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EXHIBIT 2.19
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AGREEMENT AND PLAN OF EXCHANGE
dated as of
June 27, 1997
by and among
AMERICAN PHYSICIAN PARTNERS, INC.
(a Delaware corporation),
SOUTH TEXAS NO. 1 MRI LIMITED PARTNERSHIP
(a Texas limited partnership)
and
THE SELLERS LISTED ON THE SIGNATURE PAGES HEREOF
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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............................................. 5
ARTICLE II Exchange............................................................ 6
ARTICLE III Representations and Warranties of Sellers........................... 6
Section 3.1 Organization and Good Standing; Qualification....................... 7
Section 3.2 Authorization and Validity.......................................... 7
Section 3.3 Governmental Authorization.......................................... 7
Section 3.4 Capitalization and Title............................................ 7
Section 3.5 Transactions in Partnership Units................................... 7
Section 3.6 Continuity of Business Enterprise................................... 8
Section 3.7 Subsidiaries and Investments........................................ 8
Section 3.8 Absence of Conflicting Agreements or Required Consents.............. 8
Section 3.9 Absence of Changes.................................................. 8
Section 3.10 No Undisclosed Liabilities.......................................... 9
Section 3.11 Litigation and Claims............................................... 9
Section 3.12 No Violation of Law................................................. 9
Section 3.13 Lease Agreements.................................................... 10
Section 3.14 Real and Personal Property.......................................... 10
Section 3.15 Indebtedness for Borrowed Money..................................... 10
Section 3.16 Contracts and Commitments........................................... 11
Section 3.17 Employee Matters.................................................... 11
Section 3.18 Labor Relations..................................................... 12
Section 3.19 Employee Benefit Plans.............................................. 12
Section 3.20 Environmental Matters............................................... 12
Section 3.21 Filing Reports...................................................... 13
Section 3.22 Insurance Policies.................................................. 13
Section 3.23 Accounts Receivable................................................. 14
Section 3.24 Accounts Payable; Suppliers......................................... 14
Section 3.25 Inventory........................................................... 14
Section 3.26 Licenses, Authorization and Provider Programs....................... 14
Section 3.27 Inspections and Investigations...................................... 15
Section 3.28 Proprietary Rights and Information.................................. 15
Section 3.29 Taxes............................................................... 16
Section 3.30 Related Party Arrangements.......................................... 16
Section 3.31 Banking Relations................................................... 17
Section 3.32 Fraud and Abuse and Self Referral................................... 17
Section 3.33 Restrictions on Business Activities................................. 17
Section 3.34 Agreements in Full Force and Effect................................. 17
Section 3.35 Statements True and Correct......................................... 17
Section 3.36 Schedules........................................................... 17
Section 3.37 Finders' Fees....................................................... 17
ARTICLE IV Representations and Warranties of APP............................... 18
Section 4.1 Organization and Good Standing; Qualification....................... 18
Section 4.2 Authorization and Validity.......................................... 18
Section 4.3 Governmental Authorization.......................................... 18
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Section 4.4 Capitalization...................................................... 18
Section 4.5 Subsidiaries and Investments........................................ 19
Section 4.6 Absence of Conflicting Agreements or Required Consents.............. 19
Section 4.7 Absence of Changes.................................................. 19
Section 4.8 No Undisclosed Liabilities.......................................... 19
Section 4.9 Litigation and Claims............................................... 20
Section 4.10 No Violation of Law................................................. 20
Section 4.11 Employee Matters.................................................... 20
Section 4.12 Taxes............................................................... 20
Section 4.13 Related Party Arrangements.......................................... 21
Section 4.14 Statements True and Correct......................................... 21
Section 4.15 Schedules........................................................... 21
Section 4.16 Finder's Fees....................................................... 21
ARTICLE V Covenants of Seller and South Texas................................. 21
Section 5.1 Required Conduct of Seller and South Texas.......................... 22
Section 5.2 Prohibited Conduct of Seller and South Texas........................ 22
Section 5.3 Title to Assets; Indebtedness....................................... 23
Section 5.4 Access.............................................................. 23
Section 5.5 Acquisition Proposals............................................... 23
Section 5.6 Compliance With Obligations......................................... 24
Section 5.7 Notice of Certain Events............................................ 24
Section 5.8 Partners' Consent................................................... 25
Section 5.9 Obligations of Seller and .......................................... 25
Section 5.10 Intentionally omitted............................................... 25
Section 5.11 Accounting and Tax Matters.......................................... 25
ARTICLE VI Covenants of APP.................................................... 26
Section 6.1 Consummation of Agreement........................................... 26
Section 6.2 Access.............................................................. 26
Section 6.3 Notification of Certain Matters..................................... 26
ARTICLE VII Covenants of APP, Seller and South Texas............................ 26
Section 7.1 Filings; Other Action............................................... 26
Section 7.2 Amendments of Schedules............................................. 27
Section 7.3 Actions Contrary to Stated Intent................................... 27
Section 7.4 Public Announcements................................................ 27
Section 7.5 Expenses............................................................ 27
Section 7.6 Registration Statements............................................. 28
ARTICLE VIII Conditions Precedent of APP......................................... 28
Section 8.1 Representations and Warranties...................................... 28
Section 8.2 Covenants........................................................... 28
Section 8.3 Legal Opinion....................................................... 28
Section 8.4 Proceedings......................................................... 28
Section 8.5 No Material Adverse Effect.......................................... 28
Section 8.6 Government Approvals and Required Consents.......................... 28
Section 8.7 Securities Approvals................................................ 28
Section 8.8 Closing Deliveries.................................................. 29
Section 8.9 Closing of Initial Public Offering.................................. 29
Section 8.10 Closing of Related Acquisitions..................................... 29
Section 8.11 Closing of General Partner Acquisition.............................. 29
Section 8.12 Execution by Each Seller and South Texas............................ 29
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ARTICLE IX Conditions Precedent of Seller and South Texas...................... 29
Section 9.1 Representations and Warranties...................................... 29
Section 9.2 Covenants........................................................... 29
Section 9.3 Legal Opinions...................................................... 29
Section 9.4 Proceedings......................................................... 29
Section 9.5 Government Approvals and Required Consents.......................... 29
Section 9.6 "Blue Sky" Approvals; Nasdaq Listing................................ 29
Section 9.7 Closing of Initial Public Offering.................................. 30
Section 9.8 Closing Deliveries.................................................. 30
Section 9.9 No Material Adverse Effect.......................................... 30
ARTICLE X Closing Deliveries.................................................. 30
Section 10.1 Deliveries of Seller and South Texas................................ 30
Section 10.2 Deliveries of APP................................................... 31
ARTICLE XI Post Closing Matters................................................ 32
Section 11.1 Further Instruments of Transfer..................................... 32
Section 11.2 Exchange Tax Covenant............................................... 32
ARTICLE XII Remedies............................................................ 32
Section 12.1 Indemnification by Sellers.......................................... 32
Section 12.2 Indemnification by APP.............................................. 33
Section 12.3 Conditions of Indemnification....................................... 34
Section 12.4 Remedies Not Exclusive.............................................. 36
Section 12.5 Costs, Expenses and Legal Fees...................................... 36
Section 12.6 Tax Benefits; Insurance Proceeds.................................... 36
Section 12.7 Dispute Resolution.................................................. 37
ARTICLE XIII Termination......................................................... 38
Section 13.1 Termination......................................................... 38
Section 13.2 Effect of Termination............................................... 38
ARTICLE XIV Nondisclosure of Confidential Information........................... 39
Section 14.1 Non-Disclosure Covenant............................................. 39
Section 14.2 Damages............................................................. 39
Section 14.3 Survival............................................................ 39
ARTICLE XV Miscellaneous....................................................... 39
Section 15.1 Amendment; Waivers.................................................. 39
Section 15.2 Assignment.......................................................... 39
Section 15.3 Parties in Interest; No Third Party Beneficiaries................... 40
Section 15.4 Entire Agreement.................................................... 40
Section 15.5 Severability........................................................ 40
Section 15.6 Survival of Representations, Warranties and Covenants............... 40
Section 15.7 Governing Law....................................................... 40
Section 15.8 Captions............................................................ 40
Section 15.9 Gender and Number................................................... 40
Section 15.10 Confidentiality; Publicity and Disclosures.......................... 41
Section 15.11 Notice.............................................................. 41
Section 15.12 No Waiver; Remedies................................................. 42
Section 15.13 Counterparts........................................................ 42
Section 15.14 Defined Terms....................................................... 42
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EXHIBITS
Exhibit A - List of Sellers and Exchange Consideration.......................................... A-1
Exhibit B - Target Companies.................................................................... B-1
Exhibit C - Legal Opinion of Sellers' Counsel................................................... C-1
Exhibit D - Legal Opinion of APP's Counsel...................................................... D-1
Exhibit E - Seller Release...................................................................... E-1
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AGREEMENT AND PLAN OF EXCHANGE
This Agreement and Plan of Exchange ("Agreement") dated June ___,
1997 is by and among American Physician Partners, Inc., a Delaware corporation,
("APP"), South Texas No. 1 MRI Limited Partnership, a Texas limited partnership
("South Texas") and each of the individuals whose names appear on Exhibit A
hereto (each individually, a "Seller" and collectively "Sellers").
RECITALS
A. Each Seller is a limited partner of South Texas and the Sellers
together own an aggregate of ninety-nine percent (99%) of the total interests of
the partners in South Texas.
B. South Texas owns a forty-nine percent (49%) interest in Baptist
Imaging Center and Northeast Baptist Imaging Center, respectively, and each such
entity owns assets relating to and operates a diagnostic imaging center.
C. APP 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.
▇. ▇▇▇▇▇▇▇ desire to convey to APP and APP desires to acquire from
Sellers, ninety-nine percent (99%) of the total interests of the partners in
South Texas (the "Partnership Units") in consideration for cash and shares of
common stock, par value $.0001 per share, of APP (the "APP Common Stock") as set
forth herein (the "Exchange").
E. The General Partner of South Texas, South Texas MR, Inc., a Texas
corporation, owns a one percent (1%) interest in South Texas, which interest is
being acquired indirectly by APP (the "General Partner Acquisition").
F. APP and subsidiaries of APP 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 Sellers, the "Target Interest Holders") of
each of the entities listed on Exhibit B (together with South Texas, the "Target
Companies").
AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
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ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Acquisition" shall have the meaning set forth in Section 2.1.
"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.
"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 partners
set forth in Exhibit A, stockholder or director, as the case may be, 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 Seller and South Texas made
specifically in Section 3.20 is expressly qualified to the knowledge or best
knowledge of Sellers and South Texas, it shall mean the knowledge of any of the
Sellers set forth in Exhibit A, partner or executive officer of South Texas
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 12.3(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"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.
"Current Policies" shall have the meaning set forth in Section 3.22.
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"Damages" shall have the meaning set forth in Section 12.1.
"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date that the Form S-1 Registration
Statement is declared effective by the SEC.
"Election Period" shall have the meaning set forth in Section
12.3(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
3.20(e).
"Environmental Liabilities" shall have the meaning set forth in
Section 3.20(e).
"ERISA" shall have the meaning set forth in Section 3.17.
"Exchange" shall have the meaning set forth in the recitals.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" shall have the meaning set forth in the
recitals to this Agreement.
"Exchange Consideration" shall have the meaning set forth in Section
2.1.
"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 Exchange and other mergers or
acquisitions contemplated by the Other Agreements.
"FTC" shall mean the United States Federal Trade Commission.
"General Partner Acquisition" shall have the meaning set forth in
the recitals.
"Governmental Programs" shall have the meaning set forth in Section
3.26(a).
"Hazardous Substance" shall have the meaning set forth in Section
3.20(e).
"Indemnified Party" shall have the meaning set forth in Section
12.1.
"Indemnifying Party" shall have the meaning set forth in Section
12.1.
"Indemnity Notice" shall have the meaning set forth in Section
12.3(d).
"Initial Public Offering" shall mean the initial underwritten public
offering of APP Common Stock contemplated by the Form S-1.
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"Insurance Policies" shall have the meaning set forth in Section
3.22.
"IRS" shall mean the Internal Revenue Service.
"Lease Agreements" shall have the meaning set forth in Section 3.13.
"Lock-Up Provisions" shall have the meaning set forth in Section
5.12.
"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 South Texas's assets or operations and purport to
regulate Medical Waste or impose requirements related to Medical Waste.
"Medicare and Medicaid Programs" shall have the meaning set forth in
Section 3.26(a).
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
Sections 6992, et seq.
"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.
"Partnership Agreement" shall have the meaning set forth in Section
3.1 hereto.
"Partnership 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, partnership interests
of South Texas, or by which South Texas is or may be bound to issue additional
Partnership Units or other Partnership Rights.
"Partnership Subsidiary" shall have the meaning set forth in Section
3.7.
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"Partnership Units" shall have the meaning set forth in the recitals
to this Agreement.
"Person" shall mean any natural person, corporation, partnership,
joint venture, limited liability company, association, group, organization or
other entity.
"Private Programs" shall have the meaning set forth in Section
3.26(a).
"Proprietary Right" shall have the meaning set forth in Section
3.28(a).
"Registration Statements" shall mean the Form S-1 and the Form S-4.
"Regulated Activity" shall have the meaning set forth in Section
3.20(e).
"Related Acquisitions" shall mean, collectively, 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 11.2.
"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.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Release" shall have the meaning set forth in Section
11.1(l).
"South Texas" shall have the meaning set forth in the preamble 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
12.3(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.
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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
Exchange
Section 2.1 Exchange of Partnership Units for Cash and APP Common
Stock.
(a) Subject to and upon the terms and conditions contained
herein, on the Closing Date Sellers shall convey, transfer deliver and assign to
APP ninety-nine percent (99%) of the total interests of the partners in South
Texas, free and clear of all obligations, security interests, claims, liens and
encumbrances whatsoever (the "Acquisition"). Subject to and upon the terms and
conditions contained herein, as consideration for such Partnership Units on the
Closing Date each Seller shall receive (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 A attached hereto (the "Exchange
Consideration").
(b) Each Seller shall deliver to APP at the Closing a ▇▇▇▇
of Sale representing the Partnership Units owned by him, her or it. Each Seller
agrees to cure any deficiencies with respect to the endorsement of the
certificates or other documents of conveyance with respect to such Partnership
Units or with respect to the powers accompanying any Partnership Unit. Upon such
delivery, each Seller shall receive in exchange therefor the Exchange
Consideration pursuant to Exhibit A.
Section 2.2 Legends. All APP Common Stock certificates issued to the
Sellers shall bear one or more of the following restrictive legends:
(a) Any legend required to put third-parties on notice of
the existence of the Lock-Up Provisions.
(b) Any legend relating to affiliates of the Company as
required pursuant to the Securities and Exchange Act of 1934.
Section 2.3 Closing. The closing (the "Closing") of the transactions
provided for in Section 2.1 shall take place at 10:00 a.m., local time, at the
offices of APP located at 2301 NationsBank Plaza, 901 Main Street, 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."
ARTICLE III
Representations and Warranties of Sellers and South Texas
As an inducement to APP to enter into this Agreement, each of Seller
and South Texas represents and warrants to APP both as of the date hereof and as
of the Closing Date as set forth below, subject to those exceptions set forth in
the Disclosure Schedules attached hereto and incorporated herein by this
reference, specifically identifying the relevant subparagraph hereof, which
exceptions shall be deemed to be representations and warranties as if made
hereunder.
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Section 3.1 Organization and Good Standing; Qualification. South
Texas is a limited partnership duly organized and validly existing under the
laws of its state of organization, with all requisite power and authority to
own, operate and lease its assets and properties and to carry on its business as
currently conducted. South Texas 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
South Texas. Copies of the Certificate of Limited Partnership and all amendments
thereto of South Texas and the Limited Partnership Agreement of South Texas and
all amendments thereto (the "Partnership Agreement") and copies of the minutes
of South Texas, 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 minutes, accurately reflect all material proceedings of the
partners of South Texas (and all committees thereof).
Section 3.2 Authorization and Validity. South Texas has all
requisite right, power and authority to execute, deliver and perform this
Agreement and all agreements and other documents executed and delivered by it
pursuant to this Agreement or to be executed and delivered on the Closing Date,
and has taken all action required by law, its Certificate of Limited
Partnership, its Partnership Agreement or otherwise, to authorize the execution,
delivery and performance of this Agreement and such related documents. Seller
has the legal capacity to enter into and perform this Agreement and the other
agreements to be executed and delivered in connection herewith. This Agreement
and all agreements and documents executed and delivered in connection herewith
have been, or will be as of the Closing Date, duly executed and delivered by
Seller and South Texas and constitute or will constitute the legal, valid and
binding obligations of Seller, enforceable against Seller and South Texas in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by general equity principles, or by public policy.
Section 3.3 Governmental Authorization. Other than consents, filings
or notifications required to be made or obtained solely by APP (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 Seller and South Texas of this Agreement and the agreements
provided for herein, and the consummation of the transactions contemplated
hereby and thereby by Seller and South Texas requires no action by or in respect
of, or filing with, any governmental body, agency, official or authority.
Section 3.4 Capitalization and Title. The Sellers collectively are,
and will be immediately prior to the Closing Date, the record and beneficial
owners of all the issued and outstanding Partnership Units of South Texas and
Seller is the owner of the Partnership Units currently held in his or her name
on the record books of South Texas, free and clear of all Encumbrances. Each
Partnership Unit held by Seller 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 and (ii) all applicable state
securities laws.
Section 3.5 Transactions in Partnership Units. There exist no
Partnership Rights. Except for the General Partner Acquisition referenced
herein, South Texas has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its partnership interests or to pay any
dividend or make any distribution in respect thereof. Neither the equity
structure of South Texas nor the relative ownership of partnership interests
among any of its partners has been altered or changed in contemplation of the
Exchange within the two (2) years preceding the date of this Agreement.
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Section 3.6 Continuity of Business Enterprise. There has not been
any sale, distribution or spin-off of significant assets of South Texas or any
of its Affiliates other than in the ordinary course of business within the two
(2) years preceding the date of this Agreement.
Section 3.7 Subsidiaries and Investments. South Texas 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 "Partnership Subsidiary").
Section 3.8 Absence of Conflicting Agreements or Required Consents.
The execution, delivery and performance by Seller and South Texas 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 South Texas; (ii) will not conflict with or result in
a violation of any provision of South Texas's Certificate of Limited Partnership
or Partnership Agreement; (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 Seller or South Texas or
by which Seller or South Texas or South Texas's 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 modify, or permit any person to accelerate or modify, any performance
required by the terms of any agreement, instrument, license or permit, to which
South Texas is a party or by which South Texas 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 South
Texas; and (v) except as contemplated by this Agreement, will not create any
Encumbrance or restriction upon the Partnership Units or any of the assets or
properties of South Texas.
Section 3.9 Absence of Changes. Except as permitted or contemplated
by this Agreement, since March 31, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 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 South Texas;
(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 South Texas, 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;
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(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 for 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 South Texas, 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 partner or any other holder of any partnership
interest in South Texas (except as expressly contemplated herein); or
(m) agreed, whether in writing or otherwise, to take any
action described in this Section 3.9.
Section 3.10 No Undisclosed Liabilities. To the best knowledge of
Seller and South Texas, South Texas 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 in the Disclosure
Schedules.
Section 3.11 Litigation and Claims. There are no claims, lawsuits,
actions, arbitrations, administrative or other proceedings, governmental
investigations or inquiries pending or, to the knowledge of Seller and South
Texas, threatened against, or affecting South Texas, any Partnership Subsidiary,
or, to the knowledge of Seller and South Texas, any Seller or any other licensed
professional or other individual affiliated with South Texas affecting or that
would reasonably be likely to affect the Partnership Units or the operations,
business condition (financial or otherwise), or results of operations of South
Texas which (i) if successful, may, individually or in the aggregate, have a
Material Adverse Effect on South Texas or (ii) could adversely affect the
ability of South Texas or any Partnership Subsidiary to effect the transactions
contemplated hereby, and to the knowledge of Seller and South Texas 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 Seller, South Texas or any Partnership Subsidiary
or any licensed professional or other individual affiliated with South Texas or
any Partnership Subsidiary relating to services provided on behalf of South
Texas or any Partnership Subsidiary or any consent decrees to which any of the
foregoing is subject. Each of the matters, if any, set forth in this Section
3.11 is fully covered by policies of insurance of South Texas or any Partnership
Subsidiary as in effect on the date hereof.
Section 3.12 No Violation of Law. Neither South Texas nor any
Partnership Subsidiary has been, nor shall be as of the Closing Date (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
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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
South Texas.
Section 3.13 Lease Agreements. The Disclosure Schedules contain a
true, accurate and complete list of all the lease agreements and license
agreements to which South Texas or any Partnership Subsidiary is a party and
pursuant to which South Texas or any Partnership 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"). South Texas 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 South Texas or any Partnership 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 South Texas or any Partnership Subsidiary
(as applicable) and, individually or in the aggregate, may reasonably result in
a Material Adverse Effect on South Texas, or, (ii) to the knowledge of Seller
and South Texas, 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 Seller and South Texas, there is no pending or
threatened reassessment of any property covered by the Lease Agreements. To the
extent necessary to accomplish the intent of the Agreement, South Texas or any
Partnership Subsidiary shall use reasonable good faith efforts, and Seller shall
use reasonable good faith efforts to cause South Texas, to obtain prior to the
Closing Date 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 in writing such consents as are necessary to effect a
valid and binding transfer or assignment of South Texas's or any Partnership
Subsidiary's rights thereunder. South Texas 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.
Section 3.14 Real and Personal Property.
(a) Neither South Texas nor each Partnership Subsidiary owns
any interest (other than the Lease Agreements) in real property.
(b) South Texas and each Partnership 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;
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 South Texas and each Partnership Subsidiary constitutes the
necessary personal property assets to continue operation of South Texas and each
Partnership Subsidiary.
Section 3.15 Indebtedness for Borrowed Money. Except for trade
payables incurred in the ordinary course of business, South Texas 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.
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Section 3.16 Contracts and Commitments.
(a) The Disclosure Schedules contain a true, accurate and
complete list, and South Texas has delivered to APP true and complete copies, of
each contract, agreement and other instrument requiring South Texas to make
future payments of $10,000 in any fiscal year or $25,000 in the aggregate (other
than insurance contracts identified in Section 3.22 or Lease Agreements
identified in Section 3.13) to which South Texas is a party or by which it or
any of its properties or assets are bound including, without limitation, (i) all
agreements between South Texas, on the one hand, and any 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 South Texas to make, or
setting forth conditions under which South Texas 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 South Texas
(or any provider employee of South Texas) 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 South Texas 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 in the ordinary course of business 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 South Texas 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 of the assets and properties to be acquired by APP from South
Texas, or which could inhibit or prevent South Texas from transferring to or
vesting in APP good and sufficient title to the assets and properties to be
acquired by APP except where the failure to transfer would not have a Material
Adverse Effect on APP. In every instance where consent is necessary, on or
before the Closing Date South Texas shall use reasonable good faith efforts, and
Seller shall use reasonable good faith efforts to cause South Texas, to obtain
and deliver to APP in writing, effective as of the Closing Date, such consents
as are necessary to enable APP to enjoy all of the rights now enjoyed by South
Texas under such contracts. Any and all such consents shall be in a form
reasonably acceptable to APP and shall contain an acknowledgment by the
consenting party that South Texas has fully complied with and is not in default
under any provision of the particular contract or agreement.
(b) (i) Neither South Texas nor Seller has received notice
of any plan or intention of any other party to exercise any right to cancel or
terminate any contract, agreement or instrument, and to the knowledge of South
Texas and Seller there are no facts that would justify the exercise of such a
right; and (ii) neither South Texas nor Seller currently contemplates, or has
reason to believe any other Person currently contemplates, any amendment or
change to any such contract, agreement or instrument.
Section 3.17 Employee Matters. South Texas does not have any
employees and 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 or other nonqualified benefit or compensation
commitments, benefit plans, arrangements or plans (whether written
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or oral), including all welfare plans (as defined in Section 3(1) of ERISA) of
or pertaining to South Texas and any of its present or former employees, or any
predecessors in interest.
Section 3.18 Labor Relations. Intentionally omitted.
Section 3.19 Employee Benefit Plans. Intentionally omitted.
Section 3.20 Environmental Matters.
(a) Neither South Texas nor any Partnership Subsidiary has,
within the five (5) years preceding the date hereof, through the Closing Date,
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 Seller and South Texas no investigation or review is pending by any
governmental entity, with respect to any (i) alleged violation by South Texas of
any Environmental Law (as defined in subsection (e) below) (ii) alleged failure
by South Texas 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 South Texas.
(b) Neither South Texas nor any Partnership 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 that would be reasonably
likely to give rise to any Environmental Liabilities for South Texas under any
applicable Environmental Law that had, or would reasonably be likely to have, a
Material Adverse Effect on South Texas. Neither South Texas nor any Partnership
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
South Texas's or any Partnership Subsidiary's owned or leased premises. To the
knowledge of Seller and South Texas, there is no friable asbestos in or on South
Texas's or any Partnership Subsidiary's owned or leased premises.
(c) To the knowledge of Seller and South Texas, no soil or
water in or under any assets currently or formerly held for use or sale by South
Texas or any Partnership 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 South Texas or any Partnership Subsidiary, where such
contamination had, or would be reasonably likely to have, a Material Adverse
Effect on South Texas.
(d) There have been no environmental audits and other
similar reports which have been prepared by, for or, to the knowledge of Seller
and South Texas, concerning South Texas or any Partnership Subsidiary within the
five (5) years preceding the date hereof through the Closing Date with respect
to any real property now or previously owned or leased by South Texas, any
Partnership Subsidiary or any of its predecessors, true and complete copies of
which have been provided to APP.
(e) For the purposes of this Section 3.20(e), the following
terms have the following meanings:
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"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 Closing
Date.
"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 3.21 Filing Reports. All returns, reports, plans and filings
of any kind or nature necessary to be filed by South Texas 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 South Texas.
Section 3.22 Insurance Policies. The Disclosure Schedules list and
briefly describe South Texas's policies of insurance to which South Texas or any
Partnership Subsidiary is a party or under which South Texas or any Partnership
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 South Texas or any Partnership 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
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 South
Texas or any Partnership Subsidiary ("Current Policies") taken together, (i)
provide adequate insurance coverage for the assets, properties and operations of
South Texas and its Affiliates for all risks normally insured against by a
Person carrying on a substantially similar business or businesses as South Texas
and its Affiliates, (ii) are sufficient for compliance with legal and
contractual requirements to which South Texas 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
South Texas nor any Partnership Subsidiary nor any officer or partner 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 Seller and South Texas, 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 South Texas nor any Partnership Subsidiary has filed a written
application for any
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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 South
Texas or any Partnership Subsidiary during the immediately preceding three-year
period.
Section 3.23 Accounts Receivable. The Disclosure Schedules set forth
a list and aging of all accounts receivable of South Texas 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 Seller and South Texas collectible in the ordinary course of
business, net of reserves for doubtful and uncollectible accounts shown on the
accounting records of South Texas (which reserves are adequate and calculated
consistent with past practice).
Section 3.24 Accounts Payable; Suppliers.
(a) The Disclosure Schedules set forth a true and complete
(i) list of the accounts payable of South Texas as of March 31, 1997, and (ii)
list of each individual indebtedness owned by South Texas 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 South Texas (including, without limitation all providers
of care to patients) which accounted for a dollar volume of purchases paid for
by South Texas 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 South Texas in excess of $25,000 for the fiscal year to
end [DECEMBER 31, 1997].
Section 3.25 Inventory. All items of inventory on hand on the date
of this Agreement consist, and all such items on hand on the Closing Date 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 South Texas's business and conform to
generally accepted standards in the industry of which South Texas is a part.
Purchase commitments of South Texas 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 3.26 Licenses, Authorization and Provider Programs.
(a) South Texas and each other licensed employee or
contractor of South Texas (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 his/her/its business 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 South Texas is eligible ("Governmental Programs"). Each of
South Texas and Seller 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 South Texas is presently
receiving payments directly or indirectly from any Payor for technical imaging
services provided by any licensed technician or contractor of South Texas (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
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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 South Texas,
and there is no action pending or to the knowledge of Seller and South Texas
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 South Texas 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
Seller and South Texas, there has been no decision not to renew any existing
agreement with any provider or Payor relating to South Texas's business as
presently being conducted by it. South Texas (i) has not had 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 not 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), (iii) is not 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 it in connection
with a malpractice or similar action.
(b) South Texas is not required, or for the 72-month period
prior to the Closing Date was not required, to file any cost reports or other
reports with any Governmental Program or Private Program.
Section 3.27 Inspections and Investigations. Neither the right of
South Texas, nor the right of any licensed professional or other individual
affiliated with South Texas 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 licensed professional or other individual affiliated with the business
has, during the past three (3) years prior to the Closing Date, 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 3.27 have been provided to APP.
Section 3.28 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 South Texas or any
Partnership 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 South Texas or any Partnership Subsidiary, (iii) all
licenses, royalties, and assignments thereof to which South Texas or any
Partnership Subsidiary are a party (iv) all copyrights (for published and
unpublished works) currently owned in whole or part, or used by South Texas or
any
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Partnership Subsidiary and (v) other similar agreements relating to the
foregoing to which South Texas or any Partnership 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 South Texas 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 knowledge of Seller and South Texas, any threatened
disputes or disagreements with respect to any such agreement.
(c) South Texas 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 Seller and South
Texas, no claim has been asserted by any person to the ownership of or for
infringement by South Texas of any Proprietary Right of any other Person, and
neither South Texas nor Seller is aware of any valid basis for any such claim.
To the best knowledge of Seller and South Texas, no proceedings have been
threatened which challenge the Proprietary Rights of South Texas. South Texas
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 3.29 Taxes.
(a) Filing of Tax Returns. South Texas 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 South Texas for the periods covered thereby.
(b) All Withholding Requirements Satisfied. All monies
required to be withheld by South Texas 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.
(c) Safe Harbor Lease. None of the properties or assets of
South Texas constitutes property that South Texas, APP, 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.
(d) Tax Exempt Entity. None of the assets or properties of
South Texas are subject to a lease to a "tax exempt entity" as such term is
defined in Section 168(h)(2) of the Code.
(e) Boycotts. South Texas has not at any time participated
in or cooperated with any international boycott as defined in Section 999 of the
Code.
Section 3.30 Related Party Arrangements. The Disclosure Schedules
set forth a description of any interest held, directly or indirectly, by any
officer, partner or other Affiliate of South Texas in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to South
Texas'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 South Texas's
business. There is no commitment to, and no income that has been derived from,
an Affiliate, and following the Closing South Texas shall not have any
obligation of any kind or designation to any such Affiliate.
Section 3.31 Banking Relations. Set forth in the Disclosure
Schedules is a complete and accurate list of all borrowing and investing
arrangements that South Texas 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 3.32 Fraud and Abuse and Self Referral. Neither South Texas
nor any Partnership Subsidiary has engaged and, to the knowledge of Seller and
South Texas, neither South Texas's officers and partners nor other Persons and
entities providing professional services for or on behalf of South Texas 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 3.33 Restrictions on Business Activities. There is no
material agreement, judgment, injunction, order or decree binding upon South
Texas, any Partnership Subsidiary or officer, partner or key employee of South
Texas or Partnership Subsidiary, which has or reasonably could be expected to
have the effect of prohibiting or materially impairing any acquisition of
property by South Texas or any Partnership Subsidiary or the conduct of business
by South Texas or any Partnership Subsidiary.
Section 3.34 Agreements in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referred to, or required to be
referred to, in the 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 Seller and South Texas,
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 South Texas or any other party thereto.
Section 3.35 Statements True and Correct. No representation or
warranty made herein by South Texas or Seller, nor any statement, certificate,
information, exhibit or instrument to be furnished by South Texas or Seller to
APP or any of its representatives pursuant to this Agreement, contains or will
contain as of the Closing Date 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 3.36 Schedules. The 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 3.37 Finders' Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of
Seller or South Texas 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 each Seller and South Texas to enter into this
Agreement, APP represents and warrants to each Seller and South Texas both as of
the date hereof and as of the Closing Date as set forth below, subject to those
exceptions set forth in the Disclosure Schedules attached hereto and
incorporated herein by this reference, specifically identifying the relevant
subparagraphs hereof, which exceptions shall be deemed to be representations and
warranties as if made hereunder.
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
transactions contemplated hereby, all of which have been or will be made
available to Sellers and South Texas 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 transactions contemplated hereby. The stock record books
of APP, which have been or will be made available to Sellers and South Texas 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 to consummate the
transactions contemplated hereby. The execution, delivery and performance by APP
of this Agreement, the agreements provided for herein and 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 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
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 consents, filings
or notifications required to be made or obtained solely by South Texas, the
execution, delivery and performance by APP of this Agreement and the agreements
provided for herein, and the consummation of 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,
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
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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, 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.
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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 Closing Date (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 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.
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(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.
(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 a Seller or South Texas pursuant
to this Agreement, contains or will contain as of the Closing Date 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 Disclosure 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.
ARTICLE V
Covenants of Seller and South Texas
Each of Seller and South Texas makes the covenants and agreements as
set forth in this Article V, which shall apply with respect to the period from
the date hereof to the Closing Date and, to the extent contemplated herein,
thereafter and agree that:
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Section 5.1 Required Conduct of Seller and South Texas. From the
date hereof until the Closing Date, South Texas shall, and Seller shall use
his/her/its best efforts to cause South Texas to, in all material respects,
conduct the business of South Texas in the ordinary and usual course consistent
with past practices and shall use reasonable efforts to:
(a) preserve intact South Texas's business and its
relationships with referral sources, customers, suppliers, patients, employees
and others having business relations with it;
(b) maintain and keep South Texas's properties and assets in
good repair and condition consistent with past practice as is material to the
conduct of the business of South Texas;
(c) continuously maintain insurance coverage substantially
equivalent to the insurance coverage in existence on the date hereof.
Section 5.2 Prohibited Conduct of Seller and South Texas. Without
the written consent of APP, South Texas shall not, and Seller shall use
his/her/its best efforts to cause South Texas not to:
(a) amend South Texas's Certificate of Limited Partnership
or Partnership Agreement or other charter documents;
(b) issue, sell or authorize for issuance or sale, any
partnership interests of South Texas (except for the General Partner
Acquisition) 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 interests;
(c) 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;
(d) declare or pay any dividend or other distribution
(whether in cash, stock or other property) with respect to its partnership
interest (except as expressly contemplated herein);
(e) voluntarily sell, transfer, surrender, abandon or
dispose of any of South Texas's 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;
(f) grant or make any mortgage or pledge or subject South
Texas or any of South Texas's 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;
(g) 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 South Texas's
business;
(h) make or commit to make any capital expenditures which
are not reasonably necessary for the conduct of South Texas's business;
(i) grant any increase in the compensation payable or to
become payable to partners, officers, consultants or employees other than merit
increases to employees of South Texas who are not partners or officers of South
Texas, except in the ordinary course of business and consistent with past
practices;
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(j) change in any manner any accounting principles or
methods other than changes which are consistent with generally accepted
accounting principles;
(k) enter into any material commitment or transaction other
than in the ordinary course of business;
(l) take any action which could reasonably be expected to
have a Material Adverse Effect on South Texas;
(m) 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 South Texas, other than in
the ordinary course and consistent with past practices;
(n) agree, whether in writing or otherwise, to do any of the
foregoing; and
(o) take any action to in any way amend, revise or otherwise
affect South Texas's prior approval and effectiveness of this Agreement or any
of the agreements attached as exhibits hereto, other than as required to
discharge their fiduciary duties.
Section 5.3 Title to Assets; Indebtedness. As of the Closing Date,
South Texas shall (i) except for sales of assets held as inventory, if any, in
the ordinary course of business prior to the Closing Date and except as
otherwise specifically described in the 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 Disclosure Schedules hereto or for
normal and recurring accrued obligations of South Texas 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 5.4 Access. At all times prior to the Closing Date, 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 South Texas,
including, without limitation, deeds, title documents, leases, patient lists,
insurance policies, minute books, Partnership Unit 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 South Texas. 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 South Texas or Seller of the Exchange to the
employees of South Texas which shall occur no later than three (3) days
subsequent to execution hereof by South Texas), accountants, counsel and agents
of South Texas in connection with such investigation of the properties and
business of South Texas. No investigation by APP shall diminish or otherwise
affect any of the representations, warranties, covenants or agreements of South
Texas under this Agreement. Any access or investigation referred to in this
Section 5.4 shall be conducted in such a manner as to minimize the disruption to
South Texas's ongoing business operations.
Section 5.5 Acquisition Proposals. Except for the General Partner
Acquisition, Seller shall not, and shall use his/her/its best efforts to cause
South Texas not to, and South Texas shall not, and shall cause each of its
partners, officers, employees or agents not to, directly or indirectly:
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(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 partnership interests of
South Texas, 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 South Texas, 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 South Texas. If South Texas receives any
offer or proposal after the date hereof, written or otherwise, of the type
referred to above, South Texas 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 5.6 Compliance With Obligations. Prior to the Closing Date,
South Texas shall, and Seller shall use his/her/its best efforts to cause South
Texas to, 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 Partnership Agreement, 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 South Texas, and its respective
properties or assets.
Section 5.7 Notice of Certain Events. Each of Seller and South Texas
shall, and Seller shall use his/her/its best efforts to cause South Texas to,
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 South
Texas 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 South
Texas;
(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 South Texas 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;
(f) any material adverse change in the operation of South
Texas, 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
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(g) any notice or other communication indicating a material
deterioration in the relationship with any Payor or supplier or key employee of
South Texas and, if requested by APP, will exert its reasonable best efforts to
restore the relationship.
Section 5.8 Partners' Consent. Seller hereby consents to this
Agreement and the transactions contemplated hereby, including, without
limitation, the Exchange, on the terms and conditions set forth herein and in
the agreements and documents contemplated hereby, and hereby waives all other
rights of first offer, rights of first refusal and similar rights that Seller
may have with respect to a transfer of Partnership Units by him/her/it or any
other Seller.
Section 5.9 Obligations of Seller and South Texas. Subject to
Section 5.8 hereof, each of Seller and South Texas shall, and Seller shall use
his/her/its best efforts to cause South Texas to, perform its obligations under
this Agreement and all related agreements, and each of Seller and South Texas
shall, and Seller shall use his/her/its best efforts to cause South Texas to,
consummate the transactions contemplated hereby and thereby on the terms and
conditions set forth in this Agreement and such agreements.
Section 5.10 Intentionally omitted.
Section 5.11 Accounting and Tax Matters. South Texas will not, and
Seller shall use his/her/its best efforts to cause South Texas not to, change in
any material respect the accounting methods or practices followed by South Texas
(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. South Texas will not, and
Seller shall use his/her/its best efforts to cause South Texas not to, 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. South
Texas will, and Seller shall use his/her/its best efforts to cause South Texas
to, duly, accurately and timely (without regard to any extensions of time) file
all returns, information statements and other documents relating to taxes of
South Texas required to be filed by it, and South Texas shall, and Seller shall
use his/her/its best efforts to cause South Texas to, pay all taxes required to
be paid by South Texas, on or before the Closing Date.
Section 5.12 Lock-Up Provisions. Seller irrevocably agrees that
he/she/it will not, directly or indirectly, sell, offer, contract for sale, make
any short sale, pledge or otherwise transfer or dispose of any of the APP Common
Stock without the prior written consent of APP (which consent may be
unreasonably withheld in APP's absolute and sole discretion) during the two-year
period commencing on the Effective Date. Notwithstanding the preceding, the
restrictions contained in the prior sentence shall no longer apply (i) as to
twenty-five percent (25%) of the Shares of APP Common Stock received by a Seller
pursuant to the Exchange following expiration of a one-year period following the
Effective Date, (ii) as to an additional twenty-five percent (25%) of the Shares
of APP Common Stock received by a Seller pursuant to the Exchange following
expiration of an eighteen-month period following the Effective Date, and (iii)
as to the remaining fifty percent (50%) of the Shares of APP Common Stock
received by Seller pursuant to the Exchange following expiration of a
twenty-four-month period following the Effective Date. Seller understands and
acknowledges that the restrictions contained in this Section 5.12 (the "Lock-Up
Provisions") are irrevocable and shall be binding upon Seller's heirs, legal
representatives, successors and assigns.
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ARTICLE VI
Covenants of APP
APP agrees that between the date hereof and the Closing:
Section 6.1 Consummation of Agreement. APP 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 Exchange; provided, however, that this
covenant shall not require APP to make any expenditures that are not expressly
set forth in this Agreement or otherwise contemplated herein.
Section 6.2 Access. APP shall, at reasonable times during normal
business hours and on reasonable notice, permit South Texas and its authorized
representatives reasonable access to, and make available for inspection, all of
the assets and business of APP, including its executive officers, and permit
South Texas and its authorized representatives to inspect and, at South Texas's
sole expense, make copies of all documents, records and information with respect
to the affairs of APP as South Texas and its representatives may reasonably
request, all for the sole purpose of permitting South Texas to become familiar
with the business and assets and liabilities of APP. No investigation by South
Texas or Seller shall diminish or otherwise affect any of the representations,
warranties, covenants or agreements of APP under this Agreement.
Section 6.3 Notification of Certain Matters. APP shall promptly
inform South Texas 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 Closing Date under any contract, agreement or investment
material to APP'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.
ARTICLE VII
Covenants of APP, Seller and South Texas
APP, Seller and South Texas agree as follows:
Section 7.1 Filings; Other Action.
(a) South Texas shall cooperate with APP 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. Seller and South Texas shall cooperate with APP
in the preparation of the Registration Statements and shall furnish all
information concerning South Texas as may be reasonably requested in connection
with any such action in a timely manner.
(b) Seller, South Texas and APP and each separately represent and
warrant that (i) in the case of Seller and South Texas, none of the written
information or documents supplied or to be supplied by
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Seller and South Texas specifically for inclusion in the Registration
Statements, by exhibit or otherwise and (ii) in the case of APP, 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. Seller and South Texas
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. Seller and South Texas shall have no responsibility for
information contained in the Registration Statements except for information
provided by Seller or South Texas specifically for inclusion therein. Seller's
and South Texas's review of the Registration Statements shall not diminish or
otherwise affect the representations, covenants and warranties of APP contained
in this Agreement.
(c) Seller and South Texas shall, upon request, furnish APP with all
information concerning South Texas, its subsidiaries, partners and officers, 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 transactions contemplated by this
Agreement.
Section 7.2 Amendments of 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 Schedules with respect to any matter
that would have been or would be required to be set forth or described in the
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 Schedule that constitutes or reflects a Material Adverse Effect
on South Texas 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 Sellers and South Texas
consent to such amendment or supplement. For purposes of this Agreement,
including without limitation for purposes of determining whether the conditions
set forth in Sections 8.1 and 9.1 have been fulfilled, the Disclosure Schedules
hereto shall be deemed to be the Disclosure Schedules as amended or supplemented
pursuant to this Section 7.2. In the event that Sellers or South Texas seek to
amend or supplement a Disclosure Schedule pursuant to this Section 7.2 and APP
does not consent to such amendment or supplement, or APP seeks to amend or
supplement a Disclosure Schedule pursuant to this Section 7.2, and Seller and
South Texas do not consent, this Agreement shall be deemed terminated by mutual
consent as set forth in Section 13.1(a) hereof.
Section 7.3 Actions Contrary to Stated Intent. No party hereto will
knowingly, either before or after the Closing Date, take any action that would
prevent the Exchange from qualifying as a tax-free exchange within the meaning
of Section 351 of the Code.
Section 7.4 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 7.5 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
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expenses incurred by Seller and South Texas shall be paid by Seller in full
immediately prior to the Closing.
Section 7.6 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 transactions contemplated
hereby.
ARTICLE VIII
Conditions Precedent of APP
Except as may be waived in writing by APP, the obligations of APP
hereunder are subject to the fulfillment at or prior to the Closing Date of each
of the following conditions:
Section 8.1 Representations and Warranties. The representations and
warranties of the Sellers and South Texas contained herein 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 Closing Date.
Section 8.2 Covenants. Each Seller and South Texas shall have
performed and complied in all material respects with all covenants required by
this Agreement to be performed and complied with by each Seller and South Texas,
respectively, prior to the Closing Date.
Section 8.3 Legal Opinion. Counsel to Sellers and South Texas shall
have delivered to APP their opinion, dated as of the Closing Date, in form and
substance substantially in the form set forth in Exhibit C.
Section 8.4 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.
Section 8.5 No Material Adverse Effect. No Material Adverse Effect
on South Texas shall have occurred since March 31, 1997, whether or not such
change shall have been caused by the deliberate act or omission of any Seller or
South Texas.
Section 8.6 Government Approvals and Required Consents. Seller,
South Texas 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 8.7 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 Closing 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.
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Section 8.8 Closing Deliveries. APP shall have received all
Schedules, documents, assignments and agreements, duly executed and delivered in
form reasonably satisfactory to APP, referred to in Section 10.1.
Section 8.9 Closing of Initial Public Offering. The Initial Public
Offering shall have closed.
Section 8.10 Closing of Related Acquisitions. Each of the Related
Acquisitions shall have closed.
Section 8.11 Closing of General Partner Acquisition. The General
Partner Acquisition shall have closed.
Section 8.12 Execution by Each Seller and South Texas. Each Seller
and South Texas shall have executed this Agreement and its respective
Partnership Units shall have been transferred to APP.
ARTICLE IX
Conditions Precedent of Seller and South Texas
Except as may be waived in writing by Seller and South Texas, the
obligations of Seller and South Texas hereunder are subject to fulfillment at or
prior to the Closing Date of each of the following conditions:
Section 9.1 Representations and Warranties. The representations and
warranties of APP 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 Closing Date.
Section 9.2 Covenants. APP 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 Closing Date.
Section 9.3 Legal Opinions. Counsel to APP shall have delivered to
Seller and South Texas their opinion, dated as of the Closing Date, in form and
substance substantially in the form set forth in Exhibit D.
Section 9.4 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 9.5 Government Approvals and Required Consents. Sellers,
South Texas and APP shall have obtained all licenses, permits and all necessary
government and other third-party approvals and consents (including consent of
Sellers required by applicable state law or the Partnership Agreement dated as
of the date of this Agreement) required under any law, contracts or any statute,
rule, regulation or ordinances to consummate the transactions contemplated by
this Agreement.
Section 9.6 "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 Closing Date, APP shall have received
all state securities and "Blue Sky" permits necessary to consummate the
transactions contemplated hereby. At or
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prior to the Closing Date, the APP Common Stock shall have been approved for
listing on the Nasdaq National Market, subject only to official notification of
issuance.
Section 9.7 Closing of Initial Public Offering. The Initial Public
Offering shall have closed.
Section 9.8 Closing Deliveries. Seller and South Texas shall have
received all Schedules, documents, assignments and agreements, duly executed and
delivered in form reasonably satisfactory to Sellers and South Texas referred to
in Section 10.2.
Section 9.9 No Material Adverse Effect. No Material Adverse Effect
on APP shall have occurred since [__________], 1997, whether or not such change
shall have been caused by the deliberate act or omission of APP.
ARTICLE X
Closing Deliveries
Section 10.1 Deliveries of Seller and South Texas. At or prior to
the Closing Date, Seller and South Texas shall deliver to APP the following, all
of which shall be in a form reasonably satisfactory to APP:
(a) ▇▇▇▇ of sale representing the Partnership Units held by
each Seller, duly endorsed in blank by such Seller or accompanied by duly
executed powers in blank, which certificates together shall represent all of the
issued and outstanding Partnership Units of South Texas;
(b) a copy of resolutions of the partners of South Texas or
of Seller, if applicable, authorizing the execution, delivery and performance of
this Agreement and all related documents and agreements and consummation of the
transactions contemplated hereby, each certified by an officer as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
(c) a certificate of each of Seller and an officer of South
Texas dated the Closing Date, as to the truth and correctness of the
representations and warranties of Seller and South Texas, respectively,
contained herein on and as of the Closing Date;
(d) a certificate of each of Seller and an officer of South
Texas dated the Closing Date, (i) as to the performance of and compliance in all
material respects by South Texas and Seller, respectively, with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent required by Seller and South Texas, respectively, to be
satisfied shall have been satisfied;
(e) a certificate of an officer of South Texas certifying as
to the incumbency and as to the signatures of each of the officers of South
Texas who have executed documents delivered at the Closing on behalf of South
Texas;
(f) certificates, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of Texas for South Texas establishing
that South Texas is in existence in the state of Texas;
(g) certificates, dated within ten (10) days prior to the
Closing Date, of the Secretaries of State of the states in which South Texas is
qualified to do business, to the effect that South
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Texas is qualified to do business and, if applicable, is in good standing as a
foreign entity in each of such states;
(h) all authorizations, consents, approvals, permits and
licenses referenced in Section 3.27;
(i) the resignations of officers of South Texas as requested
by APP;
(j) a nonforeign affidavit, as such affidavit is referred to
in Section 1445(b)(2) of the Code, of Seller, signed under a penalty of perjury
and dated as of the Closing Date, to the effect that Seller is a United States
citizen or a resident alien (and thus not a foreign person) and providing
Seller's United States taxpayer identification number;
(k) an executed Seller Release by Seller in substantially
the form attached hereto as Exhibit E (the "Seller Release"); and
(l) 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 10.2 Deliveries of APP. At or prior to the Closing Date, APP
shall deliver to each Seller and South Texas the following, all of which shall
be in a form reasonably satisfactory to Seller and South Texas:
(a) the Exchange Consideration;
(b) 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;
(c) a certificate of the President of APP dated the Closing
Date as to the truth and correctness of the representations and warranties of
APP contained herein on and as of the Closing Date;
(d) a certificate of the President of APP dated the Closing
Date, (i) as to the performance and compliance by APP with all covenants
contained herein on and as of the Closing Date and (ii) certifying that all
conditions precedent required to be satisfied by APP have been satisfied;
(e) a certificate of the Secretary of APP certifying as to
the incumbency and to the signatures of the officers of APP who have executed
documents delivered at the Closing on behalf of APP;
(f) a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of Delaware establishing that APP is in
existence, has paid all franchise or similar taxes, if any, and otherwise is in
good standing to transact business in the state of Delaware;
(g) certificates (or photocopies thereof), dated within ten
(10) days prior to the Closing Date, of the Secretaries of State of the states
in which either APP is qualified to do business, to the effect that APP is
qualified to do business and is in good standing as a foreign corporation in
such state;
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(h) such other instrument or instruments of transfer
prepared by Seller or South Texas as shall be necessary or appropriate, as
Seller or South Texas or his/her/its respective counsel shall reasonably
request, to carry out and effect the purpose and intent of this Agreement.
ARTICLE XI
Post Closing Matters
Section 11.1 Further Instruments of Transfer. Following the Closing,
at the request of APP and at APP's sole cost and expense, Seller and South Texas
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.
Section 11.2 Exchange Tax Covenant.
(a) The parties intend that the Exchange will qualify as a
tax-free transaction within the meaning of Section 351 of the Code in which the
Company will not recognize gain or loss, and pursuant to which any gain
recognized by Seller as a result of the Exchange will not exceed the amount of
any cash received by a Seller in the Exchange (a "Reorganization").
(b) Both prior to and after the Closing Date, all books and
records shall be maintained, and all Tax Returns and schedules thereto shall be
filed in a manner consistent with the Exchange 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 Exchange as a Reorganization and such opinion either is
furnished prior to the Closing Date or is based on facts or events not known at
the Closing Date. 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 Exchange as a
Reorganization.
(c) 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 Sellers who are affiliates of
South Texas to meet the requirements of Rule 145(d) under the Securities Act.
ARTICLE XII
Remedies
Section 12.1 Indemnification by Sellers. Subject to the terms,
limitations and conditions of this Agreement, Sellers (each an "Indemnifying
Party" and collectively, the "Indemnifying Parties"), severally, agree to
indemnify, defend and hold APP and its directors, officers, employees, agents,
attorneys, consultants and Affiliates (each an "Indemnified Party" and
collectively, the "Indemnified Parties"), 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 an
Indemnified Party arising out of or resulting from:
(a) a breach of any representation, warranty or covenant of
any Seller or South Texas contained in this Agreement (without giving effect to
any Material Adverse Effect qualifier contained as
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part of any such representation or warranty or covenant contained in this
Agreement or in any Schedule or certificate delivered hereunder);
(b) any violation (or alleged violation) by any Seller or
South Texas and/or any of its past or present directors, officers, partners,
employees, 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; 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 a
part thereof, or any amendment thereof or supplement thereto relating to South
Texas (including any Partnership Subsidiary) or (ii) failure to state
information necessary to make the statements required to be stated therein not
misleading arising (in the case of either (i) or (ii)) solely from information
provided in writing to APP or its counsel by South Texas or any Seller 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 (including, without limitation, schedules, exhibits and certifications
delivered by South Texas or any of its agents in connection with this
Agreement).
Notwithstanding anything herein to the contrary, nothing contained
in this Agreement shall relieve any Seller or South Texas of any liability or
limit any liability that he, she or it may have in the case of fraud in
connection with the transactions contemplated by this Agreement.
Section 12.2 Indemnification by APP. Subject to the terms,
limitations and conditions of this Agreement, APP (an "Indemnifying Party")
hereby agrees to indemnify, defend and hold the Sellers, and, as applicable,
their respective directors, partners, officers, stockholders, employees, agents,
attorneys, consultants and Affiliates (each an "Indemnified Party") and
collectively, the "Indemnified Parties") 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 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 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 (i) untrue statements
of a material fact in any Registration Statement or any prospectus forming a
part thereof, or any amendment thereof or supplement thereto or (ii) failure to
state information necessary to make the statements required to be stated 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
South Texas or any Seller which was 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 herein to the contrary, nothing contained
in this Agreement shall relieve APP 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 12.3 Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) The Indemnified Party shall promptly (and, in any event,
at least ten (10) days prior to the due date for any responsive pleadings,
filings or other documents) (i) notify each 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 Parties 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 Parties shall
notify the Indemnified Party (x) whether the Indemnifying Parties dispute their
potential liability to the Indemnified Party under this Agreement with respect
to such Third Party Claim and (y) whether the Indemnifying Parties desire, at
the sole cost and expense of each Indemnifying Party, to defend the Indemnified
Party against such Third Party Claim.
(b) If the Indemnifying Parties notify the Indemnified Party
within the Election Period that the Indemnifying Parties elect to assume the
defense of the Third Party Claim, then the Indemnifying Parties shall have the
right to defend, at their sole cost and expense, with counsel reasonably
acceptable to such Indemnified Party or Indemnified Parties, such Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted
diligently by the Indemnifying Parties to a final conclusion or settled at the
discretion of the Indemnifying Parties in accordance with this Section 12.3(b).
Except as set forth in Section 12.3(f) below, the Indemnifying Parties 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 Parties (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
Parties and not prejudicial to the Indemnifying Parties. If requested by the
Indemnifying Parties, the Indemnified Party agrees, at the sole cost and expense
of the Indemnifying Parties, to cooperate with the Indemnifying Parties and
their counsel in contesting any Third Party Claim that the Indemnifying Parties
elect 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 Parties pursuant to this Section 12.3(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 Parties 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 Parties, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Parties, and upon written
notification thereof, the Indemnifying Parties shall not have the right to
assume the defense of such action on behalf of the Indemnified Party; provided
further that the Indemnifying Parties 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 Parties shall be prohibited from confessing or settling any
criminal
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allegations brought against the Indemnified Party without the express written
consent of the Indemnified Party.
(c) If the Indemnifying Parties fail to notify the
Indemnified Party within the Election Period that the Indemnifying Parties elect
to defend the Indemnified Party pursuant to Section 12.3(b), or if the
Indemnifying Parties elect to defend the Indemnified Party pursuant to Section
12.3(b) but fail diligently and promptly to prosecute or settle the Third Party
Claim, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Parties (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 Parties to a final conclusion or settled. The Indemnified
Parties shall have full control of such defense and proceedings, provided,
however, that the Indemnified Parties may not enter into, without the
Indemnifying Parties' consent, which shall not be unreasonably withheld, any
compromise or settlement of such Third Party Claim. Notwithstanding the
foregoing, if the Indemnifying Parties have delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Parties dispute their
potential liability to the Indemnified Party under this Agreement and if such
dispute is resolved in favor of the Indemnifying Parties, the Indemnifying
Parties shall not be required to bear the costs and expenses of the Indemnified
Parties' defense pursuant to this paragraph or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Parties in full for all costs and
expenses of such litigation. The Indemnifying Parties may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 12.3(c), and the Indemnifying Parties shall bear their
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 Parties have 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 Parties 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 Parties.
(d) In the event any Indemnified Party should have a claim
against any Indemnifying Parties hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Parties 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 Parties do not notify the Indemnified Party
within sixty (60) days from its receipt of the Indemnity Notice that the
Indemnifying Parties dispute such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Parties hereunder. If the Indemnifying Parties have timely disputed such claim,
as provided above, such dispute shall be resolved by the procedures set forth in
Section 12.7.
(e) Payments of all amounts owing by any Indemnifying Party
pursuant to this Agreement 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 Parties liability to the Indemnified
Party under this Agreement. Payments of all amounts owing by the Indemnifying
Parties pursuant to Section 12.3(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 Parties liability to the Indemnified Party under this Agreement.
During the two-year period following the Closing Date, each Seller shall be
entitled to satisfy payments owed to APP by transfer of APP Common Stock from
such Seller to APP. For all
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purposes of this Agreement, the value of each share of APP Common Stock
transferred to APP pursuant to this Agreement shall be calculated by averaging
the daily closing prices for a share of APP Common Stock for the twenty (20)
consecutive trading days on which such shares are actually traded on the Nasdaq
National Market preceding the date of the Claim Notice. The number of shares of
APP Common Stock permitted to be transferred under this Section 12.3(e) shall be
diminished proportionately in accordance with the percentage of APP Common Stock
released under the Lock-Up Provisions set forth herein. The rights of any Seller
to transfer shares of APP Common Stock in satisfaction of payments owed to APP
pursuant to this Agreement shall terminate upon the earlier of (x) the
termination of the Lock-Up Provisions set forth herein or (y) at the end of the
two-year period following the Closing Date.
(f) The Indemnifying Parties 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
Parties notify the Indemnified Party in writing that the Indemnifying Parties
agree 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
Parties 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 Parties desired to accept such settlement.
(g) Notwithstanding anything contained in this Agreement to
the contrary, Indemnifying Parties in the aggregate (i) shall have no obligation
hereunder to provide indemnification for the first [$_______] of Damages
(without counting Immaterial Claims as defined below), and (ii) in no event
shall the Indemnifying Parties have any liability hereunder with respect to any
singular incident or a fact involving a breach or inaccuracy of South Texas if
the Damages from such claim are equal to or less than [$_______] ("Immaterial
Claims"). Notwithstanding anything to the contrary contained herein, the
obligations of each Seller hereunder shall not exceed the value of the Exchange
Consideration paid to such Seller pursuant to the Related Acquisition, if any,
on the Closing Date.
Section 12.4 Remedies Exclusive. The remedies provided in this
Agreement are the exclusive remedies available to one party against the other,
either at law or in equity, except in the case of fraud.
Section 12.5 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 12.6 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.
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Section 12.7 Dispute Resolution.
(a) Arbitration. The parties hereto agree that any claim,
controversy, dispute or disagreement between or among any of the parties arising
out of or relating to this Agreement shall be governed exclusively by the terms
and provisions of this Section 12.7; provided, however, that within ten (10)
days from the date which any claim, controversy, dispute or disagreement cannot
be resolved and prior to commencing an arbitration procedure pursuant to this
Section 12.7, the parties shall meet to discuss and consider other alternative
dispute resolution procedures other than arbitration including, but not limited
to, Judicial Arbitration & Mediation Services, Inc., if applicable. If at any
time prior to the rendering of the decision by the arbitrator (or pursuant to
such other alternative dispute resolution procedure) as contemplated in this
Section 12.7 to the extent a party makes a written offer to the other party
proposing a settlement of the matter(s) at issue and such offer is rejected,
then the party rejecting such offer shall be obligated to pay the costs and
expenses (excluding the amount of the award granted under the decision) of the
party that offered the settlement from the date such offer was received by such
other party if the decision is for a dollar amount that is less than the amount
of such offer to settle. Notwithstanding the foregoing, the terms and provisions
of this Section 12.7 shall not preclude any party hereto from seeking, or a
court of competent jurisdiction from granting, a temporary restraining order,
temporary injunction or other equitable relief for any breach of (i) any
noncompetition or confidentiality covenant or (ii) any duty, obligation,
covenant, representation or warranty, the breach of which may cause irreparable
harm or damage.
(b) Arbitrators. In the event there is a claim, controversy,
dispute or disagreement among the parties hereto arising out of or relating to
this Agreement (including any claim based on or arising from an alleged tort)
and the parties hereto have not reached agreement regarding an alternative to
arbitration, the parties agree to select within thirty (30) days of notice by a
party to the other of its desire to seek arbitration under this Section 12.7 one
(1) arbitrator mutually acceptable to APP and the Sellers to hear and decide all
such claims under this Section 12.7. Each of the arbitrators proposed shall be
impartial and independent of all parties. If the parties cannot agree on the
selection of an arbitrator within said 30-day period, then any party may in
writing request the judge of the United States District Court for the Western
District of Texas senior in term of service to appoint the arbitrator and,
subject to this Section 12.7, such arbitrator shall hear all arbitration matters
arising under this Section 12.7.
(c) Applicable Rules.
(1) Each arbitration hearing shall be held at a place in
Boxar County, Texas acceptable to the arbitrator. The arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association to the extent such rules do not conflict with the terms
hereof; provided, however, that if the parties hereto agree to an alternative to
arbitration they may agree to an alternative set of rules, including as to rules
of evidence and procedure. The decision of the arbitrator shall be reduced to
writing and shall be binding on the parties and such decision shall contain a
concise statement of the reasons in support of such decision. Judgment upon the
award(s) rendered by the arbitrator may be entered and execution had in any
court of competent jurisdiction or application may be made to such court for a
judicial acceptance of the award and an order of enforcement. The charges and
expenses of the arbitrator shall be shared equally by the parties to the
hearing.
(2) The arbitration shall commence within ten (10) days
after the arbitrator is selected in accordance with the provisions of this
Section 12.7. In fulfilling his duties with respect to determining the amount of
any loss, the arbitrator may consider such matters as, in the opinion of the
arbitrator, are necessary or helpful to make a proper valuation. The arbitrator
may consult with and
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engage disinterested third parties to advise the arbitrator. The arbitrator
shall not add any interest factor reflecting the time value of money to the
amount of any loss and shall not award any punitive damages.
(3) If the arbitrator selected hereunder should die,
resign or be unable to perform his or her duties hereunder, the parties, or such
senior judge (or such judge's successor) in the event the parties cannot agree,
shall select a replacement arbitrator. The procedure set forth in this Section
12.7 for selecting the arbitrator shall be followed from time to time as
necessary.
(4) As to any determination of the amount of any loss,
or as to the resolution of any other claim, controversy, dispute or
disagreement, that under the terms hereof is made subject to arbitration, no
lawsuit based on such claimed loss or such resolution shall be instituted by the
parties hereto, other than to compel arbitration proceedings or enforce the
award of the arbitrator, except as otherwise provided in Section 12.7(b).
(5) All privileges under Texas and federal law,
including attorney-client and work-product privileges, shall be preserved and
protected to the same extent that such privileges would be protected in a
federal court proceeding applying Texas law.
ARTICLE XIII
Termination
Section 13.1 Termination. This Agreement may be terminated and the
Exchange may be abandoned:
(a) at any time prior to the Closing Date by mutual
agreement of all parties;
(b) at any time prior to the Closing Date by APP if any
material representation or warranty of any Seller or South Texas contained in
this Agreement or in any certificate or other document executed and delivered by
any Seller or South Texas pursuant to this Agreement is or becomes untrue or
breached in any material respect or if any Seller or South Texas 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 Closing Date by Seller as to
Seller if any representation or warranty of APP contained in this Agreement or
in any certificate or other document executed and delivered by APP pursuant to
this Agreement is or becomes untrue in any material respect of 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 Closing 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 Seller as to Seller if the Exchange shall not
have been consummated by September 30, 1997.
Section 13.2 Effect of Termination. Except as set forth in Section
14.3, in the event this Agreement is terminated pursuant to this Article XIV,
this Agreement shall forthwith become void.
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ARTICLE XIV
Nondisclosure of Confidential Information
Section 14.1 Non-Disclosure Covenant. Seller and South Texas
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 that
is valuable, special and a unique asset of such entity's business. APP
acknowledges that it had in the past, currently has, and in the future may
possibly have, access to certain Confidential Information of South Texas that is
valuable, special and a unique asset of each such business. Seller, South Texas
and APP, 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, Seller and South Texas and (b) to counsel and other advisers to APP,
Sellers and South Texas provided that such advisers (other than counsel) agree
to the confidentiality provisions of this Section 14.1, unless (i) such
information becomes available to or known by the public generally through no
fault of South Texas, Seller or APP, 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)
South Texas, Seller or APP, as the case may be, shall, if possible, give prior
written notice thereof to South Texas, Seller or APP and provide South Texas,
Seller or APP 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 Exchange or otherwise. In the event of a breach
or threatened breach by Seller or South Texas, on the one hand, and APP, on the
other hand, of the provisions of this Section, APP, Seller and South Texas 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 14.2 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, Seller and South Texas 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 14.3 Survival. The obligations of the parties under this
Article XIV shall survive the termination of this Agreement.
ARTICLE XV
Miscellaneous
Section 15.1 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 15.2 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
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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 15.3 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 respective heirs, legal
representatives, successors and assigns of the parties hereto. Except 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 15.4 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 15.5 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 15.6 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 South Texas, Seller or APP pursuant to
this Agreement shall be deemed to have been representations and warranties made
by South Texas, Seller and APP, respectively. 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
3.20 with respect to environmental matters shall survive for a period of ten
(10) years, (b) the representations and warranties set forth in Section 3.29
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 3.26 and Section 3.32 with
respect to healthcare matters shall survive for a period of six (6) years and
(d) solely for purposes of Section 12.1(c) and Section 12.2(b), 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 15.7 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 15.8 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 15.9 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.
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Section 15.10 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 Target 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 15.11 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: American Physician Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to South Texas or Seller: South Texas No. 1 MRI Limited Partnership
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Managing Partner
with a copy to : ▇▇▇▇▇▇▇▇▇▇▇, Blend, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Section 15.12 No Waiver; Remedies. No party hereto shall by any act
(except by written instrument pursuant to Section 16.1 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 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. Except as set forth herein,
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 15.13 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 15.14 Defined Terms. Terms used in Exhibit A, Exhibit B,
Exhibit C, Exhibit D Exhibit E, and the 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
SOUTH TEXAS:
SOUTH TEXAS NO. 1 MRI LIMITED
PARTNERSHIP
By:
------------------------------
Its:
-----------------------------
SELLERS:
---------------------------------
▇▇▇▇ ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
R.K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Rise ▇. ▇▇▇▇
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
LIST OF SELLERS AND EXCHANGE CONSIDERATION
A-1
51
EXHIBIT B
TARGET COMPANIES
B-1
52
EXHIBIT C
LEGAL OPINION OF SELLERS' COUNSEL
C-1
53
EXHIBIT D
LEGAL OPINION OF APP'S COUNSEL
D-1
54
EXHIBIT E
SELLER RELEASE
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
TO THE
AGREEMENT AND PLAN OF EXCHANGE
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
Exchange dated [____________], 1997, by and between American Physician Partners,
Inc., South Texas No. 1 MRI Limited Partnership and Sellers (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.
