MERGER AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
XXXX X. SMALL, M.D. & ASSOCIATES, P.A.,
XXXX X. SMALL, M.D.
AND
XXXXXXXXX X. XXXXXX, M.D.
July 3, 1997
TABLE OF CONTENTS
Page
----
1. Definitions.........................................................................1
2. Basic Transaction...................................................................4
(a) The Merger................................................................4
(b) The Closing...............................................................4
(c) Actions at the Closing....................................................4
(d) Effect of Merger..........................................................4
(e) No Fractional Shares......................................................5
3. Representations and Warranties of NCS&A and NCS&A Stockholder.......................5
(a) Organization, Qualification, and Corporate Power..........................5
(b) NCS&A Stockholder Interests and Capitalization............................5
(c) Authorization of Transaction..............................................5
(d) Noncontravention..........................................................5
(e) Subsidiaries and Investments..............................................6
(f) Financial Statement.......................................................6
(g) Undisclosed Liabilities...................................................6
(h) Brokers' Fees.............................................................6
(i) Material Contracts........................................................6
(j) Insurance; Malpractice....................................................7
(k) No Changes Prior to Closing Date..........................................7
(l) Title; Condition..........................................................8
(m) Litigation................................................................8
(n) Permits and Licenses......................................................8
(o) Tax Matters...............................................................8
(p) Employee Benefit Plans....................................................8
(q) Third-Party Relations.....................................................9
(r) Compliance with Applicable Laws..........................................10
(s) Employee Compensation....................................................10
(t) Environmental Matters....................................................10
(u) Healthcare Compliance....................................................10
(v) Fraud and Abuse..........................................................11
(w) Practice Compliance......................................................11
(x) Rates and Reimbursement Policies.........................................11
(y) Accounts Receivable......................................................11
(z) Guaranties...............................................................12
(aa) Powers of Attorney......................................................12
(bb) Tangible Assets.........................................................12
(cc) SCN Share Ownership; Investment Intent..................................12
(dd) Full Disclosure.........................................................13
4. Representations and Warranties of SCN..............................................13
(a) Organization.............................................................13
(b) Capitalization...........................................................13
(c) Authorization of Transaction.............................................13
(d) Noncontravention.........................................................13
(e) Brokers' Fees............................................................14
i
Page
----
(f) Securities Filings.......................................................14
5. Covenants..........................................................................14
(a) General..................................................................14
(b) Notices and Consents.....................................................14
(c) Regulatory Matters and Approvals.........................................14
(d) Operation of Business....................................................14
(e) Further Acts and Assurances..............................................15
(f) Full Access..............................................................15
(g) Notice of Developments...................................................15
(h) Exclusivity..............................................................15
(i) Collection of Accounts Receivable........................................15
(j) Payment of Expenses......................................................16
(k) Corporate Authorization..................................................16
(l) Malpractice Insurance....................................................16
(m) Distribution of Excluded Assets..........................................16
(n) Satisfaction of Indebtedness.............................................16
(o) Conversion into Business Corporation.....................................16
(p) Employee Benefit Plans...................................................16
(q) Securities Laws Compliance...............................................16
(r) Piggyback Registration...................................................17
6. Conditions to Obligation to Close..................................................18
(a) Conditions to Obligation of SCN..........................................18
(b) Conditions to Obligation of NCS&A........................................19
7. Items to be Delivered at or Prior to Closing.......................................19
(a) By the NCS&A Stockholder or NCS&A........................................19
(b) By SCN...................................................................20
8. Termination........................................................................20
(a) Termination of Agreement.................................................20
(b) Effect of Termination....................................................21
9. Indemnification....................................................................21
(a) Indemnification by the NCS&A Stockholder.................................21
(b) Notice to the NCS&A Stockholder; Opportunity to Defend...................21
(c) General Indemnification by SCN...........................................21
(d) Notice to SCN; Opportunity to Defend.....................................21
(e) Right of Setoff..........................................................21
10. Miscellaneous.....................................................................22
(a) Survival.................................................................22
(b) No Third-Party Beneficiaries.............................................22
(c) Entire Agreement.........................................................22
(d) Succession and Assignment................................................22
(e) Counterparts.............................................................22
(f) Headings.................................................................22
ii
Page
----
(g) Notices..................................................................22
(h) Governing Law; Venue.....................................................23
(i) Amendments and Waivers...................................................23
(j) Severability.............................................................23
(k) Expenses.................................................................23
(l) Construction.............................................................24
(n) Incorporation of Exhibits and Schedules..................................24
EXHIBIT 1 AGREEMENT AND PLAN OF MERGER...............................Exhibit 1-1
EXHIBIT 2(a)(1) CERTIFICATE OF MERGER................................Exhibit 2(a)(1)-1
EXHIBIT 2(a)(2) TEXAS ARTICLES OF MERGER.............................Exhibit 2(a)(2)-1
EXHIBIT 7(a)(iv) SERVICE AGREEMENT...........................................7(a)(iv)-1
EXHIBIT 7(a)(vi) NCS&A OPINION LETTER................................Exhibit 7(a)(vi)-1
EXHIBIT 7(b)(iii) SCN OPINION LETTER.................................Exhibit 7(b)(iii)-1
iii
MERGER AGREEMENT
----------------
THIS MERGER AGREEMENT (this "Agreement") is entered into this the 3rd
day of July, 1997, by and among SPECIALTY CARE NETWORK, INC., a Delaware
corporation ("SCN"), XXXX X. SMALL, M.D. & ASSOCIATES, P.A., a Texas
professional association ("NCS&A") and XXXX X. SMALL, M.D. and XXXXXXXXX X.
XXXXXX, M.D. (collectively, the "NCS&A Stockholder"). SCN, NCS&A and the NCS&A
Stockholder are referred to collectively herein as the "Parties".
W I T N E S S E T H:
--------------------
WHEREAS, SCN and NCS&A have determined that it is desirable and in the
best interests of their respective corporations and stockholders that NCS&A
merges with and into SCN, with SCN as the surviving corporation, on the terms
and subject to the conditions set forth in this Agreement and the corresponding
Agreement and Plan of Merger in the form attached hereto as Exhibit 1 (the
"Agreement and Plan of Merger");
WHEREAS, SCN and NCS&A intend that the transaction contemplated by this
Agreement shall qualify as a tax-free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code") and intend that
this Agreement along with the Agreement and Plan of Merger shall constitute a
"plan of reorganization" within the meaning of Section 368 of the Code;
WHEREAS, the Parties do not intend for this Agreement to be a binding
obligation of any Party unless and until the provisions of Section 6 are
satisfied or waived by the appropriate party; and
WHEREAS, the Parties desire to set forth in writing the terms and
conditions under which said transaction will be consummated.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Parties, and in accordance with the applicable
provisions of the Delaware General Corporation Law and the Professional
Association Act, the parties hereby agree as follows:
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preface above.
"Agreement and Plan of Merger" has the meaning set forth in the first
recital above.
"Applicable Laws" has the meaning set forth in Section 3(r).
"Texas Articles of Merger" has the meaning set forth in Section 2(a)
below.
"Texas Professional Association Act" means the Professional Association
Act of the State of Texas, as amended.
"Closing Date" has the meaning set forth in Section 2(b) below.
"Closing" has the meaning set forth in Section 2(b) below.
- 1 -
"Code" has the meaning set forth in the recitals above.
"Conversion Ratio" has the meaning set forth in Section 2(d)(v) below.
"Delaware Certificate of Merger" shall have the meaning set forth in
Section 2(a) below.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"NCS&A" has the meaning set forth in the preface above.
"NCS&A Share" means any share of the issued and outstanding common
stock of NCS&A at the date of this Agreement.
"NCS&A Stockholders" has the meaning set forth in the preface above.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Employee Benefit Plans" has the meaning set forth in Section 3(p)(i)
below.
"Environmental Laws" means all federal, state, and local laws, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder and other governmental requirements relating to pollution,
control of chemicals, storage and handling of petroleum products, management of
waste (including biohazardous or biomedical waste), discharges of materials into
the environment, health, safety, natural resources, and the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" has the meaning set forth in Section 3(p)(i) below.
"Excluded Assets" has the meaning set forth in Section 5(m) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Materials" has the meaning set forth in Section 3(t) below.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable investigation.
"Medical Waste" includes, but is not limited to, pathological waste,
blood, sharp, wastes from surgery or autopsy, dialysis waste, including
contaminated disposable equipment and supplies, cultures and stocks of
infectious agents and associated biological agents, contaminated animals,
isolation wastes, contaminated equipment, laboratory waste, various other
biological waste and discarded materials contaminated with or exposed to blood,
excretion or secretion from human beings or animals, and any substance,
pollutant, material or contaminant listed or regulated under the Medical Waste
Tracking Act of 1988, 42 U.S.C. xx.xx. 6992, et seq.
- 2 -
"Medical Waste Law" means the Medical Waste Tracking Act of 1988, as
amended, the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33
U.S.C.A. xx.xx. 2501, et seq., the Marine Protection, Research and Sanctuaries
Act of 1972, 33 U.S.C.A. xx.xx. 1401, et seq., the Occupational Safety and
Health Act, 29 U.S.C.A. xx.xx. 651, et seq., the United States Department of
Health and Human Services, National Institute for Occupational Self-Safety and
Health Infectious Waste Disposal Guidelines, Publication No. 88-119, all
regulations and orders issued pursuant to any of the foregoing, and any other
federal, state, regional, county, municipal or other local laws, regulations and
ordinances insofar as they purport to regulate Medical Waste or impose
requirements relating to Medical Waste.
"Merger" has the meaning set forth in Section 2(a) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Parties" has the meaning set forth in the preface above.
"PBGC" has the meaning set forth in Section 3(p)(ii) below.
"PCBs" has the meaning set forth in Section 3(t) below.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Practice Assets" has the meaning set forth in Section 3(l) below.
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"SCN" has the meaning set forth in the preface above.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Service Agreement" shall mean that certain Service Agreement dated as
of the Closing Date by and among SCN, Associated Orthopaedics & Sports Medicine,
P.A., Xxxxxxxxx X. Xxxxxx, M.D., and the NCS&A Stockholder to be executed and
delivered at the Closing.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2(a)
below.
- 3 -
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, NCS&A will merge with and into SCN (the "Merger") at the Effective
Time. SCN shall enter into the Agreement and Plan of Merger upon adoption of the
Agreement and Plan of Merger by the Board of Directors of SCN and the
satisfaction or waiver of the conditions precedent to SCN's obligations set
forth in this Agreement. NCS&A shall enter into the Agreement and Plan of Merger
upon adoption of the Agreement and Plan of Merger by the Board of Directors of
NCS&A and the NCS&A Stockholder and the satisfaction or waiver of the conditions
precedent to NCS&A's obligation set forth in this Agreement. Upon all other
conditions herein being satisfied or waived in accordance with the terms of this
Agreement, a Certificate of Merger in substantially the form attached hereto as
Exhibit 2(a)(1) (the "Delaware Certificate of Merger") shall be executed and
filed with the Secretary of State of the State of Delaware and Articles of
Merger in substantially the form attached hereto as Exhibit 2(a)(2) (the "Texas
Articles of Merger")shall be executed and filed with the Secretary of State of
the State of Texas, together with all certificates or documents as may be
required to be filed under the laws of the State of Delaware and the State of
Texas to effect the Merger. Thereafter, the separate corporate existence of
NCS&A shall cease and NCS&A shall be merged with and into SCN (the "Surviving
Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of NCS&A, 0000 Xxxx
Xxxxx Xxxxxxx, Xxxxx, Xxxxx 00000 commencing at 9:00 A.M. local time on the
second business day following the day on which the last of the conditions set
forth in Section 6 have been fulfilled or waived, or such other date or place as
the Parties may mutually determine (the "Closing Date"). Time is of the essence
for this Agreement.
(c) Actions at the Closing. At the Closing, (i) NCS&A will deliver to
SCN the various certificates, instruments, and documents referred to in Section
7(a) below, (ii) SCN will deliver to NCS&A the various certificates,
instruments, and documents referred to in Section 7(b) below, (iii) SCN and
NCS&A will file with the Secretary of State of the State of Delaware the
Delaware Certificate of Merger, and (iv) SCN and NCS&A will file with the
Secretary of State of the State of Texas the Texas Articles of Merger.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time
(the "Effective Time") SCN and NCS&A file the Delaware Certificate of
Merger with the Secretary of State of the State of Delaware and file
the Texas Articles of Merger with the Secretary of State of the State
of Texas. The Merger shall have the effect set forth in the Delaware
General Corporation Law and the Texas Professional Association Act. The
Surviving Corporation may, at any time after the Effective Time, take
any action (including executing and delivering any document) in the
name and on behalf of either SCN or NCS&A in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of SCN in effect at and as of the Effective Time will
remain the Certificate of Incorporation of the Surviving Corporation
without any modification or amendment as a result of the Merger.
(iii) Bylaws. The Bylaws of SCN in effect at and as of the
Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment as a result of the Merger.
(iv) Directors and Officers. The directors and officers of SCN
in office at and as of the Effective Time will remain the directors and
officers of the Surviving Corporation (retaining their respective
positions and terms of office).
- 4 -
(v) Conversion of NCS&A Shares. At and as of the Effective
Time, each of the issued and outstanding NCS&A Shares shall be
converted into (A) the right to receive 45.39 SCN Shares (the ratio of
90,780 SCN Shares divided by the total number of NCS&A Shares
outstanding is referred to herein as the "Conversion Ratio") and (B)
the right to receive a cash payment of $201.56. The NCS&A Stockholder
shall deliver to SCN a schedule executed by each NCS&A Stockholder
setting forth the allocation of SCN Shares and cash to be delivered to
each of the NCS&A Stockholder at the Effective Time. The Conversion
Ratio shall be subject to equitable adjustment in the event of any
stock split, stock dividend, reverse stock split, or other change in
the number of NCS&A Shares or SCN Shares outstanding.
(vi) SCN Shares. Each SCN Share issued and outstanding at and
as of the Effective Time will remain issued and outstanding and shall
be unaffected by the Merger.
(e) No Fractional Shares. No fractional SCN Shares shall be issued
pursuant to the Merger. In lieu of the issuance of any such fractional SCN
Shares, cash adjustments will be paid to holders in respect of any fractional
SCN Shares that would otherwise be issuable. The amount of such adjustment shall
be the product of such fraction of a SCN Share multiplied by $11.75.
3. Representations and Warranties of NCS&A and NCS&A Stockholder. NCS&A
and the NCS&A Stockholder, jointly and severally, represent and warrant to SCN
that the statements contained in this Section 3 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3), except as set forth in
the disclosure schedule (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3.
(a) Organization, Qualification, and Corporate Power. NCS&A is a
professional association duly organized, validly existing, and in good standing
under the laws of the State of Texas. NCS&A is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the character or location of the properties owned or the business conducted by
NCS&A makes such qualification necessary. NCS&A has the full corporate power and
authority to carry on the business in which it is engaged and to own and use the
properties owned and used by it.
(b) NCS&A Stockholder Interests and Capitalization. The capital stock
of NCS&A is owned in the manner set forth in Section 3(b) of the Disclosure
Schedule. All of the issued and outstanding NCS&A Shares have been duly
authorized and are validly issued, fully paid, and nonassessable. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require NCS&A to issue, sell or otherwise cause to become outstanding
any of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to NCS&A. As of the date of this Agreement, the authorized capital stock
of NCS&A consists of 100,000 shares of NCS&A common stock, of which 2,000 shares
were issued and outstanding.
(c) Authorization of Transaction. NCS&A has the full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of NCS&A and the NCS&A Stockholder, enforceable in accordance with
its terms and conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which
NCS&A is subject or any provision of the charter or bylaws of NCS&A or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument
- 5 -
or other arrangement to which NCS&A is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets). NCS&A is not required to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(e) Subsidiaries and Investments. NCS&A does not own, directly or
indirectly, any capital stock or other equity ownership or proprietary interest
in any other corporation, partnership, association, limited liability company,
trust, joint venture or other entity.
(f) Financial Statements. NCS&A has furnished SCN with unaudited
balance sheets dated December 31, 1995 and 1996 and May 31, 1997 and unaudited
income statements for the twelve (12) month periods ending December 31, 1996,
1995 and 1994 and the five (5) months ended May 31, 1997. Such financial
statements, including the notes thereto, except as indicated therein, were
prepared on a basis consistent with past accounting practices of NCS&A and
fairly present the results of operations for the periods noted therein. The
balance sheets of NCS&A delivered by NCS&A to SCN fairly present the financial
condition of NCS&A at the date thereof, and except as indicated therein, reflect
all claims against and all debts and liabilities of NCS&A, fixed or contingent,
as of the date thereof.
(g) Undisclosed Liabilities. NCS&A has no uninsured liability (whether
known or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to become due),
including any liability for taxes, except for (i) liabilities set forth on the
face of the balance sheet dated as of December 31, 1996 and (ii) liabilities
which have arisen after December 31, 1996 in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(h) Brokers' Fees. NCS&A does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(i) Material Contracts. Section 3(i) of the Disclosure Schedule lists
the following contracts and other material agreements to which NCS&A is a party:
(i) any agreement (or group of related agreements) for the
lease of real or personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services;
(iii) any agreement concerning a partnership, limited
liability company or joint venture;
(iv) any agreement (or group of related agreements) under
which NCS&A has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation
pursuant to which it has imposed a Security Interest in respect of any
of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of NCS&A's current or former directors,
officers, and employees;
(vii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000 or providing severance benefits;
- 6 -
(viii) any agreement pursuant to which NCS&A has advanced or
loaned any amount to any of its directors, officers, and employees;
(ix) any agreement pursuant to which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of NCS&A;
(x) any third-party provider agreement; or
(xi) any other agreement (or group of related agreements)
outside the ordinary course of NCS&A's business or operations the
performance of which involves consideration in excess of $15,000.
NCS&A has delivered or given SCN access to a correct and complete copy of each
written agreement listed in Section 3(i) of the Disclosure Schedule (as amended
through the Closing Date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3(i) of the Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B) except as set
forth in Section 3(i) of the Disclosure Schedule, no notice of this Agreement or
consent of any third party is required in order for NCS&A to execute and deliver
this Agreement or to consummate the transactions contemplated hereby, and, after
assignment to SCN at Closing, the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms; (C) no
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
(j) Insurance; Malpractice. Section 3(j) of the Disclosure Schedule
contains a list and brief description of all policies or binders of fire,
liability, product liability, workers compensation, health and other forms of
insurance policies or binders currently in force insuring against risks which
will remain in full force and effect at least through the Closing Date. Section
3(j) of the Disclosure Schedule contains a description of all current
malpractice liability insurance policies of NCS&A Stockholder, NCS&A and NCS&A's
professional employees and all predecessor policies in effect since February 1,
1990. Neither NCS&A, the NCS&A Stockholder, nor NCS&A's professional employees
have, in the last seven (7) years, filed a written application for any insurance
coverage relating to NCS&A's business or property which has been denied by an
insurance agency or carrier. NCS&A, NCS&A's professional employees and the NCS&A
Stockholder have been continuously insured for professional malpractice claims
during the same period. Section 3(j) of the Disclosure Schedule also sets forth
a list of all claims for any insured loss in excess of Five Thousand Dollars
($5,000.00) per occurrence filed by or against NCS&A, NCS&A's professional
employees or the NCS&A Stockholder during the three (3) year period immediately
preceding the date hereof, including workers compensation, general liability,
environmental liability and professional malpractice liability claims. None of
NCS&A, NCS&A's professional employees or the NCS&A Stockholder is in material
default with respect to any provision contained in any such policy and none of
them has failed to give any notice or present any claim under any such policy in
due and timely fashion.
(k) No Changes Prior to Closing Date. During the period from December
31, 1996 through the date hereof, NCS&A has not (i) incurred any liability or
obligation of any nature (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated and
whether due or to become due), except in the Ordinary Course of Business, (ii)
written off as uncollectible any notes or accounts receivable, except write-offs
in the Ordinary Course of Business charged to applicable reserves, none of which
individually or in the aggregate is material to NCS&A, (iii) conducted its
business in such a manner so as to materially increase its accounts payable or
so as to materially decrease its accounts receivable, (iv) granted any increase
in the rate of wages, salaries, bonuses, or other remunerations of any employee,
except in the Ordinary Course of Business, (v) canceled or waived any claims or
rights of substantial value, (vi) made any change in any method of accounting,
(vii) otherwise conducted its business or entered into any transaction, except
in the usual and ordinary manner and in the Ordinary Course of
- 7 -
Business, (viii) agreed, whether or not in writing, to do any of the foregoing,
or (ix) disposed of its assets other than in the Ordinary Course of Business.
(l) Title; Condition. Section 3(l) of the Disclosure Schedule contains
a complete, true and correct list of those assets which are material to the
business or operations of NCS&A (the "Practice Assets"). NCS&A has good and
marketable title to all of the Practice Assets subject to no mortgage, pledge,
lien, lease, conditional sales agreement, option, right of first refusal or any
other encumbrance or charge, including taxes. NCS&A agrees to remove all
security interests reflected on any search of public records, if any, prior to
the Effective Time and remove any other security interest filed with respect to
the Practice Assets between the date of such search of public records and the
Effective Time.
(m) Litigation. There is no suit, action, proceeding at law or in
equity, arbitration, administrative proceeding or other proceeding or
investigation by any governmental entity pending, or threatened against, or
affecting NCS&A or any of the Practice Assets, or any physician or other health
care professional engaged or employed by NCS&A, and there is no basis for any of
the foregoing. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 3(m) of the Disclosure Schedule could result
in any material adverse change in the operations, results of operations, or
future prospects of the business assets to be operated by SCN after the Closing.
(n) Permits and Licenses. NCS&A and all physicians and other health
care professionals engaged or employed by NCS&A have all permits and licenses
required by all applicable laws; have made all regulatory filings necessary for
the conduct of NCS&A's business; and are not in violation of any of said
permitting or licensing requirements.
(o) Tax Matters. All federal, state and other tax returns of NCS&A
required by law to be filed have been timely filed, and NCS&A has paid or
adequately provided for all taxes (including taxes on properties, income,
franchises, licenses, sales and payrolls) which have become due pursuant to such
returns or pursuant to any assessment, except for any taxes and assessments, the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which NCS&A has set aside
on its books adequate reserves. There are no tax liens on any of NCS&A's assets
except those with respect to taxes not yet due and payable. There are no pending
tax examinations of NCS&A's tax returns nor has NCS&A received a revenue agent's
report asserting a tax deficiency in the last twelve (12) months. There are not
and will not be at the Closing Date, any claims pending or asserted against
NCS&A for unpaid taxes by any federal, state or other governmental body. NCS&A
has withheld from each payment made to employees of NCS&A the amount of all
taxes (including, but not limited to, federal, state and local income taxes and
Federal Insurance Contribution Act taxes) required to be withheld therefrom and
all amounts customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
has paid or will pay the same to, or has deposited or will deposit such payment
with, the proper tax receiving officers or other appropriate authorities.
(p) Employee Benefit Plans.
(i) List of Plans. Section 3(p) of the Disclosure Schedule
contains an accurate and complete list of all employee benefit plans
("Employee Benefit Plans") within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not any Employee Benefit Plans are otherwise exempt from the
provisions of ERISA, established, maintained or contributed to by NCS&A
(including all employers (whether or not incorporated) which by reason
of common control are treated together with NCS&A and/or the NCS&A
Stockholder as a single employer within the meaning of Section 414 of
the Code) since September 2, 1974.
(ii) Status of Plans. NCS&A has never maintained and does not
now maintain or contribute to any Employee Benefit Plan subject to
ERISA which is not in substantial compliance with ERISA, or which has
incurred any accumulated funding deficiency within the meaning of
Section 412 or
- 8 -
418B of the Code, or which has applied for or obtained a waiver from
the Internal Revenue Service of any minimum funding requirement under
Section 412 of the Code or which is subject to Title IV of ERISA. NCS&A
has not incurred any liability to the Pension Benefit Guaranty
Corporation ("PBGC") in connection with any Employee Benefit Plan
covering any employees of NCS&A or ceased operations at any facility or
withdrawn from any such Plan in a manner which could subject it to
liability under Section 4062(f), 4063 or 4064 of ERISA, and knows of no
facts or circumstances which might give rise to any liability of NCS&A
to the PBGC under Title IV of ERISA which could reasonably be
anticipated to result in any claims being made against NCS&A by the
PBGC. NCS&A has not incurred any withdrawal liability (including any
contingent or secondary withdrawal liability) within the meaning of
Sections 4201 and 4202 of ERISA, to any Employee Benefit Plan which is
a Multiemployer Plan (as defined in Section 4001 of ERISA), and no
event has occurred, and there exists no condition or set of
circumstances, which represent a material risk of the occurrence of any
withdrawal from or the partition, termination, reorganization or
insolvency of any Multiemployer Plan which would result in any
liability of NCS&A.
(iii) Contributions. Full payment has been made of all amounts
which NCS&A is required, under applicable law or under any Employee
Benefit Plan or any agreement relating to any Employee Benefit Plan to
which NCS&A is a party, to have paid as contributions thereto as of the
last day of the most recent plan year of such Employee Benefit Plan
ended prior to the date hereof. NCS&A has made adequate provision for
reserves to meet contributions that have not been made because they are
not yet due under the terms of any Employee Benefit Plan or related
agreements. Benefits under all Employee Benefit Plans are as
represented and have not been increased subsequent to the date as of
which documents have been provided.
(iv) Tax Qualification. Each Employee Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined to be
so qualified by the Internal Revenue Service and nothing has occurred
since the date of the last such determination which resulted or is
likely to result in the revocation of such determination.
(v) Transactions. NCS&A has not engaged in any transaction
with respect to the Employee Benefit Plans which would subject it to a
material tax, penalty or liability for prohibited transactions under
ERISA or the Code nor have any of its directors, officers or employees
to the extent they or any of them are fiduciaries with respect to such
plans, breached any of their responsibilities or obligations imposed
upon fiduciaries under Title I of ERISA which would result in any
material claim being made under or by or on behalf of any such plans by
any party with standing to make such claim.
(vi) Other Plans. NCS&A presently does not maintain any
Employee Benefit Plans or any other foreign pension, welfare or
retirement benefit plans other than those listed on Section 3(p) of the
Disclosure Schedule.
(vii) Documents. NCS&A has delivered or caused to be delivered
to SCN true and complete copies of (i) all Employee Benefit Plans as in
effect, together with all amendments thereto which will become
effective at a later date, as well as the latest IRS determination
letter obtained with respect to any such Employee Benefit Plan
qualified under Section 401 or 501 of the Code, and (ii) the most
recently filed Form 5500 for each Employee Benefit Plan required to
file such form.
(q) Third-Party Relations. NCS&A has not received any notice that any
material patient, supplier, employee or associated physician intends to cease
doing business with NCS&A.
- 9 -
(r) Compliance with Applicable Laws. NCS&A has operated in compliance
with all federal, state, county and municipal laws, constitutions, ordinances,
statutes, rules, regulations and orders applicable thereto ("Applicable Laws").
No item disclosed in Section 3(r) of the Disclosure Schedule could have a
material effect on SCN. Neither NCS&A nor any physician associated with or
employed by NCS&A has received payment or any remuneration whatsoever to induce
or encourage the referral of patients or the purchase of goods and/or services
as prohibited under 42 U.S.C. ss. 1320a-7b(b), or otherwise perpetrated any
Medicare or Medicaid fraud or abuse nor has any fraud or abuse been alleged
within the last five (5) years by any government agency.
(s) Employee Compensation. NCS&A has paid or discharged or will pay or
discharge or assume all liabilities for compensation and benefits to which all
employees, including physician employees, are entitled through the Closing Date,
including but not limited to all salaries, wages, bonuses, incentive
compensation, payroll taxes, hospitalization and medical expenses, deferred
compensation, and vacation and sick pay, as well as any severance pay becoming
due as a result of the termination of NCS&A's employees.
(t) Environmental Matters.
(i) NCS&A is in full compliance with all applicable
Environmental Laws.
(ii) NCS&A has not authorized or conducted the disposal or
release, or other handling of any hazardous substance, Medical Waste,
hazardous waste, hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, asbestos, radon, polychlorinated
biphenyls ("PCBs"), petroleum product or waste (including crude oil or
any fraction thereof), natural gas, liquefied gas, synthetic gas,
biohazardous or biomedical material, or other material defined,
regulated controlled or potentially subject to any remediation
requirement under any Environmental Law (collectively "Hazardous
Materials"), on, in, under or affecting any property owned or leased by
NCS&A.
(iii) NCS&A has, and is in compliance with, all licenses,
permits, registrations, and government authorizations necessary to
operate under all applicable Environmental Laws. Section 3(t) of the
Disclosure Schedule lists all such licenses, permits, registrations and
government authorizations required by any Environmental Law.
(iv) NCS&A has not received any written or oral notice from
any governmental agency or entity or any other Person and there is no
pending or threatened claim, litigation or any administrative agency
proceeding that: (a) alleges a violation of any Environmental Law(s) by
NCS&A or, with respect to the Practice Assets or any property owned or
leased by NCS&A (b) alleges that NCS&A is a liable party or potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
analogous state law, (c) has resulted or could result in the attachment
of an environmental lien on any of the Practice Assets or property
owned or leased by NCS&A, or (d) alleges that NCS&A is liable for any
contamination of the environment, contamination of any property owned
or leased by NCS&A, damage to natural resources, property damage, or
personal injury based on its activities or the activities of any
predecessor or third parties involving Hazardous Materials, whether
arising under the Environmental Laws, common law principles, or other
legal standards.
(v) With respect to the generation, transportation, treatment,
storage and disposal or other handling of Medical Waste, NCS&A has
complied with all Medical Waste Laws.
(u) Healthcare Compliance. NCS&A is participating in or otherwise
authorized to receive reimbursement from Medicare and Medicaid and is a party to
other third-party payor agreements if any, discussed in Section 3(i) of the
Disclosure Schedule. All necessary certifications and contracts required for
participation in such programs are in full force and effect and have not been
amended or otherwise modified, rescinded, revoked or assigned, and no condition
- 10 -
exists or event has occurred which in itself or with the giving of notice or the
lapse of time or both would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such third-party payor program. NCS&A is in
compliance in all material respects with the requirements of all such
third-party payors. NCS&A, the NCS&A Stockholder, and NCS&A's physician
employees do not have any financial relationship (whether investment interest,
compensation interest, or otherwise) with any entity to which any of the
foregoing refer patients, except for such financial relationships that qualify
for exceptions to state and federal laws restricting physician referrals to
entities in which they have a financial interest.
(v) Fraud and Abuse. NCS&A, the NCS&A Stockholder and persons and
entities providing professional services for NCS&A have not engaged in any
activities which are prohibited under 42 U.S.C. ss. 1320a-7b, or the regulations
promulgated thereunder pursuant to such statutes, or related state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including the following: (a) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in any
application for any benefit or payment; (b) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment; (c) failing to disclose
knowledge by a claimant of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with intent to fraudulently secure such benefit or payment; or (d)
knowingly and willfully soliciting or receiving any remuneration (including any
kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in
cash or in kind or offering to pay or receive such remuneration (1) in return
for referring an individual to a person for the furnishing or arranging for the
furnishing or any item or service for which payment may be made in whole or in
part by Medicare or Medicaid, or (2) in return for purchasing, leasing, or
ordering or arranging for or recommending purchasing, leasing, or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid.
(w) Practice Compliance. NCS&A is duly licensed as a medical practice
and is lawfully operated in accordance with the requirements of all Applicable
Laws and has all necessary authorizations for the use and operation of a medical
practice, all of which are in full force and effect. There are no outstanding
notices of deficiencies relating to NCS&A issued by any governmental authority
or third-party payor requiring conformity or compliance with any applicable law
or condition for participation with such governmental authority or third-party
payor, and after reasonable and independent inquiry and due diligence and
investigation, NCS&A has neither received notice nor has any Knowledge or reason
to believe that such necessary authorizations may be revoked or not renewed in
the Ordinary Course of Business.
(x) Rates and Reimbursement Policies. The jurisdiction in which NCS&A
is located does not currently impose any restrictions or limitations on rates
which may be charged to private pay patients receiving services provided by
NCS&A. NCS&A does not have any rate appeal currently pending before any
governmental authority or any administrator of any third-party payor program. No
Applicable Law which affects rates or reimbursement procedures has been enacted,
promulgated or issued within the eighteen (18) months preceding the date of this
Agreement and no such legal requirement is proposed or currently pending in the
jurisdiction in which NCS&A is located, which could have a material adverse
effect on NCS&A or may result in the imposition of additional Medicaid,
Medicare, charity, free care, welfare, or other discounted or government
assisted patients at NCS&A or require NCS&A to obtain any necessary
authorization which NCS&A does not currently possess.
(y) Accounts Receivable. All accounts receivable, unbilled invoices and
other debts due or recorded in the respective records and books of account of
NCS&A, as being due to NCS&A, (i) are valid, existing and are collectible within
one hundred eighty (180) days following the date of this Agreement without
resort to legal proceedings or use of collection agencies, (ii) have arisen in
the Ordinary Course of Business, and (iii) none of such accounts receivable or
other debts is or will at the Closing Date be subject to any counterclaim or
set-off except to the extent of any such provision or reserve. There has been no
material adverse change since May 31, 1997, in the amount of accounts
- 11 -
receivable or other debts due NCS&A, the allowances with respect thereto, or
accounts payable of NCS&A from that reflected in the most recent balance sheet
previously delivered by NCS&A to SCN.
(z) Guaranties. NCS&A is not a guarantor and otherwise is not liable
for any liability or obligation (including indebtedness) of any other Person.
(aa) Powers of Attorney. There are no outstanding powers of attorney
executed by NCS&A, except as may be contained in financing documents or security
agreements listed in Section 3(i) of the Disclosure Schedule.
(bb) Tangible Assets. NCS&A owns or leases all land, buildings,
machinery, equipment, and other tangible assets necessary for the conduct of its
business as presently conducted. Each tangible asset is free from defects, has
been maintained in accordance with normal industry practice, and is in good
operating condition and repair (subject to normal wear and tear).
(cc) SCN Share Ownership; Investment Intent.
(i) Neither NCS&A nor the NCS&A Stockholder owns,
beneficially or otherwise, any SCN Shares.
(ii) SCN Shares issuable in the Merger are being acquired by
the NCS&A Stockholder solely for his own account for investment and not
with a view to the distribution thereof, and the NCS&A Stockholder
acknowledges and understands that the certificate(s) representing such
SCN Shares will bear a legend in substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES ACT AND CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
SUCH ACTS OR UNLESS EXEMPTIONS FROM REGISTRATION ARE
AVAILABLE.
(iii) The NCS&A Stockholder represents and warrants as
follows:
(A) Each NCS&A Stockholder is an "accredited
investor" as defined under Rule 501 of Regulation D
promulgated under the Securities Act.
(B) The NCS&A Stockholder confirms that SCN has made
available to them or to their representatives the opportunity
to ask questions of SCN officers and directors and to acquire
such information about the SCN Shares and the business and
financial condition of SCN as the NCS&A Stockholder requested,
which additional information has been received.
(C) In deciding to acquire SCN Shares pursuant to
this Agreement, the NCS&A Stockholder consulted with his
legal, financial, and tax advisors with respect to the Merger
and the nature of the investment together with any additional
information provided under subsection (B) above.
(D) Each NCS&A Stockholder has adequate means of
providing for his current needs and personal contingencies and
has no need for liquidity in his investment in SCN. Each NCS&A
Stockholder, either alone or with his representatives, has
such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and
risks of the Merger.
- 12 -
(E) The NCS&A Stockholder understands and
acknowledges that the investment in the SCN Shares is a
speculative investment which involves a high degree risk of
loss of such NCS&A Stockholders' investment therein; that
there are substantial restrictions on the transferability of
the SCN Shares under the applicable provisions of the
Securities Act and the rules and regulations promulgated
thereunder and applicable state securities or "blue sky" laws;
and, accordingly, that it may not be possible to liquidate an
investment in the SCN Shares.
(F) The NCS&A Stockholder has been advised and
understands that (i) the offer and sale of the SCN Shares have
not been registered under the Securities Act; (ii) the SCN
Shares must held indefinitely and the NCS&A Stockholder must
continue to bear the economic risk of the investment in the
SCN Shares until the offer or sale of the SCN Shares is
subsequently registered under the Securities Act or any "blue
sky" laws or an exemption from such registration is available;
(iii) Rule 144 promulgated under the Securities Act is not
presently available with respect to the sale of any securities
of SCN, including the SCN Shares, and when and if the SCN
Shares may be disposed of without registration in reliance on
Rule 144, such disposition can be made only in accordance with
the terms and conditions of such Rule; (iv) the restrictive
legends described in Section 3(ac)(ii) shall be placed on the
certificates representing the SCN Shares; and (v) a notation
shall be made in the appropriate records of SCN indicating
that the SCN Shares are subject to restrictions on transfer
and appropriate stop-transfer instructions will be issued to
any transfer agent with respect to the SCN Shares.
(dd) Full Disclosure. No representation or warranty made by NCS&A in
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not materially misleading.
4. Representations and Warranties of SCN. SCN represents and warrants
to NCS&A that the statements contained in this Section 4 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4).
(a) Organization. SCN is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Capitalization. As of the date of this Agreement, the entire
authorized capital stock of SCN consists of 50,000,000 SCN Shares, of which
14,662,575 SCN Shares are issued and outstanding and 2,000,000 shares of
preferred stock, none of which are issued and outstanding. All of the SCN Shares
to be issued in the Merger have been duly authorized and, upon consummation of
the Merger, will be validly issued, fully paid, and nonassessable.
(c) Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, to issue the SCN Shares and otherwise to perform its obligations
hereunder; provided, however, that SCN cannot consummate the transaction unless
and until the Merger receives the approval of the SCN Board of Directors. Except
as set forth in the preceding sentence, this Agreement constitutes the valid and
legally binding obligation of SCN, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which SCN
is subject or may become subject as a result of the transaction contemplated by
this Agreement, or any provision of the charter or bylaws of SCN or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or
- 13 -
require any notice under any agreement, contract, lease, license, instrument or
other arrangement to which SCN is a party or by which it is bound or to which
any of its assets is subject. Other than state and federal filings required by
the Securities Act and similar state statutes, SCN does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. SCN does not have any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which SCN could become liable or
obligated.
(f) Securities Filings. All reports and statements filed with respect
to SCN pursuant to the Securities Act or the Securities Exchange Act conform to
the requirements of the Securities Act and the Securities Exchange Act and the
rules and regulations promulgated thereunder and did not include at the time of
filing such document any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 6 below) to be
satisfied by him or it. This paragraph shall not be construed to obligate any of
the Parties to waive any condition precedent to his or its obligations to
perform hereunder.
(b) Notices and Consents. NCS&A will give any notices to third parties,
and will use its best efforts to obtain any third party consents necessary or
required to consummate the Merger or that SCN reasonably may request in
connection with the matters referred to in Section 3(i) above.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any necessary authorizations, consents, and approvals of governments and
governmental agencies in connection with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing:
(i) Tax Reporting. The Merger is intended to qualify as a
reorganization under Code Section 368(a)(1)(A). Each of the parties
agrees to report this transaction for all purposes in accordance with
the foregoing.
(ii) Licenses and Permits. Each of the Parties shall have
obtained all licenses and permits necessary to operate their respective
businesses.
(d) Operation of Business. From the date of this Agreement through the
Closing Date, NCS&A will not engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Without limiting
the generality of the foregoing:
(i) NCS&A will not authorize or effect any change in its
charter documents or bylaws;
(ii) NCS&A will not grant any options, warrants, or other
rights to purchase or obtain any of its capital stock or issue, sell or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
- 14 -
(iii) NCS&A will not declare, set aside, or pay any dividend
or distribution with respect to its capital stock (whether in cash or
in kind), or redeem, repurchase, or otherwise acquire any of its
capital stock in either case outside the Ordinary Course of Business
without the consent of SCN, which consent shall not be unreasonably
withheld;
(iv) NCS&A will not issue any note, bond or other debt
security or create, incur, assume or guarantee any indebtedness for
borrowed money or capitalized lease obligation outside the Ordinary
Course of Business;
(v) NCS&A will not impose any Security Interest upon any of
its assets outside the Ordinary Course of Business;
(vi) NCS&A will not make any capital investment in, make any
loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii) NCS&A will not make any change in employment terms for
any of its directors, officers or employees outside the Ordinary Course
of Business; and
(viii) NCS&A will not commit to do any of the foregoing.
(e) Further Acts and Assurances. NCS&A and the NCS&A Stockholder shall,
at any time and from time to time at and after the Effective Time, upon request
of SCN, take any and all steps necessary to place SCN in possession and
operating control of the Practice Assets and to effectuate the Merger, and will
do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, and assurances as may be required
for better transferring and confirming to SCN or its successors and assigns, or
for better reducing to possession, any or all of the Practice Assets or
consummating the Merger.
(f) Full Access. Upon three (3) days prior notice, NCS&A will permit
representatives of SCN to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to NCS&A during normal business hours. SCN will treat and hold as
such any confidential information it receives from NCS&A in the course of the
reviews contemplated by this Section 5(f), will not use any of the confidential
information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, agrees to return to NCS&A all tangible
embodiments (and all copies) thereof which are in its possession.
(g) Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 or Section 4 above, as
applicable. No disclosure by any Party pursuant to this Section 5(g), however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant.
(h) Exclusivity. Until the earlier of (i) July 31, 1997, or (ii) the
Effective Time, NCS&A will not solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of NCS&A (including any
acquisition structured as a merger, consolidation, or share exchange). NCS&A
shall notify SCN immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(i) Collection of Accounts Receivable. The NCS&A Stockholder agrees to
cooperate with SCN in the collection of accounts receivable owned by NCS&A as of
the Effective Time acquired pursuant to this Agreement. SCN, at its option,
shall have the right to require the collection of said accounts receivable
through a lockbox or bank account sweep arrangement. In connection therewith,
the NCS&A Stockholder agrees to execute the necessary
- 15 -
documents and follow the necessary procedures as described in the Service
Agreement to accommodate the collection of the accounts receivable in such
manner.
(j) Payment of Expenses. On or before the Effective Time, NCS&A shall
have paid or discharged any and all liabilities or charges for costs or fees
owed as a result of the transaction contemplated by this Agreement.
(k) Corporate Authorization. By execution of this Agreement, the NCS&A
Stockholder agrees to take any and all steps necessary and will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such acts, deeds and assurances required in order to consummate
the Merger, including voting as directors of NCS&A in favor of the Merger and
voting as stockholders of NCS&A in favor of the Merger at any meetings (or in
any action by written consent) required by the Texas Professional Association
Act.
(l) Malpractice Insurance. On or before the Effective Time, all
physicians and employees of NCS&A must be covered by medical malpractice
insurance and, if required by SCN, medical malpractice tail insurance to cover
prior occurrences shall be procured by NCS&A.
(m) Distribution of Excluded Assets. Prior to the Effective Time, NCS&A
shall have distributed to the NCS&A Stockholder all of the assets listed on
Schedule 5(m), which constitute the entirety of the assets owned by NCS&A not
being acquired by SCN (the "Excluded Assets").
(n) Satisfaction of Indebtedness. Prior to the Effective Time, NCS&A
shall have caused the payoff of all liabilities owed to third-parties and all
indebtedness owed to banks or other financial institutions or lenders or shall
have caused the assumption thereof by a new entity organized by the NCS&A
Stockholder; provided, however, that SCN shall assume payment for (i) all of
NCS&A's trade payables (rent, utilities, telephone, etc.) incurred by NCS&A
during the thirty day period prior to the Closing Date and in the Ordinary
Course of Business and (ii) NCS&A's state franchise tax liability not to exceed,
in the aggregate with the state franchise tax liabilities of Xxxx X. Small,
M.D., P.A., Associated Arthoscopy Institute, Inc., Allied Health Services, P.A.,
Xxxxxxxxx X. Xxxxxx, M.D., P.A. and Access Medical Supply, Inc. being assumed by
SCN pursuant to the agreements referred to in Section 6 (a)(ix) below, $160,000.
Notwithstanding any contrary provision contained herein, SCN shall not be deemed
to have assumed, nor shall SCN assume: (i) any liability which may be incurred
by reason of any breach of or default under such contracts, leases, commitments
or obligations which occurred prior to the Closing Date; (ii) any liability for
any employee benefits payable to employees of NCS&A, including, but not limited
to, liabilities arising under any Employee Benefit Plan or accrued vacation or
sick pay; (iii) any liability based upon or arising out of a violation of any
laws by NCS&A, including, without limiting the generality of the foregoing, any
such liability which may arise in connection with agreements, contracts,
commitments or provision of services by NCS&A; nor (iv) any liability based upon
or arising out of any tortious or wrongful actions of NCS&A or any Physician
Owner, or any liability for the payment of any taxes imposed by law on NCS&A
arising from or by reason of the transactions contemplated by this Agreement.
NCS&A shall establish a reserve for income, excise or other taxes to be paid
upon the collection of any cash basis accounts receivable existing on the books
of NCS&A at the Effective Time.
(o) Conversion into Business Corporation. If required by the Texas
Professional Association Act, prior to the Effective Time, the NCS&A Stockholder
shall have caused the conversion of NCS&A to a Texas business corporation.
(p) Employee Benefit Plans. Prior to the Effective Time, all Employee
Benefit Plans shall be terminated in accordance with, and to the extent required
by, Applicable Law.
(q) Securities Laws Compliance. No NCS&A Stockholder shall dispose of
the SCN Shares received as a result of the Merger except in accordance with the
provisions of the Securities Act, the provisions of any rule adopted by the
Securities and Exchange Commission pursuant to the Securities Act and the "blue
sky" laws of any applicable state.
- 16 -
(r) Piggyback Registration.
(i) Notice of Piggyback Registration and Inclusion of SCN
Shares.
If within one (1) year from the date of this Agreement SCN
shall elect to file a registration statement ("Registration Statement") on Form
S-2 or S-3 (or any successor form thereto) under the Act with respect to any of
its securities, either for its own account or the account of a security holder
or holders, other than a registration on Form S-4 (or its equivalent) in
connection with a reorganization, or a registration relating solely to employee
benefit plans (excluding the foregoing events, a "Registration"), SCN will: (i)
promptly give the NCS&A Stockholder written notice thereof (which shall include
a list of the jurisdictions in which SCN intends to attempt to qualify such
securities under the applicable Blue Sky or other state securities laws) and
(ii) include in such Registration (and any related registration and/or
qualification under Blue Sky laws or other compliance), and in any underwriting
involved therein, all the SCN Shares specified in a written request delivered to
SCN by the NCS&A Stockholder within 30 days after delivery of such written
notice from SCN.
(ii) Underwriting in Piggyback Registration.
A. Notice of Underwriting in Piggyback Registration.
If the Registration of which SCN gives notice is for a
Registered public offering involving an underwriting, SCN shall so advise the
NCS&A Stockholder as a part of the written notice given above. In such event,
the right of the NCS&A Stockholder to Registration shall be conditioned upon
such underwriting and the inclusion of the NCS&A Stockholder's SCN Shares in
such underwriting to the extent provided in this Section. The NCS&A Stockholder
shall (together with SCN and any other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the Underwriter ("Underwriter's Representative")
for such offering. The NCS&A Stockholder shall have no right to participate in
the selection of underwriters for an offering pursuant to this Section.
B. Marketing Limitation in Piggyback Registration.
In the event the Underwriter's Representative advises the
NCS&A Stockholder in writing that market factors (including, without limitation,
the aggregate number of shares of Common Stock requested to be included in such
Registration, the general condition of the market, and the status of the persons
proposing to sell securities pursuant to the Registration) require a limitation
of the number of shares to be underwritten, the Underwriter's Representative
(subject to the allocation priority set forth in Section 5(r)(ii)C). may limit
(or reduce to zero) the number of SCN Shares to be included in such Registration
and underwriting; provided however, that any SCN Shares so excluded shall retain
any and all Registration rights set forth in this Section.
C. Allocation of SCN Shares in Piggyback Registration.
In the event that the Underwriter's Representative limits
the number of shares to be included in a Registration pursuant to Section
5(r)(ii)C., the number of shares to be included in such Registration shall be
allocated in the following manner: Common Stock held by persons who are not
contractually entitled to include shares in such Registration shall be excluded
from such Registration and underwriting to the extent required by such
limitation. If a limitation of the number of shares is still required after such
exclusion, the number of shares of Common Stock that may be included in the
Registration and underwriting by all selling shareholders (including the NCS&A
Stockholder and all other persons contractually entitled to such registration)
shall be allocated among the NCS&A Stockholder and other holders of securities
other than SCN Shares requesting and contractually entitled to include shares in
such Registration, in proportion, as nearly as practicable, to the respective
amounts of securities (including SCN Shares) which the NCS&A Stockholder and
such other holders would otherwise be entitled to include in such Registration.
No
- 17 -
SCN Shares or other securities excluded from the underwriting by reason of this
Section shall be included in the Registration Statement.
D. Withdrawal in Piggyback Registration.
If the NCS&A Stockholder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to SCN
and the underwriter delivered at least seven days prior to the effective date of
the Registration Statement. Any SCN Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such Registration.
(iii) Blue Sky in Piggyback Registration.
In the event of any Registration of SCN Shares pursuant to
this Section, SCN will use its best efforts to register and/or qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of such securities; provided, however, that notwithstanding
anything in this Agreement to the contrary, in the event any jurisdiction in
which the securities shall be qualified imposes a non-waivable requirement that
expenses incurred in connection with the qualification of the securities be
borne by selling Stockholders, the NCS&A Stockholder shall pay its pro rata
share of such expenses.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of SCN. The obligation of SCN to
consummate the Merger is subject to satisfaction of the following conditions or
before the Closing Date:
(i) NCS&A shall have procured all of the third party consents
specified in Section 5(b) above;
(ii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) NCS&A shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Surviving
Corporation to own the former assets or to operate the former business
of NCS&A;
(v) SCN shall have received the resignations, effective as of
the Closing, of each director and officer of NCS&A other than those
whom SCN shall have specified in writing prior to the Closing;
(vi) all actions to be taken by NCS&A and/or the NCS&A
Stockholder in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
have been taken or delivered to SCN and are satisfactory in form and
substance to SCN;
(vii) the issuance of the SCN Shares to the NCS&A Stockholders
will not violate federal securities laws or the securities laws of any
state of the United States;
- 18 -
(viii) SCN shall have completed and be satisfied with its due
diligence review, including SCN's review of the Disclosure Schedule;
(ix) On or before the Closing Date the transactions
contemplated by (i) the Merger Agreement between SCN, Xxxx X. Small,
M.D., P.A. and Xxxx X. Small, M.D. dated July 3, 1997, (ii) the Asset
Purchase Agreement between SCN, Associated Arthoscopy Institute, Inc.,
Xxxxxxxxx X. Xxxxxx, M.D. and Xxxx X. Small, M.D. dated July 3, 1997,
(iii) the Merger Agreement between SCN, Xxxxxxxxx X. Xxxxxx, M.D., P.A.
and Xxxxxxxxx X. Xxxxxx, M.D. dated July 3, 1997, (iv) the Asset
Purchase Agreement between SCN, Allied Health Services, P.A. and Xxxx
X. Small, M.D. dated July 3, 1997 and (v) the Asset Purchase Agreement
between SCN, Access Medical Supply, Inc., Xxxxxxxxx X. Xxxxxx, M.D. and
Xxxx X. Small, M.D. dated July 3, 1997 shall have been consummated; and
(x) SCN's Board of Directors shall have approved the Merger in
their sole and absolute discretion.
SCN may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of NCS&A. The obligation of NCS&A to
consummate the Merger is subject to satisfaction of the following conditions:
(i) This Agreement and the Merger shall have received the
NCS&A director and NCS&A Stockholders' approval required by the Texas
Professional Association Act.
(ii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Surviving
Corporation to own the former assets of NCS&A.
NCS&A may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Items to be Delivered at or Prior to Closing.
(a) By the NCS&A Stockholder or NCS&A. The NCS&A Stockholder or NCS&A,
as applicable, shall execute and deliver to SCN, prior to or at the Closing:
(i) Certified resolutions of the directors and stockholders of
NCS&A authorizing the execution of all documents and the consummation
of all transactions contemplated hereby;
(ii) The Texas Articles of Merger which shall be in the form
required by SCN's legal counsel;
(iii) Stock Certificates representing ownership of all shares
of NCS&A, duly endorsed to SCN;
- 19 -
(iv) A Service Agreement in the form attached hereto as
Exhibit 7(a)(iv);
(v) A certificate duly executed by the President of NCS&A and
the NCS&A Stockholder stating as of the Closing Date, all
representations and warranties are true, all covenants and agreements
contained in the Agreement to be performed by NCS&A and the NCS&A
Stockholder has been performed or complied with and all conditions to
closing have been complied with;
(vi) An opinion from NCS&A's counsel in substantially the form
attached hereto as Exhibit 7(a)(vi);
(vii) Such other instruments as may be reasonably requested by
SCN in order to effect to or carry out the intent of this Agreement.
(b) By SCN. SCN shall deliver to NCS&A at or prior to the Closing:
(i) Stock Certificates representing the SCN Shares being
issued to the NCS&A Stockholder pursuant to Section 2(d)(v);
(ii) The Delaware Certificate of Merger in substantially the
form attached hereto as Exhibit 2(a)(1);
(iii) An opinion from SCN's counsel in substantially the form
attached hereto as Exhibit 7(b)(iii);
(iv) A certificate, duly executed by the President of SCN,
stating as of the Closing Date, all representations and warranties of
SCN are true, all covenants and agreements contained in the Agreement
to be performed by SCN have been performed or complied with and all
conditions to Closing have been satisfied;
(v) A Service Agreement in the form attached hereto as Exhibit
7(a)(iv);
(vi) Certified resolutions of SCN authorizing the execution of
all documents and the consummation of all transactions contemplated
thereby;
(vii) The cash payment for any fractional SCN Shares pursuant
to Section 2(e); and
(viii) Such other instruments as may be reasonably requested
by NCS&A or the NCS&A Stockholder in order to effect to or carry out
the intent of this Agreement.
8. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) SCN may terminate this Agreement by giving written notice
to NCS&A at any time prior to the Effective Time (A) in the event NCS&A
has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, SCN has notified NCS&A of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach, (B) if the Closing shall not have
occurred on or before July 31, 1997 by reason of the failure of any
condition precedent under Section 6(a) hereof (unless the failure
results primarily from SCN breaching any representation, warranty, or
covenant contained in this Agreement); or
- 20 -
(iii) NCS&A may terminate this Agreement by giving written
notice to SCN at any time prior to the Effective Time (A) in the event
SCN has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, NCS&A has notified SCN of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall not have
occurred on or before July 31, 1997 by reason of the failure of any
condition precedent under Section 6(b) hereof (unless the failure
results primarily from NCS&A breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any party to any other Party
(except for any liability of any Party then in breach).
9. Indemnification.
(a) Indemnification by the NCS&A Stockholder. The NCS&A Stockholder,
agrees to and shall defend, indemnify and hold harmless SCN, its successors and
assigns, officers and directors against any and all losses, liabilities,
expenses (including, but without limitation, reasonable attorneys fees) and
damages resulting from or arising out of the breach, untruth or inaccuracy of
any representation, warranty or covenant of NCS&A or the NCS&A Stockholder set
forth in this Agreement. The NCS&A Stockholder shall not be liable to SCN for
any claims against the NCS&A Stockholder under this Section 9(a) unless and
until the aggregate of all claims against the NCS&A Stockholder exceeds the sum
of $25,000.00, whereupon SCN shall be entitled to recover the full amount of all
claims, including the initial $25,000.00.
(b) Notice to the NCS&A Stockholder; Opportunity to Defend. SCN agrees
to give prompt notice to the NCS&A Stockholder of the assertion of any claims,
or the commencement of any suits, actions or proceedings, in respect of which
indemnity may be sought under Section 9(a). The NCS&A Stockholder may
participate in and at his election, or at the request of SCN, assumes the
defense of any such suit, action or proceeding at the NCS&A Stockholders'
expense. The NCS&A Stockholder shall not be liable under Section 9(a) for any
settlement effected without their consent of any claim, litigation or proceeding
in respect of which indemnity may be sought under Section 9(a) which consent
shall not be unreasonably withheld.
(c) General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless the NCS&A Stockholder, his heirs and assigns against
any and all losses, liabilities, expenses (including, but without limitation,
reasonable attorneys fees) and damages resulting from the breach, untruth or
inaccuracy of any representations, warranties or covenants of SCN set forth in
this Agreement. SCN shall not be liable to the NCS&A Stockholder for any claims
against SCN under this Section 9(c) unless and until the aggregate of all claims
against SCN exceeds the sum of $25,000.00, whereupon the NCS&A Stockholder shall
be entitled to recover the full amount of all claims, including the initial
$25,000.00.
(d) Notice to SCN; Opportunity to Defend. The NCS&A Stockholder agrees
to give prompt notice to SCN of the assertion of any claim, or the commencement
of any suit, action or proceeding in respect of which indemnity may be sought
under Section 9(c). SCN may participate in and at its election, or at the
request of the NCS&A Stockholder, assume the defense of any such suit, action or
proceeding at SCN's expense. SCN shall not be liable under Section 9(c) for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder, which consent shall not
be unreasonably withheld.
(e) Right of Setoff. In the event of any breach of warranty,
representation, covenant or agreement by NCS&A or the NCS&A Stockholder giving
rise to indemnification to SCN under Section 9(a) hereof, SCN shall be entitled
to offset the amount of damages incurred by it as a result of such breach of
warranty, representation, covenant or agreement against the amounts payable to
the NCS&A Stockholder or Associated Orthopaedics & Sports Medicine, P.A. under
- 21 -
the Service Agreement. In the event that SCN determines that an amount is to be
so offset, as a condition precedent to such right of setoff, SCN shall give the
NCS&A Stockholder written notice of the amount of such proposed setoff and the
basis therefor within thirty (30) days after the date on which such amount is
finally determined. If SCN shall not have received written notice from the NCS&A
Stockholder contesting such setoff within twenty (20) days of their receipt of
such written notice from SCN, the setoff shall be deemed to have been consented
to by the NCS&A Stockholder, and SCN shall be entitled to deduct the entire
amount claimed as a setoff from the next succeeding amounts payable under the
Service Agreement. In the event that the NCS&A Stockholder shall object to the
proposed setoff by written notice received by SCN during such twenty (20) day
period, the entitlement of SCN to the claimed setoff shall be determined as set
forth in Section 10.4.3 of the Service Agreement.
10. Miscellaneous.
(a) Survival. The representations and warranties of the NCS&A
Stockholder, NCS&A and SCN contained in this Agreement and the indemnifications
contained herein shall survive the Closing. No claim for indemnification with
respect to any alleged misrepresentation or breach of warranty or covenant may
be made after three (3) years following the Closing Date. Any matter to which
indemnification pertains and with respect to which a claim has been asserted or
threatened following the Closing Date shall continue to be subject to the
indemnification under this Agreement until finally terminated, settled, resolved
or adjudicated; and all terms, conditions and stipulations of this Agreement
shall likewise continue to apply.
(b) No Third-Party Beneficiaries. Except as provided in Section 9(e),
this Agreement shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the parties and supersedes
any prior understandings, agreements, or representations by or between the
parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
- 22 -
If to NCS&A: Copy to:
Xxxx X. Small, M.D. Xxxxx Xxxxxxxxx
0000 Xxxx Xxxxx Xxxxxxx 0000 Xxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxx 00000 Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to SCN: Copy to:
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxxxx, Esq.
Specialty Care Network, Inc. Baker, Donelson, Bearman & Xxxxxxxx
00 Xxxxx Xxxxxxxxx, Xxxxx 000 165 Madison Ave, Suite 2100
Lakewood, Colorado 80228 Xxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
(h) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Texas without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas. Each of the parties
submits to the jurisdiction of any state or federal court sitting in Denver,
Colorado, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto.
(i) Amendments and Waivers. The parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to NCS&A stockholder approval will be
subject to the restrictions contained in the Texas Professional Association Act.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both of the parties. No waiver by any party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
- 23 -
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between the
parties that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant patients.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
* * * * *
- 24 -
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:_______________________________________
Title:____________________________________
XXXX X. SMALL, M.D. & ASSOCIATES, P.A.
By:_______________________________________
Title:____________________________________
------------------------------------------
XXXX X. SMALL, M.D., Stockholder
------------------------------------------
XXXXXXXXX X. XXXXXX, M.D., Stockholder
- 25 -
