1
EXHIBIT(2)-3
AMENDED AND RESTATED
PLAN AND AGREEMENT OF MERGER
DATED AS OF OCTOBER 24TH, 1996
BY AND BETWEEN
MEDPARTNERS, INC.
AND
CARDINAL HEALTHCARE, P.A.
2
TABLE OF CONTENTS
AMENDED AND RESTATED
PLAN AND AGREEMENT OF MERGER
BY AND BETWEEN
MEDPARTNERS, INC.
AND
CARDINAL HEALTHCARE, P.A.
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Parties.................................................................... A-5
Recitals................................................................... A-5
Section 1. THE MERGER.................................................. A-5
1.1 The Merger.................................................. A-5
1.2 The Closing................................................. A-5
1.3 Effective Time.............................................. A-6
1.4 Effect of the Merger........................................ A-6
Section 2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES...................... A-6
2.1 Effect on Capital Stock..................................... A-6
2.2 Exchange of Certificates.................................... A-7
2.3 Certificate of Incorporation of Surviving Corporation....... A-9
2.4 By-laws of the Surviving Corporation........................ A-9
2.5 Directors and Officers of the Surviving Corporation......... A-9
2.6 Assets, Liabilities, Reserves and Accounts.................. A-9
2.7 Corporate Acts of Cardinal.................................. A-9
Section 3. REPRESENTATIONS AND WARRANTIES OF CARDINAL.................. A-9
3.1 Organization, Existence and Good Standing................... A-9
3.2 Cardinal Capital Stock...................................... A-10
3.3 Subsidiaries................................................ A-10
3.4 Foreign Qualifications...................................... A-10
3.5 Power and Authority......................................... A-10
3.6 Cardinal Financial Information.............................. A-10
3.7 Contracts, etc.............................................. A-11
3.8 Properties and Assets....................................... A-11
3.9 Legal Proceedings........................................... A-11
3.10 Subsequent Events........................................... A-11
3.11 Accounts Receivable......................................... A-12
3.12 Tax Returns................................................. A-12
3.13 Employee Benefit Plans; Employment Matters.................. A-12
3.14 Compliance with Laws in General............................. A-13
3.15 Regulatory Approvals........................................ A-13
3.16 Commissions and Fees........................................ A-13
3.17 Retirement or Re-Acquisition of MedPartners Common Stock.... A-13
3.18 Disposition of Assets of Surviving Corporation.............. A-13
3.19 Vote Required............................................... A-13
3.20 No Untrue Representations................................... A-13
3.21 Cardinal Shareholder Investment Qualification............... A-13
Section 4. REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS............... A-14
4.1 Organization, Existence and Good Standing................... A-14
4.2 MedPartners Capitalization.................................. A-14
4.3 MedPartners Common Stock.................................... X-00
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4.4 Subsidiaries and Affiliated Entities........................ A-14
4.5 Organization, Existence and Good Standing of MedPartners
Subsidiaries and MedPartners Professional Corporations...... A-15
4.6 Foreign Qualifications...................................... A-15
4.7 Power and Authority......................................... A-15
4.8 MedPartners Public Information.............................. A-15
4.9 Legal Proceedings........................................... A-16
4.10 Subsequent Events........................................... A-16
4.11 Compliance with Laws in General............................. A-16
4.12 Regulatory Approvals........................................ A-16
4.13 Investment Intent........................................... A-17
4.14 Commissions and Fees........................................ A-17
4.15 Retirement or Re-Acquisition of MedPartners Common Stock.... A-17
4.16 Disposition of Assets of Surviving Corporation.............. A-17
4.17 No Untrue Representations................................... A-17
Section 5. ACCESS TO INFORMATION AND DOCUMENTS......................... A-17
5.1 Access to Information....................................... A-17
5.2 Return of Records........................................... A-18
5.3 Effect of Access............................................ A-18
Section 6. COVENANTS................................................... A-18
6.1 Preservation of Business.................................... A-18
6.2 Material Transactions....................................... A-18
6.3 Meeting of Cardinal Shareholders............................ A-19
6.4 Securities Matters.......................................... A-19
6.5 Exemption from State Takeover Laws.......................... A-20
6.6 Public Disclosures.......................................... A-20
6.7 Resignation of Cardinal Directors........................... A-20
6.8 Practice Integration........................................ A-20
6.9 Notice of Subsequent Events................................. A-20
6.10 No Solicitations............................................ A-20
6.11 Other Actions............................................... A-20
6.12 Cardinal Conversion......................................... A-21
6.13 Accounting Methods.......................................... A-21
6.14 Pooling and Tax-Free Reorganization Treatment............... A-21
6.15 Affiliate and Pooling Agreements............................ A-21
6.16 Cooperation................................................. A-21
6.17 Publication of Combined Results............................. A-21
6.18 Transfer of Cardinal Assets................................. A-22
6.19 Stock Purchase Plan......................................... A-22
6.20 MedPartners Employment...................................... A-22
6.21 Spin-Off Subsidiary......................................... A-22
6.22 Clinic Services Agreement................................... A-22
6.23 Employee Benefit Plans...................................... A-22
Section 7. TERMINATION, AMENDMENT AND WAIVER........................... A-23
7.1 Termination................................................. A-23
7.2 Effect of Termination....................................... A-24
7.3 Amendment................................................... A-24
7.4 Extension; Waiver........................................... A-24
7.5 Procedure for Termination, Amendment, Extension or Waiver... A-24
7.6 Expenses.................................................... X-00
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Section 8. CONDITIONS TO CLOSING....................................... A-25
8.1 Mutual Conditions........................................... A-25
8.2 Conditions to Obligations of MedPartners.................... A-25
8.3 Conditions to Obligations of Cardinal....................... A-26
Section 9. MISCELLANEOUS............................................... A-27
9.1 Nonsurvival of Representations and Warranties............... A-27
9.2 Notices..................................................... A-27
9.3 Further Assurances.......................................... A-28
9.4 Indemnification............................................. A-28
9.5 Governing Law............................................... A-28
9.6 "Including"................................................. A-28
9.7 "Knowledge"................................................. A-28
9.8 "Material adverse change" or "material adverse effect"...... A-28
9.9 "Hazardous Materials"....................................... A-28
9.10 Environmental Laws.......................................... A-29
9.11 Captions.................................................... A-29
9.12 Integration of Exhibits..................................... A-29
9.13 Entire Agreement............................................ A-29
9.14 Counterparts................................................ A-29
9.15 Binding Effect.............................................. A-29
9.16 No Rule of Construction..................................... A-29
Testimonium................................................................ A-29
Signatures................................................................. X-00
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PLAN AND AGREEMENT OF MERGER
AMENDED AND RESTATED PLAN AND AGREEMENT OF MERGER ("Plan of Merger"), made
and entered into as of the 24th day of October, 1996, by and between
MEDPARTNERS, INC. a Delaware corporation ("MedPartners"), and CARDINAL
HEALTHCARE, P.A., a North Carolina professional association ("Cardinal")
(Cardinal and MedPartners being sometimes collectively referred to herein as the
"Constituent Corporations").
WITNESSETH:
WHEREAS, the respective Boards of Directors of MedPartners and Cardinal
have approved the merger of Cardinal with and into MedPartners (the "Merger"),
upon the terms and conditions set forth in this Plan of Merger, amended and
restated as set forth herein, whereby each share of Common Stock, no par value
per share, of Cardinal (the "Cardinal Common Stock"), not owned directly or
indirectly by Cardinal, except Dissenting Shares (as herein defined), will be
converted into the right to receive the Merger Consideration (as herein defined)
(the Cardinal Common Stock may be sometimes hereinafter referred to as the
"Cardinal Shares");
WHEREAS, each of MedPartners and Cardinal desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, immediately prior to the Merger, certain of Cardinal's assets and
liabilities are to be transferred to a wholly-owned subsidiary of Cardinal (the
"Spin-Off Subsidiary"), including physician employment agreements, patient
records, Medicare employer identification number, pension, profit sharing and
welfare benefit plans, provider contracts, securities and certain obligations to
pay expenses, and the shares of the Spin-Off Subsidiary are to be distributed to
Cardinal's shareholders by dividend.
NOW, THEREFORE, in consideration of the premises, and the mutual covenants
and agreements contained herein, the parties hereto do hereby agree as follows:
SECTION 1.
THE MERGER.
1.1 The Merger. Upon the terms and conditions set forth in this Plan of
Merger, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL") and the North Carolina Business Corporation Act (the
"NCBCA") Cardinal shall be merged with and into MedPartners at the Effective
Time (as defined in Section 1.3). Following the Effective Time, the separate
corporate existence of Cardinal shall cease and MedPartners shall continue as
the surviving corporation (the "Surviving Corporation") as a business
corporation incorporated under the laws of the State of Delaware under the name
MedPartners, Inc. and shall succeed to and assume all the rights and obligations
of Cardinal and MedPartners in accordance with the DGCL and the NCBCA.
1.2 The Closing. The closing of the Merger (the "Closing") will take place
at 10:00 a.m. Central Time on a date to be specified by the parties (the
"Closing Date"), which (subject to satisfaction or waiver of the conditions set
forth in Sections 8.2 and 8.3) shall be no later than the second business day
after satisfaction of the conditions set forth in Section 8.1 (other than
Section 8.1(a)), but in no event later than November 30, 1996, at the offices of
Xxxxxx & Bird, Atlanta, Georgia, unless another date or place is agreed to in
writing by the parties hereto.
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1.3 Effective Time. Subject to the provisions of this Plan of Merger,
MedPartners shall file a Certificate of Merger (the "Certificate of Merger")
executed by MedPartners in accordance with the relevant provisions of the DGCL
and MedPartners and Cardinal shall file Articles of Merger (the "Articles of
Merger") executed by MedPartners and Cardinal in accordance with the relevant
provisions of the NCBCA and shall make all other filings or recordings required
under the DGCL and the NCBCA and as soon as practicable on or after the Closing
Date. The Merger shall become effective at such time as the Certificate of
Merger is duly filed with the Secretary of State of the State of Delaware and
the Articles of Merger is duly filed with the Secretary of State of North
Carolina, or at such other time as MedPartners and Cardinal shall agree should
be specified in the respective Delaware Certificate of Merger and the Articles
of Merger (the "Effective Time").
1.4 Effect of the Merger. The Merger shall have the effects set forth in
Section 259 of the DGCL and Section 55-11-06 of the NCBCA.
SECTION 2.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES.
2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of shares of Cardinal
Common Stock:
(a) Cancellation of Treasury Stock. Each share of Cardinal Common
Stock that is owned by Cardinal or by any subsidiary of Cardinal shall
automatically be canceled and retired and shall cease to exist, and none of
the Common Stock, par value $.001 per share, of MedPartners ("MedPartners
Common Stock"), cash or other consideration shall be delivered in exchange
therefor.
(b) Conversion of Cardinal Shares. In the Merger, all of the Cardinal
Shares (other than Dissenting Shares and those shares cancelled pursuant to
Section 2.1 (a)) shall be converted into the right to receive that number
of shares of MedPartners Common Stock equal to the Merger Consideration (as
defined herein). All such shares of MedPartners Common Stock shall be fully
paid and nonassessable and are hereinafter sometimes referred to as the
"MedPartners Shares". Upon such conversion, all such Cardinal Shares shall
be canceled and cease to exist, and each holder thereof shall cease to have
any rights with respect thereto other than the right to receive MedPartners
Shares issued in exchange therefor on the terms provided herein.
"Merger Consideration" means the sum of (i) the Closing Date Share
Amount and (ii) the amount, if any, by which the Registration Date Share
Amount exceeds the Closing Date Share Amount (such difference, if any,
being referred to herein as the "Excess Shares"). "Closing Date Share
Amount" means that number of MedPartners Shares (rounded to the nearest
whole share) equal to $43,000,000 divided by the lesser of $23 or the
Closing Date Trading Price. "Registration Date Share Amount" means that
number of MedPartners Shares (rounded to the nearest whole share) equal to
$43,000,000 divided by the lesser of $23 or the Registration Date Trading
Price. "Closing Date Trading Price" means the average of the last reported
sale prices per share of the MedPartners Common Stock for the 10
consecutive trading days on which such shares are actually traded on the
New York Stock Exchange, Inc. (the "NYSE") ending at the close of trading
on the second trading day immediately preceding the Closing Date.
"Registration Date Trading Price" means the average of the last reported
sale prices per share of the MedPartners Common Stock for the 10
consecutive trading days on which such shares are actually traded on the
NYSE ending at the close of trading on the second trading day immediately
preceding the date on which the Shelf Registration, as defined in Section
6.4(f) hereof, is declared effective (the "Registration Effective Date").
(c) Dissenting Shares. Notwithstanding anything in this Plan of
Merger to the contrary, Cardinal Shares outstanding immediately prior to
the Effective Time held by a holder (if any) who is entitled to, and who
properly dissents in accordance with Article 13 of the NCBCA ("Dissenting
Shares") shall not be converted into a right to receive the Merger
Consideration and any cash in lieu of fractional shares of MedPartners
Common Stock unless such holder fails to perfect or otherwise loses such
holder's right to
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appraisal, if any. If, after the Effective Time , such holder fails to
perfect or loses any such right to appraisal, such shares shall be treated
as if they had been converted as of the Effective Time of the Merger into
the right to receive the Merger Consideration pursuant to Section 2.1(c)
and the cash in lieu of fractional shares of MedPartners Common Stock
specified in Section 2.2(e).
(d) Anti-Dilution Provisions. If after the date hereof and prior to
the date of effectiveness of the Shelf Registration, MedPartners shall have
declared a stock split (including a reverse split) of MedPartners Common
Stock or a dividend payable in MedPartners Common Stock, or any other
distribution of securities or dividend (in cash or otherwise) to holders of
MedPartners Common Stock with respect to their MedPartners Common Stock
(including without limitation such a distribution or dividend made in
connection with a recapitalization, reclassification, merger,
consolidation, reorganization or similar transaction) then the Merger
Consideration shall be appropriately adjusted to reflect such stock split,
dividend or other distribution of securities.
2.2 Exchange of Certificates. (a) Exchange Agent. Upon Cardinal's written
direction, MedPartners shall use its best efforts to arrange for delivery of all
MedPartners shares that are issuable as of the Effective Time pursuant to the
Merger to former Cardinal shareholders at Cardinal's address as provided in
Section 9.2 hereof. Such written direction shall be provided one day prior to
Closing and shall include the names of all such holders and numbers of shares to
be included in the certificate or certificates for each such holder. Shares
shall be placed into the custody of such courier no later than close of business
no later than the second business day following the Closing Date, for delivery
to Cardinal on the third business day following the Closing Date. In the event
that Cardinal does not provide the directions described above in this paragraph,
prior to the Effective Time, MedPartners shall enter into an agreement with
First Chicago Trust of New York, New York, New York (the "Exchange Agent"),
which provides that MedPartners shall deposit with the Exchange Agent as of the
Effective Time, for the benefit of the holders of Cardinal Shares, for exchange
in accordance with this Section 2, through the Exchange Agent, (i) certificates
representing the shares of MedPartners Common Stock in the Closing Date Share
Amount pursuant to Section 2.1 and (ii) cash in an amount equal to the aggregate
amount required to be paid in lieu of fractional interests of MedPartners Common
Stock pursuant to Section 2.2 (such shares of MedPartners Common Stock, together
with any dividends or distributions with respect thereto with a record date
after the Effective Time, and together with the cash referred to in clause (ii)
of this Section 2.2(a), being hereinafter referred to as the "Exchange Fund") in
exchange for outstanding Cardinal Shares. Excess Shares if any, shall be
issuable on the Registration Effective Date and shall be sent to former Cardinal
Shareholders entitled to such shares by overnight courier at the notice address
for Cardinal provided in Section 9 hereof.
(b) Exchange Procedures. As soon as reasonably practicable, but no later
than ten business days, after the Effective Time, MedPartners shall cause the
Exchange Agent to mail to each holder of record of a certificate or certificates
(to the extent such certificates have not already been submitted to the Exchange
Agent) which immediately prior to the Effective Time represented outstanding
Cardinal Shares (the "Certificates") whose shares were converted into the right
to receive the Merger Consideration pursuant to Section 2.1, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as MedPartners may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of MedPartners Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that number of whole
shares of MedPartners Common Stock which such holder has the right to receive on
and as of the Closing Date pursuant to the provisions of this Section 2, and the
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Cardinal Shares which is not registered in the transfer
records of Cardinal, a certificate representing the proper number of shares of
MedPartners Common Stock may be issued to a person other than the person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer and the
person requesting such payment shall pay any transfer or other taxes required by
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reason of the issuance of shares of MedPartners Common Stock to a person other
than the registered holder of such Certificate or establish to the satisfaction
of MedPartners that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of MedPartners
Common Stock and cash in lieu of any fractional shares of MedPartners Common
Stock as contemplated by this Section 2.2. No interest will be paid or will
accrue on any cash payable in lieu of any fractional shares of MedPartners
Common Stock. Former shareholders of record of Cardinal shall not be entitled to
vote after the Effective Time at any meeting of MedPartners stockholders unless
such holders have exchanged their Certificates for certificates representing
MedPartners Common Stock in accordance with this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to MedPartners Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of MedPartners Common Stock represented
thereby and no cash payment in lieu of fractional shares shall be paid to any
such holder pursuant to Section 2.2(e) until the surrender of such Certificate
in accordance with this Section 2. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificate representing whole shares of MedPartners Common Stock issued
in exchange therefor, without interest, (i) at the time of such surrender, the
amount of any cash payable in lieu of a fractional share of MedPartners Common
Stock to which such holder is entitled pursuant to Section 2.2(e) and the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of MedPartners Common Stock,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to such
surrender and with a payment date subsequent to such surrender payable with
respect to such whole shares of MedPartners Common Stock.
(d) No Further Ownership Rights in Cardinal Shares. All shares of
MedPartners Common Stock issued upon the surrender for exchange of Certificates
in accordance with the terms of this Section 2 (including any cash paid pursuant
to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued (and paid) in
full satisfaction of all rights pertaining to the Cardinal Shares theretofore
represented by such Certificates. If, after the Effective Time, Certificates are
presented to the Surviving Corporation or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Section 2, except as
otherwise provided by law.
(e) No Fractional Shares. No certificates or scrip representing fractional
shares of MedPartners Common Stock shall be issued upon the surrender for
exchange of Certificates, and such fractional share interests will not entitle
the owner thereof to vote or to any rights of a stockholder of MedPartners.
Notwithstanding any other provision of this Plan of Merger, each holder of
shares of Cardinal Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a share of MedPartners
Common Stock (after taking into account all Certificates delivered by such
holder) on and as of the Closing Date shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
MedPartners Common Stock multiplied by the lesser of the Closing Date Trading
Price or $23 as set forth in Section 2.1(b). No fractional shares or cash in
lieu thereof shall be issued in connection with amounts exceeding whole numbers
of Excess Shares, if any, determined to be issuable at the Registration
Effective Date.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of the Certificates for six months after
the Effective Time shall be delivered to MedPartners, upon demand, and any
holders of the Certificates who have not theretofore complied with this Section
2 shall thereafter look only to MedPartners for payment of MedPartners Common
Stock, any cash in lieu of fractional shares of MedPartners Common Stock and any
dividends or distributions with respect to MedPartners Common Stock.
(g) No Liability. None of MedPartners, Cardinal or the Exchange Agent
shall be liable to any person in respect of any shares of MedPartners Common
Stock (or dividends or distributions with respect thereto) or
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cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. If any Certificates shall
not have been surrendered prior to the end of the applicable period after the
Effective Time under escheat laws (or immediately prior to such earlier date on
which any shares of MedPartners Common Stock, any cash in lieu of fractional
shares of MedPartners Common Stock or any dividends or distributions with
respect to MedPartners Common Stock in respect of such Certificates would
otherwise escheat to or become the property of any governmental entity), any
such shares, cash, dividends or distributions in respect of such Certificates
shall, to the extent permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest of any person
previously entitled thereto.
(i) If any certificate shall have been lost, stolen or destroyed, upon
execution by the holder of such certificate of an affidavit to the effect that
such certificate has been lost, stolen or destroyed, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed certificate the applicable
number of MedPartners Shares issuable to the former Cardinal shareholder, any
cash in lieu of fractional shares to which the former Cardinal shareholder is
entitled pursuant to Section 2.2(e) of this Agreement and any dividends or other
distributions to which the holder thereof is entitled pursuant to this
Agreement.
(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by MedPartners, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
MedPartners.
2.3 Certificate of Incorporation of Surviving Corporation. The Certificate
of Incorporation of MedPartners, effective immediately following the Effective
Time, shall become the Certificate of Incorporation of the Surviving Corporation
from and after the Effective Time and until thereafter amended as provided by
law.
2.4 By-laws of the Surviving Corporation. The By-laws of MedPartners shall
be the By-laws of the Surviving Corporation from and after the Effective Time
and until thereafter altered, amended or repealed in accordance with the DGCL,
the Certificate of Incorporation of the Surviving Corporation and the said By-
laws.
2.5 Directors and Officers of the Surviving Corporation. The directors and
officers of MedPartners immediately prior to the Effective Time shall be the
directors and officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation.
2.6 Assets, Liabilities, Reserves and Accounts. At the Effective Time, the
assets, liabilities, reserves and accounts of each of MedPartners and Cardinal
shall be taken up on the books of the Surviving Corporation at the amounts at
which they respectively shall be carried on the books of said corporations
immediately prior to the Effective Time, except as otherwise set forth in this
Plan of Merger and subject to such adjustments, or elimination of intercompany
items, as may be appropriate in giving effect to the Merger in accordance with
generally accepted accounting principles.
2.7 Corporate Acts of Cardinal. All corporate acts, plans, policies,
approvals and authorizations of Cardinal, its officers and agents, its
shareholders, its Board of Directors, and committees elected or appointed by the
Board of Directors, valid immediately prior to the Effective Time, shall be
those of the Surviving Corporation and shall be as effective and binding thereon
as they were with respect to Cardinal to the extent not inconsistent with the
terms of this Plan of Merger.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF CARDINAL.
Cardinal hereby represents and warrants to MedPartners as follows:
3.1 Organization, Existence and Good Standing. Cardinal is a professional
corporation duly organized, validly existing and in good standing under the laws
of the State of North Carolina. Cardinal has all necessary corporate power to
own its properties and assets and to carry on its business as presently
conducted. Cardinal
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does not, and has not within the two years immediately preceding the date of
this Plan of Merger owned, directly or indirectly, any shares of MedPartners
Common Stock.
3.2 Cardinal Capital Stock. Cardinal's authorized capital consists of
50,000 shares of Class A Common Stock, no par value per share, of which 54
shares are issued and outstanding as of September 30, 1996 and no shares are
held in treasury; 5,000 shares of Class B Cumulative Preferred Stock, no par
value per share, of which no shares are issued and outstanding and no shares are
held in treasury; and 45,000 shares of Class C Preferred Stock, no par value per
share, of which no shares are issued and outstanding and no shares are held in
treasury. All of the issued and outstanding Cardinal Shares are duly and validly
issued, fully paid and nonassessable. Except as set forth in Exhibit 3.2 to the
Disclosure Schedule delivered to MedPartners by Cardinal at the time of the
execution and delivery of this Plan of Merger (the "Cardinal Disclosure
Schedule"), there are no options, warrants, or similar rights granted by
Cardinal or outstanding securities convertible into Cardinal Common Stock, or
any other agreements to which Cardinal is a party providing for the issuance or
sale by it of any additional securities which would remain in effect after the
Effective Time. There is no liability for dividends declared or accumulated but
unpaid with respect to any of the Cardinal Shares. Cardinal has not made any
distributions to any holders of Cardinal Shares or participated in or effected
any issuance, exchange or retirement of Cardinal Shares, or otherwise changed
the equity interests of holders of Cardinal Shares in contemplation of effecting
the Merger within the two years immediately preceding the date of this Plan of
Merger. Any Cardinal Shares that Cardinal has re-acquired during the two years
immediately preceding the date of this Plan of Merger have been so re-acquired
only for purposes other than "business combinations", as such term is defined in
Accounting Principles Board Opinion No. 16, as amended ("Business
Combinations").
3.3 Subsidiaries. Except as set forth in Exhibit 3.3 to the Cardinal
Disclosure Schedule, Cardinal does not own stock in and does not control,
directly or indirectly, any other corporation, association or business
organization. Except as set forth in Exhibit 3.3 to the Cardinal Disclosure
Schedule, Cardinal does not own an equity interest in, nor does such entity
control, directly or indirectly, any other joint venture or partnership.
3.4 Foreign Qualifications. Cardinal is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
nature or character of the property owned, leased or operated by it or the
nature of the business transacted by it makes such qualification necessary,
except where the failure to so qualify would not have a material adverse effect
on its business or operations.
3.5 Power and Authority. Subject to the satisfaction of the conditions
precedent set forth herein, Cardinal has the corporate power to execute, deliver
and perform this Plan of Merger and all agreements and other documents executed
and delivered or to be executed and delivered by it pursuant to this Plan of
Merger, and, subject to the satisfaction of the conditions precedent set forth
herein has taken all action required by its Articles of Incorporation, By-laws
or otherwise, to authorize the execution, delivery and performance of this Plan
of Merger and such related documents. Except as set forth in Exhibit 3.5 to the
Cardinal Disclosure Schedule, the execution and delivery of this Plan of Merger
does not and, subject to the receipt of required stockholder and regulatory
approvals and any other required third-party consents or approvals, the
consummation of the Merger will not, violate any provisions of the Articles of
Incorporation or By-laws of Cardinal or any provisions of, or result in the
acceleration of any obligation under, any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree, to which Cardinal is a
party, or by which it is bound, or violate any restrictions of any kind to which
it is subject which, if violated or accelerated would have a material adverse
effect on Cardinal. The execution and delivery of this Plan of Merger has been
approved by the Board of Directors of Cardinal.
3.6 Cardinal Financial Information. Cardinal has heretofore furnished
MedPartners with a true and complete copy of the audited financial statements of
Cardinal as of and for the period ended, June 30, 1996, and such financial
statements are set forth in Exhibit 3.6 to the Cardinal Disclosure Schedule. The
financial statements, together with the notes thereto reflect all known
liabilities of Cardinal, fixed or contingent, required to be stated therein, and
present fairly the financial condition of Cardinal at said dates and the results
of operations and cash flows of Cardinal for the periods then ended MedPartners
has relied on such financial
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statements in evaluating the Merger and determining the Merger consideration.
The balance sheet of Cardinal at September 30, 1996, is herein sometimes
referred to as the "Cardinal Balance Sheet".
3.7 Contracts, etc. (a) All material contracts, leases, agreements and
arrangements to which Cardinal is a party are legally valid and binding in
accordance with their terms and in full force and effect and Cardinal has
provided MedPartners with copies of all such documents. To the knowledge of
Cardinal, all parties to such contracts, leases, agreements and arrangements
have complied with the provisions of such contracts, leases, agreements and
arrangements, and, to the knowledge of Cardinal, no party is in default
thereunder, and no event has occurred which, but for the passage of time or the
giving of notice or both, would constitute a default thereunder, except, in each
case, where the invalidity of the lease, contract, agreement or arrangement or
the default or breach thereunder or thereof would not, individually or in the
aggregate, have a material adverse effect on Cardinal.
(b) Except as set forth in Exhibit 3.7 to the Cardinal Disclosure Schedule,
no contract or agreement to which Cardinal is a party will, by its terms,
terminate as a result of the transactions contemplated hereby or require any
consent from any obligor thereto in order to remain in full force and effect
immediately after the Effective Time, except for contracts or agreements which,
if terminated, would not have a material adverse effect on Cardinal. Set forth
on Exhibit 3.7 to the Cardinal Disclosure Schedule is a list of all material
contracts to which Cardinal is a party which cannot be terminated on 90 days
notice, without cause.
(c) Except as set forth in Exhibit 3.7 to the Cardinal Disclosure Schedule,
Cardinal has not granted any right of first refusal or similar right in favor of
any third party with respect to any material portion of its properties or assets
(excluding liens described in Section 3.8) or entered into any non-competition
agreement or similar agreement restricting its ability to engage in any business
in any location.
3.8 Properties and Assets. Cardinal owns or leases all of the real and
personal property included in the Cardinal Balance Sheet (except assets recorded
under capital lease obligations and such property as has been disposed of during
the ordinary course of Cardinal's business since the date of the Cardinal
Balance Sheet), free and clear of any liens, claims, charges, exceptions or
encumbrances, except for those (i) if any, which in the aggregate are not
material and which do not materially affect continued use of such property, or
(ii) which are set forth in Exhibit 3.8 to the Cardinal Disclosure Schedule.
3.9 Legal Proceedings. Except as listed in Exhibit 3.9 to the Cardinal
Disclosure Schedule, there are no actions, suits or proceedings pending or, to
the knowledge of Cardinal, threatened against Cardinal, at law or in equity,
relating to or affecting Cardinal, including the Merger that would reasonably be
expected, individually or in the aggregate, to have a material adverse effect on
the business or assets of Cardinal. Cardinal does not know or have any
reasonable grounds to know of any justification for any such action, suit or
proceeding that would reasonably be expected, individually or in the aggregate,
to have a material adverse effect on the business or assets of Cardinal.
3.10 Subsequent Events. Except as set forth in Exhibit 3.10 to the
Cardinal Disclosure Schedule or as contemplated by this Plan of Merger, Cardinal
has not, since the date of the Cardinal Balance Sheet:
(a) Incurred any material adverse change.
(b) Discharged or satisfied any material lien or encumbrance, or paid
or satisfied any material obligation or liability (absolute, accrued,
contingent or otherwise) other than (i) liabilities shown or reflected on
the Cardinal Balance Sheet or (ii) liabilities incurred since the date of
the Cardinal Balance Sheet in the ordinary course of business, which
discharge or satisfaction would not have a material adverse effect on
Cardinal.
(c) Increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor which would have a
material adverse effect on Cardinal, except as may have been required due
to income or operations of Cardinal since the date of the Cardinal Balance
Sheet.
(d) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets, tangible or intangible, which assets are
material to the consolidated business or financial condition of Cardinal.
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(e) Sold or transferred any of the assets material to the consolidated
business of Cardinal, canceled any material debts or claims or waived any
material rights, except in the ordinary course of business.
(f) Granted any general or uniform increase in the rates of pay of
employees or any material increase in salary payable or to become payable
by Cardinal to any officer or employee, consultant or agent (other than
normal merit increases), or by means of any bonus or pension plan, contract
or other commitment, increased in a material respect the compensation of
any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement executed
and delivered pursuant to this Plan of Merger, entered into any material
transaction other than in the ordinary course of business or permitted
under other Sections of this Plan of Merger.
(h) Issued any stock, bonds or other securities or any options or
rights to purchase any of its securities.
3.11 Accounts Receivable. Since the date of the Cardinal Balance Sheet,
Cardinal has not changed any principle or practice with respect to the
recordation of accounts receivable or the calculation of reserves therefor, or
any material collection, discount or write-off policy or procedure. Cardinal is
in compliance with the terms and conditions of all third-party payor
arrangements relating to its accounts receivable, except to the extent that such
noncompliance would not have a material adverse effect on Cardinal.
3.12 Tax Returns. Cardinal has filed all tax returns required to be filed
by it or requests for extensions to file such returns or reports have been
timely filed and granted and have not expired, except to the extent that such
failures to file, taken together, do not have a material adverse effect on
Cardinal. Cardinal has made all payments shown as due on such returns. Cardinal
has not been notified that any tax returns of Cardinal are currently under audit
by the Internal Revenue Service or any state or local tax agency. No agreements
have been made by Cardinal for the extension of time or the waiver of the
statute of limitations for the assessment or payment of any federal, state or
local taxes.
3.13 Employee Benefit Plans; Employment Matters. (a) Except as set forth
in Exhibit 3.13(a) to the Cardinal Disclosure Schedule, Cardinal has neither
established nor maintains nor is obligated to make contributions to or under or
otherwise participate in (i) any bonus or other type of incentive compensation
plan, program or arrangement (whether or not set forth in a written document),
(ii) any pension, profit-sharing, retirement or other plan, program or
arrangement, or (iii) any other employee benefit plan, fund or program,
including, but not limited to, those described in Section 3(3) of ERISA. All
such plans listed in Exhibit 3.13(a) to the Cardinal Disclosure Schedule
(individually, a "Cardinal Plan" and collectively, the "Cardinal Plans") have
been operated and administered in all material respects in accordance with, as
applicable, ERISA, the Age Discrimination in Employment Act of 1967, as amended,
and the related rules and regulations adopted by those federal agencies
responsible for the administration of such laws. No act or failure to act by
Cardinal has resulted in a "prohibited transaction" (as defined in ERISA) with
respect to the Cardinal Plans that is not subject to a statutory or regulatory
exception and that could have a material adverse effect on Cardinal. No
"reportable event" (as defined in ERISA, but excluding any event for which
notice is waived under the ERISA regulations) has occurred with respect to any
of the Cardinal Plans which is subject to Title IV of ERISA. Cardinal has not
previously made, is not currently making, and is not obligated in any way to
make, any contributions to any multi-employer plan within the meaning of the
Multi-Employer Pension Plan Amendments Act of 1980.
(b) Except as disclosed in the Cardinal Documents or as set forth in
Exhibit 3.13(b) to the Cardinal Disclosure Schedule, Cardinal is not a party to
any oral or written (i) union, guild or collective bargaining agreement which
agreement covers employees in the United States (nor is it aware of any union
organizing activity currently being conducted in respect to any of its
employees), (ii) agreement with any executive officer or other key employee the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction of the nature contemplated by this Plan of
Merger and which provides for the payment of in excess of $25,000, or (iii)
agreement or plan, including any stock option plan, stock appreciation rights
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be
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increased, or the vesting of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Plan of Merger or the value of any of
the benefits of which will be calculated on the basis of any of the transactions
contemplated by this Plan of Merger.
3.14 Compliance with Laws in General. Except as set forth in Exhibit 3.14
to the Cardinal Disclosure Schedule, Cardinal has not received any notices of
material violations of any federal, state and local laws, regulations and
ordinances relating to its business and operations, including, without
limitation, the Occupational Safety and Health Act, the Americans with
Disabilities Act, the Medicare or applicable Medicaid statutes and regulations
and any Environmental Laws, and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by Cardinal which, if
it were determined that a violation had occurred, would have a material adverse
effect on Cardinal.
3.15 Regulatory Approvals. Except as set forth in Exhibit 3.15 to the
Cardinal Disclosure Schedule, Cardinal holds all licenses, certificates of need
and other regulatory approvals required or necessary to be applied for or
obtained in connection with its business as presently conducted or as presently
proposed to be conducted, except where the failure to obtain such license,
certificate of need or regulatory approval would not have a material adverse
effect on Cardinal. All such licenses, certificates of need and other regulatory
approvals relating to the business, operations and facilities of Cardinal are in
full force and effect, except where any failure of such license, certificate of
need or regulatory approval to be in full force and effect would not have a
material adverse effect on Cardinal. Any and all past litigation concerning such
licenses, certificates of need and regulatory approvals, and all claims and
causes of action raised therein, has been finally adjudicated. No such license,
certificate of need or regulatory approval has been revoked, conditioned (except
as may be customary) or restricted, and no action (equitable, legal or
administrative), arbitration or other process is pending, or to the best
knowledge of Cardinal, threatened, which in any way challenges the validity of,
or seeks to revoke, condition or restrict any such license, certificate of need,
or regulatory approval. Subject to compliance with applicable securities laws,
the consummation of the Merger will not violate any law or restriction to which
Cardinal is subject which, if violated, would have a material adverse effect on
Cardinal.
3.16 Commissions and Fees. Except for fees payable to Xxxxxxxx Xxxxxxx
Partners pursuant to the engagement letter, dated December 20, 1995, there are
no valid claims for brokerage commissions or finder's or similar fees in
connection with the transactions contemplated by this Plan of Merger which may
be now or hereafter asserted against MedPartners resulting from any action taken
by Cardinal or its officers, directors or agents, or any of them.
3.17 Retirement or Re-Acquisition of MedPartners Common Stock. Cardinal is
not a party to any agreement the effect of which would be to require MedPartners
directly or indirectly to retire or re-acquire all or part of the shares of
MedPartners Common Stock issued pursuant to Section 2.1 hereof.
3.18 Disposition of Assets of Surviving Corporation. Cardinal is not a
party to any plan to dispose of a significant part of the assets of the
Surviving Corporation within two years after the Closing Date, other than
dispositions in the ordinary course of business of the Surviving Corporation and
dispositions intended to eliminate duplicate facilities or excess capacity.
3.19 Vote Required. The affirmative vote of the holders of a majority of
the outstanding Cardinal Shares entitled to vote thereon is the only vote of the
holders of any class or series of Cardinal capital stock necessary to approve
this Plan of Merger, the Merger and the transactions contemplated hereby.
3.20 No Untrue Representations. No representation or warranty by Cardinal
in this Plan of Merger, and no exhibit or certificate issued by Cardinal and
furnished or to be furnished to MedPartners pursuant hereto, or in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact in response to the disclosure requested, or omits
or will omit to state a material fact necessary to make the statements or facts
contained therein in response to the disclosure requested not misleading in
light of all of the circumstances then prevailing.
3.21 Cardinal Shareholder Investment Qualification. More than nineteen of
Cardinal's shareholders earned more than $200,000 for each of the past two years
and are expected to earn more than $200,000 during the current year.
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SECTION 4.
REPRESENTATIONS AND WARRANTIES OF MEDPARTNERS.
MedPartners hereby represents and warrants to Cardinal as follows:
4.1 Organization, Existence and Good Standing. MedPartners is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. MedPartners has all necessary corporate power
to own its properties and assets and to carry on its business as presently
conducted. MedPartners is not, and has not been within the two years immediately
preceding the date of this Plan of Merger, a subsidiary or division of another
corporation, nor has MedPartners within such time owned, directly or indirectly,
any Cardinal Shares.
4.2 MedPartners Capitalization. MedPartners has an authorized
capitalization of 9,500,000 shares of Preferred Stock, par value $.001 per
share, of which no shares are issued and outstanding, and no shares are held in
treasury, 500,000 shares of Series C Junior Participating Preferred Stock, par
value $.001 per share, of which no shares are issued and outstanding and no
shares are held in treasury and 200,000,000 shares of Common Stock, par value
$.001 per share, of which 146,208,305 shares were issued and outstanding at
September 13, 1996, and no shares are held in treasury. All of the issued and
outstanding shares of MedPartners Common Stock have been duly and validly issued
and are fully paid and nonassessable. Except as disclosed in the MedPartners
Documents (as herein defined), and except as described on Exhibit 4.2 to the
MedPartners Disclosure Schedule delivered to Cardinal at the time of the
execution and delivery of this Plan of Merger (the "MedPartners Disclosure
Schedule"), there are no options, warrants or similar rights granted by
MedPartners or outstanding securities convertible into MedPartners Common Stock,
or any other agreements to which MedPartners is a party providing for the
issuance or sale by it of any additional securities.
There is no liability for dividends declared or accumulated but unpaid with
respect to any shares of MedPartners Common Stock. MedPartners has not made any
distributions to any holder of MedPartners Common Stock or participated in or
effected any issuance, exchange or retirement of MedPartners Common Stock, or
otherwise changed the equity interests of holders of MedPartners Common Stock,
in contemplation of effecting the Merger within the two years immediately
preceding the date of this Plan of Merger. Any shares of MedPartners Common
Stock that MedPartners has re-acquired during the two years immediately
preceding the date of this Plan of Merger have been so re-acquired only for
purposes other than Business Combinations.
4.3 MedPartners Common Stock. On the Closing Date, MedPartners will have a
sufficient number of authorized but unissued shares of its Common Stock
available for issuance to the holders of Cardinal Shares in accordance with the
provisions of this Plan of Merger. The MedPartners Common Stock to be issued
pursuant to this Plan of Merger (i) will, when so delivered, be duly and validly
issued, fully paid and nonassessable, (ii) will be made the subject of an
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), and (iii) will be listed on the NYSE, upon official
notice of issuance.
4.4 Subsidiaries and Affiliated Entities. (a) Attached as Exhibit 4.4 to
the MedPartners Disclosure Schedule is a list of all subsidiaries of MedPartners
(individually, a "MedPartners Subsidiary", and collectively, the "MedPartners
Subsidiaries") and their states of incorporation and all professional
corporations or professional associations of which MedPartners has control and
their states of incorporation ("MedPartners Professional Corporations"). Except
as set forth in Exhibit 4.4, MedPartners does not own stock in and does not
control, directly or indirectly, any other corporation, association, partnership
or business organization.
(b) Also disclosed in Exhibit 4.4 is a list of all general or limited
partnerships in which a general partner is MedPartners, a MedPartners Subsidiary
or another partnership controlled by MedPartners (individually a "MedPartners
Partnership" and collectively, the "MedPartners Partnerships"), and all limited
liability companies in which MedPartners, a MedPartners Subsidiary or a
MedPartners Partnership is a member (individually, a "MedPartners LLC" (the
MedPartners Professional Corporation and the MedPartners LLCs being collectively
called the "Other MedPartners Entities"), and their states of organization.
Except as set forth in Exhibit 4.4, neither MedPartners nor any MedPartners
Subsidiary nor any MedPartners Partnership
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owns an equity interest in, nor does such entity control, directly or
indirectly, any other joint venture, limited liability company or partnership.
4.5 Organization, Existence and Good Standing of MedPartners Subsidiaries
and MedPartners Professional Corporations. (a) Each MedPartners Subsidiary
(including MedPartners of Delaware and MAC (as defined herein)) and each
MedPartners Professional Corporation is a corporation duly organized, validly
existing and in good standing under the laws of its respective state of
incorporation. Each MedPartners Subsidiary and each MedPartners Professional
Corporation has all necessary corporate power to own its properties and assets
and to carry on its business as presently conducted.
(b) Each MedPartners Partnership that is a limited partnership is validly
formed, each MedPartners Partnership that is a general partnership has been duly
organized, and each MedPartners Partnership is in good standing under the laws
of its respective state of organization. Each MedPartners Partnership has all
necessary power to own its property and assets and to carry on its business as
presently conducted.
(c) Each MedPartners LLC is validly formed and in good standing under the
laws of its respective state of organization. Each MedPartners LLC has all
necessary power to own its property and assets and to carry on its business as
presently conducted.
4.6 Foreign Qualifications. MedPartners, each MedPartners Subsidiary and
each MedPartners LLC is qualified to do business as a foreign corporation or
foreign limited liability company and is in good standing in each jurisdiction
where the nature or character of the property owned, leased or operated by it or
the nature of the business transacted by it makes such qualification necessary,
except where the failure to so qualify would not have a material adverse effect
on MedPartners.
4.7 Power and Authority. MedPartners has corporate power to execute,
deliver and perform this Plan of Merger and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to this
Plan of Merger, and, subject to the satisfaction of the conditions precedent set
forth herein has taken all actions required by law, its Certificate of
Incorporation, its By-laws or otherwise, to authorize the execution and delivery
of this Plan of Merger and such related documents. The execution and delivery of
this Plan of Merger does not and, subject to the receipt of required regulatory
approvals and any other required third-party consents or approvals, the
consummation of the Merger contemplated hereby will not, violate any provisions
of the Certificate of Incorporation or By-laws of MedPartners, or any provision
of, or result in the acceleration of any obligation under, any mortgage, lien,
lease, agreement, instrument, order, arbitration award, judgment or decree to
which MedPartners is a party or by which it is bound, or violate any
restrictions of any kind to which MedPartners is subject. The execution and
delivery of this Plan of Merger has been approved by the Board of Directors of
MedPartners.
4.8 MedPartners Public Information. MedPartners has heretofore furnished
Cardinal with information regarding MedPartners including its Prospectus dated
October 16, 1996 (Registration No. 333-13471) relating to shares of MedPartners
Common Stock (the "Prospectus"), its Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 ("10-K")and its Quarterly Report for the quarter
ended June 30, 1996 ("10-Q") filed with the Securities and Exchange Commission
("SEC") (as any such documents have been amended since their original filing,
the "MedPartners Documents"). As of their respective filing dates, the
MedPartners Documents did not contain any untrue statements of material facts or
omit to state material facts required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. As of their respective filing dates, the MedPartners
Documents complied in all material respects with the applicable requirements of
the Securities Act and the Securities Exchange Act of 1934, as amended
("Exchange Act"), and the rules and regulations promulgated under such statutes.
The financial statements contained in the MedPartners Documents, together with
the notes thereto, have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods indicated
(except as may be indicated in the notes thereto, or, in the case of the
unaudited financial statements, as permitted by Form 10-Q), reflect all known
liabilities of MedPartners, fixed or contingent, required to be stated therein,
and present fairly the financial condition of MedPartners at said dates and the
consolidated results of operations and cash flows of MedPartners for the periods
then ended. The consolidated balance sheet of MedPartners at December 31,1995,
included in the 10-K is herein sometimes referred to as the "MedPartners Balance
Sheet".
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4.9 Legal Proceedings. There is no pending or threatened litigation,
governmental investigation, condemnation or other proceeding against or relating
to or affecting MedPartners, any MedPartners Subsidiary or any Other MedPartners
Entity or the transactions contemplated by this Plan of Merger for which
MedPartners is uninsured or which, if resolved adversely to MedPartners, any
MedPartners Subsidiary or any Other MedPartners Entity would have a material
adverse effect on MedPartners and, to the knowledge of MedPartners, no basis for
any such action exists.
4.10 Subsequent Events. Except as set forth in Exhibit 4.10 to the
MedPartners Disclosure Schedule, MedPartners (including the MedPartners
Subsidiaries and Other MedPartners Entities) has not, since the date of the
MedPartners Balance Sheet:
(a) Incurred any material adverse change.
(b) Discharged or satisfied any material lien or encumbrance, or paid
or satisfied any material obligation or liability (absolute, accrued,
contingent or otherwise) other than (i) liabilities shown or reflected on
the MedPartners Balance Sheet or (ii) liabilities incurred since the date
of the MedPartners Balance Sheet in the ordinary course of business, which
discharge or satisfaction would not have a material adverse effect on
MedPartners.
(c) Increased or established any reserve for taxes or any other
liability on its books or otherwise provided therefor which would have a
material adverse effect on MedPartners, except as may have been required
due to income or operations of MedPartners since the date of the
MedPartners Balance Sheet.
(d) Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets, tangible or intangible, which assets are
material to the consolidated business or financial condition of
MedPartners.
(e) Sold or transferred any of the assets material to the consolidated
business of MedPartners, canceled any material debts or claims or waived
any material rights, except in the ordinary course of business.
(f) Granted any general or uniform increase in the rates of pay of
employees or any material increase in salary payable or to become payable
by MedPartners to any officer or employee, consultant or agent (other than
normal merit increases), or by means of any bonus or pension plan, contract
or other commitment, increased in a material respect the compensation of
any officer, employee, consultant or agent.
(g) Except for this Plan of Merger and any other agreement executed
and delivered pursuant to this Plan of Merger, entered into any material
transaction other than in the ordinary course of business or permitted
under other Sections of this Plan of Merger.
(h) Issued any stock, bonds or other securities or any options or
rights to purchase any of its securities (other than stock issued upon the
exercise of outstanding options under MedPartners' stock option plans or
stock options under such plans and except as set forth in Exhibit 4.10 to
the MedPartners Disclosure Schedule.
4.11 Compliance with Laws in General. None of MedPartners, any MedPartners
Subsidiary or any Other MedPartners Entity has received any notices of material
violations of any federal, state and local laws, regulations and ordinances
relating to its business and operations, including, without limitation, the
Occupational Safety and Health Act, the Americans with Disabilities Act, the
Medicare or applicable Medicaid statutes and regulations and any Environmental
Laws, and no notice of any pending inspection or violation of any such law,
regulation or ordinance has been received by MedPartners, any MedPartners
Subsidiary or any Other MedPartners Entity which, if it were determined that a
violation had occurred, would have a material adverse effect on MedPartners.
4.12 Regulatory Approvals. Except as disclosed in the MedPartners
Documents or in Exhibit 4.12 to the MedPartners Disclosure Schedule, MedPartners
and each MedPartners Subsidiary, as applicable, holds all licenses, certificates
of need and other regulatory approvals required or necessary to be applied for
or obtained in connection with its business as presently conducted or as
proposed to be conducted, except where the failure to obtain such license,
certificate of need or regulatory approval would not have a material adverse
effect on MedPartners. All such licenses, certificates of need and other
regulatory approvals relating to the
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business, operations and facilities of MedPartners and each MedPartners
Subsidiary are in full force and effect, except where any failure of such
license, certificate of need or regulatory approval to be in full force and
effect would not have a material adverse effect on MedPartners. Any and all past
litigation concerning such licenses, certificates of need and regulatory
approvals, and all claims and causes of action raised therein, has been finally
adjudicated. No such license, certificate of need or regulatory approval has
been revoked, conditioned (except as may be customary) or restricted, and no
action (equitable, legal or administrative), arbitration or other process is
pending, or to the best knowledge of MedPartners, threatened, which in any way
challenges the validity of, or seeks to revoke, condition or restrict any such
license, certificate of need, or regulatory approval. The consummation of the
Merger will not violate any law or restriction to which MedPartners is subject
which, if violated, would have a material adverse effect on MedPartners.
4.13 Investment Intent. MedPartners is acquiring the Cardinal Shares
hereunder for its own account and not with a view to the distribution or sale
thereof, and MedPartners has no understanding, agreement or arrangement to sell,
distribute, partition or otherwise transfer or assign all or any part of the
Cardinal Shares to any other person, firm or corporation.
4.14 Commissions and Fees. There are no claims for brokerage commissions,
investment bankers' fees or finder's fees in connection with the transactions
contemplated by this Plan of Merger resulting from any action taken by
MedPartners or any of its officers, Directors or agents.
4.15 Retirement or Re-Acquisition of MedPartners Common Stock. MedPartners
has not agreed directly or indirectly to retire or re-acquire all or part of the
shares of MedPartners Common Stock issued pursuant to Section 2.1 hereof.
4.16 Disposition of Assets of Surviving Corporation. MedPartners does not
intend or plan to dispose of, or to cause the Surviving Corporation to dispose
of, or to cause the Surviving Corporation to dispose of, a significant part of
the assets of the Surviving Corporation within two years after the Effective
Date, other than dispositions in the ordinary course of business of the
Surviving Corporation and dispositions intended to eliminate duplicate
facilities or excess capacity.
4.17 No Untrue Representations. No representation or warranty by
MedPartners in this Plan of Merger, and no exhibit or certificate issued by
MedPartners and furnished or to be furnished to Cardinal pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact in response to the disclosure requested,
or omits or will omit to state a material fact necessary to make the statements
or facts contained therein in response to the disclosure requested not
misleading in light of all of the circumstances then prevailing.
SECTION 5.
ACCESS TO INFORMATION AND DOCUMENTS.
5.1 Access to Information. (a) Between the date hereof and the Closing
Date, Cardinal will give to MedPartners and its counsel, accountants and other
representatives full access to all the properties, documents, contracts,
personnel files and other records and shall furnish MedPartners with copies of
such documents and with such information with respect to the affairs as
MedPartners may from time to time reasonably request. Cardinal will disclose and
make available to MedPartners and its representatives all books, contracts,
accounts, personnel records, letters of intent, papers, records, communications
with regulatory authorities and other documents relating to the business and
operations of Cardinal. In addition, Cardinal shall make available to
MedPartners all such banking, investment and financial information as shall be
necessary to allow for the efficient integration of Cardinal's banking,
investment and financial arrangements with those of MedPartners at the Effective
Time.
(b) Between the date hereof and the Closing Date, MedPartners will give to
Cardinal and its counsel, accountants and other representatives reasonable
access to all the properties, documents, contracts, personnel files and other
records and shall furnish Cardinal with copies of such documents and with such
information with respect to the affairs as Cardinal may from time to time
reasonably request. MedPartners will disclose
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and make available to Cardinal and its representatives all books, contracts,
accounts, personnel records, letters of intent, papers, records, communications
with regulatory authorities and other documents relating to the business and
operations of MedPartners. It is understood and agreed that no information or
document which is proprietary or not available to the public will be delivered
to Cardinal pursuant to this Section 5.1(b).
5.2 Return of Records. If the transactions contemplated hereby are not
consummated and this Plan of Merger terminates, each party agrees to promptly
return all documents, contracts, records or properties of the other party and
all copies thereof furnished pursuant to this Section 5 or otherwise.
5.3 Effect of Access. (a) Nothing contained in this Section 5 shall be
deemed to create any duty or responsibility on the part of either party to
investigate or evaluate the value, validity or enforceability of any contract,
lease or other asset included in the assets of the other party.
(b) With respect to matters as to which any party has made express
representations or warranties herein, the parties shall be entitled to rely upon
such express representations and warranties irrespective of any investigations
made by such parties, except to the extent that such investigations result in
actual knowledge of the inaccuracy or falsehood of particular representations
and warranties.
SECTION 6.
COVENANTS.
6.1 Preservation of Business. Cardinal will use its reasonable best
efforts to preserve the business organization of Cardinal intact, to keep
available to MedPartners and the Surviving Corporation the services of the
present employees of Cardinal, and to preserve for MedPartners and the Surviving
Corporation the goodwill of the suppliers, customers and others having business
relations with Cardinal.
6.2 Material Transactions. Prior to the Effective Time, Cardinal will not
(other than as contemplated by the terms of this Plan of Merger and the related
documents, including, without limitation, the employment agreements by and
between Cardinal and the physician employees of Cardinal, and other than with
respect to transactions for which binding commitments have been entered into
prior to the date hereof and transactions described on Exhibit 6.2 to the
Cardinal Disclosure Schedule which do not vary materially from the terms set
forth on such Exhibit 6.2), without first obtaining the written consent of
MedPartners:
(a) Encumber any asset or enter into any transaction or make any
contract or commitment relating to the properties, assets and business of
Cardinal, other than in the ordinary course of business or as otherwise
disclosed herein.
(b) Enter into any employment contract which is not terminable upon
notice of 30 days or less, at will, and without penalty to Cardinal except
as provided herein.
(c) Enter into any contract or agreement (i) which cannot be performed
within three months or less, or (ii) which involves the expenditure of over
$150,000.
(d) Issue or sell, or agree to issue or sell, any shares of capital
stock or other securities of Cardinal.
(e) Make any payment or distribution to the trustee under any bonus,
pension, profit-sharing or retirement plan or incur any obligation to make
any such payment or contribution which is not in accordance with Cardinal's
usual past practice, or make any payment or contributions or incur any
obligation pursuant to or in respect of any other plan or contract or
arrangement providing for bonuses, executive incentive compensation,
pensions, deferred compensation, retirement payments, profit-sharing or the
like, establish or enter into any such plan, contract or arrangement, or
terminate any plan.
(f) Extend credit to anyone except in the ordinary course of business
consistent with prior practices.
(g) Guarantee the obligation of any person, firm or corporation,
except in the ordinary course of business consistent with prior practices.
(h) Amend its Articles of Incorporation or By-laws.
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(i) Take any action of a character described in Section 3.10(a) to
3.10(h), inclusive.
6.3 Meeting of Cardinal Shareholders. Cardinal will take all steps
necessary in accordance with its Articles of Incorporation and By-laws to call,
give notice of, convene and hold a meeting of its shareholders (the
"Shareholders Meeting") as soon as practicable after the date of execution of
this Plan of Merger for the purpose of approving this Plan of Merger and for
such other purposes as may be necessary. Unless this Plan of Merger shall have
been validly terminated as provided herein, the Board of Directors of Cardinal
(subject to the provisions of Section 7.1(d) hereof) will (i) recommend to its
shareholders the approval of this Plan of Merger, the transactions contemplated
hereby and any other matters to be submitted to the Shareholders in connection
therewith, to the extent that such approval is required by applicable law in
order to consummate the Merger, and (ii) use its reasonable, good faith efforts
to obtain the approval by its Shareholders of this Plan of Merger and the
transactions contemplated hereby.
6.4 Securities Matters. (a) MedPartners and Cardinal shall prepare and
Cardinal shall distribute to the holders of Cardinal Shares an information
package, including an Offering Circular and Proxy Statement (collectively, the
"Information Package") designed to provide each shareholder with such
information needed about this Plan of Merger and the Merger in order to qualify
the private placement of MedPartners Shares into which the Cardinal Shares are
to be converted pursuant to this Plan of Merger for the exemption under the
Securities Act provided by Section 4(2). Cardinal shall provide MedPartners with
such information and documentation as shall be reasonably requested by
MedPartners in order to prepare the Information Package contemplated by this
Section 6.4(a).
(b) The information specifically designated as being supplied by Cardinal
for inclusion in the Information Package shall not, at the time the Information
Package is delivered to the shareholders of Cardinal, at the time of the meeting
of the Cardinal shareholders and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to Cardinal, or its officers or directors, should be discovered by
Cardinal which should be set forth in an amendment or a supplement to the
Information Package, Cardinal shall promptly inform MedPartners.
(c) The information supplied by MedPartners for inclusion in the
Information Package shall not, at the time the Information Package is delivered
to the shareholder of Cardinal, at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to MedPartners, or its officers or Directors, should be discovered by
MedPartners which should be set forth in an amendment or a supplement to the
Information Package, MedPartners shall promptly inform Cardinal and shall
promptly prepare and distribute such amendment or supplement to the Information
Package.
(d) Prior to the Closing Date, MedPartners shall cause, to the extent
required, the shares of MedPartners Common Stock to be issued pursuant to the
Merger to be registered or qualified under all applicable securities or Blue Sky
laws of each of the states and territories of the United States, and to take any
other actions which may be necessary to enable the MedPartners Common Stock to
be issued pursuant to the Merger to be distributed in each such jurisdiction.
(e) Prior to the Closing Date, MedPartners shall file a Subsequent Listing
Application with the NYSE relating to the shares of MedPartners Common Stock to
be issued in connection with the Merger, and shall cause such shares of
MedPartners Common Stock to be listed on the NYSE, upon official notice of
issuance, prior to the Closing Date.
(f) Immediately after the Closing Date, MedPartners shall file with the SEC
a Registration Statement on Form S-1, or on Form S-3 if then eligible (the
"Shelf Registration"), as contemplated in Section 3(a) of a Registration Rights
Agreement, in substantially the form attached hereto as Exhibit 6.4(f).
MedPartners shall use its reasonable best efforts to cause such Shelf
Registration to be declared effective as soon as practicable thereafter. In
connection with the Shelf Registration, Cardinal shall and shall use its best
effort to cause the
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holders of Cardinal Shares to provide all information regarding Cardinal and
such holders as MedPartners shall reasonably require in the preparation of the
Shelf Registration.
6.5 Exemption from State Takeover Laws. Cardinal shall take all reasonable
steps necessary and within its power to exempt the Merger from the requirements
of any state takeover statute or other similar state law which would prevent or
impede the consummation of the transactions contemplated hereby, by action of
Cardinal's Board of Directors.
6.6 Public Disclosures. MedPartners and Cardinal will consult with each
other before issuing any press release or otherwise making any public statement
with respect to the transactions contemplated by this Plan of Merger, and shall
not issue any such press release or make any such public statement prior to such
consultation except as may be required by applicable law or requirements of the
NYSE. The parties shall issue a joint press release, mutually acceptable to
MedPartners and Cardinal, promptly upon execution and delivery of this Plan of
Merger.
6.7 Resignation of Cardinal Directors. On or prior to the Closing Date,
Cardinal shall deliver to MedPartners evidence satisfactory to MedPartners of
the resignation of the Directors of Cardinal, such resignations to be effective
on the Closing Date.
6.8 Practice Integration. MedPartners will use its best efforts to
integrate into Cardinal the 16 primary care physicians managed by a subsidiary
of MedPartners as a result of its acquisition of Pacific Physician Services,
Inc., in a method agreeable to MedPartners, Cardinal and such physicians.
6.9 Notice of Subsequent Events. Each party hereto shall notify the other
parties of any changes, additions or events of which they have knowledge which
would cause any material change in or material addition to any exhibit delivered
by the notifying party under this Plan of Merger, promptly after the occurrence
of the same. If the effect of such change or addition would, individually or in
the aggregate with the effect of changes or additions previously disclosed
pursuant to this Section 6.9, constitute a material adverse effect on the
notifying party, the non-notifying party may, within ten days after receipt of
such notice, elect to terminate this Plan of Merger. If the non-notifying party
does not give written notice of such termination within such 10-day period, the
non-notifying party shall be deemed to have consented to such change or addition
and shall not be entitled to terminate this Plan of Merger by reason thereof.
6.10 No Solicitations. Either MedPartners or Cardinal may, directly or
indirectly, furnish information and access, in response to unsolicited requests
therefor, to the same extent permitted by Section 5.1, to any corporation,
partnership, person or other entity or group, pursuant to appropriate
confidentiality agreements, and may participate in discussions and negotiate
with such corporation, partnership, person or other entity or group concerning
any proposal to acquire such party upon a merger, purchase of assets, purchase
of or tender offer for shares of its Common Stock or similar transaction (an
"Acquisition Transaction"), if the Board of Directors of MedPartners or
Cardinal, as the case may be, determines in its good faith judgment in the
exercise of its fiduciary duties or the exercise of its duties under Rule 14e-2
under the Exchange Act, after consultation with legal counsel and its financial
advisors, that such action is appropriate in furtherance of the best interest of
its stockholders. Except as set forth above, MedPartners or Cardinal shall not,
and will direct each officer, director, employee, representative and agent of
such party not to, directly or indirectly, encourage, solicit, participate in or
initiate discussions or negotiations with or provide any information to any
corporation, partnership, person or other entity or group (other than
MedPartners or an affiliate or associate or agent of MedPartners) concerning any
merger, sale of assets, sale of or tender offer for its shares or similar
transactions involving such party. Such party shall promptly notify the other
party if it shall, on or after the date hereof, have entered into a
confidentiality agreement with any third party in response to any unsolicited
request for information and access in connection with a possible Acquisition
Transaction involving such party, such notification to include the identity of
such third party and the proposed terms of such possible Acquisition
Transaction.
6.11 Other Actions. Subject to the provisions of Section 6.10 hereof, none
of Cardinal, MedPartners and the Subsidiary shall knowingly or intentionally
take any action, or omit to take any action, if such action or omission would,
or reasonably might be expected to, result in any of its representations and
warranties set forth
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herein being or becoming untrue in any material respect, or in any of the
conditions to the Merger set forth in this Plan of Merger not being satisfied,
or (unless such action is required by applicable law) which would materially
adversely affect the ability of Cardinal or MedPartners to obtain any consents
or approvals required for the consummation of the Merger without imposition of a
condition or restriction which would have a material adverse effect on the
Surviving Corporation or which would otherwise materially impair the ability of
Cardinal or MedPartners to consummate the Merger in accordance with the terms of
this Plan of Merger or materially delay such consummation.
6.12 Cardinal Conversion. Prior to the Effective Time, Cardinal and or its
shareholders shall take such action as is required to convert Cardinal to a
business corporation organized under the NCBCA. This Plan of Merger shall apply
as to such business corporation in the same manner as if such corporation were a
party hereto.
6.13 Accounting Methods. Neither MedPartners nor Cardinal shall change, in
any material respect, its methods of accounting in effect at its most recent
fiscal year end, except as required by changes in generally accepted accounting
principles as concurred by such parties' independent accountants.
6.14 Tax-Free Reorganization Treatment. Neither MedPartners nor Cardinal
shall intentionally take or cause to be taken any action, whether on or before
the Effective Time, which would disqualify the Merger as a "reorganization"
within the meaning of Section 368(a) of the Code.
6.15 Affiliate Agreements. MedPartners and Cardinal will each use their
respective reasonable, good faith efforts to cause each of their respective
Directors and executive officers and each of their respective "affiliates"
(within the meaning of Rule 145 under the Securities Act) to execute and deliver
to MedPartners as soon as practicable an agreement substantially in the form
attached hereto as Exhibit 6.15 relating to the disposition of shares of
Cardinal Common Stock and shares of MedPartners Common Stock held by such person
and the shares of MedPartners Common Stock issuable pursuant to this Plan of
Merger.
6.16 Cooperation. (a) MedPartners and Cardinal shall together, or pursuant
to an allocation of responsibility agreed to between them, (i) cooperate with
one another in determining whether any filings required to be made or consents
required to be obtained in any jurisdiction prior to the Effective Time in
connection with the consummation of the transactions contemplated hereby and
cooperate in making any such filings promptly and in seeking to obtain timely
any such consents, (ii) use their respective best efforts to cause to be lifted
any injunction prohibiting the Merger, or any part thereof, or the other
transactions contemplated hereby, and (iii) furnish to one another and to one
another's counsel all such information as may be required to effect the
foregoing actions.
(b) Subject to the terms and conditions herein provided, and unless this
Plan of Merger shall have been validly terminated as provided herein, each of
MedPartners and Cardinal shall use all reasonable efforts (i) to take, or cause
to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to the Plan of Merger and to consummate
the transactions contemplated hereby, subject to the vote of its shareholders
described above, and (ii) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any governmental entity and/or any other public or private third party which is
required to be obtained or made by such party or any of its subsidiaries or
affiliates in connection with this Plan of Merger and the transactions
contemplated hereby. Each of MedPartners and Cardinal will promptly cooperate
with and furnish information to the other in connection with any such burden
suffered by, or requirement imposed upon, either of them or any of their
subsidiaries or affiliates in connection with the foregoing.
6.17 Publication of Combined Results. MedPartners agrees that
approximately 30 days after the end of the first full calendar quarter following
the Effective Time, MedPartners shall cause publication of the combined results
of operations of MedPartners and Cardinal, provided however that such period
shall be tolled for such period as the financial statements required for the
preparation of such financial statements for such publication are not reasonably
available to MedPartners. For purposes of this Section 6.17, the term
"publication" shall have the meaning provided in SEC Accounting Series Release
No. 135.
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6.18 Transfer of Cardinal Assets. Following the Effective Time,
MedPartners will transfer the assets and liabilities of Cardinal acquired in the
Merger to the wholly-owned subsidiary of MedPartners which is to manage the
practice of Cardinal Healthcare, P.A.
6.19 Stock Purchase Plan. MedPartners will allow Cardinal IPA physicians
to participate in the MedPartners Stock Purchase Plan at such time as the plan
is adopted and instituted, provided (i) MedPartners shall have entered into a
contractual relationship with Cardinal I.P.A. for the provision of management
services and (ii) there are no legal or other restrictions that would preclude
such participation. If such participation is so precluded, MedPartners will use
its best efforts to provide a substitute program of stock purchase that is at
least as favorable to such physicians as the MedPartners Stock Purchase Program
would have been.
6.20 MedPartners Employment. The current administrative staff and
physicians of Cardinal will be given preferred consideration for positions with
MedPartners as Regional Vice President of Operations and Regional Medical
Director. Final selection of individuals from Cardinal for these positions will
be made based on numerous factors including agreement by the Cardinal Board of
Directors. MedPartners represents that there is no current Regional Medical
Director.
6.21 Spin-Off Subsidiary. (a) Immediately prior to the Effective Time and
pursuant to the terms and provisions for the Agreement and Plan of
Reorganization and Corporate Separation, in substantially the form attached
hereto as Exhibit 6.21, Cardinal shall form and duly organize the Spin-Off
Subsidiary and transfer to such subsidiary certain of Cardinal's assets and
liabilities as agreed upon by the parties, including physician employment and
independent contractor agreements, patient records, Medicare provider
number,certain pension, profit sharing, welfare benefit plans and qualified
retirement plans, all shares of Cardinal Physician Practice Management
Corporation then owned by Cardinal, professional liability insurance policies
and obligations to pay certain expenses.
(b) By letter dated October 1, 1996, Xxxxx X. Xxxxx, M.D. ("Xxxxx")
provided Cardinal with notice of termination of his employment. Cardinal has not
yet had the opportunity to quantify the amounts, if any, which may be due to
Xxxxx with respect to his termination. Pursuant to the Spin-Off, Cardinal will
transfer Xxxxx'x employment contract to the Spin-Off Subsidiary which shall
assume all obligations and liabilities due to Xxxxx thereunder and shall treat
as a Practice Expense under the Clinic Services Agreement any liability incurred
with respect to Xxxxx'x equity interest, if any, in Cardinal. Furthermore, with
respect to the employment contracts of Xxxxxx Xxxxxx, M.D. ("Xxxxxx") and
Xxxxxxx Xxxxx, M.D. ("Xxxxx"), Cardinal will transfer the employment contracts
of Xxxxxx and Xxxxx to the SpinOff Subsidiary, and shall treat as a Practice
Expense under the Clinic Services Agreement any liability incurred with respect
to respective equity interests of Xxxxxx and Xxxxx, if any, in Cardinal.
6.22 Clinic Services Agreement. Prior to the Effective Time, Cardinal and
the SpinOff Subsidiary shall enter into a Clinic Services Agreement
substantially in the form of Exhibit 8.1(g) hereto.
6.23 Employee Benefit Plans. (a) MedPartners shall (i) provide coverage to
each individual who is an employee of Cardinal immediately prior to the
Effective Time and will become an employee of MedPartners as of the Effective
Time (an "Affected Employee") under MedPartners' 401(k) retirement plan (the
"MedPartners 401(k) Plan") effective immediately following the Effective Time;
(ii) make profit sharing and/or matching contributions under the MedPartners
401(k) Plan on behalf of the Affected Employees for each plan year of the
MedPartners 401(k) Plan in an amount equal to at least 3% of the compensation of
the Affected Employees or, to the extent such contributions are not made, treat
an equivalent amount of profit sharing and/or matching contributions made on
behalf of the Affected Employees under the 401(k) retirement plan maintained by
New Cardinal as MedPartners Expenses as provided in the Clinic Services
Agreement; (iii) provide coverage to each Affected Employee under the group
medical plan, group dental plan, group vision plan, group long-term disability
insurance plan, group short-term disability plan, flexible benefits plan, and
another benefit plan or arrangement maintained by MedPartners for the benefit of
its employees (collectively, the "MedPartners Welfare Plans") effective either
immediately following the Effective Time or as of the first date subsequent to
the Effective Time on which it is administratively feasible to provide such
coverage to the Affected Employees, provided that MedPartners shall ensure that
the Affected
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Employees will be eligible for group medical plan coverage, group dental plan
coverage, group short-term disability plan coverage, group long-term disability
plan coverage and flexible benefit plan coverage during any period following the
Effective Time during which the Affected Employees are not yet eligible for
coverage under the corresponding MedPartners Welfare Plan(s); (iv) recognize
accumulated service of the Affected Employees with Cardinal for purposes of
eligibility and vesting under the MedPartners 401(k) Plan and the MedPartners
Welfare Plans; and (v) waive, or cause any insurance carriers providing benefits
under the MedPartners Welfare Plans to waive, any preexisting condition
requirements under the MedPartners Welfare Plans with respect to the Affected
Employees.
(b) To the extent that the New Cardinal desires to adopt the MedPartners
401(k) Plan, MedPartners shall take all actions necessary to allow New Cardinal
to adopt the MedPartners 401(k) Plan, modified to the extent necessary or
desirable, as mutually determined acceptable by New Cardinal and MedPartners, to
reflect the manner in which New Cardinal shall participate in the MedPartners
401(k) Plan, provided that such modifications are consistent with applicable
law.
(c) To the extent that New Cardinal desires to participate in the group
medical plan, group dental plan and/or group vision plan maintained by
MedPartners (collectively, the "MedPartners Health Plans"), MedPartners shall
take all actions necessary to allow New Cardinal to participate in the
MedPartners Health Plans, provided that MedPartners shall ensure that such
participation by New Cardinal in the MedPartners Health Plans is in accordance
with the terms of the MedPartners Health Plans and applicable law.
(d) MedPartners shall allow each individual who is an employee of Cardinal
immediately prior to the Effective Time and who will become an employee of New
Cardinal as of the Effective Time (the "New Cardinal Employees") to continue to
receive reimbursements from his or her flexible spending accounts maintained
under the Cardinal Healthcare, P.A. Flexible Benefits Plan for qualifying
expenses incurred (i) prior to the Effective Time, or (ii) subsequent to the
Effective time but on or before January 31, 1997.
(e) MedPartners shall offer continued coverage to the New Cardinal
Employees under the group health plans currently maintained by the Cardinal (the
"Cardinal Health Plans") or, to the extent the Cardinal Health Plans are
terminated, under MedPartners' group health plans, in accordance with the
requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.
SECTION 7.
TERMINATION, AMENDMENT AND WAIVER.
7.1 Termination. This Plan of Merger may be terminated at any time prior
to the Effective Time, whether before or after approval of matters presented in
connection with the Merger by the holders of Cardinal Common Stock:
(a) by mutual written consent of MedPartners and Cardinal:
(b) by either MedPartners or Cardinal;
(i) if, upon a vote at a duly held meeting of shareholders or any
adjournment thereof, any required approval of the holders of Cardinal
Shares shall not have been obtained;
(ii) if the Merger shall not have been consummated on or before
November 30, 1996, unless the failure to consummate the Merger is the
result of a willful and material breach of this Plan of Merger by the
party seeking to terminate this Plan of Merger; provided, however, that
the passage of such period shall be tolled for any part thereof (but not
exceeding 60 days in the aggregate) during which any party shall be
subject to a nonfinal order, decree, ruling or action restraining,
enjoining or otherwise prohibiting the consummation of the Merger or the
calling or holding of a meeting of shareholders;
(iii) if any court of competent jurisdiction or other governmental
entity shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise
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prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Plan of Merger which (A) would give rise to the failure of a condition
set forth in Section 8.2(a) or (b) or Section 8.3(a) or (b), as
applicable, and (B) cannot be or has not been cured within 30 days after
the giving of written notice to the breaching party of such breach (a
"Material Breach") (provided that the terminating party is not then in
Material Breach of any representation, warranty, covenant or other
agreement contained in this Plan of Merger); or
(v) if either MedPartners or Cardinal gives notice of termination
pursuant to Section 6.9;
(c) by either MedPartners or Cardinal in the event that (i) all of the
conditions to the obligation of such party to effect the Merger set forth
in Section 8.1 shall have been satisfied and (ii) any condition to the
obligation of such party to effect the Merger set forth in Section 8.2 (in
the case of MedPartners) or Section 8.3 (in the case of Cardinal) is not
capable of being satisfied prior to the end of the period referred to in
Section 7.1(b)(ii);
(d) By Cardinal, if Cardinal's Board of Directors shall have (i)
determined, in the exercise of its fiduciary duties under applicable law,
not to recommend the Merger to the holders of Cardinal Shares or shall have
withdrawn such recommendation or (ii) approved, recommended or endorsed any
Acquisition Transaction (as defined in Section 6.10) other than this Plan
of Merger or (iii) resolved to do any of the foregoing; or
(e) By MedPartners, if the holders of more than 10% of the Cardinal
Shares shall have dissented as provided in Chapter 13 of the NCBCA before
the taking of a vote on the Merger at the Shareholders Meeting.
7.2 Effect of Termination. In the event of termination of this Plan of
Merger as provided in Section 7.1, this Plan of Merger shall forthwith become
void and have no effect, without any liability or obligation on the part of any
party, other than the provisions of Sections 5.2 and 7.6, and except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or other agreements
set forth in this Plan of Merger.
7.3 Amendment. This Plan of Merger may be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the holders of Cardinal Shares; provided, however, that after
any such approval, there shall be made no amendment that pursuant to the NCBCA
requires further approval by such shareholders. This Plan of Merger may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Plan of Merger or in any
document delivered pursuant to this Plan of Merger or (c) subject to the proviso
of Section 7.3, waive compliance with any of the agreements or conditions
contained in this Plan of Merger. Any agreement on the part of a party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this Plan of
Merger to assert any of its rights under this Plan of Merger or otherwise shall
not constitute a waiver of such rights, except as otherwise provided in Section
6.9.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Plan of Merger pursuant to Section 7.1, an amendment of this
Plan of Merger pursuant to Section 7.3, or an extension or waiver pursuant to
Section 7.4 shall, in order to be effective, require in the case of MedPartners
or Cardinal, action by its Board of Directors or the duly authorized designee of
the Board of Directors.
7.6 Expenses. All costs and expenses incurred in connection with the Plan
of Merger and the transactions contemplated hereby shall be paid by the party
incurring such expense, it being understood that if
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the Merger is consummated, by reason thereof, MedPartners will indirectly bear
the expenses incurred by Cardinal.
SECTION 8.
CONDITIONS TO CLOSING.
8.1 Mutual Conditions. The respective obligations of each party to effect
the Merger shall be subject to the satisfaction, at or prior to the Closing
Date, of the following conditions (any of which may be waived in writing by
MedPartners and Cardinal):
(a) Neither MedPartners nor Cardinal nor any of their respective
subsidiaries, if any, shall be subject to any order, decree or injunction
by a court of competent jurisdiction which (i) prevents or materially
delays the consummation of the Merger or (ii) would impose any material
limitation on the ability of MedPartners effectively to exercise full
rights of ownership of the Common Stock of the Surviving Corporation or any
material portion of the assets or business of Cardinal, taken as a whole.
(b) No statute, rule or regulation shall have been enacted by the
government (or any governmental agency) of the United States or any state,
municipality or other political subdivision thereof that makes the
consummation of the Merger and any other transaction contemplated hereby
illegal.
(c) The holders of shares of Cardinal Common Stock shall have approved
the adoption of this Plan of Merger and any other matters submitted to them
in accordance with the provisions of Section 6.3 hereof.
(d) The shares of MedPartners Common Stock to be issued in connection
with the Merger shall have been listed on the NYSE, upon official notice of
issuance, and shall have been issued in transactions qualified or exempt
from registration under applicable securities or Blue Sky laws of such
states and territories of the United States as may be required.
(e) MedPartners and Cardinal shall have received all consents,
approvals and authorizations of third parties with respect to all material
leases and management agreements to which such parties are parties, which
consents, approvals and authorizations are required of such third parties
by such documents, in form and substance acceptable to MedPartners or
Cardinal, as the case may be, except where the failure to obtain such
consent, approval or authorization would not have a material effect on the
business of the Surviving Corporation.
(f) MedPartners and Cardinal and the shareholders of Cardinal shall
have entered into the Stock Restriction and Registration Rights Agreement
set forth in Exhibit 6.4(f) attached hereto.
(g) Cardinal and the Spin-Off Subsidiary shall have entered into the
Clinic Services Agreement in the form of Exhibit 8.1(g) hereto.
8.2 Conditions to Obligations of MedPartners. The obligations of
MedPartners to consummate the Merger and the other transactions contemplated
hereby shall be subject to the satisfaction, at or prior to the Closing Date, of
the following conditions (any of which may be waived by MedPartners and
Cardinal):
(a) Each of the agreements of Cardinal to be performed at or prior to
the Closing Date pursuant to the terms hereof shall have been duly
performed in all material respects, and Cardinal shall have performed, in
all material respects, all of the acts required to be performed by it at or
prior to the Closing Date by the terms hereof.
(b) The representation and warranty of Cardinal set forth in Section
3.10(a) shall be true and correct as of the date of this Plan of Merger and
as of the Closing Date. The representations and warranties of Cardinal set
forth in this Plan of Merger that are qualified as to materiality shall be
true and correct, and those that are not so qualified shall be true and
correct in all material respects, as of the date of this Plan of Merger and
as of the Closing Date as though made at and as of such time, except to the
extent such representations and warranties expressly relate to an earlier
date (in which case such
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representations and warranties that are qualified as to materiality shall
be true and correct, and those that are not so qualified shall be true and
correct in all material respects, as of such earlier date); provided,
however, that Cardinal shall not be deemed to be in breach of any such
representations or warranties by taking any action permitted (or approved
by MedPartners) under Section 6.2 or otherwise permitted herein.
MedPartners shall have been furnished with a certificate, executed by a
duly authorized officer of Cardinal, dated the Closing Date, certifying in
such detail as MedPartners may reasonably request as to the fulfillment of
the foregoing conditions.
(c) MedPartners shall have obtained, or obtained the transfer of, any
licenses and other regulatory approvals necessary to allow the Surviving
Corporation to operate Cardinal's business, unless the failure to obtain
such transfer or approval would not have a material adverse effect on
Cardinal.
(d) MedPartners shall have received an opinion from Xxxxxxx Xxxxxxxxx
& Young, L.L.C., to the effect that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, which
opinion may be based upon reasonable representations of fact provided by
officers of MedPartners and Cardinal.
(e) MedPartners shall have received an opinion from Xxxxxx & Bird, in
customary form and reasonably satisfactory to MedPartners.
(f) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Plan of Merger shall have been obtained or made, except
for filings in connection with the Merger and any other documents required
to be filed after the Effective Time.
(g) MedPartners shall have received "Affiliate Letters" as provided in
Section 6.15 herein from each of the affiliates of Cardinal.
(h) Each of the shareholders of Cardinal shall have executed and
delivered to MedPartners an investment letter in the form of Exhibit 8.2(h)
attached to this Plan of Merger.
(i) Each of the shareholders of Cardinal shall have executed and
delivered to MedPartners a Financial Data Sheet in the form included in the
Information Package.
(j) Each of the shareholders of Cardinal shall have executed and
delivered an Indemnification Agreement covering uninsured medical
malpractice liability in the form of Exhibit 8.2(j) attached to this Plan
of Merger.
(k) No more than five shareholders of Cardinal shall have voted
against the Merger.
8.3 Conditions to Obligations of Cardinal. The obligations of Cardinal to
consummate the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction, at or prior to the Closing Date, of the following
conditions (any of which may be waived by Cardinal):
(a) Each of the agreements of MedPartners to be performed at or prior
to the Closing Date pursuant to the terms hereof shall have been duly
performed, in all material respects, and MedPartners shall have performed,
in all material respects, all of the acts required to be performed by them
at or prior to the Closing Date by the terms hereof.
(b) The representation and warranty of MedPartners set forth in
Section 4.10(a) shall be true and correct as of the date of the Plan of
Merger and as of the Closing Date. The representations and warranties of
MedPartners set forth in this Plan of Merger that are qualified as to
materiality shall be true and correct, and those that are not so qualified
shall be true and correct in all material respects, as of the date of this
Plan of Merger and as of the Closing as though made at and as of such time,
except to the extent such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties that
are qualified as to materiality shall be true and correct, and those that
are not so qualified shall be true and correct in all material respects, as
of such earlier date). Cardinal shall have been furnished with a
certificate, executed by duly authorized officers of MedPartners, dated
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the Closing Date, certifying in such detail as Cardinal may reasonably
request as to the fulfillment of the foregoing conditions.
(c) Cardinal shall have received an opinion from Xxxxxx & Bird to the
effect that the Merger will constitute a reorganization with the meaning of
Section 368(a) of the Code which opinion may be based upon reasonable
representations of fact provided by officers of MedPartners and Cardinal.
(d) Cardinal shall have received an opinion from Xxxxxxx Xxxxxxxxx &
Young, L.L.C., in customary form and reasonably satisfactory to Cardinal.
(e) All consents, authorizations, orders and approvals of (or filings
or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Plan of Merger shall have been obtained or made, except
for filings in connection with the Merger and any other documents required
to be filed after the Effective Time.
(f) MedPartners shall have either extinguished the underlying
indebtedness or arranged for the release from personal liability of any
indebtedness to third party lenders with respect to which any Cardinal
shareholder is personally liable.
SECTION 9.
MISCELLANEOUS.
9.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Plan of Merger or in any instrument
delivered pursuant to this Plan of Merger shall survive the Effective Time.
9.2 Notices. Any communications required or desired to be given hereunder
shall be deemed to have been properly given if sent by hand delivery or by
facsimile and overnight courier to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to MedPartners:
MedPartners, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: J. Xxxxxx Xxxxxxxx, Xx., Esq.
Senior Vice President and General Counsel
Facsimile: (000) 000-0000
with a copy to:
0000 XxXxxxx/Xxxxxxx Xxxxx
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: X. Xxxxxxx XxXxxxxx, Jr., Esq.
Xxxxxxx Xxxxxxxxx & Young, L.L.C.
Facsimile: (000) 000-0000
If to Cardinal:
Cardinal Healthcare, P.A.
0000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: D. Xxxxx Xxxxx, M.D.
Facsimile: (000)000-0000
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with a copy to:
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxxx X. Xxxx, Esq.
Facsimile: (000)000-0000
All such communications shall be deemed to have been delivered on the date
of hand delivery or on the next business day following the deposit of such
communications with the overnight courier.
9.3 Further Assurances. Each party hereby agrees to perform any further
acts and to execute and deliver any documents which may be reasonably necessary
to carry out the provisions of this Plan of Merger.
9.4 Indemnification. MedPartners agrees that all rights to indemnification
for acts or omissions occurring prior to the Effective Time now existing in
favor of the current or former directors or officers of Cardinal as provided in
their respective certificates or articles of incorporation or by-laws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms. The provisions of this Section 9.4 are intended to be for the
benefit of, and shall be enforceable by, each such indemnified party and each
such indemnified party's heirs and representatives.
9.5 Governing Law. This Plan of Merger shall be interpreted, construed and
enforced in accordance with the laws of the State of Delaware, applied without
giving effect to any conflicts-of-law principles.
9.6 "Including". The word "including", when following any general
statement, term or matter, shall not be construed to limit such statement, term
or matter to the specific terms or matters as provided immediately following the
word "including" or to similar items or matters, whether or not non-limiting
language (such as "without limitation", "but not limited to", or words of
similar import) is used with reference to the word "including" or the similar
items or matters, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of the
general statement, term or matter.
9.7 "Knowledge". "To the knowledge", "to the best knowledge, information
and belief", or any similar phrase shall be deemed to refer to the knowledge of
the Chairman of the Board, Chief Executive Officer or Chief Financial Officer of
a party and to include the assurance that such knowledge is based upon a
reasonable investigation, unless otherwise expressly provided.
9.8 "Material adverse change" or "material adverse effect". "Material
adverse change" or "material adverse effect" means, when used in connection with
Cardinal or MedPartners, any change, effect, event or occurrence that has, or is
reasonably likely to have, individually or in the aggregate, a material adverse
impact on the business or financial position of such party and its subsidiaries,
if any, taken as a whole; provided, however, that "material adverse change" and
"material adverse effect" shall be deemed to exclude the impact of (i) changes
in generally accepted accounting principles, (ii) changes in applicable law, and
(iii) any changes resulting from any restructuring or other similar charges or
write-offs taken by Cardinal with the consent of MedPartners; provided, however,
that no such charges or write-offs will be taken if such would adversely affect
pooling-of-interests accounting treatment for the Merger. Moreover, it shall not
be deemed a "material adverse change" or "material adverse effect" so long as
future financial performance shall be consistent with discussions between the
parties in connection with the Merger.
9.9 "Hazardous Materials". The term "Hazardous Materials" means any
material which has been determined by any applicable governmental authority to
be harmful to the health or safety of human or animal life or vegetation,
regardless of whether such material is found on or below the surface of the
ground, in any surface or underground water, airborne in ambient air or in the
air inside any structure built or located upon or below the surface of the
ground or in building materials or in improvements of any structures, or in any
personal property located or used in any such structure, including, but not
limited to, all hazardous substances, imminently hazardous substances, hazardous
wastes, toxic substances, infectious wastes, pollutants and contaminants from
time to time defined, listed, identified, designated or classified as such under
any Environmental Laws (as defined in Section 9.10) regardless of the quantity
of any such material.
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9.10 "Environmental Laws". The term "Environmental Laws" means any
federal, state or local statute, regulation, rule or ordinance, and any judicial
or administrative interpretation thereof, regulating the use, generation,
handling, storage, transportation, discharge, emission, spillage or other
release of Hazardous Materials or relating to the protection of the environment.
9.11 Captions. The captions or headings in this Plan of Merger are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this Plan of
Merger.
9.12 Integration of Exhibits. All Exhibits attached to this Plan of Merger
are integral parts of this Plan of Merger as if fully set forth herein, and all
statements appearing therein shall be deemed disclosed for all purposes and not
only in connection with the specific representation in which they are explicitly
referenced.
9.13 Entire Agreement. This instrument, including all Exhibits attached
hereto and the Confidentiality Agreement contain the entire agreement of the
parties and supersede any and all prior or contemporaneous agreements between
the parties, written or oral, with respect to the transactions contemplated
hereby. Such agreement may not be changed or terminated orally, but may only be
changed by an agreement in writing signed by the party or parties against whom
enforcement of any waiver, change, modification, extension, discharge or
termination is sought.
9.14 Counterparts. This Plan of Merger may be executed in several
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
9.15 Binding Effect. This Plan of Merger shall be binding on, and shall
inure to the benefit of, the parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Plan of Merger. No party may assign any right or obligation hereunder
without the prior written consent of the other parties.
9.16 No Rule of Construction. The parties acknowledge that this Plan of
Merger was initially prepared by MedPartners, and that all parties have read and
negotiated the language used in this Plan of Merger. The parties agree that,
because all parties participated in negotiating and drafting this Plan of
Merger, no rule of construction shall apply to this Plan of Merger which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting this Plan of Merger.
IN WITNESS WHEREOF, MedPartners and Cardinal have caused this Amended and
Restated Plan and Agreement of Merger to be executed by their respective duly
authorized officers, all as of the day and year first above written.
MEDPARTNERS, INC.
By
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Its:
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CARDINAL HEALTHCARE, P.A.
By
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D. Xxxxx Xxxxx, M.D.
President
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