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EXHIBIT 2.18
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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),
MADISON SQUARE JOINT VENTURE
(a general partnership)
and
THE SELLERS LISTED ON THE SIGNATURE PAGES HEREOF
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TABLE OF CONTENTS
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ARTICLE I Definitions..................................................... 1
Section 1.1 Definitions.............................................. 1
Section 1.2 Rules Of Interpretation.................................. 5
ARTICLE II Exchange....................................................... 5
ARTICLE III Representations and Warranties of Sellers..................... 6
Section 3.1 Organization and Good Standing; Qualification............ 6
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........................ 7
Section 3.7 Subsidiaries and Investments............................. 7
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............................... 10
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.................................... 19
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 Madison................................. 21
Section 5.1 Required Conduct of Seller and Madison................... 21
Section 5.2 Prohibited Conduct of Seller and Madison................. 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 Madison.......................... 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....................................... 28
Section 8.9 Closing of Initial Public Offering....................... 29
Section 8.10 Closing of Related Acquisitions......................... 29
Section 8.11 Execution by Each Seller................................ 29
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ARTICLE IX Conditions Precedent of Seller and Madison..................... 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....................... 29
Section 9.8 Closing Deliveries....................................... 29
Section 9.9 No Material Adverse Effect............................... 30
ARTICLE X Closing Deliveries.............................................. 30
Section 10.1 Deliveries of Seller and Madison........................ 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........................... 33
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...................................... 36
ARTICLE XIII Termination.................................................. 38
Section 13.1 Termination............................................. 38
Section 13.2 Effect of Termination................................... 38
ARTICLE XIV Nondisclosure of Confidential Information..................... 38
Section 14.1 Non-Disclosure Covenant................................. 38
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....... 39
Section 15.4 Entire Agreement........................................ 39
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............. 40
Section 15.11 Notice................................................. 41
Section 15.12 No Waiver; Remedies.................................... 41
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 May ___, 1997 is
by and among American Physician Partners, Inc., a Delaware corporation, ("APP"),
Madison Square Joint Venture, a Texas general partnership ("Madison") 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 partner of Madison and the Sellers are the only
partners of Madison.
▇. ▇▇▇▇▇▇▇ 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, one hundred percent of the outstanding general partnership interests of
Madison (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. 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 Madison, 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:
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.
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"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 Madison made
specifically in Section 3.20 is expressly qualified to the knowledge or best
knowledge of Sellers and Madison, it shall mean the knowledge of any of the
Sellers set forth in Exhibit A, partner or executive officer of Madison 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.
"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.
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"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.
"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.
"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.
"Madison" shall have the meaning set forth in the preamble to this
Agreement.
"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.
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"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 SectionSection 2501 et seq., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA SectionSection 1401
et seq., (iv) The Occupational Safety and Health Act, 29 USCA SectionSection 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 Madison'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 to
this Agreement.
"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, general partnership
interests of Madison, or by which Madison 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.
"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).
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"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 10.1(l).
"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.
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 all
of the Partnership Units, 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 the
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").
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(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."
Section 2.4 Resignations. At the Closing, the persons who are the officers
of Madison immediately prior to the Closing Date shall submit a written
resignation, in form and substance acceptable to APP, effective as of the
Closing Date.
ARTICLE III
Representations and Warranties of Sellers and Madison
As an inducement to APP to enter into this Agreement, each of Seller and
Madison 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.
Section 3.1 Organization and Good Standing; Qualification. Madison is a
general partnership duly organized, 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. Copies of the Joint Venture Agreement of Madison, as amended (the
"Partnership Agreement"), and copies of the minutes of Madison, 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 Madison (and all
committees thereof).
Section 3.2 Authorization and Validity. Madison 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 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
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connection herewith have been, or will be as of the Closing Date, duly executed
and delivered by Seller and Madison and constitute or will constitute the legal,
valid and binding obligations of Seller, enforceable against Seller and Madison
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 Madison of this Agreement and the agreements provided
for herein, and the consummation of the transactions contemplated hereby and
thereby by Seller and Madison 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 Madison and Seller is the
owner of the Partnership Units currently held in his or her name on the record
books of Madison, 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. Madison has no obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any of its Partnership Units or to pay any dividend or make
any distribution in respect thereof. Neither the equity structure of Madison 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.
Section 3.6 Continuity of Business Enterprise. There has not been any
sale, distribution or spin-off of significant assets of Madison 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. Madison 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 Madison 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 Madison; (ii) will not conflict with or result in a violation of any
provision of Madison's 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 Madison or by which Seller or Madison or Madison'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 Madison is a party or by which Madison 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 Madison; and (v) except as contemplated by this
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Agreement, will not create any Encumbrance or restriction upon the Partnership
Units or any of the assets or properties of Madison.
Section 3.9 Absence of Changes. Except as permitted or contemplated by
this Agreement, since March 31, 1997, Madison 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
Madison;
(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 Madison, taken as a whole, or made any
capital expenditure or commitment in excess of $25,000;
(f) made any change in any method of accounting or accounting
practice, credit practices, collection policies, or payment policies;
(g) except in the ordinary course of business consistent with past
practice, incurred any liabilities or obligations (absolute, accrued or
contingent) in excess of $10,000 individually or $25,000 in the aggregate;
(h) mortgaged, pledged, subjected or agreed to subject, any of its
assets, tangible or intangible, to any claim or Encumbrance, except for liens
for current personal property taxes not yet due and payable 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 Madison, 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
Madison (except as expressly contemplated herein); or
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(m) agreed, whether in writing or otherwise, to take any action
described in this Section 3.9.
Section 3.10 No Undisclosed Liabilities. To the best knowledge of Seller
and Madison, Madison 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 Madison,
threatened against, or affecting Madison, any Partnership Subsidiary, or, to the
knowledge of Seller and Madison, any Seller or any other licensed professional
or other individual affiliated with Madison 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 Madison which (i) if
successful, may, individually or in the aggregate, have a Material Adverse
Effect on Madison or (ii) could adversely affect the ability of Madison or any
Partnership Subsidiary to effect the transactions contemplated hereby, and to
the knowledge of Seller and Madison 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,
Madison or any Partnership Subsidiary or any licensed professional or other
individual affiliated with Madison or any Partnership Subsidiary relating to
services provided on behalf of Madison 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 Madison or any Partnership Subsidiary as in effect on the date hereof.
Section 3.12 No Violation of Law. Neither Madison 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
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
Madison.
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 Madison or any Partnership Subsidiary is a party and pursuant to which
Madison 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"). Madison 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 Madison 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 Madison or any Partnership Subsidiary (as applicable) and, individually or in
the aggregate, may reasonably result in a Material Adverse Effect on Madison,
or, (ii) to the knowledge of Seller and Madison, 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 Madison,
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, Madison or any Partnership Subsidiary shall use reasonable good faith
efforts, and Seller shall use reasonable good faith efforts to cause
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Madison, 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 Madison's or any Partnership Subsidiary's rights thereunder. Madison 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 Madison nor each Partnership Subsidiary owns any
interest (other than the Lease Agreements) in real property.
(b) Madison 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 Madison and each Partnership Subsidiary constitutes the
necessary personal property assets to continue operation of Madison and each
Partnership Subsidiary.
Section 3.15 Indebtedness for Borrowed Money. Except for trade payables
incurred in the ordinary course of business, Madison does not have any direct or
indirect indebtedness for borrowed money, including indebtedness by way of
lease-purchase arrangements or guarantees, and is not obligated in any manner
(actual or contingent) to assume or guarantee any indebtedness or obligation of
another Person.
Section 3.16 Contracts and Commitments.
(a) The Disclosure Schedules contain a true, accurate and complete
list, and Madison has delivered to APP true and complete copies, of each
contract, agreement and other instrument requiring Madison 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 Madison is a party or by which it or any of its
properties or assets are bound including, without limitation, (i) all agreements
between Madison, 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, (i) 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 Madison to make, or setting forth
conditions under which Madison would be required to make, aggregate future
payments in excess of $10,000 in any fiscal year or $25,000 in the aggregate,
(ii) all agreements for capital improvements or acquisitions involving an amount
of $75,000 in any fiscal year or $75,000 in the aggregate, (iii) all agreements
containing a covenant limiting the freedom of Madison (or any provider employee
of Madison) to compete in any line of business with any person or entity or in
any geographic area or (iv) all written contracts and commitments providing for
future payments by Madison 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
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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 Madison 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 Madison, or which could inhibit or
prevent Madison 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 Madison shall use
reasonable good faith efforts, and Seller shall use reasonable good faith
efforts to cause Madison, 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 Madison 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 Madison has fully complied with and
is not in default under any provision of the particular contract or agreement.
(b) (i) Neither Madison 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 Madison and Seller
there are no facts that would justify the exercise of such a right; and (ii)
neither Madison 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. Madison 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 or oral), including all
welfare plans (as defined in Section 3(1) of ERISA) of or pertaining to Madison
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 Madison 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 Madison no investigation or review is pending by any governmental
entity, with respect to any (i) alleged violation by Madison of any
Environmental Law (as defined in subsection (e) below) (ii) alleged failure by
Madison 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 Madison.
(b) Neither Madison 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 Madison under any
applicable
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Environmental Law that had, or would reasonably be likely to have, a Material
Adverse Effect on Madison. Neither Madison 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 Madison's
or any Partnership Subsidiary's owned or leased premises. To the knowledge of
Seller and Madison, there is no friable asbestos in or on Madison's or any
Partnership Subsidiary's owned or leased premises.
(c) To the knowledge of Seller and Madison, no soil or water in or
under any assets currently or formerly held for use or sale by Madison 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 Madison or any Partnership Subsidiary, where such contamination
had, or would be reasonably likely to have, a Material Adverse Effect on
Madison.
(d) There have been no environmental audits and other similar
reports which have been prepared by, for or, to the knowledge of Seller and
Madison, concerning Madison 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 Madison, 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:
"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 Madison 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 Madison.
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Section 3.22 Insurance Policies. The Disclosure Schedules list and briefly
describe Madison's policies of insurance to which Madison or any Partnership
Subsidiary is a party or under which Madison 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
Madison 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 Madison or any Partnership Subsidiary
("Current Policies") taken together, (i) provide adequate insurance coverage for
the assets, properties and operations of Madison and its Affiliates for all
risks normally insured against by a Person carrying on a substantially similar
business or businesses as Madison and its Affiliates, (ii) are sufficient for
compliance with legal and contractual requirements to which Madison 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 Madison 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
Madison, 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 Madison nor any Partnership Subsidiary has filed a written application
for any professional liability insurance coverage which has been denied by an
insurance agency or carrier. The Disclosure Schedules also set forth a list of
all claims under any Insurance Policy in excess of $10,000 per occurrence filed
by Madison 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 Madison 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 Madison collectible in the ordinary course of business,
net of reserves for doubtful and uncollectible accounts shown on the accounting
records of Madison (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 Madison as of March 31, 1997, and (ii) list of each
individual indebtedness owned by Madison 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 Madison (including, without limitation all providers of care to
patients) which accounted for a dollar volume of purchases paid for by Madison
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
Madison in excess of $25,000 for the fiscal year to end [DECEMBER 31, 1997].
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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 Madison's business and conform to generally accepted
standards in the industry of which Madison is a part. Purchase commitments of
Madison 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) Madison and each other licensed employee or contractor of
Madison (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 Madison is eligible ("Governmental Programs"). Each of Madison 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 Madison is presently receiving payments directly
or indirectly from any Payor for technical imaging services provided by any
licensed technician or contractor of Madison (such non-governmental programs
herein referred to as "Private Programs"). A true, correct and complete list of
such licenses, permits and other authorizations (including, but not limited to
verification of Medicare and Medicaid provider numbers and participating
physician contracts under 1842(h) of the Social Security Act) and provider
agreements is set forth in the Disclosure Schedules, true, complete and correct
copies of which have been provided to APP. No violation, default, order or
deficiency exists with respect to any of the items listed in the Disclosure
Schedules except for such violations, defaults, orders or deficiencies which
would not be reasonably likely to have a Material Adverse Effect on Madison, and
there is no action pending or to the knowledge of Seller and Madison 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 Madison 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 Madison,
there has been no decision not to renew any existing agreement with any provider
or Payor relating to Madison's business as presently being conducted by it.
Madison (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) Madison 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.
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Section 3.27 Inspections and Investigations. Neither the right of Madison,
nor the right of any licensed professional or other individual affiliated with
Madison 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 Madison 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 Madison or any Partnership Subsidiary, (iii) all licenses,
royalties, and assignments thereof to which Madison or any Partnership
Subsidiary are a party (iv) all copyrights (for published and unpublished works)
currently owned in whole or part, or used by Madison or any Partnership
Subsidiary and (v) other similar agreements relating to the foregoing to which
Madison 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 Madison 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 Madison, any threatened disputes
or disagreements with respect to any such agreement.
(c) Madison 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 Madison, no claim
has been asserted by any person to the ownership of or for infringement by
Madison of any Proprietary Right of any other Person, and neither Madison nor
Seller is aware of any valid basis for any such claim. To the best knowledge of
Seller and Madison, no proceedings have been threatened which challenge the
Proprietary Rights of Madison. Madison 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. Madison 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
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complete and accurate in all material respects and properly reflect the taxes of
Madison for the periods covered thereby.
(b) All Withholding Requirements Satisfied. All monies required to
be withheld by Madison 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 Madison
constitutes property that Madison, 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 Madison
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. Madison 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 Madison in any property, real or personal
or mixed, tangible or intangible, used in or pertaining to Madison's business
and any arrangement or agreement with any such person concerning the provision
of goods or services or other matters pertaining to Madison's business. There is
no commitment to, and no income that has been derived from, an Affiliate, and
following the Closing Madison 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
Madison 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 Madison nor any
Partnership Subsidiary has engaged and, to the knowledge of Seller and Madison,
neither Madison's officers and partners nor other Persons and entities providing
professional services for or on behalf of Madison 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 Madison, any
Partnership Subsidiary or officer, partner or key employee of Madison or
Partnership Subsidiary, which has or reasonably could be expected to have the
effect of prohibiting or materially impairing any acquisition of property by
Madison or any Partnership Subsidiary or the conduct of business by Madison 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
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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 Madison, 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 Madison or any other
party thereto.
Section 3.35 Statements True and Correct. No representation or warranty
made herein by Madison or Seller, nor any statement, certificate, information,
exhibit or instrument to be furnished by Madison 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
Madison who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or referred to herein.
ARTICLE IV
Representations and Warranties of APP
As inducement to each Seller and Madison to enter into this Agreement, APP
represents and warrants to each Seller and Madison 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 Madison 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 Madison 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
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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 Madison, 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 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 ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇ (▇) have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated therein
or in the notes thereto), (b) present fairly the financial position of APP and
APP Subsidiaries as of the dates indicated and present fairly the results of
APP's and APP Subsidiaries' operations for the periods then ended, and (c) are
in accordance with the books and records of APP and APP Subsidiaries, which have
been properly maintained and are complete and correct in all material respects.
Section 4.7 Absence of Changes. Except as permitted or contemplated by
this Agreement, since March 31, 1997, there has not been (i) any change in the
working capital, condition (financial or otherwise), assets, liabilities,
reserves, business or operations of APP that has had or is reasonably likely to
have a Material Adverse Effect on APP; or (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the APP Common Stock.
Section 4.8 No Undisclosed Liabilities. Except as set forth in the Form
S-4 or reflected or reserved for in the financial statements included therein,
APP does not have any material liability or obligation accrued, contingent or
otherwise, that is reasonably likely to have a Material Adverse Effect on APP.
Section 4.9 Litigation and Claims. There are no claims, lawsuits, actions,
arbitrations, administrative or other proceedings, governmental investigations
or inquiries pending or, to the knowledge of APP, threatened against, or
affecting APP. There are no unsatisfied judgments against APP or any consent
decrees to which APP is subject. Each of the matters, if any, set forth in the
Disclosure Schedules are fully covered by policies of insurance of APP as in
effect on that date.
Section 4.10 No Violation of Law. APP has not been, nor shall be as of the
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
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not yet become due and (ii) APP is not delinquent in the payment of any tax,
assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or Audits.
APP has not received any notice that any tax deficiency or delinquency has been
asserted against APP. There is no unpaid assessment, proposal for additional
taxes, deficiency or delinquency in the payment of any of the taxes of APP that
could be asserted by any taxing authority. There is no taxing authority audit of
APP pending, or to the knowledge of APP, threatened, and the results of any
completed audits are properly reflected in the financial statements of APP. APP
has not violated any federal, state, local or foreign tax law.
(d) No Extension of Limitation Period. APP has not granted an
extension to any taxing authority of the limitation period during which any tax
liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies required to
be withheld by APP and paid to governmental agencies for all income, social
security, unemployment insurance, sales, excise, use, and other taxes have been
collected or withheld and paid to the respective governmental agencies.
(f) Foreign Person. Neither APP nor any holders of APP Common Stock
is a foreign person, as such term is referred to in Section 1445(f)(3) of the
Code.
(g) Tax Exempt Entity. None of the assets of APP are subject to a
lease to a "tax exempt entity" as such term is defined in Section 168(h)(2) of
the Code.
(h) Collapsible Corporation. APP has not at any time consented, and
the holders of APP Common Stock will not permit APP to elect, to have the
provisions of Section 341(f)(2) of the Code apply to it.
(i) Boycotts. APP has not at any time participated in or cooperated
with any international boycott as defined in Section 999 of the Code.
(j) Parachute Payments. No payment required or contemplated to be
made by APP will be characterized as an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
(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
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or Madison 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 Madison
Each of Seller and Madison 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:
Section 5.1 Required Conduct of Seller and Madison. From the date hereof
until the Closing Date, Madison shall, and Seller shall use his/her best efforts
to cause Madison to, in all material respects, conduct the business of Madison
in the ordinary and usual course consistent with past practices and shall use
reasonable efforts to:
(a) preserve intact Madison's business and its relationships with
referral sources, customers, suppliers, patients, employees and others having
business relations with it;
(b) maintain and keep Madison's properties and assets in good
repair and condition consistent with past practice as is material to the conduct
of the business of Madison;
(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 Madison. Without the written
consent of APP, Madison shall not, and Seller shall use his/her best efforts to
cause Madison not to:
(a) amend Madison's Partnership Agreement or other charter
documents;
(b) issue, sell or authorize for issuance or sale, any partnership
interests of Madison 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);
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(e) voluntarily sell, transfer, surrender, abandon or dispose of
any of Madison'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 Madison or any
of Madison'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 Madison's business;
(h) make or commit to make any capital expenditures which are not
reasonably necessary for the conduct of Madison'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 Madison who are not partners or officers of Madison,
except in the ordinary course of business and consistent with past practices;
(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 Madison;
(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 Madison, 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
Madison'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, Madison
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 Madison 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.
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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 Madison, 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 Madison. 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 Madison or Seller of the Exchange to the
employees of Madison which shall occur no later than three (3) days subsequent
to execution hereof by Madison), accountants, counsel and agents of Madison in
connection with such investigation of the properties and business of Madison. No
investigation by APP shall diminish or otherwise affect any of the
representations, warranties, covenants or agreements of Madison 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 Madison's ongoing
business operations.
Section 5.5 Acquisition Proposals. Seller shall not, and shall use his/her
best efforts to cause Madison not to, and Madison shall not, and shall cause
each of its partners, officers, employees or agents not to, directly or
indirectly:
(a) solicit, initiate, encourage or participate in any negotiations
or discussions with respect to any offer or proposal to acquire all or a
substantial portion of the business, properties or partnership interests of
Madison, 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 Madison, 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 Madison. If Madison receives any offer or proposal after the date
hereof, written or otherwise, of the type referred to above, Madison 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,
Madison shall, and Seller shall use his/her/its best efforts to cause Madison
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 the 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 Madison, and its respective properties or assets.
Section 5.7 Notice of Certain Events. Each of Seller and Madison shall,
and Seller shall use his/her best efforts to cause Madison 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 Madison who is
expected to receive annualized compensation of at least $50,000 in 1997;
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(c) any termination of employment by, or threat to terminate
employment received from, any salaried or non-hourly, skilled employee of
Madison;
(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
Madison 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 Madison,
including but not limited to any licensure or certification deficiencies, or
violations; limitations on a license or a provider agreement; freeze or
reduction in Medicare or Medicaid rates, notice of overpayment; being the
subject of any investigation relating to patient abuse, fraud, kickbacks, false
claims or other alleged illegal payment practices under the Fraud and Abuse
Statutes; and
(g) any notice or other communication indicating a material
deterioration in the relationship with any Payor or supplier or key employee of
Madison 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 or any other Seller.
Section 5.9 Obligations of Seller and Madison. Subject to Section 5.8
hereof, each of Seller and Madison shall, and Seller shall use his/her best
efforts to cause Madison to, perform its obligations under this Agreement and
all related agreements, and each of Seller and Madison shall, and Seller shall
use his/her best efforts to cause Madison 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. Madison will not, and Seller
shall use his/her best efforts to cause Madison not to, change in any material
respect the accounting methods or practices followed by Madison (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. Madison will not, and Seller shall use his/her
best efforts to cause Madison 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. Madison will, and
Seller shall use his/her best efforts to cause Madison to, duly, accurately and
timely (without regard to any extensions of time) file all returns, information
statements and other documents relating to taxes of Madison required to be filed
by it, and Madison shall, and Seller shall use his/her best efforts to cause
Madison to, pay all taxes required to be paid by Madison, on or before the
Closing Date.
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Section 5.12 Lock-Up Provisions. Seller irrevocably agrees that he/she
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.
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 Madison 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
Madison and its authorized representatives to inspect and, at Madison's sole
expense, make copies of all documents, records and information with respect to
the affairs of APP as Madison and its representatives may reasonably request,
all for the sole purpose of permitting Madison to become familiar with the
business and assets and liabilities of APP. No investigation by Madison 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
Madison 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.
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ARTICLE VII
Covenants of APP, Seller and Madison
APP, Seller and Madison agree as follows:
Section 7.1 Filings; Other Action.
(a) Madison 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 Madison shall cooperate with APP in
the preparation of the Registration Statements and shall furnish all information
concerning Madison as may be reasonably requested in connection with any such
action in a timely manner.
(b) Seller, Madison and APP and each separately represent and warrant that
(i) in the case of Seller and Madison, none of the written information or
documents supplied or to be supplied by Seller and Madison 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 Madison 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 Madison shall
have no responsibility for information contained in the Registration Statements
except for information provided by Seller or Madison specifically for inclusion
therein. Seller's and Madison'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 Madison shall, upon request, furnish APP with all
information concerning Madison, 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 Madison 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 Madison 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
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Disclosure Schedules as amended or supplemented pursuant to this Section 7.2. In
the event that Sellers or Madison 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 Madison 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 expenses incurred by Seller and Madison 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 Madison 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 Madison 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 Madison, respectively,
prior to the Closing Date.
Section 8.3 Legal Opinion. Counsel to Sellers and Madison 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.
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Section 8.5 No Material Adverse Effect. No Material Adverse Effect on
Madison 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
Madison.
Section 8.6 Government Approvals and Required Consents. Seller, Madison
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.
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 Execution by Each Seller and Madison. Each Seller and Madison
shall have executed this Agreement.
ARTICLE IX
Conditions Precedent of Seller and Madison
Except as may be waived in writing by Seller and Madison, the obligations
of Seller and Madison 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 Madison their opinion, dated as of the Closing Date, in form and substance
substantially in the form set forth in Exhibit D.
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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, Madison
and APP shall have obtained all licenses, permits and all necessary government
and other third-party approvals and consents (including consent of Sellers
required under applicable state law or the Partnership 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 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 Madison shall have received all
Schedules, documents, assignments and agreements, duly executed and delivered in
form reasonably satisfactory to Sellers and Madison 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 Madison. At or prior to the Closing
Date, Seller and Madison shall deliver to APP the following, all of which shall
be in a form reasonably satisfactory to APP:
(a) a ▇▇▇▇ of sale representing the Partnership Units held by each
Seller, which ▇▇▇▇ of sale shall represent all of the issued and outstanding
Partnership Units of Madison;
(b) a copy of resolutions of the partners of Madison 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 Madison dated
the Closing Date, as to the truth and correctness of the representations and
warranties of Seller and Madison, respectively, contained herein on and as of
the Closing Date;
(d) a certificate of each of Seller and an officer of Madison dated
the Closing Date, (i) as to the performance of and compliance in all material
respects by Madison and Seller, respectively,
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with all covenants contained herein on and as of the Closing Date and (ii)
certifying that all conditions precedent required by Seller and Madison,
respectively, to be satisfied shall have been satisfied;
(e) a certificate of an officer of Madison certifying as to the
incumbency and as to the signatures of each of the officers of Madison who have
executed documents delivered at the Closing on behalf of Madison;
(f) intentionally omitted;
(g) intentionally omitted;
(h) all authorizations, consents, approvals, permits and licenses
referenced in Section 3.27;
(i) the resignations of officers of Madison 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 Madison the following, all of which shall be in a
form reasonably satisfactory to Seller and Madison:
(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;
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(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;
(h) such other instrument or instruments of transfer prepared by
Seller or Madison as shall be necessary or appropriate, as Seller or Madison 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 Madison 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 Madison 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,
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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 Madison contained in this Agreement (without giving effect to any
Material Adverse Effect qualifier contained as 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 Madison
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 Madison
(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 Madison 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 Madison 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 Madison 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
Madison or any Seller which was derived from any information provided in writing
by the
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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.
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
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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 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
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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 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 Madison 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 __________ percent
(_____%) of 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 rights or 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
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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.
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.
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(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 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 Madison contained in this Agreement
or in any certificate or other document executed and delivered by any Seller or
Madison pursuant to this Agreement is or becomes untrue or breached in any
material respect or if any Seller or Madison 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.
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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.
ARTICLE XIV
Nondisclosure of Confidential Information
Section 14.1 Non-Disclosure Covenant. Seller and Madison 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 Madison that is valuable, special
and a unique asset of each such business. Seller, Madison 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 Madison
and (b) to counsel and other advisers to APP, Sellers and Madison 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 Madison, 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) Madison, Seller or APP, as the case may be, shall,
if possible, give prior written notice thereof to Madison, Seller or APP and
provide Madison, 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 Madison, on the one hand, and APP, on the
other hand, of the provisions of this Section, APP, Seller and Madison 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 Madison 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.
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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 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 Madison, Seller or APP pursuant to this
Agreement shall be deemed to have been representations and warranties made by
Madison, 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.
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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.
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 Madison or Seller: Madison Square Joint Venture
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Managing Partner
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with a copy to:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
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. 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
Madison:
MADISON SQUARE JOINT VENTURE
By:
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Its: Managing General Partner
SELLERS:
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▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
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R.K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
LIST OF SELLERS AND EXCHANGE CONSIDERATION
A-1
50
EXHIBIT B
TARGET COMPANIES
B-1
51
EXHIBIT C
LEGAL OPINION OF SELLERS' COUNSEL
C-1
52
EXHIBIT D
LEGAL OPINION OF APP'S COUNSEL
D-1
53
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.,
Madison Square Joint Venture 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.