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EXHIBIT 2.15
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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);
SOUTH TEXAS MR, INC.
(a Texas corporation)
and
THE STOCKHOLDERS OF SOUTH TEXAS MR, INC.
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TABLE OF CONTENTS
Page
ARTICLE I Definitions..................................................... 2
Section 1.1 Definitions......................................... 2
Section 1.2 Rules Of Interpretation............................. 5
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 Conversion of Company Common Stock.................. 6
Section 2.7 Exchange of Certificates Representing Shares
of the Company Common Stock......................... 7
Section 2.8 Fractional Shares................................... 7
ARTICLE III Representations and Warranties of the Company................. 7
Section 3.1 Organization and Good Standing; Qualification....... 7
Section 3.2 Authorization and Validity.......................... 8
Section 3.3 Governmental Authorization.......................... 8
Section 3.4 Capitalization...................................... 8
Section 3.5 Transactions in Capital Stock....................... 8
Section 3.6 Continuity of Business Enterprise................... 8
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................................. 10
Section 3.14 Lease Agreements.................................... 10
Section 3.15 Real and Personal Property.......................... 11
Section 3.16 Indebtedness for Borrowed Money..................... 11
Section 3.17 Contracts and Commitments........................... 11
Section 3.18 Employee Matters.................................... 12
Section 3.19 Intentionally Omitted............................... 12
Section 3.20 Intentionally Omitted............................... 12
Section 3.21 Environmental Matters............................... 12
Section 3.22 Filing Reports...................................... 13
Section 3.23 Insurance Policies.................................. 13
Section 3.24 Accounts Receivable; Payors......................... 14
Section 3.25 Accounts Payable; Suppliers......................... 14
Section 3.26 Inventory........................................... 15
Section 3.27 Licenses, Authorization and Provider Programs....... 15
Section 3.28 Inspections and Investigations...................... 15
Section 3.29 Proprietary Rights and Information.................. 16
Section 3.30 Taxes............................................... 16
Section 3.31 Related Party Arrangements.......................... 17
Section 3.32 Banking Relations................................... 18
Section 3.33 Fraud and Abuse and Self Referral................... 18
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Section 3.34 Restrictions on Business Activities................. 18
Section 3.35 Agreements in Full Force and Effect................. 18
Section 3.36 Statements True and Correct......................... 18
Section 3.37 Disclosure Schedules................................ 18
Section 3.38 Finders' Fees....................................... 18
ARTICLE IV Representations and Warranties of APP.......................... 19
Section 4.1 Organization and Good Standing; Qualification....... 19
Section 4.2 Authorization and Validity.......................... 19
Section 4.3 Governmental Authorization.......................... 19
Section 4.4 Capitalization...................................... 19
Section 4.5 Subsidiaries and Investments........................ 20
Section 4.6 Absence of Conflicting Agreements or Required
Consents............................................ 20
Section 4.7 Absence of Changes.................................. 20
Section 4.8 No Undisclosed Liabilities.......................... 20
Section 4.9 Litigation and Claims............................... 20
Section 4.10 No Violation of Law................................. 20
Section 4.11 Employee Matters.................................... 21
Section 4.12 Taxes............................................... 21
Section 4.13 Related Party Arrangements.......................... 22
Section 4.14 Statements True and Correct......................... 22
Section 4.15 Disclosure Schedules................................ 22
Section 4.16 Finder's Fees....................................... 22
ARTICLE V INTENTIONALLY OMITTED ...........................................22
ARTICLE VI INTENTIONALLY OMITTED.......................................... 22
ARTICLE VII Covenants of the Company...................................... 22
Section 7.1 Conduct of The Company.............................. 22
Section 7.2 Title to Assets; Indebtedness....................... 24
Section 7.3 Access.............................................. 24
Section 7.4 Acquisition Proposals............................... 24
Section 7.5 Compliance With Obligations......................... 24
Section 7.6 Notice of Certain Events............................ 25
Section 7.7 Intentionally Omitted............................... 25
Section 7.8 Stockholders' Consent............................... 25
Section 7.9 Obligations of Company and Stockholders............. 25
Section 7.10 Intentionally Omitted............................... 25
Section 7.11 Accounting and Tax Matters.......................... 25
ARTICLE VIII Covenants of APP............................................. 26
Section 8.1 Consummation of Agreement........................... 26
Section 8.2 Requirements to Effect the Merger and
Acquisitions........................................ 26
Section 8.3 Access.............................................. 26
Section 8.4 Notification of Certain Matters..................... 26
ARTICLE IX Covenants of APP and the Company............................... 27
Section 9.1 Filings; Other Action............................... 27
Section 9.2 Amendments of Disclosure Schedules.................. 27
Section 9.3 Actions Contrary to Stated Intent................... 28
Section 9.4 Public Announcements................................ 28
Section 9.5 Expenses............................................ 28
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Section 9.6 Patient Confidentiality............................. 28
Section 9.7 Registration Statements............................. 28
ARTICLE X Conditions Precedent of ........................................ 28
Section 10.1 Representations and Warranties...................... 28
Section 10.2 Covenants........................................... 28
Section 10.3 Legal Opinion....................................... 28
Section 10.4 Proceedings......................................... 28
Section 10.5 No Material Adverse Effect.......................... 28
Section 10.6 Government Approvals and Required Consents.......... 29
Section 10.7 Securities Approvals................................ 29
Section 10.8 Closing Deliveries.................................. 29
Section 10.9 Closing of Initial Public Offering.................. 29
Section 10.10 Closing of Related Acquisitions..................... 29
Section 10.11 Dissenter's Rights.................................. 29
Section 10.12 Stockholder Representation Letter;
Indemnification Agreement........................... 29
ARTICLE XI Conditions Precedent of the Company............................ 29
Section 11.1 Representations and Warranties...................... 29
Section 11.2 Covenants........................................... 29
Section 11.3 Legal Opinions...................................... 29
Section 11.4 Proceedings......................................... 29
Section 11.5 Government Approvals and Required Consents.......... 30
Section 11.6 "Blue Sky" Approvals; Nasdaq Listing................ 30
Section 11.7 Closing of Initial Public Offering.................. 30
Section 11.8 Closing Deliveries.................................. 30
Section 11.9 No Material Adverse Effect.......................... 30
ARTICLE XII Closing Deliveries............................................ 30
Section 12.1 Deliveries of the Company........................... 30
Section 12.2 Deliveries of APP................................... 31
ARTICLE XIII Post Closing Matters......................................... 32
Section 13.1 Further Instruments of Transfer..................... 32
Section 13.2 Merger Tax Covenant................................. 32
Section 13.3 Current Public Information.......................... 32
ARTICLE XIV Remedies...................................................... 33
Section 14.1 Indemnification by the Company and the
Stockholders........................................ 33
Section 14.2 Indemnification by APP.............................. 33
Section 14.3 Conditions of Indemnification....................... 34
Section 14.4 Costs, Expenses and Legal Fees...................... 36
Section 14.5 Tax Benefits; Insurance Proceeds.................... 36
Section 14.6 Dispute Resolution.................................. 36
ARTICLE XV Termination.................................................... 38
Section 15.1 Termination......................................... 38
Section 15.2 Effect of Termination............................... 38
ARTICLE XVI Nondisclosure of Confidential Information..................... 38
Section 16.1 Non-Disclosure Covenant............................. 38
Section 16.2 Damages............................................. 39
Section 16.3 Survival............................................ 39
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ARTICLE XVII Miscellaneous................................................ 39
Section 17.1 Amendment; Waivers.................................. 39
Section 17.2 Assignment.......................................... 39
Section 17.3 Parties in Interest; No Third Party
Beneficiaries....................................... 39
Section 17.4 Entire Agreement.................................... 39
Section 17.5 Severability........................................ 39
Section 17.6 Survival of Representations, Warranties
and Covenants....................................... 40
Section 17.7 Governing Law....................................... 40
Section 17.8 Captions............................................ 40
Section 17.9 Gender and Number................................... 40
Section 17.10 Intentionally omitted............................... 40
Section 17.11 Confidentiality; Publicity and Disclosures.......... 40
Section 17.12 Notice.............................................. 40
Section 17.13 No Waiver; Remedies................................. 41
Section 17.14 Counterparts........................................ 41
Section 17.15 Defined Terms....................................... 41
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 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"), SOUTH TEXAS MR, INC., a Texas corporation (the
"Company") and THE STOCKHOLDERS OF SOUTH TEXAS MR, INC. (the "Stockholders").
RECITALS
A. The Company is the general partner of South Texas No. 1 MRI Limited
Partnership. All of the shares of the common stock of the Company (the "Company
Common Stock") are owned beneficially and of record by the Stockholders.
B. APP 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 and the Company intend that the Company
be merged with and into APP, and that APP be the sole surviving corporation
(sometimes referred to hereinafter as the "Surviving Corporation"), and the
Company be the disappearing corporation (sometimes referred to hereinafter as
the "Disappearing Corporation").
D. APP and the Company have each determined to engage in the transactions
contemplated hereby, pursuant to which (i) the Company will merge with and into
APP upon the terms and conditions set forth herein and in accordance with the
laws of the State of Texas, (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.
E. 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").
F. 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 and each of their Affiliates.
"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.
"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).
"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.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
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"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 2.6(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.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stockholders" shall mean the stockholders of the Company immediately
prior to the Effective Time.
"Stockholder Release" shall have the meaning set forth in Section 12.1(m).
"Surviving Corporation" shall have the meaning set forth in the recitals
to this Agreement.
"Target Companies" shall have the meaning set forth in the recitals to
this Agreement.
"Target Interest Holders" shall have the meaning set forth in the recitals
to this Agreement.
"Tax Returns" shall include all federal, state, local or foreign income,
excise, corporate, franchise, property, sales, use, payroll, withholding,
provider, environmental, duties, value added and other tax returns (including
information returns).
"Third Party Claim" shall have the meaning set forth in Section 14.3(a).
Section 1.2 Rules Of Interpretation. The definitions set forth in Section
1.1 shall be equally applicable to both the singular and the plural forms of the
terms therein defined and shall cover both genders.
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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, the Company shall be merged with and into APP
in accordance with this Agreement and the separate corporate existence of the
Disappearing Corporation shall thereupon cease (the "Merger"). APP shall be the
Surviving Corporation in the Merger and shall continue to be governed by the
laws of the State of Delaware, and the separate corporate existence of APP 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
5.04 of the Texas Business Corporation Act. The Merger shall become effective at
the time of the filing of such documents with the Secretary of State of the
State of Texas, 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 Certificate of Incorporation of the Company
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation without any amendment or modification
as a result of the Merger.
Section 2.5 Bylaws of Surviving Corporation. The Bylaws of the Company 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 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 2.6(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
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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) 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 2.7 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 2.8 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 2.8 hereof, if
applicable.
Section 2.8 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 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
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Company represents and warrants to APP 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
(including, without limitation, in connection with the Initial Public Offering,
Form S-4 or any ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ filing to be made by APP, if any), the
execution, delivery and performance by the Company of this Agreement and the
agreements provided for herein, and the consummation of the transactions
contemplated hereby and thereby by the Company require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority.
Section 3.4 Capitalization. The authorized capital stock of the Company
consists of 100,000 shares of the Company Common Stock, of which 120 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 Schedule 3.4. 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
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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 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;
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(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 for mechanics,
landlords, materialsmen, 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 or any other licensed professional or other individual affiliated
with the Company affecting or that would reasonably be likely to affect the
Company Common Stock or the operations, business condition, (financial or
otherwise), or results of operations of the Company which (i) if successful,
may, individually or in the aggregate, have a Material Adverse Effect on the
Company or (ii) could adversely affect the ability of the Company or any Company
Subsidiary to effect the transactions contemplated hereby, and to the knowledge
of the Company there is no basis for any such action or any state of facts or
occurrence of any event which would reasonably be likely to give rise to the
foregoing. There are no unsatisfied judgments against the Company or any Company
Subsidiary or any licensed professional or other individual affiliated with the
Company or any Company Subsidiary relating to services provided on behalf of the
Company or any Company Subsidiary or any consent decrees to which any of the
foregoing is subject. Each of the matters,
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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 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.
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.
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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 of the assets
and properties to be acquired by APP from the Company, or which could inhibit or
prevent the Company from transferring to or vesting in APP good and sufficient
title to the assets and properties to be acquired by APP and the Surviving
Corporation except where the failure to transfer would not have a Material
Adverse Effect on APP. 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 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. No contract with a health care provider or Payor has been materially
amended or terminated within the last twelve (12) months.
(b) The Company (i) has not received notice of any plan or
intention of any other party to exercise any right to cancel or terminate any
contract, agreement or instrument required to be disclosed pursuant to Section
3.17(a), and to the knowledge of the Company there are no fact(s) that would
justify the exercise of such a right; and (ii) does not currently contemplate,
or have reason to believe any other Person currently contemplates, any amendment
or change to any such contract, agreement or instrument.
Section 3.18 Employee Matters. The Company does not have employees and is
not currently a party to any employment contract (except for oral employment
agreements which are terminable at will), consulting or collective bargaining
contracts, deferred compensation, pension plan (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended, and all rules
and regulations from time to time promulgated thereunder ("ERISA")), profit
sharing, bonus, 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.
Section 3.19 Intentionally omitted.
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Section 3.20 Intentionally omitted.
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.
Schedule 3.21(b) discloses any known presence of asbestos in or on the Company's
or any Company Subsidiary's owned or leased premises. To the knowledge of the
Company, there is no friable asbestos in or on the Company's or any Company
Subsidiary's owned or leased premises.
(c) To the knowledge of the Company, no soil or water in or under
any assets currently or formerly held for use or sale by the Company or any
Company Subsidiary is or has been contaminated by any Hazardous Substance while
such assets or premises were owned, leased, operated or managed, directly or
indirectly by the Company or any Company Subsidiary, where such contamination
had, or would be reasonably likely to have, a Material Adverse Effect on the
Company.
(d) There have been no environmental audits and other similar
reports which have been prepared by, for or, to the knowledge of the Company,
concerning the Company or any Company Subsidiary within the five (5) years
preceding the date hereof through the Effective Time with respect to any real
property now or previously owned or leased by the Company, any Company
Subsidiary or any of its predecessors, true and complete copies of which have
been provided to APP.
(e) For the purposes of this Section 3.21, the following terms
have the following meanings:
"Environmental Laws" shall mean any federal, state or local laws,
ordinances, codes, regulations, rules, policies and orders (including
without limitation, Medical Waste Laws) that are intended to assure the
protection of the environment, or that classify, regulate, call for the
remediation of, require reporting with respect to, or list or define
air, water, groundwater, solid waste, hazardous, toxic, or radioactive
substances, materials, wastes, pollutants or contaminants, [or which are
intended to assure the safety of employees, workers or other persons,
including the public in each case as in effect on the date hereof.]
"Environmental Liabilities" shall mean all liabilities of the
Company or any Company Subsidiary, whether contingent or fixed, which
(i) have arisen, or would reasonably be likely to
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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 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.
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 adequate and
calculated consistent with generally accepted accounting principles and past
practice).
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(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.
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/his/her 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 ("Governmental Programs"). The
Company, the Stockholders, and each employee has a current provider number for
such Governmental Programs and with such private non-governmental programs
(including without limitation any private insurance program) under which the
Company is presently receiving payments directly or indirectly from any Payor
for patient care provided by such licensed employee or independent contractor
(such non-governmental programs herein referred to as "Private Programs"). A
true, correct and complete list of such licenses, permits and other
authorizations (including, but not limited to verification of Medicare and
Medicaid provider numbers and participating physician contracts under 1842(h) of
the Social Security Act), and provider agreements, is set forth in the
Disclosure Schedules, true, complete and correct copies of which have been
provided to APP. No violation, default, order or deficiency exists with respect
to any of the items listed in the Disclosure Schedules except for such
violations, defaults, orders or deficiencies which would not be reasonably
likely to have a Material Adverse Effect on the Company, and there is no action
pending or to the Company's knowledge recommended by any state or federal
agencies having jurisdiction over the items
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listed in the Disclosure Schedules, either to revoke, withdraw or suspend any
material license or to terminate the participation of the Company in any
Governmental Program or Private Program, and no event has occurred which, with
or without notice or lapse of time, or both, would constitute grounds for a
violation, order or deficiency with respect to any of the items listed in the
Disclosure Schedules to revoke, withdraw or suspend any material license to
operate its business as is presently being conducted by it. To the knowledge of
the Company, there has been no decision not to renew any existing agreement with
any provider or Payor relating to the Company's business as presently being
conducted by it. Neither the Company nor any licensed employee (i) has had
his/her/its license, Drug Enforcement Agency number, or 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, or Payor (including orders that have been
entered by any such entities but stayed), or (iii) is the subject of an initial
or final determination by any federal or state authority that could result in
any demand or reimbursement under the Medicare, Medicaid or Government Programs
or any exclusion or which monetary penalty under federal or state law or (iv)
has had a final judgment or settlement entered against him/her/it in connection
with a malpractice or similar action.
(b) The Company is not required, or for the 72-month period prior
to the Effective Time was not required, to file any cost reports or other
reports with any Governmental Program or Private Program.
Section 3.28 Inspections and Investigations. Neither the right of the
Company 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 licensed professional or other individual affiliated with the business
has, during the past three (3) years prior to the Effective Time, had their
license limited, suspended or revoked by any governmental regulatory authority
or agency, integrated delivery system, trade association, review organization,
accrediting organization or certifying agency (including orders that have been
entered by any such entities but stayed). True, correct and complete copies of
all reports, correspondence, notices and other documents relating to any matter
described or referenced in this Section 3.28 have been provided to APP.
Section 3.29 Proprietary Rights and Information.
(a) Set forth in the Disclosure Schedules is a complete and
accurate list and summary description of the following: (i) all trademarks
(registered and unregistered), trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, currently owned in whole or part, or used by the Company or any
Company Subsidiary, (ii) all patents and applications therefor and inventions
and discoveries that may be patentable currently owned, in whole or in part, or
used by the Company or any Company Subsidiary, (iii) all licenses, royalties,
and assignments thereof to which the Company or any Company Subsidiary are a
party (iv) all copyrights (for published and unpublished works) currently owned
in whole or part, or used by the Company or any Company Subsidiary and (v) other
similar agreements relating to the foregoing to which the Company or any Company
Subsidiary is a party (including expiration date if applicable) (collectively,
the "Proprietary Rights").
(b) The Disclosure Schedules contain a complete and accurate list
and summary description of all agreements relating to technology, trade secrets,
know-how or processes that the Company is licensed or authorized to use by
others (other than technology, know-how or processes generally available to
other health care providers) or which it licenses or authorizes others to use,
true, correct and complete copies of which have been provided to APP. There are
no outstanding and, to the Company's knowledge, any threatened disputes or
disagreements with respect to any such agreement.
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(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 Schedule 3.30(b), (i) the Company has paid all taxes,
penalties, assessments and interest that have become due with respect to any Tax
Returns that it has filed and has properly accrued on its books and records in
accordance with generally accepted accounting principles for all of the same
that have not yet become due and payable and (ii) the Company is not delinquent
in the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or
Audits. The Company has not received any notice that any tax deficiency or
delinquency has been asserted against the Company and to the best knowledge of
the Company, there is no threat of such assertion. There is no unpaid
assessment, proposal for additional taxes, deficiency or delinquency in the
payment of any of the taxes of the Company that could reasonably be likely to be
asserted by any taxing authority. There is no taxing authority audit of the
Company pending, or to the actual knowledge of the Company, threatened within
the last five (5) years, and the results of any completed audits are properly
reflected in the Company Financial Statements. The Company has not violated any
applicable federal, state, local or foreign tax law. There are no security
interests or liens on any assets of the Company or any Company Subsidiary which
have resulted from any failure to pay (or alleged failure to pay) taxes.
(d) No Extension of Limitation Period. The Company has not
granted an extension to any taxing authority of the statute of limitation period
during which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies required
to be withheld by the Company and paid to governmental agencies for all income,
social security, unemployment insurance, sales, excise, use, and other taxes
have been collected or withheld and paid to the respective governmental
agencies.
(f) Foreign Person. Neither the Company nor any Stockholder is
a foreign person, as such term is referred to in Section 1445(f)(3) of the Code
and Treasury Regulations Section 1.1445-2.
(g) Safe Harbor Lease. None of the properties or assets of the
Company constitutes property that the Company, APP 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.
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(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.
Section 3.33 Fraud and Abuse and Self Referral. Neither the Company nor
any Company Subsidiary has engaged and, to the knowledge of the Company, neither
the Company's officers and directors nor the Physician Employees or other
Persons and entities providing professional services for or on behalf of the
Company have engaged, in any activities which are prohibited under 42 U.S.C.
Sections 1320a 7, 7a or 7b or 42 U.S.C. Section 1395nn (subject to the
exceptions or safe harbor provisions set forth in such legislation), or the
regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations, or which are prohibited by applicable rules of
professional conduct or 18 U.S.C. Sections 24, 287, 371, 664, 669, 1001,
1027, 1035, 1341, 1343, 1347, 1518, 1954, 1956(c)(7)(F) and 3486.
Section 3.34 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon the Company, any
Company Subsidiary or officer, director or key employee of the Company or
Company Subsidiary, which has or reasonably could be expected to have the effect
of prohibiting or materially impairing the current business of the Company or
any Company Subsidiary or the continuation of that business 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
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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.
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 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, APP represents and warrants to the
Company and the Stockholders both as of the date hereof and as of the Effective
Time as follows:
Section 4.1 Organization and Good Standing; Qualification . APP is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware, with all requisite corporate power and authority to
own, operate and lease its assets and properties and to carry on its business as
currently conducted. APP is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where such failure to be so qualified or in good
standing would not have a Material Adverse Effect on APP. Copies of the
certificate of incorporation and all amendments thereto of APP and the bylaws of
APP, as amended, and copies of the corporate minutes of APP regarding the Merger
and the transactions contemplated hereby, all of which have been or will be made
available to the Company for review, are true, correct and complete as in effect
on the date of this Agreement and accurately reflect all material proceedings of
the stockholders and directors of APP (and all committees thereof) regarding the
Merger and the transactions contemplated hereby. The stock record books of APP,
which have been or will be made available to the Company for review, contain
true, complete and accurate records of the stock ownership of APP and the
transfer of the shares of its capital stock.
Section 4.2 Authorization and Validity. APP has all requisite corporate
power to execute and deliver this Agreement and the Other Agreements and to
consummate the Merger and the transactions contemplated hereby. The execution,
delivery and performance by APP of this Agreement and the agreements provided
for herein, including the Other Agreements and the consummation by APP of the
transactions contemplated hereby and thereby are within APP's corporate powers
and have been duly authorized by all necessary action on the part of APP's Board
of Directors. This Agreement has and the Other Agreements have been duly
executed by APP. This Agreement and all other agreements and obligations entered
into and undertaken in connection with the Merger and the transactions
contemplated hereby to which APP is a party constitute, or upon execution will
constitute, valid and binding agreements
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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").
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.
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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 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 Schedule 4.12(b), (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.
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(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. Schedule 4.13 or Form S-4 sets
forth a description of any interest held, directly or indirectly, by any
officer, director or other Affiliate of APP in any property, real or personal or
mixed, tangible or intangible, used in or pertaining to APP's business and any
arrangement or agreement with any such person concerning the provision of goods
or services or other matters pertaining to APP's business.
Section 4.14 Statements True and Correct. No representation or warranty
made herein by APP, nor any statement, certificate, information, exhibit or
instrument to be furnished by APP to the Company or a Stockholder pursuant to
this Agreement, contains or will contain as of the Effective Time any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein not misleading.
Section 4.15 Disclosure Schedules. All Disclosure Schedules required by
Article IV hereof and attached hereto are true, correct and complete in all
material respects as of the date of this Agreement.
Section 4.16 Finder's Fees. No investment banker, broker, finder or other
intermediary has been retained by or is authorized to act on behalf of APP who
is entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement or referred to herein.
ARTICLE V
INTENTIONALLY OMITTED.
ARTICLE VI
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INTENTIONALLY OMITTED.
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, patients, employees and others
having business relations with it;
(b) maintain and keep its properties and assets in good repair
and condition consistent with past practice as is material to the conduct of the
business of the Company;
(c) continuously maintain insurance coverage substantially
equivalent to the insurance coverage in existence on the date hereof. In
addition, without the written consent of APP, the Company shall not:
(1) amend its articles or certificate of incorporation or
bylaws, or other charter documents;
(2) issue, sell or authorize for issuance or sale, shares of
any class of its securities (including, but not limited to, by way
of stock split, dividend, recapitalization or other
reclassification) or any subscriptions, options, warrants, rights or
convertible securities, or enter into any agreements or commitments
of any character obligating it to issue or sell any such securities;
(3) redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or any option, warrant
or other right to purchase or acquire any such shares;
(4) declare or pay any dividend or other distribution (whether
in cash, stock or other property) with respect to its capital stock
(except as expressly contemplated herein);
(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;
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(8) make or commit to make any capital expenditures which are
not reasonably necessary for the conduct of its business;
(9) grant any increase in the compensation payable or to
become payable to directors, officers, consultants or employees
other than merit increases to employees of the Company who are not
directors or officers of the Company, except in the ordinary course
of business and consistent with past practices;
(10) change in any manner any accounting principles or methods
other than changes which are consistent with generally accepted
accounting principles;
(11) enter into any material commitment or transaction other
than in the ordinary course of business;
(12) take any action which could reasonably be expected to
have a Material Adverse Effect on the Company;
(13) apply any of its assets to the direct or indirect
payment, discharge, satisfaction or reduction of any amount payable
directly or indirectly to or for the benefit of any Affiliate of the
Company, other than in the ordinary course and consistent with past
practices;
(14) agree, whether in writing or otherwise, to do any of the
foregoing; and
(15) take any action at the Board of Director or Stockholder
level to (in any way) amend, revise or otherwise affect the prior
corporate approval and effectiveness of this Agreement or any of the
agreements attached as exhibits hereto, other than as required to
discharge its or their fiduciary duties.
Section 7.2 Title to Assets; Indebtedness. As of the Effective Time, the
Company shall (i) except for sales of assets held as inventory, if any, in the
ordinary course of business prior to the Effective Time and except as otherwise
specifically described in the Disclosure Schedules to this Agreement, have good
and valid title to all of its assets free and clear of all Encumbrances of any
nature whatsoever, except for current year ad valorem taxes and liens which
arise by operation of law, and (ii) have no direct or indirect indebtedness
except for indebtedness disclosed in the Company Financial Statements, the
Disclosure Schedules hereto or for normal and recurring accrued obligations of
the Company arising in connection with its business operations in the ordinary
course of business and which arise from the purchase of merchandise, supplies,
inventory and services used in connection with the provision of services.
Section 7.3 Access. At all times prior to the Effective Time, APP's
employees, attorneys, accountants, agents and other authorized and designated
representatives will be allowed full access upon reasonable prior notice and
during regular business hours (and at such other times as the parties may
reasonably agree) to the properties, books and records of the Company,
including, without limitation, 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
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Section 7.3 shall be conducted in such a manner as to minimize the disruption to
the Company's ongoing business operations.
Section 7.4 Acquisition Proposals. The Company shall not, and shall
cause each of its directors, officers, employees or agents not to directly or
indirectly:
(a) solicit, initiate, encourage or participate in any
negotiations or discussions with respect to any offer or proposal to acquire all
or a substantial portion of the business, properties or capital stock of the
Company, whether by merger, consolidation, share exchange, business combination,
purchase of assets or otherwise; or
(b) except as required by law or pursuant to subpoena or court
order, disclose to any Person, other than APP or its agents, any information not
customarily disclosed concerning the business, assets, liabilities, properties
and personnel of the Company, or, without APP's prior written approval, afford
to any Person other than APP and its agents access to the properties, books or
records of the Company. If the Company receives any offer or proposal after the
date hereof, written or otherwise, of the type referred to above, the Company
shall promptly inform APP of such offer or proposal, decline such offer and
furnish APP with a copy thereof if such offer or proposal is in writing.
Section 7.5 Compliance With Obligations. Prior to the Effective Time, the
Company shall comply in all material respects with (i) all applicable federal,
state, local and foreign laws, rules and regulations; (ii) all material
agreements and obligations, including its articles or certificate of
incorporation or charter documents, by which it or its properties or its assets
(real, personal or mixed, tangible or intangible) may be bound; and (iii) all
decrees, orders, writs, injunctions, judgments, statutes, rules and regulations
applicable to the Company, and its respective properties or assets.
Section 7.6 Notice of Certain Events. The Company shall promptly notify
APP of:
(a) any notice or other communication from any Person or entity
alleging that the consent of such Person or entity is or may be required in
connection with the transactions contemplated by this Agreement;
(b) any employment of any new non-hourly employee by the Company
who is expected to receive annualized compensation of at least $50,000 in 1997;
(c) any termination of employment by, or threat to terminate
employment received from, any salaried or non-hourly, skilled employee of the
Company;
(d) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions contemplated
by this Agreement;
(e) any actions, suits, claims, investigations or proceedings
commenced or threatened against, relating to or involving or otherwise affecting
the Company which, if pending on the date of this Agreement, would have been
required to have been disclosed to APP hereunder or which relate to the
consummation of the transactions contemplated by this Agreement;
(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
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(g) any notice or other communication indicating a material
deterioration in the relationship with any Payor or supplier or key employee of
the Company and, if requested by APP, will exert its reasonable best efforts to
restore the relationship.
Section 7.7 Intentionally omitted.
Section 7.8 Stockholders' Consent. The Company shall use its best efforts
to obtain the unanimous approval of its Stockholders to the Merger. In seeking
the approval of its Stockholders, the Company shall provide each Stockholder
with the Form S-4 which shall include information as may be required by
applicable law or as APP shall deem appropriate. The Board of Directors of the
Company shall recommend the approval of the Merger by the Stockholders of the
Company. If the Stockholders' approval is not unanimous, the Company shall give
notice to the nonconsenting Stockholders of the action taken by the consenting
Stockholders as may be required by applicable law.
Section 7.9 Obligations of Company and Stockholders. Subject to Section
7.8 hereof, the Company will take all action reasonably necessary to cause the
Company to perform its obligations under this Agreement and all related
agreements and to consummate the Merger and other transactions contemplated
hereby and thereby on the terms and conditions set forth in this Agreement and
such agreements; provided, however, that this covenant shall not require the
Company to make any expenditures that are not expressly set forth in this
Agreement or otherwise contemplated herein.
Section 7.10 Intentionally omitted.
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.
ARTICLE VIII
Covenants of APP
APP agrees that between the date hereof and the Closing:
Section 8.1 Consummation of Agreement. APP will take all action reasonably
necessary to cause the consummation of the transactions contemplated hereby in
accordance with their terms and conditions and take all corporate and other
action necessary to approve the Merger; provided, however, that this covenant
shall not require APP to make any expenditures that are not expressly set forth
in this Agreement or otherwise contemplated herein.
Section 8.2 Requirements to Effect the Merger and Acquisitions. APP will
use its 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.
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Section 8.3 Access. APP 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, including its executive
officers, and permit the Company and its 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 as the Company and its
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. 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 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
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 and the Company
APP and the Company agree as follows:
Section 9.1 Filings; Other Action.
(a) The Company shall cooperate with APP to promptly prepare and
file with the SEC the Registration Statements on Form S-1 and Form S-4 (or other
appropriate Forms) to be filed by APP in connection with its Initial Public
Offering and offering of the shares of APP Common Stock to the Target Interest
Holders pursuant to the transactions contemplated by this Agreement and the
Other Agreements (including the prospectus constituting parts thereof, the
"Registration Statements"). APP shall obtain all necessary state securities law
or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. 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 and APP each separately represent and warrant
that (i) in the case of the Company, none of the written information or
documents supplied or to be supplied by it specifically for inclusion in the
Registration Statements, by exhibit or otherwise and (ii) in the case of APP
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 contained in this Agreement.
(c) The Company shall, upon request, furnish APP with all
information concerning itself, its subsidiaries, directors, officers, partners
and 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
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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
Disclosure 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 shall be paid by the Company in full
immediately prior to the Closing and such expenses shall be the sole
responsibility of the Stockholders following the Closing Date and not APP.
Section 9.6 Patient Confidentiality. APP 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
Except as may be waived in writing by APP, the obligations of APP
hereunder are subject to the fulfillment at or prior to the Effective Date of
each of the following conditions:
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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.
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
the Texas Business Corporation Act, 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 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.
ARTICLE XI
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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 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 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 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 and APP shall have obtained all licenses, permits and all necessary
government and other third-party approvals and consents (including consent of
the Stockholders required by applicable state law or the Company's charter
documents in effect as of the date of this Agreement) required under any law,
contracts or any statute, rule, regulation or ordinances to consummate the
transactions contemplated by this Agreement.
Section 11.6 "Blue Sky" Approvals; Nasdaq Listing. The Registration
Statements shall have become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statements shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. At or prior to the Effective Date, APP shall have
received all state securities and "Blue Sky" permits necessary to consummate the
transactions contemplated hereby. At or prior to the Effective Date, the APP
Common Stock shall have been approved for listing on the Nasdaq National Market,
subject only to official notification of issuance.
Section 11.7 Closing of Initial Public Offering. The Initial Public
Offering shall have closed.
Section 11.8 Closing Deliveries. The Company shall have received all
Disclosure Schedules, documents, assignments and agreements, duly executed and
delivered in form reasonably satisfactory to the Company referred to in Section
12.2.
Section 11.9 No Material Adverse Effect. No Material Adverse Effect on APP
shall have occurred since __________, 1997, whether or not such change shall
have been caused by the deliberate act or omission of APP.
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:
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(a) a copy of resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance of this 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) Intentionally omitted;
(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 Texas 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 Texas;
(g) certificates, dated within ten (10) days prior to the
Effective Date, of the Secretaries of State of the states in which either the
Company is qualified to do business, to the effect that each such corporation is
qualified to do business and, if applicable, is in good standing as a foreign
corporation in each of such states;
(h) all authorizations, consents, approvals, permits and licenses
referenced in Section 3.27;
(i) the resignations of the directors and officers of the Company
as requested by APP;
(j) 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 G (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.
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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) Intentionally omitted;
(c) a certificate of the President of APP dated the Closing Date
as to the truth and correctness of the representations and warranties of APP
contained herein on and as of the Effective Date;
(d) a certificate of the President of APP dated the Closing Date,
(i) as to the performance and compliance by APP with all covenants contained
herein on and as of the Effective Date and (ii) certifying that all conditions
precedent required to be satisfied by APP shall have been satisfied;
(e) a certificate of the Secretary of APP certifying as to the
incumbency and to the signatures of the officers of APP who have executed
documents delivered at the Closing on behalf of APP;
(f) a certificate, dated within ten (10) days prior to the
Effective Date, of the secretary of state of incorporation establishing that APP
is in existence, has paid all franchise or similar taxes, if any, and otherwise
is in good standing to transact business in the state of Delaware;
(g) certificates (or photocopies thereof), dated within ten (10)
days prior to the Effective Date, of the Secretaries of State of the states in
which APP is qualified to do business, to the effect that APP is qualified to do
business and is in good standing as a foreign corporation in such state;
(h) the executed Service Agreement as revised in accordance with
the changes specified in Section 12.1(j);
(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, 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.
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(a) The parties intend that the Merger will qualify as a tax-free
reorganization within the meaning of Section 351 of the Code in which the
Company will not recognize gain or loss, and pursuant to which any gain
recognized by a Stockholder as a result of the Merger will not exceed the amount
of any cash received by a Stockholder in the Merger (a "Reorganization").
(b) Both prior to and after the Effective Time, all books and
records shall be maintained, and all Tax Returns and schedules thereto shall be
filed in a manner consistent with the Merger being treated as a Reorganization.
These obligations are excused as to a party required to maintain the books or
file a Tax Return if such party has provided to the other parties a written
opinion of competent tax counsel to the effect that there is not substantial
authority, within the meaning of Section 6662(d)(2)(B)(i) of the Code, to report
the Merger as a Reorganization and such opinion either is furnished prior to the
Effective Time or is based on facts or events not known at the Effective Time.
Each party shall provide to each other party such tax information, reports,
returns, or schedules as may be reasonably required to assist such party in
accounting for and reporting the Merger as a Reorganization.
(c) The parties agree that no Stockholder shall be liable for any
taxes incurred by the Company and for which APP has successor liability therefor
which arise solely as a result of the Merger or the consummation of the
transactions contemplated hereby; provided that the foregoing shall not limit or
otherwise be deemed a waiver of any right of indemnification under Section 14.1
for a breach of any representation, warranty or covenant of the Company or any
Stockholder.
Section 13.3 Current Public Information. APP shall cause the requirements
of Rule 144(c) under the Securities Act to be met with respect to APP for so
long as those requirements must be met to enable sales by the Stockholders who
are affiliates of the Company to meet the requirements of Rule 145(d) under the
Securities Act.
ARTICLE XIV
Remedies
Section 14.1 Indemnification by the Company and the Stockholders. Subject
to the terms and conditions of this Article XIV, the Company and the
Stockholders agree 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 or any Stockholder 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 or any Stockholder contained in this Agreement or in any
Disclosure 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
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(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 untrue statement of material
fact in any Registration Statement or any prospectus forming or part thereof, or
any amendment thereof or supplement thereto relating to the Company (including
any Company Subsidiary) or failure to state information necessary to make the
statements required to be stated therein not misleading arising 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.
Notwithstanding anything herein to the contrary, nothing
contained in this Agreement shall relieve the Company of any liability or limit
any liability that it may have in the case of fraud in connection with the
transactions contemplated by this Agreement.
Section 14.2 Indemnification by APP. Subject to the terms and conditions
of this Article XIV, APP hereby agrees to indemnify, defend and hold the
Stockholders, the Company and its 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 of any representation or warranty (without
giving effect to any Material Adverse Effect qualifier contained as part of any
such representation or warranty) or covenant of APP contained in this Agreement
or in any schedule or certificate delivered hereunder; and
(b) any liability under the Securities Act, the Exchange Act or
any other federal or state "blue sky" or securities law or regulation, at common
law or otherwise, arising out of or based upon any 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 the
Company or any Stockholder which was derived from any information provided in
writing by the Company or a Company Subsidiary or any of their agents contained
in the representations and warranties set forth in this Agreement or any
certificate, exhibit, schedule or instrument required to be delivered under this
Agreement).
Notwithstanding anything herein to the contrary, nothing
contained in this Agreement shall relieve APP of any liability or limit any
liability that it may have in the case of fraud in connection with the
transactions contemplated by this Agreement.
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
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desires, at the sole cost and expense of such Indemnifying Party, to defend the
Indemnified Party against such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at their sole cost and expense, with counsel reasonably
acceptable to such Indemnified Party, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled at the discretion of the
Indemnifying Party in accordance with this Section 14.3(b). Except as set forth
in Section 14.3(f) below, the Indemnifying Party shall have full control of such
defense and proceedings, including any compromise or settlement thereof. The
Indemnified Party is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Party is entitled to
indemnification hereunder), to file, during the Election Period, any motion,
answer or other pleadings that the Indemnified Party shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party and not
prejudicial to the Indemnifying Party. If requested by the Indemnifying Party,
the Indemnified Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnifying Party and their counsel in contesting
any Third Party Claim that the Indemnifying Party elects to contest, including,
without limitation, the making of any related counterclaim against the person
asserting the Third Party Claim or any cross-complaint against any person. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
Section 14.3(b) and shall bear its own costs and expenses with respect to such
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party, and the Indemnified Party has been advised by counsel that
there may be one or more legal defenses available to it that are
different from or additional to those available to the Indemnifying Party, then
the Indemnified Party may employ separate counsel at the expense of the
Indemnifying Party, and upon written notification thereof, the Indemnifying
Party shall not have the right to assume the defense of such action on behalf of
the Indemnified Party; provided further that the Indemnifying Party shall not,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the Indemnified Party,
which firm shall be designated in writing by the Indemnified Party.
Notwithstanding the foregoing, the Indemnifying Party shall be prohibited from
confessing or settling any criminal allegations brought against the Indemnified
Party without the express written consent of the Indemnified Party.
(c) If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have 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
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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.
During the two-year period following the Effective Date, each Stockholder shall
be entitled to satisfy payments owed to APP by transfer of APP Common Stock from
such Stockholder to APP. For all purposes of this Agreement, the value of each
share of APP Common Stock transferred to APP pursuant to this Agreement shall be
calculated by averaging the daily closing prices for a share of APP Common Stock
for the twenty (20) consecutive trading days on which such shares are actually
traded on the Nasdaq National Market preceding the date of the Claim Notice or
Indemnity Notice, as the case may be. The number of shares of APP Common Stock
permitted to be transferred under this Paragraph 2(e) shall be diminished
proportionately in accordance with the percentage of APP Common Stock released
under the Lock-Up Provisions set forth in Paragraph 1 of the Stockholder
Representation Letter. The rights of any Stockholder to transfer shares of APP
Common Stock in satisfaction of payments owed to APP pursuant to this Agreement
shall terminate upon the earlier of (x) the termination of the Lock-Up
Provisions set forth in the Stockholder Representation Letter or (y) at the end
of the two-year period following the Effective Date.
(f) The Indemnifying Party shall provide the Indemnified Party
with written notice of any firm offer that is made to settle or compromise a
Third Party Claim against an Indemnified Party. If a firm offer is made to
settle such a claim solely by the payment of money damages and the Indemnifying
Party notifies the Indemnified Party in writing that the Indemnifying Party
agrees to such settlement, but the Indemnified Party elects not to accept and
agree to it, the Indemnified Party may continue to contest or defend such Third
Party Claim and, in such event, the total maximum liability of the Indemnifying
Party to indemnify or otherwise reimburse the Indemnified Party hereunder with
respect to such a claim shall be limited to and shall not exceed the amount of
such settlement offer, plus reasonable out-of-pocket costs and reasonable
expenses (including reasonable attorneys' fees and disbursements) to the date of
notice that the Indemnifying Party desired to accept such settlement.
(g) Notwithstanding anything contained in this Agreement or the
Merger Agreement to the contrary, the Indemnifying Parties in the aggregate (i)
shall have no obligation hereunder to provide indemnification for the first
$100,000 of Damages (without counting Immaterial Claims as defined below),
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and (ii) in no event shall the Indemnifying Parties have any liability hereunder
with respect to any singular incident or a fact involving a breach or inaccuracy
of the Company if the Damages from such claim are equal to or less than $7,500
("Immaterial Claims"). Notwithstanding anything to the contrary contained herein
or in the Merger Agreement, the obligations of each Stockholder hereunder shall
not exceed fifty percent (50%) of the aggregate value of the Merger
Consideration or Exchange Consideration, as the case may be, paid to such
Stockholder pursuant to any Related Acquisition on the Closing Date.
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.
Section 14.6 Dispute Resolution.
(a) Arbitration. The parties hereto agree that any claim,
controversy, dispute or disagreement between or among any of the parties arising
out of or relating to this Agreement shall be governed exclusively by the terms
and provisions of this Section 14.6; provided, however, that within ten (10)
days from the date which any claim, controversy, dispute or disagreement cannot
be resolved and prior to commencing an arbitration procedure pursuant to this
Section 14.6, the parties shall meet to discuss and consider other alternative
dispute resolution procedures other than arbitration including, but not limited
to, Judicial Arbitration & Mediation Services, Inc., if applicable. If at any
time prior to the rendering of the decision by the arbitrator (or pursuant to
such other alternative dispute resolution procedure) as contemplated in this
Section 14.6 to the extent a party makes a written offer to the other party
proposing a settlement of the matter(s) at issue and such offer is rejected,
then the party rejecting such offer shall be obligated to pay the costs and
expenses (excluding the amount of the award granted under the decision) of the
party that offered the settlement from the date such offer was received by such
other party if the decision is for a dollar amount that is less than the amount
of such offer to settle. Notwithstanding the foregoing, the terms and provisions
of this Section 14.6 shall not preclude any party hereto from seeking, or a
court of competent jurisdiction from granting, a temporary restraining order,
temporary injunction or other equitable relief for any breach of (i) any
noncompetition or confidentiality covenant or (ii) any duty, obligation,
covenant, representation or warranty, the breach of which may cause irreparable
harm or damage.
(b) Arbitrators. In the event there is a claim, controversy,
dispute or disagreement among the parties hereto arising out of or relating to
this Agreement (including any claim based on or arising from an alleged tort)
and the parties hereto have not reached agreement regarding an alternative to
arbitration, the parties agree to select within thirty (30) days of notice by a
party to the other of its desire to seek arbitration under this Section 14.6 one
(1) arbitrator mutually acceptable to APP and the Sellers to hear and decide all
such claims under this Section 14.6. Each of the arbitrators proposed shall be
impartial and independent of all parties. If the parties cannot agree on the
selection of an arbitrator within said 30-day period, then any party may in
writing request the judge of the United States District Court for the
[_____________] District of [__________] senior in term of service to appoint
the arbitrator and, subject to this Section 14.6, such arbitrator shall hear all
arbitration matters arising under this Section 14.6.
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(c) Applicable Rules.
(1) Each arbitration hearing shall be held at a place in
[_____________] acceptable to the arbitrator. The arbitration shall be conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association to the extent such rules do not conflict with the terms hereof;
provided, however, that if the parties hereto agree to an alternative to
arbitration they may agree to an alternative set of rules, including as to rules
of evidence and procedure. The decision of the arbitrator shall be reduced to
writing and shall be binding on the parties and such decision shall contain a
concise statement of the reasons in support of such decision. Judgment upon the
award(s) rendered by the arbitrator may be entered and execution had in any
court of competent jurisdiction or application may be made to such court for a
judicial acceptance of the award and an order of enforcement. The charges and
expenses of the arbitrator shall be shared equally by the parties to the
hearing.
(2) The arbitration shall commence within ten (10) days
after the arbitrator is selected in accordance with the provisions of this
Section 14.6. In fulfilling his duties with respect to determining the amount of
any loss, the arbitrator may consider such matters as, in the opinion of the
arbitrator, are necessary or helpful to make a proper valuation. The arbitrator
may consult with and engage disinterested third parties to advise the
arbitrator. The arbitrator shall not add any interest factor reflecting the time
value of money to the amount of any loss and shall not award any punitive
damages.
(3) If the arbitrator selected hereunder should die, resign
or be unable to perform his or her duties hereunder, the parties, or such senior
judge (or such judge's successor) in the event the parties cannot agree, shall
select a replacement arbitrator. The procedure set forth in this Section 14.6
for selecting the arbitrator shall be followed from time to time as necessary.
(4) As to any determination of the amount of any loss, or
as to the resolution of any other claim, controversy, dispute or disagreement,
that under the terms hereof is made subject to arbitration, no lawsuit based on
such claimed loss or such resolution shall be instituted by the parties hereto,
other than to compel arbitration proceedings or enforce the award of the
arbitrator, except as otherwise provided in Section 12.7(b).
(5) All privileges under [STATE] and federal law, including
attorney-client and work-product privileges, shall be preserved and protected to
the same extent that such privileges would be protected in a federal court
proceeding applying [STATE] law.
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;
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(c) at any time prior to the Effective Date by the Company if any
representation or warranty of APP contained in this Agreement or in any
certificate or other document executed and delivered by APP pursuant to this
Agreement is or becomes untrue in any material respect of if APP fails to comply
in any material respect with any covenant or agreement contained herein, and any
such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within thirty (30) days after receipt of written notice thereof;
(d) at any time prior to the Effective Date by APP if, as a
result of the conduct of due diligence and regulatory compliance procedures, APP
deems termination to be advisable; or
(e) by APP or the Company if the Merger shall not have been
consummated by September 30, 1997.
Section 15.2 Effect of Termination. Except as set forth in Section 16.3,
in the event this Agreement is terminated pursuant to this Article XV, this
Agreement shall forthwith become void.
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 acknowledges that it had in the past, currently has, 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 and APP, severally, agree that they will not disclose such
Confidential Information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, except (a) to authorized
representatives of APP, Surviving Corporation and the Company and (b) to counsel
and other advisers to APP, 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 or APP, as the case may be,
(ii) disclosure is required by law or the order of any governmental authority
under color of law, provided, that prior to disclosing any information pursuant
to this clause (ii) the Company or APP, as the case may be, shall, if possible,
give prior written notice thereof to the Company or APP and provide the Company
or APP with the opportunity to contest such disclosure, (iii) the disclosing
party reasonably believes that such disclosure is required in connection with
the defense of a lawsuit against the disclosing party, or (iv) the disclosing
party is the sole and exclusive owner of such Confidential Information as a
result of the Merger or otherwise. In the event of a breach or threatened breach
by the Company, on the one hand, and APP, on the other hand, of the provisions
of this Section, APP, 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, 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.
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ARTICLE XVII
Miscellaneous
Section 17.1 Amendment; Waivers. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of any terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
Section 17.2 Assignment. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by APP to a
wholly owned subsidiary of APP; provided that any such assignment shall not
relieve APP of its obligations hereunder.
Section 17.3 Parties in Interest; No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. APP acknowledges
and agrees 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 against Damages incurred by the Stockholders resulting from a breach by
APP of any representation, warranty or covenant of APP 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 or APP
pursuant to this Agreement shall be deemed to have been representations and
warranties by the Company, such Stockholder and APP. 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
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party to be indemnified pursuant to such provisions actually incurs liability
under the Securities Act, the Exchange Act or any other federal or state
securities law, the representations and warranties set forth therein shall
survive until the expiration of any applicable limitations period.
Section 17.7 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF
LAWS) OF THE STATE OF TEXAS.
Section 17.8 Captions. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
Section 17.9 Gender and Number. When the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
Section 17.10 Intentionally omitted.
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: American Physician Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to the Company
or any Stockholder: M & S X-Ray Associates, P.A.
P.O. Box 120310 (mailing only)
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇ (▇▇▇-▇▇)
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D.
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇, Blend, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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 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 and 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.
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
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THE COMPANY:
SOUTH TEXAS MR, INC.
By:
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Its:
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THE STOCKHOLDERS:
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F. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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49
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44
50
EXHIBIT A
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
TARGET COMPANIES
A-1
51
EXHIBIT B
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
MERGER CONSIDERATION
B-1
52
EXHIBIT C
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
SHAREHOLDER REPRESENTATION LETTER
C-1
53
EXHIBIT D
to
Agreement and Plan of Reorganization and Merger
dated ________, 1997
INDEMNIFICATION AGREEMENT
D-1
54
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., the Company or any Company Subsidiary or that
it will have a material adverse effect on American Physician Partners, Inc., the
Company or any Company Subsidiary.