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EXHIBIT 2.20
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AGREEMENT AND PLAN OF EXCHANGE
dated as of
June 27, 1997
by and among
AMERICAN PHYSICIAN PARTNERS, INC.
(a Delaware corporation),
SAN ANTONIO MRI PARTNERSHIP NO. 2, LTD.
(a Texas limited partnership)
and
THE SELLERS LISTED ON THE SIGNATURE PAGES HEREOF
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rules Of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.1 Organization and Good Standing; Qualification . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 Capitalization and Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Transactions in Partnership Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.6 Continuity of Business Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.7 Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.8 Absence of Conflicting Agreements or Required Consents . . . . . . . . . . . . . . . . . . . 8
Section 3.9 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.10 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.11 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.12 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.13 Lease Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.14 Real and Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.15 Indebtedness for Borrowed Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.16 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.17 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.18 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.21 Filing Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.22 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.23 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.24 Accounts Payable; Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.25 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.26 Licenses, Authorization and Provider Programs . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.27 Inspections and Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.28 Proprietary Rights and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.29 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.30 Related Party Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.31 Banking Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.32 Fraud and Abuse and Self Referral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.33 Restrictions on Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.34 Agreements in Full Force and Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.35 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.36 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.37 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV Representations and Warranties of APP . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.1 Organization and Good Standing; Qualification . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.2 Authorization and Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 4.4 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Subsidiaries and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.6 Absence of Conflicting Agreements or Required Consents . . . . . . . . . . . . . . . . . . . 19
Section 4.7 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.8 No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.9 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.10 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.11 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.13 Related Party Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.14 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.15 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.16 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V Covenants of Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1 Required Conduct of Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.2 Prohibited Conduct of Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.3 Title to Assets; Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.4 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.6 Compliance With Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.7 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.8 Partners' Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.9 Obligations of Seller and . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.10 Intentionally omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.11 Accounting and Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI Covenants of APP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.3 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII Covenants of APP, Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.1 Filings; Other Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.2 Amendments of Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.3 Actions Contrary to Stated Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.6 Registration Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII Conditions Precedent of APP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.3 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.4 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.5 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.6 Government Approvals and Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.7 Securities Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.9 Closing of Initial Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.10 Closing of Related Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.11 Closing of General Partner Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.12 Execution by Each Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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ARTICLE IX Conditions Precedent of Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.3 Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.4 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.5 Government Approvals and Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.6 "Blue Sky" Approvals; Nasdaq Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.7 Closing of Initial Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 9.9 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE X Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.1 Deliveries of Seller and San Antonio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.2 Deliveries of APP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE XI Post Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.1 Further Instruments of Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.2 Exchange Tax Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE XII Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.1 Indemnification by Sellers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 12.2 Indemnification by APP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 12.3 Conditions of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 12.4 Remedies Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 12.5 Costs, Expenses and Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 12.6 Tax Benefits; Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 12.7 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XIII Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 13.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 13.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XIV Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 14.1 Non-Disclosure Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 14.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 14.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XV Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.1 Amendment; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.3 Parties in Interest; No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 39
Section 15.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.6 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . 40
Section 15.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.9 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.10 Confidentiality; Publicity and Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 15.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 15.12 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 15.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 15.14 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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EXHIBITS
Exhibit A - List of Sellers and Exchange Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B - Target Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Legal Opinion of Sellers' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Exhibit D - Legal Opinion of APP's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E - Seller Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
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AGREEMENT AND PLAN OF EXCHANGE
This Agreement and Plan of Exchange ("Agreement") dated June ___, 1997
is by and among American Physician Partners, Inc., a Delaware corporation,
("APP"), San Antonio MRI Partnership No. 2, LTD., a Texas limited partnership
("San Antonio") and each of the individuals whose names appear on Exhibit A
hereto (each individually, a "Seller" and collectively "Sellers").
RECITALS
A. Each Seller is a limited partner of San Antonio and the
Sellers together own an aggregate of ninety-nine percent (99%) of the total
interests of the partners in San Antonio.
B. San Antonio owns a sixty percent (60%) interest in Lexington
MR, Ltd. which owns and operates diagnostic imaging centers.
C. APP is engaged in the business of owning, operating and
acquiring the assets of, and managing the non-medical aspects of, radiology
practices and diagnostic imaging centers.
▇. ▇▇▇▇▇▇▇ desire to convey to APP and APP desires to acquire
from Sellers, ninety-nine percent (99%) of the total interests of the partners
in San Antonio (the "Partnership Units") in consideration for cash and shares
of common stock, par value $.0001 per share, of APP (the "APP Common Stock") as
set forth herein (the "Exchange").
E. The General Partner of San Antonio, San Antonio MR, Inc., a
Texas corporation, owns a one percent (1%) interest in San Antonio, which
interest is being acquired indirectly by APP (the "General Partner
Acquisition").
F. APP and subsidiaries of APP have entered into, or intend to
enter into, an Agreement and Plan of Reorganization and Merger or other
acquisition agreements (collectively, the "Other Agreements") similar to this
Agreement with interest holders (together with the Sellers, the "Target
Interest Holders") of each of the entities listed on Exhibit B (together with
San Antonio, the "Target Companies").
AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals mutual
representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below:
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"Acquisition" shall have the meaning set forth in Section 2.1.
"Affiliate" with respect to any person shall mean a person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"APP" shall have the meaning set forth in the preamble to this
Agreement.
"APP Common Stock" shall have the meaning set forth in the recitals to
this Agreement.
"Best knowledge" or "to the knowledge of" and similar phrases shall
mean (i) in the case of a natural person, the particular fact was known, or not
known, as the context requires, to such person after reasonable investigation
and inquiry by such person, and (ii) in the case of an entity, the particular
fact was known, or not known, as the context requires, to any of the partners
set forth in Exhibit A, stockholder or director, as the case may be, or
executive officer of such entity after reasonable investigation and inquiry by
the executive officers of such entity; provided, however, that to the extent
any of the representations, warranties and statements of Seller and San Antonio
made specifically in Section 3.20 is expressly qualified to the knowledge or
best knowledge of Sellers and San Antonio, it shall mean the knowledge of any
of the Sellers set forth in Exhibit A, partner or executive officer of San
Antonio actually possesses without the necessity of any special inquiry as to
the matters which are the subject thereof.
"Claim Notice" shall have the meaning set forth in Section 12.3(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall mean all trade secrets and other
confidential and/or proprietary information of the particular person,
including, but not limited to, information derived from reports, processes,
data, know-how, software programs, improvements, inventions, strategies,
compensation structures, reports, investigations, research, work in progress,
codes, marketing and sales programs and plans, financial projections, cost
summaries, formulae, contract analyses, financial information, forecasts,
confidential filings with any state or federal agency, and all other
confidential concepts, methods of doing business, ideas, materials or
information prepared or performed for, by or on behalf of such person by its
employees, officers, directors, agents, representatives, or consultants.
"Current Policies" shall have the meaning set forth in Section 3.22.
"Damages" shall have the meaning set forth in Section 12.1.
"DOJ" shall mean the United States Department of Justice.
"Effective Date" shall mean the date that the Form S-1 Registration
Statement is declared effective by the SEC.
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"Election Period" shall have the meaning set forth in Section 12.3(a).
"Encumbrance" shall mean any charge, claim, community property
interest, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
"Environmental Laws" shall have the meaning set forth in Section
3.20(e).
"Environmental Liabilities" shall have the meaning set forth in
Section 3.20(e).
"ERISA" shall have the meaning set forth in Section 3.17.
"Exchange" shall have the meaning set forth in the recitals.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" shall have the meaning set forth in the recitals
to this Agreement.
"Exchange Consideration" shall have the meaning set forth in Section
2.1.
"Form S-1" shall mean the Form S-1 Registration Statement filed with
the SEC by APP pursuant to the Securities Act in connection with its Initial
Public Offering.
"Form S-4" shall mean the Form S-4 Registration Statement filed with
the SEC by APP pursuant to the Securities Act in connection with the offering
of APP Common Stock as consideration under the Exchange and other mergers or
acquisitions contemplated by the Other Agreements.
"FTC" shall mean the United States Federal Trade Commission.
"General Partner Acquisition" shall have the meaning set forth in the
recitals.
"Governmental Programs" shall have the meaning set forth in Section
3.26(a).
"Hazardous Substance" shall have the meaning set forth in Section
3.20(e).
"Indemnified Party" shall have the meaning set forth in Section 12.1.
"Indemnifying Party" shall have the meaning set forth in Section 12.1.
"Indemnity Notice" shall have the meaning set forth in Section
12.3(d).
"Initial Public Offering" shall mean the initial underwritten public
offering of APP Common Stock contemplated by the Form S-1.
"Insurance Policies" shall have the meaning set forth in Section 3.22.
"IRS" shall mean the Internal Revenue Service.
"Lease Agreements" shall have the meaning set forth in Section 3.13.
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"Lock-Up Provisions" shall have the meaning set forth in Section 5.12.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations, condition (financial or otherwise),
liabilities or results of operations of the Person or Persons being referred
to, taken as a whole (including its consolidated subsidiaries, if any), in
consideration of all relevant facts and circumstances.
"Medical Waste" shall mean (i) pathological waste, (ii) blood, (iii)
sharps, (iv) wastes from surgery or autopsy, (v) dialysis waste, including
contaminated disposable equipment and supplies, (vi) cultures and stocks of
infectious agents and associated biological agents, (vii) contaminated animals,
(viii) isolation wastes, (ix) contaminated equipment, (x) laboratory waste,
(xi) any substance, pollutant, material, or contaminant listed or regulated
under any Medical Waste Law, and (xii) other biological waste and discarded
materials contaminated with or exposed to blood, excretion, or secretions from
human beings or animals.
"Medical Waste Laws" shall mean the following, including regulations
promulgated and orders issued thereunder, as in effect on the date hereof and
the Closing Date: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA Section Section 2501 et seq., (iii) the
Marine Protection, Research, and Sanctuaries Act of 1972, 33 USCA Section
Section 1401 et seq., (iv) The Occupational Safety and Health Act, 29 USCA
Section Section 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 San
Antonio's assets or operations and purport to regulate Medical Waste or impose
requirements related to Medical Waste.
"Medicare and Medicaid Programs" shall have the meaning set forth in
Section 3.26(a).
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
Section Section 6992, et seq.
"Ordinary course of business" shall mean the usual and customary way
in which the particular entity has conducted its business in the past.
"Other Agreements" shall have the meaning set forth in the recitals to
this Agreement.
"Partnership Agreement" shall have the meaning set forth in Section
3.1 hereto.
"Partnership Right" shall mean all arrangements, calls, commitments,
agreements, options, rights to subscribe to, scrips, understandings, warrants,
or other binding obligations of any character whatsoever relating to or
securities or rights convertible into or exchangeable for, partnership
interests of San Antonio, or by which San Antonio is or may be bound to issue
additional Partnership Units or other Partnership Rights.
"Partnership Subsidiary" shall have the meaning set forth in Section
3.7.
"Partnership Units" shall have the meaning set forth in the recitals
to this Agreement.
"Person" shall mean any natural person, corporation, partnership,
joint venture, limited liability company, association, group, organization or
other entity.
"Private Programs" shall have the meaning set forth in Section
3.26(a).
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"Proprietary Right" shall have the meaning set forth in Section
3.28(a).
"Registration Statements" shall mean the Form S-1 and the Form S-4.
"Regulated Activity" shall have the meaning set forth in Section
3.20(e).
"Related Acquisitions" shall mean, collectively, the mergers and
acquisitions of each Founding Company and its related entities and assets
contemplated by the Other Agreements.
"Reorganization" shall have the meaning set forth in Section 11.2.
"San Antonio" shall have the meaning set forth in the preamble to this
Agreement.
"Schedules" shall mean the schedules attached hereto as of the date
hereof or otherwise delivered by any party hereto pursuant to the terms hereof,
as such may be amended or supplemented from time to time pursuant to the
provisions hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller Release" shall have the meaning set forth in Section 11.1(l).
"Target Companies" shall have the meaning set forth in the recitals to
this Agreement.
"Target Interest Holders" shall have the meaning set forth in the
recitals to this Agreement.
"Tax Returns" shall include all federal, state, local or foreign
income, excise, corporate, franchise, property, sales, use, payroll,
withholding, provider, environmental, duties, value added and other tax returns
(including information returns).
"Third Party Claim" shall have the meaning set forth in Section
12.3(a).
Section 1.2 Rules Of Interpretation. The definitions set forth
in Section 1.1 shall be equally applicable to both the singular and the plural
forms of the terms therein defined and shall cover both genders.
Unless otherwise indicated, "herein," "hereby," "hereunder," "hereof,"
"hereinabove," "hereinafter" and other equivalent words refer to this Agreement
and not solely to the particular Article, Section or subdivision hereof in
which such word is used.
Unless otherwise indicated, reference herein to an Article number
(e.g., Article IV) or a Section number (e.g., Section 6.2) shall be construed
to be a reference to the designated Article number or Section number of this
Agreement.
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ARTICLE II
Exchange
Section 2.1 Exchange of Partnership Units for Cash and APP Common
Stock.
(a) Subject to and upon the terms and conditions
contained herein, on the Closing Date Sellers shall convey, transfer deliver
and assign to APP ninety-nine percent (99%) of the total interests of the
partners in San Antonio, free and clear of all obligations, security interests,
claims, liens and encumbrances whatsoever (the "Acquisition"). Subject to and
upon the terms and conditions contained herein, as consideration for such
Partnership Units on the Closing Date each Seller shall receive (i) cash and
(ii) validly issued, fully paid and nonassessable shares of APP Common Stock,
all as determined in accordance with the provisions of Exhibit A attached
hereto (the "Exchange Consideration").
(b) Each Seller shall deliver to APP at the Closing a
▇▇▇▇ of Sale representing the Partnership Units owned by him, her or it. Each
Seller agrees to cure any deficiencies with respect to the endorsement of the
certificates or other documents of conveyance with respect to such Partnership
Units or with respect to the powers accompanying any Partnership Unit. Upon
such delivery, each Seller shall receive in exchange therefor the Exchange
Consideration pursuant to Exhibit A.
Section 2.2 Legends. All APP Common Stock certificates issued to
the Sellers shall bear one or more of the following restrictive legends:
(a) Any legend required to put third-parties on notice of
the existence of the Lock-Up Provisions.
(b) Any legend relating to affiliates of the Company as
required pursuant to the Securities and Exchange Act of 1934.
Section 2.3 Closing. The closing (the "Closing") of the
transactions provided for in Section 2.1 shall take place at 10:00 a.m., local
time, at the offices of APP located at 2301 NationsBank Plaza, 901 Main Street,
on the day on which the transactions contemplated by the Initial Public
Offering are consummated. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
ARTICLE III
Representations and Warranties of Sellers and San Antonio
As an inducement to APP to enter into this Agreement, each of Seller
and San Antonio represents and warrants to APP both as of the date hereof and
as of the Closing Date as set forth below, subject to those exceptions set
forth in the Disclosure Schedules attached hereto and incorporated herein by
this reference, specifically identifying the relevant subparagraph hereof,
which exceptions shall be deemed to be representations and warranties as if
made hereunder.
Section 3.1 Organization and Good Standing; Qualification. San
Antonio is a limited partnership duly organized and validly existing under the
laws of its state of organization, with all requisite power and authority to
own, operate and lease its assets and properties and to carry on its business
as currently conducted. San Antonio 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,
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except where such failure to be so qualified or in good standing would not have
a Material Adverse Effect on San Antonio. Copies of the Certificate of Limited
Partnership and all amendments thereto of San Antonio and the Limited
Partnership Agreement of San Antonio and all amendments thereto (the
"Partnership Agreement") and copies of the minutes of San Antonio, all of which
have been or will be made available to APP for review, are true and complete as
in effect on the date of this Agreement, and in the case of the minutes,
accurately reflect all material proceedings of the partners of San Antonio (and
all committees thereof).
Section 3.2 Authorization and Validity. San Antonio has all
requisite right, power and authority to execute, deliver and perform this
Agreement and all agreements and other documents executed and delivered by it
pursuant to this Agreement or to be executed and delivered on the Closing Date,
and has taken all action required by law, its Certificate of Limited
Partnership, its Partnership Agreement or otherwise, to authorize the
execution, delivery and performance of this Agreement and such related
documents. Seller has the legal capacity to enter into and perform this
Agreement and the other agreements to be executed and delivered in connection
herewith. This Agreement and all agreements and documents executed and
delivered in connection herewith have been, or will be as of the Closing Date,
duly executed and delivered by Seller and San Antonio and constitute or will
constitute the legal, valid and binding obligations of Seller, enforceable
against Seller and San Antonio in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or by general equity principles, or by
public policy.
Section 3.3 Governmental Authorization. Other than consents,
filings or notifications required to be made or obtained solely by APP
(including, without limitation, in connection with the Initial Public Offering,
Form S-4 or any ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ filing to be made by APP, if any), the
execution, delivery and performance by Seller and San Antonio of this Agreement
and the agreements provided for herein, and the consummation of the
transactions contemplated hereby and thereby by Seller and San Antonio requires
no action by or in respect of, or filing with, any governmental body, agency,
official or authority.
Section 3.4 Capitalization and Title. The Sellers collectively
are, and will be immediately prior to the Closing Date, the record and
beneficial owners of all the issued and outstanding Partnership Units of San
Antonio and Seller is the owner of the Partnership Units currently held in his
or her name on the record books of San Antonio, free and clear of all
Encumbrances. Each Partnership Unit held by Seller has been legally and
validly issued and is fully paid and nonassessable, and was issued pursuant to
a valid exemption from registration under (i) the Securities Act and (ii) all
applicable state securities laws.
Section 3.5 Transactions in Partnership Units. There exist no
Partnership Rights. Except for the General Partner Acquisition referenced
herein, San Antonio has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any of its partnership interests or to pay any
dividend or make any distribution in respect thereof. Neither the equity
structure of San Antonio nor the relative ownership of partnership interests
among any of its partners has been altered or changed in contemplation of the
Exchange within the two (2) years preceding the date of this Agreement.
Section 3.6 Continuity of Business Enterprise. There has not
been any sale, distribution or spin-off of significant assets of San Antonio or
any of its Affiliates other than in the ordinary course of business within the
two (2) years preceding the date of this Agreement.
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Section 3.7 Subsidiaries and Investments. San Antonio does not
own, directly or indirectly, any capital stock or other equity, ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity (each a "Partnership Subsidiary").
Section 3.8 Absence of Conflicting Agreements or Required
Consents. The execution, delivery and performance by Seller and San Antonio 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 San Antonio; (ii) will not conflict with or result
in a violation of any provision of San Antonio's Certificate of Limited
Partnership or Partnership Agreement; (iii) will not conflict with, result in a
violation of, or constitute a default under any law, rule, ordinance,
regulation or any ruling, decree, determination, award, judgment, order or
injunction of any court or governmental instrumentality which is applicable to
Seller or San Antonio or by which Seller or San Antonio or San Antonio's
properties are subject or bound; (iv) will not conflict with, constitute
grounds for termination of, result in a breach of, constitute a default under,
require any notice under, or accelerate or modify, or permit any person to
accelerate or modify, any performance required by the terms of any agreement,
instrument, license or permit, to which San Antonio is a party or by which San
Antonio 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 San Antonio; and (v) except as contemplated by this
Agreement, will not create any Encumbrance or restriction upon the Partnership
Units or any of the assets or properties of San Antonio.
Section 3.9 Absence of Changes. Except as permitted or
contemplated by this Agreement, since March 31, 1997, San Antonio 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 San Antonio;
(b) paid, discharged or satisfied any material liability,
other than the payment, discharge or satisfaction of liabilities in the
ordinary course of business;
(c) written off as uncollectible any receivable, except
for write-offs in the ordinary course of business;
(d) except in the ordinary course of business and
consistent with past practice, cancelled or compromised any debts or waived or
permitted to lapse any claims or rights or sold, transferred or otherwise
disposed of any of its properties or assets;
(e) entered into any commitment or transaction not in the
ordinary course of business that is material to San Antonio, 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;
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(h) mortgaged, pledged, subjected or agreed to subject,
any of its assets, tangible or intangible, to any claim or Encumbrance, except
for liens for current personal property taxes not yet due and payable for
mechanics, landlords, materialmen, and other statutory liens, purchase money
security interests, sale-leaseback interests granted and all other Encumbrances
granted in similar transactions;
(i) sold, redeemed, acquired or otherwise transferred any
equity or other interest in itself;
(j) increased any salaries, wages or any employee
benefits for any employee of San Antonio, except in the ordinary course of
business and consistent with past practice;
(k) hired, committed to hire or terminated any employee
except in the ordinary course of business;
(l) declared, set aside or made any payments, dividends
or other distributions to any partner or any other holder of any partnership
interest in San Antonio (except as expressly contemplated herein); or
(m) agreed, whether in writing or otherwise, to take any
action described in this Section 3.9.
Section 3.10 No Undisclosed Liabilities. To the best knowledge of
Seller and San Antonio, San Antonio does not have any liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
asserted or unasserted except for liabilities or obligations reflected in the
Disclosure Schedules.
Section 3.11 Litigation and Claims. There are no claims,
lawsuits, actions, arbitrations, administrative or other proceedings,
governmental investigations or inquiries pending or, to the knowledge of Seller
and San Antonio, threatened against, or affecting San Antonio, any Partnership
Subsidiary, or, to the knowledge of Seller and San Antonio, any Seller or any
other licensed professional or other individual affiliated with San Antonio
affecting or that would reasonably be likely to affect the Partnership Units or
the operations, business condition (financial or otherwise), or results of
operations of San Antonio which (i) if successful, may, individually or in the
aggregate, have a Material Adverse Effect on San Antonio or (ii) could
adversely affect the ability of San Antonio or any Partnership Subsidiary to
effect the transactions contemplated hereby, and to the knowledge of Seller and
San Antonio there is no basis for any such action or any state of facts or
occurrence of any event which would reasonably be likely to give rise to the
foregoing. There are no unsatisfied judgments against Seller, San Antonio or
any Partnership Subsidiary or any licensed professional or other individual
affiliated with San Antonio or any Partnership Subsidiary relating to services
provided on behalf of San Antonio or any Partnership Subsidiary or any consent
decrees to which any of the foregoing is subject. Each of the matters, if any,
set forth in this Section 3.11 is fully covered by policies of insurance of San
Antonio or any Partnership Subsidiary as in effect on the date hereof.
Section 3.12 No Violation of Law. Neither San Antonio nor any
Partnership Subsidiary has been, nor shall be as of the Closing Date (by virtue
of any action, omission to act, contract to which it is a party or any
occurrence or state of facts whatsoever), in violation of any applicable local,
state or federal law, ordinance, regulation, order, injunction or decree, or
any other requirement of any governmental body, agency, authority or court
binding on it, or relating to its properties, assets or business or its
advertising, sales or pricing practices, except for violations which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on San Antonio.
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Section 3.13 Lease Agreements. The Disclosure Schedules contain a
true, accurate and complete list of all the lease agreements and license
agreements to which San Antonio or any Partnership Subsidiary is a party and
pursuant to which San Antonio or any Partnership Subsidiary leases (whether as
lessor or lessee) or licenses (whether as licensor or licensee) any real or
personal property related to the operation of its business and which requires
payments in excess of $12,000 per year (the "Lease Agreements"). San Antonio
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 San Antonio or any Partnership Subsidiary (as applicable)
or event of material default or event which with notice or lapse of time, or
both, would constitute a material default by San Antonio or any Partnership
Subsidiary (as applicable) and, individually or in the aggregate, may
reasonably result in a Material Adverse Effect on San Antonio, or, (ii) to the
knowledge of Seller and San Antonio, any existing material default by any other
party under any of the Lease Agreements or any event of material default or
event which with notice or lapse of time, or both, would constitute a material
default by any such party. To the knowledge of Seller and San Antonio, there
is no pending or threatened reassessment of any property covered by the Lease
Agreements. To the extent necessary to accomplish the intent of the Agreement,
San Antonio or any Partnership Subsidiary shall use reasonable good faith
efforts, and Seller shall use reasonable good faith efforts to cause San
Antonio, to obtain prior to the Closing Date the consent of each landlord or
lessor whose consent is required to the assignment of the Lease Agreements and
will use reasonable good faith efforts to deliver to APP in writing such
consents as are necessary to effect a valid and binding transfer or assignment
of San Antonio's or any Partnership Subsidiary's rights thereunder. San
Antonio has a good, clear, valid and enforceable leasehold interest under each
of the Lease Agreements. The Lease Agreements comply with the exceptions to
ownership interests and compensation arrangements set out in 42 U.S.C. Section
1395nn, 42 C.F.R. Section 1001.952, and any similar applicable state law safe
harbor or other exemption provisions.
Section 3.14 Real and Personal Property.
(a) Neither San Antonio nor each Partnership Subsidiary
owns any interest (other than the Lease Agreements) in real property.
(b) San Antonio and each Partnership Subsidiary (i) has
good title to all of its properties and assets (real, personal and mixed,
tangible and intangible) and any rights or interests therein which it purports
to own; and (ii) owns such rights, interests, assets and property free and
clear of all Encumbrances, title defects or objections (except for taxes not
yet due and payable). The personal property presently used in connection with
the operation of the business of San Antonio and each Partnership Subsidiary
constitutes the necessary personal property assets to continue operation of San
Antonio and each Partnership Subsidiary.
Section 3.15 Indebtedness for Borrowed Money. Except for trade
payables incurred in the ordinary course of business, San Antonio does not have
any direct or indirect indebtedness for borrowed money, including indebtedness
by way of lease-purchase arrangements or guarantees, and is not obligated in
any manner (actual or contingent) to assume or guarantee any indebtedness or
obligation of another Person.
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Section 3.16 Contracts and Commitments.
(a) The Disclosure Schedules contain a true, accurate and
complete list, and San Antonio has delivered to APP true and complete copies,
of each contract, agreement and other instrument requiring San Antonio to make
future payments of $10,000 in any fiscal year or $25,000 in the aggregate
(other than insurance contracts identified in Section 3.22 or Lease Agreements
identified in Section 3.13) to which San Antonio is a party or by which it or
any of its properties or assets are bound including, without limitation, (i)
all agreements between San Antonio, on the one hand, and any government entity,
provider, hospital, health maintenance organization, other managed care
organization or other third-party provider, on the other hand, then in effect
relating to the provision of medical, diagnostic imaging or consulting
services, treatments, patient referrals or other similar activities, (ii) all
indentures, mortgages, notes, loan or credit agreements and other agreements
and obligations relating to the borrowing of money or to the direct or indirect
guarantee or assumption of obligations of third parties requiring San Antonio
to make, or setting forth conditions under which San Antonio 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 San Antonio (or any provider employee of San Antonio) 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 San Antonio
in excess of $10,000 in any fiscal year or $25,000 in the aggregate and that
are not cancelable by providing notice of sixty (60) days or less. All such
contracts, agreements or other instruments are in full force and effect, there
has been no threatened cancellation thereof, there are no outstanding disputes
thereunder, each is with unrelated third parties and was entered into on an
arms-length basis in the ordinary course of business and, assuming the receipt
of the appropriate consents, all will continue to be binding in accordance with
their terms after consummation of the transaction contemplated herein; there
are no contracts, agreements or other instruments to which San Antonio 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 San Antonio, or which could inhibit or prevent San Antonio from
transferring to or vesting in APP good and sufficient title to the assets and
properties to be acquired by APP except where the failure to transfer would not
have a Material Adverse Effect on APP. In every instance where consent is
necessary, on or before the Closing Date San Antonio shall use reasonable good
faith efforts, and Seller shall use reasonable good faith efforts to cause San
Antonio, to obtain and deliver to APP in writing, effective as of the Closing
Date, such consents as are necessary to enable APP to enjoy all of the rights
now enjoyed by San Antonio 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 San Antonio has fully complied with
and is not in default under any provision of the particular contract or
agreement.
(b) (i) Neither San Antonio nor Seller has received
notice of any plan or intention of any other party to exercise any right to
cancel or terminate any contract, agreement or instrument, and to the knowledge
of San Antonio and Seller there are no facts that would justify the exercise of
such a right; and (ii) neither San Antonio nor Seller currently contemplates,
or has reason to believe any other Person currently contemplates, any amendment
or change to any such contract, agreement or instrument.
Section 3.17 Employee Matters. San Antonio 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 or other
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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 San Antonio and any of its present
or former employees, or any predecessors in interest.
Section 3.18 Labor Relations. Intentionally omitted.
Section 3.19 Employee Benefit Plans. Intentionally omitted.
Section 3.20 Environmental Matters.
(a) Neither San Antonio nor any Partnership Subsidiary
has, within the five (5) years preceding the date hereof, through the Closing
Date, received from any federal, state or local governmental body, agency,
authority or entity, or any other Person, any written notice, demand, citation,
summons, complaint or order or any notice of any penalty, lien or assessment,
and to the knowledge of Seller and San Antonio no investigation or review is
pending by any governmental entity, with respect to any (i) alleged violation
by San Antonio of any Environmental Law (as defined in subsection (e) below)
(ii) alleged failure by San Antonio 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 San Antonio.
(b) Neither San Antonio nor any Partnership Subsidiary
has used, transported, disposed of or arranged for the disposal of (as those
terms are defined in and construed under the Comprehensive Environmental
Response, Compensation and Liability Act) any Hazardous Substance that would be
reasonably likely to give rise to any Environmental Liabilities for San Antonio
under any applicable Environmental Law that had, or would reasonably be likely
to have, a Material Adverse Effect on San Antonio. Neither San Antonio nor any
Partnership Subsidiary has engaged in any activity or failed to undertake any
activity which action or failure to act has given, or would reasonably be
likely to give, rise to any Environmental Liabilities or enforcement action by
any federal, state or local regulatory agency or authority, or has resulted, or
would reasonably be likely to result, in any fine or penalty imposed pursuant
to any Environmental Law. The Disclosure Schedules disclose any known presence
of asbestos in or on San Antonio's or any Partnership Subsidiary's owned or
leased premises. To the knowledge of Seller and San Antonio, there is no
friable asbestos in or on San Antonio's or any Partnership Subsidiary's owned
or leased premises.
(c) To the knowledge of Seller and San Antonio, no soil
or water in or under any assets currently or formerly held for use or sale by
San Antonio or any Partnership Subsidiary is or has been contaminated by any
Hazardous Substance while such assets or premises were owned, leased, operated
or managed, directly or indirectly by San Antonio or any Partnership
Subsidiary, where such contamination had, or would be reasonably likely to
have, a Material Adverse Effect on San Antonio.
(d) There have been no environmental audits and other
similar reports which have been prepared by, for or, to the knowledge of Seller
and San Antonio, concerning San Antonio or any Partnership Subsidiary within
the five (5) years preceding the date hereof through the Closing Date with
respect to any real property now or previously owned or leased by San Antonio,
any Partnership Subsidiary or any of its predecessors, true and complete copies
of which have been provided to APP.
(e) For the purposes of this Section 3.20(e), the
following terms have the following meanings:
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"Environmental Laws" shall mean any federal, state or local
laws, ordinances, codes, regulations, rules, policies and orders
(including without limitation, Medical Waste Laws) that are intended
to assure the protection of the environment, or that classify,
regulate, call for the remediation of, require reporting with respect
to, or list or define air, water, groundwater, solid waste, hazardous,
toxic, or radioactive substances, materials, wastes, pollutants or
contaminants, or which are intended to assure the safety of employees,
workers or other persons, including the public in each case as in
effect on the date hereof.
"Environmental Liabilities" shall mean all liabilities of the
Company or any Company Subsidiary, whether contingent or fixed, which
(i) have arisen, or would reasonably be likely to arise, under
Environmental Laws and (ii) relate to actions occurring or conditions
existing on or prior to the date hereof or the Closing Date.
"Hazardous Substances" shall mean any toxic or hazardous
substances, material or waste, including Medical Waste, or any
pollutant or contaminant, or infectious or radioactive substance or
material, including without limitation, those substances, materials
and wastes defined in or regulated under any Environmental Laws.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any
Hazardous Substances.
Section 3.21 Filing Reports. All returns, reports, plans and
filings of any kind or nature necessary to be filed by San Antonio 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 San Antonio.
Section 3.22 Insurance Policies. The Disclosure Schedules list
and briefly describe San Antonio's policies of insurance to which San Antonio
or any Partnership Subsidiary is a party or under which San Antonio or any
Partnership Subsidiary, officer or director thereof is or has been covered at
any time during the last five (5) years preceding the date of this Agreement
relating to the business of San Antonio or any Partnership Subsidiary (the
"Insurance Policies"). All of the Insurance Policies are valid, outstanding
and enforceable policies, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies and all premiums with respect thereto which
are due and payable are currently paid. All Insurance Policies currently
maintained by San Antonio or any Partnership Subsidiary ("Current Policies")
taken together, (i) provide adequate insurance coverage for the assets,
properties and operations of San Antonio and its Affiliates for all risks
normally insured against by a Person carrying on a substantially similar
business or businesses as San Antonio and its Affiliates, (ii) are sufficient
for compliance with legal and contractual requirements to which San Antonio 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 San Antonio nor any Partnership Subsidiary nor
any officer or partner thereof has received any notice or other written
communication from any issuer of any Current Policy cancelling such policy,
materially increasing any deductibles or retained amounts thereunder, or
materially increasing the annual or other premiums payable thereunder and, to
the knowledge of Seller and San Antonio, 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 San Antonio nor any Partnership
Subsidiary has filed a written application for any
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professional liability insurance coverage which has been denied by an insurance
agency or carrier. The Disclosure Schedules also set forth a list of all
claims under any Insurance Policy in excess of $10,000 per occurrence filed by
San Antonio or any Partnership Subsidiary during the immediately preceding
three-year period.
Section 3.23 Accounts Receivable. The Disclosure Schedules set
forth a list and aging of all accounts receivable of San Antonio as of March
31, 1997, which list is complete, true and accurate in all material respects.
All such accounts receivable arose in the ordinary course of business and have
not been previously written off as bad debts and, are, to the extent still
uncollected, to the knowledge of Seller and San Antonio collectible in the
ordinary course of business, net of reserves for doubtful and uncollectible
accounts shown on the accounting records of San Antonio (which reserves are
adequate and calculated consistent with past practice).
Section 3.24 Accounts Payable; Suppliers.
(a) The Disclosure Schedules set forth a true and
complete (i) list of the accounts payable of San Antonio as of March 31, 1997,
and (ii) list of each individual indebtedness owned by San Antonio 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 San Antonio (including, without limitation all
providers of care to patients) which accounted for a dollar volume of purchases
paid for by San Antonio 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 San Antonio in excess of $25,000 for the fiscal
year to end [DECEMBER 31, 1997].
Section 3.25 Inventory. All items of inventory on hand on the
date of this Agreement consist, and all such items on hand on the Closing Date
will consist, net of all applicable reserves with respect thereto (calculated
consistent with past practice), of items of a quality and a quantity usable and
saleable in the ordinary course of San Antonio's business and conform to
generally accepted standards in the industry of which San Antonio is a part.
Purchase commitments of San Antonio for inventory are not materially in excess
of normal requirements, and none of such purchase commitments are at prices in
excess of prevailing market prices at the time of such purchase commitment.
Section 3.26 Licenses, Authorization and Provider Programs.
(a) San Antonio and each other licensed employee or
contractor of San Antonio (i) is the holder of all valid licenses, approvals,
orders, consents, permits, registrations, qualifications and other rights and
authorizations required by law, ordinance, regulation or ruling of any
governmental regulatory authority necessary to operate his/her/its business and
(ii) is eligible to participate in and to receive reimbursement under Titles
XVIII and XIX of the Social Security Act (the "Medicare and Medicaid Programs")
and any other programs funded in whole or in part by federal, state or local
entities for which San Antonio is eligible ("Governmental Programs"). Each of
San Antonio and Seller has a current provider number for such Governmental
Programs and with such private non-governmental programs (including without
limitation any private insurance program) under which San Antonio is presently
receiving payments directly or indirectly from any Payor for technical imaging
services provided by any licensed technician or contractor of San Antonio (such
non-governmental programs herein referred to as "Private Programs"). A true,
correct and complete list of such licenses, permits and other authorizations
(including, but not limited to verification of Medicare and Medicaid provider
numbers and participating physician contracts under 1842(h) of the Social
Security Act) and provider
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agreements is set forth in the Disclosure Schedules, true, complete and correct
copies of which have been provided to APP. No violation, default, order or
deficiency exists with respect to any of the items listed in the Disclosure
Schedules except for such violations, defaults, orders or deficiencies which
would not be reasonably likely to have a Material Adverse Effect on San
Antonio, and there is no action pending or to the knowledge of Seller and San
Antonio recommended by any state or federal agencies having jurisdiction over
the items listed in the Disclosure Schedules, either to revoke, withdraw or
suspend any material license or to terminate the participation of San Antonio
in any Governmental Program or Private Program, and no event has occurred
which, with or without notice or lapse of time, or both, would constitute
grounds for a violation, order or deficiency with respect to any of the items
listed in the Disclosure Schedules to revoke, withdraw or suspend any material
license to operate its business as is presently being conducted by it. To the
knowledge of Seller and San Antonio, there has been no decision not to renew
any existing agreement with any provider or Payor relating to San Antonio's
business as presently being conducted by it. San Antonio (i) has not had its
professional license, Drug Enforcement Agency number, Medicare/Medicaid
provider status or staff privileges at any hospital or diagnostic imaging
center suspended, relinquished, terminated or revoked (including orders that
have been entered by any such entities but stayed), (ii) has not been
reprimanded in writing, sentenced, or disciplined by any licensing board, state
agency, regulatory body or authority, hospital, Payor or specialty board
(including orders that have been entered by any such entities but stayed),
(iii) is not the subject of an initial or final determination by any federal or
state authority that could result in any demand or reimbursement under the
Medicare, Medicaid or Government Programs or any exclusion or which monetary
penalty under federal or state law or (iv) has had a final judgment or
settlement entered against it in connection with a malpractice or similar
action.
(b) San Antonio is not required, or for the 72-month
period prior to the Closing Date was not required, to file any cost reports or
other reports with any Governmental Program or Private Program.
Section 3.27 Inspections and Investigations. Neither the right of
San Antonio, nor the right of any licensed professional or other individual
affiliated with San Antonio to receive reimbursements pursuant to any
Governmental Program or Private Program has been terminated or otherwise
materially and adversely affected as a result of any investigation or action
whether by any federal or state governmental regulatory authority or other
third party. No licensed professional or other individual affiliated with the
business has, during the past three (3) years prior to the Closing Date, had
their professional license or staff privileges limited, suspended or revoked by
any governmental regulatory authority or agency, hospital, integrated delivery
system, trade association, professional review organization, accrediting
organization or certifying agency (including orders that have been entered by
any such entities but stayed). True, correct and complete copies of all
reports, correspondence, notices and other documents relating to any matter
described or referenced in this Section 3.27 have been provided to APP.
Section 3.28 Proprietary Rights and Information.
(a) Set forth in the Disclosure Schedules is a complete
and accurate list and summary description of the following: (i) all trademarks
(registered and unregistered), trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, currently owned in whole or part, or used by San Antonio or any
Partnership Subsidiary, (ii) all patents and applications therefor and
inventions and discoveries that may be patentable currently owned, in whole or
in part, or used by San Antonio or any Partnership Subsidiary, (iii) all
licenses, royalties, and assignments thereof to which San Antonio or any
Partnership Subsidiary are a party (iv) all copyrights (for published and
unpublished works) currently owned in whole or part, or used by San Antonio or
any
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Partnership Subsidiary and (v) other similar agreements relating to the
foregoing to which San Antonio or any Partnership Subsidiary is a party
(including expiration date if applicable) (collectively, the "Proprietary
Rights").
(b) The Disclosure Schedules contain a complete and
accurate list and summary description of all agreements relating to technology,
trade secrets, know-how or processes that San Antonio is licensed or authorized
to use by others (other than technology, know-how or processes generally
available to other health care providers) or which it licenses or authorizes
others to use, true, correct and complete copies of which have been provided to
APP. There are no outstanding and, to the knowledge of Seller and San Antonio,
any threatened disputes or disagreements with respect to any such agreement.
(c) San Antonio owns or has the legal right to use the
Proprietary Rights without conflicting with, infringing or violating the rights
of any other Person. No consent of any person will be required for the use
thereof by APP upon consummation of the transactions contemplated hereby and
the Proprietary Rights are freely transferable. To the knowledge of Seller and
San Antonio, no claim has been asserted by any person to the ownership of or
for infringement by San Antonio of any Proprietary Right of any other Person,
and neither San Antonio nor Seller is aware of any valid basis for any such
claim. To the best knowledge of Seller and San Antonio, no proceedings have
been threatened which challenge the Proprietary Rights of San Antonio. San
Antonio has the right to use, free and clear of any adverse claims or rights of
others, all trade secrets, customer lists and proprietary information required
for the performance and marketing of all medical services.
Section 3.29 Taxes.
(a) Filing of Tax Returns. San Antonio 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 San Antonio for the periods covered thereby.
(b) All Withholding Requirements Satisfied. All monies
required to be withheld by San Antonio and paid to governmental agencies for
all income, social security, unemployment insurance, sales, excise, use, and
other taxes have been collected or withheld and paid to the respective
governmental agencies.
(c) Safe Harbor Lease. None of the properties or assets
of San Antonio constitutes property that San Antonio, APP, or any Affiliate of
APP, will be required to treat as being owned by another person pursuant to the
"Safe Harbor Lease" provisions of Section 168(f)(8) of the Code prior to repeal
by the Tax Equity and Fiscal Responsibility Act of 1982.
(d) Tax Exempt Entity. None of the assets or properties
of San Antonio are subject to a lease to a "tax exempt entity" as such term is
defined in Section 168(h)(2) of the Code.
(e) Boycotts. San Antonio has not at any time
participated in or cooperated with any international boycott as defined in
Section 999 of the Code.
Section 3.30 Related Party Arrangements. The Disclosure Schedules
set forth a description of any interest held, directly or indirectly, by any
officer, partner or other Affiliate of San Antonio in
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any property, real or personal or mixed, tangible or intangible, used in or
pertaining to San Antonio's business and any arrangement or agreement with any
such person concerning the provision of goods or services or other matters
pertaining to San Antonio's business. There is no commitment to, and no income
that has been derived from, an Affiliate, and following the Closing San Antonio
shall not have any obligation of any kind or designation to any such Affiliate.
Section 3.31 Banking Relations. Set forth in the Disclosure
Schedules is a complete and accurate list of all borrowing and investing
arrangements that San Antonio has with any bank or other financial institution,
indicating with respect to each relationship the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the Person or Persons authorized in respect thereof.
Section 3.32 Fraud and Abuse and Self Referral. Neither San
Antonio nor any Partnership Subsidiary has engaged and, to the knowledge of
Seller and San Antonio, neither San Antonio's officers and partners nor other
Persons and entities providing professional services for or on behalf of San
Antonio have engaged, in any activities which are prohibited under 42 U.S.C.
Section Section 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. Section Section 24, 287, 371, 664, 669,
1001, 1027, 1035, 1341, 1343, 1347, 1518, 1954, 1956(c)(7)(F) and 3486.
Section 3.33 Restrictions on Business Activities. There is no
material agreement, judgment, injunction, order or decree binding upon San
Antonio, any Partnership Subsidiary or officer, partner or key employee of San
Antonio or Partnership Subsidiary, which has or reasonably could be expected to
have the effect of prohibiting or materially impairing any acquisition of
property by San Antonio or any Partnership Subsidiary or the conduct of
business by San Antonio or any Partnership Subsidiary.
Section 3.34 Agreements in Full Force and Effect. All contracts,
agreements, plans, leases, policies and licenses referred to, or required to be
referred to, in the Disclosure Schedules delivered hereunder are valid and
binding, and are in full force and effect and are enforceable in accordance
with their terms, except to the extent that the validity or enforceability
thereof may be limited by bankruptcy or other laws affecting the enforcement of
creditors' rights generally, or by general equity principles, or by public
policy. There is no pending or, to the knowledge of Seller and San Antonio,
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 San Antonio or any other party
thereto.
Section 3.35 Statements True and Correct. No representation or
warranty made herein by San Antonio or Seller, nor any statement, certificate,
information, exhibit or instrument to be furnished by San Antonio or Seller to
APP or any of its representatives pursuant to this Agreement, contains or will
contain as of the Closing Date any untrue statement of material fact or omits
or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading.
Section 3.36 Schedules. The Disclosure Schedules required by
Article III hereof and attached hereto are true, correct and complete in all
material respects as of the date of this Agreement.
Section 3.37 Finders' Fees. No investment banker, broker, finder
or other intermediary has been retained by or is authorized to act on behalf of
Seller or San Antonio who is entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement or referred to
herein.
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ARTICLE IV
Representations and Warranties of APP
As inducement to each Seller and San Antonio to enter into this
Agreement, APP represents and warrants to each Seller and San Antonio both as
of the date hereof and as of the Closing Date as set forth below, subject to
those exceptions set forth in the Disclosure Schedules attached hereto and
incorporated herein by this reference, specifically identifying the relevant
subparagraphs hereof, which exceptions shall be deemed to be representations
and warranties as if made hereunder.
Section 4.1 Organization and Good Standing; Qualification. APP
is a corporation duly organized, validly existing and in good standing under
the laws of the state of Delaware, with all requisite corporate power and
authority to own, operate and lease its assets and properties and to carry on
its business as currently conducted. APP is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except where such failure to be so
qualified or in good standing would not have a Material Adverse Effect on APP.
Copies of the certificate of incorporation and all amendments thereto of APP
and the bylaws of APP, as amended, and copies of the corporate minutes of APP
regarding the transactions contemplated hereby, all of which have been or will
be made available to Sellers and San Antonio for review, are true, correct and
complete as in effect on the date of this Agreement and accurately reflect all
material proceedings of the stockholders and directors of APP (and all
committees thereof) regarding the transactions contemplated hereby. The stock
record books of APP, which have been or will be made available to Sellers and
San Antonio for review, contain true, complete and accurate records of the
stock ownership of APP and the transfer of the shares of its capital stock.
Section 4.2 Authorization and Validity. APP has all requisite
corporate power to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
APP of this Agreement, the agreements provided for herein and the Other
Agreements, and the consummation by APP of the transactions contemplated hereby
and thereby are within APP's corporate powers and have been duly authorized by
all necessary action on the part of APP's Board of Directors. This Agreement
and the Other Agreements have been duly executed by APP. This Agreement and
all other agreements and obligations entered into and undertaken in connection
with the transactions contemplated hereby to which APP is a party constitute,
or upon execution will constitute, valid and binding agreements of APP,
enforceable against it in accordance with their respective terms, except as may
be limited by bankruptcy or other laws affecting creditors' rights generally,
or by general equity principles, or by public policy.
Section 4.3 Governmental Authorization. Other than consents,
filings or notifications required to be made or obtained solely by San Antonio,
the execution, delivery and performance by APP of this Agreement and the
agreements provided for herein, and the consummation of the transactions
contemplated hereby and thereby by APP requires no action by or in respect of,
or filing with, any governmental body, agency, official or authority.
Section 4.4 Capitalization. The authorized capital stock of APP
consists of 20,000,000 shares of APP Common Stock, of which 2,000,000 shares
are issued and outstanding and 10,000,000 shares of APP Preferred Stock, none
of which are outstanding. Each outstanding share of APP Common Stock has been
legally and validly issued and is fully paid and nonassessable, and was issued
pursuant to a valid exemption from registration under (i) the Securities Act,
and (ii) all applicable state securities laws. No shares of capital stock are
owned by APP in treasury. No shares of capital stock of APP have been
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issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any stockholders of APP. APP has no bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable for securities having the right to
vote) with the stockholders of APP on any matter. There exist no options,
warrants, subscriptions, calls, commitments or other rights to purchase, or
securities convertible into or exchangeable for, any of the authorized or
outstanding securities of APP and no option, warrant, subscription, call, or
commitment or commission right of any kind exists which obligates APP to issue
any of its authorized but unissued capital stock. APP has no obligation
(contingent or otherwise) to purchase, redeem or otherwise acquire any of its
equity securities or any interests therein or to pay any dividend or make any
distribution in respect thereof.
Section 4.5 Subsidiaries and Investments. APP does not own,
directly or indirectly, any capital stock or other equity, ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity (the "APP Subsidiaries").
Section 4.6 Absence of Conflicting Agreements or Required
Consents. The execution, delivery and performance of this Agreement by APP and
any other documents contemplated hereby (with or without the giving of notice,
the lapse of time, or both): (i) does not require the consent of any
governmental or regulatory body or authority or any other third party except
for such consents, for which the failure to obtain would not result in a
Material Adverse Effect on APP; (ii) will not conflict with any provision of
APP's Certificate of Incorporation or Bylaws; (iii) will not conflict with,
result in a violation of, or constitute a default under any law, ordinance,
regulation, ruling, judgment, order or injunction of any court or governmental
instrumentality to which APP is a party or by which APP or its properties are
subject or bound; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, require any
notice under, or accelerate or permit the acceleration of any performance
required by the terms of any agreement, instrument, license or permit, material
to this transaction, to which APP is a party or by which APP or any of its
properties are bound except for such conflict, termination, breach or default,
the occurrence of which would not result in a Material Adverse Effect on APP;
and (v) will not create any Encumbrance or restriction upon APP Common Stock or
any of the assets or properties of APP. The financial statements of APP
contained in the Registration Statements (a) have been prepared in accordance
with generally accepted accounting principles consistently applied (except as
may be indicated therein or in the notes thereto), (b) present fairly the
financial position of APP and APP Subsidiaries as of the dates indicated and
present fairly the results of APP's and APP Subsidiaries' operations for the
periods then ended, and (c) are in accordance with the books and records of APP
and APP Subsidiaries, which have been properly maintained and are complete and
correct in all material respects.
Section 4.7 Absence of Changes. Except as permitted or
contemplated by this Agreement, since March 31, 1997, there has not been (i)
any change in the working capital, condition (financial or otherwise), assets,
liabilities, reserves, business or operations of APP that has had or is
reasonably likely to have a Material Adverse Effect on APP; or (ii) any
declaration, setting aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to the APP Common Stock.
Section 4.8 No Undisclosed Liabilities. Except as set forth in
the Form S-4 or reflected or reserved for in the financial statements included
therein, APP does not have any material liability or obligation accrued,
contingent or otherwise, that is reasonably likely to have a Material Adverse
Effect on APP.
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Section 4.9 Litigation and Claims. There are no claims,
lawsuits, actions, arbitrations, administrative or other proceedings,
governmental investigations or inquiries pending or, to the knowledge of APP,
threatened against, or affecting APP. There are no unsatisfied judgments
against APP or any consent decrees to which APP is subject. Each of the
matters, if any, set forth in the Disclosure Schedules are fully covered by
policies of insurance of APP as in effect on that date.
Section 4.10 No Violation of Law. APP has not been, nor shall be
as of the Closing Date (by virtue of any action, omission to act, contract to
which it is a party or any occurrence or state of facts whatsoever), in
violation of any applicable local, state or federal law, ordinance, regulation,
order, injunction or decree, or any other requirement of any governmental body,
agency or authority or court binding on it, or relating to its property or
business or its advertising, sales or pricing practices, except for violations
which are not reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on APP.
Section 4.11 Employee Matters. Except as set forth in the Form
S-4, APP does not have any material arrangements, agreements or plans with any
person with respect to the employment by APP of such person or whereby such
person is to serve as an officer or director of APP.
Section 4.12 Taxes.
(a) Filing of Tax Returns. APP has duly and timely filed
(in accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all Tax
Returns and reports required to be filed with the United States or any state or
any political subdivision thereof or any foreign jurisdiction. All such Tax
Returns or reports are complete and accurate in all material respects and
properly reflect the taxes of APP for the periods covered thereby.
(b) Payment of Taxes. Except for such items as APP may
be disputing in good faith by proceedings in compliance with applicable law,
which are described in the Disclosure Schedules, (i) APP has paid all taxes,
penalties, assessments and interest that have become due with respect to any
Tax Returns that it has filed and has properly accrued on its books and records
for all of the same that have not yet become due and (ii) APP is not delinquent
in the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments
or Audits. APP has not received any notice that any tax deficiency or
delinquency has been asserted against APP. There is no unpaid assessment,
proposal for additional taxes, deficiency or delinquency in the payment of any
of the taxes of APP that could be asserted by any taxing authority. There is
no taxing authority audit of APP pending, or to the knowledge of APP,
threatened, and the results of any completed audits are properly reflected in
the financial statements of APP. APP has not violated any federal, state,
local or foreign tax law.
(d) No Extension of Limitation Period. APP has not
granted an extension to any taxing authority of the limitation period during
which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies
required to be withheld by APP and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and paid to the respective governmental
agencies.
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(f) Foreign Person. Neither APP nor any holders of APP
Common Stock is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code.
(g) Tax Exempt Entity. None of the assets of APP are
subject to a lease to a "tax exempt entity" as such term is defined in Section
168(h)(2) of the Code.
(h) Collapsible Corporation. APP has not at any time
consented, and the holders of APP Common Stock will not permit APP to elect, to
have the provisions of Section 341(f)(2) of the Code apply to it.
(i) Boycotts. APP has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the
Code.
(j) Parachute Payments. No payment required or
contemplated to be made by APP will be characterized as an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.
(k) S Corporation. APP has not made an election to be
taxed as an "S" corporation under Section 1362(a) of the Code.
(l) Personal Holding Companies. APP is not or has not
been a personal holding company within the meaning of Section 542 of the Code.
Section 4.13 Related Party Arrangements. The Disclosure Schedules
or Form S-4 sets forth a description of any interest held, directly or
indirectly, by any officer, director or other Affiliate of APP in any property,
real or personal or mixed, tangible or intangible, used in or pertaining to
APP's business and any arrangement or agreement with any such person concerning
the provision of goods or services or other matters pertaining to APP's
business.
Section 4.14 Statements True and Correct. No representation or
warranty made herein by APP, nor any statement, certificate, information,
exhibit or instrument to be furnished by APP to a Seller or San Antonio
pursuant to this Agreement, contains or will contain as of the Closing Date any
untrue statement of material fact or omits or will omit to state a material
fact necessary to make the statements contained herein and therein not
misleading.
Section 4.15 Schedules. All Disclosure Schedules required by
Article IV hereof and attached hereto are true, correct and complete in all
material respects as of the date of this Agreement.
Section 4.16 Finder's Fees. No investment banker, broker, finder
or other intermediary has been retained by or is authorized to act on behalf of
APP who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or referred to herein.
ARTICLE V
Covenants of Seller and San Antonio
Each of Seller and San Antonio makes the covenants and agreements as
set forth in this Article V, which shall apply with respect to the period from
the date hereof to the Closing Date and, to the extent contemplated herein,
thereafter and agree that:
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Section 5.1 Required Conduct of Seller and San Antonio. From the
date hereof until the Closing Date, San Antonio shall, and Seller shall use
his/her/its best efforts to cause San Antonio to, in all material respects,
conduct the business of San Antonio in the ordinary and usual course consistent
with past practices and shall use reasonable efforts to:
(a) preserve intact San Antonio's business and its
relationships with referral sources, customers, suppliers, patients, employees
and others having business relations with it;
(b) maintain and keep San Antonio's properties and assets
in good repair and condition consistent with past practice as is material to
the conduct of the business of San Antonio;
(c) continuously maintain insurance coverage
substantially equivalent to the insurance coverage in existence on the date
hereof.
Section 5.2 Prohibited Conduct of Seller and San Antonio.
Without the written consent of APP, San Antonio shall not, and Seller shall use
his/her/its best efforts to cause San Antonio not to:
(a) amend San Antonio's Certificate of Limited
Partnership or Partnership Agreement or other charter documents;
(b) issue, sell or authorize for issuance or sale, any
partnership interests of San Antonio (except for the General Partner
Acquisition) or any subscriptions, options, warrants, rights or convertible
securities, or enter into any agreements or commitments of any character
obligating it to issue or sell any such interests;
(c) redeem, purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock or any option, warrant or other
right to purchase or acquire any such shares;
(d) declare or pay any dividend or other distribution
(whether in cash, stock or other property) with respect to its partnership
interest (except as expressly contemplated herein);
(e) voluntarily sell, transfer, surrender, abandon or
dispose of any of San Antonio's assets or property rights (tangible or
intangible) other than the sale of inventory, if any, in the ordinary course of
business consistent with past practices;
(f) grant or make any mortgage or pledge or subject San
Antonio or any of San Antonio's properties or assets to any lien, charge or
encumbrance of any kind, except liens for taxes not currently due and except
for liens which arise by operation of law;
(g) voluntarily incur or assume any liability or
indebtedness (contingent or otherwise), except in the ordinary course of
business or which is reasonably necessary for the conduct of San Antonio's
business;
(h) make or commit to make any capital expenditures which
are not reasonably necessary for the conduct of San Antonio's business;
(i) grant any increase in the compensation payable or to
become payable to partners, officers, consultants or employees other than merit
increases to employees of San Antonio who are not partners or officers of San
Antonio, except in the ordinary course of business and consistent with past
practices;
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(j) change in any manner any accounting principles or
methods other than changes which are consistent with generally accepted
accounting principles;
(k) enter into any material commitment or transaction
other than in the ordinary course of business;
(l) take any action which could reasonably be expected to
have a Material Adverse Effect on San Antonio;
(m) apply any of its assets to the direct or indirect
payment, discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of any Affiliate of San Antonio, other than in
the ordinary course and consistent with past practices;
(n) agree, whether in writing or otherwise, to do any of
the foregoing; and
(o) take any action to in any way amend, revise or
otherwise affect San Antonio's prior approval and effectiveness of this
Agreement or any of the agreements attached as exhibits hereto, other than as
required to discharge their fiduciary duties.
Section 5.3 Title to Assets; Indebtedness. As of the Closing
Date, San Antonio shall (i) except for sales of assets held as inventory, if
any, in the ordinary course of business prior to the Closing Date and except as
otherwise specifically described in the Schedules to this Agreement, have good
and valid title to all of its assets free and clear of all Encumbrances of any
nature whatsoever, except for current year ad valorem taxes and liens which
arise by operation of law, and (ii) have no direct or indirect indebtedness
except for indebtedness disclosed in the Disclosure Schedules hereto or for
normal and recurring accrued obligations of San Antonio arising in connection
with its business operations in the ordinary course of business and which arise
from the purchase of merchandise, supplies, inventory and services used in
connection with the provision of services.
Section 5.4 Access. At all times prior to the Closing Date,
APP's employees, attorneys, accountants, agents and other authorized and
designated representatives will be allowed full access upon reasonable prior
notice and during regular business hours (and at such other times as the
parties may reasonably agree) to the properties, books and records of San
Antonio, including, without limitation, deeds, title documents, leases, patient
lists, insurance policies, minute books, Partnership Unit registers, accounts,
tax returns, financial statements and all other data that, in the reasonable
opinion of APP, are required for APP to make such investigation as it may
desire of the properties and business of San Antonio. 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 San Antonio or Seller of
the Exchange to the employees of San Antonio which shall occur no later than
three (3) days subsequent to execution hereof by San Antonio), accountants,
counsel and agents of San Antonio in connection with such investigation of the
properties and business of San Antonio. No investigation by APP shall diminish
or otherwise affect any of the representations, warranties, covenants or
agreements of San Antonio under this Agreement. Any access or investigation
referred to in this Section 5.4 shall be conducted in such a manner as to
minimize the disruption to San Antonio's ongoing business operations.
Section 5.5 Acquisition Proposals. Except for the General
Partner Acquisition, Seller shall not, and shall use his/her/its best efforts
to cause San Antonio not to, and San Antonio shall not, and shall cause each of
its partners, officers, employees or agents not to, directly or indirectly:
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(a) solicit, initiate, encourage or participate in any
negotiations or discussions with respect to any offer or proposal to acquire
all or a substantial portion of the business, properties or partnership
interests of San Antonio, 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 San Antonio, 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 San Antonio. If San Antonio receives any
offer or proposal after the date hereof, written or otherwise, of the type
referred to above, San Antonio shall promptly inform APP of such offer or
proposal, decline such offer and furnish APP with a copy thereof if such offer
or proposal is in writing.
Section 5.6 Compliance With Obligations. Prior to the Closing
Date, San Antonio shall, and Seller shall use his/her/its best efforts to cause
San Antonio to, comply in all material respects with (i) all applicable
federal, state, local and foreign laws, rules and regulations; (ii) all
material agreements and obligations, including its Partnership Agreement, by
which it or its properties or its assets (real, personal or mixed, tangible or
intangible) may be bound; and (iii) all decrees, orders, writs, injunctions,
judgments, statutes, rules and regulations applicable to San Antonio, and its
respective properties or assets.
Section 5.7 Notice of Certain Events. Each of Seller and San
Antonio shall, and Seller shall use his/her/its best efforts to cause San
Antonio to, promptly notify APP of:
(a) any notice or other communication from any Person or
entity alleging that the consent of such Person or entity is or may be required
in connection with the transactions contemplated by this Agreement;
(b) any employment of any new non-hourly employee by San
Antonio 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 San Antonio;
(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 San Antonio 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 San
Antonio, 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 San Antonio and, if requested by APP, will exert its reasonable
best efforts to restore the relationship.
Section 5.8 Partners' Consent. Seller hereby consents to this
Agreement and the transactions contemplated hereby, including, without
limitation, the Exchange, on the terms and conditions set forth herein and in
the agreements and documents contemplated hereby, and hereby waives all other
rights of first offer, rights of first refusal and similar rights that Seller
may have with respect to a transfer of Partnership Units by him/her/it or any
other Seller.
Section 5.9 Obligations of Seller and San Antonio. Subject to
Section 5.8 hereof, each of Seller and San Antonio shall, and Seller shall use
his/her/its best efforts to cause San Antonio to, perform its obligations under
this Agreement and all related agreements, and each of Seller and San Antonio
shall, and Seller shall use his/her/its best efforts to cause San Antonio to,
consummate the transactions contemplated hereby and thereby on the terms and
conditions set forth in this Agreement and such agreements.
Section 5.10 Intentionally omitted.
Section 5.11 Accounting and Tax Matters. San Antonio will not,
and Seller shall use his/her/its best efforts to cause San Antonio not to,
change in any material respect the accounting methods or practices followed by
San Antonio (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. San Antonio will
not, and Seller shall use his/her/its best efforts to cause San Antonio not to,
make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. San Antonio will, and Seller shall use his/her/its best
efforts to cause San Antonio to, duly, accurately and timely (without regard to
any extensions of time) file all returns, information statements and other
documents relating to taxes of San Antonio required to be filed by it, and San
Antonio shall, and Seller shall use his/her/its best efforts to cause San
Antonio to, pay all taxes required to be paid by San Antonio, on or before the
Closing Date.
Section 5.12 Lock-Up Provisions. Seller irrevocably agrees that
he/she/it will not, directly or indirectly, sell, offer, contract for sale,
make any short sale, pledge or otherwise transfer or dispose of any of the APP
Common Stock without the prior written consent of APP (which consent may be
unreasonably withheld in APP's absolute and sole discretion) during the
two-year period commencing on the Effective Date. Notwithstanding the
preceding, the restrictions contained in the prior sentence shall no longer
apply (i) as to twenty-five percent (25%) of the Shares of APP Common Stock
received by a Seller pursuant to the Exchange following expiration of a
one-year period following the Effective Date, (ii) as to an additional
twenty-five percent (25%) of the Shares of APP Common Stock received by a
Seller pursuant to the Exchange following expiration of an eighteen-month
period following the Effective Date, and (iii) as to the remaining fifty
percent (50%) of the Shares of APP Common Stock received by Seller pursuant to
the Exchange following expiration of a twenty-four-month period following the
Effective Date. Seller understands and acknowledges that the restrictions
contained in this Section 5.12 (the "Lock-Up Provisions") are irrevocable and
shall be binding upon Seller's heirs, legal representatives, successors and
assigns.
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ARTICLE VI
Covenants of APP
APP agrees that between the date hereof and the Closing:
Section 6.1 Consummation of Agreement. APP will take all action
reasonably necessary to cause the consummation of the transactions contemplated
hereby in accordance with their terms and conditions and take all corporate and
other action necessary to approve the Exchange; provided, however, that this
covenant shall not require APP to make any expenditures that are not expressly
set forth in this Agreement or otherwise contemplated herein.
Section 6.2 Access. APP shall, at reasonable times during normal
business hours and on reasonable notice, permit San Antonio and its authorized
representatives reasonable access to, and make available for inspection, all of
the assets and business of APP, including its executive officers, and permit
San Antonio and its authorized representatives to inspect and, at San Antonio's
sole expense, make copies of all documents, records and information with
respect to the affairs of APP as San Antonio and its representatives may
reasonably request, all for the sole purpose of permitting San Antonio to
become familiar with the business and assets and liabilities of APP. No
investigation by San Antonio or Seller shall diminish or otherwise affect any
of the representations, warranties, covenants or agreements of APP under this
Agreement.
Section 6.3 Notification of Certain Matters. APP shall promptly
inform San Antonio in writing of (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by APP subsequent to the date of this
Agreement and prior to the Closing Date under any contract, agreement or
investment material to APP's condition (financial or otherwise), operations,
assets, liabilities or business and to which it is subject; (b) any material
adverse change in APP's condition (financial or otherwise), operations, assets,
liabilities or business or (c) defaults or disputes regarding Other Agreements.
ARTICLE VII
Covenants of APP, Seller and San Antonio
APP, Seller and San Antonio agree as follows:
Section 7.1 Filings; Other Action.
(a) San Antonio shall cooperate with APP to promptly prepare and
file with the SEC the Registration Statements on Form S-1 and Form S-4 (or
other appropriate Forms) to be filed by APP in connection with its Initial
Public Offering and offering of the shares of APP Common Stock to the Target
Interest Holders pursuant to the transactions contemplated by this Agreement
and the Other Agreements (including the prospectus constituting parts thereof,
the "Registration Statements"). APP shall obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. Seller and San Antonio shall
cooperate with APP in the preparation of the Registration Statements and shall
furnish all information concerning San Antonio as may be reasonably requested
in connection with any such action in a timely manner.
(b) Seller, San Antonio and APP and each separately represent and
warrant that (i) in the case of Seller and San Antonio, none of the written
information or documents supplied or to be supplied by
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Seller and San Antonio specifically for inclusion in the Registration
Statements, by exhibit or otherwise and (ii) in the case of APP, will, at the
time the Registration Statements and each amendment and supplement thereto, if
any, becomes effective under the Securities Act, none of them contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading. Seller and
San Antonio shall be entitled to review the Registration Statements and each of
the amendments thereto, if any, prior to the time each becomes effective under
the Securities Act. Seller and San Antonio shall have no responsibility for
information contained in the Registration Statements except for information
provided by Seller or San Antonio specifically for inclusion therein. Seller's
and San Antonio's review of the Registration Statements shall not diminish or
otherwise affect the representations, covenants and warranties of APP contained
in this Agreement.
(c) Seller and San Antonio shall, upon request, furnish APP with
all information concerning San Antonio, its subsidiaries, partners and
officers, and such other matters as may be reasonably requested by APP in
connection with the preparation of the Registration Statements and each of the
amendments or supplements thereto, or any other statement, filing, notice or
application made by or on behalf of each such party or any of its subsidiaries
to any governmental entity in connection with the transactions contemplated by
this Agreement.
Section 7.2 Amendments of Schedules. Each party hereto agrees
that, with respect to the representations and warranties of such party
contained in this Agreement, such party shall have the continuing obligation
until the Closing to supplement or amend promptly the Schedules with respect to
any matter that would have been or would be required to be set forth or
described in the Schedules in order to not materially breach any
representation, warranty or covenant of such party contained herein; provided
that no amendment or supplement to a Schedule that constitutes or reflects a
Material Adverse Effect on San Antonio may be made unless APP consents to such
amendment or supplement, and no amendment or supplement to a Schedule that
constitutes or reflects a Material Adverse Effect on APP may be made unless
Sellers and San Antonio consent to such amendment or supplement. For purposes
of this Agreement, including without limitation for purposes of determining
whether the conditions set forth in Sections 8.1 and 9.1 have been fulfilled,
the Disclosure Schedules hereto shall be deemed to be the Disclosure Schedules
as amended or supplemented pursuant to this Section 7.2. In the event that
Sellers or San Antonio seek to amend or supplement a Disclosure Schedule
pursuant to this Section 7.2 and APP does not consent to such amendment or
supplement, or APP seeks to amend or supplement a Disclosure Schedule pursuant
to this Section 7.2, and Seller and San Antonio do not consent, this Agreement
shall be deemed terminated by mutual consent as set forth in Section 13.1(a)
hereof.
Section 7.3 Actions Contrary to Stated Intent. No party hereto
will knowingly, either before or after the Closing Date, take any action that
would prevent the Exchange from qualifying as a tax-free exchange within the
meaning of Section 351 of the Code.
Section 7.4 Public Announcements. The parties hereto will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law, will not issue any
such press release or make any such public statement prior to such
consultation, although the foregoing shall not apply to any disclosure by APP
in any filing with the DOJ, FTC or SEC.
Section 7.5 Expenses. Each party to this Agreement shall be
solely responsible for their own fees and expenses with respect to the
transactions contemplated herein including, without limitation, the fees
charged by attorneys, accountants and financial advisors retained by such
parties. The fees and
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expenses incurred by Seller and San Antonio shall be paid by Seller in full
immediately prior to the Closing.
Section 7.6 Registration Statements. APP shall prepare and file
the Registration Statements with the SEC, and shall use its reasonable good
faith efforts to cause the Registration Statements to become effective under
the Securities Act and take any action required to be taken under the
applicable state "Blue Sky" or other securities laws in connection with the
issuance of the shares of APP Common Stock upon consummation of the
transactions contemplated hereby.
ARTICLE VIII
Conditions Precedent of APP
Except as may be waived in writing by APP, the obligations of APP
hereunder are subject to the fulfillment at or prior to the Closing Date of
each of the following conditions:
Section 8.1 Representations and Warranties. The representations
and warranties of the Sellers and San Antonio contained herein shall have been
true and correct in all material respects when initially made and shall be true
and correct in all material respects as of the Closing Date.
Section 8.2 Covenants. Each Seller and San Antonio shall have
performed and complied in all material respects with all covenants required by
this Agreement to be performed and complied with by each Seller and San
Antonio, respectively, prior to the Closing Date.
Section 8.3 Legal Opinion. Counsel to Sellers and San Antonio
shall have delivered to APP their opinion, dated as of the Closing Date, in
form and substance substantially in the form set forth in Exhibit C.
Section 8.4 Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened orally or in
writing, asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
Section 8.5 No Material Adverse Effect. No Material Adverse
Effect on San Antonio shall have occurred since March 31, 1997, whether or not
such change shall have been caused by the deliberate act or omission of any
Seller or San Antonio.
Section 8.6 Government Approvals and Required Consents. Seller,
San Antonio and APP shall have obtained all licenses, permits and all necessary
government and other third-party approvals and consents required under any law,
statements, rule, regulation or ordinance to consummate the transactions
contemplated by this Agreement.
Section 8.7 Securities Approvals. The Registration Statements
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statements shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC. At or prior to the Closing Date, APP shall have
received all state securities and "Blue Sky" permits necessary to consummate
the transactions contemplated hereby. The APP Common Stock shall have been
approved for listing on the Nasdaq National Market, subject only to official
notification of issuance.
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Section 8.8 Closing Deliveries. APP shall have received all
Schedules, documents, assignments and agreements, duly executed and delivered
in form reasonably satisfactory to APP, referred to in Section 10.1.
Section 8.9 Closing of Initial Public Offering. The Initial
Public Offering shall have closed.
Section 8.10 Closing of Related Acquisitions. Each of the Related
Acquisitions shall have closed.
Section 8.11 Closing of General Partner Acquisition. The General
Partner Acquisition shall have closed.
Section 8.12 Execution by Each Seller and San Antonio. Each
Seller and San Antonio shall have executed this Agreement and into respective
Partnership Units shall have been transferred to APP.
ARTICLE IX
Conditions Precedent of Seller and San Antonio
Except as may be waived in writing by Seller and San Antonio, the
obligations of Seller and San Antonio hereunder are subject to fulfillment at
or prior to the Closing Date of each of the following conditions:
Section 9.1 Representations and Warranties. The representations
and warranties of APP contained herein shall be true and correct in all
material respects when initially made and shall be true and correct in all
material respects as of the Closing Date.
Section 9.2 Covenants. APP shall have performed and complied in
all material respects with all covenants and conditions required by this
Agreement to be performed and complied with by it prior to the Closing Date.
Section 9.3 Legal Opinions. Counsel to APP shall have delivered
to Seller and San Antonio their opinion, dated as of the Closing Date, in form
and substance substantially in the form set forth in Exhibit D.
Section 9.4 Proceedings. No action, proceeding or order by any
court or governmental body or agency shall have been threatened in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
Section 9.5 Government Approvals and Required Consents. Sellers,
San Antonio and APP shall have obtained all licenses, permits and all necessary
government and other third-party approvals and consents (including consents of
Sellers required under applicable state law or the Partnership Agreement)
required under any law, contracts or any statute, rule, regulation or
ordinances to consummate the transactions contemplated by this Agreement.
Section 9.6 "Blue Sky" Approvals; Nasdaq Listing. The
Registration Statements shall have become effective under the Securities Act
and no stop order suspending the effectiveness of the Registration Statements
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC. At or prior to the Closing Date, APP shall
have received all state securities and "Blue Sky" permits necessary to
consummate the transactions contemplated hereby. At or
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prior to the Closing Date, the APP Common Stock shall have been approved for
listing on the Nasdaq National Market, subject only to official notification of
issuance.
Section 9.7 Closing of Initial Public Offering. The Initial
Public Offering shall have closed.
Section 9.8 Closing Deliveries. Seller and San Antonio shall
have received all Schedules, documents, assignments and agreements, duly
executed and delivered in form reasonably satisfactory to Sellers and San
Antonio referred to in Section 10.2.
Section 9.9 No Material Adverse Effect. No Material Adverse
Effect on APP shall have occurred since [__________], 1997, whether or not such
change shall have been caused by the deliberate act or omission of APP.
ARTICLE X
Closing Deliveries
Section 10.1 Deliveries of Seller and San Antonio. At or prior to
the Closing Date, Seller and San Antonio shall deliver to APP the following,
all of which shall be in a form reasonably satisfactory to APP:
(a) a ▇▇▇▇ of sale representing the Partnership Units
held by each Seller which certificates together shall represent all of the
issued and outstanding Partnership Units of San Antonio;
(b) a copy of resolutions of the partners of San Antonio
or of Seller, if applicable, authorizing the execution, delivery and
performance of this Agreement and all related documents and agreements and
consummation of the transactions contemplated hereby, each certified by an
officer as being true and correct copies of the originals thereof subject to no
modifications or amendments;
(c) a certificate of each of Seller and an officer of San
Antonio dated the Closing Date, as to the truth and correctness of the
representations and warranties of Seller and San Antonio, respectively,
contained herein on and as of the Closing Date;
(d) a certificate of each of Seller and an officer of San
Antonio dated the Closing Date, (i) as to the performance of and compliance in
all material respects by San Antonio and Seller, respectively, with all
covenants contained herein on and as of the Closing Date and (ii) certifying
that all conditions precedent required by Seller and San Antonio, respectively,
to be satisfied shall have been satisfied;
(e) a certificate of an officer of San Antonio certifying
as to the incumbency and as to the signatures of each of the officers of San
Antonio who have executed documents delivered at the Closing on behalf of San
Antonio;
(f) certificates, dated within ten (10) days prior to
the Closing Date, of the Secretary of State of Texas for San Antonio
establishing that San Antonio is in existence and otherwise is in good standing
to transact business in the state of Texas;
(g) certificates, dated within ten (10) days prior to the
Closing Date, of the Secretaries of State of the states in which San Antonio is
qualified to do business, to the effect that San
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Antonio 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 officers of San Antonio as
requested by APP;
(j) a nonforeign affidavit, as such affidavit is referred
to in Section 1445(b)(2) of the Code, of Seller, signed under a penalty of
perjury and dated as of the Closing Date, to the effect that Seller is a United
States citizen or a resident alien (and thus not a foreign person) and
providing Seller's United States taxpayer identification number;
(k) an executed Seller Release by Seller in substantially
the form attached hereto as Exhibit E (the "Seller Release"); and
(l) such other instrument or instruments of transfer
prepared by APP as shall be necessary or appropriate, as APP or its counsel
shall reasonably request, to carry out and effect the purpose and intent of
this Agreement.
Section 10.2 Deliveries of APP. At or prior to the Closing Date,
APP shall deliver to each Seller and San Antonio the following, all of which
shall be in a form reasonably satisfactory to Seller and San Antonio:
(a) the Exchange Consideration;
(b) a copy of resolutions of the Board of Directors of
APP authorizing the execution, delivery and performance of this Agreement and
all related documents and agreements, certified by APP's Secretary as being
true and correct copies of the originals thereof subject to no modifications or
amendments;
(c) a certificate of the President of APP dated the
Closing Date as to the truth and correctness of the representations and
warranties of APP contained herein on and as of the Closing Date;
(d) a certificate of the President of APP dated the
Closing Date, (i) as to the performance and compliance by APP with all
covenants contained herein on and as of the Closing Date and (ii) certifying
that all conditions precedent required to be satisfied by APP have been
satisfied;
(e) a certificate of the Secretary of APP certifying as
to the incumbency and to the signatures of the officers of APP who have
executed documents delivered at the Closing on behalf of APP;
(f) a certificate, dated within ten (10) days prior to
the Closing Date, of the Secretary of State of Texas establishing that APP is
in existence in the state of Texas;
(g) intentionally omitted;
(h) such other instrument or instruments of transfer
prepared by Seller or San Antonio as shall be necessary or appropriate, as
Seller or San Antonio or his/her/its respective counsel shall reasonably
request, to carry out and effect the purpose and intent of this Agreement.
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ARTICLE XI
Post Closing Matters
Section 11.1 Further Instruments of Transfer. Following the
Closing, at the request of APP and at APP's sole cost and expense, Seller and
San Antonio shall deliver any further instruments of transfer and take all
reasonable action as may be necessary or appropriate to carry out the purpose
and intent of this Agreement.
Section 11.2 Exchange Tax Covenant.
(a) The parties intend that the Exchange will qualify as
a tax-free transaction within the meaning of Section 351 of the Code in which
the Company will not recognize gain or loss, and pursuant to which any gain
recognized by Seller as a result of the Exchange will not exceed the amount of
any cash received by a Seller in the Exchange (a "Reorganization").
(b) Both prior to and after the Closing Date, all books
and records shall be maintained, and all Tax Returns and schedules thereto
shall be filed in a manner consistent with the Exchange being treated as a
Reorganization. These obligations are excused as to a party required to
maintain the books or file a Tax Return if such party has provided to the other
parties a written opinion of competent tax counsel to the effect that there is
not substantial authority, within the meaning of Section 6662(d)(2)(B)(i) of
the Code, to report the Exchange as a Reorganization and such opinion either is
furnished prior to the Closing Date or is based on facts or events not known at
the Closing Date. Each party shall provide to each other party such tax
information, reports, returns, or schedules as may be reasonably required to
assist such party in accounting for and reporting the Exchange as a
Reorganization.
(c) APP shall cause the requirements of Rule 144(c) under
the Securities Act to be met with respect to APP for so long as those
requirements must be met to enable sales by the Sellers who are affiliates of
San Antonio to meet the requirements of Rule 145(d) under the Securities Act.
ARTICLE XII
Remedies
Section 12.1 Indemnification by Sellers. Subject to the terms,
limitations and conditions of this Agreement, Sellers (each an "Indemnifying
Party" and collectively, the "Indemnifying Parties"), severally, agree to
indemnify, defend and hold APP and its directors, officers, employees, agents,
attorneys, consultants and Affiliates (each an "Indemnified Party" and
collectively, the "Indemnified Parties"), harmless from and against all losses,
claims, obligations, demands, assessments, penalties, liabilities, costs,
damages, reasonable attorneys' fees and expenses (including, without
limitation, all costs of experts and all costs incidental to or in connection
with any appellate process) (collectively, "Damages") asserted against or
incurred by an Indemnified Party arising out of or resulting from:
(a) a breach of any representation, warranty or covenant
of any Seller or San Antonio contained in this Agreement (without giving effect
to any Material Adverse Effect qualifier contained as part of any such
representation or warranty or covenant contained in this Agreement or in any
Schedule or certificate delivered hereunder);
(b) any violation (or alleged violation) by any Seller or
San Antonio and/or any of its past or present directors, officers, partners,
employees, agents, attorneys, consultants and Affiliates
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of any state or federal law governing health care fraud and abuse or
prohibition on referral of patients to Persons in which a licensed professional
has a financial or other form of interest (including, but not limited to, fraud
and abuse in the Medicare and Medicaid Programs) occurring on or before the
Closing Date; and
(c) any liability under the Securities Act, the Exchange
Act or any other federal or state "Blue Sky" or securities law or regulation,
at common law or otherwise, arising out of or based upon any (i) untrue
statement of a material fact in any Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto relating
to San Antonio (including any Partnership Subsidiary) or (ii) failure to state
information necessary to make the statements required to be stated therein not
misleading arising (in the case of either (i) or (ii)) solely from information
provided in writing to APP or its counsel by San Antonio or any Seller or their
agents specifically for inclusion in any such Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto (including, without limitation, schedules, exhibits and certifications
delivered by San Antonio or any of its agents in connection with this
Agreement).
Notwithstanding anything herein to the contrary, nothing contained in
this Agreement shall relieve any Seller or San Antonio of any liability or
limit any liability that he, she or it may have in the case of fraud in
connection with the transactions contemplated by this Agreement.
Section 12.2 Indemnification by APP. Subject to the terms,
limitations and conditions of this Agreement, APP (an "Indemnifying Party")
hereby agrees to indemnify, defend and hold the Sellers, and, as applicable,
their respective directors, partners, officers, stockholders, employees,
agents, attorneys, consultants and Affiliates (each an "Indemnified Party" and
collectively, the "Indemnified Parties") harmless from and against all Damages
asserted against or incurred by such individuals and/or entities arising out of
or resulting from:
(a) a breach by APP of any representation or warranty
(without giving effect to any Material Adverse Effect qualifier contained as
part of any such representation or warranty) or covenant of APP contained in
this Agreement or in any schedule or certificate delivered hereunder; and
(b) any liability under the Securities Act, the Exchange
Act or any other federal or state "Blue Sky" or securities law or regulation,
at common law or otherwise, arising out of or based upon any (i) untrue
statements of a material fact in any Registration Statement or any prospectus
forming a part thereof, or any amendment thereof or supplement thereto, or (ii)
failure to state information necessary to make the statements required to be
stated therein not misleading (except for any liability based upon any actual
or alleged untrue statement of material fact or an omission to state a material
fact relating to San Antonio or any Seller which was derived from any
information provided in writing by the Company or a Company Subsidiary or any
of their agents contained in the representations and warranties set forth in
this Agreement or any certificate, exhibit, schedule or instrument required to
be delivered under this Agreement.)
Notwithstanding anything herein to the contrary, nothing contained in
this Agreement shall relieve APP of any liability or limit any liability that
it may have in the case of fraud in connection with the transactions
contemplated by this Agreement.
Section 12.3 Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
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(a) The Indemnified Party shall promptly (and, in any
event, at least ten (10) days prior to the due date for any responsive
pleadings, filings or other documents) (i) notify each Indemnifying Party of
any third-party claim or claims asserted against the Indemnified Party ("Third
Party Claim") that could give rise to a right of indemnification under this
Agreement and (ii) transmit to the Indemnifying Parties a written notice
("Claim Notice") describing in reasonable detail the nature of the Third Party
Claim, a copy of all papers served with respect to such claim (if any), an
estimate of the amount of Damages attributable to the Third Party Claim and the
basis of the Indemnified Party's request for indemnification under this
Agreement. The failure to promptly deliver a Claim Notice shall not relieve
any Indemnifying Party of its obligations to any Indemnified Party with respect
to the related Third Party Claim except to the extent that the resulting delay
is materially prejudicial to the defense of such claim. Within thirty (30)
days after receipt of any Claim Notice (the "Election Period"), the
Indemnifying Parties shall notify the Indemnified Party (x) whether the
Indemnifying Parties dispute their potential liability to the Indemnified Party
under this Agreement with respect to such Third Party Claim and (y) whether the
Indemnifying Parties desire, at the sole cost and expense of each Indemnifying
Party, to defend the Indemnified Party against such Third Party Claim.
(b) If the Indemnifying Parties notify the Indemnified
Party within the Election Period that the Indemnifying Parties elect to assume
the defense of the Third Party Claim, then the Indemnifying Parties shall have
the right to defend, at their sole cost and expense, with counsel reasonably
acceptable to such Indemnified Party or Indemnified Parties, such Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted
diligently by the Indemnifying Parties to a final conclusion or settled at the
discretion of the Indemnifying Parties in accordance with this Section 12.3(b).
Except as set forth in Section 12.3(f) below, the Indemnifying Parties shall
have full control of such defense and proceedings, including any compromise or
settlement thereof. The Indemnified Party is hereby authorized, at the sole
cost and expense of the Indemnifying Parties (but only if the Indemnified Party
is entitled to indemnification hereunder), to file, during the Election Period,
any motion, answer or other pleadings that the Indemnified Party shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Parties and not prejudicial to the Indemnifying Parties. If requested by the
Indemnifying Parties, the Indemnified Party agrees, at the sole cost and
expense of the Indemnifying Parties, to cooperate with the Indemnifying Parties
and their counsel in contesting any Third Party Claim that the Indemnifying
Parties elect to contest, including, without limitation, the making of any
related counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Parties pursuant to this Section 12.3(b) and shall bear its
own costs and expenses with respect to such participation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Parties and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Parties, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Parties, and upon written
notification thereof, the Indemnifying Parties shall not have the right to
assume the defense of such action on behalf of the Indemnified Party; provided
further that the Indemnifying Parties shall not, in connection with any one
such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm
of attorneys at any time for the Indemnified Party, which firm shall be
designated in writing by the Indemnified Party. Notwithstanding the foregoing,
the Indemnifying Parties shall be prohibited from confessing or settling any
criminal allegations brought against the Indemnified Party without the express
written consent of the Indemnified Party.
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(c) If the Indemnifying Parties fail to notify the
Indemnified Party within the Election Period that the Indemnifying Parties
elect to defend the Indemnified Party pursuant to Section 12.3(b), or if the
Indemnifying Parties elect to defend the Indemnified Party pursuant to Section
12.3(b) but fail diligently and promptly to prosecute or settle the Third Party
Claim, then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the Indemnifying Parties (if the Indemnified Party is
entitled to indemnification hereunder), the Third Party Claim by all
appropriate proceedings, which proceedings shall be promptly and vigorously
prosecuted by the Indemnified Parties to a final conclusion or settled. The
Indemnified Parties shall have full control of such defense and proceedings,
provided, however, that the Indemnified Parties may not enter into, without the
Indemnifying Parties' consent, which shall not be unreasonably withheld, any
compromise or settlement of such Third Party Claim. Notwithstanding the
foregoing, if the Indemnifying Parties have delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Parties dispute their
potential liability to the Indemnified Party under this Agreement and if such
dispute is resolved in favor of the Indemnifying Parties, the Indemnifying
Parties shall not be required to bear the costs and expenses of the Indemnified
Parties' defense pursuant to this paragraph or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Parties in full for all costs and
expenses of such litigation. The Indemnifying Parties may participate in, but
not control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 12.3(c), and the Indemnifying Parties shall bear their
own costs and expenses with respect to such participation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnifying Parties have been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnified Party, then the Indemnifying Parties may employ
separate counsel and upon written notification thereof, the Indemnified Party
shall not have the right to assume the defense of such action on behalf of the
Indemnifying Parties.
(d) In the event any Indemnified Party should have a
claim against any Indemnifying Parties hereunder that does not involve a Third
Party Claim, the Indemnified Party shall transmit to the Indemnifying Parties a
written notice (the "Indemnity Notice") describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to such
claim and the basis of the Indemnified Party's request for indemnification
under this Agreement. If the Indemnifying Parties do not notify the
Indemnified Party within sixty (60) days from its receipt of the Indemnity
Notice that the Indemnifying Parties dispute such claim, the claim specified by
the Indemnified Party in the Indemnity Notice shall be deemed a liability of
the Indemnifying Parties hereunder. If the Indemnifying Parties have timely
disputed such claim, as provided above, such dispute shall be resolved by the
procedures set forth in Section 12.7.
(e) Payments of all amounts owing by any Indemnifying
Party pursuant to this Agreement relating to a Third Party Claim shall be made
within thirty (30) days after the latest of (i) the settlement of such Third
Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim, or (iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Parties liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by the
Indemnifying Parties pursuant to Section 12.3(d) shall be made within thirty
(30) days after the later of (i) the expiration of the 60-day Indemnity Notice
period or (ii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Parties liability to the Indemnified Party under this
Agreement. During the two-year period following the Closing Date, each Seller
shall be entitled to satisfy payments owed to APP by transfer of APP Common
Stock from such Seller to APP. For all 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
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National Market preceding the date of the Claim Notice. The number of shares
of APP Common Stock permitted to be transferred under this Section 12.3(e)
shall be diminished proportionately in accordance with the percentage of APP
Common Stock released under the Lock-Up Provisions set forth herein. The
rights of any Seller to transfer shares of APP Common Stock in satisfaction of
payments owed to APP pursuant to this Agreement shall terminate upon the
earlier of (x) the termination of the Lock-Up Provisions set forth herein or
(y) at the end of the two-year period following the Closing Date.
(f) The Indemnifying Parties shall provide the
Indemnified Party with written notice of any firm offer that is made to settle
or compromise a Third Party Claim against an Indemnified Party. If a firm
offer is made to settle such a claim solely by the payment of money damages and
the Indemnifying Parties notify the Indemnified Party in writing that the
Indemnifying Parties agree to such settlement, but the Indemnified Party elects
not to accept and agree to it, the Indemnified Party may continue to contest or
defend such Third Party Claim and, in such event, the total maximum liability
of the Indemnifying Parties to indemnify or otherwise reimburse the Indemnified
Party hereunder with respect to such a claim shall be limited to and shall not
exceed the amount of such settlement offer, plus reasonable out-of-pocket costs
and reasonable expenses (including reasonable attorneys' fees and
disbursements) to the date of notice that the Indemnifying Parties desired to
accept such settlement.
(g) Notwithstanding anything contained in this Agreement
to the contrary, Indemnifying Parties in the aggregate (i) shall have no
obligation hereunder to provide indemnification for the first $__________ of
Damages (without counting Immaterial Claims as defined below), and (ii) in no
event shall the Indemnifying Parties have any liability hereunder with respect
to any singular incident or a fact involving a breach or inaccuracy of San
Antonio if the Damages from such claim are equal to or less than $__________
("Immaterial Claims"). Notwithstanding anything to the contrary contained
herein, the obligations of each Seller hereunder shall not exceed the value of
the Exchange Consideration paid to such Seller pursuant to the Related
Acquisition, if any, on the Closing Date.
Section 12.4 Remedies Exclusive. The remedies provided in this
Agreement are the exclusive rights available to one party against the other,
either at law or in equity, except in the case of fraud.
Section 12.5 Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (a) enforcing
any of the terms of this Agreement or (b) proving that another party breached
any of the terms of this Agreement.
Section 12.6 Tax Benefits; Insurance Proceeds. The total amount
of any indemnity payments owed by one party to another party to this Agreement
shall be reduced by any correlative tax benefit received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
respect to recovery from third parties or insurance proceeds, and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
Section 12.7 Dispute Resolution.
(a) Arbitration. The parties hereto agree that any
claim, controversy, dispute or disagreement between or among any of the parties
arising out of or relating to this Agreement shall be governed exclusively by
the terms and provisions of this Section 12.7; provided, however, that within
ten (10) days from the date which any claim, controversy, dispute or
disagreement cannot be resolved and prior to commencing an arbitration
procedure pursuant to this Section 12.7, the parties shall meet to discuss and
consider other alternative dispute resolution procedures other than arbitration
including,
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but not limited to, Judicial Arbitration & Mediation Services, Inc., if
applicable. If at any time prior to the rendering of the decision by the
arbitrator (or pursuant to such other alternative dispute resolution procedure)
as contemplated in this Section 12.7 to the extent a party makes a written
offer to the other party proposing a settlement of the matter(s) at issue and
such offer is rejected, then the party rejecting such offer shall be obligated
to pay the costs and expenses (excluding the amount of the award granted under
the decision) of the party that offered the settlement from the date such offer
was received by such other party if the decision is for a dollar amount that is
less than the amount of such offer to settle. Notwithstanding the foregoing,
the terms and provisions of this Section 12.7 shall not preclude any party
hereto from seeking, or a court of competent jurisdiction from granting, a
temporary restraining order, temporary injunction or other equitable relief for
any breach of (i) any noncompetition or confidentiality covenant or (ii) any
duty, obligation, covenant, representation or warranty, the breach of which may
cause irreparable harm or damage.
(b) Arbitrators. In the event there is a claim,
controversy, dispute or disagreement among the parties hereto arising out of or
relating to this Agreement (including any claim based on or arising from an
alleged tort) and the parties hereto have not reached agreement regarding an
alternative to arbitration, the parties agree to select within thirty (30) days
of notice by a party to the other of its desire to seek arbitration under this
Section 12.7 one (1) arbitrator mutually acceptable to APP and the Sellers to
hear and decide all such claims under this Section 12.7. Each of the
arbitrators proposed shall be impartial and independent of all parties. If the
parties cannot agree on the selection of an arbitrator within said 30-day
period, then any party may in writing request the judge of the United States
District Court for the Western District of Texas senior in term of service to
appoint the arbitrator and, subject to this Section 12.7, such arbitrator shall
hear all arbitration matters arising under this Section 12.7.
(c) Applicable Rules.
(1) Each arbitration hearing shall be held at a
place in Boxar County, Texas acceptable to the arbitrator. The arbitration
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association to the extent such rules do not conflict with
the terms hereof; provided, however, that if the parties hereto agree to an
alternative to arbitration they may agree to an alternative set of rules,
including as to rules of evidence and procedure. The decision of the
arbitrator shall be reduced to writing and shall be binding on the parties and
such decision shall contain a concise statement of the reasons in support of
such decision. Judgment upon the award(s) rendered by the arbitrator may be
entered and execution had in any court of competent jurisdiction or application
may be made to such court for a judicial acceptance of the award and an order
of enforcement. The charges and expenses of the arbitrator shall be shared
equally by the parties to the hearing.
(2) The arbitration shall commence within ten
(10) days after the arbitrator is selected in accordance with the provisions of
this Section 12.7. In fulfilling his duties with respect to determining the
amount of any loss, the arbitrator may consider such matters as, in the opinion
of the arbitrator, are necessary or helpful to make a proper valuation. The
arbitrator may consult with and engage disinterested third parties to advise
the arbitrator. The arbitrator shall not add any interest factor reflecting
the time value of money to the amount of any loss and shall not award any
punitive damages.
(3) If the arbitrator selected hereunder should
die, resign or be unable to perform his or her duties hereunder, the parties,
or such senior judge (or such judge's successor) in the event the parties
cannot agree, shall select a replacement arbitrator. The procedure set forth
in this Section 12.7 for selecting the arbitrator shall be followed from time
to time as necessary.
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(4) As to any determination of the amount of any
loss, or as to the resolution of any other claim, controversy, dispute or
disagreement, that under the terms hereof is made subject to arbitration, no
lawsuit based on such claimed loss or such resolution shall be instituted by
the parties hereto, other than to compel arbitration proceedings or enforce the
award of the arbitrator, except as otherwise provided in Section 12.7(b).
(5) All privileges under Texas and federal law,
including attorney-client and work-product privileges, shall be preserved and
protected to the same extent that such privileges would be protected in a
federal court proceeding applying Texas law.
ARTICLE XIII
Termination
Section 13.1 Termination. This Agreement may be terminated and
the Exchange may be abandoned:
(a) at any time prior to the Closing Date by mutual
agreement of all parties;
(b) at any time prior to the Closing Date by APP if any
material representation or warranty of any Seller or San Antonio contained in
this Agreement or in any certificate or other document executed and delivered
by any Seller or San Antonio pursuant to this Agreement is or becomes untrue or
breached in any material respect or if any Seller or San Antonio fails to
comply in any material respect with any material covenant or agreement
contained herein, and any such misrepresentation, noncompliance or breach is
not cured, waived or eliminated within thirty (30) days after receipt of
written notice thereof;
(c) at any time prior to the Closing Date by Seller as to
Seller if any representation or warranty of APP contained in this Agreement or
in any certificate or other document executed and delivered by APP pursuant to
this Agreement is or becomes untrue in any material respect of if APP fails to
comply in any material respect with any covenant or agreement contained herein,
and any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within thirty (30) days after receipt of written notice thereof;
(d) at any time prior to the Closing Date by APP if, as a
result of the conduct of due diligence and regulatory compliance procedures,
APP deems termination to be advisable; or
(e) by APP or Seller as to Seller if the Exchange shall
not have been consummated by September 30, 1997.
Section 13.2 Effect of Termination. Except as set forth in
Section 14.3, in the event this Agreement is terminated pursuant to this
Article XIV, this Agreement shall forthwith become void.
ARTICLE XIV
Nondisclosure of Confidential Information
Section 14.1 Non-Disclosure Covenant. Seller and San Antonio
recognize and acknowledge that each has in the past, currently has, and in the
future may possibly have, access to certain Confidential Information of APP
that is valuable, special and a unique asset of such entity's business. APP
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acknowledges that it had in the past, currently has, and in the future may
possibly have, access to certain Confidential Information of San Antonio that
is valuable, special and a unique asset of each such business. Seller, San
Antonio and APP, severally, agree that they will not disclose such Confidential
Information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, except (a) to authorized representatives of
APP, Seller and San Antonio and (b) to counsel and other advisers to APP,
Sellers and San Antonio provided that such advisers (other than counsel) agree
to the confidentiality provisions of this Section 14.1, unless (i) such
information becomes available to or known by the public generally through no
fault of San Antonio, Seller or APP, as the case may be, (ii) disclosure is
required by law or the order of any governmental authority under color of law,
provided, that prior to disclosing any information pursuant to this clause (ii)
San Antonio, Seller or APP, as the case may be, shall, if possible, give prior
written notice thereof to San Antonio, Seller or APP and provide San Antonio,
Seller or APP with the opportunity to contest such disclosure, (iii) the
disclosing party reasonably believes that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party, or (iv)
the disclosing party is the sole and exclusive owner of such Confidential
Information as a result of the Exchange or otherwise. In the event of a breach
or threatened breach by Seller or San Antonio, on the one hand, and APP, on the
other hand, of the provisions of this Section, APP, Seller and San Antonio
shall be entitled to an injunction restraining the other party, as the case may
be, from disclosing, in whole or in part, such Confidential Information.
Nothing herein shall be construed as prohibiting any of such parties from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages.
Section 14.2 Damages. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
they would have no other adequate remedy, APP, Seller and San Antonio agree
that, in the event of a breach by either of them of the foregoing covenant, the
covenant may be enforced against them by injunctions and restraining orders.
Section 14.3 Survival. The obligations of the parties under this
Article XIV shall survive the termination of this Agreement.
ARTICLE XV
Miscellaneous
Section 15.1 Amendment; Waivers. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed by all the
parties hereto. Any waiver of any terms and conditions hereof must be in
writing, and signed by the parties hereto. The waiver of any of the terms and
conditions of this Agreement shall not be construed as a waiver of any other
terms and conditions hereof.
Section 15.2 Assignment. Neither this Agreement nor any right
created hereby or in any agreement entered into in connection with the
transactions contemplated hereby shall be assignable by any party hereto,
except by APP to a wholly owned subsidiary of APP; provided that any such
assignment shall not relieve APP of its obligations hereunder.
Section 15.3 Parties in Interest; No Third Party Beneficiaries.
Except as otherwise provided herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. Except as
otherwise provided herein, neither this Agreement nor any other agreement
contemplated hereby shall be deemed to confer upon any person not a party
hereto or thereto any rights or remedies hereunder or thereunder.
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Section 15.4 Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding
the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
Section 15.5 Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 15.6 Survival of Representations, Warranties and
Covenants. The representations, warranties and covenants contained herein
shall survive the Closing and all statements contained in any certificate,
exhibit or other instrument delivered by or on behalf of San Antonio, Seller or
APP pursuant to this Agreement shall be deemed to have been representations and
warranties made by San Antonio, Seller and APP, respectively. Notwithstanding
any provision in this Agreement to the contrary, the representations and
warranties contained herein shall survive the Closing until the second
anniversary of the Closing Date except that (a) the representations and
warranties set forth in Section 3.20 with respect to environmental matters
shall survive for a period of ten (10) years, (b) the representations and
warranties set forth in Section 3.29 with respect to tax matters shall survive
until such time as the limitations period has run for all tax periods ended
prior to the Closing Date, (c) the representations and warranties contained in
Section 3.26 and Section 3.32 with respect to healthcare matters shall survive
for a period of six (6) years and (d) solely for purposes of Section 12.1(c)
and Section 12.2(b), and solely to the extent that any party to be indemnified
pursuant to such provisions actually incurs liability under the Securities Act,
the Exchange Act or any other federal or state securities law, the
representations and warranties set forth therein shall survive until the
expiration of any applicable limitations period.
Section 15.7 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING
CONFLICTS OF LAWS) OF THE STATE OF TEXAS.
Section 15.8 Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
Section 15.9 Gender and Number. When the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter and the number of all words shall include the singular and plural.
Section 15.10 Confidentiality; Publicity and Disclosures. Each
party shall keep this Agreement and its terms confidential, and shall make no
press release or public disclosure, either written or oral, regarding the
transactions contemplated by this Agreement without the prior knowledge and
consent of the other parties hereto; provided that the foregoing shall not
prohibit any disclosure (a) by press release, filing or otherwise that APP has
determined in its good faith judgment and after advice of legal counsel to be
required by federal securities laws or the rules of the National Association of
Securities Dealers, (b) to attorneys, accountants, investment bankers or other
agents of the parties assisting the parties in connection with the transactions
contemplated by this Agreement and (c) by APP in connection with the
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conduct of its Initial Public Offering and conducting an examination of the
operations and assets of the Target Companies; provided that APP shall
reasonably promptly provide notice of any release. In the event that the
transactions contemplated hereby are not consummated for any reason whatsoever,
the parties hereto agree not to disclose or use any Confidential Information
they may have concerning the affairs of the other parties, except for
information that is required by law to be disclosed; provided that should the
transactions contemplated hereby not be consummated, nothing contained in this
Section shall be construed to prohibit the parties hereto from operating
businesses in competition with each other.
Section 15.11 Notice. Whenever this Agreement requires or permits
any notice, request, or demand from one party to another, the notice, request
or demand must be in writing to be effective and shall be deemed to be
delivered and received (i) if personally delivered or if delivered by telex,
telegram or courier service, when delivered to the party to whom notice is
sent, (ii) if delivered by facsimile transmission, when so sent and receipt
acknowledged by receipt or (iii) if delivered by mail (whether actually
received or not), at the close of business on the third business day next
following the day when placed in the mail, postage prepaid, certified or
registered, addressed to the appropriate party or parties, at the address of
such party set forth below (or at such other address as such party may
designate by written notice to all other parties in accordance herewith):
If to APP: American Physician Partners, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
with a copy to: ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
If to San Antonio or Seller: San Antonio MRI Partnership
No. 2 Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Managing Partner
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇, Blend, ▇▇▇▇▇▇▇▇ &
▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Section 15.12 No Waiver; Remedies. No party hereto shall by any
act (except by written instrument pursuant to Section 16.1 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in
this Agreement or
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otherwise conferred upon or reserved to any party shall be considered exclusive
of any other remedy available to any party, but the same shall be distinct,
separate and cumulative and may be exercised from time to time as often as
occasion may arise or as may be deemed expedient.
Section 15.13 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
Section 15.14 Defined Terms. Terms used in Exhibit A, Exhibit B,
Exhibit C, Exhibit D Exhibit E, and the Schedules attached hereto with their
initial letter capitalized and not otherwise defined therein shall have the
meanings as assigned to such terms in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
APP:
AMERICAN PHYSICIAN PARTNERS, INC.
By:
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
SAN ANTONIO:
SAN ANTONIO MRI PARTNERSHIP NO. 2 LTD.
By:
-----------------------------
Its:
-----------------------------
SELLERS:
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▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
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R.K. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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--------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Rise ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
LIST OF SELLERS AND EXCHANGE CONSIDERATION
Name of Seller Partnership Unit %
-------------- ------------------
A-1
51
EXHIBIT B
TARGET COMPANIES
B-1
52
EXHIBIT C
LEGAL OPINION OF SELLERS' COUNSEL
C-1
53
EXHIBIT D
LEGAL OPINION OF APP'S COUNSEL
D-1
54
EXHIBIT E
SELLER RELEASE
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
TO THE
AGREEMENT AND PLAN OF EXCHANGE
DATED AS OF [_____________], 1997
The following Disclosure Schedules and the disclosures set forth
therein are delivered in connection with that certain Agreement and Plan of
Exchange dated [____________], 1997, by and between American Physician
Partners, Inc., San Antonio MRI Partnership No. 2 LTD. and Sellers (the
"Agreement").
The section numbers set forth on the following Disclosure Schedules
correspond to the section numbers in the Agreement. If disclosures made
pursuant to one section number can reasonably be interpreted by other parties
to be a disclosure to another section number, such disclosure shall constitute
disclosure for purposes of such additional section number. Capitalized terms
used herein have the meanings assigned to such terms in the Agreement.