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ASSET PURCHASE AGREEMENT
dated as of
April 1, 1998
by and among
AMERICAN PHYSICIAN PARTNERS, INC.
(a Delaware corporation),
TREASURE COAST IMAGING PARTNERS, INC.
(a Delaware corporation),
and
ST. LUCIE IMAGING AND BREAST CENTER, INC.
(a Florida corporation),
and
XXXXXX X. XXXXXXXX, M.D., XXXXXX XXXXXXXXX, M.D., X.X. XXXXX, M.D.,
XXXXXX X. XXXXXXX, M.D., XXXX X. XXXXXX, M.D., and XXXXX X. XXXXXXXX, M.D.
(all individuals residing in Florida)
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................1
Section 1.1 Definitions...............................1
Section 1.2 Rules of Interpretation...................4
ARTICLE II PURCHASE AND SALE OF ASSETS.................................5
Section 2.1 Purchased Assets..........................5
Section 2.2 Excluded Assets...........................7
Section 2.3 Subsequent Actions........................7
ARTICLE III ASSUMED LIABILITIES.........................................7
Section 3.1 Assumed Liabilities.......................7
ARTICLE IV PURCHASE PRICE..............................................8
Section 4.1 Purchase Price............................8
Section 4.2 Closing and Effective Time................9
Section 4.3 Closing Deliveries........................9
Section 4.4 Delivery of Closing Stock To Principal
Stockholders..............................9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER AND
PRINCIPAL STOCKHOLDERS......................................9
Section 5.1 Organization and Good Standing;
Qualification.............................9
Section 5.2 Authorization and Validity...............10
Section 5.3 Title to Purchased Assets................10
Section 5.4 Condition of Tangible Assets.............10
Section 5.5 Consents and Approvals...................10
Section 5.6 Governmental Authorization...............10
Section 5.7 Continuity of Business Enterprise........11
Section 5.8 Subsidiaries and Investments.............11
Section 5.9 Absence of Conflicting Agreements or
Required Consents........................11
Section 5.10 Seller Financial Statements..............11
Section 5.11 Intentionally Omitted....................11
Section 5.12 Litigation and Claims....................11
Section 5.13 No Violation of Law......................12
Section 5.14 Contracts and Commitments................12
Section 5.15 No Brokers...............................13
Section 5.16 No Other Agreements to Sell the Assets of
the Business.............................13
Section 5.17 Employee Matters.........................13
Section 5.18 Labor Relations..........................13
Section 5.19 Employee Benefit Plans...................14
Section 5.20 Lease Agreements.........................16
Section 5.21 Real and Personal Property...............16
Section 5.22 Environmental Matters....................16
Section 5.23 Filing Reports...........................18
Section 5.24 Insurance Policies.......................18
Section 5.25 Accounts Receivable; Payors..............18
Section 5.26 Suppliers................................19
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Section 5.27 Intentionally Omitted....................19
Section 5.28 Licenses, Authorization and Provider
Programs.................................19
Section 5.29 Inspections and Investigations...........20
Section 5.30 Proprietary Rights and Information.......20
Section 5.31 Taxes....................................21
Section 5.32 Related Party Arrangements...............22
Section 5.33 Banking Relations........................22
Section 5.34 Fraud and Abuse and Self Referral........22
Section 5.35 Restrictions on Business Activities......22
Section 5.36 Agreements in Full Force and Effect......22
Section 5.37 Statements True and Correct..............23
Section 5.38 Schedules................................23
Section 5.39 Finders' Fees............................23
Section 5.40 Investment Decision......................23
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER AND APPM...........23
Section 6.1 Organization and Good Standing;
Qualification............................23
Section 6.2 Authorization and Validity...............23
Section 6.3 Governmental Authorization...............24
Section 6.4 Capitalization...........................24
Section 6.5 Absence of Conflicting Agreements or
Required Consents........................24
Section 6.6 Statements True and Correct..............24
Section 6.7 Schedules................................24
Section 6.8 Finders' Fees............................24
ARTICLE VII INTENTIONALLY OMITTED......................................25
ARTICLE VIII INTENTIONALLY OMITTED......................................25
ARTICLE IX INTENTIONALLY OMITTED......................................25
ARTICLE X INTENTIONALLY OMITTED......................................25
ARTICLE XI CLOSING DELIVERIES.........................................25
Section 11.1 Deliveries of Seller.....................25
Section 11.2 Deliveries of APPM.......................26
ARTICLE XII INTENTIONALLY OMITTED......................................26
ARTICLE XIII POST CLOSING MATTERS.......................................27
Section 13.1 Further Instruments of Transfer..........27
Section 13.2 Certain Prorations.......................27
Section 13.3 Certain Expenses.........................27
Section 13.4 Letter of Issuance.......................27
Section 13.5 Intentionally Omitted....................27
Section 13.6 Lock-up..................................27
ARTICLE XIV REMEDIES...................................................28
Section 14.1 Indemnification by Seller................28
Section 14.2 Indemnification by APPM and Buyer........29
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Section 14.3 Conditions of Indemnification............29
Section 14.4 Remedies Not Exclusive...................31
Section 14.5 Costs, Expenses and Legal Fees...........31
Section 14.6 Tax Benefits; Insurance Proceeds.........31
Section 14.7 Commencing Actions.......................31
ARTICLE XV INTENTIONALLY OMITTED......................................31
ARTICLE XVI NONDISCLOSURE OF CONFIDENTIAL INFORMATION..................32
Section 16.1 Non-Disclosure Covenant..................32
Section 16.2 Damages..................................32
Section 16.3 Survival.................................32
ARTICLE XVII MISCELLANEOUS..............................................32
Section 17.1 Amendment; Waivers.......................32
Section 17.2 Assignment...............................32
Section 17.3 Parties in Interest; No Third Party
Beneficiaries............................32
Section 17.4 Entire Agreement.........................32
Section 17.5 Severability.............................33
Section 17.6 Survival of Representations, Warranties,
Covenants, Indemnifications and Lock-Up..33
Section 17.7 Governing Law............................33
Section 17.8 Captions.................................33
Section 17.9 Gender and Number........................33
Section 17.10 Reference to Agreement...................33
Section 17.11 Confidentiality; Publicity and
Disclosures..............................33
Section 17.12 Notice...................................33
Section 17.13 No Waiver; Remedies......................34
Section 17.14 Counterparts.............................34
Section 17.15 Defined Terms............................34
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SCHEDULES
Schedule 2.1(a) Leasehold Improvements
Schedule 2.1(b) Personal Property
Schedule 2.1(d)(i) Intellectual Property
Schedule 2.1(d)(iii) Governmental Licenses and Permits
Schedule 2.1(d)(vi) Prepaids
Schedule 2.1(d)(viii) Interest in Other Entities, Joint Ventures
Schedule 2.1(d)(ix) Warranties, Guarantees and Covenants
Schedule 2.1(e) Purchased Contracts
Schedule 2.2 Excluded Assets
Schedule 3.1 Assumed Liabilities
Schedule 4.1 Allocation of Purchase Price
Schedule 5.3(a) Encumbrances
Schedule 5.3(b) Permitted Encumbrances
Schedule 5.4 Condition of Tangible Assets
Schedule 5.5 Consents and Approvals
Schedule 5.6 Governmental Authorizations
Schedule 5.7 Sale, Distribution or Spin-Off of Assets
Schedule 5.8 Subsidiaries and Investments
Schedule 5.9 Conflicting Agreements or Required Consents
Schedule 5.10 Seller Financial Statements
Schedule 5.12 Litigation and Claims
Schedule 5.14 Contracts and Commitments
Schedule 5.17(a) Employment Contracts
Schedule 5.17(b) Employees Earning Over $50,000
Schedule 5.17(c) Severance Arrangements
Schedule 5.18(a) Employees Terminating Employment
Schedule 5.18(b) Unfair Labor Practice Complaints
Schedule 5.18(c) Discrimination Charges, Investigations, Proceedings
or Complaints; Governmental Audits
Schedule 5.18(d) Inquiries, Investigations or Monitoring of
Professional Personnel
Schedule 5.19(a) Employee Benefit Plans
Schedule 5.19(c) Audits, Investigations, etc., of Employee Benefit
Plans
Schedule 5.19(e) Pending or Threatened Claims Against Employee
Benefit Plans
Schedule 5.19(g) Funding Status
Schedule 5.19(l) Other Compensation Arrangements
Schedule 5.20 Lease Agreements
Schedule 5.22(b) Asbestos
Schedule 5.22(d) Environmental Audits
Schedule 5.24 Insurance Policies
Schedule 5.25(a) Accounts Receivable Aging
Schedule 5.25(b) Certain Payors
Schedule 5.26(b) Certain Providers/Suppliers
Schedule 5.28(a) Licenses; Permits; Authorizations; Provider
Agreements
Schedule 5.28(b) Cost Reports
Schedule 5.29 Inspections and Investigations
Schedule 5.30(a) Proprietary Rights and Information
Schedule 5.30(b) Proprietary Rights and Information - Technology
Agreements
Schedule 5.30(c) Proprietary Rights and Information - Required
Consents
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Schedule 5.31(b) Taxes - Disputes
Schedule 5.31(c) Notices and Threats of Tax Deficiency or Delinquency
Schedule 5.32 Related Party Arrangements
Schedule 5.33 Banking Relations
Schedule 5.35 Restrictions on Business Activities
Schedule 5.39 Finders' Fees
Schedule 6.3 Governmental Authorization
Schedule 6.5 Conflicting Agreements; Required Consents
Schedule 13.2(a) Prorated Items
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated as of April 1,
1998, is by and among AMERICAN PHYSICIAN PARTNERS, INC., a Delaware corporation
("APPM"), Treasure Coast Imaging Partners, Inc., a Delaware corporation and a
wholly-owned subsidiary of APPM ("Buyer"), and St. Lucie Imaging and Breast
Center, Inc., a Florida corporation (referred to herein as "SLIBC" and the
"Seller"), and Xxxxxx X. Xxxxxxxx, M.D., Xxxxxx Xxxxxxxxx, M.D., X.X. Xxxxx,
M.D., Xxxxxx X. Xxxxxxx, M.D., Xxxx X. Xxxxxx, M.D., and Xxxxx X. Xxxxxxxx,
M.D. (collectively, the "Principal Stockholders").
RECITALS
A. The Seller owns and operates (i) a professional medical practice
specializing in radiology and (ii) one (1) diagnostic imaging center
(collectively, the "Business").
B. The Principal Stockholders own all of the issued and outstanding
capital stock and membership interests of SLIBC.
C. Buyer is a wholly-owned subsidiary of APPM. APPM 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.
D. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, certain of the assets and other rights related to the Business (which
assets and rights are defined in Section 2.1 as the "Purchased Assets"), and to
assume certain liabilities of Seller relating thereto, as set forth herein, on
the terms and conditions in this Agreement.
E. The Principal Stockholders acknowledge that they have received
adequate consideration for entering into this Agreement and performing their
obligations under this Agreement, and that they will be benefitted by the
transactions contemplated by this Agreement. The Principal Stockholders
acknowledge that APPM and Buyer have relied on the Principal Stockholders'
participation in this Agreement in connection with APPM's and Buyer's entering
into this Agreement and consummating the transactions provided for in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" with respect to any person shall mean a person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
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"APPM" shall have the meaning set forth in the preamble 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 diligent 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 Principal Stockholder,
director or executive officer of such entity after diligent investigation and
inquiry by the executive officers of such entity.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Claim Notice" shall have the meaning set forth in Section 14.3(a).
"Closing Date" shall have the meaning set forth in Section 4.2.
"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.
"Controlled Group" shall have the meaning set forth in Section 5.19(g).
"Damages" shall have the meaning set forth in Section 14.1.
"Effective Time" shall have the meaning set forth in Section 4.2.
"Election Period" shall have the meaning set forth in Section 14.3(a).
"Employee Benefit Plans" shall have the meaning set forth in Section
5.19(a).
"Encumbrance" shall mean any charge, claim, community property interest,
condition, 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
5.22(e).
"ERISA" shall have the meaning set forth in Section 5.17(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Indemnified Party" shall have the meaning set forth in Section 14.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
14.3(a).
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"Indemnity Notice" shall have the meaning set forth in Section 14.3(d).
"Insurance Policies" shall have the meaning set forth in Section 5.24.
"IRS" shall mean the Internal Revenue Service.
"Lease Assignments" shall have the meaning set forth in Section 11.1(k).
"Lease Agreements" shall have the meaning set forth in Section 5.20.
"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, 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 of the date hereof: (i)
the MWTA; (ii) the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33
USCA Section 2501 et seq.; (iii) the Marine Protection, Research, and
Sanctuaries Act of 1972, 33 USCA Section 1401 et seq.; (iv) The Occupational
Safety and Health Act, 29 USCA 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
Seller's assets or operations and purport to regulate Medical Waste or impose
requirements related to Medical Waste.
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
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 Section 11.1(b).
"Payors" shall mean any and all third-party payors including, but not
limited to, Medicare and Medicaid Programs (as defined in Section 5.28),
insurance companies, health maintenance organizations, preferred provider
organizations, independent practice associations, hospitals, hospital systems,
integrated delivery systems, CHAMPUS, and any and all other private or
governmental entity rendering payment to Seller for professional medical or
technical services.
"Person" shall mean any natural person, corporation, partnership, joint
venture, limited liability company, association, group, organization or other
entity.
"Physician Employee" shall mean each radiologist employed by Seller.
"Purchased Assets" shall have the meaning set forth in Section 2.1.
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"Principal Stockholders" shall have the meaning set forth in the
preamble to this Agreement.
"Regulated Activity" shall have the meaning set forth in Section
5.22(e).
"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.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller Current Balance Sheet" shall have the meaning set forth in
Section 5.10.
"Seller Current Financial Statements" shall have the meaning set forth
in Section 5.10.
"Seller Financial Statements" shall have the meaning set forth in
Section 5.10.
"Seller Subsidiary" shall have the meaning set forth in Section 5.8.
"SLIBC" shall have the meaning set forth in the preamble to this
Agreement.
"Tax Returns" shall include all federal, state, local or foreign income,
excise, corporate, franchise, property, sales, use, payroll, withholding,
provider, environmental, duties, value added and other tax returns (including
information returns).
"Third Party Claim" shall have the meaning set forth in Section 14.3(a).
Section 1.2 Rules of Interpretation. The definitions set forth in
Section 1.1 shall be equally applicable to both the singular and the plural
forms of the terms therein defined and shall cover both genders.
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.
This Agreement occasionally omits the modifying words "all" and "any"
and the articles "the" and "an," but the fact that a modifier or an article is
absent from one statement and appears in another is not intended to affect the
interpretation of either statement.
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
PURCHASE AND SALE OF ASSETS
Section 1.3 Purchased Assets. Seller hereby sells, assigns,
transfers, conveys and delivers to Buyer, and Buyer hereby purchases, all
right, title and interest of Seller in and to the following assets, rights and
interests used in the operation of the Business, of every kind and description,
wherever located, whether tangible or intangible, real, personal or mixed,
excluding the Excluded Assets (as such term is defined in Section 2.2 below,
including, without limitation, the following assets, rights and interests
(collectively, the "Purchased Assets"):
(1) Leasehold Improvements. All leasehold improvements, other
constructions, construction-in-progress and fixtures (collectively, the
"Improvements") owned by Seller and located on the real property subject to the
Lease Agreements (as defined in Section 5.20 hereof);
(2) Personal Property. All tangible personal property
(collectively, the "Personal Property") of every kind and nature (other than
items of tangible personal property that are consumed, disposed of or held for
sale or are inventoried in the ordinary course of business), including, without
limitation, all furniture, fixtures, machinery, vehicles, owned or licensed
computer systems, and equipment, including, without limitation, the Personal
Property listed in Schedule 2.1(b) hereto;
(3) Intentionally Omitted;
(4) Intangible Assets. All intangible property (collectively,
the "Intangible Assets") of every kind and nature, including, without
limitation, the following:
(1) All patents, trademarks, trade names, corporate
names, business names (including all names associated with specialty programs
or services operated by Seller), service marks, logos, trade secrets,
copyrights, and all applications and registrations therefor that are owned by
Seller, and licenses thereof pursuant to which Seller has any right to the use
or benefit of, or other rights with respect to, any of the foregoing (the
"Intellectual Property"), including, without limitation, the items identified
in Schedule 2.1(d)(i) attached hereto;
(2) All telephone numbers;
(3) All licenses, permits, certificates, franchises,
registrations, authorizations, filings, consents, accreditations, approvals and
other indicia of authority relating to the operation of the Business as
presently conducted by Seller (collectively, the "Governmental Licenses and
Permits"), which Governmental Licenses and Permits are listed in Schedule
2.1(d)(iii) attached hereto. In the event the sale, transfer, assignment, or
conveyance of any of the Governmental Licenses and Permits is unlawful or is
not permissible under any agreement, or federal, state, or local law, rule, or
regulation, then the terms "sale, transfer or assignment," for the purposes of
this Agreement with respect to any such Governmental Licenses and Permits,
shall be deemed to mean and require (i) each Seller's relinquishment of all of
its right, title and interest in, to and under such Governmental Licenses and
Permits as of the date hereof to the fullest extent necessary or appropriate to
enable Buyer to acquire such Governmental Licenses and Permits; and (ii) the
issuance or grant to Buyer by the appropriate third party, federal, state, or
local governmental authority of all right, title and interest in, to and under
such Governmental Licenses and Permits as of the date hereof reasonably
equivalent to that relinquished by the Seller, including, but not limited to,
the right, authority, and approval for Buyer to provide long-term care services
from and after the date hereof in a reasonably equivalent manner as Seller
prior to the date hereof;
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(4) All benefits, proceeds or any other amounts payable
under any policy of insurance maintained by Seller with respect to destruction
of, damage to or loss of use of any of the Purchased Assets;
(5) All deposits (the "Deposits") held by Seller in
connection with future services to be rendered by Seller, delivered under the
Leases (as defined below);
(6) Those advance payments, prepayments, prepaid
expenses, deposits and the like (the "Prepaids") which are existing as of the
date hereof, including real property taxes and assessments and utility deposits
and payments (subject to the prorations provided for in this Agreement), which
were made by Seller solely with respect to its operation of the Business (the
"Purchased Prepaids"), the current categories and amounts of which are set
forth in Schedule 2.1(d)(vi);
(7) Seller's goodwill associated with the Purchased
Assets;
(8) All interests in joint ventures, partnerships,
corporations and limited liability companies, other than the marketable and
investment securities identified in Schedule 2.2 as Excluded Assets (as defined
in Section 2.2) (provided that the failure of Seller to list publicly-traded
securities in such exhibit shall not cause same to be among the Purchased
Assets), including, without limitation, the interests identified in Schedule
2.1(d)(viii) attached hereto; and
(9) to the extent assignable, all warranties,
guarantees and covenants not to compete with respect to the Business including,
without limitation, the arrangements identified in Schedule 2.1(d)(ix);
(5) Purchased Contracts. All right, title and interest of
Seller in, to and under the leases, contracts and agreements to which Seller is
a party or a beneficiary and which relate to or are necessary for the Business
(collectively the "Purchased Contracts"). Schedule 2.1(e) hereto contains a
list of all leases, contracts and agreements to which Seller is a party or a
beneficiary, which relate to or are necessary for the Business and which either
(i) involve the payment or receipt by Seller of any form of services or
consideration in any 12-month period in excess of $10,000; or (ii) which are
not terminable or cancelable upon 60 days' notice;
(6) Books and Records. Seller hereby delivers to Buyer, and
Buyer hereby takes possession of, all operating data and records pertaining to
the assets, properties, business, operations, accounts, financial condition,
customers or suppliers of the Business, including all of Seller's books,
records, papers, computer tapes, disks or data and instruments related to the
Business or the Purchased Assets or which are required or necessary in order
for Buyer to operate the Business from and after the date hereof, including,
without limitation, the following:
(1) patient and medical records and all other medical
and financial information regarding patients of the Business (which shall be
subject to the confidentiality provisions set forth in this Agreement);
(2) patient lists;
(3) employment and personnel records relating to the
Seller employees who are hired by Buyer;
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(4) personnel policies and manuals, electronic data
processing materials, books of account, accounting books, financial records,
sales records, sales and payroll tax returns, customer data, journals and
ledgers; and
(5) all material, documents, and information relating
to the Personal Property, the Purchased Contracts and the Lease Agreements, all
title information (including but not limited to all title insurance policies,
commitments, acts of sale, covenants, conditions, restrictions, leases,
licenses, occupancy agreements, easements, servitudes, and other items of
record), all environmental studies, reports and information, all property use
and operational material, plans and specifications, contracts, site plans,
plats, surveys, zoning material, correspondence, and governmental material
(i.e., licenses, permits, notices, and other matters with respect to
governmental authorities), information and notices.
(7) Accounts Receivable. Accounts receivable of Seller
arising on or before the Closing Date (provided, however, that notwithstanding
anything to the contrary herein, Seller shall not sell to Buyer any of Seller's
Medicare or Medicaid accounts receivable as of December 31, 1997 (the "Medicare
Receivables"), but Seller shall irrevocably retain Buyer to collect on Seller's
behalf such Medicare Receivables, and which, immediately following the
collection of such Medicare Receivables, as such collection may occur from time
to time, Seller shall immediately deliver to Buyer the proceeds of such
Medicare Receivable collections); and
(8) Residual Assets. All other assets of Seller other than
the Excluded Assets (as such term is defined in Section 2.2 below).
Section 1.4 Excluded Assets. Notwithstanding Section 2.1(a), the
definition of "Purchased Assets" shall exclude all assets, rights and interests
identified on Schedule 2.2 (collectively, the "Excluded Assets"). The Excluded
Assets shall not be transferred by Seller to Buyer.
Section 1.5 Subsequent Actions. If, at any time after the Effective
Time, APPM or Buyer shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in APPM or Buyer
its right, title or interest in, to or under any of the Purchased Assets or
otherwise to carry out the transactions described in this Agreement, Seller
shall, at the sole cost and expense of Seller, execute and deliver all such
deeds, bills of sale, assignments and assurances and to take and do all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under the Purchased
Assets or otherwise to carry out the transactions described in this Agreement.
ARTICLE III
ASSUMED LIABILITIES
Section 1.6 Assumed Liabilities. Buyer hereby assumes only those
liabilities and obligations of Seller relating to operation of the Business as
set forth on Schedule 3.1 hereto (the "Assumed Liabilities"). Other than the
Assumed Liabilities, Buyer shall not assume, nor shall APPM, Buyer or any of
their respective affiliates or subsidiaries be deemed to have assumed,
guaranteed, agreed to perform or otherwise be bound by, or be responsible or
otherwise liable for, any liability or obligation of any nature of Seller
(whether or not related to the Business), or claims for such liability or
obligation, whether accrued, matured or unmatured, liquidated or unliquidated,
fixed or contingent, known or unknown (the "Unassumed Liabilities").
Specifically, and without limiting the generality of the foregoing, other than
the Assumed Liabilities, neither APPM, Buyer nor any of their respective
affiliates or subsidiaries shall have any liability or obligation with respect
to or arising out of: (a) acts or omissions of Seller, its members,
shareholders, directors, officers, partners, agents or employees whether prior
or subsequent to the date hereof, whether or not in the ordinary course of
business; (b) liabilities or obligations relating to or secured by any portion
of either the Purchased Assets or the Business prior to the date hereof;
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(c) employee-related liabilities (including accrued wages, vacation, employee-
related insurance or deferred compensation claimed by any person in connection
with his or her employment by, or termination of employment with, Seller or
payroll taxes payable or liabilities arising under any employee benefit plan
maintained by Seller); (d) liabilities or obligations of Seller, including
those for attorneys' fees, arising out of any litigation or other proceeding
pending as of or arising prior to the date hereof in connection with the
Business or any claim, whether or not asserted and whether or not liquidated or
contingent, with respect to the Business arising from acts or the failure to
take any action by Seller or any of its shareholders, directors, officers,
partners, agents or employees prior to the date hereof; (e) liabilities for any
income or other tax, whether disputed or not, attributable to Seller and/or the
Business for any period or transaction through the date hereof; (f) except as
set forth on Schedule 3.1, trade payables which arise prior to the date hereof;
(g) claims by any third-party payor (including Medicare or Medicaid) or patient
with respect to any matter or billing occurring prior to the date hereof; and
(h) any other liability or obligation of Seller. All employment tax
liabilities of Seller shall remain Seller's responsibility for collection,
remittance and tax filing purposes for the period through the date hereof.
Seller shall supply confirmation that all past and current employment taxes
through the date hereof have been remitted to the appropriate agencies in a
timely manner.
ARTICLE IV
PURCHASE PRICE
Section 1.7 Purchase Price.
(1) Purchase Price. Subject to the terms and conditions
herein, in consideration for the sale, transfer, assignment, conveyance and
delivery of the Purchased Assets from Seller to Buyer, Buyer hereby delivers
the following ("Purchase Price"):
(i) Five Million Nine Hundred Seventy-One Thousand Five
Hundred Twenty-Six and 60/100 Dollars
($5,971,526.60) by wire transfer of immediately
available funds to one or more accounts designated
in writing by Seller;
(ii) 433,662 shares of common stock, par value $.0001
per share, of APPM (each share of such class being
referred to herein as a share of "APPM Stock")
having an aggregate value equal to $4,396,470.40.
The number of shares of APPM Stock delivered to
Seller on the date hereof is referred to herein as
the "Closing Stock." The number of shares of APPM
Stock that constitute the Closing Stock has been
determined based on the average closing sale price
of the APPM Stock for the twenty (20) trading days
prior to the Closing Date; and
(iii) The assumption by Buyer of the Assumed Liabilities.
Whole shares shall be delivered in lieu of any fractional shares that otherwise
would have been delivered pursuant to this Section 4.1(b). In addition to the
terms and conditions set forth herein, the APPM Stock shall be subject to the
terms and conditions of a lock-up agreement between APPM and Seller of even
date.
(2) Allocation of Purchase Price. The Purchase Price shall be
allocated by Buyer and Seller in accordance with Schedule 4.1(b) hereto.
Section 1.8 Closing and Effective Time. The closing of the
transactions contemplated under this Agreement shall take place at the offices
of APPM, Dallas, Texas at 10:00 a.m. local time on April 2, 1998 (the "Closing
Date").
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The transfer of the Purchased Assets by Seller to Buyer and Buyer's
assumption of the Assumed Liabilities shall be deemed effective as of 12:01
a.m. on April 1, 1998 (the "Effective Time"). The obligations and proceeds
from the operations of the Business shall be deemed to be the property of Buyer
from and after the Effective Time, and Buyer and Seller shall take any and all
actions reasonably necessary to carry out the intent of this Section 4.2.
Section 1.9 Closing Deliveries.
(1) Seller. Simultaneously with the execution and delivery of
this Agreement, Seller hereby executes and delivers to Buyer: (i) a Xxxx of
Sale substantially in the form attached as Exhibit A hereto ("Xxxx of Sale");
and (ii) the documents required to be delivered pursuant to Section 11.1
hereof.
(2) Buyer. Simultaneously with the execution and delivery of
this Agreement, Buyer hereby delivers to Seller: (i) the cash portion of the
Purchase Price; and (ii) the documents required to be delivered pursuant to
Section 11.2 hereof.
Buyer also shall deliver certificate(s) for the Closing Stock as
described in Section 13.4.
Section 1.10 Delivery of Closing Stock To Principal Stockholders. As
soon as practicable after the Closing (but in any event prior to the delivery
of the Closing Stock), Seller shall liquidate pursuant to Florida law and
distribute to the Principal Stockholders the Purchase Price. Therefore, Seller
has requested that the Closing Stock be issued directly to the Principal
Stockholders as described in Section 13.4 hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND PRINCIPAL STOCKHOLDERS
As an inducement to APPM and to Buyer to enter into this Agreement,
Seller and each Principal Stockholder jointly and severally (subject to the
terms and conditions hereof) represent and warrant to APPM and to Buyer as of
the date hereof.
Section 1.11 Organization and Good Standing; Qualification. SLIBC is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite corporate power and
authority to own, operate and lease its assets and properties and to carry on
its business as currently conducted and as now contemplated, to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement. Seller and each Seller Subsidiary do not transact business outside
the State of Florida and accordingly are not qualified to do business as a
foreign corporation in any other jurisdiction. The Principal Stockholders own
all of the issued and outstanding capital stock and membership interests of
SLIBC.
Each Principal Stockholder has full requisite power, authority and
capacity to execute, deliver and perform this Agreement. No Principal
Stockholder is aware of any defect (or facts that might be deemed to constitute
such a defect) in any other Principal Stockholder's power, authority or
capacity that could impair the enforceability of this Agreement and the
applicable Other Agreements against any other Principal Stockholder. The
Agreement has been duly executed and delivered by each Principal Stockholder
and constitutes the legal, valid and binding obligations of each Principal
Stockholder, enforceable against them in accordance with its terms.
Section 1.12 Authorization and Validity. Seller has all requisite
corporate power to enter into this Agreement and all other agreements entered
into in connection with the transactions contemplated hereby and to consummate
the transactions contemplated hereby. The execution, delivery and, subject to
approval of this
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Agreement by the Principal Stockholders, performance by Seller of this
Agreement and the agreements contemplated herein, and the consummation by
Seller of the transactions contemplated hereby and thereby are within Seller's
respective corporate powers and have been duly authorized by all necessary
action on the part of Seller's Boards of Directors. This Agreement has been
duly executed by Seller, and this Agreement and all other agreements and
obligations entered into and undertaken in connection with the transactions
contemplated hereby to which Seller is a party constitute, or upon execution
will constitute, valid and binding agreements of Seller, enforceable against it
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy or other laws affecting the enforcement of creditors'
rights generally, or by general equity principles, or by public policy.
Section 1.13 Title to Purchased Assets.
(1) Schedule 5.3(a) hereto sets forth a true, correct and
complete list of all claims, liabilities, liens, pledges, options, charges,
adverse claims, leases, licenses, rights to use or occupancy, security
interests, restrictions and encumbrances of any kind affecting the Purchased
Assets (collectively, the "Encumbrances").
(2) Seller has good, clear, record and marketable title to, or
valid leasehold interests in, all of the Purchased Assets, free and clear of
all Encumbrances, except as set forth in Schedule 5.3(b) hereto (the "Permitted
Encumbrances"), and, subject to the Permitted Encumbrances, Seller has full
power and right to sell, assign and deliver the Purchased Assets in accordance
with the terms of this Agreement. The delivery to Buyer of the instruments of
transfer of ownership contemplated by this Agreement shall vest valid and
marketable title to the Purchased Assets in Buyer, free and clear of all
Encumbrances, except for the Permitted Encumbrances. Except for Excluded
Assets, there are no material assets used in the Business which are not
Purchased Assets.
Section 1.14 Condition of Tangible Assets. Except as set forth on
Schedule 5.4, the tangible Personal Property and any other tangible Purchased
Assets are in reasonable operating condition and are sufficient for the
operation of the Business as presently conducted and are in conformity in all
material respects with all applicable laws, ordinances, orders, regulations and
other requirements (including, without limitation, applicable occupational
safety and health laws and regulations) relating thereto currently in effect.
Section 1.15 Consents and Approvals. Except as set forth on Schedule
5.5, no consent, approval or authorization of, notice to, or declaration,
filing or registration with, any governmental entity or any other Person is
required to be made or obtained by Seller in connection with its execution,
delivery and performance of this Agreement and its consummation of the
transactions contemplated hereby.
Section 1.16 Governmental Authorization. Except as set forth in
Schedule 5.6, and other than consents, filings or notifications required to be
made or obtained by Buyer or APPM, the execution, delivery and performance by
Seller of this Agreement and the agreements provided for herein, and the
consummation of the transactions contemplated hereby and thereby by Seller
require no action by or in respect of, or filing with, any governmental body,
agency, official or authority.
Section 1.17 Continuity of Business Enterprise. Except as set forth in
Schedule 5.7, there has not been any sale, distribution or spin-off of
significant assets of Seller other than in the ordinary course of business
within the two (2) years preceding the date of this Agreement.
Section 1.18 Subsidiaries and Investments. Except as set forth in
Schedule 5.8, Seller 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 "Seller
Subsidiary").
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Section 1.19 Absence of Conflicting Agreements or Required Consents.
The execution, delivery and performance by Seller of this Agreement and any
other documents contemplated hereby (with or without the giving of notice, the
lapse of time, or both): (i) except as set forth in Schedule 5.6 and Schedule
5.9 hereto, does not require the consent of any governmental or regulatory body
or authority or any other third party; (ii) will not conflict with or result in
a violation of any provision of Seller's articles or certificate of
incorporation or bylaws; (iii) will not conflict with, result in a violation
of, or constitute a default under any law, rule, ordinance, regulation or any
ruling, decree, determination, award, judgment, order or injunction of any
court or governmental instrumentality which is applicable to Seller or by which
Seller or its properties are subject to or bound; (iv) except as set forth in
Schedule 5.9, 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 Seller is a party or by which Seller or any of its properties
are subject to or bound; and (v) will not create any Encumbrance or restriction
upon any of the Purchased Assets.
Section 1.20 Seller Financial Statements. Attached hereto as Schedule
5.10 are (i) the consolidated balance sheet of Seller as of December 31, 1997,
and the related statements of income, Principal Stockholders' equity and
statements of cash flows of Seller and Seller Subsidiaries for the year ended
December 31, 1997 (collectively, the "Seller Financial Statements"); and (ii)
the unaudited consolidated balance sheet of Seller and Seller Subsidiaries as
of February 28, 1998 (the "Seller Current Balance Sheet") and the related
statements of income, Principal Stockholders' equity and statements of cash
flows of Seller and Seller Subsidiaries for the two (2) month period ended
February 28, 1998, (collectively, the "Seller Current Financial Statements").
Seller Financial Statements and Seller Current Financial Statements are
sometimes collectively referred to herein as the "Seller Financial Statements."
Seller Financial 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
Seller as of the dates indicated and present fairly the results of Seller's
operations for the periods then ended; and (c) are in accordance with the books
and records of Seller, which have been properly maintained and are complete and
correct in all material respects. Seller Current Financial Statements present
fairly the financial position of Seller and Seller Subsidiaries as at the dates
thereof and the results of its operations and changes in financial position for
the periods then ended, subject to normal year-end audit adjustments (the
effect of which will not individually or in the aggregate result in a Material
Adverse Effect on Seller) and lack of footnotes thereto.
Section 1.21 Intentionally Omitted.
Section 1.22 Litigation and Claims. Except as listed in Schedule 5.12
hereto, there are no claims, lawsuits, actions, arbitrations, administrative or
other proceedings, governmental investigations or inquiries pending, or
affecting, or to the knowledge of Seller threatened against, or affecting
Seller, any Seller Subsidiary, any Principal Stockholder, the Physician
Employees or any other licensed professional or other individual affiliated
with Seller affecting or that could affect the operations, business condition,
(financial or otherwise), or results of operations or the prospects of Seller
which (i) if successful, may, individually or in the aggregate, have a Material
Adverse Effect on Seller or (ii) could adversely affect the ability of Seller
or any Seller Subsidiary to effect the transactions contemplated hereby, and
there is no basis for any such action or any state of facts or occurrence of
any event which might give rise to the foregoing. There are no unsatisfied
judgments against Seller or any Seller Subsidiary or any licensed professional
or other individual affiliated with Seller or any Seller Subsidiary relating to
services provided by or on behalf of Seller or any Seller Subsidiary or any
consent decrees to which any of the foregoing is subject. Except as set forth
in Schedule 5.12, each of the matters, if any, set forth in Schedule 5.12 is
fully covered by policies of insurance of Seller or any Seller Subsidiary as in
effect on the date hereof.
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Section 1.23 No Violation of Law. Neither Seller nor any Seller
Subsidiary has been, nor shall be as of the date hereof (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 have a Material Adverse Effect on Seller.
Section 1.24 Contracts and Commitments.
(1) Schedule 5.14 contains a true, accurate and complete list,
and Seller has delivered to APPM true and complete copies, of each contract,
agreement and other instrument (other than insurance contracts identified in
Schedule 5.24 or Lease Agreements identified in Schedule 5.20) to which Seller
is a party or by which it or any of its properties or assets are bound
including, without limitation, (i) all agreements between Seller, on the one
hand, and any government entity, Payor, provider, hospital, health maintenance
organization, other managed care organization or other third-party provider, on
the other hand, 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
Seller to make, or setting forth conditions under which Seller 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 Seller (or any Physician Employee of Seller) to compete in any line of
business with any person or entity or in any geographic area; or (v) all
written contracts and commitments to which aggregate future payments by Seller
are 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. Except
as noted in Schedule 5.14, 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, each
constituting an Assumed Contract will continue to be binding in accordance with
their terms after consummation of the transaction contemplated herein. Except
as noted in Schedule 5.14, there are no contracts, agreements or other
instruments to which Seller 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 Buyer of the
Purchased Assets, or which could inhibit or prevent Seller from transferring to
or vesting in Buyer good and sufficient title to the Purchased Assets. For
each of the Assumed Liabilities, in every instance where consent is necessary,
Seller obtained and delivered to Buyer in writing, effective as of the date
hereof, such consents as are necessary to effect a valid and binding transfer
or assignment so as to enable Buyer to enjoy all of the rights now enjoyed by
Seller under such contracts. Notwithstanding the foregoing, Seller shall not
transfer to Buyer any contracts or agreements relating to the provision of
professional medical services or other such agreements and contracts that Buyer
consents to in writing to be retained by Seller. Except as set forth in
Schedule 5.14, no contract with a health care provider or Payor has been
materially amended or terminated within the last twelve (12) months.
(2) Except as disclosed in Schedule 5.14, (i) Seller has not
received notice of any plan or intention of any other party to exercise any
right to cancel or terminate such contract, agreement or instrument, and Seller
is not aware of any fact(s) that would justify the exercise of such a right;
and (ii) Seller does not currently contemplate, or have reason to believe any
other Person currently contemplates, any amendment or change to any such
contract, agreement or instrument.
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Section 1.25 No Brokers. Seller has not entered into and will not
enter into any agreement, arrangement or understanding with any person or firm
which will result in the obligation of Buyer to pay any finder's fee, brokerage
commission or similar payment.
Section 1.26 No Other Agreements to Sell the Assets of the Business.
Seller does not have any legal obligation, absolute or contingent, to any
Person to sell any of the Purchased Assets (other than agreements for the sale
of Inventory in the ordinary course), or to effect any sale of the Business or
to enter into any agreement with respect thereto.
Section 1.27 Employee Matters.
(1) Employment Contracts. Except as set forth in Schedule
5.17(a), Seller 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 (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated thereunder
("ERISA")), profit sharing, bonus, stock option, stock purchase or other
nonqualified benefit or compensation commitments, benefit plans, arrangements
or plans (whether written or oral), including all welfare plans (as defined in
Section 3(1) of ERISA) of or pertaining to Seller and any of its present or
former employees, or any predecessors in interest.
(2) Employees. As of February 28, 1998, Seller employed a
collective total of twenty-one (21) full-time and part-time employees.
Schedule 5.17(b) lists each employee of, or consultant to, Seller who received
combined salary, benefits and bonuses for 1997 in excess of $50,000 or who is
expected to receive combined salary, benefits and bonuses in 1998 in excess of
$50,000. Seller is not delinquent in payment to any of its employees or
Physician Employees for wages, salaries, bonuses or other direct compensation
for any services performed for it to the date hereof or amounts required to be
reimbursed to such employees.
(3) Severance Arrangements. Except as set forth on Schedule
5.17(c), upon termination of employment of any employee or Physician Employee,
no severance or other payments will become due and Seller has no policy, past
practice or plan of paying severance on termination of employment.
Section 1.28 Labor Relations.
(1) Except as set forth on Schedule 5.18(a), to the knowledge
of Seller, no executive, key employee or group of employees has any plans to
terminate employment with Seller, except by reason of terminating such
relationship by becoming an employee of Buyer in connection with Buyer's
purchase of the Business pursuant hereto.
(2) Except as set forth in Schedule 5.18(b), there is no
unfair labor practice, charge or complaint or any other employment-related
matter against or involving Seller pending or threatened before the National
Labor Relations Board or any federal, state or local agency, authority or
court.
(3) Except as set forth in Schedule 5.18(c), there are no
charges, investigations, administrative proceedings or formal complaints of
discrimination (including discrimination based upon sex, age, marital status,
race, national origin, the making of workers' compensation claims, sexual
preference, handicap or veteran status) pending or threatened before the Equal
Employment Opportunity Commission or any federal, state or local agency,
authority or court against Seller. There have been no governmental audits of
the equal employment opportunity practices of Seller and no basis for any such
audit exists which, if conducted would result in a Material Adverse Effect on
Seller.
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(4) Except as set forth in Schedule 5.18(d), there are no
inquiries, investigations or monitoring activities of any licensed, registered,
or certified professional personnel employed or retained by, credentialed or
privileged, or otherwise affiliated with Seller pending or threatened by any
state professional board or agency charged with regulating the professional
activities of health care practitioners.
Section 1.29 Employee Benefit Plans.
(1) Identification. Schedule 5.19(a) contains a complete and
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of ERISA) sponsored by Seller or to which Seller contributes on behalf of its
employees and all employee benefit plans previously sponsored or contributed to
on behalf of its employees within the three years preceding the date hereof
(the "Employee Benefit Plans"). Seller has provided to Buyer copies of all
plan documents (as they may have been amended to the date hereof),
determination letters, pending determination letter applications, trust
instruments, insurance contracts or policies related to an Employee Benefit
Plan, administrative services contracts, annual reports, actuarial valuations,
summary plan descriptions, summaries of material modifications, administrative
forms and other documents that constitute a part of or are incident to the
administration of the Employee Benefit Plans. In addition, Seller has provided
or made available to Buyer a written description of all existing practices
engaged in by Seller that constitute Employee Benefit Plans. Except as set
forth in Schedule 5.19(a), subject to the requirements of ERISA, each of the
Employee Benefit Plans can be terminated or amended at will by Seller without
any further liability or obligation on the part of such entity to make further
contributions or payments in connection therewith following such termination.
Except as set forth in Schedule 5.19(a), no unwritten amendment exists with
respect to any Employee Benefit Plan.
(2) Administration. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect to
Seller.
(3) Examinations. Except as set forth in Schedule 5.19(c),
Seller has not received any notice that any Employee Benefit Plan is currently
the subject of an audit, investigation, enforcement action or other similar
proceeding conducted by any state or federal agency or authority.
(4) Prohibited Transactions. No prohibited transactions
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) have
occurred with respect to any Employee Benefit Plan. There has been no breach
of any duty under ERISA or applicable law (including, without limitation, any
health care contractor requirements or any other tax law requirements, or
conditions to favorable tax treatment, applicable to such plan), which could
result, directly or indirectly, (including through any obligation of
indemnification or contribution), in any taxes, penalties or other liability to
Seller, APPM or any of their respective Affiliates.
(5) Claims and Litigation. Except as set forth in Schedule
5.19(e), no pending or threatened claims, suits or other proceedings exist with
respect to any Employee Benefit Plan other than normal benefit claims filed by
participants or beneficiaries.
(6) Qualification. Seller has received a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) or
501(c)(9) of the Code and/or tax-exempt within the meaning of Section 501(a) of
the Code and, to the best knowledge of Seller and each Principal Stockholder,
has been continually qualified under the applicable section of the Code since
the effective date of such Employee Benefit Plan. No proceedings exist or have
been threatened that could result in the revocation of any such favorable
determination letter or ruling.
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(7) Funding Status. Except as set forth in Schedule 5.19(g),
no accumulated funding deficiency (within the meaning of Section 412 of the
Code), whether waived or unwaived, exists with respect to any Employee Benefit
Plan or any plan sponsored by any member of a controlled group (within the
meaning of Section 412(n)(6)(B) of the Code) in which Seller is a member (a
"Controlled Group"). Except as set forth in Schedule 5.19(g), with respect to
each Employee Benefit Plan subject to Title IV of ERISA, the assets of each
such plan are at least equal in value to the present value of accrued benefits
determined on an ongoing basis as of the date hereof. With respect to each
Employee Benefit Plan described in Section 501(c)(9) of the Code, the assets of
each such plan are at least equal in value to the present value of accrued
benefits, based upon the most recent actuarial valuation as of a date no more
than ninety (90) days prior to the date hereof. Schedule 5.19(g) contains a
complete and accurate statement of all actuarial assumptions applied to
determine the present value of accrued benefits under all Employee Benefit
Plans subject to actuarial assumptions.
(8) Excise Taxes. Neither Seller nor any member of a
Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
(9) Multiemployer Plans. Neither Seller nor any member of a
Controlled Group is or ever has been obligated to contribute to a multiemployer
plan within the meaning of Section 3(37) of ERISA or any other Employee Benefit
Plan which has been subject to Title IV of ERISA or Section 412 of the Code.
(10) PBGC. No facts or circumstances exist that would result
in the imposition of liability against APPM, Buyer or any of its Affiliates by
the Pension Benefit Guaranty Corporation ("PBGC") as a result of any act or
omission by Seller or any member of a Controlled Group. No reportable event
(within the meaning of Section 4043 of ERISA) for which the notice requirement
has not been waived has occurred with respect to any Employee Benefit Plan
subject to the requirements of Title IV of ERISA.
(11) Retirees. Seller has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of
its employees who may retire or any of its former employees who have retired
except as may be required pursuant to the continuation of coverage provisions
of Section 4980B of the Code and the applicable provisions of ERISA.
(12) Other Compensation Arrangements. Except as set forth in
Schedule 5.19(l), neither Seller nor any Principal Stockholder or Physician
Employee of Seller is a party to any compensation or debt arrangement with any
Person relating to the provision of health care related services other than
arrangements with Seller.
Section 1.30 Lease Agreements. Schedule 5.20 contains a true, accurate
and complete list of all the lease agreements and license agreements to which
Seller or any Seller Subsidiary is a party and pursuant to which Seller or any
Seller 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 $10,000 per year (the
"Lease Agreements"). Seller has delivered to Buyer 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 Seller or any Seller 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 Seller or any
Seller Subsidiary (as applicable) and, individually or in the aggregate, result
in a Material Adverse Effect on Seller; or (ii) any existing material default
by any other party under any of the Lease Agreements or, to the knowledge of
Seller, 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. There is
no pending or threatened reassessment of any property covered by the Lease
Agreements. Seller or a Seller Subsidiary (as applicable) has obtained the
consent of each landlord or lessor whose consent is required to the assignment
of the Lease Agreements and has delivered to Buyer in writing such consents as
are necessary to effect a valid and binding
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transfer or assignment of Seller's or any Seller Subsidiary's rights
thereunder. Seller has a good, clear, valid and enforceable leasehold interest
under each of the Lease Agreements. The Lease Agreements are in compliance
with all applicable safe harbor provisions promulgated by the Department of
Health and Human Services in connection with the enforcement of the federal
Fraud and Abuse Xxxxxxx, 00 XXX Part 1001 and any similar applicable state law
safe harbor or other exemption provisions.
Section 1.31 Real and Personal Property.
(1) Except as set forth in Schedule 2.1(a), neither
Seller nor any Seller Subsidiary owns any interest (other than the Lease
Agreements) in real property.
(2) Except as set forth in Schedule 5.3(b), Seller and
any Seller Subsidiary (i) has good and marketable title to all of its
properties and assets (personal and mixed, tangible and intangible) and any
rights or interests therein which it purports to own including, without
limitation, all the property and assets reflected in Seller Financial
Statements; and (ii) owns such rights, interests, assets and property free and
clear of all Encumbrances, title defects or objections (except for taxes not
yet due and payable). Seller Financial Statements reflect all personal
property used in connection with the operation of the business subject to
disposition in the ordinary course of business and such personal property are
the necessary assets to continue operation of Seller and any Seller Subsidiary.
Section 1.32 Environmental Matters.
(1) Neither Seller nor any Seller Subsidiary has, within the
five (5) years preceding the date hereof, through the Effective Time, received
from any federal, state or local governmental body, agency, authority or
entity, or any other Person, any written notice, demand, citation, summons,
complaint or order or any notice of any penalty, lien or assessment, and no
investigation or review is pending by any governmental entity, with respect to
any (i) alleged violation by Seller of any Environmental Law (as defined in
subsection (e) below); (ii) alleged failure by Seller 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 Seller.
(2) Neither Seller nor any Seller Subsidiary has used,
transported, disposed of or arranged for the disposal of (as those terms are
defined in and construed under the Comprehensive Environmental Response,
Compensation and Liability Act) any Hazardous Substance (as defined herein in
subsection (e) below) that would give rise to any Environmental Liabilities (as
defined in subsection (e) below) for Seller under any applicable Environmental
Law that had, or could likely have, a Material Adverse Effect on Seller.
Neither Seller nor any Seller Subsidiary has engaged in any activity or failed
to undertake any activity which action or failure to act has given, or could
likely give, rise to any Environmental Liabilities or enforcement action by any
federal, state or local regulatory agency or authority, or has resulted, or
could likely result, in any fine or penalty imposed pursuant to any
Environmental Law. Schedule 5.22(b) discloses any known presence of asbestos
in or on Seller's or any Seller Subsidiary's owned or leased premises. There
is no friable asbestos in or on Seller's or any Seller Subsidiary's owned or
leased premises.
(3) No soil or water in or under any assets currently or
formerly held for use or sale by Seller or any Seller 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 Seller or any
Seller Subsidiary where such contamination had, or could likely have, a
Material Adverse Effect on Seller.
(4) Schedule 5.22(d) contains a list of all environmental
audits and other similar reports which have been prepared by, for or concerning
Seller or any Seller Subsidiary within the five (5) years preceding
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the date hereof through the Effective Time with respect to any real property
now or previously owned or leased by Seller, any Seller Subsidiary or any of
their predecessors, true and complete copies of which have been provided to
Buyer.
(5) For the purposes of this Section 5.22, the following terms
have the following meanings:
"Environmental Laws" shall mean any and all domestic federal,
state and local laws (including case law), regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions and permits
relating to the environment or to emissions, discharges or releases of
Hazardous Substances into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances or the clean-up
or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities of Seller
or any Seller Subsidiary, whether contingent or fixed, which (i) have
arisen, or could likely arise, under Environmental Laws and (ii) relate
to actions occurring or conditions existing on or prior to the date
hereof or the Effective Time.
"Hazardous Substances" shall mean any air pollution, toxic,
radioactive, caustic or otherwise hazardous substance regulated by any
Environmental Law (including, but not limited to, (i) Medical Waste and
(ii) petroleum, its derivatives, by-products and other hydrocarbons),
and any material constituent elements thereof displaying any of the
foregoing characteristics.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Substances.
Section 1.33 Filing Reports. All returns, reports, plans and filings
of any kind or nature necessary to be filed by Seller 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 Seller.
Section 1.34 Insurance Policies. Schedule 5.24 lists and briefly
describes Seller's policies of insurance to which Seller or any Affiliate is a
party or under which Seller or any Affiliate, 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 Seller or any of its Affiliates
(the "Insurance Policies"). Except as set forth in Schedule 5.24, all of the
Insurance Policies are issued by insurers that are financially sound and
reputable and 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 are currently paid. All Insurance Policies
currently maintained by Seller or any Affiliate thereof ("Current Policies")
taken together (i) provide adequate insurance coverage for the assets,
properties and operations of Seller and its Affiliates for all risks normally
insured against by a Person carrying on a substantially similar business or
businesses as Seller and its Affiliates; (ii) are sufficient for compliance
with legal and contractual requirements to which Seller 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 date hereof. True,
complete and correct copies of all Insurance Policies have been provided to
APPM. Except as set forth in Schedule 5.24, neither Seller nor any of its
Affiliates nor any officer or director thereof has received any notice or other
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 the Principal Stockholders, no such cancellation or
increase of deductibles, retainages or premiums is threatened. Except as set
forth in Schedule 5.24, there are no outstanding claims, settlements or
premiums owed against any Insurance Policy, and all required notices have been
given and all potential or actual claims under any Insurance Policy have
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been presented in due and timely fashion. Except as set forth in
Schedule 5.24, since January 1, 1993, neither Seller nor any Affiliate thereof
has filed a written application for any professional liability insurance
coverage which has been denied by an insurance agency or carrier. Schedule
5.24 also sets forth a list of all claims under any Insurance Policy in excess
of $10,000 per occurrence filed by Seller or any Affiliate thereof during the
immediately preceding three-year period. Except as set forth in Schedule 5.24,
each Physician Employee has, at all times while a Physician Employee,
maintained or been covered by professional malpractice insurance in such types
and amounts as customary for such a physician practicing the same type of
medicine in the same geographic area.
Section 1.35 Accounts Receivable; Payors.
(1) Attached hereto as Schedule 5.25(a) is a list and aging of
all accounts receivable of Seller as of February 28, 1998, 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,
collectible in the ordinary course of business, net of contractual allowances,
reserves for doubtful and uncollectible accounts shown in Seller Financial
Statements or on the accounting records of Seller (which reserves are adequate
and calculated consistent with past practice).
(2) Schedule 5.25(b) sets forth a true, correct and complete
list of the names and addresses of each Payor including, but not limited to,
all private-pay patients as a single Payor, of Seller which accounted for more
than 5% of the revenues of Seller in the fiscal year ended February 28, 1998,
or which is reasonably expected to account for more than 5% of the revenues of
Seller for the fiscal year ended December 31, 1998. Except as set forth in
Schedule 5.25(b), Seller has satisfactory relations with such Payors and none
of such Payors has notified Seller that it intends to discontinue its
relationship with Seller or to deny any payments due from, or any claims for
payment submitted to any such party.
Section 1.36 Suppliers.
(1) Intentionally Omitted.
(2) Schedule 5.26(b) sets forth a true, correct and complete
list of the names and addresses of each of the providers/suppliers of products
or services to Seller (including, without limitation all non-Physician Employee
providers of care to patients) which accounted for a dollar volume of purchases
paid for by Seller in excess of $2,500 for the fiscal year ended December 31,
1997, or which is reasonably expected to account for a dollar volume of
purchases paid for by Seller in excess of $2,500 for the fiscal year ended
December 31, 1998.
Section 1.37 Intentionally Omitted.
Section 1.38 Licenses, Authorization and Provider Programs.
(1) Except as listed in Schedule 5.28(a), Seller, and each
Physician Employee and other licensed employee or independent contractor of
Seller (i) is the holder of all valid licenses, approvals, orders, consents,
permits, registrations, qualifications and other rights and authorizations
required by law, ordinance, regulation or ruling of any governmental regulatory
authority necessary to operate its/his/her business and (ii) is certified for
participation under Titles XVIII and XIX of the Social Security Act (the
"Medicare and Medicaid Programs") (Medicare and Medicaid Programs and such
other similar federal, state or local reimbursement or governmental programs
for which Seller is eligible are hereinafter referred to collectively as the
"Governmental Programs") and has current provider numbers for such Governmental
Programs and with such private non-governmental programs (including without
limitation any private insurance program) under which Seller is presently
receiving payments directly or indirectly from any Payor for patient care (such
non-governmental
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programs herein referred to as "Private Programs"). A true, correct and
complete list of such licenses, permits and other authorizations, and provider
agreements, is set forth in Schedule 5.28(a), true, complete and correct copies
of which have been provided to APPM. No violation, default, order or
deficiency exists with respect to any of the items listed in Schedule 5.28(a)
except for such violations, defaults, orders or deficiencies which would not be
reasonably likely to have a Material Adverse Effect on Seller, and there is no
action pending or recommended by any state or federal agencies having
jurisdiction over the items listed in Schedule 5.28(a), either to revoke,
withdraw or suspend any material license or to terminate the participation of
Seller 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 Schedule 5.28(a) or to revoke, withdraw or suspend any
material license to operate its business as is presently being conducted by it.
To the knowledge of Seller, there has been no decision not to renew any
existing agreement with any provider or Payor relating to Seller's business as
presently being conducted by it. Except as set forth in Schedule 5.28(a) or
Schedule 5.12 hereof, neither Seller nor any Physician Employee (i) has had
his/her/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; (ii)
has been reprimanded, sentenced, or disciplined by any licensing board, state
agency, regulatory body or authority, hospital, Payor or specialty board; or
(iii) has had a final judgment or settlement entered against him/her/its in
connection with a malpractice or similar action.
(2) Except as set forth in Schedule 5.28(b), Seller is not
required, and for the 72-month period prior to the Effective Time was not
required, to file any cost reports or other reports with any Governmental
Program or Private Program.
Section 1.39 Inspections and Investigations. Neither the right of
Seller, or any Physician Employee, nor the right of any licensed professional
or other individual affiliated with Seller 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. Except as set forth and described in Schedule 5.29, no Physician
Employee, licensed professional or other individual affiliated with the
business has, during the past three (3) years prior to the Effective Time, had
their license suspended or revoked by any governmental regulatory authority or
agency, hospital, integrated delivery system, trade association, professional
review organization, accrediting organization or certifying agency. True,
correct and complete copies of all reports, correspondence, notices and other
documents relating to any matter described or referenced in Schedule 5.29 have
been provided to Buyer.
Section 1.40 Proprietary Rights and Information.
(1) Set forth in Schedule 5.30(a) 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 Seller or any of its Affiliates; (ii) all
patents and applications therefor and inventories and discoveries that may be
patentable currently owned, in whole or in part, or used by Seller or any of
its Affiliates; (iii) all licenses, royalties, and assignments thereof to which
Seller or any of its Affiliates are a party; (iv) all copyrights (for published
and unpublished works) currently owned in whole or part, or used by Seller or
any of its Affiliates; and (v) other similar agreements relating to the
foregoing to which Seller or any of its affiliates is a party (including
expiration date if applicable) (collectively, the "Proprietary Rights").
(2) Schedule 5.30(b) contains a complete and accurate list and
summary description of all agreements relating to technology, trade secrets,
know-how or processes that Seller 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
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to Buyer or APPM. There are no outstanding or, to Seller's knowledge,
threatened disputes or disagreements with respect to any such agreement.
(3) Seller owns or has the legal right to use the Proprietary
Rights without conflicting with, infringing or violating the rights of any
other person. Except as disclosed in Schedule 5.30(c), no consent of any
person will be required for the use thereof by Buyer or APPM upon consummation
of the transactions contemplated hereby and the Proprietary Rights are freely
transferable. No claim has been asserted by any person to the ownership of or
for infringement by Seller of any Proprietary Right of any other Person, and
neither Seller nor any Principal Stockholder is aware of any valid basis for
any such claim. To the best knowledge of Seller, no proceedings have been
threatened which challenge the Proprietary Rights of Seller. Seller 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 merchandise and services formerly or presently
sold or marketed by them.
Section 1.41 Taxes.
(1) Filing of Tax Returns. Seller 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 by 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 Seller for the periods covered thereby.
(2) Payment of Taxes. Except for such items as Seller may be
disputing in good faith by proceedings in compliance with applicable law, which
are described in Schedule 5.31(b), (i) Seller has paid all taxes, penalties,
assessments and interest that have become due with respect to any Tax Returns
that it has filed and has properly accrued on its books and records in
accordance with generally accepted accounting principles for all of the same
that have not yet become due and payable; and (ii) Seller is not delinquent in
the payment of any tax, assessment or governmental charge.
(3) No Pending Deficiencies, Delinquencies, Assessments or
Audits. Except as set forth in Schedule 5.31(c), Seller has not received any
notice that any tax deficiency or delinquency has been asserted against Seller,
and to the best knowledge of Seller, there is no threat of such assertion.
There is no unpaid assessment, proposal for additional taxes, deficiency or
delinquency in the payment of any of the taxes of Seller that could be asserted
by any taxing authority. Since January 1, 1993, there has been no taxing
authority audit and there is no taxing authority audit of Seller pending, or to
the actual knowledge of Seller, threatened against Seller or any Seller
Subsidiary (and the results of any completed audits are properly reflected in
Seller Financial Statements). Seller has not violated any applicable federal,
state, local or foreign tax law. There are no security interests or liens on
any assets of Seller or any Seller Subsidiary which have resulted from any
failure to pay (or alleged failure to pay) taxes.
(4) No Extension of Limitation Period. Seller has not granted
an extension to any taxing authority of the statute of limitation period during
which any tax liability may be assessed or collected.
(5) All Withholding Requirements Satisfied. All monies
required to be withheld by Seller and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and timely paid to the respective
governmental agencies.
(6) Foreign Person. Neither Seller nor any Principal
Stockholder is a foreign person, as such term is referred to in Section
1445(f)(3) of the Code and Treasury Regulations Section 1.1445-2.
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(7) Safe Harbor Lease. None of the properties or assets of
Seller constitutes property that Seller, APPM, Buyer or any Affiliate of APPM,
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.
(8) Tax Exempt Entity. None of the assets or properties of
Seller are subject to a lease to a "tax exempt entity" as such term is defined
in Section 168(h)(2) of the Code.
(9) Collapsible Corporation. Seller has not at any time
consented to have the provisions of Section 341(f)(2) of the Code apply to it.
(10) Boycotts. Seller has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the
Code.
(11) Parachute Payments. No payment required or contemplated
to be made by Seller will be characterized as an "excess parachute payment"
within the meaning of Section 280G of the Code.
(12) S Corporation. Seller has made an election to be taxed as
an "S" corporation under Section 1362(a) of the Code.
(13) Personal Holding Companies. Seller is not and has not
been a personal holding company within the meaning of Section 542 of the Code.
Section 1.42 Related Party Arrangements. Schedule 5.32 sets forth a
description of any interest held, directly or indirectly, by any officer,
director or other Affiliate of Seller in any property, real or personal or
mixed, tangible or intangible, used in or pertaining to Seller's business and
any arrangement or agreement with any such Person concerning the provision of
goods or services or other matters pertaining to Seller's business. There is
no commitment to, and no income reflected in Seller Financial Statements that
has been derived from an Affiliate. Except as set forth in Schedule 5.32, none
of the Assumed Liabilities includes any obligation of any kind or designation
to any Affiliate of Seller or the Principal Stockholders.
Section 1.43 Banking Relations. Set forth in Schedule 5.33 is a
complete and accurate list of all borrowing and investing arrangements that
Seller 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 1.44 Fraud and Abuse and Self Referral. Neither Seller nor any
Seller Subsidiary has engaged and, to the knowledge of Seller, neither Seller's
officers and directors nor the Physician Employees or other Persons and entities
providing professional services for or on behalf of Seller have engaged, in any
activities which are prohibited under 42 U.S.C. Sections 1320a 7, 7a or 7b or 42
U.S.C. Section 1395nn (subject to the exceptions or safe harbor provisions set
forth in such legislation), or the regulations promulgated thereunder or
pursuant to similar state or local statutes or regulations, or which are
prohibited by applicable rules of professional conduct.
Section 1.45 Restrictions on Business Activities. Except as disclosed
in Schedule 5.14 or Schedule 5.35, there is no material agreement, judgment,
injunction, order or decree binding upon Seller, any Seller Subsidiary or
officer, director or key employee (including, but not limited to, Physician
Employees) of Seller or Seller Subsidiary, which has or reasonably could be
expected to have the effect of prohibiting or materially impairing any current
or future business practice of Seller or any Seller Subsidiary, any acquisition
of property by Seller, any Seller Subsidiary or the conduct of business by
Seller or any Seller Subsidiary.
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Section 1.46 Agreements in Full Force and Effect. Except as expressly
set forth in Seller's Schedules to this Agreement, all contracts, agreements,
plans, leases, policies and licenses referred to, or required to be referred
to, in Seller's 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, 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 Seller or any other party thereto. No contract with a health
care provider has been terminated in the last twelve (12) months.
Section 1.47 Statements True and Correct. No representation or
warranty made herein by Seller or any Principal Stockholder, nor any statement,
certificate, exhibit or instrument to be furnished by Seller or any Principal
Stockholder to APPM or Buyer pursuant to this Agreement, contains or will
contain as of the Effective Time any untrue statement of material fact or omits
or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading.
Section 1.48 Schedules. All Schedules required by Article V hereof and
attached hereto are true, correct and complete in all material respects as of
the date of this Agreement.
Section 1.49 Finders' Fees. Except as set forth in Schedule 5.39, no
investment banker, broker, finder or other intermediary has been retained by or
is authorized to act on behalf of any of the Principal Stockholders or Seller
who is entitled to any fee or commission upon consummation of the transactions
contemplated by this Agreement or referred to herein.
Section 1.50 Investment Decision. Seller is entering into this
Agreement at the direction of, and based on the prior written approval of, the
Principal Stockholders. The Principal Stockholders have taken or have caused
Seller to take all actions necessary or appropriate to effectuate the
dissolution of Seller on, or as soon as practicable after, the date hereof (but
in any event prior to the issuance of the Closing Stock). The determination
(i) to accept the Closing Stock as a portion of the consideration to be
delivered by Buyer for the transactions contemplated herein, (ii) to dissolve
Seller, (iii) to have the Closing Stock issued directly to the Principal
Stockholders, and (iv) to accept such Closing Stock to be held as restricted
securities as described in those certain Investment Representation Letters of
even date, have been made by the Principal Stockholders.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND APPM
Buyer and APPM each represents and warrants to Seller as follows:
Section 1.51 Organization and Good Standing; Qualification. Each of
Buyer and APPM 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. Each of Buyer and APPM 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 Buyer or APPM. Copies of the certificate of incorporation
and all amendments thereto of Buyer and APPM and the bylaws of Buyer and APPM,
as amended, and copies of the corporate minutes of Buyer and APPM regarding
this transaction, all of which have been or will be made available to Seller
for review, are true, correct and complete as in effect on the date of this
Agreement
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and accurately reflect all material proceedings of the Principal Stockholders
and directors of Buyer and APPM (and all committees thereof) regarding this
transaction.
Section 1.52 Authorization and Validity. Each of Buyer and APPM has
all requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Buyer and APPM of this Agreement and the agreements provided for
herein, and the consummation by Buyer and APPM of the transactions contemplated
hereby and thereby are within Buyer and APPM's respective corporate powers and
have been duly authorized by all necessary action on the part of Buyer's and
APPM's Boards of Directors. This Agreement has been duly executed by Buyer and
APPM. This Agreement and all other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby to which
Buyer and APPM is a party constitute, or upon execution will constitute, valid
and binding agreements of Buyer and APPM, 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 1.53 Governmental Authorization. Except as expressly set forth
in Schedule 6.3, and other than consents, filings or notifications required to
be made or obtained by Buyer and APPM, the execution, delivery and performance
by Buyer and APPM of this Agreement and the agreements provided for herein, and
the consummation of the transactions contemplated hereby and thereby by Buyer
and APPM, to the best knowledge of Buyer and APPM, requires no action by or in
respect of, or filing with, any governmental body, agency, official or
authority.
Section 1.54 Capitalization. The authorized capital stock of APPM
consists of 50,000,000 shares of APPM Common Stock, of which approximately
17,540,000 shares are issued and outstanding and 10,000,000 shares of APPM
Preferred Stock, none of which are outstanding. Each outstanding share of APPM
Common Stock which is being purchased by Seller hereunder has been legally and
validly issued and is fully paid and nonassessable, and based in part upon the
representations of Seller in this Agreement will be issued pursuant to a valid
exemption from registration under (i) the Securities Act and (ii) all
applicable state securities laws.
Section 1.55 Absence of Conflicting Agreements or Required Consents.
To the best knowledge of Buyer and APPM, the execution, delivery and
performance of this Agreement by Buyer and/or APPM and any other documents
contemplated hereby (with or without the giving of notice, the lapse of time,
or both): (i) except as set forth in Schedule 6.3 and Schedule 6.5 hereto, does
not require the consent of any governmental or regulatory body or authority or
any other third party; (ii) will not conflict with any provision of Buyer's or
APPM'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 Buyer or APPM is a party or by which Buyer or APPM or
their or its properties are subject to or bound; and (iv) except as set forth
in Schedule 6.5, 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 Buyer or APPM is a party or by which Buyer or APPM or any of their
respective properties are bound.
Section 1.56 Statements True and Correct. No representation or
warranty made herein by Buyer or APPM, nor any statement, certificate or
instrument to be furnished by Buyer or APPM to Seller or a Principal
Stockholder pursuant to this Agreement, contains or will contain as of the
Effective Time any untrue statement of material fact or omits or will omit to
state a material fact necessary to make the statements contained herein and
therein not misleading.
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Section 1.57 Schedules. All Schedules required by Article IV hereof
and attached hereto are true, correct and complete in all material respects as
of the date of this Agreement.
Section 1.58 Finders' Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of
Buyer or APPM who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or referred to herein.
ARTICLE VII
INTENTIONALLY OMITTED
ARTICLE VIII
INTENTIONALLY OMITTED
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
INTENTIONALLY OMITTED
ARTICLE XI
CLOSING DELIVERIES
Section 1.59 Deliveries of Seller. Seller hereby delivers to Buyer the
following:
(1) a copy of resolutions of the Boards of Directors of Seller
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements, each certified by the Secretary of such
corporation as being true and correct copies of the originals thereof subject
to no modifications or amendments;
(2) a copy of resolutions of the Boards of Directors of Seller
authorizing the execution, delivery and performance of the Service Agreement
(as defined below) and Employment Agreements (as defined below) (collectively,
the "Other Agreements") each certified by the Secretary of Seller as being true
and correct copies of the originals thereof subject to no modifications or
amendments;
(3) Intentionally Omitted;
(4) Intentionally Omitted;
(5) a certificate of the Secretary of Seller certifying as to
the incumbency of the directors and officers of such corporation and as to the
signatures of such directors and officers who have executed documents delivered
on behalf of that corporation;
(6) a certificate, dated within ten (10) days prior to the
date hereof, of the Secretary of State of Florida establishing that Seller is
in existence, has paid all franchise or similar taxes, if any, and, if
applicable, otherwise is in good standing to transact business in the state of
Florida;
(7) certificates, dated within ten (10) days prior to the date
hereof, of the Secretaries of State of the states in which Seller is qualified
to do business, to the effect that each such corporation is qualified to do
business and, if applicable, is in good standing as a foreign corporation in
each of such states;
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(8) all authorizations, consents, approvals, permits and
licenses referenced in Section 5.28;
(9) the executed Service Agreement entered into by and among
Buyer, APPM and Seller as of the date hereof (the "Service Agreement");
(10) Intentionally Omitted;
(11) an assignment to Buyer of (i) each lease for real or
personal property described on Schedule 5.20 (the "Lease Assignments"); (ii)
all contracts described on Schedule 5.14 which can be assigned to Buyer
("Non-Payor Contract Assignments"); (iii) all Purchased Contracts; and (iv) all
contracts described in Schedule 5.14 which cannot be assigned to Buyer ("Payor
Contract Assignments");
(12) the executed employment agreements by and between SLIBC
and each of the Principal Stockholders (the "Employment Agreements");
(13) the executed legal opinion by counsel to Seller dated of
even date; and
(14) the executed Investment Representation Letter
Section 1.60 Deliveries of APPM. APPM hereby delivers to Seller the
following:
(1) a copy of resolutions of the Board of Directors of APPM
authorizing the execution, delivery and performance of this Agreement, and all
related documents and agreements, certified by APPM's Secretary as being true
and correct copies of the originals thereof subject to no modifications or
amendments;
(2) the Purchase Price accordance with Article IV hereof;
(3) Intentionally Omitted;
(4) Intentionally Omitted;
(5) a certificate of the Secretary of Buyer certifying as to
the incumbency of the officers of Buyer who have executed documents on behalf
of Buyer;
(6) a certificate, dated within ten (10) days prior to the
date hereof, of the Secretary of State of Delaware establishing that Buyer is
in existence, has paid all franchise or similar taxes, if any, and, if
applicable, otherwise is in good standing to transact business in the state of
Delaware;
(7) certificates (or photocopies thereof), dated within ten
(10) days prior to the date hereof, of the Secretaries of State of the states
in which Buyer is qualified to do business, to the effect that Buyer is
qualified to do business and, if applicable, is in good standing as a foreign
corporation in such state;
(8) the executed Other Agreements; and
(9) the executed Lease Assignments, Non-Payor Contract
Assignments, Purchased Contracts and Payor Contract Assignments.
ARTICLE XII
INTENTIONALLY OMITTED
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ARTICLE XIII
POST CLOSING MATTERS
Section 1.61 Further Instruments of Transfer. Following the date
hereof, at the request of Buyer and at Buyer's sole cost and expense, the
Principal Stockholders and Seller 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 1.62 Certain Prorations.
(1) The items set forth on Schedule 13.2(a) shall be prorated
or adjusted between the parties hereto as of the Effective Time.
(2) On the date hereof, each party shall pay or credit to the
other party all sums required to effectuate the prorations and adjustments
contemplated by the provisions of this Section 13.2. If final figures have not
been calculated on any of the adjustments, prorations or reimbursements as of
the date hereof, then the parties hereto shall close this transaction using
estimated adjustments, prorations and reimbursements which shall be subject to
later readjustment when such final figures have been calculated. The parties
hereto shall seek to determine the amounts of all prorations, adjustments and
reimbursements required hereunder on or before the date hereof, if possible,
and no later than six (6) months following the date hereof.
Section 1.63 Certain Expenses.
(1) Seller shall be responsible for the following expenses:
(i) obtaining, filing and recording any and all releases, satisfactions, deeds,
UCC termination statements and similar documents required in order to cause
title to the Purchased Assets to be free, clear and unencumbered except for
Permitted Encumbrances (as defined in Section 5.3(b) hereof); and (ii) all
sales, use, transfer and other taxes, if any, required by or imposed as a
result of the transactions contemplated hereby.
(2) Each party shall be responsible for its own attorneys',
accountants' and other advisory fees associated with the closing of the
transactions contemplated by this Agreement.
(3) Seller shall pay all prepayment penalties and all other
costs of any kind whatsoever associated with the payment of the mortgages and
leases on the properties referenced on Schedules 2.1 and 3.1.
Section 1.64 Letter of Issuance. Within three (3) days following the
Closing Date, APPM will submit a letter to its transfer agent requesting that
the transfer agent issue to the Principal Stockholders the Closing Stock as
described in Section 4.4..
Section 1.65 Intentionally Omitted.
Section 1.66 Lock-up. Prior to the second anniversary of the Closing
Date, the Principal Stockholders shall not (a) directly or indirectly sell,
offer, pledge, hypothecate, assign, sell short or long, subject to an option,
distribute, transfer or otherwise dispose of, or (b) agree to do any of the
foregoing, in either case with respect to any shares of the Closing Stock
without the prior written consent of APPM. If at any time prior to the two-
year anniversary of the Closing Date, Buyer or APPM delivers a Claim Note (as
defined in Article XIV) to any Principal Stockholder to the effect that Buyer
or APPM believes that any Principal Stockholder has or may have liability to
Buyer or APPM pursuant to Article XIV hereof, then Buyer and/or APPM shall have
the sole and absolute right to not release shares of the Closing Stock from a
lock-up described in this section. Notwithstanding the preceding, the
restrictions contained in this Section 13.6, the prior sentence shall no longer
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apply (i) as to twenty-five percent (25%) of the APPM Common Stock received by
the Principal Stockholders following expiration of a one-year period following
the Effective Date, (ii) as to an additional twenty-five percent (25%) of the
APPM Common Stock received by the Principal Stockholders following expiration
of an eighteen-month period following the Effective Date, and (iii) as to the
remaining fifty percent (50%) of the APPM Common Stock received by the
Principal Stockholders following expiration of a twenty-four month period
following the Effective Date. In addition, the release by APPM of the lock-up
restrictions described in this section shall not effect or release any
Principal Stockholder from liability for indemnification obligations pursuant
to Article XIV hereof. The Principal Stockholders acknowledge that the
certificates representing the Closing Stock will bear a legend describing the
restrictions set forth in this Section. The Principal Stockholders acknowledge
that remedies at law may be inadequate to protect against breach of this
Section and the Principal Stockholders hereby in advance agree to the granting
of injunctive relief in APPM's favor against a breach of this Section, without
proof of actual damages.
ARTICLE XIV
REMEDIES
Section 1.67 Indemnification by Seller. Subject to the terms and
conditions of this Article XIV, SLIBC and each Principal Stockholder, jointly
and severally, shall indemnify, defend and hold APPM and Buyer and their
respective directors, officers, members, managers, employees, agents, attorneys
and Affiliates (collectively, the "Buyer Indemnitees") harmless from and
against all losses, claims, obligations, demands, assessments, penalties,
liabilities, costs, damages, reasonable attorneys' fees and expenses
(collectively, "Damages") asserted against or incurred by such Buyer
Indemnitees arising out of or resulting from:
(1) a breach 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 Seller contained herein or in any
Schedule or certificate delivered hereunder;
(2) any violation (or alleged violation) by Seller and/or any
of its past or present directors, officers, partners, shareholders, employees
(including, without limitation, any Physician Employee), agents, consultants
and Affiliates of state or federal laws governing health care fraud and abuse
(including, but not limited to, fraud and abuse in the Medicare and Medicaid
programs) occurring on or before the date hereof, or any overpayment or
obligation (or alleged overpayment or obligation) arising out of or resulting
from claims submitted to any Payor on or before the date hereof;
(3) any liability under the Securities Act, the Exchange Act
or any other federal or state "blue sky" or securities law or regulation, at
common law or otherwise, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact relating to Seller (including any
Seller Subsidiary) or any Principal Stockholder, and provided to APPM or its
counsel by Seller, specifically for inclusion in any preliminary prospectus,
registration statement or prospectus forming a part thereof, or any amendment
thereof or supplement thereto), arising out of or based upon any omission or
alleged omission to state therein a material fact relating to Seller required
to be stated therein or necessary to make the statements therein not
misleading; and
(4) all Unassumed Liabilities.
Section 1.68 Indemnification by APPM and Buyer. Subject to the terms
and conditions of this Article XIV, APPM and Buyer jointly and severally shall
indemnify, defend and hold Seller and its respective agents, attorneys and
Affiliates (collectively, the "Seller Indemnities") harmless from and against
all Damages asserted against or incurred by such Seller Indemnities arising out
of or resulting from:
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(1) a breach by APPM or Buyer 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 APPM
or Buyer contained herein or in any schedule or certificate delivered
hereunder; and
(2) all Assumed Liabilities.
Section 1.69 Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(1) A party claiming indemnification under this Agreement (an
"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 the party from whom indemnification is sought (the "Indemnifying
Party") of any third-party claim or claims asserted against the Indemnified
Party ("Third Party Claim") that could give rise to a right of indemnification
under this Agreement and (ii) transmit to the Indemnifying Party a written
notice ("Claim Notice") describing in reasonable detail the nature of the Third
Party Claim, a copy of all papers served with respect to such claim (if any),
an estimate of the amount of Damages attributable to the Third Party Claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. Except as set forth in Section 14.6, the failure to promptly
deliver a Claim Notice shall not relieve the Indemnifying Party of its
obligations to the Indemnified Party with respect to the related Third Party
Claim except to the extent that the resulting delay is materially prejudicial
to the defense of such claim.
Within thirty (30) days after receipt of any Claim Notice
(the "Election Period"), the Indemnifying Party shall notify the Indemnified
Party (i) whether the Indemnifying Party disputes its potential liability to
the Indemnified Party under this Article XIV with respect to such Third Party
Claim; and (ii) whether the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against such
Third Party Claim.
(2) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by
the Indemnifying Party to a final conclusion or settled at the discretion of
the Indemnifying Party in accordance with this Section 14.3(b). The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof. The Indemnified Party is
hereby authorized, at the sole cost and expense of the Indemnifying Party (but
only if the Indemnified Party is entitled to indemnification hereunder), to
file, during the Election Period, any motion, answer or other pleadings that
the Indemnified Party shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party and not prejudicial to the
Indemnifying Party (it being understood and agreed that if an Indemnified Party
takes any such action that is prejudicial and causes a final adjudication that
is adverse to the Indemnifying Party, the Indemnifying Party shall be relieved
of its obligations hereunder with respect to such Third Party Claim). If
requested by the Indemnifying Party, the Indemnified Party agrees, at the sole
cost and expense of the Indemnifying Party, to cooperate with the Indemnifying
Party and its counsel in contesting any Third Party Claim that the Indemnifying
Party elects to contest, including, without limitation, the making of any
related counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 14.3(b) and shall bear its
own costs and expenses with respect to such participation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party, and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and upon written
notification thereof, the
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Indemnifying Party shall not have the right to assume the defense of such
action on behalf of the Indemnified Party; provided further that the
Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by
the Indemnified Party.
(3) If the Indemnifying Party fails to notify the Indemnified
Party within the Election Period that the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however,
that the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the foregoing, if the Indemnifying
Party has delivered a written notice to the Indemnified Party to the effect
that the Indemnifying Party disputes its potential liability to the Indemnified
Party under this Article XIV and if such dispute is resolved in favor of the
Indemnifying Party, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant to this Section
or of the Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party shall reimburse the Indemnifying Party in
full for all costs and expenses of such litigation. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 14.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation;
provided, however, that if the named parties to any such action (including any
impleaded parties) include both the Indemnifying Party and the Indemnified
Party, and the Indemnifying Party has been advised by counsel that there may be
one or more legal defenses available to it that are different from or
additional to those available to the Indemnified Party, then the Indemnifying
Party may employ separate counsel and upon written notification thereof, the
Indemnified Party shall not have the right to assume the defense of such action
on behalf of the Indemnifying Party.
(4) In the event any Indemnified Party should have a claim
against any Indemnifying Party hereunder that does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a written
notice (the "Indemnity Notice") describing in reasonable detail the nature of
the claim, an estimate of the amount of damages attributable to such claim and
the basis of the Indemnified Party's request for indemnification under this
Agreement. If the Indemnifying Party does not notify the Indemnified Party
within sixty (60) days from its receipt of the Indemnity Notice that the
Indemnifying Party disputes such claim, the claim specified by the Indemnified
Party in the Indemnity Notice shall be deemed a liability of the Indemnifying
Party hereunder. If the Indemnifying Party has timely disputed such claim, as
provided above, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction if the parties do not reach a settlement of
such dispute within thirty (30) days after notice of a dispute is given.
(5) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article XIV relating to a Third Party Claim shall be made
within thirty (30) days after the latest of (i) the settlement of such Third
Party Claim, (ii) the expiration of the period for appeal of a final
adjudication of such Third Party Claim, or (iii) the expiration of the period
for appeal of a final adjudication of the Indemnifying Party's liability to the
Indemnified Party under this Agreement. Payments of all amounts owing by an
Indemnifying Party pursuant to Section 14.3(d) shall be made within 30 days
after the later of (i) the expiration of the 60-day Indemnity Notice period or
(ii) the expiration of the period for appeal of a final adjudication of the
Indemnifying Party's liability to the Indemnified Party under this Agreement.
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(6) Notwithstanding any provision herein to the contrary, the
obligation of APPM or Buyer, on the one hand, or Seller or any Principal
Stockholder, on the other hand, to provide indemnification for breach of any
representation or warranty as provided in Section 14.1(a) or Section 14.2(a)
hereof shall not take effect unless and until the Damages asserted against or
incurred in the aggregate and on a collective basis by APPM or Buyer, on the
one hand, or Seller, on the other hand, as a result of such a breach or
breaches exceeds $5,000.00, and then such Indemnifying Party shall indemnify
the Indemnified Party to the full amount of such Damages.
Section 1.70 Remedies Not Exclusive.
(1) The remedies provided in this Agreement shall not be
exclusive of any other rights or remedies available to one party against the
other, either at law or in equity.
Section 1.71 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 1.72 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 1.73 Commencing Actions. Any action against any party hereto
that is not commenced on or before the third anniversary of the Closing Date
shall be deemed waived, and no person shall have any remedy against any party
therefor; provided, however, that actions by Buyer or APPM against any Seller
or Principal Stockholder may be commenced at any time with respect to actions
(i) that constitute fraud or intentional misrepresentation by any Seller or
Principal Stockholder; (ii) that result from the failure of any Seller or
Principal Stockholder to pay any taxes or any penalties, assessments or
interest thereon; (iii) that result from the failure of any Seller or Principal
Stockholder to deliver to Buyer or APPM good, valid and marketable title to the
Purchased Assets; or (iv) that result from any breach of Section 5.13 or
Section 5.22 or any misrepresentation relating to the representations and
warranties set forth therein.
ARTICLE XV
INTENTIONALLY OMITTED
ARTICLE XVI
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 1.74 Non-Disclosure Covenant. Seller recognizes and
acknowledges that it has in the past, currently has, and in the future may
possibly have, access to certain Confidential Information of APPM that is
valuable, special and unique assets of APPM's businesses. Seller shall not
disclose such Confidential Information to any person, firm, corporation,
association or other entity for any purpose or reason whatsoever, unless (i)
such information becomes available to or known by the public generally through
no fault of Seller; (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), Seller shall, if possible, give
prior written notice thereof to APPM and provide APPM with the opportunity to
contest such disclosure; or (iii) the disclosing party reasonably believes that
such disclosure is required by applicable law in connection with the defense of
a lawsuit
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against the disclosing party. In the event of a breach or threatened breach by
Seller of the provisions of this Section, APPM 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 APPM from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
Section 1.75 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, Seller agrees that, in the event of a breach by it of
the foregoing covenant, the covenant may be enforced against it by injunctions
and restraining orders.
Section 1.76 Survival. The obligations of Seller under this Article
XVI shall survive the consummation of the transactions as described in this
Agreement.
ARTICLE XVII
MISCELLANEOUS
Section 1.77 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 1.78 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 APPM to
a wholly owned subsidiary of APPM, provided that any such assignment shall not
relieve APPM of its obligations hereunder.
Section 1.79 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. Neither this
Agreement nor any other agreement contemplated hereby shall be deemed to confer
upon any Person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
Section 1.80 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 1.81 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 1.82 Survival of Representations, Warranties, Covenants,
Indemnifications and Lock-Up. The representations, warranties, covenants,
indemnifications, lock-up and undertakings contained herein shall survive the
consummation of the transactions described herein and all statements contained
in any certificate, exhibit or other instrument delivered by or on behalf of
Seller, any Principal Stockholder, APPM or Buyer pursuant to this Agreement
shall be deemed to have been representations and warranties by such Seller,
such
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Principal Stockholder, APPM or Buyer and, notwithstanding any provision in this
Agreement to the contrary, the representations and warranties contained herein
shall survive the Closing.
Section 1.83 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 1.84 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 1.85 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 1.86 Reference to Agreement. Use of the words "herein,"
"hereof," "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
Section 1.87 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 APPM has
determined in its good faith judgment 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 APPM in connection with conducting an examination of the
operations and assets of Seller; provided that APPM shall reasonably promptly
provide notice of any release. Notwithstanding the foregoing, APPM and Buyer
shall have the right to issue a press release announcing the Closing of the
transactions covered by this Agreement following the Closing.
Section 1.88 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,
facsimile or courier service, when actually received by the party to whom
notice is sent; or (ii) 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 APPM and Buyer: American Physician Partners, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, President
Xxxx X. Xxxxx, Esq, General
Counsel and Senior Vice
President
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with a copy to: Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to Seller
or any Principal Stockholder: St. Lucie Imaging and Breast Center, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, M.D.
with a copy to: Rogers, Bowers, Xxxxxxx and Xxxxxxxx
Flagler Center Tower
000 X. Xxxxxxx Xxxxx, Xxxxx 0000
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Section 1.89 No Waiver; Remedies. No party hereto shall by any act
(except by written instrument pursuant to Section 17.1 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. Except as set forth in Section 14.4(a) or Section
14.4(b) above, 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.
Section 1.90 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 1.91 Defined Terms. Terms used in 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.
APPM:
AMERICAN PHYSICIAN PARTNERS, INC.
By:
-------------------------------
Xxxxxxx X. Xxxxxxx, President
BUYER:
TREASURE COAST IMAGING PARTNERS, INC.
By:
-------------------------------
Xxxxxxx X. Xxxxxxx, President
SELLER:
ST. LUCIE IMAGING AND BREAST CENTER, INC.
By:
-------------------------------
Xxxxxx X. Xxxxxxxx, M.D., President
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41
Xxxxxx X. Xxxxxxxx, M.D.
-------------------------------
Xxxxxx Xxxxxxxxx, M.D.
-------------------------------
X.X. Xxxxx, M.D.
-------------------------------
Xxxxxx X. Xxxxxxx, M.D.
-------------------------------
Xxxx X. Xxxxxx, M.D.
-------------------------------
Xxxxx X. Xxxxxxxx, M.D.
35
