provisions of the applicable state corporate laws regarding the
approval of the Merger and the filing of the Certificates of Merger and any
other required documents related to the Merger, and other than consents,
filings or notifications required to be made or obtained solely by the Company,
the execution, delivery and performance by APP of this Agreement and the
agreements provided for herein, and the consummation of the Merger and the
transactions contemplated hereby and thereby by APP requires no action by or in
respect of, or filing with, any governmental body, agency, official or
authority.
Section 4.4 Capitalization. The authorized capital stock of APP
consists of 20,000,000 shares of APP Common Stock, of which 2,000,000 shares
are issued and outstanding and 10,000,000 shares of APP Preferred Stock, none
of which are outstanding. Each outstanding share of APP Common Stock has been
legally and validly issued and is fully paid and nonassessable, and was issued
pursuant to a valid exemption from registration under (i) the Securities Act of
1933, as amended, and (ii) all applicable state securities laws. No shares of
capital stock are owned by APP in treasury. No shares of capital stock of APP
have been issued or disposed of in violation of the preemptive rights, rights
of first refusal or similar rights of any stockholders of APP. APP has no
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or are convertible into or exercisable for securities having the
right to vote) with the stockholders of APP on any matter. There exist no
options, warrants,
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subscriptions, calls, commitments or other rights to purchase, or securities
convertible into or exchangeable for, any of the authorized or outstanding
securities of APP and no option, warrant, subscription, call, or commitment or
commission right of any kind exists which obligates APP to issue any of its
authorized but unissued capital stock. APP has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof.
Section 4.5 Subsidiaries and Investments. APP does not own,
directly or indirectly, any capital stock or other equity, ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity (the "APP Subsidiaries").
Section 4.6 Absence of Conflicting Agreements or Required
Consents. The execution, delivery and performance of this Agreement by APP and
any other documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) does not require the consent of any
governmental or regulatory body or authority or any other third party except
for such consents, for which the failure to obtain would not result in a
Material Adverse Effect on APP; (ii) will not conflict with any provision of
APP's certificate of incorporation or bylaws; (iii) will not conflict with,
result in a violation of, or constitute a default under any law, ordinance,
regulation, ruling, judgment, order or injunction of any court or governmental
instrumentality to which APP is a party or by which APP or its properties are
subject or bound; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, require any
notice under, or accelerate or permit the acceleration of any performance
required by the terms of any agreement, instrument, license or permit, material
to this transaction, to which APP is a party or by which APP or any of its
properties are bound except for such conflict, termination, breach or default,
the occurrence of which would not result in a Material Adverse Effect on APP;
and (v) will not create any Encumbrance or restriction upon APP Common Stock or
any of the assets or properties of APP. The financial statements of APP
contained in the Registration Statements (a) have been prepared in accordance
with generally accepted accounting principles consistently applied (except as
may be indicated therein or in the notes thereto), (b) present fairly the
financial position of APP and APP Subsidiaries as of the dates indicated and
present fairly the results of APP's and APP Subsidiaries' operations for the
periods then ended, and (c) are in accordance with the books and records of APP
and APP Subsidiaries, which have been properly maintained and are complete and
correct in all material respects.
Section 4.7 Absence of Changes. Except as permitted or
contemplated by this Agreement, since March 31, 1997, there has not been (i)
any change in the working capital, condition (financial or otherwise), assets,
liabilities, reserves, business or operations of APP that has had or is
reasonably likely to have a Material Adverse Effect on APP; or (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the APP Common Stock.
Section 4.8 No Undisclosed Liabilities. Except as set forth in
the Form S-4 or reflected or reserved for in the financial statements included
therein, APP does not have any material liability or obligation accrued,
contingent or otherwise, that is reasonably likely to have a Material Adverse
Effect on APP.
Section 4.9 Litigation and Claims. There are no claims,
lawsuits, actions, arbitrations, administrative or other proceedings,
governmental investigations or inquiries pending or, to the knowledge of APP,
threatened against, or affecting APP. There are no unsatisfied judgments
against APP or any consent decrees to which APP is subject. Each of the
matters, if any, set forth in the Disclosure Schedules are fully covered by
policies of insurance of APP as in effect on that date.
Section 4.10 No Violation of Law. APP has not been, nor shall be
as of the Effective Time (by virtue of any action, omission to act, contract to
which it is a party or any occurrence or state of facts whatsoever), in
violation of any applicable local, state or federal law, ordinance, regulation,
order, injunction or decree, or any other requirement of any governmental body,
agency or authority or court binding on it, or relating to its property or
business or its advertising, sales or pricing practices, except
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for violations which are not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on APP.
Section 4.11 Employee Matters. Except as set forth in the Form
S-4, APP does not have any material arrangements, agreements or plans with any
person with respect to the employment by APP of such person or whereby such
person is to serve as an officer or director of APP.
Section 4.12 Taxes.
(a) Filing of Tax Returns. APP has duly and timely filed
(in accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all Tax
Returns and reports required to be filed with the United States or any state or
any political subdivision thereof or any foreign jurisdiction. All such Tax
Returns or reports are complete and accurate in all material respects and
properly reflect the taxes of APP for the periods covered thereby.
(b) Payment of Taxes. Except for such items as APP may
be disputing in good faith by proceedings in compliance with applicable law,
which are described in the Disclosure Schedules, (i) APP has paid all taxes,
penalties, assessments and interest that have become due with respect to any
Tax Returns that it has filed and has properly accrued on its books and records
for all of the same that have not yet become due and (ii) APP is not delinquent
in the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments
or Audits. APP has not received any notice that any tax deficiency or
delinquency has been asserted against APP. There is no unpaid assessment,
proposal for additional taxes, deficiency or delinquency in the payment of any
of the taxes of APP that could be asserted by any taxing authority. There is
no taxing authority audit of APP pending, or to the knowledge of APP,
threatened, and the results of any completed audits are properly reflected in
the financial statements of APP. APP has not violated any federal, state,
local or foreign tax law.
(d) No Extension of Limitation Period. APP has not
granted an extension to any taxing authority of the limitation period during
which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies
required to be withheld by APP and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and paid to the respective governmental
agencies.
(f) Foreign Person. Neither APP nor any holders of APP
Common Stock is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code.
(g) Tax Exempt Entity. None of the assets of APP are
subject to a lease to a "tax exempt entity" as such term is defined in Section
168(h)(2) of the Code.
(h) Collapsible Corporation. APP has not at any time
consented, and the holders of APP Common Stock will not permit APP to elect, to
have the provisions of Section 341(f)(2) of the Code apply to it.
(i) Boycotts. APP has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the
Code.
(j) Parachute Payments. No payment required or
contemplated to be made by APP will be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.
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(k) S Corporation. APP has not made an election to be
taxed as an "S" corporation under Section 1362(a) of the Code.
(l) Personal Holding Companies. APP is not or has not
been a personal holding company within the meaning of Section 542 of the Code.
Section 4.13 Related Party Arrangements. The Disclosure Schedules
or Form S-4 sets forth a description of any interest held, directly or
indirectly, by any officer, director or other Affiliate of APP in any property,
real or personal or mixed, tangible or intangible, used in or pertaining to
APP's business and any arrangement or agreement with any such person concerning
the provision of goods or services or other matters pertaining to APP's
business.
Section 4.14 Statements True and Correct. No representation or
warranty made herein by APP, nor any statement, certificate, information,
exhibit or instrument to be furnished by APP to the Company or a Stockholder
pursuant to this Agreement, contains or will contain as of the Effective Time
any untrue statement of material fact or omits or will omit to state a material
fact necessary to make the statements contained herein and therein not
misleading.
Section 4.15 Schedules. All Schedules required by Article IV
hereof and attached hereto are true, correct and complete in all material
respects as of the date of this Agreement.
Section 4.16 Finder's Fees. No investment banker, broker, finder
or other intermediary has been retained by or is authorized to act on behalf of
APP who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or referred to herein.
Section 4.17 Agreements in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referred to, or required to be
referred to, in APP's Disclosure Schedules delivered hereunder are valid and
binding, and are in full force and effect and are enforceable in accordance
with their terms, except to the extent that the validity or enforceability
thereof may be limited by bankruptcy or other laws affecting the enforcement of
creditors' rights generally, or by general equity principles, or by public
policy. There is no pending or, to the knowledge of APP, threatened
bankruptcy, insolvency or similar proceeding with respect to any other party to
such agreements, and no event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder by APP or any other party thereto.
ARTICLE V
Closing Date Representations and Warranties of the Company
The Company represents and warrants that the following will be true
and correct on the Closing Date as if made on that date:
Section 5.1 Organization and Good Standing; Qualification. NewCo
is a professional corporation duly organized, validly existing and in good
standing under the laws of its state of organization, with all requisite
corporate power and authority to carry on the business in which it intends to
engage, to own the properties it intends to own, and to execute and deliver the
Service Agreement, the Security Agreement and the Physician Employment
Agreements and consummate the transactions and perform the services
contemplated thereby. NewCo is duly qualified and licensed to do business and
is in good standing in all jurisdictions where the nature of its intended
business makes such qualification necessary, which jurisdictions are listed in
the Disclosure Schedules, except where the failure to be so qualified shall not
have a Material Adverse Effect on NewCo.
Section 5.2 Capitalization. The authorized capital stock of
NewCo consists of [_____] shares of NewCo Common Stock, of which [______]
shares are issued and outstanding, and no shares of capital stock of NewCo are
held in treasury. The Stockholders own all of the issued and outstanding
shares of NewCo Common Stock, free and clear of any Encumbrance. Each
outstanding share of NewCo Common
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Stock has been legally and validly issued and is fully paid and nonassessable.
There exist no options, warrants, subscriptions or other rights to purchase, or
securities convertible into or exchangeable for, any of the authorized or
outstanding securities of NewCo. No shares of capital stock of NewCo have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of NewCo's stockholders.
Section 5.3 Corporate Records. The copies of the articles or
certificate of incorporation and bylaws, and all amendments thereto, of NewCo
that have been delivered or made available to APP are true, correct and
complete copies thereof, as in effect on the Closing Date.
Section 5.4 Authorization and Validity. The execution, delivery
and performance by NewCo of the Service Agreement, the Security Agreement, the
Physician Employment Agreements and the other agreements contemplated thereby,
and the consummation of the transactions and provision of services contemplated
thereby, have been duly authorized by the Board of Directors of NewCo. The
Service Agreement, the Security Agreement, the Physician Employment Agreements
and each other agreement contemplated thereby will be as of the Closing Date
duly executed and delivered by NewCo and will constitute valid and binding
obligations of NewCo enforceable against NewCo in accordance with their
respective terms, except as may be limited by applicable bankruptcy, or other
laws affecting creditors' rights generally, or by general equity principles, or
by public policy.
Section 5.5 No Violation. Neither the execution, delivery or
performance of the Service Agreement, the Security Agreement, the Physician
Employment Agreements or the other agreements contemplated thereby nor the
consummation of the transactions or provision of services contemplated thereby
will (a) conflict with, or result in a violation or breach of the terms,
conditions or provisions of, or constitute a default under, the articles or
certificate of incorporation or bylaws of NewCo, or (b) violate or conflict
with any applicable local, state or federal law, ordinance, regulation, order,
injunction or decree, or any other requirement of any governmental body, agency
or authority or court binding on it, or relating to its property or business.
Section 5.6 No Business, Agreements, Assets or Liabilities.
NewCo has not commenced business since its incorporation. Other than its
articles or certificate of incorporation and bylaws, and as of the Closing
Date, the Service Agreement, the Security Agreement, the Physician Employment
Agreements, and the other contracts and agreements assigned to NewCo as part of
the Spin-Off Transaction, NewCo is not a party to or subject to any agreement,
indenture or other instrument. NewCo does not own any assets (tangible or
intangible) other than the consideration received upon the issuance of shares
of its capital stock or pursuant to the Spin-Off Transaction, and NewCo does
not have any liabilities, accrued, contingent or otherwise (known or unknown
and asserted or unasserted) other than those assumed pursuant to the Spin-Off
Transaction.
Section 5.7 Compliance with Laws. NewCo has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports, except where failure
to so comply or file would not, individually or in the aggregate, have a
Material Adverse Effect on NewCo.
ARTICLE VI
Closing Date Representations and Warranties Regarding APP Sub
APP and APP Sub, jointly and severally, represent and warrant that the
following will be true and correct on the Closing Date as if made on that date:
Section 6.1 Authorization and Validity. The execution, delivery
and performance by APP Sub of this Agreement and the consummation of the
transactions contemplated thereby, have been duly authorized by APP Sub. This
Agreement will be as of the Closing Date duly executed and delivered by APP Sub
and will constitute the legal, valid and binding obligation of APP Sub
enforceable against APP
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Sub in accordance with its respective terms, except as may be limited by
bankruptcy or other laws affecting creditors' rights generally, or by equity
principles, or by public policy.
Section 6.2 No Violation. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with, or result in a violation or breach of
the terms, conditions or provisions of, or constitute a default under, the
certificate of incorporation or bylaws of APP Sub.
Section 6.3 No Business, Agreements, Assets or Liabilities. APP
Sub has not commenced business since its incorporation. APP Sub does not own
any assets (tangible or intangible) other than the consideration received upon
the issuance of shares of its capital stock and APP Sub does not have any
liabilities, accrued, contingent or otherwise (known or unknown and asserted or
unasserted) other than those assumed pursuant to this Agreement.
ARTICLE VII
Covenants of the Company
The Company makes the covenants and agreements as set forth in this
Article VII, which shall apply with respect to the period from the date hereof
to the Effective Time and, to the extent contemplated herein, thereafter and
agree that:
Section 7.1 Conduct of The Company. Except as required pursuant
to the Spin-Off Transaction, from the date hereof until the Effective Time, the
Company shall, in all material respects, conduct its business in the ordinary
and usual course consistent with past practices and shall use reasonable
efforts to:
(a) preserve intact its business and its relationships
with Payors, referral sources, customers, suppliers, patients, employees and
others having business relations with it;
(b) maintain and keep its properties and assets in good
repair and condition consistent with past practice as is material to the
conduct of the business of the Company;
(c) continuously maintain insurance coverage
substantially equivalent to the insurance coverage in existence on the date
hereof. In addition, without the written consent of APP, the Company shall
not:
(1) amend its articles or certificate of
incorporation or bylaws, or other charter documents;
(2) issue, sell or authorize for issuance or
sale, shares of any class of its securities (including, but
not limited to, by way of stock split, dividend,
recapitalization or other reclassification) or any
subscriptions, options, warrants, rights or convertible
securities, or enter into any agreements or commitments of any
character obligating it to issue or sell any such securities;
(3) redeem, purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock or any
option, warrant or other right to purchase or acquire any such
shares;
(4) declare or pay any dividend or other
distribution (whether in cash, stock or other property) with
respect to its capital stock (except as expressly contemplated
herein);
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(5) voluntarily sell, transfer, surrender,
abandon or dispose of any of its assets or property rights
(tangible or intangible) other than the sale of inventory, if
any, in the ordinary course of business consistent with past
practices;
(6) grant or make any mortgage or pledge or
subject itself or any of its properties or assets to any lien,
charge or encumbrance of any kind, except liens for taxes not
currently due and except for liens which arise by operation of
law;
(7) voluntarily incur or assume any liability or
indebtedness (contingent or otherwise), except in the ordinary
course of business or which is reasonably necessary for the
conduct of its business;
(8) make or commit to make any capital
expenditures which are not reasonably necessary for the
conduct of its business;
(9) grant any increase in the compensation
payable or to become payable to directors, officers,
consultants or employees other than merit increases to
employees of the Company who are not directors or officers of
the Company, except in the ordinary course of business and
consistent with past practices;
(10) change in any manner any accounting
principles or methods other than changes which are consistent
with generally accepted accounting principles;
(11) enter into any material commitment or
transaction other than in the ordinary course of business;
(12) take any action which could reasonably be
expected to have a Material Adverse Effect on the Company;
(13) apply any of its assets to the direct or
indirect payment, discharge, satisfaction or reduction of any
amount payable directly or indirectly to or for the benefit of
any Affiliate of the Company, other than in the ordinary
course and consistent with past practices;
(14) agree, whether in writing or otherwise, to
do any of the foregoing; and
(15) take any action at the Board of Director or
Stockholder level to (in any way) amend, revise or otherwise
affect the prior corporate approval and effectiveness of this
Agreement or any of the agreements attached as exhibits
hereto, other than as required to discharge its or their
fiduciary duties.
Section 7.2 Title to Assets; Indebtedness. As of the Effective
Time, the Company shall (i) except for sales of assets held as inventory, if
any, in the ordinary course of business prior to the Effective Time and except
as otherwise specifically described in the Disclosure Schedules to this
Agreement, have good and valid title to all of its assets free and clear of all
Encumbrances of any nature whatsoever, except for current year ad valorem taxes
and liens which arise by operation of law, and (ii) have no direct or indirect
indebtedness except for indebtedness disclosed in the Company Financial
Statements, the Disclosure Schedules hereto or for normal and recurring accrued
obligations of the Company arising in connection with its business operations
in the ordinary course of business and which arise from the purchase of
merchandise, supplies, inventory and services used in connection with the
provision of services.
Section 7.3 Access. At all times prior to the Effective Time,
APP's employees, attorneys, accountants, agents and other authorized and
designated representatives will be allowed full access upon reasonable prior
notice and during regular business hours (and at such other times as the
parties may reasonably agree) to the properties, books and records of the
Company, including, without limitation,
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deeds, title documents, leases, patient lists, insurance policies, minute
books, share certificate books, share registers, accounts, tax returns,
financial statements and all other data that, in the reasonable opinion of APP,
are required for APP to make such investigation as it may desire of the
properties and business of the Company. APP shall also be allowed full access
upon reasonable prior notice and during regular business hours (and at such
other times as the parties may reasonably agree) to consult with the officers,
employees (after announcement by the Company of the Merger to its employees
which shall occur no later than three (3) days subsequent to execution hereof
by the Company), accountants, counsel and agents of the Company in connection
with such investigation of the properties and business of the Company. No
investigation by APP shall diminish or otherwise affect any of the
representations, warranties, covenants or agreements of the Company under this
Agreement. Any access or investigation referred to in this Section 7.3 shall
be conducted in such a manner as to minimize the disruption to the Company's
ongoing business operations.
Section 7.4 Acquisition Proposals. The Company shall not, and
shall cause each of its directors, officers, employees or agents not to
directly or indirectly:
(a) solicit, initiate, encourage or participate in any
negotiations or discussions with respect to any offer or proposal to acquire
all or a substantial portion of the business, properties or capital stock of
the Company, whether by merger, consolidation, share exchange, business
combination, purchase of assets or otherwise; or
(b) except as required by law or pursuant to subpoena or
court order, disclose to any Person, other than APP or its agents, any
information not customarily disclosed concerning the business, assets,
liabilities, properties and personnel of the Company, or, without APP's prior
written approval, afford to any Person other than APP and its agents access to
the properties, books or records of the Company. If the Company receives any
offer or proposal after the date hereof, written or otherwise, of the type
referred to above, the Company shall promptly inform APP of such offer or
proposal, decline such offer and furnish APP with a copy thereof if such offer
or proposal is in writing.
Section 7.5 Compliance With Obligations. Prior to the Effective
Time, the Company shall comply in all material respects with (i) all applicable
federal, state, local and foreign laws, rules and regulations; (ii) all
material agreements and obligations, including its articles or certificate of
incorporation or charter documents, by which it or its properties or its assets
(real, personal or mixed, tangible or intangible) may be bound; and (iii) all
decrees, orders, writs, injunctions, judgments, statutes, rules and regulations
applicable to the Company, and its respective properties or assets.
Section 7.6 Notice of Certain Events. The Company shall promptly
notify APP of:
(a) any notice or other communication from any Person or
entity alleging that the consent of such Person or entity is or may be required
in connection with the transactions contemplated by this Agreement;
(b) any employment of any new non-hourly employee by the
Company who is expected to receive annualized compensation of at least $50,000
in 1997;
(c) any termination of employment by, or threat to
terminate employment received from, any salaried or non-hourly, skilled
employee of the Company;
(d) any notice or other communication from any
governmental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement;
(e) any actions, suits, claims, investigations or
proceedings commenced or threatened against, relating to or involving or
otherwise affecting the Company which, if pending on the date of this
Agreement, would have been required to have been disclosed to APP hereunder or
which relate to the consummation of the transactions contemplated by this
Agreement;
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(f) any material adverse change in the operation of the
Company, including but not limited to any licensure or certification
deficiencies, or violations; limitations on a license or a provider agreement;
freeze or reduction in MediCare or Medicaid rates, notice of overpayment; being
the subject of any investigation relating to patient abuse, fraud, kickbacks,
false claims or other alleged illegal payment practices under the Fraud and
Abuse Statutes; and
(g) any notice or other communication indicating a
material deterioration in the relationship with any Payor or supplier or key
employee of the Company and, if requested by APP, will exert its reasonable
best efforts to restore the relationship.
Section 7.7 Intentionally omitted.
Section 7.8 Stockholders' Consent. The Company shall use its
best efforts to obtain the unanimous approval of its Stockholders to the
Merger. In seeking the approval of its Stockholders, the Company shall provide
each Stockholder with the Form S-4 which shall include information as may be
required by applicable law or as APP shall deem appropriate. The Board of
Directors of the Company shall recommend the approval of the Merger by the
Stockholders of the Company. If the Stockholders' approval is not unanimous,
the Company shall give notice to the nonconsenting Stockholders of the action
taken by the consenting Stockholders as may be required by applicable law.
Section 7.9 Obligations of Company and Stockholders. Subject to
Section 7.8 hereof, the Company will take all action reasonably necessary to
cause the Company to perform its obligations under this Agreement and all
related agreements and to consummate the Merger and other transactions
contemplated hereby and thereby on the terms and conditions set forth in this
Agreement and such agreements; provided, however, that this covenant shall not
require the Company to make any expenditures that are not expressly set forth
in this Agreement or otherwise contemplated herein.
Section 7.10 Funding of Accrued Employee Benefits. The Company
hereby covenants and agrees that it will take whatever steps are necessary to
pay for or fund completely any accrued benefits, where applicable, or vested
accrued benefits for which the Company or any entity might have any liability
whatsoever arising from any tax-qualified plan as required under applicable
law. The Company acknowledges that the purpose and intent of this covenant is
to assure that APP Sub shall have no liability whatsoever at any time after the
Closing Date with respect to any such tax-qualified plan, unless such plan is
merged with a plan sponsored by APP or APP Sub.
Section 7.11 Accounting and Tax Matters. The Company will not
change in any material respect the accounting methods or practices followed by
the Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
Section 7.12 Spin-Off Transaction. The Company shall form,
organize and incorporate NewCo in the state of California, and the articles or
certificate of incorporation and bylaws of NewCo shall be in form and substance
reasonably satisfactory to APP. Except for consummating the Spin-Off
Transaction, NewCo shall not commence business until the Closing Date. On or
prior to the Closing, the Company shall take all actions and execute all
documents, agreements or instruments necessary pursuant to and in compliance
with applicable law to effect the Spin-Off Transaction, including without
limitation, the following: Prior to the Closing, the Company shall transfer to
NewCo good, valid and marketable title to all of the Company's right, title and
interest in and to the Employee Benefit Plans, all
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contracts and agreements and other assets listed on the Disclosure Schedules
(to be delivered by the Company prior to Closing, which schedule will be
subject to the approval of APP, which approval shall not be unreasonably
withheld) which by law either cannot be acquired or cannot be used by APP
because they relate to the practice of medicine or radiology, and shall
contribute to NewCo such other consideration and assets of the Company as may
be required under applicable law, in exchange for the issuance by NewCo of
shares of NewCo Common Stock, such shares being all of the issued and
outstanding shares of NewCo Common Stock. The Company shall then distribute
the shares of NewCo Common Stock to the Stockholders in proportion to their
respective ownership interest in the Company.
ARTICLE VIII
Covenants of APP and APP Sub
APP and APP Sub agree that between the date hereof and the Closing:
Section 8.1 Consummation of Agreement. APP and APP Sub will take
all action reasonably necessary to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions and take all
corporate and other action necessary to approve the Merger; provided, however,
that this covenant shall not require APP and APP Sub to make any expenditures
that are not expressly set forth in this Agreement or otherwise contemplated
herein.
Section 8.2 Requirements to Effect the Merger and Acquisitions.
APP and APP Sub will use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
Section 8.3 Access. APP and APP Sub shall, at reasonable times
during normal business hours and on reasonable notice, permit the Company and
its authorized representatives of the Company reasonable access to, and make
available for inspection, all of the assets and business of APP and APP Sub,
including its executive officers, and permit the Company and their authorized
representatives to inspect and, at the Company's sole expense, make copies of
all documents, records and information with respect to the affairs of APP and
APP Sub as the Company and their representatives may reasonably request, all
for the sole purpose of permitting the Company to become familiar with the
business and assets and liabilities of APP and APP Sub. No investigation by
the Company or the Stockholders shall diminish or otherwise affect any of the
representations, warranties, covenants or agreements of APP under this
Agreement.
Section 8.4 Notification of Certain Matters. APP and APP Sub
shall promptly inform the Company in writing of (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of
time or both, would become a default, received by APP subsequent to the date of
this Agreement and prior to the Effective Time under any contract, agreement or
investment material to APP's or APP Sub's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; (b) any
material adverse change in APP's condition (financial or otherwise),
operations, assets, liabilities or business or (c) defaults or disputes
regarding Other Agreements.
Section 8.5 Qualified Retirement Plans. APP and APP Sub shall
use their best efforts to establish a qualified plan and trust for NewCo,
within the meaning of Section 401(a) and 501(a), respectively, of the Code
("New Qualified Plan") that will provide benefits comparable (as determined
under Section 401(a)(4) of the Code) to the benefits provided under the
qualified plans referenced in the Disclosure Schedules, if any, sponsored by
the Company as of March 31, 1997. APP will file for a favorable determination
letter from the IRS on the New Qualified Plan and request a favorable
determination from the IRS that NewCo is not a member of an affiliated service
group (as defined in Section 414(m) of the Code) or a recipient organization of
leased employee services (as defined in Section 414(n) of the Code). Any
benefits provided under the New Qualified Plan shall be conditioned on a
favorable determination letter from the IRS. Costs associated with the
establishment and design of the
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New Qualified Plan shall be paid by APP or APP Sub. NewCo shall be responsible
for funding any contributions to, or any ongoing administrative costs of, the
New Qualified Plan.
ARTICLE IX
Covenants of APP, APP Sub and the Company
APP, APP Sub and the Company agree as follows:
Section 9.1 Filings; Other Action.
(a) The Company shall cooperate with APP and APP Sub to promptly
prepare and file with the SEC the Registration Statements on Form S-1 and Form
S-4 (or other appropriate Forms) to be filed by APP in connection with its
Initial Public Offering and offering of the shares of APP Common Stock to the
Target Interest Holders pursuant to the transactions contemplated by this
Agreement and the Other Agreements (including the prospectus constituting parts
thereof, the "Registration Statements"). APP shall obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. The Company shall cooperate with
APP in the preparation of the Registration Statements and shall furnish all
information concerning the Company and NewCo as may be reasonably requested in
connection with any such action in a timely manner.
(b) The Company, APP and APP Sub and each separately represent and
warrant that (i) in the case of the Company, none of the written information or
documents supplied or to be supplied by it specifically for inclusion in the
Registration Statements, by exhibit or otherwise and (ii) in the case of APP or
APP Sub, will, at the time the Registration Statements and each amendment and
supplement thereto, if any, becomes effective under the Securities Act, none of
them contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company shall be entitled to review the Registration
Statements and each of the amendments thereto, if any, prior to the time each
becomes effective under the Securities Act. The Company shall have no
responsibility for information contained in the Registration Statements except
for information provided by the Company specifically for inclusion therein.
The Company's review of the Registration Statements shall not diminish or
otherwise affect the representations, covenants and warranties of APP and APP
Sub contained in this Agreement.
(c) The Company shall, upon request, furnish APP with all
information concerning itself, its subsidiaries, directors, officers, partners,
Stockholders and NewCo, and such other matters as may be reasonably requested
by APP in connection with the preparation of the Registration Statements and
each of the amendments or supplements thereto, or any other statement, filing,
notice or application made by or on behalf of each such party or any of its
subsidiaries to any governmental entity in connection with the Merger and the
other transactions contemplated by this Agreement.
Section 9.2 Amendments of Disclosure Schedules. Each party
hereto agrees that, with respect to the representations and warranties of such
party contained in this Agreement, such party shall have the continuing
obligation until the Closing to supplement or amend promptly the Disclosure
Schedules with respect to any matter that would have been or would be required
to be set forth or described in the Disclosure Schedules in order to not
materially breach any representation, warranty or covenant of such party
contained herein; provided that no amendment or supplement to a Disclosure
Schedule that constitutes or reflects a Material Adverse Effect on the Company
may be made unless APP consents to such amendment or supplement, and no
amendment or supplement to a Schedule that constitutes or reflects a Material
Adverse Effect on APP may be made unless the Company consents to such amendment
or supplement. For purposes of this Agreement, including without limitation
for purposes of determining whether the conditions set forth in Sections 10.1
and 11.1 have been fulfilled, the Disclosure Schedules hereto shall be deemed
to be the Disclosure Schedules as amended or supplemented pursuant to this
Section 9.2. In the event that the Company seeks to amend or supplement a
Disclosure Schedule pursuant to this Section 9.2 and APP does not consent to
such amendment or supplement, or APP seeks to amend
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or supplement a Disclosure Schedule pursuant to this Section 9.2, and the
Company does not consent, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 15.1(a) hereof.
Section 9.3 Actions Contrary to Stated Intent. No party hereto
will knowingly, either before or after the Merger, take any action that would
prevent the Merger from qualifying as a tax-free exchange within the meaning of
Section 351 of the Code.
Section 9.4 Public Announcements. The parties hereto will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law, will not issue any
such press release or make any such public statement prior to such
consultation, although the foregoing shall not apply to any disclosure by APP
in any filing with the DOJ, FTC or SEC.
Section 9.5 Expenses. Each party to this Agreement shall be
solely responsible for their own fees and expenses with respect to the
transactions contemplated herein including, without limitation, the fees
charged by attorneys, accountants and financial advisors retained by such
parties. The fees and expenses incurred by the Company and NewCo in connection
with the Merger shall be paid by the Company in full immediately prior to the
Closing and such expenses shall be the sole responsibility of the Stockholders
following the Closing Date and not APP.
Section 9.6 Patient Confidentiality. APP and APP Sub shall agree
to keep all records and information regarding the patients of the Company and
NewCo confidential in accordance with all applicable laws.
Section 9.7 Registration Statements. APP shall prepare and file
the Registration Statements with the SEC, and shall use its reasonable good
faith efforts to cause the Registration Statements to become effective under
the Securities Act and take any action required to be taken under the
applicable state Blue Sky or other securities laws in connection with the
issuance of the shares of APP Common Stock upon consummation of the Merger.
ARTICLE X
Conditions Precedent of APP and APP Sub
Except as may be waived in writing by APP, the obligations of APP and
APP Sub hereunder are subject to the fulfillment at or prior to the Effective
Date of each of the following conditions:
Section 10.1 Representations and Warranties. The representations
and warranties of the Company contained herein and each Stockholder contained
in the Stockholders Representation Letter (as delivered pursuant to Section
10.12 hereof) shall have been true and correct in all material respects when
initially made and shall be true and correct in all material respects as of the
Effective Date.
Section 10.2 Covenants. The Company shall have performed and
complied in all material respects with all covenants required by this Agreement
to be performed and complied with by the Company prior to the Effective Date.
Section 10.3 Legal Opinion. Counsel to the Company shall have
delivered to APP their opinion, dated as of the Effective Date, in form and
substance substantially in the form set forth in Exhibit 10.3.
Section 10.4 Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened orally or in
writing, asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
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Section 10.5 No Material Adverse Effect. No Material Adverse
Effect on the Company shall have occurred since March 31, 1997, whether or not
such change shall have been caused by the deliberate act or omission of the
Company or any Stockholder.
Section 10.6 Government Approvals and Required Consents. The
Company, the Stockholders, NewCo and APP shall have obtained all licenses,
permits and all necessary government and other third-party approvals and
consents required under any law, statements, rule, regulation or ordinance to
consummate the transactions contemplated by this Agreement.
Section 10.7 Securities Approvals. The Registration Statements
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statements shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. At or prior to the Effective Date, APP shall have
received all state securities and "Blue Sky" permits necessary to consummate
the transactions contemplated hereby. The APP Common Stock shall have been
approved for listing on the Nasdaq National Market, subject only to official
notification of issuance.
Section 10.8 Closing Deliveries. APP shall have received all
Disclosure Schedules, documents, assignments and agreements, duly executed and
delivered in form reasonably satisfactory to APP, referred to in Section 12.1.
Section 10.9 Closing of Initial Public Offering. The Initial
Public Offering shall have closed.
Section 10.10 Closing of Related Acquisitions. Each of the Related
Acquisitions shall have closed.
Section 10.11 Dissenter's Rights. The Company shall have satisfied
each of its obligations to its Stockholders regarding dissenters or related
rights under California Corporate Law, and the sum of the amount which may
become due to the Stockholders who have dissented to the Merger and have
indicated their intent to seek appraisal rights plus the cash portion of the
Merger Consideration shall not exceed 25% of the total Merger Consideration due
hereunder.
Section 10.12 Stockholder Representation Letter; Indemnification
Agreement. Each Stockholder receiving Merger Consideration shall have executed
and delivered to APP the Stockholder Representation Letter in substantially the
form of Exhibit C. Each Stockholder shall have executed and delivered to APP
the Indemnification Agreement in substantially the form of Exhibit D.
Section 10.13 Transfer of Assets. All of the assets and properties
of the Company and its related entities to be transferred to NewCo pursuant to
the Spin-Off Transaction and as approved by APP shall have been transferred,
assigned and conveyed to NewCo in order to effectuate the transactions
contemplated by this Agreement.
Section 10.14 Physician Employment Agreements. Each Physician
Employee and such other radiologists whose names are set forth on Schedule 10.14
shall have entered into a Physician Employment Agreement between NewCo and each
such Physician Employee in a form reasonably consistent to the form attached as
Exhibit E and satisfactory to APP in its sole discretion (the "Physician
Employment Agreements").
ARTICLE XI
Conditions Precedent of the Company
Except as may be waived in writing by the Company, the obligations of
the Company hereunder are subject to fulfillment at or prior to the Effective
Date of each of the following conditions:
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Section 11.1 Representations and Warranties. The representations
and warranties of APP and APP Sub contained herein shall be true and correct in
all material respects when initially made and shall be true and correct in all
material respects as of the Effective Date.
Section 11.2 Covenants. APP and APP Sub shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed and complied with by it prior to the Effective
Date.
Section 11.3 Legal Opinions. Counsel to APP and APP Sub shall
have delivered to the Company their opinion, dated as of the Effective Date, in
form and substance substantially in the form set forth in Exhibit 11.3.
Section 11.4 Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
Section 11.5 Government Approvals and Required Consents. The
Company, the Stockholders, NewCo, APP and APP Sub shall have obtained all
licenses, permits and all necessary government and other third-party approvals
and consents required under any law, contracts or any statute, rule, regulation
or ordinances to consummate the transactions contemplated by this Agreement.
Section 11.6 "Blue Sky" Approvals; Nasdaq Listing. The
Registration Statements shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the Registration Statements
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC. At or prior to the Effective Date, APP
shall have received all state securities and "Blue Sky" permits necessary to
consummate the transactions contemplated hereby. At or prior to the Effective
Date, the APP Common Stock shall have been approved for listing on the Nasdaq
National Market, subject only to official notification of issuance.
Section 11.7 Closing of Initial Public Offering. The Initial
Public Offering shall have closed.
Section 11.8 Closing Deliveries. The Company shall have received
all Disclosure Schedules, documents, assignments and agreements, duly executed
and delivered in form reasonably satisfactory to the Company referred to in
Section 12.2.
Section 11.9 No Material Adverse Effect. No Material Adverse
Effect on APP or APP Sub shall have occurred since __________, 1997, whether or
not such change shall have been caused by the deliberate act or omission of APP
or APP Sub.
Section 11.10 Service Agreement Analysis. The Company shall have
received from ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Partners, Inc. its opinion and analysis, in form
satisfactory to the Company, that the terms of the Service Agreement are fair
and commercially reasonable.
Section 11.11 Tax Opinion. The Company shall have received from
▇▇▇▇▇▇ and ▇▇▇▇▇, L.L.P., a tax opinion,substantially in the form set forth in
Exhibit 11.11.
Section 11.12 Closing of Related Acquisition Involving Total
Medical Imaging, Inc. The Related Acquisition involving Total Medical Imaging,
Inc. shall have closed.
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ARTICLE XII
Closing Deliveries
Section 12.1 Deliveries of the Company. At or prior to the
Effective Date, the Company shall deliver to APP the following, all of which
shall be in a form reasonably satisfactory to APP:
(a) a copy of resolutions of the Board of Directors of
the Company authorizing the execution, delivery and performance of this
Agreement and the Service Agreement and all related documents and agreements
and consummation of the Merger, each certified by the Secretary of the Company
as being true and correct copies of the originals thereof subject to no
modifications or amendments;
(b) a copy of resolutions of the Board of Directors of
NewCo authorizing the execution, delivery and performance of the Service
Agreement, the Security Agreement and the Physician Employment Agreements each
certified by the Secretary of NewCo as being true and correct copies of the
originals thereof subject to no modifications or amendments;
(c) a certificate of the President of the Company dated
the Closing Date, as to the truth and correctness of the representations and
warranties of the Company contained herein on and as of the Effective Date;
(d) a certificate of the President of the Company dated
the Closing Date, (i) as to the performance of and compliance in all material
respects by the Company with all covenants contained herein on and as of the
Effective Date and (ii) certifying that all conditions precedent required by
the Company to be satisfied shall have been satisfied;
(e) a certificate of the Secretary of the Company and the
Secretary of NewCo certifying as to the incumbency of the directors and
officers of such corporation and as to the signatures of such directors and
officers who have executed documents delivered at the Closing on behalf of that
corporation;
(f) certificates, dated within ten (10) days prior to
the Effective Date, of the Secretary of State of California for the Company and
NewCo establishing that each such corporation is in existence, has paid all
franchise or similar taxes, if any, and, if applicable, otherwise is in good
standing to transact business in the state of California;
(g) certificates, dated within ten (10) days prior to the
Effective Date, of the Secretaries of State of the states in which either the
Company or NewCo is qualified to do business, to the effect that each such
corporation is qualified to do business and, if applicable, is in good standing
as a foreign corporation in each of such states;
(h) all authorizations, consents, approvals, permits and
licenses referenced in Section 3.27;
(i) the resignations of the directors and officers of the
Company as requested by APP;
(j) the executed Service Agreement in substantially the
form attached hereto as Exhibit F, as revised in accordance with changes
reasonably deemed necessary or advisable by legal counsel retained by APP, the
Company and NewCo in the State of California to address regulatory and
compliance issues (the "Service Agreement");
(k) executed Certificates of Merger necessary to effect
the Merger referred to in Section 2.1;
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(l) a nonforeign affidavit, as such affidavit is referred
to in Section 1445(b)(2) of the Code, of each Stockholder, signed under a
penalty of perjury and dated as of the Closing Date, to the effect that such
Stockholder is a United States citizen or a resident alien (and thus not a
foreign person) and providing such Stockholder's United States taxpayer
identification number;
(m) an executed Stockholder Release by the Stockholders
in substantially the form attached hereto as Exhibit G (the "Stockholder
Release");
(n) documentation, satisfactory to APP, evidencing the
legal transfer of (1) the real property located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and any related mortgage or indebtedness and (2) the Jeep
vehicle and any related indebtedness; and
(o) such other instrument or instruments of transfer
prepared by APP as shall be necessary or appropriate, as APP or its counsel
shall reasonably request, to carry out and effect the purpose and intent of
this Agreement.
Section 12.2 Deliveries of APP. At or prior to the Effective
Date, APP shall deliver to the Company the following, all of which shall be in
a form reasonably satisfactory to the Company:
(a) a copy of resolutions of the Board of Directors of
APP authorizing the execution, delivery and performance of this Agreement, and
all related documents and agreements, certified by APP's Secretary as being
true and correct copies of the originals thereof subject to no modifications or
amendments;
(b) a copy of resolutions of the Board of Directors of
APP Sub authorizing the execution, delivery and performance of this Agreement,
the Service Agreement and the Security Agreement, each certified by the
Secretary of APP Sub as being true correct copies of the originals thereof
subject to no modifications or amendments;
(c) a certificate of the President of APP and APP Sub
dated the Closing Date as to the truth and correctness of the representations
and warranties of APP and APP Sub contained herein on and as of the Effective
Date;
(d) a certificate of the President of APP and APP Sub
dated the Closing Date, (i) as to the performance and compliance by APP or APP
Sub with all covenants contained herein on and as of the Effective Date and
(ii) certifying that all conditions precedent required to be satisfied by APP
and APP Sub shall have been satisfied;
(e) a certificate of the Secretary of APP and APP Sub
certifying as to the incumbency and to the signatures of the officers of APP or
APP Sub who have executed documents delivered at the Closing on behalf of APP
or APP Sub;
(f) a certificate, dated within ten (10) days prior to
the Effective Date, of the secretary of state of incorporation establishing
that APP and APP Sub are, respectively, in existence, have paid all franchise
or similar taxes, if any, and otherwise are in good standing to transact
business in the state of Delaware and California;
(g) certificates (or photocopies thereof), dated within
ten (10) days prior to the Effective Date, of the Secretaries of State of the
states in which either APP and APP Sub is qualified to do business, to the
effect that APP and APP Sub is qualified to do business and is in good standing
as a foreign corporation in such state;
(h) the executed Service Agreement as revised in
accordance with the changes specified in Section 12.1(j);
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(i) executed Certificates of Merger necessary to effect
the Merger referred to in Section 2.1;
(j) the Merger Consideration in accordance with Article
II and Exhibit B hereof; and
(k) such other instrument or instruments of transfer
prepared by the Company as shall be necessary or appropriate, as the Company or
its counsel shall reasonably request, to carry out and effect the purpose and
intent of this Agreement.
ARTICLE XIII
Post Closing Matters
Section 13.1 Further Instruments of Transfer. Following the
Closing, at the request of APP or the Surviving Corporation and at APP's sole
cost and expense, the Stockholders and the Company shall deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to carry out the purpose and intent of this Agreement. Following
the Closing, at the request of NewCo and at NewCo's sole cost and expense, APP
or the Surviving Corporation shall deliver any further instruments of transfer
and take all reasonable action as may be necessary and appropriate to carry out
the purpose and intent of this Agreement.
Section 13.2 Merger Tax Covenant.
(a) The parties intend that the Merger will qualify as a tax-free
transaction under Section 351 of the Code in which the Company will not
recognize gain or loss, and pursuant to which any gain recognized by a
Stockholder as a result of the Merger will not exceed the amount of any cash
received by a Stockholder in the Merger (a "Reorganization").
(b) Both prior to and after the Effective Time, all books and
records shall be maintained, and all Tax Returns and schedules thereto shall be
filed in a manner consistent with the Merger being treated as a Reorganization.
These obligations are excused as to a party required to maintain the books or
file a Tax Return if such party has provided to the other parties a written
opinion of competent tax counsel to the effect that there is not substantial
authority, within the meaning of Section 6662(d)(2)(B)(i) of the Code, to
report the Merger as a Reorganization and such opinion either is furnished
prior to the Effective Time or is based on facts or events not known at the
Effective Time. Each party shall provide to each other party such tax
information, reports, returns, or schedules as may be reasonably required to
assist such party in accounting for and reporting the Merger as a
Reorganization.
(c) The parties agree that no Stockholder shall be liable for any
taxes incurred by the Company and for which APP has successor liability
therefor which arise solely as a result of the Merger or the consummation of
the transactions contemplated hereby; provided that the foregoing shall not
limit or otherwise be deemed a waiver of any right of indemnification under
Section 14.1 for a breach of any representation, warranty or covenant of the
Company or any Stockholder.
Section 13.3 Current Public Information. APP shall cause the
requirements of Rule 144(c) under the Securities Act to be met with respect to
APP for so long as those requirements must be met to enable sales by the
Stockholders who are affiliates of the Company to meet the requirements of Rule
145(d) under the Securities Act.
ARTICLE XIV
Remedies
Section 14.1 Indemnification by the Company. Subject to the terms
and conditions of this Article XIV, the Company agrees to indemnify, defend and
hold APP and the Surviving Corporation and their respective directors,
officers, stockholders, employees, agents, attorneys, consultants and
Affiliates
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harmless from and against all losses, claims, obligations, demands,
assessments, penalties, liabilities, costs, damages, reasonable attorneys' fees
and expenses (including, without limitation, all costs of experts and all costs
incidental to or in connection with any appellate process) (collectively,
"Damages") asserted against or incurred by such individuals and/or entities
arising out of or resulting from:
(a) a breach by the Company of any representation or
warranty (without giving effect to any Material Adverse Effect qualifier
contained as part of any such representation or warranty) or covenant of the
Company contained in this Agreement or in any Schedule or certificate delivered
thereunder;
(b) any violation (or alleged violation) by the Company
and/or any of its past or present directors, officers, partners, stockholders,
employees (including, without limitation, any Physician Employee), agents,
attorneys, consultants and Affiliates of any state or federal law governing
health care fraud and abuse or prohibition on referral of patients to Persons
in which a licensed professional has a financial or other form of interest
(including, but not limited to, fraud and abuse in the Medicare and Medicaid
Programs) occurring on or before the Closing Date, or any overpayment or
obligation (or alleged overpayment or obligation) arising out of or resulting
from claims submitted to any Payor on or before the Closing Date; and
(c) any liability under the Securities Act, the Exchange
Act or any other federal or state "blue sky" or securities law or regulation,
at common law or otherwise, arising out of or based upon any (i) untrue
statement of a material fact in any Registration Statement or any prospectus
forming or part thereof, or any amendment thereof or supplement thereto
relating to the Company (including any Company Subsidiary) or NewCo required to
be stated therein or (ii) failure to state information necessary to make the
statements therein not misleading, which untrue statement or failure to state
information arises or results solely from information provided in writing to
APP or its counsel by the Company or any Stockholder or their agents
specifically for inclusion in any such Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto.
Section 14.2 Indemnification by APP and APP Sub. Subject to the
terms and conditions of this Article XIV, APP and APP Sub jointly and severally
hereby agree to indemnify, defend and hold the Stockholders, the Company and
NewCo and their respective directors, officers, stockholders, employees,
agents, attorneys, consultants and Affiliates harmless from and against all
Damages asserted against or incurred by such individuals and/or entities
arising out of or resulting from:
(a) a breach by APP or APP Sub of any representation or
warranty (without giving effect to any Material Adverse Effect qualifier
contained as part of any such representation or warranty) or covenant of APP or
APP Sub contained in this Agreement or in any schedule or certificate delivered
hereunder; and
(b) any liability under the Securities Act, the Exchange
Act or any other federal or state "blue sky" or securities law or regulation,
at common law or otherwise, arising out of or based upon any untrue statements
of material fact in any Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or required to be
stated therein or failure to state information necessary to make the statements
therein not misleading (except for any liability based upon any actual or
alleged untrue statement of material fact or an omission to state a material
fact relating to NewCo, the Company or any Stockholder to the extent derived
from any information provided in writing by the Company or a Company Subsidiary
or any of their agents contained in the representations and warranties set
forth in this Agreement or any certificate, exhibit, schedule or instrument
required to be delivered under this Agreement.)
Notwithstanding anything contained in either Sections 14.1 or
14.2 herein to the contrary, nothing contained in this Agreement shall relieve
any of the parties hereto of any liability or limit any liability that it may
have in the case of fraud in connection with the transactions contemplated by
this Agreement.
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Section 14.3 Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) Any party claiming indemnification under the
Agreement (an "Indemnified Party") shall promptly (and, in the event, at least
ten (10) days prior to the due date for any responsive pleadings, filings or
other documents) (i) notify the party for whom indemnification is sought (the
"Indemnifying Party) of any third-party claim or claims asserted against the
Indemnified Party ("Third Party Claim") that could give rise to a right of
indemnification under this Agreement and (ii) transmit to the Indemnifying
Party a written notice ("Claim Notice") describing in reasonable detail the
nature of the Third Party Claim, a copy of all papers served with respect to
such claim (if any), an estimate of the amount of Damages attributable to the
Third Party Claim and the basis of the Indemnified Party's request for
indemnification under this Agreement. The failure to promptly deliver a Claim
Notice shall not relieve any Indemnifying Party of its obligations to any
Indemnified Party with respect to the related Third Party Claim except to the
extent that the resulting delay is materially prejudicial to the defense of
such claim. Within thirty (30) days after receipt of any Claim Notice (the
"Election Period"), the Indemnifying Party shall notify the Indemnified Party
(x) whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Article XIV with respect to such Third Party Claim
and (y) whether the Indemnifying Party desires, at the sole cost and expense of
such Indemnifying Party, to defend the Indemnified Party against such Third
Party Claim.
(b) If the Indemnifying Party notifies the Indemnified
Party within the Election Period that the Indemnifying Party elects to assume
the defense of the Third Party Claim, then the Indemnifying Party shall have
the right to defend, at their sole cost and expense, with counsel reasonably
acceptable to such Indemnified Party, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 14.3(b). Except as set
forth in Section 14.3(f) below, the Indemnifying Party shall have full control
of such defense and proceedings, including any compromise or settlement
thereof. The Indemnified Party is hereby authorized, at the sole cost and
expense of the Indemnifying Party (but only if the Indemnified Party is
entitled to indemnification hereunder), to file, during the Election Period,
any motion, answer or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and not prejudicial to the Indemnifying Party. If requested by the
Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense
of the Indemnifying Party, to cooperate with the Indemnifying Party and their
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, the making of any related
counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 14.3(b) and shall bear its
own costs and expenses with respect to such participation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and upon written
notification thereof, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the Indemnified Party; provided further
that the Indemnifying Party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnified Party, which firm shall be designated
in writing by the Indemnified Party. Notwithstanding the foregoing, the
Indemnifying Party shall be prohibited from confessing or settling any criminal
allegations brought against the Indemnified Party without the express written
consent of the Indemnified Party.
(c) If the Indemnifying Party fails to notify the
Indemnified Party within the Election Period that the Indemnifying Party elects
to defend the Indemnified Party pursuant to Section 14.3(b), or if the
Indemnifying Party elects to defend the Indemnified Party pursuant to Section
14.3(b) but fails diligently and promptly to prosecute or settle the Third
Party Claim, then the Indemnified Party shall have
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the right to defend, at the sole cost and expense of the Indemnifying Party (if
the Indemnified Party is entitled to indemnification hereunder), the Third
Party Claim by all appropriate proceedings, which proceedings shall be promptly
and vigorously prosecuted by the Indemnified Party to a final conclusion or
settled. The Indemnified Party shall have full control of such defense and
proceedings, provided, however, that the Indemnified Party may not enter into,
without the Indemnifying Party's consent, which shall not be unreasonably
withheld, any compromise or settlement of such Third Party Claim.
Notwithstanding the foregoing, if the Indemnifying Party has delivered a
written notice to the Indemnified Party to the effect that the Indemnifying
Party disputes their potential liability to the Indemnified Party under this
Article XIV and if such dispute is resolved in favor of the Indemnifying Party,
the Indemnifying Party shall not be required to bear the costs and expenses of
the Indemnified Party's defense pursuant to this Section or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party shall reimburse the Indemnifying Party in full for all costs
and expenses of such litigation. The Indemnifying Party may participate in,
but not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 14.3(c), and the Indemnifying Party shall bear its own
costs and expenses with respect to such participation; provided, however, that
if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnifying Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnified Party, then the Indemnifying Party may employ
separate counsel and upon written notification thereof, the Indemnified Party
shall not have the right to assume the defense of such action on behalf of the
Indemnifying Party.
(d) In the event any Indemnified Party should have a
claim against any Indemnifying Party hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the Indemnifying Party a
written notice (the "Indemnity Notice") describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to such
claim and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Party does not notify the
Indemnified Party within sixty (60) days from its receipt of the Indemnity
Notice that the Indemnifying Party disputes such claim, the claim specified by
the Indemnified Party in the Indemnity Notice shall be deemed a liability of
the Indemnifying Party hereunder. If the Indemnifying Party has timely
disputed such claim, as provided above, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction if the parties do
not reach a settlement of such dispute within thirty (30) days after notice of
a dispute is given.
(e) Payments of all amounts owing by any Indemnifying
Party pursuant to this Article XIV relating to a Third Party Claim shall be
made within thirty (30) days after the latest of (i) the settlement of such
Third Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim, or (iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by the
Indemnifying Party pursuant to Section 14.3(d) shall be made within thirty (30)
days after the later of (i) the expiration of the 60-day Indemnity Notice
period or (ii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement.
(f) The Indemnifying Party shall provide the Indemnified
Party with written notice of any firm offer that is made to settle or
compromise a Third Party Claim against an Indemnified Party. If a firm offer
is made to settle such a claim solely by the payment of money damages and the
Indemnifying Party notifies the Indemnified Party in writing that the
Indemnifying Party agrees to such settlement, but the Indemnified Party elects
not to accept and agree to it, the Indemnified Party may continue to contest or
defend such Third Party Claim and, in such event, the total maximum liability
of the Indemnifying Party to indemnify or otherwise reimburse the Indemnified
Party hereunder with respect to such a claim shall be limited to and shall not
exceed the amount of such settlement offer, plus reasonable out-of-pocket costs
and reasonable expenses (including reasonable attorneys' fees and
disbursements) to the date of notice that the Indemnifying Party desired to
accept such settlement.
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(g) Notwithstanding any provision herein to the contrary,
the obligation of an Indemnifying Party to provide indemnification to an
Indemnified Party for breach of any representation or warranty as provided in
Sections 14.1(a) or 14.2(a) hereof shall not take effect unless and until the
Damages asserted against or incurred in the aggregate and on a collective basis
by the Indemnified Parties pursuant to either Section 14.1 or 14.2 (as
applicable) as a result of such a breach or breaches exceeds [$100,000].
Section 14.4 Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (a) enforcing
any of the terms of this Agreement or (b) proving that another party breached
any of the terms of this Agreement.
Section 14.5 Tax Benefits; Insurance Proceeds. The total amount
of any indemnity payments owed by one party to another party to this Agreement
shall be reduced by any correlative tax benefit received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
respect to recovery from third parties or insurance proceeds, and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
ARTICLE XV
Termination
Section 15.1 Termination. This Agreement may be terminated and
the Merger and the Acquisitions may be abandoned:
(a) at any time prior to the Effective Date by mutual
agreement of all parties;
(b) at any time prior to the Effective Date by APP if any
material representation or warranty of the Company or any Stockholder contained
in this Agreement or in any certificate or other document executed and
delivered by the Company or any Stockholder pursuant to this Agreement is or
becomes untrue or breached in any material respect or if the Company or any
Stockholder fails to comply in any material respect with any material covenant
or agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within thirty (30) days after receipt
of written notice thereof;
(c) at any time prior to the Effective Date by the
Company if any representation or warranty of APP or APP Sub contained in this
Agreement or in any certificate or other document executed and delivered by APP
or APP Sub pursuant to this Agreement is or becomes untrue in any material
respect or if APP fails to comply in any material respect with any covenant or
agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within thirty (30) days after receipt
of written notice thereof;
(d) at any time prior to the Effective Date by APP if, as
a result of the conduct of due diligence and regulatory compliance procedures,
APP deems termination to be advisable; or
(e) by APP or the Company if the Merger shall not have
been consummated by September 30, 1997.
Section 15.2 Effect of Termination. Except as set forth in
Section 16.3, in the event this Agreement is terminated pursuant to this
Article XV, this Agreement shall forthwith become void.
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ARTICLE XVI
Nondisclosure of Confidential Information
Section 16.1 Non-Disclosure Covenant. The Company and NewCo
recognize and acknowledge that each has in the past, currently has, and in the
future may possibly have, access to certain Confidential Information of APP and
the Surviving Corporation that is valuable, special and a unique asset of such
entity's business. APP and APP Sub acknowledge that they had in the past,
currently have, and in the future may possibly have, access to certain
Confidential Information of the Company and NewCo that is valuable, special and
a unique asset of each such business. The Company, NewCo, APP, and APP Sub,
severally, agree that they will not disclose such Confidential Information to
any person, firm, corporation, association or other entity for any purpose or
reason whatsoever, except (a) to authorized representatives of APP, APP Sub,
Surviving Corporation, NewCo and the Company and (b) to counsel and other
advisers to APP, APP Sub, Surviving Corporation, NewCo and the Company provided
that such advisers (other than counsel) agree to the confidentiality provisions
of this Section 16.1, unless (i) such information becomes available to or known
by the public generally through no fault of the Company, NewCo, APP or APP Sub,
as the case may be, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii) the Company, NewCo, APP or APP
Sub, as the case may be, shall, if possible, give prior written notice thereof
to the Company, NewCo, APP or APP Sub and provide the Company, APP or APP Sub
with the opportunity to contest such disclosure, (iii) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party, or (iv) the disclosing party
is the sole and exclusive owner of such Confidential Information as a result of
the Merger or otherwise. In the event of a breach or threatened breach by the
Company, on the one hand, and APP or APP Sub, on the other hand, of the
provisions of this Section, APP, APP Sub, the Surviving Corporation, NewCo and
the Company shall be entitled to an injunction restraining the other party, as
the case may be, from disclosing, in whole or in part, such Confidential
Information. Nothing herein shall be construed as prohibiting any of such
parties from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
Section 16.2 Damages. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, APP, APP Sub, the Surviving
Corporation, NewCo and the Company agree that, in the event of a breach by
either of them of the foregoing covenant, the covenant may be enforced against
them by injunctions and restraining orders.
Section 16.3 Survival. The obligations of the parties under this
Article XVI shall survive the termination of this Agreement.
ARTICLE XVII
Miscellaneous
Section 17.1 Amendment; Waivers. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed by all the
parties hereto. Any waiver of any terms and conditions hereof must be in
writing, and signed by the parties hereto. The waiver of any of the terms and
conditions of this Agreement shall not be construed as a waiver of any other
terms and conditions hereof.
Section 17.2 Assignment. Neither this Agreement nor any right
created hereby or in any agreement entered into in connection with the
transactions contemplated hereby shall be assignable by any party hereto,
except by APP to a wholly owned subsidiary of APP; provided that any such
assignment shall not relieve APP of its obligations hereunder.
Section 17.3 Parties in Interest; No Third Party Beneficiaries.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the
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respective heirs, legal representatives, successors and assigns of the parties
hereto. APP and APP Sub acknowledge and agree that the rights and remedies of
the Company under this Agreement will be directly available to the Stockholders
as third party beneficiaries of the rights and remedies of the Company under
this Agreement, including, without limitation, the rights and remedies under
Article 14 hereof to indemnification from APP and APP Sub against Damages
incurred by the Stockholders resulting from a breach by APP or APP Sub of any
representation, warranty or covenant of APP or APP Sub contained herein.
Except as provided in the preceding sentence or as otherwise provided herein,
neither this Agreement nor any other agreement contemplated hereby shall be
deemed to confer upon any person not a party hereto or thereto any rights or
remedies hereunder or thereunder.
Section 17.4 Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding
the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
Section 17.5 Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 17.6 Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants contained herein
shall survive the Closing and all statements contained in any certificate,
exhibit or other instrument delivered by or on behalf of the Company, any
Stockholder, APP or APP Sub pursuant to this Agreement shall be deemed to have
been representations and warranties by the Company, such Stockholder, APP and
APP Sub. Notwithstanding any provision in this Agreement to the contrary, the
representations and warranties contained herein shall survive the Closing until
the second anniversary of the Closing Date except that (a) the representations
and warranties set forth in Section 3.21 with respect to environmental matters
shall survive for a period of ten (10) years, (b) the representations and
warranties set forth in Section 3.30 with respect to tax matters shall survive
until such time as the limitations period has run for all tax periods ended
prior to the Closing Date, (c) the representations and warranties contained in
Section 3.27 and Section 3.33 with respect to healthcare matters shall survive
for a period of six (6) years and (d) solely for purposes of Section 14.1(c)
and Section 14.2(c), and solely to the extent that any party to be indemnified
pursuant to such provisions actually incurs liability under the Securities Act,
the Exchange Act or any other federal or state securities law, the
representations and warranties set forth therein shall survive until the
expiration of any applicable limitations period.
Section 17.7 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF TEXAS.
Section 17.8 Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
Section 17.9 Gender and Number. When the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter and the number of all words shall include the singular and plural.
Section 17.10 Intentionally omitted.
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Section 17.11 Confidentiality; Publicity and Disclosures. Each
party shall keep this Agreement and its terms confidential, and shall make no
press release or public disclosure, either written or oral, regarding the
transactions contemplated by this Agreement without the prior knowledge and
consent of the other parties hereto; provided that the foregoing shall not
prohibit any disclosure (a) by press release, filing or otherwise that APP has
determined in its good faith judgment and after advice of legal counsel to be
required by federal securities laws or the rules of the National Association of
Securities Dealers, (b) to attorneys, accountants, investment bankers or other
agents of the parties assisting the parties in connection with the transactions
contemplated by this Agreement and (c) by APP in connection with the conduct of
its Initial Public Offering and conducting an examination of the operations and
assets of the Companies; provided that APP shall reasonably promptly provide
notice of any release. In the event that the transactions contemplated hereby
are not consummated for any reason whatsoever, the parties hereto agree not to
disclose or use any Confidential Information they may have concerning the
affairs of the other parties, except for information that is required by law to
be disclosed; provided that should the transactions contemplated hereby not be
consummated, nothing contained in this Section shall be construed to prohibit
the parties hereto from operating businesses in competition with each other.
Section 17.12 Notice. Whenever this Agreement requires or permits
any notice, request, or demand from one party to another, the notice, request
or demand must be in writing to be effective and shall be deemed to be
delivered and received (i) if personally delivered or if delivered by telex,
telegram or courier service, when delivered to the party to whom notice is
sent, (ii) if delivered by facsimile transmission, when so sent and receipt
acknowledged by receipt or (iii) if delivered by mail (whether actually
received or not), at the close of business on the third business day next
following the day when placed in the mail, postage prepaid, certified or
registered, addressed to the appropriate party or parties, at the address of
such party set forth below (or at such other address as such party may
designate by written notice to all other parties in accordance herewith):
If to APP and APP Sub: American Physician Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to the Company
or any Stockholder: Pacific Imaging Consultants
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, MBA
with a copy to: Wendel, Rosen, Black & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 17.13 No Waiver; Remedies. No party hereto shall by any
act (except by written instrument pursuant to Section 17.1 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party
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hereto, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. No remedy set forth in this Agreement
or otherwise conferred upon or reserved to any party shall be considered
exclusive of any other remedy available to any party, but the same shall be
distinct, separate and cumulative and may be exercised from time to time as
often as occasion may arise or as may be deemed expedient.
Section 17.14 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
Section 17.15 Defined Terms. Terms used in Exhibit A, Exhibit B,
Exhibit C, Exhibit D Exhibit E, Exhibit F, Exhibit G and the Disclosure
Schedules attached hereto with their initial letter capitalized and not
otherwise defined therein shall have the meanings as assigned to such terms in
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
APP:
AMERICAN PHYSICIAN PARTNERS, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
APP SUB:
[AMERICAN PHYSICIAN PARTNERS,
SUBSIDIARY, INC.]
By:
------------------------------------
Its:
------------------------------------
THE COMPANY:
PACIFIC IMAGING CONSULTANTS, A MEDICAL
GROUP, INC.
By:
--------------------------------
Its:
--------------------------------
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EXHIBIT A
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
TARGET COMPANIES
A-1
54
EXHIBIT B
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
MERGER CONSIDERATION
B-1
55
EXHIBIT C
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
SHAREHOLDER REPRESENTATION LETTER
C-1
56
EXHIBIT D
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
INDEMNIFICATION AGREEMENT
D-1
57
EXHIBIT E
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
PHYSICIAN EMPLOYMENT AGREEMENT
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
SERVICE AGREEMENT
F-2
59
EXHIBIT G
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
STOCKHOLDER RELEASE
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
TO THE
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED AS OF ________________, 1997
The following Disclosure Schedules and the disclosures set forth therein
are delivered in connection with that certain Agreement and Plan of
Reorganization and Merger dated ____________, 1997, by and between American
Physician Partners, Inc. and the Company (the "Agreement").
The section numbers set forth on the following Disclosure Schedules
correspond to the section numbers in the Agreement. If disclosures made
pursuant to one section number can reasonably be interpreted by other parties to
be a disclosure to another section number, such disclosure shall constitute
disclosure for purposes of such additional section number. Capitalized terms
used herein have the meanings assigned to such terms in the Agreement.
To the extent that the following Disclosure Schedules contain exceptions
to the representations and warranties set forth in Article III of the Agreement,
the inclusion of an item on these Disclosure Schedules shall not be deemed an
admission by American Physician Partners, Inc. that such item is material to
American Physician Partners, Inc., APP Sub, the Company, NewCo or any Company
Subsidiary or that it will have a material adverse effect on American Physician
Partners, Inc., APP Sub, the Company, NewCo or any Company Subsidiary.