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EXHIBIT 2.11
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
dated as of
June 27, 1997
by and among
AMERICAN PHYSICIAN PARTNERS, INC.
(a Delaware corporation),
[AMERICAN PHYSICIAN PARTNERS SUBSIDIARY, INC.]
(a California corporation),
and
TOTAL MEDICAL IMAGING, INC.
(a California corporation)
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TABLE OF CONTENTS
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ARTICLE I Definitions.......................................................................... 2
Section 1.1 Definitions.......................................................................... 2
Section 1.2 Rules Of Interpretation.............................................................. 6
ARTICLE II The Merger........................................................................... 6
Section 2.1 The Merger........................................................................... 6
Section 2.2 The Closing.......................................................................... 6
Section 2.3 Effective Time....................................................................... 6
Section 2.4 Certificate of Incorporation of Surviving Corporation................................ 6
Section 2.5 Bylaws of Surviving Corporation...................................................... 6
Section 2.6 Directors of the Surviving Corporation............................................... 6
Section 2.7 Officers of the Surviving Corporation................................................ 6
Section 2.8 Conversion of Company Common Stock................................................... 7
Section 2.9 Exchange of Certificates Representing Shares of the Company Common Stock............. 7
Section 2.10 Fractional Shares.................................................................... 8
ARTICLE III Representations and Warranties of the Company........................................ 8
Section 3.1 Organization and Good Standing; Qualification........................................ 8
Section 3.2 Authorization and Validity........................................................... 8
Section 3.3 Governmental Authorization........................................................... 8
Section 3.4 Capitalization....................................................................... 9
Section 3.5 Transactions in Capital Stock........................................................ 9
Section 3.6 Continuity of Business Enterprise.................................................... 9
Section 3.7 Subsidiaries and Investments......................................................... 9
Section 3.8 Absence of Conflicting Agreements or Required Consents............................... 9
Section 3.9 Intentionally omitted................................................................ 9
Section 3.10 Absence of Changes................................................................... 9
Section 3.11 No Undisclosed Liabilities........................................................... 10
Section 3.12 Litigation and Claims................................................................ 10
Section 3.13 No Violation of Law.................................................................. 11
Section 3.14 Lease Agreements..................................................................... 11
Section 3.15 Real and Personal Property........................................................... 11
Section 3.16 Indebtedness for Borrowed Money...................................................... 12
Section 3.17 Contracts and Commitments............................................................ 12
Section 3.18 Employee Matters..................................................................... 13
Section 3.19 Labor Relations...................................................................... 13
Section 3.20 Employee Benefit Plans............................................................... 13
Section 3.21 Environmental Matters................................................................ 15
Section 3.22 Filing Reports....................................................................... 16
Section 3.23 Insurance Policies................................................................... 16
Section 3.24 Accounts Receivable; Payors.......................................................... 17
Section 3.25 Accounts Payable; Suppliers.......................................................... 17
Section 3.26 Inventory............................................................................ 17
Section 3.27 Licenses, Authorization and Provider Programs........................................ 18
Section 3.28 Inspections and Investigations....................................................... 18
Section 3.29 Proprietary Rights and Information................................................... 19
Section 3.30 Taxes................................................................................ 19
Section 3.31 Related Party Arrangements........................................................... 20
Section 3.32 Banking Relations.................................................................... 20
Section 3.33 Fraud and Abuse and Self Referral.................................................... 21
Section 3.34 Restrictions on Business Activities.................................................. 21
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Section 3.35 Agreements in Full Force and Effect.................................................. 21
Section 3.36 Statements True and Correct.......................................................... 21
Section 3.37 Disclosure Schedules................................................................. 21
Section 3.38 Finders' Fees........................................................................ 21
ARTICLE IV Representations and Warranties of APP................................................ 21
Section 4.1 Organization and Good Standing; Qualification........................................ 21
Section 4.2 Authorization and Validity........................................................... 22
Section 4.3 Governmental Authorization........................................................... 22
Section 4.4 Capitalization....................................................................... 22
Section 4.5 Subsidiaries and Investments......................................................... 22
Section 4.6 Absence of Conflicting Agreements or Required Consents............................... 23
Section 4.7 Absence of Changes................................................................... 23
Section 4.8 No Undisclosed Liabilities........................................................... 23
Section 4.9 Litigation and Claims................................................................ 23
Section 4.10 No Violation of Law.................................................................. 23
Section 4.11 Employee Matters..................................................................... 23
Section 4.12 Taxes................................................................................ 23
Section 4.13 Related Party Arrangements........................................................... 24
Section 4.14 Statements True and Correct.......................................................... 25
Section 4.15 Schedules............................................................................ 25
Section 4.16 Finder's Fees........................................................................ 25
Section 4.17 Agreements in Full Force and Effect.................................................. 25
ARTICLE V ..................................................................................... 25
ARTICLE VI Closing Date Representations and Warranties Regarding ............................... 25
Section 6.1 Authorization and Validity........................................................... 25
Section 6.2 No Violation......................................................................... 25
Section 6.3 No Business, Agreements, Assets or Liabilities....................................... 25
ARTICLE VII Covenants of the Company............................................................. 26
Section 7.1 Conduct of The Company............................................................... 26
Section 7.2 Title to Assets; Indebtedness........................................................ 27
Section 7.3 Access............................................................................... 27
Section 7.4 Acquisition Proposals................................................................ 27
Section 7.5 Compliance With Obligations.......................................................... 28
Section 7.6 Notice of Certain Events............................................................. 28
Section 7.7 Intentionally omitted................................................................ 28
Section 7.8 Stockholders' Consent................................................................ 28
Section 7.9 Obligations of Company and Stockholders.............................................. 29
Section 7.10 Funding of Accrued Employee Benefits................................................. 29
Section 7.11 Accounting and Tax Matters........................................................... 29
ARTICLE VIII Covenants of APP..................................................................... 29
Section 8.1 Consummation of Agreement............................................................ 29
Section 8.2 Requirements to Effect the Merger and Acquisitions................................... 29
Section 8.3 Access............................................................................... 29
Section 8.4 Notification of Certain Matters...................................................... 30
ARTICLE IX Covenants of APP, APP Sub and the Company............................................ 30
Section 9.1 Filings; Other Action................................................................ 30
Section 9.2 Amendments of Disclosure Schedules................................................... 30
Section 9.3 Actions Contrary to Stated Intent.................................................... 31
Section 9.4 Public Announcements................................................................. 31
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Section 9.5 Expenses............................................................................. 31
Section 9.6 Patient Confidentiality.............................................................. 31
Section 9.7 Registration Statements.............................................................. 31
ARTICLE X Conditions Precedent of APP.......................................................... 31
Section 10.1 Representations and Warranties....................................................... 31
Section 10.2 Covenants............................................................................ 31
Section 10.3 Legal Opinion........................................................................ 32
Section 10.4 Proceedings.......................................................................... 32
Section 10.5 No Material Adverse Effect........................................................... 32
Section 10.6 Government Approvals and Required Consents........................................... 32
Section 10.7 Securities Approvals................................................................. 32
Section 10.8 Closing Deliveries................................................................... 32
Section 10.9 Closing of Initial Public Offering................................................... 32
Section 10.10 Closing of Related Acquisitions...................................................... 32
Section 10.11 Dissenter's Rights................................................................... 32
Section 10.12 Stockholder Representation Letter; Indemnification Agreement......................... 32
Section 10.13 Transfer of Assets................................................................... 32
ARTICLE XI Conditions Precedent of the Company.................................................. 32
Section 11.1 Representations and Warranties....................................................... 33
Section 11.2 Covenants............................................................................ 33
Section 11.3 Legal Opinions....................................................................... 33
Section 11.4 Proceedings.......................................................................... 33
Section 11.5 Government Approvals and Required Consents........................................... 33
Section 11.6 "Blue Sky" Approvals; Nasdaq Listing................................................. 33
Section 11.7 Closing of Initial Public Offering................................................... 33
Section 11.8 Closing Deliveries................................................................... 33
Section 11.9 No Material Adverse Effect........................................................... 33
ARTICLE XII Closing Deliveries................................................................... 33
Section 12.1 Deliveries of the Company............................................................ 33
Section 12.2 Deliveries of APP. .................................................................. 34
ARTICLE XIII Post Closing Matters................................................................. 35
Section 13.1 Further Instruments of Transfer...................................................... 35
Section 13.2 Merger Tax Covenant.................................................................. 35
Section 13.3 Current Public Information........................................................... 36
ARTICLE XIV Remedies............................................................................. 36
Section 14.1 Indemnification by the Company....................................................... 36
Section 14.2 Indemnification by APP and APP Sub................................................... 37
Section 14.3 Conditions of Indemnification........................................................ 37
Section 14.4 Costs, Expenses and Legal Fees....................................................... 39
Section 14.5 Tax Benefits; Insurance Proceeds..................................................... 39
ARTICLE XV Termination.......................................................................... 39
Section 15.1 Termination.......................................................................... 39
Section 15.2 Effect of Termination................................................................ 40
ARTICLE XVI Nondisclosure of Confidential Information............................................ 40
Section 16.1 Non-Disclosure Covenant.............................................................. 40
Section 16.2 Damages.............................................................................. 40
Section 16.3 Survival............................................................................. 41
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ARTICLE XVII Miscellaneous........................................................................ 41
Section 17.1 Amendment; Waivers................................................................... 41
Section 17.2 Assignment........................................................................... 41
Section 17.3 Parties in Interest; No Third Party Beneficiaries.................................... 41
Section 17.4 Entire Agreement..................................................................... 41
Section 17.5 Severability......................................................................... 41
Section 17.6 Survival of Representations, Warranties and Covenants................................ 41
Section 17.7 Governing Law........................................................................ 42
Section 17.8 Captions............................................................................. 42
Section 17.9 Gender and Number.................................................................... 42
Section 17.10 Intentionally omitted................................................................ 42
Section 17.11 Confidentiality; Publicity and Disclosures........................................... 42
Section 17.12 Notice............................................................................... 42
Section 17.13 No Waiver; Remedies.................................................................. 43
Section 17.14 Counterparts......................................................................... 43
Section 17.15 Defined Terms........................................................................ 43
EXHIBITS
Exhibit A - List of Target Companies........................................................................... A-1
Exhibit B - Merger Consideration............................................................................... B-1
Exhibit C - Stockholder Representation Letter.................................................................. C-1
Exhibit D - Indemnification Agreement.......................................................................... D-1
Exhibit E - Stockholder Release................................................................................ G-1
Exhibit 1.1 - List of Stockholders
Exhibit 2.6 - List of Directors
Exhibit 2.7 - List of Officers
Exhibit 10.3 - Legal Opinion (Company Counsel)
Exhibit 11.3 - Legal Opinion (APP Counsel)
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
This Agreement and Plan of Reorganization and Merger (this
"Agreement"), dated as of June __, 1997, is by and among AMERICAN PHYSICIAN
PARTNERS, INC., a Delaware corporation ("APP"), [AMERICAN PHYSICIAN PARTNERS
SUBSIDIARY, INC.], a California corporation and a wholly-owned subsidiary of APP
("APP Sub"), and TOTAL MEDICAL IMAGING, INC., a California corporation (the
"Company").
RECITALS
A. The Company owns assets relating to the operation of diagnostic
imaging centers related to the professional medical practice specializing in
radiology conducted by PACIFIC IMAGING CONSULTANTS, A MEDICAL GROUP, INC., a
California professional medical corporation ("PIC"). All of the shares of the
common stock of the Company (the "Company Common Stock") are owned beneficially
and of record by the Stockholders. The Stockholders also own beneficially and of
record all of the shares of the common stock of PIC. PIC is a "Founding Company"
(as defined in Section 1.1 hereof).
B. APP Sub is engaged in the business of owning, operating and
acquiring the assets of, and managing the non-medical aspects of, radiology
practices and diagnostic imaging centers.
C. Pursuant to this Agreement, APP, APP Sub, and the Company intend
that APP Sub be merged with and into the Company, and that the Company be the
sole surviving corporation (sometimes referred to hereinafter as the "Surviving
Corporation"), and APP Sub be the disappearing corporation (sometimes referred
to hereinafter as the "Disappearing Corporation").
D. APP, APP Sub and the Company have each determined to engage in the
transactions contemplated hereby, pursuant to which (i) APP Sub will merge with
and into the Company upon the terms and conditions set forth herein and in
accordance with the laws of the State of California, (ii) the outstanding shares
of the Company Common Stock shall be converted at such time into cash and shares
of common stock, par value $.0001 per share, of APP (the "APP Common Stock") as
set forth herein, and (iii) the Company shall become a wholly-owned subsidiary
of APP.
E. Prior to the Merger, the Company and PIC each intends to transfer
certain of its assets and liabilities to a newly formed professional corporation
("NewCo") in exchange for all of the capital stock of NewCo and to thereafter
distribute such NewCo stock to Stockholders (the "Spin-Off Transaction").
F. APP and APP Subsidiaries have entered into, or intend to enter into,
an Agreement and Plan of Reorganization and Merger or other acquisition
agreements (collectively, the "Other Agreements") similar to this Agreement with
interest holders (together with the Stockholders, the "Target Interest Holders")
of each of the entities listed on Exhibit A (together with the Company, the
"Target Companies").
G. The parties intend for the transaction contemplated by this
Agreement along with the transactions contemplated by the Other Agreements to
qualify as a tax-free exchange within the meaning of Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code") and the regulations promulgated
thereunder.
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AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliate" with respect to any person shall mean a person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"APP" shall have the meaning set forth in the preamble to this
Agreement.
"APP Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
"APP Group" shall mean APP, APP Sub and each of their Affiliates.
"APP Sub" shall have the meaning set forth in the preamble to this
Agreement.
"APP Subsidiaries" shall have the meaning set forth in Section 4.5.
"Best knowledge" or "to the knowledge of" and similar phrases shall
mean (i) in the case of a natural person, the particular fact was known, or not
known, as the context requires, to such person after reasonable investigation
and inquiry by such person, and (ii) in the case of an entity, the particular
fact was known, or not known, as the context requires, to any of the
Stockholders listed on Exhibit 1.1, director or executive officer of such entity
after reasonable investigation and inquiry by the executive officers of such
entity; provided, however, that to the extent any of the representations,
warranties and statements of the Company made specifically in Section 3.21 is
expressly qualified to the knowledge or best knowledge of the Company, it shall
mean the knowledge of any of the Stockholders listed on Exhibit 1.1, director or
executive officer of the Company actually possesses without the necessity of any
special inquiry as to the matters which are the subject thereof.
"Claim Notice" shall have the meaning set forth in Section 14.3(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"Code" shall have the meaning set forth in the recitals to this
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Company Audited Financial Statements" shall mean the audited
consolidated balance sheet of the Company as of December 31, 1996 and the
related statements of income, stockholders' equity and statements of cash flows
of the Company and its Subsidiaries for the year ended December 31, 1996.
"Company Common Stock" shall have the meaning set forth in the recitals
to this Agreement.
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"Company Current Balance Sheet" shall mean the unaudited consolidated
balance sheet of Company and its Subsidiaries as of March 31, 1997.
"Company Current Financial Statements" shall mean the Company Current
Balance Sheet and the related statements of income, stockholders' equity and
statements of cash flows of Company and the Company Subsidiaries for the _____
(__) month period then ended.
"Company Financial Statements" shall mean collectively the Company
Audited Financial Statements and the Company Current Financial Statements.
"Company Right" shall mean all arrangements, calls, commitments,
agreements, options, rights to subscribe to, scrips, understandings, warrants,
or other binding obligations of any character whatsoever relating to or
securities or rights convertible into or exchangeable for, shares of Company
Common Stock, or by which the Company is or may be bound to issue additional
shares of Company Common Stock or other Company Rights.
"Company Subsidiaries" shall have the meaning set forth in Section 3.7.
"Confidential Information" shall mean all trade secrets and other
confidential and/or proprietary information of the particular person, including,
but not limited to, information derived from reports, processes, data, know-how,
software programs, improvements, inventions, strategies, compensation
structures, reports, investigations, research, work in progress, codes,
marketing and sales programs and plans, financial projections, cost summaries,
formulae, contract analyses, financial information, forecasts, confidential
filings with any state or federal agency, and all other confidential concepts,
methods of doing business, ideas, materials or information prepared or performed
for, by or on behalf of such person by its employees, officers, directors,
agents, representatives, or consultants.
"Controlled Group" shall have the meaning set forth in Section 3.20(g).
"Damages" shall have the meaning set forth in Section 14.1.
"Disappearing Corporation" shall have the meaning set forth in the
recitals to this Agreement.
"Disclosure Schedules" shall mean the schedules attached hereto as of
the date hereof or otherwise delivered by any party hereto pursuant to the terms
hereof, as such may be amended or supplemented from time to time pursuant to the
provisions hereof.
"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date that the Registration Statement is
declared effective by the SEC.
"Effective Time" shall have the meaning set forth in Section 2.3.
"Election Period" shall have the meaning set forth in Section 14.3(a).
"Employee Benefit Plans" shall have the meaning set forth in Section
3.20(a).
"Encumbrance" shall mean any charge, claim, community property
interest, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
"Environmental Laws" shall have the meaning set forth in Section
3.21(e).
"ERISA" shall have the meaning set forth in Section 3.18.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Form S-1" shall mean the Form S-1 Registration Statement filed with
the SEC by APP pursuant to the Securities Act in connection with its Initial
Public Offering.
"Form S-4" shall mean the Form S-4 Registration Statement filed with
the SEC by APP pursuant to the Securities Act in connection with the offering of
APP Common Stock as consideration under the Merger and other mergers
contemplated by the Other Agreements.
"Founding Company" shall mean a Target Company that is either a party
to this Agreement or an Other Agreement that has not been terminated prior to
Closing.
"FTC" shall mean the United States Federal Trade Commission.
"Indemnified Party" shall have the meaning set forth in Section
14.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
14.3(a).
"Indemnity Notice" shall have the meaning set forth in Section 14.3(d).
"Initial Public Offering" shall mean the initial underwritten public
offering of APP Common Stock contemplated by the Form S-1.
"Initial Public Offering Price" shall mean the price per share of APP
Common Stock received by APP before underwriting commissions, discounts or other
fees in connection with its Initial Public Offering.
"Insurance Policies" shall have the meaning set forth in Section 3.23.
"IRS" shall mean the Internal Revenue Service.
"Lease Agreements" shall have the meaning set forth in Section 3.14.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations, condition (financial or otherwise),
liabilities or results of operations of the Person or Persons being referred to,
taken as a whole (including its consolidated subsidiaries, if any), in
consideration of all relevant facts and circumstances.
"Medical Waste" shall mean (i) pathological waste, (ii) blood, (iii)
sharps, (iv) wastes from surgery or autopsy, (v) dialysis waste, including
contaminated disposable equipment and supplies, (vi) cultures and stocks of
infectious agents and associated biological agents, (vii) contaminated animals,
(viii) isolation wastes, (ix) contaminated equipment, (x) laboratory waste, (xi)
any substance, pollutant, material, or contaminant listed or regulated under any
Medical Waste Law, and (xii) other biological waste and discarded materials
contaminated with or exposed to blood, excretion, or secretions from human
beings or animals.
"Medical Waste Laws" shall mean the following, including regulations
promulgated and orders issued thereunder, as in effect on the date hereof and
the Closing Date: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA Sections 2501 et seq., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA Sections 1401
et seq., (iv) The Occupational Safety and Health Act, 29 USCA Sections 651
et seq., (v) the United States Department of Health and Human Services, National
Institute for Occupational Safety and Health, Infectious Waste Disposal
Guidelines, Publication No. 88-119, and (vi) any other federal, state, regional,
county, municipal, or other local laws, regulations, and ordinances insofar as
they are applicable to any of the Company's assets or operations and purport to
regulate Medical Waste or impose requirements related to Medical Waste.
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"Merger" shall have the meaning set forth in Section 2.1.
"Merger Consideration" shall have the meaning set forth in Section
2.8(a).
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
Sections 6992, et seq.
"Ordinary course of business" shall mean the usual and customary way in
which the particular entity has conducted its business in the past.
"Other Agreements" shall have the meaning set forth in the recitals to
this Agreement.
"Payors" shall mean any and all private or governmental Persons,
obligated by contract or by law to render payment to the Company in
consideration of the performance of professional medical or technical services
including, but not limited to, Medicare and Medicaid Programs (as defined in
Section 3.27(a)), insurance companies, health maintenance organizations,
preferred provider organizations, independent practice associations, hospitals,
hospital systems, integrated delivery systems and CHAMPUS.
"Person" shall mean any natural person, corporation, partnership, joint
venture, limited liability company, association, group, organization or other
entity.
"Registration Statements" shall mean the Form S-1 and the Form S-4.
"Regulated Activity" shall have the meaning set forth in Section
3.21(e).
"Related Acquisitions" shall mean, collectively, the Merger and the
mergers and acquisitions of each Founding Company and its related entities and
assets contemplated by the Other Agreements.
"Reorganization" shall have the meaning set forth in Section 13.2.
"Security Agreement" shall have the meaning set forth in the Service
Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Spin-Off Transaction" shall have the meaning set forth in the recitals
to this Agreement.
"Stockholders" shall mean the stockholders of the Company immediately
prior to the Effective Time.
"Stockholder Release" shall have the meaning set forth in Section
12.1(m).
"Surviving Corporation" shall have the meaning set forth in the
recitals to this Agreement.
"Target Companies" shall have the meaning set forth in the recitals to
this Agreement.
"Target Interest Holders" shall have the meaning set forth in the
recitals to this Agreement.
"Tax Returns" shall include all federal, state, local or foreign
income, excise, corporate, franchise, property, sales, use, payroll,
withholding, provider, environmental, duties, value added and other tax returns
(including information returns).
"Third Party Claim" shall have the meaning set forth in Section
14.3(a).
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Section 1.2 Rules Of Interpretation. The definitions set forth in
Section 1.1 shall be equally applicable to both the singular and the plural
forms of the terms therein defined and shall cover both genders.
Unless otherwise indicated, "herein," "hereby," "hereunder," "hereof,"
"hereinabove," "hereinafter" and other equivalent words refer to this Agreement
and not solely to the particular Article, Section or subdivision hereof in which
such word is used.
Unless otherwise indicated, reference herein to an Article number
(e.g., Article IV) or a Section number (e.g., Section 6.2) shall be construed to
be a reference to the designated Article number or Section number of this
Agreement.
ARTICLE II
The Merger
Section 2.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, APP Sub shall be merged with and into the
Company in accordance with this Agreement and the separate corporate existence
of the Disappearing Corporation shall thereupon cease (the "Merger"). The
Company shall be the Surviving Corporation in the Merger and shall continue to
be governed by the laws of the State of California, and the separate corporate
existence of the Company with all its rights, privileges, powers, immunities,
purposes and franchises shall continue unaffected by the Merger, except as set
forth herein. The Surviving Corporation may, at any time concurrent with and/or
after the Effective Time, take any action in the name of or on behalf of the
Disappearing Corporation in order to effectuate the transactions contemplated by
this Agreement.
Section 2.2 The Closing. The closing (the "Closing") shall take place
at 10:00 a.m., local time, at the offices of APP located at 2301 NationsBank
Plaza, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ on the day on which the transactions
contemplated by the Initial Public Offering are consummated. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
Section 2.3 Effective Time. If all the conditions to the Merger set
forth in Articles XI and XII shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated in accordance with
Article XVI, the parties hereto shall cause to be properly executed and filed on
the Closing Date, Certificates of Merger meeting the requirements of Section
1103 of the California General Corporation Law. The Merger shall become
effective at the time of the filing of such documents with the Secretary of
State of the State of California, in accordance with such law or at such later
time which the parties hereto have theretofore agreed upon and designated in
such filings as the effective time of the Merger (the "Effective Time").
Section 2.4 Certificate of Incorporation of Surviving Corporation.
Effective at the Effective Time, the Article of Incorporation of the Company in
effect immediately prior to the Effective Time shall be amended and restated in
a manner satisfactory to APP. The Article of Incorporation, as so amended and
restated, shall be the Article of Incorporation of the Surviving Corporation.
Section 2.5 Bylaws of Surviving Corporation. The Bylaws of APP Sub in
effect immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation without any amendment or modification as a result of the
Merger, until duly amended in accordance with applicable laws.
Section 2.6 Directors of the Surviving Corporation. The persons who are
directors of the Company immediately prior to the Effective Time shall submit a
written resignation in form and substance acceptable to APP, effective as of the
Effective Time. The directors of the Surviving Corporation following the
Effective Time shall be set forth in Exhibit 2.6.
Section 2.7 Officers of the Surviving Corporation. The persons who are
officers of the Company immediately prior to the Effective Time shall submit a
written resignation in form and
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substance acceptable to APP, effective as of the Effective Time. The officers of
the Surviving Corporation following the Effective Time shall be set forth in
Exhibit 2.7.
Section 2.8 Conversion of Company Common Stock. The manner of
converting shares of Company Common Stock in the Merger shall be as follows:
(a) As a result of the Merger and without any action on the
part of the holder thereof, all shares of Company Common Stock issued and
outstanding at the Effective Time (excluding shares held by APP pursuant to
Section 2.8(d) hereof) shall cease to be outstanding and shall be cancelled and
retired and shall cease to exist, and each holder of a certificate or
certificates representing any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive, without interest, (i) cash and (ii)
validly issued, fully paid and nonassessable shares of APP Common Stock, all as
determined in accordance with the provisions of Exhibit B attached hereto (the
"Merger Consideration").
(b) Each share of Company Common Stock held in the Company's
treasury, if any, at the Effective Time, by virtue of the Merger, shall be
cancelled and retired without payment of any consideration therefor and shall
cease to exist.
(c) Each Company Right outstanding at the Effective Time shall
be terminated and cancelled, without payment of any consideration therefor, and
shall cease to exist.
(d) Each share of common stock of APP Sub issued and
outstanding at the Effective Time shall be converted to one share of Company
Common Stock.
(e) At the Effective Time, each share of APP Common Stock
issued and outstanding as of the Effective Time shall, by virtue of the Merger
and without any action on the part of the holder thereof, continue unchanged and
remain outstanding as a validly issued, fully paid and nonassessable share of
APP Common Stock.
Section 2.9 Exchange of Certificates Representing Shares of the Company
Common Stock.
(a) At or after the Effective Time and at the Closing (i) the
Stockholders, as holders of a certificate or certificates representing shares of
the Company's Common Stock, shall upon surrender of each certificate or
certificates (or completion of appropriate affidavit of lost certificate and
indemnity) receive such allocation of Merger Consideration as determined in
accordance with the provisions of Exhibit B attached hereto; and (ii) until each
certificate or certificates representing Company Common Stock have been
surrendered by the Stockholders, the certificates for Company Common Stock
shall, for all purposes, represent solely the right to receive Merger
Consideration as determined in accordance with the provisions of Exhibit B
attached hereto and Section 2.10 hereof, if applicable. At the Effective Time,
each share of Company Common Stock converted into Merger Consideration shall by
virtue of the Merger and without any action on the part of the holders thereof,
cease to be outstanding, be cancelled and returned and all shares of APP Common
Stock issuable to the Stockholders in the Merger as part of the Merger
Consideration shall be deemed for all purposes to have been issued by APP at the
Effective Time.
(b) Each Stockholder shall deliver to APP at the Closing the
certificates representing Company Common Stock owned by him, her or it, duly
endorsed in blank by the Stockholder, or accompanied by duly executed stock
powers in blank, and with all necessary transfer tax and other revenue stamps,
acquired at the Stockholder's expense, affixed and cancelled. Each Stockholder
agrees to cure any deficiencies with respect to the endorsement of the
certificates or other documents of conveyance with respect to such Company
Common Stock or with respect to the stock powers accompanying any Company Common
Stock. Upon such delivery (or completion of appropriate affidavit of lost
certificate and indemnity), each Stockholder shall receive in exchange therefor
the Merger Consideration pursuant to Exhibit B and Section 2.10 hereof, if
applicable.
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Section 2.10 Fractional Shares. Notwithstanding any other provision
herein, no fractional shares of APP Common Stock will be issued and any
Stockholder otherwise entitled to receive a fractional share of APP Common Stock
as part of the Merger Consideration hereunder shall receive a cash payment in
lieu thereof reflecting such Stockholder's proportionate interest in a share of
APP Common Stock multiplied by the Initial Public Offering Price.
ARTICLE III
Representations and Warranties of the Company
As an inducement to APP and APP Sub to enter into this Agreement and to
consummate the Merger and except as set forth in the Disclosure Schedules
attached hereto and incorporated herein by this reference, the Company
represents and warrants to APP and APP Sub both as of the date hereof and as of
the Effective Time as follows:
Section 3.1 Organization and Good Standing; Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite corporate power and
authority to own, operate and lease its assets and properties and to carry on
its business as currently conducted. The Company and each Company Subsidiary is
in good standing in each jurisdiction where the character of the property owned
or leased by it or the nature of its activities makes such qualification
necessary, except where such failure to be so qualified or in good standing
would not have a Material Adverse Effect on the Company. Copies of the articles
or certificates of incorporation and all amendments thereto of the Company and
each Company Subsidiary and the bylaws of the Company and each Company
Subsidiary, as amended, and copies of the corporate minutes of the Company, all
of which have been or will be made available to APP for review, are true and
complete as in effect on the date of this Agreement and, in the case of the
corporate minutes, accurately reflect all material proceedings of the
Stockholders and directors of the Company (and all committees thereof). The
stock record books of the Company, which have been or will be made available to
APP for review, contain true, complete and accurate records of the stock
ownership of record of the Company and the transfer record of the shares of its
capital stock.
Section 3.2 Authorization and Validity. The Company has all requisite
corporate power to enter into this Agreement and all other agreements entered
into in connection with the transactions contemplated hereby and to consummate
the transactions contemplated hereby. The execution, delivery and, subject to
approval of this Agreement and the Merger by the Stockholders, performance by
the Company of this Agreement and the agreements contemplated herein, and the
consummation by the Company of the transactions contemplated hereby and thereby
are within the Company's respective corporate powers and have been duly
authorized by all necessary action on the part of the Company's Board of
Directors. Subject to the approval of this Agreement and the Merger by the
Stockholders, this Agreement has been duly executed by the Company, and this
Agreement and all other agreements and obligations entered into and undertaken
in connection with the transactions contemplated hereby to which the Company is
a party constitute, or upon execution will constitute, valid and binding
agreements of the Company, enforceable against it in accordance with their
respective terms, except as enforceability may be limited by bankruptcy or other
laws affecting the enforcement of creditors' rights generally, or by general
equity principles, or by public policy.
Section 3.3 Governmental Authorization. Other than complying with the
provisions of the applicable state corporate laws regarding the approval of the
Merger and the filing of the Certificates of Merger (as contemplated by Section
2.3) and any other required documents related to the Merger, and other than
consents, filings or notifications required to be made or obtained solely by APP
or APP Sub (including, without limitation, in connection with the Initial Public
Offering, Form S-4 or any ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ filing to be made by APP, if any),
the execution, delivery and performance by the Company of this Agreement and the
agreements provided for herein, and the consummation of the transactions
contemplated hereby and thereby by the Company require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority.
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Section 3.4 Capitalization. The authorized capital stock of the Company
consists of [_____] shares of the Company Common Stock, of which 10,000 shares
are issued and outstanding. The Stockholders collectively are and will be
immediately prior to the Effective Time the record and beneficial owners of all
the issued and outstanding Company Common Stock, free and clear of all
Encumbrances, in the respective amounts set forth in the Disclosure Schedules.
Each outstanding share of Company Common Stock has been legally and validly
issued and is fully paid and nonassessable, and was issued pursuant to a valid
exemption from registration under (i) the Securities Act of 1933, as amended,
and (ii) all applicable state securities laws. No shares of Company Common Stock
are owned by the Company in treasury. No shares of Company Common Stock have
been issued or disposed of in violation of any preemptive rights, rights of
first refusal or similar rights of any of the Stockholders. Other than Company
Common Stock, the Company has no securities, bonds, debentures, notes or other
obligations the holders of which have the right to vote (or are convertible into
or exercisable for securities having the right to vote) with the Stockholders on
any matter.
Section 3.5 Transactions in Capital Stock. There exist no Company
Rights. The Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its equity securities or any interests
therein or to pay any dividend or make any distribution in respect thereof.
Neither the equity structure of the Company nor the relative ownership of shares
among any of its Stockholders has been altered or changed in contemplation of
the Merger within the two (2) years preceding the date of this Agreement.
Section 3.6 Continuity of Business Enterprise. There has not been any
sale, distribution or spin-off of significant assets of the Company or any of
its Affiliates other than in the ordinary course of business within the (2) two
years preceding the date of this Agreement.
Section 3.7 Subsidiaries and Investments. The Company does not own,
directly or indirectly, any capital stock or other equity, ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity (each a "Company Subsidiary").
Section 3.8 Absence of Conflicting Agreements or Required Consents.
Subject to approval of this Agreement and the Merger by the Stockholders of the
Company, the execution, delivery and performance by the Company of this
Agreement and any other documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent of
any governmental or regulatory body or authority or any other third party except
for such consents, for which the failure to obtain would not result in a
Material Adverse Effect on the Company; (ii) will not conflict with or result in
a violation of any provision of the Company's articles or certificate of
incorporation or bylaws, (iii) will not conflict with, result in a violation of,
or constitute a default under any law, rule, ordinance, regulation or any
ruling, decree, determination, award, judgment, order or injunction of any court
or governmental instrumentality which is applicable to the Company or by which
the Company or its properties are subject or bound; (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, require any notice under, or accelerate or modify, or permit any
person to accelerate or modify, any performance required by the terms of any
agreement, instrument, license or permit, to which the Company is a party or by
which the Company or any of its properties are subject or bound except for such
conflict, termination, breach or default, the occurrence of which would not
result in a Material Adverse Effect on the Company; and (v) except as
contemplated by this Agreement, will not create any Encumbrance or restriction
upon the Company Common Stock or any of the assets or properties of the Company.
Section 3.9 Intentionally omitted.
Section 3.10 Absence of Changes. Except as permitted or contemplated by
this Agreement, since March 31, 1997, the Company has conducted its business
only in the ordinary course and has not:
(a) suffered any change or changes in its working capital,
condition (financial or otherwise), assets, liabilities, reserves, business or
operations (whether or not covered by insurance) that
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individually or in the aggregate has had or could reasonably be expected to have
a Material Adverse Effect on the Company;
(b) paid, discharged or satisfied any material liability,
other than the payment, discharge or satisfaction of liabilities in the ordinary
course of business;
(c) written off as uncollectible any receivable, except for
write-offs in the ordinary course of business;
(d) except in the ordinary course of business and consistent
with past practice, cancelled or compromised any debts or waived or permitted to
lapse any claims or rights or sold, transferred or otherwise disposed of any of
its properties or assets;
(e) entered into any commitment or transaction not in the
ordinary course of business that is material to the Company, taken as a whole,
or made any capital expenditure or commitment in excess of $25,000;
(f) made any change in any method of accounting or accounting
practice, credit practices, collection policies, or payment policies;
(g) except in the ordinary course of business consistent with
past practice, incurred any liabilities or obligations (absolute, accrued or
contingent) in excess of $10,000 individually or $25,000 in the aggregate;
(h) mortgaged, pledged, subjected or agreed to subject, any of
its assets, tangible or intangible, to any claim or Encumbrance, except for
liens for current personal property taxes not yet due and payable, mechanics,
landlords, materialmen, and other statutory liens, purchase money security
interests, sale-leaseback interests granted and all other Encumbrances granted
in similar transactions;
(i) sold, redeemed, acquired or otherwise transferred any
equity or other interest in itself;
(j) increased any salaries, wages or any employee benefits for
any employee of the Company, except in the ordinary course of business and
consistent with past practice;
(k) hired, committed to hire or terminated any employee except
in the ordinary course of business;
(l) declared, set aside or made any payments, dividends or
other distributions to any Stockholder or any other holder of capital stock of
the Company (except as expressly contemplated herein); or
(m) agreed, whether in writing or otherwise, to take any
action described in this Section 3.10.
Section 3.11 No Undisclosed Liabilities. To the best of its knowledge,
the Company does not have any liabilities or obligations of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted except for
liabilities or obligations reflected or reserved against in the Company's
Current Balance Sheet.
Section 3.12 Litigation and Claims. There are no claims, lawsuits,
actions, arbitrations, administrative or other proceedings, governmental
investigations or inquiries pending or, to the knowledge of the Company,
threatened against, or affecting the Company, any Company Subsidiary, any
Stockholder, the Physician Employees or any other licensed professional or other
individual affiliated with the Company affecting or that would reasonably be
likely to affect the Company Common Stock or the operations, business condition,
(financial or otherwise), or results of operations of the Company which
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(i) if successful, may, individually or in the aggregate, have a Material
Adverse Effect on the Company or (ii) could adversely affect the ability of the
Company or any Company Subsidiary to effect the transactions contemplated
hereby, and to the knowledge of the Company there is no basis for any such
action or any state of facts or occurrence of any event which would reasonably
be likely to give rise to the foregoing. There are no unsatisfied judgments
against the Company or any Company Subsidiary or any licensed professional or
other individual affiliated with the Company or any Company Subsidiary relating
to services provided on behalf of the Company or any Company Subsidiary or any
consent decrees to which any of the foregoing is subject. Each of the matters,
if any, set forth in this Section 3.12 is fully covered by policies of insurance
of the Company or any Company Subsidiary as in effect on the date hereof.
Section 3.13 No Violation of Law. Neither the Company nor any Company
Subsidiary has been, nor shall be as of the Effective Time (by virtue of any
action, omission to act, contract to which it is a party or any occurrence or
state of facts whatsoever), in violation of any applicable local, state or
federal law, ordinance, regulation, order, injunction or decree, or any other
requirement of any governmental body, agency, authority or court binding on it,
or relating to its properties, assets or business or its advertising, sales or
pricing practices, except for violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 3.14 Lease Agreements. The Disclosure Schedules contain a true,
accurate and complete list of all the lease agreements and license agreements to
which the Company or any Company Subsidiary is a party and pursuant to which the
Company or any Company Subsidiary leases (whether as lessor or lessee) or
licenses (whether as licensor or licensee) any real or personal property related
to the operation of its business and which requires payments in excess of
$12,000 per year (the "Lease Agreements"). The Company has delivered to APP true
and complete copies of all of the Lease Agreements. Each Lease Agreement is
valid, effective and in full force in accordance with its terms, and there is
not under any such lease (i) any existing or claimed material default by the
Company or any Company Subsidiary (as applicable) or event of material default
or event which with notice or lapse of time, or both, would constitute a
material default by the Company or any Company Subsidiary (as applicable) and,
individually or in the aggregate, may reasonably result in a Material Adverse
Effect on the Company, or, (ii) to the knowledge of the Company, any existing
material default by any other party under any of the Lease Agreements or any
event of material default or event which with notice or lapse of time, or both,
would constitute a material default by any such party. To the knowledge of the
Company, there is no pending or threatened reassessment of any property covered
by the Lease Agreements. The Company or any Company Subsidiary will use
reasonable good faith efforts to obtain, prior to the Effective Time, the
consent of each landlord or lessor whose consent is required to the assignment
of the Lease Agreements and will use reasonable good faith efforts to deliver to
APP or APP Sub in writing such consents as are necessary to effect a valid and
binding transfer or assignment of the Company's or any Company Subsidiary's
rights thereunder. The Company has a good, clear, valid and enforceable
leasehold interest under each of the Lease Agreements. The Lease Agreements
comply with the exceptions to ownership interests and compensation arrangements
set out in 42 U.S.C. Section 1395nn, 42 C.F.R. Section 1001.952, and any similar
applicable state law safe harbor or other exemption provisions.
Section 3.15 Real and Personal Property.
(a) Neither the Company nor any Company Subsidiary owns any
interest (other than the Lease Agreements) in real property.
(b) The Company and any Company Subsidiary (i) has good title
to all of its properties and assets (real, personal and mixed, tangible and
intangible) and any rights or interests therein which it purports to own
including, without limitation, all the property and assets reflected in the
Company Current Financial Statements; and (ii) owns such rights, interests,
assets and property free and clear of all Encumbrances, title defects or
objections (except for taxes not yet due and payable). The personal property
presently used in connection with the operation of the business of the Company
and the Company Subsidiaries constitutes the necessary personal property assets
to continue operation of the Company and any Company Subsidiary.
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Section 3.16 Indebtedness for Borrowed Money. Except for trade payables
incurred in the ordinary course of business, the Company does not have any
direct or indirect indebtedness for borrowed money, including indebtedness by
way of lease-purchase arrangements or guarantees, and is not obligated in any
manner (actual or contingent) to assume or guarantee any indebtedness or
obligation of another Person.
Section 3.17 Contracts and Commitments.
(a) The Disclosure Schedules contain a true, accurate and
complete list, and the Company has delivered to APP true and complete copies, of
each contract, agreement and other instrument requiring the Company to make
future payments of $10,000 in any fiscal year or $25,000 in the aggregate (other
than insurance contracts identified in Section 3.23 or Lease Agreements
identified in Section 3.14) to which the Company is a party or by which it or
any of its properties or assets are bound including, without limitation, (i) all
agreements between the Company, on the one hand, and any Payor, government
entity, provider, hospital, health maintenance organization, other managed care
organization or other third-party provider, on the other hand, then in effect
relating to the provision of medical, diagnostic imaging or consulting services,
treatments, patient referrals or other similar activities, (ii) all indentures,
mortgages, notes, loan or credit agreements and other agreements and obligations
relating to the borrowing of money or to the direct or indirect guarantee or
assumption of obligations of third parties requiring the Company to make, or
setting forth conditions under which the Company would be required to make,
aggregate future payments in excess of $10,000 in any fiscal year or $25,000 in
the aggregate, (iii) all agreements for capital improvements or acquisitions
involving an amount of $75,000 in any fiscal year or $75,000 in the aggregate,
(iv) all agreements containing a covenant limiting the freedom of the Company
(or any provider employee of the Company) to compete in any line of business
with any person or entity or in any geographic area or (v) all written contracts
and commitments providing for future payments by the Company in excess of
$10,000 in any fiscal year or $25,000 in the aggregate and that are not
cancelable by providing notice of sixty (60) days or less. All such contracts,
agreements or other instruments are in full force and effect, there has been no
threatened cancellation thereof, there are no outstanding disputes thereunder,
each is with unrelated third parties and was entered into on an arms-length
basis and, assuming the receipt of the appropriate consents, all will continue
to be binding in accordance with their terms after consummation of the
transaction contemplated herein; there are no contracts, agreements or other
instruments to which the Company is a party or is bound (other than physician
employment contracts and insurance policies) which could either singularly or in
the aggregate have a Material Adverse Effect on the value to APP or APP Sub of
the assets and properties to be acquired by APP or APP Sub from the Company, or
which could inhibit or prevent the Company from transferring to or vesting in
APP or APP Sub good and sufficient title to the assets and properties to be
acquired by APP or APP Sub and the Surviving Corporation except where the
failure to transfer would not have a Material Adverse Effect on APP or APP Sub.
In every instance where consent is necessary, the Company shall, on or before
the Closing Date, use reasonable good faith efforts to obtain and deliver to APP
or APP Sub in writing, effective as of the Closing Date, such consents as are
necessary to enable the Surviving Corporation to enjoy all of the rights now
enjoyed by the Company under such contracts. Any and all such consents shall be
in a form reasonably acceptable to APP and shall contain an acknowledgment by
the consenting party that the Company has fully complied with and is not in
default under any provision of the particular contract or agreement.
Notwithstanding the foregoing, the Company shall not transfer to APP or APP Sub
any contracts or agreements relating to the provision of professional medical
services or other such agreements and contracts that APP consents to in writing
to be transferred in the Spin-off Transaction. No contract with a health care
provider or Payor has been materially amended or terminated within the last
twelve (12) months.
(b) The Company (i) has not received notice of any plan or
intention of any other party to exercise any right to cancel or terminate any
contract, agreement or instrument required to be disclosed pursuant to Section
3.17(a), and to the knowledge of the Company there are no fact(s) that would
justify the exercise of such a right; and (ii) does not currently contemplate,
or have reason to believe any other Person currently contemplates, any amendment
or change to any such contract, agreement or instrument.
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Section 3.18 Employee Matters. The Company is not currently a party to
any employment contract (except for oral employment agreements which are
terminable at will), consulting or collective bargaining contracts, deferred
compensation, pension plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended, and all rules and
regulations from time to time promulgated thereunder ("ERISA")), profit sharing,
bonus, stock option, stock purchase or other nonqualified benefit or
compensation commitments, benefit plans, arrangements or plans (whether written
or oral), including all welfare plans (as defined in Section 3(1) of ERISA) of
or pertaining to the Company and any of its present or former employees, or any
predecessors in interest. As of April 30, 1997, the Company employed a
collective total of [___] part-time and [____] full-time employees. The
Disclosure Schedules list each employee of, or consultant to, the Company who
received combined salary, benefits (other than those offered generally to all
other employees) and bonuses for 1996 in excess of $50,000 or who is expected to
receive combined salary, benefits (other than those offered generally to all
other employees) and bonuses in 1997 in excess of $50,000. The Company is not
delinquent in payment to any of its employees or Physician Employees for wages,
salaries, bonuses or other direct compensation for any services performed for it
to the date hereof or amounts required to be reimbursed to such employees. Upon
termination of employment of any employee or Physician Employee, no severance or
other payments will become due and the Company has no policy, past practice or
plan of paying severance on termination of employment.
Section 3.19 Labor Relations.
(a) To the knowledge of the Company, the Company is in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages and hours,
occupational safety and health, and is not engaged in any unfair labor practice
within the meaning of Section 8 of the National Labor Relations Act;
(b) To the knowledge of the Company, there is no unfair labor
practice, charge or complaint or any other employment-related matter against or
involving the Company pending or threatened before the National Labor Relations
Board or any federal, state or local agency, authority or court;
(c) To the knowledge of the Company, there are no charges,
investigations, administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin, the making of workers' compensation claims, sexual
preference, handicap or veteran status) pending or threatened before the Equal
Employment Opportunity Commission or any federal, state or local agency or court
against the Company. There have been no governmental audits of the equal
employment opportunity practices of the Company and, to the knowledge of the
Company, no basis for any such audit exists which, if conducted would result in
a Material Adverse Effect on the Company;
(d) The Company is in material compliance with the Immigration
Reform and Control Act of 1986, as amended, and all applicable regulations
promulgated thereunder; and
(e) To the knowledge of the Company, there are no inquiries,
investigations or monitoring activities of any licensed, registered, or
certified professional personnel employed or retained by, credentialed or
privileged, or otherwise affiliated with the Company pending or threatened by
any state professional board or agency charged with regulating the professional
activities of health care practitioners.
Section 3.20 Employee Benefit Plans.
(a) Identification. The Disclosure Schedules contain a
complete and accurate list of all employee benefit plans (within the meaning of
Section 3(3) of ERISA) sponsored by the Company or to which the Company
contributes on behalf of its employees and all employee benefit plans previously
sponsored or contributed to on behalf of its employees within the three years
preceding the date hereof (the "Employee Benefit Plans"). The Company has
provided to APP copies of all plan documents (as
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they may have been amended to the date hereof), determination letters, pending
determination letter applications, trust instruments, insurance contracts or
policies related to an Employee Benefit Plan, administrative services contracts,
annual reports, actuarial valuations, summary plan descriptions, summaries of
material modifications, administrative forms and other documents that constitute
a part of or are incident to the administration of the Employee Benefit Plans.
In addition, the Company has provided or made available to APP a written
description of all existing practices engaged in by the Company that constitute
Employee Benefit Plans. Subject to the requirements of ERISA, each of the
Employee Benefit Plans can be terminated or amended at will by the Company
without any further liability or obligation on the part of such entity to make
further contributions or payments in connection therewith following such
termination. No unwritten amendment exists with respect to any Employee Benefit
Plan.
(b) Administration. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect.
(c) Examinations. The Company has not received any notice that
any Employee Benefit Plan is currently the subject of an audit, investigation,
enforcement action or other similar proceeding conducted by any state or federal
agency or authority.
(d) Prohibited Transactions. No prohibited transactions
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) have
occurred with respect to any Employee Benefit Plan. There has been no breach of
any duty under ERISA or applicable law (including, without limitation, any
health care contractor requirements or any other tax law requirements, or
conditions to favorable tax treatment, applicable to such plan), which would be
reasonably likely to result, directly or indirectly, (including through any
obligation of indemnification or contribution), in any taxes, penalties or other
liability to APP or any of its Affiliates.
(e) Claims and Litigation. No pending or, to the Company's
knowledge, threatened, claims, suits or other proceedings exist with respect to
any Employee Benefit Plan other than normal benefit claims filed by participants
or beneficiaries.
(f) Qualification. The Company has received a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) or 501(c)(9)
of the Code and/or tax-exempt within the meaning of Section 501(a) of the Code
and, to the best knowledge of the Company and each Stockholder, has been
continually qualified under the applicable Section of the Code since the
effective date of such Employee Benefit Plan. No proceedings exist or, to the
Company's knowledge, have been threatened that could result in the revocation of
any such favorable determination letter or ruling.
(g) Funding Status. No accumulated funding deficiency (within
the meaning of Section 412 of the Code), whether waived or unwaived, exists with
respect to any Employee Benefit Plan or any plan sponsored by any member of a
controlled group (within the meaning of Section 412(n)(6)(B) of the Code) in
which the Company is a member (a "Controlled Group"). With respect to each
Employee Benefit Plan subject to Title IV of ERISA, the assets of each such plan
are at least equal in value to the present value of accrued benefits determined
on an ongoing basis as of the date hereof. With respect to each Employee Benefit
Plan described in Section 501(c)(9) of the Code, the assets of each such plan
are at least equal in value to the present value of accrued benefits, based upon
the most recent actuarial valuation as of a date no more than ninety (90) days
prior to the date hereof. The Disclosure Schedules contain a complete and
accurate statement of all actuarial assumptions applied to determine the present
value of accrued benefits under all Employee Benefit Plans subject to actuarial
assumptions.
(h) Excise Taxes. Neither the Company nor any member of a
Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
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(i) Multiemployer Plans. Neither the Company nor any member of
a Controlled Group is or ever has been obligated to contribute to a
multiemployer plan within the meaning of Section 3(37) of ERISA or any other
Employee Benefit Plan which has been subject to Title IV of ERISA or Section 412
of the Code.
(j) PBGC. No facts or circumstances are known to the Company
that would result in the imposition of liability against APP, APP Sub or any of
its Affiliates by the Pension Benefit Guaranty Corporation ("PBGC") as a result
of any act or omission by the Company or any member of a Controlled Group. No
reportable event (within the meaning of Section 4043 of ERISA) for which the
notice requirement has not been waived has occurred with respect to any Employee
Benefit Plan subject to the requirements of Title IV of ERISA.
(k) Retirees. The Company has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and the applicable provisions of ERISA.
(l) Other Compensation Arrangements. Neither the Company nor,
to the Company's knowledge, any Stockholder or Physician Employee is a party to
any compensation or debt arrangement with any Person relating to the provision
of health care related services other than arrangements with the Company.
Section 3.21 Environmental Matters.
(a) Neither the Company nor any Company Subsidiary has, within
the five (5) years preceding the date hereof, through the Effective Time,
received from any federal, state or local governmental body, agency, authority
or entity, or any other Person, any written notice, demand, citation, summons,
complaint or order or any notice of any penalty, lien or assessment, and to the
knowledge of the Company no investigation or review is pending by any
governmental entity, with respect to any (i) alleged violation by the Company of
any Environmental Law (as defined in subsection (e) below) (ii) alleged failure
by the Company to have any environmental permit, certificate, license, approval,
registration or authorization required pursuant to any Environmental Law in
connection with the conduct of its business; or (iii) alleged illegal Regulated
Activity (as defined in subsection (e) below) by the Company.
(b) Neither the Company nor any Company Subsidiary has used,
transported, disposed of or arranged for the disposal of (as those terms are
defined in and construed under the Comprehensive Environmental Response,
Compensation and Liability Act) any Hazardous Substance (as defined herein) that
would be reasonably likely to give rise to any Environmental Liabilities (as
defined in subsection (e) below) for the Company under any applicable
Environmental Law that had, or would reasonably be likely to have, a Material
Adverse Effect on the Company. Neither the Company nor any Company Subsidiary
has engaged in any activity or failed to undertake any activity which action or
failure to act has given, or would reasonably be likely to give, rise to any
Environmental Liabilities or enforcement action by any federal, state or local
regulatory agency or authority, or has resulted, or would reasonably be likely
to result, in any fine or penalty imposed pursuant to any Environmental Law. The
Disclosure Schedules disclose any known presence of asbestos in or on the
Company's or any Company Subsidiary's owned or leased premises. To the knowledge
of the Company, there is no friable asbestos in or on the Company's or any
Company Subsidiary's owned or leased premises.
(c) To the knowledge of the Company, no soil or water in or
under any assets currently or formerly held for use or sale by the Company or
any Company Subsidiary is or has been contaminated by any Hazardous Substance
while such assets or premises were owned, leased, operated or managed, directly
or indirectly by the Company or any Company Subsidiary, where such contamination
had, or would be reasonably likely to have, a Material Adverse Effect on the
Company.
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(d) There have been no environmental audits and other similar
reports which have been prepared by, for or, to the knowledge of the Company,
concerning the Company or any Company Subsidiary within the five (5) years
preceding the date hereof through the Effective Time with respect to any real
property now or previously owned or leased by the Company, any Company
Subsidiary or any of its predecessors, true and complete copies of which have
been provided to APP.
(e) For the purposes of this Section 3.21, the following terms
have the following meanings:
"Environmental Laws" shall mean any federal, state or local
laws, ordinances, codes, regulations, rules, policies and orders
(including without limitation, Medical Waste Laws) that are intended to
assure the protection of the environment, or that classify, regulate,
call for the remediation of, require reporting with respect to, or list
or define air, water, groundwater, solid waste, hazardous, toxic, or
radioactive substances, materials, wastes, pollutants or contaminants,
or which are intended to assure the safety of employees, workers or
other persons, including the public in each case as in effect on the
date hereof.
"Environmental Liabilities" shall mean all liabilities of the
Company or any Company Subsidiary, whether contingent or fixed, which
(i) have arisen, or would reasonably be likely to arise, under
Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the date hereof or the Effective Time.
"Hazardous Substances" shall mean any toxic or hazardous
substances, material or waste, including Medical Waste, or any
pollutant or contaminant, or infectious or radioactive substance or
material, including without limitation, those substances, materials and
wastes defined in or regulated under any Environmental Laws.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any
Hazardous Substances.
Section 3.22 Filing Reports. All returns, reports, plans and filings of
any kind or nature necessary to be filed by the Company with any governmental
agency or authority have been properly completed and timely filed in compliance
with all applicable requirements, except where failure to so file would not have
a Material Adverse Effect on the Company.
Section 3.23 Insurance Policies. The Disclosure Schedules list and
briefly describe the Company's policies of insurance to which the Company or any
Company Subsidiary is a party or under which the Company or any Company
Subsidiary, officer or director thereof is or has been covered at any time
during the last five (5) years preceding the date of this Agreement relating to
the business of the Company or any Company Subsidiary (the "Insurance
Policies"). All of the Insurance Policies are valid, outstanding and enforceable
policies, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies and all premiums with respect thereto which are due and
payable are currently paid. All Insurance Policies currently maintained by the
Company or any Company Subsidiary ("Current Policies") taken together, (i)
provide adequate insurance coverage for the assets, properties and operations of
the Company and its Affiliates for all risks normally insured against by a
Person carrying on a substantially similar business or businesses as the Company
and its Affiliates, (ii) are sufficient for compliance with legal and
contractual requirements to which the Company or any of its Affiliates is a
party or by which any of them may be bound, and (iii) shall be maintained in
force (including the payment of all premiums and compliance with their terms)
without interruption up to and including the Closing Date. True, complete and
correct copies of all Insurance Policies have been provided to APP. Neither the
Company nor any Company Subsidiary nor any officer or director thereof has
received any notice or other written communication from any issuer of any
Current Policy cancelling such policy, materially increasing any deductibles or
retained amounts thereunder, or materially increasing the annual or other
premiums payable thereunder and, to the knowledge of the Company, no such
cancellation or increase of deductibles, retainages or premiums is threatened.
There are no outstanding claims, settlements or premiums owed against any
Insurance
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Policy, and all required notices have been given and all known potential or
actual claims under any Insurance Policy have been presented in due and timely
fashion. Within the five (5) years preceding the Agreement, neither the Company
nor any Company Subsidiary has filed a written application for any professional
liability insurance coverage which has been denied by an insurance agency or
carrier. The Disclosure Schedules also set forth a list of all claims under any
Insurance Policy in excess of $10,000 per occurrence filed by the Company or any
Company Subsidiary during the immediately preceding three-year period. Each
Physician Employee has, at all times while a Physician Employee, maintained or
been covered by professional malpractice insurance in such types and amounts as
are customary for such a physician practicing the same type of medicine in the
same geographic area.
Section 3.24 Accounts Receivable; Payors.
(a) The Disclosure Schedules set forth a list and aging of all
accounts receivable of the Company as of March 31, 1997, which list is complete,
true and accurate in all material respects. All such accounts receivable arose
in the ordinary course of business and have not been previously written off as
bad debts and, are, to the extent still uncollected, to the knowledge of the
Company collectible in the ordinary course of business, net of reserves for
doubtful and uncollectible accounts shown in the Company Financial Statements or
on the accounting records of the Company (which reserves are calculated
consistent with generally accepted accounting principles and past practice).
(b) The Disclosure Schedules set forth (i) a true, correct and
complete list of the names and addresses of each Payor of the Company as of such
date, which accounted for more than 5% of the revenues of the Company in the
fiscal year ended December 31, 1996, or which is reasonably expected to account
for more than 5% of the revenues of the Company for the fiscal year to end
December 31, 1997, and (ii) a single line item listing for all private-pay
patients in the aggregate of the Company. The Company has satisfactory relations
with such Payors set forth in (i) above and none of such Payors has notified the
Company that it intends to discontinue its relationship with the Company or to
deny any payments due from, or any claims for payment submitted to any such
party.
Section 3.25 Accounts Payable; Suppliers.
(a) The Disclosure Schedules set forth a true and complete (i)
list of the accounts payable of the Company as of March 31, 1997, and (ii) list
of each individual indebtedness owed by the Company of $5,000 or more, setting
forth the payee and the amount of indebtedness.
(b) The Disclosure Schedules set forth a true, correct and
complete list of the names and addresses of each of the providers/suppliers of
products or services to the Company (including, without limitation all
non-Physician Employee providers of care to patients) which accounted for a
dollar volume of purchases paid for by the Company in excess of $25,000 for the
fiscal year ended December 31, 1996, or which is reasonably expected to account
for a dollar volume of purchases paid for by the Company in excess of $25,000
for the fiscal year to end December 31, 1997.
Section 3.26 Inventory. All items of inventory on the Company Current
Balance Sheet contained in the Company Financial Statements consisted, and all
such items on hand on the date of this Agreement consist, and all such items on
hand at the Effective Time will consist, net of all applicable reserves with
respect thereto (calculated consistent with past practice), of items of a
quality and a quantity usable and saleable in the ordinary course of the
Company's business and conform to generally accepted standards in the industry
of which the Company is a part. The value of the inventories reflected on the
Company Current Balance Sheet contained in the Company Financial Statements are
net of adequate reserves for damaged, excess, and unusable items. Purchase
commitments of the Company for inventory are not materially in excess of normal
requirements, and none of such purchase commitments are at prices in excess of
prevailing market prices at the time of such purchase commitment.
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Section 3.27 Licenses, Authorization and Provider Programs.
(a) The Company and other licensed employee or independent
contractor of the Company (i) is the holder of all valid licenses, approvals,
orders, consents, permits, registrations, qualifications and other rights and
authorizations required by law, ordinance, regulation or ruling of any
governmental regulatory authority necessary to operate its business and (ii) is
eligible to participate in and to receive reimbursement under Titles XVIII and
XIX of the Social Security Act (the "Medicare and Medicaid Programs") and any
other programs funded in whole or in part by federal, state or local entities
for which the Company is eligible and which are listed in the Disclosure
Schedules ("Governmental Programs"). The Company and the Stockholders have a
current provider number for such Governmental Programs and with such private
non-governmental programs (including without limitation any private insurance
program) under which the Company is presently receiving payments directly or
indirectly from any Payor, licensed employee or independent contractor (such
non-governmental programs herein referred to as "Private Programs"). A true,
correct and complete list of such licenses, permits and other authorizations
(including, but not limited to verification of Medicare and Medicaid provider
number, and provider agreements, is set forth in the Disclosure Schedules, true,
complete and correct copies of which have been provided to APP. No violation,
default, order or deficiency exists with respect to any of the items listed in
the Disclosure Schedules except for such violations, defaults, orders or
deficiencies which would not be reasonably likely to have a Material Adverse
Effect on the Company, and there is no action pending or to the Company's
knowledge recommended by any state or federal agencies having jurisdiction over
the items listed in the Disclosure Schedules, either to revoke, withdraw or
suspend any material license or to terminate the participation of the Company in
any Governmental Program or Private Program, and no event has occurred which,
with or without notice or lapse of time, or both, would constitute grounds for a
violation, order or deficiency with respect to any of the items listed in the
Disclosure Schedules to revoke, withdraw or suspend any material license to
operate its business as is presently being conducted by it. To the knowledge of
the Company, there has been no decision not to renew any existing agreement with
any provider or Payor relating to the Company's business as presently being
conducted by it. The Company (i) has not had its Medicare/Medicaid provider
status suspended, relinquished, terminated or revoked (including orders that
have been entered by any such entities but stayed), (ii) has been reprimanded in
writing, sentenced, or disciplined by any licensing board, state agency,
regulatory body or authority, hospital, Payor or specialty board (including
orders that have been entered by any such entities but stayed), or (iii) is the
subject of an initial or final determination by any federal or state authority
that could result in any demand or reimbursement under the Medicare, Medicaid or
Government Programs or any exclusion or which monetary penalty under federal or
state law or (iv) has had a final judgment or settlement entered against it in
connection with a malpractice or similar action.
(b) The Company is not required, or for the 72-month period
prior to the Effective Time was not required, to file any cost reports or other
reports with any Governmental Program or Private Program.
Section 3.28 Inspections and Investigations. Neither the right of the
Company, or any Physician Employee, nor the right of any licensed professional
or other individual affiliated with the Company to receive reimbursements
pursuant to any Governmental Program or Private Program has been terminated or
otherwise materially and adversely affected as a result of any investigation or
action whether by any federal or state governmental regulatory authority or
other third party. No Physician Employee, licensed professional or other
individual affiliated with the business has, during the past three (3) years
prior to the Effective Time, had their professional license or staff privileges
limited, suspended or revoked by any governmental regulatory authority or
agency, hospital, integrated delivery system, trade association, professional
review organization, accrediting organization or certifying agency (including
orders that have been entered by any such entities but stayed). True, correct
and complete copies of all reports, correspondence, notices and other documents
relating to any matter described or referenced in this Section 3.28 have been
provided to APP.
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Section 3.29 Proprietary Rights and Information.
(a) Set forth in the Disclosure Schedules is a complete and
accurate list and summary description of the following: (i) all trademarks
(registered and unregistered), trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, currently owned in whole or part, or used by the Company or any
Company Subsidiary, (ii) all patents and applications therefor and inventions
and discoveries that may be patentable currently owned, in whole or in part, or
used by the Company or any Company Subsidiary, (iii) all licenses, royalties,
and assignments thereof to which the Company or any Company Subsidiary are a
party (iv) all copyrights (for published and unpublished works) currently owned
in whole or part, or used by the Company or any Company Subsidiary and (v) other
similar agreements relating to the foregoing to which the Company or any Company
Subsidiary is a party (including expiration date if applicable) (collectively,
the "Proprietary Rights").
(b) The Disclosure Schedules contain a complete and accurate
list and summary description of all agreements relating to technology, trade
secrets, know-how or processes that the Company is licensed or authorized to use
by others (other than technology, know-how or processes generally available to
other health care providers) or which it licenses or authorizes others to use,
true, correct and complete copies of which have been provided to APP. There are
no outstanding and, to the Company's knowledge, any threatened disputes or
disagreements with respect to any such agreement.
(c) The Company owns or has the legal right to use the
Proprietary Rights without conflicting with, infringing or violating the rights
of any other Person. No consent of any person will be required for the use
thereof by APP upon consummation of the transactions contemplated hereby and the
Proprietary Rights are freely transferable. To the knowledge of the Company, no
claim has been asserted by any person to the ownership of or for infringement by
the Company of any Proprietary Right of any other Person, and neither the
Company nor any Stockholder is aware of any valid basis for any such claim. To
the best knowledge of the Company, no proceedings have been threatened which
challenge the Proprietary Rights of the Company. The Company has the right to
use, free and clear of any adverse claims or rights of others, all trade
secrets, customer lists and proprietary information required for the performance
and marketing of all medical services.
Section 3.30 Taxes.
(a) Filing of Tax Returns. The Company has duly and timely
filed (in accordance with any extensions duly granted by the appropriate
governmental agency, if applicable) with the appropriate governmental agencies
all Tax Returns and reports required to be filed with the United States or any
state or any political subdivision thereof or any foreign jurisdiction. All such
Tax Returns or reports are complete and accurate in all material respects and
properly reflect the taxes of the Company for the periods covered thereby.
(b) Payment of Taxes. Except for such items as the Company may
be disputing in good faith by proceedings in compliance with applicable law,
which are described in the Disclosure Schedules, (i) the Company has paid all
taxes, penalties, assessments and interest that have become due with respect to
any Tax Returns that it has filed and has properly accrued on its books and
records in accordance with generally accepted accounting principles for all of
the same that have not yet become due and payable and (ii) the Company is not
delinquent in the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or
Audits. The Company has not received any notice that any tax deficiency or
delinquency has been asserted against the Company and to the best knowledge of
the Company, there is no threat of such assertion. There is no unpaid
assessment, proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of the Company that could reasonably be likely to be
asserted by any taxing authority. There is no taxing authority audit of the
Company pending, or to the actual knowledge of the Company, threatened within
the last five (5) years, and the results of any completed audits are properly
reflected in the Company
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Financial Statements. The Company has not violated any applicable federal,
state, local or foreign tax law. There are no security interests or liens on any
assets of the Company or any Company Subsidiary which have resulted from any
failure to pay (or alleged failure to pay) taxes.
(d) No Extension of Limitation Period. The Company has not
granted an extension to any taxing authority of the statute of limitation period
during which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies
required to be withheld by the Company and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and paid to the respective governmental
agencies.
(f) Foreign Person. Neither the Company nor any Stockholder is
a foreign person, as such term is referred to in Section 1445(f)(3) of the Code
and Treasury Regulations Section 1.1445-2.
(g) Safe Harbor Lease. None of the properties or assets of the
Company constitutes property that the Company, APP, APP Sub or any Affiliate of
APP, will be required to treat as being owned by another person pursuant to the
"Safe Harbor Lease" provisions of Section 168(f)(8) of the Code prior to repeal
by the Tax Equity and Fiscal Responsibility Act of 1982.
(h) Tax Exempt Entity. None of the assets or properties of the
Company are subject to a lease to a "tax exempt entity" as such term is defined
in Section 168(h)(2) of the Code.
(i) Collapsible Corporation. The Company has not at any time
consented to have the provisions of Section 341(f)(2) of the Code apply to it.
(j) Boycotts. The Company has not at any time participated in
or cooperated with any international boycott as defined in Section 999 of the
Code.
(k) Parachute Payments. No payment required or contemplated to
be made by the Company will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
(l) S Corporation. The Company has not made an election to be
taxed as an "S" corporation under Section 1362(a) of the Code.
(m) Personal Holding Companies. The Company is not or has not
been a personal holding company within the meaning of Section 542 of the Code.
Section 3.31 Related Party Arrangements. The Disclosure Schedules set
forth a description of any interest held, directly or indirectly, by any
officer, director or other Affiliate of the Company in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the
Company's business and any arrangement or agreement with any such person
concerning the provision of goods or services or other matters pertaining to the
Company's business. There is no commitment to, and no income reflected in the
Company Financial Statements that has been derived from, an Affiliate, and
following the Closing the Company shall not have any obligation of any kind or
designation to any such Affiliate.
Section 3.32 Banking Relations. Set forth in the Disclosure Schedules
is a complete and accurate list of all borrowing and investing arrangements that
the Company has with any bank or other financial institution, indicating with
respect to each relationship the type of arrangement maintained (such as
checking account, borrowing arrangements, safe deposit box, etc.) and the Person
or Persons authorized in respect thereof.
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Section 3.33 Fraud and Abuse and Self Referral. Neither the Company nor
any Company Subsidiary has engaged and, to the knowledge of the Company, neither
the Company's officers and directors nor other Persons and entities providing
services for or on behalf of the Company have engaged, in any activities which
are prohibited under 42 U.S.C. Sections 1320a 7, 7a or 7b or 42 U.S.C.
Section 1395nn (subject to the exceptions or safe harbor provisions set forth in
such legislation), or the regulations promulgated thereunder or pursuant to
similar state or local statutes or regulations, or which are prohibited by
applicable rules of professional conduct or 18 U.S.C. Sections 24, 287, 371,
664, 669, 1001, 1027, 1035, 1341, 1343, 1347, 1518, 1954, 1956(c)(7)(F) and
3486.
Section 3.34 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon the Company, any
Company Subsidiary or officer, director or key employee of the Company or
Company Subsidiary, which has or reasonably could be expected to have the effect
of prohibiting or materially impairing the current medical practice of the
Company or any Company Subsidiary or the continuation of that medical practice
in the future, any acquisition of property by the Company, any Company
Subsidiary or the conduct of business by the Company or any Company Subsidiary.
Section 3.35 Agreements in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referred to, or required to be
referred to, in the Company's Disclosure Schedules delivered hereunder are valid
and binding, and are in full force and effect and are enforceable in accordance
with their terms, except to the extent that the validity or enforceability
thereof may be limited by bankruptcy or other laws affecting the enforcement of
creditors' rights generally, or by general equity principles, or by public
policy. There is no pending or, to the knowledge of the Company, threatened
bankruptcy, insolvency or similar proceeding with respect to any other party to
such agreements, and no event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder by the Company or any other party thereto. No
contract with a Physician Employee has been terminated in the last twelve (12)
months.
Section 3.36 Statements True and Correct. No representation or warranty
made herein by the Company or any Stockholder, nor any statement, certificate,
information, exhibit or instrument to be furnished by the Company or any
Stockholder to APP, APP Sub or any of their respective representatives pursuant
to this Agreement, contains or will contain as of the Effective Time any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein not misleading.
Section 3.37 Disclosure Schedules. All Disclosure Schedules required by
Article III hereof and attached hereto are true, correct and complete in all
material respects as of the date of this Agreement.
Section 3.38 Finders' Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of any
of the Stockholders or the Company who is entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement or referred to
herein.
ARTICLE IV
Representations and Warranties of APP
As inducement to the Company and the Stockholders to enter into this
Agreement and to consummate the Merger and except as set forth in the Disclosure
Schedules attached hereto and incorporated herein by this reference, APP
represents and warrants to the Company and the Stockholders both as of the date
hereof and as of the Effective Time as follows:
Section 4.1 Organization and Good Standing; Qualification. APP is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware, with all requisite corporate power and authority to
own, operate and lease its assets and properties and to carry on its
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business as currently conducted. APP is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where such failure to be so qualified
or in good standing would not have a Material Adverse Effect on APP. Copies of
the certificate of incorporation and all amendments thereto of APP and the
bylaws of APP, as amended, and copies of the corporate minutes of APP regarding
the Merger and the transactions contemplated hereby, all of which have been or
will be made available to the Company for review, are true, correct and complete
as in effect on the date of this Agreement and accurately reflect all material
proceedings of the stockholders and directors of APP (and all committees
thereof) regarding the Merger and the transactions contemplated hereby. The
stock record books of APP, which have been or will be made available to the
Company for review, contain true, complete and accurate records of the stock
ownership of APP and the transfer of the shares of its capital stock.
Section 4.2 Authorization and Validity. APP has all requisite corporate
power to execute and deliver this Agreement and the Other Agreements and to
consummate the Merger and the transactions contemplated hereby. The execution,
delivery and performance by APP of this Agreement and the agreements provided
for herein, including the Other Agreements and the consummation by APP of the
transactions contemplated hereby and thereby are within APP's corporate powers
and have been duly authorized by all necessary action on the part of APP's Board
of Directors. This Agreement has and the Other Agreements have been duly
executed by APP. This Agreement and all other agreements and obligations entered
into and undertaken in connection with the Merger and the transactions
contemplated hereby to which APP is a party constitute, or upon execution will
constitute, valid and binding agreements of APP, enforceable against it in
accordance with their respective terms, except as may be limited by bankruptcy
or other laws affecting creditors' rights generally, or by general equity
principles, or by public policy.
Section 4.3 Governmental Authorization. Other than complying with the
provisions of the applicable state corporate laws regarding the approval of the
Merger and the filing of the Certificates of Merger and any other required
documents related to the Merger, and other than consents, filings or
notifications required to be made or obtained solely by the Company, the
execution, delivery and performance by APP of this Agreement and the agreements
provided for herein, and the consummation of the Merger and the transactions
contemplated hereby and thereby by APP requires no action by or in respect of,
or filing with, any governmental body, agency, official or authority.
Section 4.4 Capitalization. The authorized capital stock of APP
consists of [20,000,000] shares of APP Common Stock, of which [2,000,000] shares
are issued and outstanding and [10,000,000] shares of APP Preferred Stock, none
of which are outstanding. Each outstanding share of APP Common Stock has been
legally and validly issued and is fully paid and nonassessable, and was issued
pursuant to a valid exemption from registration under (i) the Securities Act of
1933, as amended, and (ii) all applicable state securities laws. No shares of
capital stock are owned by APP in treasury. No shares of capital stock of APP
have been issued or disposed of in violation of the preemptive rights, rights of
first refusal or similar rights of any stockholders of APP. APP has no bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable for securities having the right to
vote) with the stockholders of APP on any matter. There exist no options,
warrants, 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").
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Section 4.6 Absence of Conflicting Agreements or Required Consents. The
execution, delivery and performance of this Agreement by APP and any other
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) does not require the consent of any governmental or
regulatory body or authority or any other third party except for such consents,
for which the failure to obtain would not result in a Material Adverse Effect on
APP; (ii) will not conflict with any provision of APP's certificate of
incorporation or bylaws; (iii) will not conflict with, result in a violation of,
or constitute a default under any law, ordinance, regulation, ruling, judgment,
order or injunction of any court or governmental instrumentality to which APP is
a party or by which APP or its properties are subject or bound; (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, require any notice under, or accelerate or permit
the acceleration of any performance required by the terms of any agreement,
instrument, license or permit, material to this transaction, to which APP is a
party or by which APP or any of its properties are bound except for such
conflict, termination, breach or default, the occurrence of which would not
result in a Material Adverse Effect on APP; and (v) will not create any
Encumbrance or restriction upon APP Common Stock or any of the assets or
properties of APP. The financial statements of APP contained in the Registration
Statements (a) have been prepared in accordance with generally accepted
accounting principles consistently applied (except as may be indicated therein
or in the notes thereto), (b) present fairly the financial position of APP and
APP Subsidiaries as of the dates indicated and present fairly the results of
APP's and APP Subsidiaries' operations for the periods then ended, and (c) are
in accordance with the books and records of APP and APP Subsidiaries, which have
been properly maintained and are complete and correct in all material respects.
Section 4.7 Absence of Changes. Except as permitted or contemplated by
this Agreement, since March 31, 1997, there has not been (i) any change in the
working capital, condition (financial or otherwise), assets, liabilities,
reserves, business or operations of APP that has had or is reasonably likely to
have a Material Adverse Effect on APP; or (ii) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the APP Common Stock.
Section 4.8 No Undisclosed Liabilities. Except as set forth in the Form
S-4 or reflected or reserved for in the financial statements included therein,
APP does not have any material liability or obligation accrued, contingent or
otherwise, that is reasonably likely to have a Material Adverse Effect on APP.
Section 4.9 Litigation and Claims. There are no claims, lawsuits,
actions, arbitrations, administrative or other proceedings, governmental
investigations or inquiries pending or, to the knowledge of APP, threatened
against, or affecting APP. There are no unsatisfied judgments against APP or any
consent decrees to which APP is subject. Each of the matters, if any, set forth
in the Disclosure Schedules are fully covered by policies of insurance of APP as
in effect on that date.
Section 4.10 No Violation of Law. APP has not been, nor shall be as of
the Effective Time (by virtue of any action, omission to act, contract to which
it is a party or any occurrence or state of facts whatsoever), in violation of
any applicable local, state or federal law, ordinance, regulation, order,
injunction or decree, or any other requirement of any governmental body, agency
or authority or court binding on it, or relating to its property or business or
its advertising, sales or pricing practices, except 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
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governmental agencies all Tax Returns and reports required to be filed with the
United States or any state or any political subdivision thereof or any foreign
jurisdiction. All such Tax Returns or reports are complete and accurate in all
material respects and properly reflect the taxes of APP for the periods covered
thereby.
(b) Payment of Taxes. Except for such items as APP may be
disputing in good faith by proceedings in compliance with applicable law, which
are described in the Disclosure Schedules, (i) APP has paid all taxes,
penalties, assessments and interest that have become due with respect to any Tax
Returns that it has filed and has properly accrued on its books and records for
all of the same that have not yet become due and (ii) APP is not delinquent in
the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or
Audits. APP has not received any notice that any tax deficiency or delinquency
has been asserted against APP. There is no unpaid assessment, proposal for
additional taxes, deficiency or delinquency in the payment of any of the taxes
of APP that could be asserted by any taxing authority. There is no taxing
authority audit of APP pending, or to the knowledge of APP, threatened, and the
results of any completed audits are properly reflected in the financial
statements of APP. APP has not violated any federal, state, local or foreign tax
law.
(d) No Extension of Limitation Period. APP has not granted an
extension to any taxing authority of the limitation period during which any tax
liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies
required to be withheld by APP and paid to governmental agencies for all income,
social security, unemployment insurance, sales, excise, use, and other taxes
have been collected or withheld and paid to the respective governmental
agencies.
(f) Foreign Person. Neither APP nor any holders of APP Common
Stock is a foreign person, as such term is referred to in Section 1445(f)(3) of
the Code.
(g) Tax Exempt Entity. None of the assets of APP are subject
to a lease to a "tax exempt entity" as such term is defined in Section 168(h)(2)
of the Code.
(h) Collapsible Corporation. APP has not at any time
consented, and the holders of APP Common Stock will not permit APP to elect, to
have the provisions of Section 341(f)(2) of the Code apply to it.
(i) Boycotts. APP has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the Code.
(j) Parachute Payments. No payment required or contemplated to
be made by APP will be characterized as an "excess parachute payment" within the
meaning of Section 280G(b)(1) of the Code.
(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.
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Section 4.14 Statements True and Correct. No representation or warranty
made herein by APP, nor any statement, certificate, information, exhibit or
instrument to be furnished by APP to the Company or a Stockholder pursuant to
this Agreement, contains or will contain as of the Effective Time any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein not misleading.
Section 4.15 Schedules. All Schedules required by Article IV hereof and
attached hereto are true, correct and complete in all material respects as of
the date of this Agreement.
Section 4.16 Finder's Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of APP
who is entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement or referred to herein.
Section 4.17 Agreements in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referred to, or required to be
referred to, in APP's Disclosure Schedules delivered hereunder are valid and
binding, and are in full force and effect and are enforceable in accordance with
their terms, except to the extent that the validity or enforceability thereof
may be limited by bankruptcy or other laws affecting the enforcement of
creditors' rights generally, or by general equity principles, or by public
policy. There is no pending or, to the knowledge of APP, threatened bankruptcy,
insolvency or similar proceeding with respect to any other party to such
agreements, and no event has occurred which (whether with or without notice,
lapse of time or the happening or occurrence of any other event) would
constitute a default thereunder by APP or any other party thereto.
ARTICLE V
Article V Intentionally Omitted.
ARTICLE VI
Closing Date Representations and Warranties Regarding APP Sub
APP and APP Sub, jointly and severally, represent and warrant that the
following will be true and correct on the Closing Date as if made on that date:
Section 6.1 Authorization and Validity. The execution, delivery and
performance by APP Sub of this Agreement and the consummation of the
transactions contemplated thereby, have been duly authorized by APP Sub. This
Agreement will be as of the Closing Date duly executed and delivered by APP Sub
and will constitute the legal, valid and binding obligation of APP Sub
enforceable against APP Sub in accordance with its respective terms, except as
may be limited by bankruptcy or other laws affecting creditors' rights
generally, or by equity principles, or by public policy.
Section 6.2 No Violation. Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby will conflict with, or result in a violation or breach of
the terms, conditions or provisions of, or constitute a default under, the
certificate of incorporation or bylaws of APP Sub.
Section 6.3 No Business, Agreements, Assets or Liabilities. APP Sub has
not commenced business since its incorporation. APP Sub does not own any assets
(tangible or intangible) other than the consideration received upon the issuance
of shares of its capital stock and APP Sub does not have any liabilities,
accrued, contingent or otherwise (known or unknown and asserted or unasserted)
other than those assumed pursuant to this Agreement.
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ARTICLE VII
Covenants of the Company
The Company makes the covenants and agreements as set forth in this
Article VII, which shall apply with respect to the period from the date hereof
to the Effective Time and, to the extent contemplated herein, thereafter and
agree that:
Section 7.1 Conduct of The Company. From the date hereof until the
Effective Time, the Company shall, in all material respects, conduct its
business in the ordinary and usual course consistent with past practices and
shall use reasonable efforts to:
(a) preserve intact its business and its relationships with
Payors, referral sources, customers, suppliers, employees and others having
business relations with it;
(b) maintain and keep its properties and assets in good repair
and condition consistent with past practice as is material to the conduct of the
business of the Company;
(c) continuously maintain insurance coverage substantially
equivalent to the insurance coverage in existence on the date hereof. In
addition, without the written consent of APP, the Company shall not:
(1) amend its articles or certificate of
incorporation or bylaws, or other charter documents;
(2) issue, sell or authorize for issuance or sale,
shares of any class of its securities (including, but not
limited to, by way of stock split, dividend, recapitalization
or other reclassification) or any subscriptions, options,
warrants, rights or convertible securities, or enter into any
agreements or commitments of any character obligating it to
issue or sell any such securities;
(3) redeem, purchase or otherwise acquire, directly
or indirectly, any shares of its capital stock or any option,
warrant or other right to purchase or acquire any such shares;
(4) declare or pay any dividend or other distribution
(whether in cash, stock or other property) with respect to its
capital stock (except as expressly contemplated herein);
(5) voluntarily sell, transfer, surrender, abandon or
dispose of any of its assets or property rights (tangible or
intangible) other than the sale of inventory, if any, in the
ordinary course of business consistent with past practices;
(6) grant or make any mortgage or pledge or subject
itself or any of its properties or assets to any lien, charge
or encumbrance of any kind, except liens for taxes not
currently due and except for liens which arise by operation of
law;
(7) voluntarily incur or assume any liability or
indebtedness (contingent or otherwise), except in the ordinary
course of business or which is reasonably necessary for the
conduct of its business;
(8) make or commit to make any capital expenditures
which are not reasonably necessary for the conduct of its
business;
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(9) grant any increase in the compensation payable or
to become payable to directors, officers, consultants or
employees other than merit increases to employees of the
Company who are not directors or officers of the Company,
except in the ordinary course of business and consistent with
past practices;
(10) change in any manner any accounting principles
or methods other than changes which are consistent with
generally accepted accounting principles;
(11) enter into any material commitment or
transaction other than in the ordinary course of business;
(12) take any action which could reasonably be
expected to have a Material Adverse Effect on the Company;
(13) apply any of its assets to the direct or
indirect payment, discharge, satisfaction or reduction of any
amount payable directly or indirectly to or for the benefit of
any Affiliate of the Company, other than in the ordinary
course and consistent with past practices;
(14) agree, whether in writing or otherwise, to do
any of the foregoing; and
(15) take any action at the Board of Director or
Stockholder level to (in any way) amend, revise or otherwise
affect the prior corporate approval and effectiveness of this
Agreement or any of the agreements attached as exhibits
hereto, other than as required to discharge its or their
fiduciary duties.
Section 7.2 Title to Assets; Indebtedness. As of the Effective Time,
the Company shall (i) except for sales of assets held as inventory, if any, in
the ordinary course of business prior to the Effective Time and except as
otherwise specifically described in the Disclosure Schedules to this Agreement,
have good and valid title to all of its assets including the LMI Assets (as
defined in Section 7.13 hereof) free and clear of all Encumbrances of any nature
whatsoever, except for current year ad valorem taxes and liens which arise by
operation of law, and (ii) have no direct or indirect indebtedness except for
indebtedness disclosed in the Company Financial Statements, the Disclosure
Schedules hereto or for normal and recurring accrued obligations of the Company
arising in connection with its business operations in the ordinary course of
business and which arise from the purchase of merchandise, supplies, inventory
and services used in connection with the provision of services.
Section 7.3 Access. At all times prior to the Effective Time, APP's
employees, attorneys, accountants, agents and other authorized and designated
representatives will be allowed full access upon reasonable prior notice and
during regular business hours (and at such other times as the parties may
reasonably agree) to the properties, books and records of the Company,
including, without limitation, deeds, title documents, leases, patient lists,
insurance policies, minute books, share certificate books, share registers,
accounts, tax returns, financial statements and all other data that, in the
reasonable opinion of APP, are required for APP to make such investigation as it
may desire of the properties and business of the Company. APP shall also be
allowed full access upon reasonable prior notice and during regular business
hours (and at such other times as the parties may reasonably agree) to consult
with the officers, employees (after announcement by the Company of the Merger to
its employees which shall occur no later than three (3) days subsequent to
execution hereof by the Company), accountants, counsel and agents of the Company
in connection with such investigation of the properties and business of the
Company. No investigation by APP shall diminish or otherwise affect any of the
representations, warranties, covenants or agreements of the Company under this
Agreement. Any access or investigation referred to in this Section 7.3 shall be
conducted in such a manner as to minimize the disruption to the Company's
ongoing business operations.
Section 7.4 Acquisition Proposals. The Company shall not, and shall
cause each of its directors, officers, employees or agents not to directly or
indirectly:
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(a) solicit, initiate, encourage or participate in any
negotiations or discussions with respect to any offer or proposal to acquire all
or a substantial portion of the business, properties or capital stock of the
Company, whether by merger, consolidation, share exchange, business combination,
purchase of assets or otherwise; or
(b) except as required by law or pursuant to subpoena or court
order, disclose to any Person, other than APP or its agents, any information not
customarily disclosed concerning the business, assets, liabilities, properties
and personnel of the Company, or, without APP's prior written approval, afford
to any Person other than APP and its agents access to the properties, books or
records of the Company. If the Company receives any offer or proposal after the
date hereof, written or otherwise, of the type referred to above, the Company
shall promptly inform APP of such offer or proposal, decline such offer and
furnish APP with a copy thereof if such offer or proposal is in writing.
Section 7.5 Compliance With Obligations. Prior to the Effective Time,
the Company shall comply in all material respects with (i) all applicable
federal, state, local and foreign laws, rules and regulations; (ii) all material
agreements and obligations, including its articles or certificate of
incorporation or charter documents, by which it or its properties or its assets
(real, personal or mixed, tangible or intangible) may be bound; and (iii) all
decrees, orders, writs, injunctions, judgments, statutes, rules and regulations
applicable to the Company, and its respective properties or assets.
Section 7.6 Notice of Certain Events. The Company shall promptly notify
APP of:
(a) any notice or other communication from any Person or
entity alleging that the consent of such Person or entity is or may be required
in connection with the transactions contemplated by this Agreement;
(b) any employment of any new non-hourly employee by the
Company who is expected to receive annualized compensation of at least $50,000
in 1997;
(c) any termination of employment by, or threat to terminate
employment received from, any salaried or non-hourly, skilled employee of the
Company;
(d) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(e) any actions, suits, claims, investigations or proceedings
commenced or threatened against, relating to or involving or otherwise affecting
the Company which, if pending on the date of this Agreement, would have been
required to have been disclosed to APP hereunder or which relate to the
consummation of the transactions contemplated by this Agreement;
(f) any material adverse change in the operation of the
Company, including but not limited to any licensure or certification
deficiencies, or violations; limitations on a license or a provider agreement;
freeze or reduction in MediCare or Medicaid rates, notice of overpayment; being
the subject of any investigation relating to patient abuse, fraud, kickbacks,
false claims or other alleged illegal payment practices under the Fraud and
Abuse Statutes; and
(g) any notice or other communication indicating a material
deterioration in the relationship with any Payor or supplier or key employee of
the Company and, if requested by APP, will exert its reasonable best efforts to
restore the relationship.
Section 7.7 Intentionally omitted.
Section 7.8 Stockholders' Consent. The Company shall use its best
efforts to obtain the unanimous approval of its Stockholders to the Merger. In
seeking the approval of its Stockholders, the Company shall provide each
Stockholder with the Form S-4 which shall include information as may be required
by applicable law or as APP shall deem appropriate. The Board of Directors of
the Company
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shall recommend the approval of the Merger by the Stockholders of the Company.
If the Stockholders' approval is not unanimous, the Company shall give notice to
the nonconsenting Stockholders of the action taken by the consenting
Stockholders as may be required by applicable law.
Section 7.9 Obligations of Company and Stockholders. Subject to Section
7.8 hereof, the Company will take all action reasonably necessary to cause the
Company to perform its obligations under this Agreement and all related
agreements and to consummate the Merger and other transactions contemplated
hereby and thereby on the terms and conditions set forth in this Agreement and
such agreements; provided, however, that this covenant shall not require the
Company to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
Section 7.10 Funding of Accrued Employee Benefits. The Company hereby
covenants and agrees that it will take whatever steps are necessary to pay for
or fund completely any accrued benefits, where applicable, or vested accrued
benefits for which the Company or any entity might have any liability whatsoever
arising from any tax-qualified plan as required under applicable law. The
Company acknowledges that the purpose and intent of this covenant is to assure
that APP Sub shall have no liability whatsoever at any time after the Closing
Date with respect to any such tax-qualified plan, unless such plan is merged
with a plan sponsored by APP or APP Sub.
Section 7.11 Accounting and Tax Matters. The Company will not change in
any material respect the accounting methods or practices followed by the Company
(including any material change in any assumption underlying, or any method of
calculating, any bad debt, contingency or other reserve), except as may be
required by generally accepted accounting principles. The Company will not make
any material tax election except in the ordinary course of business consistent
with past practice, change any material tax election already made, adopt any tax
accounting method except in the ordinary course of business consistent with past
practice, change any tax accounting method, enter into any closing agreement,
settle any tax claim or assessment or consent to any tax claim or assessment or
any waiver of the statute of limitations for any such claim or assessment. The
Company will duly, accurately and timely (without regard to any extensions of
time) file all returns, information statements and other documents relating to
taxes of the Company required to be filed by it, and pay all taxes required to
be paid by it, on or before the Closing Date.
Section 7.12 Spin-Off Transaction. The Company, along with PIC, shall
form, organize and incorporate NewCo in the state of California, and the
articles of incorporation and bylaws of NewCo shall be in form and substance
reasonably satisfactory to APP. Except for consummating the Spin-Off
Transaction, NewCo shall not commence business until the Closing Date. On or
prior to the Closing, the Company shall take all actions and execute all
documents, agreements or instruments necessary pursuant to and in compliance
with applicable law to effect the Spin-Off Transaction, including without
limitation, the following: Prior to Closing, the Company shall transfer to NewCo
good, valid and marketable title to all of the Company's right, title and
interest in and to the Employee Benefit Plans, and those contracts, agreements
and other assets identified in the Disclosure Schedules as being subject to
transfer to NewCo in the Spin-Off transaction, and shall contribute to NewCo
such other consideration and assets of the Company as may be required under
applicable law, in exchange for the issuance by NewCo of shares of NewCo Common
Stock, such shares, along with the shares being issued to PIC in connection with
the Spin-Off Transaction, being all of the issued and outstanding shares of
NewCo Common Stock. The Company shall then distribute the shares of NewCo Common
Stock to Stockholders in proportion to their respective ownership interests in
the Company.
Section 7.13 Transfer of Lafayette Medical Imaging Assets. Prior to the
Merger, the Company agrees to cause Lafayette Medical Imaging, a California
general partnership ("LMI"), to transfer to the Company and/or PIC valid and
marketable title to all of LMI's right, title and interest in and to the assets
listed on the Disclosure Schedules (the "LMI Assets").
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ARTICLE VIII
Covenants of APP and APP Sub
APP and APP Sub agree that between the date hereof and the Closing:
Section 8.1 Consummation of Agreement. APP and APP Sub will take all
action reasonably necessary to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions and take all
corporate and other action necessary to approve the Merger; provided, however,
that this covenant shall not require APP and APP Sub to make any expenditures
that are not expressly set forth in this Agreement or otherwise contemplated
herein.
Section 8.2 Requirements to Effect the Merger and Acquisitions. APP and
APP Sub will use their best efforts to take, or cause to be taken, all actions
necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all necessary
documents in form approved by counsel for the parties to this Agreement.
Section 8.3 Access. APP and APP Sub shall, at reasonable times during
normal business hours and on reasonable notice, permit the Company and its
authorized representatives of the Company reasonable access to, and make
available for inspection, all of the assets and business of APP and APP Sub,
including its executive officers, and permit the Company and their authorized
representatives to inspect and, at the Company's sole expense, make copies of
all documents, records and information with respect to the affairs of APP and
APP Sub as the Company and their representatives may reasonably request, all for
the sole purpose of permitting the Company to become familiar with the business
and assets and liabilities of APP and APP Sub. No investigation by the Company
or the Stockholders shall diminish or otherwise affect any of the
representations, warranties, covenants or agreements of APP under this
Agreement.
Section 8.4 Notification of Certain Matters. APP and APP Sub shall
promptly inform the Company in writing of (a) any notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by APP subsequent to the date of this
Agreement and prior to the Effective Time under any contract, agreement or
investment material to APP's or APP Sub's condition (financial or otherwise),
operations, assets, liabilities or business and to which it is subject; (b) any
material adverse change in APP's condition (financial or otherwise), operations,
assets, liabilities or business or (c) defaults or disputes regarding Other
Agreements.
ARTICLE IX
Covenants of APP, APP Sub and the Company
APP, APP Sub and the Company agree as follows:
Section 9.1 Filings; Other Action.
(a) The Company shall cooperate with APP and APP Sub to promptly
prepare and file with the SEC the Registration Statements on Form S-1 and Form
S-4 (or other appropriate Forms) to be filed by APP in connection with its
Initial Public Offering and offering of the shares of APP Common Stock to the
Target Interest Holders pursuant to the transactions contemplated by this
Agreement and the Other Agreements (including the prospectus constituting parts
thereof, the "Registration Statements"). APP shall obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. The Company shall cooperate with
APP in the preparation of the Registration Statements and shall furnish all
information concerning the Company as may be reasonably requested in connection
with any such action in a timely manner.
(b) The Company, APP and APP Sub and each separately represent and
warrant that (i) in the case of the Company, none of the written information or
documents supplied or to be supplied by it
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specifically for inclusion in the Registration Statements, by exhibit or
otherwise and (ii) in the case of APP or APP Sub, will, at the time the
Registration Statements and each amendment and supplement thereto, if any,
becomes effective under the Securities Act, none of them contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The Company shall be
entitled to review the Registration Statements and each of the amendments
thereto, if any, prior to the time each becomes effective under the Securities
Act. The Company shall have no responsibility for information contained in the
Registration Statements except for information provided by the Company
specifically for inclusion therein. The Company's review of the Registration
Statements shall not diminish or otherwise affect the representations, covenants
and warranties of APP and APP Sub contained in this Agreement.
(c) The Company shall, upon request, furnish APP with all information
concerning itself, its subsidiaries, directors, officers, partners,
Stockholders, and such other matters as may be reasonably requested by APP in
connection with the preparation of the Registration Statements and each of the
amendments or supplements thereto, or any other statement, filing, notice or
application made by or on behalf of each such party or any of its subsidiaries
to any governmental entity in connection with the Merger and the other
transactions contemplated by this Agreement.
Section 9.2 Amendments of Disclosure Schedules. Each party hereto
agrees that, with respect to the representations and warranties of such party
contained in this Agreement, such party shall have the continuing obligation
until the Closing to supplement or amend promptly the Disclosure Schedules with
respect to any matter that would have been or would be required to be set forth
or described in the Disclosure Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Disclosure Schedule that constitutes or
reflects a Material Adverse Effect on the Company may be made unless APP
consents to such amendment or supplement, and no amendment or supplement to a
Schedule that constitutes or reflects a Material Adverse Effect on APP may be
made unless the Company consents to such amendment or supplement. For purposes
of this Agreement, including without limitation for purposes of determining
whether the conditions set forth in Sections 10.1 and 11.1 have been fulfilled,
the Disclosure Schedules hereto shall be deemed to be the Disclosure Schedules
as amended or supplemented pursuant to this Section 9.2. In the event that the
Company seeks to amend or supplement a Disclosure Schedule pursuant to this
Section 9.2 and APP does not consent to such amendment or supplement, or APP
seeks to amend or supplement a Disclosure Schedule pursuant to this Section 9.2,
and the Company does not consent, this Agreement shall be deemed terminated by
mutual consent as set forth in Section 15.1(a) hereof.
Section 9.3 Actions Contrary to Stated Intent. No party hereto will
knowingly, either before or after the Merger, take any action that would prevent
the Merger from qualifying as a tax-free exchange within the meaning of Section
351 of the Code.
Section 9.4 Public Announcements. The parties hereto will consult with
each other before issuing any press release or making any public statement with
respect to this Agreement and the transactions contemplated hereby and, except
as may be required by applicable law, will not issue any such press release or
make any such public statement prior to such consultation, although the
foregoing shall not apply to any disclosure by APP in any filing with the DOJ,
FTC or SEC.
Section 9.5 Expenses. Each party to this Agreement shall be solely
responsible for their own fees and expenses with respect to the transactions
contemplated herein including, without limitation, the fees charged by
attorneys, accountants and financial advisors retained by such parties. The fees
and expenses incurred by the Company in connection with the Merger shall be paid
by the Company in full immediately prior to the Closing and such expenses shall
be the sole responsibility of the Stockholders following the Closing Date and
not APP.
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Section 9.6 Patient Confidentiality. APP and APP Sub shall agree to
keep all records and information regarding the patients of the Company
confidential in accordance with all applicable laws.
Section 9.7 Registration Statements. APP shall prepare and file the
Registration Statements with the SEC, and shall use its reasonable good faith
efforts to cause the Registration Statements to become effective under the
Securities Act and take any action required to be taken under the applicable
state Blue Sky or other securities laws in connection with the issuance of the
shares of APP Common Stock upon consummation of the Merger.
ARTICLE X
Conditions Precedent of APP and APP Sub
Except as may be waived in writing by APP, the obligations of APP and
APP Sub hereunder are subject to the fulfillment at or prior to the Effective
Date of each of the following conditions:
Section 10.1 Representations and Warranties. The representations and
warranties of the Company contained herein and each Stockholder contained in the
Stockholders Representation Letter (as delivered pursuant to Section 10.12
hereof) shall have been true and correct in all material respects when initially
made and shall be true and correct in all material respects as of the Effective
Date.
Section 10.2 Covenants. The Company shall have performed and complied
in all material respects with all covenants required by this Agreement to be
performed and complied with by the Company prior to the Effective Date.
Section 10.3 Legal Opinion. Counsel to the Company shall have delivered
to APP their opinion, dated as of the Effective Date, in form and substance
substantially in the form set forth in Exhibit 10.3.
Section 10.4 Proceedings. No action, proceeding or order by any court
or governmental body or agency shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
Section 10.5 No Material Adverse Effect. No Material Adverse Effect on
the Company shall have occurred since March 31, 1997, whether or not such change
shall have been caused by the deliberate act or omission of the Company or any
Stockholder.
Section 10.6 Government Approvals and Required Consents. The Company,
the Stockholders and APP shall have obtained all licenses, permits and all
necessary government and other third-party approvals and consents required under
any law, statements, rule, regulation or ordinance to consummate the
transactions contemplated by this Agreement.
Section 10.7 Securities Approvals. The Registration Statements shall
have become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statements shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
At or prior to the Effective Date, APP shall have received all state securities
and "Blue Sky" permits necessary to consummate the transactions contemplated
hereby. The APP Common Stock shall have been approved for listing on the Nasdaq
National Market, subject only to official notification of issuance.
Section 10.8 Closing Deliveries. APP shall have received all Disclosure
Schedules, documents, assignments and agreements, duly executed and delivered in
form reasonably satisfactory to APP, referred to in Section 12.1.
Section 10.9 Closing of Initial Public Offering. The Initial Public
Offering shall have closed.
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Section 10.10 Closing of Related Acquisitions. Each of the Related
Acquisitions shall have closed.
Section 10.11 Dissenter's Rights. The Company shall have satisfied each
of its obligations to its Stockholders regarding dissenters or related rights
under California Corporate Law, and the sum of the amount which may become due
to the Stockholders who have dissented to the Merger and have indicated their
intent to seek appraisal rights plus the cash portion of the Merger
Consideration shall not exceed 25% of the total Merger Consideration due
hereunder.
Section 10.12 Stockholder Representation Letter; Indemnification
Agreement. Each Stockholder receiving Merger Consideration shall have executed
and delivered to APP the Stockholder Representation Letter in substantially the
form of Exhibit C. Each Principal Stockholder shall have executed and delivered
to APP the Indemnification Agreement in substantially the form of Exhibit D.
Section 10.13 Transfer of Assets. All of the assets and properties of
the Company and its related entities to be transferred to pursuant to the
Spin-Off Transaction and as approved by APP shall have been transferred,
assigned and conveyed in order to effectuate the transactions contemplated by
this Agreement.
ARTICLE XI
Conditions Precedent of the Company
Except as may be waived in writing by the Company, the obligations of
the Company hereunder are subject to fulfillment at or prior to the Effective
Date of each of the following conditions:
Section 11.1 Representations and Warranties. The representations and
warranties of APP and APP Sub contained herein shall be true and correct in all
material respects when initially made and shall be true and correct in all
material respects as of the Effective Date.
Section 11.2 Covenants. APP and APP Sub shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed and complied with by it prior to the Effective
Date.
Section 11.3 Legal Opinions. Counsel to APP and APP Sub shall have
delivered to the Company their opinion, dated as of the Effective Date, in form
and substance substantially in the form set forth in Exhibit 11.3.
Section 11.4 Proceedings. No action, proceeding or order by any court
or governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
Section 11.5 Government Approvals and Required Consents. The Company,
the Stockholders, APP and APP Sub shall have obtained all licenses, permits and
all necessary government and other third-party approvals and consents required
under any law, contracts or any statute, rule, regulation or ordinances to
consummate the transactions contemplated by this Agreement.
Section 11.6 "Blue Sky" Approvals; Nasdaq Listing. The Registration
Statements shall have become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statements shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. At or prior to the Effective Date, APP shall have
received all state securities and "Blue Sky" permits necessary to consummate the
transactions contemplated hereby. At or prior to the Effective Date, the APP
Common Stock shall have been approved for listing on the Nasdaq National Market,
subject only to official notification of issuance.
Section 11.7 Closing of Initial Public Offering. The Initial Public
Offering shall have closed.
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Section 11.8 Closing Deliveries. The Company shall have received all
Disclosure Schedules, documents, assignments and agreements, duly executed and
delivered in form reasonably satisfactory to the Company referred to in Section
12.2.
Section 11.9 No Material Adverse Effect. No Material Adverse Effect on
APP or APP Sub shall have occurred since __________, 1997, whether or not such
change shall have been caused by the deliberate act or omission of APP or APP
Sub.
Section 11.10 Closing of Related Acquisition Involving PIC. The TMI
Assets shall have been transferred to PIC and the Related Acquisition involving
PIC shall have closed.
ARTICLE XII
Closing Deliveries
Section 12.1 Deliveries of the Company. At or prior to the Effective
Date, the Company shall deliver to APP the following, all of which shall be in a
form reasonably satisfactory to APP:
(a) a copy of resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance of this Agreement
and the Service Agreement and all related documents and agreements and
consummation of the Merger, each certified by the Secretary of the Company as
being true and correct copies of the originals thereof subject to no
modifications or amendments;
(b) a copy of resolutions of the Board of Directors
authorizing the execution, delivery and performance of the Service Agreement,
the Security Agreement and the Physician Employment Agreements each certified by
the Secretary as being true and correct copies of the originals thereof subject
to no modifications or amendments;
(c) a certificate of the President of the Company dated the
Closing Date, as to the truth and correctness of the representations and
warranties of the Company contained herein on and as of the Effective Date;
(d) a certificate of the President of the Company dated the
Closing Date, (i) as to the performance of and compliance in all material
respects by the Company with all covenants contained herein on and as of the
Effective Date and (ii) certifying that all conditions precedent required by the
Company to be satisfied shall have been satisfied;
(e) a certificate of the Secretary of the Company certifying
as to the incumbency of the directors and officers of such corporation and as to
the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of that corporation;
(f) certificates, dated within ten (10) days prior to the
Effective Date, of the Secretary of State of California for the Company
establishing that each such corporation is in existence, has paid all franchise
or similar taxes, if any, and, if applicable, otherwise is in good standing to
transact business in the state of California;
(g) certificates, dated within ten (10) days prior to the
Effective Date, of the Secretaries of State of the states in which the Company
is qualified to do business, to the effect that each such corporation is
qualified to do business and, if applicable, is in good standing as a foreign
corporation in each of such states;
(h) all authorizations, consents, approvals, permits and
licenses referenced in Section 3.27;
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(i) the resignations of the directors and officers of the
Company as requested by APP;
(j) intentionally omitted;
(k) executed Certificates of Merger necessary to effect the
Merger referred to in Section 2.1;
(l) a nonforeign affidavit, as such affidavit is referred to
in Section 1445(b)(2) of the Code, of each Stockholder, signed under a penalty
of perjury and dated as of the Closing Date, to the effect that such Stockholder
is a United States citizen or a resident alien (and thus not a foreign person)
and providing such Stockholder's United States taxpayer identification number;
(m) an executed Stockholder Release by the Stockholders in
substantially the form attached hereto as Exhibit E (the "Stockholder Release");
(n) intentionally omitted; and
(o) such other instrument or instruments of transfer prepared
by APP as shall be necessary or appropriate, as APP or its counsel shall
reasonably request, to carry out and effect the purpose and intent of this
Agreement.
Section 12.2 Deliveries of APP. At or prior to the Effective Date, APP
shall deliver to the Company the following, all of which shall be in a form
reasonably satisfactory to the Company:
(a) a copy of resolutions of the Board of Directors of APP
authorizing the execution, delivery and performance of this Agreement, and all
related documents and agreements, certified by APP's Secretary as being true and
correct copies of the originals thereof subject to no modifications or
amendments;
(b) a copy of resolutions of the Board of Directors of APP Sub
authorizing the execution, delivery and performance of this Agreement, the
Service Agreement and the Security Agreement, each certified by the Secretary of
APP Sub as being true correct copies of the originals thereof subject to no
modifications or amendments;
(c) a certificate of the President of APP and APP Sub dated
the Closing Date as to the truth and correctness of the representations and
warranties of APP and APP Sub contained herein on and as of the Effective Date;
(d) a certificate of the President of APP and APP Sub dated
the Closing Date, (i) as to the performance and compliance by APP or APP Sub
with all covenants contained herein on and as of the Effective Date and (ii)
certifying that all conditions precedent required to be satisfied by APP and APP
Sub shall have been satisfied;
(e) a certificate of the Secretary of APP and APP Sub
certifying as to the incumbency and to the signatures of the officers of APP or
APP Sub who have executed documents delivered at the Closing on behalf of APP or
APP Sub;
(f) a certificate, dated within ten (10) days prior to the
Effective Date, of the secretary of state of incorporation establishing that APP
and APP Sub are, respectively, in existence, have paid all franchise or similar
taxes, if any, and otherwise are in good standing to transact business in the
state of Delaware and California;
(g) certificates (or photocopies thereof), dated within ten
(10) days prior to the Effective Date, of the Secretaries of State of the states
in which either APP and APP Sub is qualified to
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do business, to the effect that APP and APP Sub is qualified to do business and
is in good standing as a foreign corporation in such state;
(h) intentionally omitted;
(i) executed Certificates of Merger necessary to effect the
Merger referred to in Section 2.1;
(j) the Merger Consideration in accordance with Article II and
Exhibit B hereof; and
(k) such other instrument or instruments of transfer prepared
by the Company as shall be necessary or appropriate, as the Company or its
counsel shall reasonably request, to carry out and effect the purpose and intent
of this Agreement.
ARTICLE XIII
Post Closing Matters
Section 13.1 Further Instruments of Transfer. Following the Closing, at
the request of APP or the Surviving Corporation and at APP's sole cost and
expense, the Stockholders and the Company shall deliver any further instruments
of transfer and take all reasonable action as may be necessary or appropriate to
carry out the purpose and intent of this Agreement. Following the Closing at
________'s sole cost and expense, APP or the Surviving Corporation shall deliver
any further instruments of transfer and take all reasonable action as may be
necessary and appropriate to carry out the purpose and intent of this Agreement.
Section 13.2 Merger Tax Covenant.
(a) The parties intend that the Merger will qualify as a tax-free
transaction under Section 351 of the Code in which the Company will not
recognize gain or loss, and pursuant to which any gain recognized by a
Stockholder as a result of the Merger will not exceed the amount of any cash
received by a Stockholder in the Merger (a "Reorganization").
(b) Both prior to and after the Effective Time, all books and records
shall be maintained, and all Tax Returns and schedules thereto shall be filed in
a manner consistent with the Merger being treated as a Reorganization. These
obligations are excused as to a party required to maintain the books or file a
Tax Return if such party has provided to the other parties a written opinion of
competent tax counsel to the effect that there is not substantial authority,
within the meaning of Section 6662(d)(2)(B)(i) of the Code, to report the Merger
as a Reorganization and such opinion either is furnished prior to the Effective
Time or is based on facts or events not known at the Effective Time. Each party
shall provide to each other party such tax information, reports, returns, or
schedules as may be reasonably required to assist such party in accounting for
and reporting the Merger as a Reorganization.
(c) The parties agree that no Stockholder shall be liable for any taxes
incurred by the Company and for which APP has successor liability therefor which
arise solely as a result of the Merger or the consummation of the transactions
contemplated hereby; provided that the foregoing shall not limit or otherwise be
deemed a waiver of any right of indemnification under Section 14.1 for a breach
of any representation, warranty or covenant of the Company or any Stockholder.
Section 13.3 Current Public Information. APP shall cause the
requirements of Rule 144(c) under the Securities Act to be met with respect to
APP for so long as those requirements must be met to enable sales by the
Stockholders who are affiliates of the Company to meet the requirements of Rule
145(d) under the Securities Act.
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ARTICLE XIV
Remedies
Section 14.1 Indemnification by the Company. Subject to the terms and
conditions of this Article XIV, the Company agrees to indemnify, defend and hold
APP and the Surviving Corporation and their respective directors, officers,
stockholders, employees, agents, attorneys, consultants and Affiliates harmless
from and against all losses, claims, obligations, demands, assessments,
penalties, liabilities, costs, damages, reasonable attorneys' fees and expenses
(including, without limitation, all costs of experts and all costs incidental to
or in connection with any appellate process) (collectively, "Damages") asserted
against or incurred by such individuals and/or entities arising out of or
resulting from:
(a) a breach by the Company of any representation or warranty
(without giving effect to any Material Adverse Effect qualifier contained as
part of any such representation or warranty) or covenant of the Company
contained in this Agreement or in any Schedule or certificate delivered
thereunder;
(b) any violation (or alleged violation) by the Company and/or
any of its past or present directors, officers, partners, stockholders,
employees (including, without limitation, any Physician Employee), agents,
attorneys, consultants and Affiliates of any state or federal law governing
health care fraud and abuse or prohibition on referral of patients to Persons in
which a licensed professional has a financial or other form of interest
(including, but not limited to, fraud and abuse in the Medicare and Medicaid
Programs) occurring on or before the Closing Date, or any overpayment or
obligation (or alleged overpayment or obligation) arising out of or resulting
from claims submitted to any Payor on or before the Closing Date; and
(c) any liability under the Securities Act, the Exchange Act
or any other federal or state "blue sky" or securities law or regulation, at
common law or otherwise, arising out of or based upon any (i) untrue statement
of a material fact in any Registration Statement or any prospectus forming or
part thereof, or any amendment thereof or supplement thereto relating to the
Company (including any Company Subsidiary) required to be stated therein or (ii)
failure to state information necessary to make the statements therein not
misleading, which untrue statement or failure to state information arises or
results solely from information provided in writing to APP or its counsel by the
Company or any Stockholder or their agents specifically for inclusion in any
such Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto.
Section 14.2 Indemnification by APP and APP Sub. Subject to the terms
and conditions of this Article XIV, APP and APP Sub jointly and severally hereby
agree to indemnify, defend and hold the Stockholders, the Company and their
respective directors, officers, stockholders, employees, agents, attorneys,
consultants and Affiliates harmless from and against all Damages asserted
against or incurred by such individuals and/or entities arising out of or
resulting from:
(a) a breach by APP or APP Sub of any representation or
warranty (without giving effect to any Material Adverse Effect qualifier
contained as part of any such representation or warranty) or covenant of APP or
APP Sub contained in this Agreement or in any schedule or certificate delivered
hereunder; and
(b) any liability under the Securities Act, the Exchange Act
or any other federal or state "blue sky" or securities law or regulation, at
common law or otherwise, arising out of or based upon any untrue statements of
material fact in any Registration Statement or any prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or required to be
stated therein or failure to state information necessary to make the statements
therein not misleading (except for any liability based upon any actual or
alleged untrue statement of material fact or an omission to state a material
fact relating to the Company or any Stockholder to the extent derived from any
information provided in writing by the Company or a Company Subsidiary or any of
their agents contained in the representations and
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warranties set forth in this Agreement or any certificate, exhibit, schedule or
instrument required to be delivered under this Agreement.)
Notwithstanding anything contained in either Sections 14.1 or
14.2 herein to the contrary, nothing contained in this Agreement shall relieve
of any of the parties hereto of liability or limit any liability that it may
have in the case of fraud in connection with the transactions contemplated by
this Agreement.
Section 14.3 Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) Any party claiming indemnification under the Agreement (an
"Indemnified Party") shall promptly (and, in the event, at least ten (10) days
prior to the due date for any responsive pleadings, filings or other documents)
(i) notify the party for whom indemnification is sought (the "Indemnifying
Party) of any third-party claim or claims asserted against the Indemnified Party
("Third Party Claim") that could give rise to a right of indemnification under
this Agreement and (ii) transmit to the Indemnifying Party a written notice
("Claim Notice") describing in reasonable detail the nature of the Third Party
Claim, a copy of all papers served with respect to such claim (if any), an
estimate of the amount of Damages attributable to the Third Party Claim and the
basis of the Indemnified Party's request for indemnification under this
Agreement. The failure to promptly deliver a Claim Notice shall not relieve any
Indemnifying Party of its obligations to any Indemnified Party with respect to
the related Third Party Claim except to the extent that the resulting delay is
materially prejudicial to the defense of such claim. Within thirty (30) days
after receipt of any Claim Notice (the "Election Period"), the Indemnifying
Party shall notify the Indemnified Party (x) whether the Indemnifying Party
disputes its potential liability to the Indemnified Party under this Article XIV
with respect to such Third Party Claim and (y) whether the Indemnifying Party
desires, at the sole cost and expense of such Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at their sole cost and expense, with counsel reasonably
acceptable to such Indemnified Party, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 14.3(b). Except as set forth
in Section 14.3(f) below, the Indemnifying Party shall have full control of such
defense and proceedings, including any compromise or settlement thereof. The
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is entitled to
indemnification hereunder), to file, during the Election Period, any motion,
answer or other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party and not
prejudicial to the Indemnifying Party. If requested by the Indemnifying Party,
the Indemnified Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnifying Party and their counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest, including,
without limitation, the making of any related counterclaim against the person
asserting the Third Party Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
Section 14.3(b) and shall bear its own costs and expenses with respect to such
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it that are different from
or additional to those available to the Indemnifying Party, then the Indemnified
Party may employ separate counsel at the expense of the Indemnifying Party, and
upon written notification thereof, the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party;
provided further that the Indemnifying Party shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnified Party, which firm shall be designated
in
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writing by the Indemnified Party. Notwithstanding the foregoing, the
Indemnifying Party shall be prohibited from confessing or settling any criminal
allegations brought against the Indemnified Party without the express written
consent of the Indemnified Party.
(c) If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however, that
the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect that
the Indemnifying Party disputes their potential liability to the Indemnified
Party under this Article XIV and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 14.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to it that are different from or additional
to those available to the Indemnified Party, then the Indemnifying Party may
employ separate counsel and upon written notification thereof, the Indemnified
Party shall not have the right to assume the defense of such action on behalf of
the Indemnifying Party.
(d) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the Indemnified Party
within sixty (60) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction if the parties do not reach a settlement of such
dispute within thirty (30) days after notice of a dispute is given.
(e) Payments of all amounts owing by any Indemnifying Party
pursuant to this Article XIV relating to a Third Party Claim shall be made
within thirty (30) days after the latest of (i) the settlement of such Third
Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim, or (iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by the
Indemnifying Party pursuant to Section 14.3(d) shall be made within thirty (30)
days after the later of (i) the expiration of the 60-day Indemnity Notice period
or (ii) the expiration of the period for appeal of a final adjudication of the
Indemnifying Party's liability to the Indemnified Party under this Agreement.
(f) The Indemnifying Party shall provide the Indemnified Party
with written notice of any firm offer that is made to settle or compromise a
Third Party Claim against an Indemnified Party. If a firm offer is made to
settle such a claim solely by the payment of money damages and the Indemnifying
Party notifies the Indemnified Party in writing that the Indemnifying Party
agrees to such
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settlement, but the Indemnified Party elects not to accept and agree to it, the
Indemnified Party may continue to contest or defend such Third Party Claim and,
in such event, the total maximum liability of the Indemnifying Party to
indemnify or otherwise reimburse the Indemnified Party hereunder with respect to
such a claim shall be limited to and shall not exceed the amount of such
settlement offer, plus reasonable out-of-pocket costs and reasonable expenses
(including reasonable attorneys' fees and disbursements) to the date of notice
that the Indemnifying Party desired to accept such settlement.
(g) Notwithstanding any provision herein to the contrary, the
obligation of an Indemnifying Party to provide indemnification to an Indemnified
Party for breach of any representation or warranty as provided in Sections
14.1(a) or 14.2(a) hereof shall not take effect unless and until the Damages
asserted against or incurred in the aggregate and on a collective basis by the
Indemnified Parties pursuant to either Section 14.1 or 14.2 (as applicable) as a
result of such a breach or breaches exceeds
[$____________].
Section 14.4 Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (a) enforcing
any of the terms of this Agreement or (b) proving that another party breached
any of the terms of this Agreement.
Section 14.5 Tax Benefits; Insurance Proceeds. The total amount of any
indemnity payments owed by one party to another party to this Agreement shall be
reduced by any correlative tax benefit received by the party to be indemnified
or the net proceeds received by the party to be indemnified with respect to
recovery from third parties or insurance proceeds, and such correlative
insurance benefit shall be net of the insurance premium, if any, that becomes
due as a result of such claim.
ARTICLE XV
Termination
Section 15.1 Termination. This Agreement may be terminated and the
Merger and the Acquisitions may be abandoned:
(a) at any time prior to the Effective Date by mutual
agreement of all parties;
(b) at any time prior to the Effective Date by APP if any
material representation or warranty of the Company or any Stockholder contained
in this Agreement or in any certificate or other document executed and delivered
by the Company or any Stockholder pursuant to this Agreement is or becomes
untrue or breached in any material respect or if the Company or any Stockholder
fails to comply in any material respect with any material covenant or agreement
contained herein, and any such misrepresentation, noncompliance or breach is not
cured, waived or eliminated within thirty (30) days after receipt of written
notice thereof;
(c) at any time prior to the Effective Date by the Company if
any representation or warranty of APP or APP Sub contained in this Agreement or
in any certificate or other document executed and delivered by APP or APP Sub
pursuant to this Agreement is or becomes untrue in any material respect or if
APP fails to comply in any material respect with any covenant or agreement
contained herein, and any such misrepresentation, noncompliance or breach is not
cured, waived or eliminated within thirty (30) days after receipt of written
notice thereof;
(d) at any time prior to the Effective Date by APP if, as a
result of the conduct of due diligence and regulatory compliance procedures, APP
deems termination to be advisable; or
(e) by APP or the Company if the Merger shall not have been
consummated by September 30, 1997.
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Section 15.2 Effect of Termination. Except as set forth in Section
16.3, in the event this Agreement is terminated pursuant to this Article XV,
this Agreement shall forthwith become void.
ARTICLE XVI
Nondisclosure of Confidential Information
Section 16.1 Non-Disclosure Covenant. The Company recognizes and
acknowledges that each has in the past, currently has, and in the future may
possibly have, access to certain Confidential Information of APP and the
Surviving Corporation that is valuable, special and a unique asset of such
entity's business. APP and APP Sub acknowledge that they had in the past,
currently have, and in the future may possibly have, access to certain
Confidential Information of the Company that is valuable, special and a unique
asset of each such business. The Company, APP, and APP Sub, severally, agree
that they will not disclose such Confidential Information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of APP, APP Sub, Surviving Corporation
and the Company and (b) to counsel and other advisers to APP, APP Sub, Surviving
Corporation and the Company provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section 16.1, unless (i) such
information becomes available to or known by the public generally through no
fault of the Company, APP or APP Sub, as the case may be, (ii) disclosure is
required by law or the order of any governmental authority under color of law,
provided, that prior to disclosing any information pursuant to this clause (ii)
the Company, APP or APP Sub, as the case may be, shall, if possible, give prior
written notice thereof to the Company, APP or APP Sub and provide the Company,
APP or APP Sub with the opportunity to contest such disclosure, (iii) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party, or (iv)
the disclosing party is the sole and exclusive owner of such Confidential
Information as a result of the Merger or otherwise. In the event of a breach or
threatened breach by the Company, on the one hand, and APP or APP Sub, on the
other hand, of the provisions of this Section, APP, APP Sub, the Surviving
Corporation and the Company shall be entitled to an injunction restraining the
other party, as the case may be, from disclosing, in whole or in part, such
Confidential Information. Nothing herein shall be construed as prohibiting any
of such parties from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
Section 16.2 Damages. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which they would have
no other adequate remedy, APP, APP Sub, the Surviving Corporation and the
Company agree that, in the event of a breach by either of them of the foregoing
covenant, the covenant may be enforced against them by injunctions and
restraining orders.
Section 16.3 Survival. The obligations of the parties under this
Article XVI shall survive the termination of this Agreement.
ARTICLE XVII
Miscellaneous
Section 17.1 Amendment; Waivers. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed by all the
parties hereto. Any waiver of any terms and conditions hereof must be in
writing, and signed by the parties hereto. The waiver of any of the terms and
conditions of this Agreement shall not be construed as a waiver of any other
terms and conditions hereof.
Section 17.2 Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by APP to a
wholly owned subsidiary of APP; provided that any such assignment shall not
relieve APP of its obligations hereunder.
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Section 17.3 Parties in Interest; No Third Party Beneficiaries. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. APP and APP Sub
acknowledge and agree that the rights and remedies of the Company under this
Agreement will be directly available to the Stockholders as third party
beneficiaries of the rights and remedies of the Company under this Agreement,
including, without limitation, the rights and remedies under Article 14 hereof
to indemnification from APP and APP Sub against Damages incurred by the
Stockholders resulting from a breach by APP or APP Sub of any representation,
warranty or covenant of APP or APP Sub contained herein. Except as provided in
the preceding sentence or as otherwise provided herein, neither this Agreement
nor any other agreement contemplated hereby shall be deemed to confer upon any
person not a party hereto or thereto any rights or remedies hereunder or
thereunder.
Section 17.4 Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof, and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
Section 17.5 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 17.6 Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of the Company, any Stockholder, APP or APP
Sub pursuant to this Agreement shall be deemed to have been representations and
warranties by the Company, such Stockholder, APP and APP Sub. Notwithstanding
any provision in this Agreement to the contrary, the representations and
warranties contained herein shall survive the Closing until the second
anniversary of the Closing Date except that (a) the representations and
warranties set forth in Section 3.21 with respect to environmental matters shall
survive for a period of ten (10) years, (b) the representations and warranties
set forth in Section 3.30 with respect to tax matters shall survive until such
time as the limitations period has run for all tax periods ended prior to the
Closing Date, (c) the representations and warranties contained in Section 3.27
and Section 3.33 with respect to healthcare matters shall survive for a period
of six (6) years and (d) solely for purposes of Section 14.1(c) and Section
14.2(c), and solely to the extent that any party to be indemnified pursuant to
such provisions actually incurs liability under the Securities Act, the Exchange
Act or any other federal or state securities law, the representations and
warranties set forth therein shall survive until the expiration of any
applicable limitations period.
Section 17.7 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF CALIFORNIA.
Section 17.8 Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of the
terms or provisions hereof.
Section 17.9 Gender and Number. When the context requires, the gender
of all words used herein shall include the masculine, feminine and neuter and
the number of all words shall include the singular and plural.
Section 17.10 Intentionally omitted.
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Section 17.11 Confidentiality; Publicity and Disclosures. Each party
shall keep this Agreement and its terms confidential, and shall make no press
release or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure (a) by press release, filing or otherwise that APP has determined in
its good faith judgment and after advice of legal counsel to be required by
federal securities laws or the rules of the National Association of Securities
Dealers, (b) to attorneys, accountants, investment bankers or other agents of
the parties assisting the parties in connection with the transactions
contemplated by this Agreement and (c) by APP in connection with the conduct of
its Initial Public Offering and conducting an examination of the operations and
assets of the Companies; provided that APP shall reasonably promptly provide
notice of any release. In the event that the transactions contemplated hereby
are not consummated for any reason whatsoever, the parties hereto agree not to
disclose or use any Confidential Information they may have concerning the
affairs of the other parties, except for information that is required by law to
be disclosed; provided that should the transactions contemplated hereby not be
consummated, nothing contained in this Section shall be construed to prohibit
the parties hereto from operating businesses in competition with each other.
Section 17.12 Notice. Whenever this Agreement requires or permits any
notice, request, or demand from one party to another, the notice, request or
demand must be in writing to be effective and shall be deemed to be delivered
and received (i) if personally delivered or if delivered by telex, telegram or
courier service, when delivered to the party to whom notice is sent, (ii) if
delivered by facsimile transmission, when so sent and receipt acknowledged by
receipt or (iii) if delivered by mail (whether actually received or not), at the
close of business on the third business day next following the day when placed
in the mail, postage prepaid, certified or registered, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
If to APP and APP Sub: American Physician Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to the Company
or any Stockholder: Total Medical Imaging, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, MBA
with a copy to : Wendel, Rosen, Black & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Section 17.13 No Waiver; Remedies. No party hereto shall by any act
(except by written instrument pursuant to Section 17.1 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party
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hereto, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. No remedy set forth in this Agreement or
otherwise conferred upon or reserved to any party shall be considered exclusive
of any other remedy available to any party, but the same shall be distinct,
separate and cumulative and may be exercised from time to time as often as
occasion may arise or as may be deemed expedient.
Section 17.14 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 17.15 Defined Terms. Terms used in Exhibit A, Exhibit B,
Exhibit C, Exhibit D Exhibit E, Exhibit F and the Disclosure Schedules attached
hereto with their initial letter capitalized and not otherwise defined therein
shall have the meanings as assigned to such terms in this Agreement.
[SIGNATURES CONTAINED ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
APP:
AMERICAN PHYSICIAN PARTNERS, INC.
By:_______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
APP SUB:
[AMERICAN PHYSICIAN PARTNERS,
SUBSIDIARY, INC.]
By:_______________________________________
Its:______________________________________
THE COMPANY:
TOTAL MEDICAL IMAGING, INC.
By:_______________________________________
Its:______________________________________
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51
EXHIBIT A
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
TARGET COMPANIES
A-1
52
EXHIBIT B
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
MERGER CONSIDERATION
B-1
53
EXHIBIT C
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
SHAREHOLDER REPRESENTATION LETTER
C-1
54
EXHIBIT D
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
INDEMNIFICATION AGREEMENT
D-1
55
EXHIBIT E
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
STOCKHOLDER RELEASE
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
TO THE
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED AS OF ________________, 1997
The following Disclosure Schedules and the disclosures set forth
therein are delivered in connection with that certain Agreement and Plan of
Reorganization and Merger dated ____________, 1997, by and between American
Physician Partners, Inc. and the Company (the "Agreement").
The section numbers set forth on the following Disclosure Schedules
correspond to the section numbers in the Agreement. If disclosures made pursuant
to one section number can reasonably be interpreted by other parties to be a
disclosure to another section number, such disclosure shall constitute
disclosure for purposes of such additional section number. Capitalized terms
used herein have the meanings assigned to such terms in the Agreement.
To the extent that the following Disclosure Schedules contain
exceptions to the representations and warranties set forth in Article III of the
Agreement, the inclusion of an item on these Disclosure Schedules shall not be
deemed an admission by American Physician Partners, Inc. that such item is
material to American Physician Partners, Inc., APP Sub, the Company or any
Company Subsidiary or that it will have a material adverse effect on American
Physician Partners, Inc., APP Sub, the Company or any Company Subsidiary.