EXHIBIT 10.10
ASSET PURCHASE AGREEMENT
AMONG
AMERICAN MEDICAL PROVIDERS, INC.
PYRAMID ANESTHESIOLOGY GROUP, INC.,
AND
THE OWNERS NAMED HEREIN
OCTOBER 31, 1997
TABLE OF CONTENTS
Page
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ARTICLE I Definitions ................................................ 1
Section 1.1. Definitions ........................................ 1
ARTICLE II The Acquisition ........................................... 7
Section 2.1. The Acquisition .................................... 7
Section 2.2. The Closing ........................................ 7
Section 2.3. Acquisition Consideration; Allocation
of Purchase Price ................................. 7
Section 2.4. Escrow Amount ...................................... 7
Section 2.5. Fractional Shares .................................. 8
Section 2.6. Subsequent Actions ................................. 8
Section 2.7. Assumed Liabilities ................................ 8
ARTICLE III Representations and Warranties of the Company
and the Owners .......................................... 8
Section 3.1. Organization and Good Standing; Qualification ...... 8
Section 3.2. Capital Structure .................................. 8
Section 3.3. Transactions in Capital ............................ 9
Section 3.4. Continuity of Business Enterprise .................. 9
Section 3.5. Records ............................................ 9
Section 3.6. Authorization and Validity ......................... 9
Section 3.7. No Violation ....................................... 9
Section 3.8. Consents ........................................... 10
Section 3.9. Financial Statements ............................... 10
Section 3.10. Liabilities and Obligations ....................... 10
Section 3.11. Employee Matters .................................. 10
Section 3.12. Aliens ............................................ 12
Section 3.13. Employee Benefit Plans ............................ 12
Section 3.14. Absence of Certain Changes ........................ 14
Section 3.15. Title; Leased Assets .............................. 16
Section 3.16. Commitments ....................................... 16
Section 3.17. Insurance ......................................... 17
Section 3.18. Proprietary Rights and Information ................ 18
Section 3.19. Taxes ............................................. 18
Section 3.20. Compliance with Laws .............................. 20
Section 3.21. Finder's Fee ...................................... 20
Section 3.22. Litigation ........................................ 20
Section 3.23. Condition of Fixed Assets ......................... 21
Section 3.24. Distributions and Repurchases ..................... 21
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Section 3.25. Banking Relations ................................. 21
Section 3.26. Interested Persons; Affiliations .................. 21
Section 3.27. Environmental Matters ............................. 21
Section 3.28. Certain Payments .................................. 22
Section 3.29. Medical Waste ..................................... 22
Section 3.30. Medicare and Medicaid Programs .................... 22
Section 3.31. Fraud and Abuse ................................... 23
Section 3.32. Payors ............................................ 23
ARTICLE IV Representations and Warranties of the Owners .............. 24
Section 4.1. Validity; Owners' Capacity ......................... 24
Section 4.2. No Violation ....................................... 24
Section 4.3. Personal Holding Companies; Control of
Related Businesses. 24
Section 4.4. Transfers of Ownership Interests ................... 24
Section 4.5. Accredited Investor Status ......................... 24
Section 4.6. Consents ........................................... 24
Section 4.7. Certain Payments ................................... 25
Section 4.8. Finder's Fee ....................................... 25
Section 4.9. Interested Persons; Affiliations ................... 25
Section 4.10. Investments in Competitors ........................ 25
Section 4.11. Disposition of AMP Shares ......................... 25
ARTICLE V Representations and Warranties of AMP ...................... 25
Section 5.1. Organization and Good Standing ..................... 25
Section 5.2. Capitalization ..................................... 26
Section 5.3. Authorization and Validity ......................... 26
Section 5.4. No Violation ....................................... 26
Section 5.5. Finder's Fee ....................................... 26
Section 5.6. Capital Stock ...................................... 27
Section 5.7. Consents ........................................... 27
ARTICLE VI Covenants of the Company and the Owner .................... 27
Section 6.1. Consummation of Agreement .......................... 27
Section 6.2. Business Operations ................................ 27
Section 6.3. Access ............................................. 27
Section 6.4. Notification of Certain Matters .................... 28
Section 6.5. Tax Returns ........................................ 28
Section 6.6. Approvals of Third Parties ......................... 28
Section 6.7. Employee Matters ................................... 28
Section 6.8. Contracts .......................................... 29
Section 6.9. Capital Assets; Payments of Liabilities ............ 29
Section 6.10. Mortgages, Liens and Guaranties ................... 29
Section 6.11. Acquisition Proposals ............................. 29
Section 6.12. Distributions and Repurchases ..................... 30
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Section 6.13. Requirements to Effect Acquisition ................ 30
Section 6.14. Access ............................................ 30
Section 6.15. Licenses and Permits .............................. 30
Section 6.16. New Employment Agreements ......................... 30
Section 6.17. Delivery of Schedules ............................. 31
ARTICLE VII Covenants of AMP ......................................... 31
Section 7.1. Consummation of Agreement .......................... 31
Section 7.2. Requirements to Effect Acquisition ................. 31
Section 7.3. Notification of Certain Matters .................... 31
Section 7.4. Approvals of Third Parties ......................... 31
Section 7.5. Licenses and Permits ............................... 31
ARTICLE VIII Covenants of AMP, the Company and the Owners ............ 31
Section 8.1. Filings; Other Action .............................. 31
Section 8.2. Amendment of Schedules ............................. 32
Section 8.3. Proration of Costs and Rents ....................... 32
ARTICLE IX Conditions Precedent of AMP ............................... 33
Section 9.1. Representations and Warranties ..................... 33
Section 9.2. Covenants .......................................... 33
Section 9.3. Legal Opinion ...................................... 33
Section 9.4. Proceedings ........................................ 33
Section 9.5. No Material Adverse Effect ......................... 33
Section 9.6. Government Approvals and Required Consents ......... 33
Section 9.7. Securities Approvals ............................... 33
Section 9.8. Closing Deliveries ................................. 33
Section 9.9. Charter Amendment .................................. 34
ARTICLE X Conditions Precedent of the Company and the Owners ......... 34
Section 10.1. Representations and Warranties .................... 34
Section 10.2. Covenants ......................................... 34
Section 10.3. Legal Opinion ..................................... 34
Section 10.4. Proceedings ....................................... 34
Section 10.5. Government Approvals and Required Consents ........ 34
Section 10.6. Securities Approvals .............................. 34
Section 10.7. Closing Deliveries ................................ 35
ARTICLE XI Closing Deliveries ........................................ 35
Section 11.1. Deliveries of the Company and the Owners .......... 35
Section 11.2. Deliveries of AMP ................................. 36
ARTICLE XII Post Closing Matters ..................................... 37
Section 12.1. Further Instruments of Transfer ................... 37
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Section 12.2. Guaranty of Payment of Liquidated Damages ......... 38
ARTICLE XIII Remedies ................................................ 38
Section 13.1. Indemnification by the Owners and the Company ..... 38
Section 13.2. Indemnification by AMP ............................ 38
Section 13.3. Indemnification Procedures ........................ 39
Section 13.4. Remedies Not Exclusive ............................ 41
Section 13.5. Costs, Expenses and Legal Fees .................... 41
ARTICLE XIV Termination .............................................. 41
Section 14.1. Termination ....................................... 41
Section 14.2. Effect of Termination ............................. 42
ARTICLE XV Noncompetition ............................................ 42
Section 15.1. Prohibited Activities ............................. 42
Section 15.2. Damages ........................................... 43
Section 15.3. Reasonable Restraint .............................. 43
Section 15.4. Severability; Reformation ......................... 43
Section 15.5. Term .............................................. 43
ARTICLE XVI Nondisclosure of Confidential Information ................ 43
Section 16.1. Nondisclosure ..................................... 43
Section 16.2. Damages ........................................... 44
Section 16.3. Survival .......................................... 44
Section 16.4. AMP Nondisclousr .................................. 44
ARTICLE XVII Transfer Restrictions ................................... 44
Section 17.1. Transfer Restrictions ............................. 44
ARTICLE XVIII Federal Securities Law Restrictions on
AMP Common Stock ...................................... 45
Section 18.1. Investment Representation ......................... 45
Section 18.2. Compliance with Law ............................... 45
Section 18.3. Economic Risk; Sophistication ..................... 46
ARTICLE XX General ................................................... 47
Section 20.1. Amendment; Waivers ................................ 47
Section 20.2. Assignment ........................................ 47
Section 20.3. Parties in Interest; No Third Party Beneficiaries . 47
Section 20.4. Entire Agreement .................................. 47
Section 20.5. Severability ...................................... 47
Section 20.6. Survival of Representations, Warranties
and Covenants .................................... 48
Section 20.7. Governing Law ..................................... 48
Section 20.8. Captions .......................................... 48
Section 20.9. Gender and Number ................................. 48
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Section 20.10. Reference to Agreement ........................... 48
Section 20.11. Confidentiality; Publicity and Disclosures ....... 48
Section 20.12. Notice ........................................... 49
Section 20.13. Choice of Forum .................................. 49
Section 20.14. No Waiver; Remedies .............................. 50
Section 20.15. Counterparts ..................................... 50
Section 20.16. Defined Terms .................................... 50
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ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (this "Agreement"), dated as of October 31, 1997,
among Pyramid Anesthesiology Group, Inc., a Georgia corporation (the "Company"),
Xxxxx Xxxxxx and Xxxxx XxXxxxxxx (collectively the "Owners" and individually an
"Owner"), and American Medical Providers, Inc., a Delaware corporation, its
affiliates, successors or assigns ("AMP").
The Company and the Owners of the Company desire to sell, and AMP desires
to purchase, certain assets of the Company, and, accordingly, the Owners, the
Company and AMP desire to effect the Acquisition (defined below) upon the terms
and subject to the conditions contained herein.
AMP intends to enter into business purchase agreements or other
acquisition agreements (collectively, the "Other Agreements") similar to this
Agreement, in order to acquire medical practices.
To provide AMP with the necessary working capital and funds to consummate
the transactions contemplated hereby and by the Other Agreements, AMP expects
to, subject to the terms and conditions of this Agreement, enter into an
underwriting agreement with an Underwriter Representative (defined below) in
connection with a proposed Initial Public Offering (defined below).
In consideration of the mutual representations, warranties and covenants
herein contained and such other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, and on the terms and
subject to the conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms have the meanings set forth
below:
"Acquisition" has the meaning set forth in Section 2.1.
"Acquisition Consideration" has the meaning set forth in Section 2.3.
"actual knowledge," "have no actual knowledge of," "do not actually know
of" and similar phrases mean (i) in the case of a natural person, the actual
conscious awareness, or not, as the context requires, of the particular fact by
such person or (ii) in the case of an entity, the actual conscious awareness, or
not, as the context requires, of the particular fact by any stockholder,
partner, owner, director or officer of such entity.
"Affiliate," with respect to any person, means a person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with such person.
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"AMP Common Stock" means the common stock, par value $0.01 per share, of
AMP.
"AMP Subsidiary" means the wholly-owned subsidiary of AMP formed prior to
Closing identified in Section 2.1.
"AMP Subsidiary Common Stock" means the common stock, par value $0.01 per
share, of AMP Subsidiary.
"Xxxxxx Xxxxxxxx" means Xxxxxx Xxxxxxxx, LLP, independent certified public
accountants.
"Assets" means the Equipment and all properties and assets (tangible and
intangible) of every kind and wherever situated that are owned by the Company or
in which the Company has any right or interest (including, without limitation,
rights under its insurance policies and warranties related thereto; its causes
of action, judgments, claims and demands of whatever nature related thereto; its
deferred charges, security deposits, advance payments, prepaid items, claims for
refunds, rights of offset and credits of all kinds related thereto certain of
its Contracts and Agreements; its intellectual property, trademarks, tradenames,
tradesecrets and other intellectual property rights of any kind whatsoever
including the name Anesthecare or any derivative thereof; all personal property
of every kind and character used in connection with Equipment and its files,
papers and records relating to the aforesaid properties and assets), other than
the Excluded Assets.
"Balance Sheet" has the meaning set forth in Section 3.9.
"Balance Sheet Date" has the meaning set forth in Section 3.9.
"best knowledge," "have no knowledge of," "do not know of" or "to the
knowledge of" and similar phrases mean (i) in the case of a natural person, the
particular fact was known, or not known, as the context requires, to such person
after diligent investigation and inquiry by such person or (ii) in the case of
an entity, the particular fact was known, or not known, as the context requires,
to any stockholder, partner, owner, director or officer of such entity after
diligent investigation and inquiry b the officers of such entity.
"Cash Compensation" has the meaning set forth in Section 3.11(a).
"Claim Notice" has the meaning set forth in Section 13.3.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" has the meaning set forth in the recitals to this Agreement.
"Commitments" has the meaning set forth in Section 3.16.
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"Company" has the meaning set forth in the recitals hereto.
"Compensation Plans" has the meaning set forth in Section 3.11(b).
"Confidential Information" means all trade secrets and other confidential
and/or proprietary information of the particular person, including information
derived from reports, investigations, research, work in progress, codes,
marketing and sales programs, financial projections, cost summaries, pricing
formulae, contract analyses, financial information, projections, confidential
filings with any state or federal agency and all other confidential concepts,
methods of doing business, ideas, materials o information prepared or performed
for, by or on behalf of such person by such person's stockholders, owners,
partners, employees, officers, directors, agents, representatives or
consultants.
"Controlled Group" has the meaning set forth in Section 3.13(g).
"Damages" has the meaning set forth in Section 13.1.
"Effective Date" means the date that the Registration Statement is
declared effective by the SEC.
"Election Period" has the meaning set forth in Section 13.3.
"Employee Benefit Plans" has the meaning set forth in Section 3.13(a).
"Employee Policies and Procedures" has the meaning set forth in Section
3.11(d).
"Employment Agreements" has the meaning set forth in Section 3.11(c).
"Environmental Laws" means any laws or regulations pertaining to health or
the environment as in effect on the date hereof and the Closing Date, including
without limitation (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. ss. 9601 ET SEQ.), as amended (including
without limitation as amended pursuant to the Superfund Amendments and
Reauthorization Act of 1986) and any regulations promulgated thereunder, (ii)
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss. 6901 ET SEQ.),
as amended, and any regulations promulgated thereunder, (iii) statutes, rules or
regulations, whether federal, state or local, applicable to the Company's Assets
or operations that relate to asbestos or polychlorinated biphenyls and (iv) the
provisions contained in any similar federal, state or local statutes or
regulations relating to environmental matters applicable to the Company's Assets
or operations.
"Equipment" means all equipment, machinery, tools and similar Assets owned
by the Company and used by the Company in its business, including, without
limitation, all supplies of the Company related thereto.
"Escrow Amount" means the portion of Acquisition Consideration withheld by
AMP under
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Section 2.4 pending certain performance targets or any substituted
collateral permitted by AMP with respect to the Escrow.
"ERISA" has the meaning set forth in Section 3.13(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means the following Assets and properties of the
Company: (i) the Acquisition Consideration, (ii) the Company's right to enforce
AMP's representations, warranties and covenants hereunder and the obligations of
AMP to pay, perform or discharge the Assumed Liabilities and all other rights,
including rights of indemnification, of the Company under this Agreement or any
instrument executed pursuant hereto and (iii) the Employee Benefit Plans.
"Financial Statements" has the meaning set forth in Section 3.9.
"Fixed Assets" has the meaning set forth in Section 3.23.
"Indemnified Party" has the meaning set forth in Section 13.3.
"Indemnifying Party" has the meaning set forth in Section 13.3.
"Indemnity Notice" has the meaning set forth in Section 13.3.
"Initial Public Offering" means the initial underwritten public offering
of AMP Common Stock contemplated by the Registration Statement.
"Initial Public Offering Price" means the price per share of AMP Common
Stock received by AMP in connection with its Initial Public Offering.
"Insurance Policies" has the meaning set forth in Section 3.17.
"IRS" means the Internal Revenue Service.
"Lease Assignments" has the meaning set forth in Section 11.1(n).
"Material Adverse Effect" means a material adverse effect on the business,
operations, condition (financial or otherwise), results of operations or
prospects of the Company in consideration of all relevant facts and
circumstances that is likely to impact the Company by more than $80,000.00
during any 12-month period.
"New Employment Agreements" has the meaning set forth in Section 6.16.
"ordinary course of business" means the usual and customary way in which
the particular entity
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has conducted its business in the past, in all cases, in compliance with law.
"Other Agreements" has the meaning set forth in the recitals to this
Agreement.
"Owner(s)" means those person(s), all of whom are identified in the first
paragraph of this Agreement, who own, beneficially and of record, all of the
ownership interests in the Company, whatever form those interests may take,
including, without limitation, capital stock, partnership interests, units,
shares in profit, membership interests or the like.
"Payors" has the meaning set forth in Section 3.30.
"person" means any natural person, corporation, partnership, joint
venture, limited liability company, association, group, organization or other
entity.
"Personal Property" has the meaning set forth in Section 3.15(b).
"Private Placement Memorandum" means the Confidential Private Placement
Memorandum, dated June 25, 1997, provided by AMP to the Owners and the Company.
"Proprietary Rights" has the meaning set forth in Section 3.18.
"Registration Rights Agreement" has the meaning set forth in Section
11.1(k).
"Registration Statement" has the meaning set forth in Section 8.1.
"Related Acquisitions" means, collectively, the Acquisition and the
mergers and acquisitions of entities and assets contemplated by the Other
Agreements.
"Schedules" means the schedules attached hereto as of the date hereof or
otherwise delivered by any party hereto pursuant to the terms hereof, as such
may be amended or supplemented from time to time pursuant to the provisions
hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Taxes" means all taxes, however denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, state, territorial, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes, real property gains taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes,
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alternative minimum taxes, transfer taxes, workers compensation or Pension
Benefit Guaranty Corporation premiums, and other obligations of the same or of a
similar nature, which the Company is required to pay, withhold or collect.
"Tax Returns" shall mean all reports, estimates, declarations of estimated
Tax, information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
"Third Party Claim" has the meaning set forth in Section 13.3.
"Underwriter Representative" means the underwriter in the Initial Public
Offering who acts as the lead managing underwriter of the Initial Public
Offering.
ARTICLE II
THE ACQUISITION
SECTION 2.1. THE ACQUISITION. Subject to the terms and conditions of this
Agreement, on the Closing Date, the Company shall transfer, assign, convey and
deliver the Assets to AMP or AMP Subsidiary, a Georgia corporation ("AMP
Subsidiary"), free and clear of all security interests, liens, claims and
encumbrances (other than statutory liens arising in the ordinary course of
business or other liens that do not materially detract from the value or
interference with the use of such properties or Assets) and AMP or AMP
Subsidiary shall accept and acquire from the Company the Assets (the
"Acquisition").
SECTION 2.2. THE CLOSING. The Closing of the Acquisition will take place
at 10:00 a.m., local time, at the offices of Xxxxx & Xxxxxxxxx, Suite 2000, 0000
Xxxxxxxxx, Xxxxxxx, Xxxxx two weeks from the day on which the transactions
contemplated by the Initial Public Offering are consummated. The date on which
the Closing occurs is the "Closing Date."
SECTION 2.3 ALLOCATION OF PURCHASE PRICE. The total consideration for the
Assets will be the cash and shares of AMP Common Stock in the amount set forth
on Annex I hereto (the "Acquisition Consideration"). The Acquisition
Consideration shall be allocated among the Assets as set forth in Schedule 2.3
to be delivered by the Company prior to Closing, which schedule will be subject
to the approval of AMP. AMP, the Company and the Owners will not take any
position on their respective income tax return that is inconsistent with such
allocation. The Acquisition Consideration less the Escrow Amount in Section 2.4
below, will be delivered to the Company at Closing.
SECTION 2.4. ESCROW AMOUNT. AMP shall withhold $1,500,000.00 cash of the
Acquisition Consideration and $500,000.00 in AMP Common Stock of the Acquisition
Consideration (the "Escrow Amount") for three fiscal years after the Closing.
Notwithstanding the foregoing, the Company and/or the Owners may substitute AMP
stock which they hold for some or all of the Cash
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portion of the Escrow, provided such AMP stock has equivalent value on the date
of Closing equal to the amount of cash for which it is being substituted, and
further provided that all documents, instruments and agreements necessary to
properly secure AMP's interest therein are in form reasonably acceptable to
AMP's attorneys. The Escrow Amount will be released to the Company as AMP is
able to reach certain operating income performance targets with the AMP
Subsidiary. These performance targets (individually the "Performance Target",
collectively the "Performance Targets"), for each of the three years will be as
follows: (i) year 1 - AMP Subsidiary operating income after salaries and
amortization of $1.5 million; (ii) year 2 - operating income after salaries and
amortization of $1.7 million; and (iii) year 3 - operating income after salaries
and amortization of $1.95 million. The performance of the AMP Subsidiary will be
evaluated at the end of each of the first three fiscal years of AMP following
the Closing, and at such time a portion of the Escrow Amount will be released
either to the Owners or to AMP, as determined below. The portio of the Escrow
Amount to be released annually is one-third of the Escrow Amount at the end of
the first fiscal year of AMP following the Closing, one-half of the Escrow
Amount at the end of the second fiscal year of AMP following the Closing, and
all of the Escrow Amount at the end of the third fiscal year of AMP following
the Closing (each, the "Release Amount"). The Owners shall be entitled to
receive that portion of the Release Amount that is the product of the Release
Amount for a given fiscal year an a fraction, the numerator of which is the
actual operating income of the AMP Subsidiary for that fiscal year (after
salaries and amortization) less sixty-four percent of the Performance Target and
the denominator of which is thirty-six percent of the Performance Target for
that fiscal year, and the balance of the Release Amount (if any) shall be
distributed to AMP. If for any reason the Closing should not occur on or before
December, 31, 1997, then the parties will use their respective best efforts to
renegotiate the period for the annual determination of the portion of the Escrow
Amount to be released to occur failing which agreement the determination shall
occur at the end of the fiscal year of AMP first following the Closing and the
Performance Target shall be adjusted ratably to reflect such short performance
evaluation year. Any interest earned on the Escrow Amount during the three-year
period will be paid to Owners after the end of each of AMP's fiscal years.
Subject to any restrictions under this Agreement or any securities laws, the
Company may convert any of the AMP Common Stock held in escrow to cash. At the
end of the third fiscal year, any portion of the Escrow Amount still retained by
AMP will be forfeited by the Company and the Owners, and AMP will be the sole
Owner thereof.
SECTION 2.5. FRACTIONAL SHARES. Notwithstanding any other provision
herein, no fractional shares of AMP Common Stock shall be issued, and the person
entitled hereunder to receive a fractional share of AMP Common Stock but for
this Section 2.5 will be entitled to receive a cash payment in lieu thereof
reflecting such person's proportionate interest in a share of AMP Common Stock
multiplied by the Initial Public Offering Price.
SECTION 2.6. SUBSEQUENT ACTIONS. If, at any time after the Closing, AMP
shall be advised that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or confirm
of record or otherwise in AMP Subsidiary its right, title or interest in, to or
under any of the rights, properties or Assets of the Company acquired or to be
acquired by AMP Subsidiary as a result of, or in connection with, the
Acquisition or otherwise to carry out this Agreement, and to transfer the Assets
of the Company in return for the consideration set forth in this Agreement, the
officers and directors of AMP Subsidiary shall be authorized to execute and
deliver, in
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the name and on behalf of the Company, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of the
Company, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or Assets in AMP Subsidiary or otherwise to carry out
this Agreement.
SECTION 2.7 ASSUMED LIABILITIENotwithstanding anything to the contrary
contained in this Agreement, AMP shall assume or cause to be assumed any and all
Executive obligations that arise on or after (but not before) the Closing Date
under the contracts and agreements described on the attached Schedule 2.7, the
parties hereto acknowledging that such obligations relate to the ordinary course
of business conducted by Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OWNERS
The Company and the Owners, jointly and severally, represent and warrant
to AMP and AMP Subsidiary that the following are true and correct as of the date
hereof and the Closing:
SECTION 3.1.ORGANIZATION AND GOOD STANDING; QUALIFICATION. The Company is
a corporation duly organized, and existing under the laws of its state of
organization with all requisite power and authority to carry on the business in
which it is engaged, to own the properties it owns, to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The Company is
not qualified or licensed to do business in any other jurisdiction. The Company
has no assets, employees or offices in a state other than the state of its
organization. Except as set forth in Schedule 3.1, neither the Company nor any
Owner controls, directly or indirectly, the capital stock of any other
corporation or any entity or a profit sharing, participation or other interest
in any corporation, partnership, joint venture or other entity that is engaged
in a business that is in or related to the healthcare industry.
SECTION 3.2. CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of __________ shares of common stock, of which ___________
shares are issued and outstanding. The Owners own all of the Company's issued
and outstanding common stock in the respective amounts set forth in Schedule
3.2, free and clear of all security interests, liens, adverse claims,
encumbrances, equities, proxies and shareholders' agreements, except to the
extent specifically disclosed in detail on Schedule 3.2. Each outstanding share
of common stock of the Company has been legally and validly issued and is fully
paid and nonassessable. No share of capital stock is owned by the Company in
treasury. No shares of capital stock of the Company has been issued or disposed
of in violation of the preemptive rights, rights of first refusal or similar
rights of any of the Company's stockholders. The Company has no bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or are convertible into or exercisable for securities having the right to
vote) with the stockholders of the Company on any matter.
SECTION 3.3. TRANSACTIONS IN CAPITAL. The Company has acquired none of its
capital stock
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since ____________, ____. Except as set forth in Schedule 3.3, there exist no
options, warrants, subscriptions or other rights to purchase, or securities
convertible into or exchangeable for, any of the authorized or outstanding
securities of the Company, and no option, warrant, call, conversion right or
commitment of any kind exists that obligates the Company to issue any of its
authorized but unissued capital stock. Except as set forth in Schedule 3.3, the
Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to
pay any dividend or make any distribution in respect thereof. Except as set
forth in Schedule 3.3, neither the equity structure of the Company nor the
relative ownership of shares among any of its stockholders has been altered or
changed in contemplation of the transactions contemplated hereby.
SECTION 3.4. CONTINUITY OF BUSINESS ENTERPRISE. Except as set forth in
Schedule 3.4 and except as contemplated this Agreement, there has not been any
sale, distribution or spin-off of Assets of the Company, other than in the
ordinary course of business within the five years preceding the date of this
Agreement.
SECTION 3.5. INTENTIONALLY OMITTED
SECTION 3.6. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Company of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by the Company. This Agreement has
been duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except for the lack of effectiveness or
enforceability because of the Bankruptcy Code, or any other provision of law
relating to fraudulent conveyances, transfers or obligations or the pursuit of
equitable remedies generally. The Company has obtained, in accordance with
applicable law and its Bylaws and its Articles of Incorporation, the approval of
its stockholders necessary to consummate the transactions contemplated hereby.
SECTION 3.7. NO VIOLATION. Except as set forth specifically in detail in
Schedule 3.7 or Schedule 3.8, neither the execution, delivery or performance of
this Agreement or the other agreements contemplated hereby nor the consummation
of the transactions contemplated hereby or thereby will (a) conflict with,
result in a violation or breach of the terms, conditions or provisions of or
constitute a default under the Bylaws or the Articles of Incorporation of the
Company, (b) except as would not, individually or in the aggregate, result in a
Material Adverse Effect, conflict with, result in a violation or breach of the
terms, conditions or provisions of or constitute a default under any agreement,
indenture or other instrument by which the Company is bound or to which any of
the Assets of the Company is subject, or result in the creation or imposition of
any security interest, lien, charge or encumbrance upon any Assets of the
Company or (c) except as would not, individually or in the aggregate, result in
a Material Adverse Effect, violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
SECTION 3.8. CONSENTS. Except as set forth in Schedule 3.8, no consent,
authorization, approval, permit or license of, or filing with, any governmental
or public body or authority, any lender, any lessor or any other person or
entity is required to authorize, or is required in connection with, the
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execution, delivery or performance of this Agreement or the agreements
contemplated hereby.
SECTION 0.0.XXXXXXXXX STATEMENTS. The Company has furnished AMP its
balance sheet and related statements of income, retained earnings and cash flows
for its prior three full fiscal years and its balance sheet dated as of
____________, 199_ (the "Balance Sheet," and the date thereof the "Balance Sheet
Date") and related statements of income, retained earnings and cash flows for
the __________ months then ended (all such financial information, with the
related notes thereto, the "Financial Statements"), each audited as agreed to by
the parties. The Financial Statements fairly present the financial condition and
results of operations of the Company as of the dates and for the periods
indicated and have been prepared in conformity with generally accepted
accounting principles (subject to normal year-end adjustments and the absence of
notes for any unaudited interim financial statement for any interim periods
presented) applied on a consistent basis with prior periods, except as otherwise
specifically indicated in the Financial Statements.
SECTION 3.10. LIABILITIES AND OBLIGATIONS. Except as set forth in Schedule
3.10, the Financial Statements reflect all liabilities of the Company, accrued,
contingent or otherwise, required to be reflected on a balance sheet, or in the
notes thereto, prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred in the ordinary
course of business consistent with reasonable past practice since the Balance
Sheet Date. Except as specifically set forth in the Financial Statements or
Schedule 3.10, to the actual knowledge of the Company and Owners, the Company is
not liable upon or with respect to, or obligated in any other way to provide
funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity, and the Company does not actually know of
any valid basis for the assertion of any claims or liabilities of any nature or
in any amount
SECTION 3.11. EMPLOYEE MATTERS.
(a) CASH COMPENSATION. Schedule 3.11(a) contains a complete and accurate
list of the names, titles and annual cash compensation as of _______________,
199_, including, without limitation, wages, salaries, bonuses (discretionary and
formula) and other cash compensation (the "Cash Compensation"), of all full and
part-time employees of the Company. In addition, Schedule 3.11(a) contains a
complete and accurate description of (i) all increases in Cash Compensation of
employees of the Company during the current fiscal year and the immediately
preceding fiscal year and (ii) any promised increases in Cash Compensation of
employees of the Company that have not yet been effected.
(b) COMPENSATION PLANS. Schedule 3.11(b) contains a complete and accurate
list of all compensation plans, arrangements or practices (the "Compensation
Plans") sponsored by the Company or to which the Company contributes on behalf
of its employees, other than Employment Agreements listed in Schedule 3.11(c)
and Employee Benefit Plans listed in Schedule 3.13(a). The Compensation Plans
include, without limitation, plans, arrangements or practices that provide for
severance pay, deferred compensation, incentive, bonus or performance awards and
stock ownership or stock options.
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The Company has provided to AMP a copy of each written Compensation Plan and a
written description of each unwritten Compensation Plan. Except as set forth on
Schedule 3.11(b), each of the Compensation Plans can be terminated or amended at
will by the Company.
(c) EMPLOYMENT AGREEMENTS. Except as set forth in Schedule 3.11(c), the
Company is not a party to any written employment agreement (the "Employment
Agreements") with respect to any of its employees. Employment Agreements
include, without limitation, employee leasing agreements, employee services
agreements and noncompetition agreements.
(d) EMPLOYEE POLICIES AND PROCEDURES. Schedule 3.11(d) contains a complete
and accurate list of all employee manuals and all policies, procedures and
work-related rules (the "Employee Policies and Procedures") that apply to
employees of the Company. The Company has provided or made available to AMP a
copy of all written Employee Policies and Procedures. To the Company and Owner's
actual knowledge, there are no unwritten Employee Policies or Procedures.
(e) UNWRITTEN AMENDMENTS. Except as described in Schedule 3.11(b),
3.11(c), or 3.11(d), no unwritten material amendments have been made, whether by
oral communication, pattern of conduct or otherwise, with respect to any
Compensation Plans, Employment Agreements or Employee Policies and Procedures.
(f) LABOR COMPLIANCE. To the Company and Owner's acutal knowledge, the
Company has been and is in compliance with all applicable laws, rules,
regulations and ordinances respecting employment and employment practices, terms
and conditions of employment and wages and hours, except for any such failures
to be in compliance that, individually or in the aggregate, would not result in
a Material Adverse Effect, and the Company is not liable for any arrears of
wages or penalties for failure to comply with any of the foregoing. To the
Company and Owners' actual knowledge, the Company has not engaged in any unfair
labor practice or discriminated on the basis of race, color, religion, sex,
national origin, age, disability or handicap in its employment conditions or
practices. Except as set forth in Schedule 3.11(f), to the Company and Owners'
actual knowledge, there are no (i) unfair labor practice charges or complaints
or racial, color, religious, sex, national origin, age, disability or handicap
discrimination charges or complaints pending or, to the knowledge of the
Company, threatened against the Company before any federal, state or local
court, board, department, commission or agency (nor, to the actual knowledge of
the Company, does any valid basis therefor exist) or (ii) existing or, to the
knowledge of the Company, threatened labor strikes, disputes, grievances,
controversies or other labor troubles affecting the Company (nor, to the actual
knowledge of the Company, does any valid basis therefor exist).
(g) UNIONS. The Company has never been a party to any agreement with any
union, labor organization or collective bargaining unit. No employees of the
Company are represented by any union, labor organization or collective
bargaining unit. Except as set forth in Schedule 3.11(g), to the actual
knowledge of the Company, none of the employees of the Company has threatened to
organize or join a union, labor organization or collective bargaining unit.
SECTION 3.12. ALIENS. All employees of the Company are citizens of, or are
authorized in
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accordance with federal immigration laws to be employed in, the United States.
SECTION 3.13. EMPLOYEE BENEFIT PLANS.
(a) IDENTIFICATION. Schedule 3.13 contains a complete and accurate list of
all employee benefit plans (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) sponsored by the
Company or to which the Company contributes on behalf of its employees and all
employee benefit plans previously sponsored or contributed to on behalf of its
employees within the five years preceding the date hereof (the "Employee Benefit
Plans"). The Company has provided to AMP copies of all plan documents,
determination letters, pending determination letter applications, trust
instruments, insurance contracts, administrative services contracts, annual
reports, actuarial valuations, summary plan descriptions, summaries of material
modifications, administrative forms and other documents that constitute a part
of or are incident to the administration of the Employee Benefit Plans. In
addition, the Company has provided AMP a written description of all existing
practices engaged in by the Company that constitute Employee Benefit Plans.
Except as set forth in Schedule 3.13, no unwritten amendment exists with respect
to any Employee Benefit Plan.
(b) ADMINISTRATION. To the Company and the Owner's actual knowledge, each
Employee Benefit Plan has been administered and maintained in compliance with
all applicable laws, rules and regulations, except where the failure to be in
compliance would not, individually or in the aggregate, result in a Material
Adverse Effect.
(c) EXAMINATIONS. Except as set forth in Schedule 3.13, the Company has
not received any notice that any Employee Benefit Plan is currently the subject
of an audit, investigation, enforcement action or other similar proceeding
conducted by any state or federal agency.
(d) PROHIBITED TRANSACTIONS. To the Company and the Owner's actual
knowledge, no prohibited transactions (within the meaning of Section 4975 of the
Code) have occurred with respect to any Employee Benefit Plan.
(e) CLAIMS AND LITIGATION. Except as set forth in Schedule 3.13, no
pending or, to the actual knowledge of the Company, threatened, claims, suits or
other proceedings exist with respect to an Employee Benefit Plan, other than
normal benefit claims filed by participants or beneficiaries.
(f) QUALIFICATIONS. The Company has received a favorable determination
letter or ruling from the IRS for each of the Employee Benefit Plans intended to
be qualified within the meaning of Section 401(a) of the Code and/or tax-exempt
within the meaning of Section 501(a) of the Code. No proceedings exist or, to
the actual knowledge of the Company, have been threatened that could result in
the revocation of any such favorable determination letter or ruling.
(g) FUNDING STATUS. To the actual knowledge of the Company, except as set
forth in Schedule 3.13, no accumulated funding deficiency (within the meaning of
Section 412 of the Code), whether waived or unwaived, exists with respect to any
Employee Benefit Plan or any plan sponsored
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by any member of a controlled group (within the meaning of Section 412(n)(6)(B)
of the Code) in which the Company is a member (a "Controlled Group"). To the
actual knowledge of the Company, except as set forth in Schedul 3.13, with
respect to each Employee Benefit Plan subject to Title IV of ERISA, the Assets
of each such plan are at least equal in value to the present value of accrued
benefits determined on an ongoing basis as of the date hereof. With respect to
each Employee Benefit Plan funded as described in Section 501(c)(9) of the Code,
to the actual knowledge of the Company, the Assets of each such plan are at
least equal in value to the present value of accrued benefits, based upon the
most recent actuarial valuation as of a date no more than 90 days prior to the
date hereof. Schedule 3.13 contains a complete and accurate statement of all
actuarial assumptions applied to determine the present value of accrued benefits
under all Employee Benefit Plans subject to actuarial assumptions.
(h) EXCISE TAXES. Neither the Company nor any member of a Controlled Group
has any liability to pay excise taxes with respect to any Employee Benefit Plan
under applicable provisions of the Code or ERISA.
(i) MULTIEMPLOYER PLANS. Neither the Company nor any member of a
Controlled Group is or ever has been obligated to contribute to a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(j) PBGC. No facts or circumstances exist that would result in the
imposition of liability against AMP or AMP Subsidiary by the Pension Benefit
Guaranty Corporation as a result of any act or omission by the Company or any
member of a Controlled Group. No reportable event (within the meaning of Section
4043 of ERISA) for which the notice requirement has not been waived has occurred
with respect to any Employee Benefit Plan subject to the requirements of Title
IV of ERISA.
(k) RETIREES. The Company has no obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired, except
as may be required pursuant to the continuation of coverage provisions of
Section 4980B of the Code and the applicable provisions of ERISA.
(l) OTHER COMPENSATION ARRANGEMENTS. Except as set forth in Schedules
3.11(a), 3.11(b), 3.11(c), 3.11(d), 3.13(a) and 3.13(l), neither the Company nor
any Owner is a party to any compensation or other arrangement with any person
relating to the provision of healthcare related services, other than
arrangements with the Company.
SECTION 3.14. ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.14 and as contemplated by this Agreement, since the Balance Sheet Date, the
Company has not
(a) suffered a Material Adverse Effect, whether or not caused by any
deliberate act or omission of the Company or any Owner;
(b) contracted for the purchase of any capital asset having a cost in
excess of $5,000 or made any single capital expenditure in excess of $5,000;
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(c) incurred any indebtedness for borrowed money (other than short-term
borrowings in the ordinary course of business consistent with reasonable past
practice) or issued or sold any debt securities;
(d) incurred or discharged any material liabilities or obligations, except
in the ordinary course of business consistent with reasonable past practice;
(e) paid any amount on any indebtedness prior to the due date, forgiven or
cancelled any claims or any debt in excess of $5,000 or released or waived any
rights or claims, except in the ordinary course of business consistent with
reasonable past practice;
(f) mortgaged, pledged or subjected to any security interest, lien, lease
or other charge or encumbrance any of its properties or Assets (other than
statutory liens arising in the ordinary course of business consistent with
reasonable past practice or other liens that do not materially detract from the
value or interfere with the use of such properties or Assets);
(g) suffered any damages or destruction to or loss of any Assets (whether
or not covered by insurance) that has resulted, or might reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Effect;
(h) acquired or disposed of any Assets having an aggregate value in excess
of $5,000, except in the ordinary course of business consistent with reasonable
past practice;
(i) written up or written down the carrying value of any of its Assets,
other than accounts receivable in the ordinary course of business consistent
with reasonable past practice;
(j) changed the costing system or depreciation methods of accounting for
its Assets;
(k) lost or terminated any employee, customer or supplier that has
resulted, or might reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect;
(l) increased the compensation of any Owner, director, officer, key
employee or consultant;
(m) increased the compensation of any employee (except for increases in
the ordinary course of business consistent with reasonable past practice) or
hired any new employee who, in either case, is expected to receive annualized
compensation of $15,000 or more;
(n) made any payments of cash or Assets to or loaned any money or Assets
to any person or entity referred to in Section 3.26;
(o) formed, or acquired or disposed of any interest in, any corporation,
partnership, joint venture, limited liability company or other entity;
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(p) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock,
securities or other ownership interests or any rights to acquire such capital
stock, securities or other ownership interests, or agreed to change the terms
and conditions of any such capital stock, securities or other ownership
interests or rights;
(q) entered into any agreement providing for total payments in excess of
$5,000 in any 12 month period with any person or group, or modified or amended
in any material respect the terms of any such existing agreement, except in the
ordinary course of business consistent with reasonable past practice; or except
with AMP's consent, which consent will not be unreasonably withheld;
(r) entered into, adopted or amended any Employee Benefit Plan, except as
contemplated hereby; or
(s) entered into any commitment or transaction, or experienced any event,
that would materially interfere with its performance under this Agreement or any
other agreements or document executed or to be executed pursuant to this
Agreement or otherwise has resulted, or might reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect.
SECTION 3.15. TITLE; LEASED ASSETS.
(a) REAL PROPERTY. The Company does not own any interest in any real
property, other than leasehold interests referred to in Schedule 3.15. The
leased real property referred to in Schedule 3.15 constitutes the only real
property necessary for the conduct of the Company's business.
(b) PERSONAL PROPERTY. Except as set forth in Schedule 3.15, the Company
has good, and valid title to all the personal property owned by it and the
Company has good, and valid title to the Assets (the Assets and the personal
property owned by the Company are collectively referred to herein as the
"Personal Property"). The Personal Property and the leased personal property
referred to in Section 3.15(c) constitute the only personal property necessary
for the conduct of the Company's business. Upon consummation of the transactions
contemplated hereby, AMP Subsidiary will have good and, valid title to the
Personal Property, free and clear of all security interests, liens, claims and
encumbrances, other than statutory liens arising in the ordinary course of
business or other liens that do not materially detract from the value or
interfere with the use of such properties or Assets.
(c) LEASES. A list and brief description of (i) all leases of real
property and (ii) leases of personal property involving rental payments within
any 12-month period in excess of $5,000, in either case to which the Company is
a party, either as lessor or lessee, are set forth in Schedule 3.15. All such
leases are valid and, to the knowledge of the Company, enforceable in accordance
with their respective terms.
SECTION 3.16. COMMITMENTS. Except as set forth in Schedule 3.16 or in
other schedules prepared pursuant to this Agreement, the Company is not a party
to nor is it bound by, nor are any of its shares of its capital stock subject
to, nor are the Assets or the business of the Company bound by,
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whether or not in writing, any of the following (collectively, the
"Commitments"):
(i) partnership or joint venture agreement;
(ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) debt instrument, loan agreement or other obligation relating
to indebtedness for borrowed money or money lent or to be lent to another;
(iv) contract to purchase real property;
(v) agreement with dealers or sales or commission agents, public
relations or advertising agencies, accountants or attorneys (other than in
connection with this Agreement and the transactions contemplated hereby)
involving total payments within any 12-month period in excess of $5,000 and that
is not terminable on 30 days' notice with or without penalty;
(vi) agreement relating to any matter or transaction involving more
than $5,000 in the aggregate;
(vii) powers of attorney;
(viii) contracts containing noncompetition covenants;
(ix) agreement providing for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service; or
(x) any other agreement or commitment not made in the ordinary
course of business or that is material to the Company's business, operations,
condition (financial or otherwise), results of operations or prospects.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, have been delivered
to AMP. Except as set forth in Schedule 3.16, to the Company's and the Owner's
actual knowledge there are no existing or asserted defaults, events of default
or events, occurrences, acts or omissions that, with the giving of notice or
lapse of time or both, would constitute defaults by the Company or, to the
actual knowledge of the Company, any other party to a material Commitment, and
no penalties have been incurred nor are amendments pending with respect to any
material Commitment, except as described in Schedule 3.16. The Commitments are
in full force and effect and are valid and enforceable obligations of the
Company except for the lack of effectiveness or enforceability because of the
Bankruptcy Code, or any other provision of law relating to fraudulent
conveyances, transfers or obligations, and to the actual knowledge of the
Company, the other parties thereto in accordance with their respective terms,
and no defenses, off-sets or counterclaims have been asserted or, to the actual
knowledge of the Company,
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may be made by any party thereto (other than by the Company) nor has the Company
waived any rights thereunder, except as described in Schedule 3.16. Except as
disclosed specifically in Schedule 3.16, (i) none of the Company or any Owner
has received notice of any plan or intention of any other party to any
Commitment to exercise any right to cancel or terminate any Commitment, and
neither the Company nor any Owner knows of any fact that would justify the
exercise of such a right and (ii) none of the Company or any Owner currently
contemplates, or has a reason to believe any other person currently
contemplates, any amendment or change to any Commitment except that the Company
contemplates amending all if its current billing agreements.
SECTION 3.17. INSURANCE. The Company and each Owner carry property,
liability, malpractice, workers' compensation and such other types of insurance
pursuant to the insurance policies listed and described in Schedule 3.17 (the
"Insurance Policies"). The Insurance Policies are all of the insurance policies
of the Company and the Owners relating to the Company, and to the actual
knowledge of the Company, are valid and enforceable policies. All Insurance
Policies will be maintained in force without interruption up to and including
the Closing Date. True, complete and correct copies of all Insurance Policies
have been provided to AMP. Except as set forth in Schedule 3.17, neither the
Company nor any Owner has received any notice or other communication from any
issuer of any Insurance Policy cancelling such policy, materially increasing any
deductibles or retained amounts thereunder or materially increasing the annual
or other premiums payable thereunder, and, to the actual knowledge of the
Company, no such cancellation or increase of deductibles, retainages or premiums
is threatened. Except as set forth on Schedule 3.17, neither the Company nor any
Owner has any outstanding claims, settlements or premiums owed against any
Insurance Policy, and the Company and each Owner have given all notices or has
presented all potential or actual claims under any Insurance Policy in a due and
timely fashion. Schedule 3.17 also sets forth a list of all claims under any
Insurance Policy in excess of $5,000 per occurrence filed by the Company or any
Owner during the immediately preceding five years.
SECTION 3.18. PROPRIETARY RIGHTS AND INFORMATION. Set forth in Schedule
3.18 is a true and correct description of the following (the "Proprietary
Rights"):
(a) all trademarks, trade-names, service marks and other trade
designations, including common law rights, registrations and applications
therefor, and all patents and applications therefor currently owned, in whole or
in part, by the Company, and all licenses, royalties, assignments and other
similar agreements relating to the foregoing to which the Company is a party
(including expiration date, if applicable); and
(b) all agreements relating to technology, know-how or processes that the
Company is licensed or authorized to use by others (other than technology,
know-how or processes generally available to other health care providers) or
which it licenses or authorizes others to use. The Company owns or has the legal
right to use the Proprietary Rights, without conflicting, infringing or
violating the rights of any other person. Except as disclosed in Schedule 3.18,
no consent of any person will be required for the use of the Proprietary Rights
by AMP Subsidiary upon consummation of the transactions contemplated hereby, and
the Proprietary Rights are freely transferable. No claim has been asserted by
any person to the ownership or for infringement by the Company of the
proprietary
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right of any other person, and the Company does not know of any valid basis for
any such claim. The Company has the right to use, free and clear of any adverse
claims or rights of others, all trade secrets, customer lists and proprietary
information required for the marketing of all merchandise and services formerly
or presently sold or marketed by it.
SECTION 3.19. TAXES.
(a) FILING OF TAX RETURNS. The Company has duly and timely filed (in
accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all Tax
Returns and reports required to be filed in the United States, any state or any
political subdivision thereof or any foreign jurisdiction. All such Tax Returns
or reports are, to the Company and Owner's actual knowledge, complete and
accurate in all material respects and properly reflect the Taxes of the Company
for the periods covered thereby.
(b) PAYMENT OF TAXES. Except for such items as the Company may be
disputing in good faith by proceedings in compliance with applicable law, which
are described in Schedule 3.19(b) and are adequately accrued for, (i) the
Company has paid all Taxes that have become due from the Company with respect to
any Tax Return that it has filed (including those related to employment) and has
properly accrued on its books and records for all of the same that have not yet
become due and (ii) the Company is not delinquent in the payment of any Tax,
assessment or governmental charge.
(c) NO PENDING DEFICIENCIES, DELINQUENCIES, ASSESSMENTS OR AUDITS. Except
as set forth in Schedule 3.19(c), the Company has not received any notice that
any Tax deficiency or delinquency has been asserted against the Company. To the
actual knowledge of the Company or Owner's, there is no unpaid assessment,
proposal for additional Taxes, deficiency or delinquency in the payment of any
of the Taxes of the Company that could be asserted by any taxing authority.
There is no taxing authority audit o the Company pending, or, to the actual
knowledge of the Company, threatened, and the results of any completed audits
are properly reflected in the Financial Statements. The Company has not violated
in any material respect any federal, state, local or foreign Tax law.
(d) NO EXTENSION OF LIMITATION PERIOD. The Company has not granted an
extension to any taxing authority of the limitation period during which any Tax
liability may be assessed or collected.
(e) ALL WITHHOLDING REQUIREMENTS SATISFIED. All monies required to be
withheld by the Company and paid to governmental agencies for all income, social
security, unemployment insurance, sales, excise, use and other Taxes have been
collected or withheld and paid to the respective governmental agencies.
(f) FOREIGN PERSON. Neither the Company nor any Owner is a foreign person,
as such term is referred to in Section 1445(f)(3) of the Code.
(g) INTENTIONALLY OMITTED.
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(h) TAX EXEMPT ENTITY. None of the Assets of the Company are subject to a
lease to a "tax exempt entity" as such term is defined in Section 168(h)(2) of
the Code.
(i) COLLAPSIBLE CORPORATION. The Company has not at any time consented,
and the Owners will not permit the Company to elect, to have the provisions of
Section 341(f)(2) of the Code apply to it.
(j) BOYCOTTS. The Company has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the Code.
(k) INTENTIONALLY OMITTED.
(l) S CORPORATION. The Company has made an election to be taxed as an "S"
corporation under Section 1362(a) of the Code.
(m) INTENTIONALLY OMITTED.
(n) INTENTIONALLY OMITTED.
SECTION 3.20. COMPLIANCE WITH LAWS. To their acutal knowledge the Company
and each Owner have to their actual knowledge, complied with, and are in
compliance with, all applicable laws, regulations and licensing requirements and
to their actual knowledge, have filed with the proper authorities all necessary
statements and reports, except where the failure to so comply or file would not,
and is not reasonably expected to, individually or in the aggregate, result in a
Material Adverse Effect except as otherwise set forth on Schedules attached
hereto. To the actual knowledge of the Company and the Owners, there are no
existing violations by the Company nor any Owner of any federal, state or local
law or regulation that could, individually or in the aggregate, result in a
Material Adverse Effect. To their actual knowledge the Company and each Owner
possess all necessary licenses, franchises, permits and governmental
authorizations for the conduct of its, his or her business as now conducted, all
of whic are listed (with expiration dates, if applicable) in Schedule 3.20.
Except as set forth in Schedule 3.20 the transactions contemplated by this
Agreement will not result in a default under or a breach or violation on of, or
adversely affect the rights and benefits afforded by, any such licenses,
franchises, permits or government authorizations, except for any such default,
breach or violation that would not, and is not reasonably expected to,
individually or in the aggregate, have a Material Adverse Effect. Except as set
forth in Schedule 3.20, or as referenced at Section 3.30, neither the Company
nor any Owner has received any notice from any federal, state or other
governmental authority or agency having jurisdiction over its, his or her
properties or activities, or any insurance or inspection body, that its, his or
her operations or any of its, his or her properties, facilities, equipment or
business practices fail to comply with any applicable law, ordinance,
regulation, building or zoning law o requirement of any public or quasi-public
authority or body, except where failure to so comply would not, and is not
reasonably expected to, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.21. FINDER'S FEE. Except as set forth in Schedule 3.21, none of
the Company, any
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Owner or any of their Affiliates has incurred any obligation for any finder's,
broker's, agent's or similar fee in connection with the transactions
contemplated hereby.
SECTION 3.22. LITIGATION. Except as described in Schedule 3.22 or as
referenced at Section 3.30, there are no legal actions, administrative
proceedings or investigations instituted, or, to the actual knowledge of the
Company, threatened, affecting or that could affect the Company, any Owner, the
outstanding ownership interests in the Company, any of the Assets of the Company
or the operations, business, condition (financial or otherwise), results of
operations or prospects of the Company which (i) if successful, could, or might
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect or (ii) could adversely affect the ability of the Company or any
Owner to effect the transactions contemplated hereby. Neither the Company nor
any Owner is (a) subject to any court or administrative order, judgment, writ,
injunction or decree or (b) in default with respect to any such order, judgment,
writ, injunction or decree. The Company and the Owners have no knowledge of any
valid basis for any such action, proceeding or investigation. Except as set
forth in Schedule 3.22, all medical malpractice claims asserted against the
Company or any of its Affiliates, general liability incidents and incident
reports have been submitted on a timely basis and in the proper manner to the
Company's insurer therefor. All claims made or threatened against the Company in
excess of its deductible are covered under its Insurance Policies.
SECTION 3.23. CONDITION OF FIXED ASSETS. All of the plants, structures and
equipment (the "Fixed Assets") used by the Company in its business are in good
condition and repair, subject to normal wear and tear, and conform in all
material respects with all applicable ordinances, regulations and other laws,
and the Company and the Owners have no actual knowledge of any latent defects
therein.
SECTION 3.24. DISTRIBUTIONS AND REPURCHASES. Except as described in
Schedule 3.24, no distribution, payment or dividend of any kind has been
declared or paid by the Company on any of its ownership interests since the
Balance Sheet Date. No repurchase of any of the Company's ownership interests
has been approved or effected or is pending or contemplated by the Board of
Directors of the Company.
SECTION 3.25. BANKING RELATIONS. Set forth in Schedule 3.25 is a complete
and accurate list of all borrowing and investing arrangements that the Company
has with any bank or other financial institution, indicating with respect to
each relationship the type of arrangement maintained (such as checking account,
borrowing arrangements, safe deposit box, etc.) and the person or persons
authorized in respect thereof.
SECTION 3.26. INTERESTED PERSONS; AFFILIATIONS. Except as set forth in
Schedule 3.26, no Owner, officer, employee or director of the Company, or any of
their respective spouses, children or Affiliates, owns, directly or indirectly,
on an individual or joint basis, any interest in, has a compensation or other
financial arrangement with or serves as an officer or director of any customer
or supplier of the Company or any organization that has a contract or
arrangement with the Company.
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SECTION 3.27. ENVIRONMENTAL MATTERS.
(a) ENVIRONMENTAL LAWS. Neither the Company nor any of its Assets is
currently in violation of, or subject to any existing, pending or, to the actual
knowledge of the Company, threatened investigation or inquiry by any
governmental authority or to any remedial obligations under, any Environmental
Law.
(b) PERMITS. The Company is not required to obtain, nor has knowledge of
any reason AMP Subsidiary will be required to obtain, by reason of any
Environmental Law, any permits, licenses or similar authorizations to occupy,
operate or use any buildings, improvements, fixtures or equipment owned or
leased by the Company.
(c) SUPERFUND LIST. None of the Assets owned or leased by the Company are
on any federal or state "Superfund" list or subject to any environmentally
related liens.
SECTION 3.28. CERTAIN PAYMENTS. None of the Company, any Owner, any
director, officer or employee of the Company or any of their respective
Affiliates has paid, caused to be paid or received, directly or indirectly, in
connection with the business of the Company:
(a) to or from any government or agency thereof or any agent of any
supplier or customer, any bribe, kick-back or other similar payment; or
(b) any contribution to any political party or candidate, other than from
personal funds not reimbursed by their respective employers or as otherwise
permitted by applicable law.
SECTION 3.29. INTENTIONALLY OMITTED
SECTION 3.30. MEDICARE AND MEDICAID PROGRAMS. The Company is engaged in
the business of filing claims on behalf of providers of professional services
participating in the Medicare and Medicaid programs. On or about September 19,
1997 the Company received a "Dear Provider" letter from the Health Care
Financing Administration (HCFA) indicating that there may be irregularities in
the manner in which the Company has been filing and collecting claims on behalf
of the providers with whom it contracts to provide billing services. A copy of
the letter is attached at Schedule 3.30. The HCFA letter indicates that any
billing irregularities require corrective action but does not expressly state
that any of the penalty provisions in the Medicare Act are implicated by any of
the irregularities described. The Company has engaged legal counsel to review
its billing format and assist in the development of corrective actions if
necessary. Based on preliminary review, the Company is not currently aware of
any instances in which it has overbilled the Medicare or Medicaid programs on
behalf of the providers to whom it provides billing services.
SECTION 3.31. FRAUD AND ABUSE. The Company is engaged in the business of
filing claims on behalf of providers of professional services participating in
the Medicare and Medicaid programs. The Company also provides management
services to these providers. The Company does not provide any services which are
directly reimbursed by Medicare or Medicaid, nor does the Company refer patients
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for designated health services as defined in 42 U.S.C. Sec. 1395nn. Subject to
the disclosure set forth in Section 3.30, to the best of its knowledge the
Company and Owners have not:
(a) knowingly and willingly made or caused to be made any false
statement or representation of a material fct with respect to any
claim for payment; or
(b) knowingly and willingly offered or received any remuneration in
return for referring a patient for a service for which payment may
be made by Medicare or Medicaid or for purchasing or arranging the
purchase of any service or good for which payment may be made by
Medicare or Medicaid.
SECTION 3.32. INTENTIONALLY OMITTED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE OWNERS
Each of the Owners, jointly and severally, represents and warrants to AMP
and AMP Subsidiary that the following are true and correct as of the date hereof
and the Closing:
SECTION 4.1. VALIDITY; OWNERS' CAPACITY. This Agreement and each other
agreement contemplated hereby has been or will be, as the case may be, as of the
Closing Date duly executed and delivered by the Owners and constitute or will
constitute, as the case may be, legal, valid and binding obligations of the
Owners, enforceable against the Owners in accordance with their respective
terms. Each Owner has legal capacity to enter into and perform this Agreement
and the other such agreements to which the Owners are a party.
SECTION 4.2. NO VIOLATION. Neither the execution, delivery or performance
of this Agreement or the other agreements of the Owners contemplated hereby nor
the consummation of the transactions contemplated hereby or thereby will (a)
conflict with, result in a violation or breach of the terms, conditions or
provisions of or constitute a default under any agreement, indenture or other
instrument by which any Owner is bound or to which any of the ownership
interests in the Company are subject, or result in the creation or imposition of
any security interest, lien, charge or encumbrance upon any of the ownership
interests in the Company or (b) to the knowledge of the Owners, violate or
conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body.
SECTION 4.3. PERSONAL HOLDING COMPANIES; CONTROL OF RELATED BUSINESSES. No
Owner owns ownership interests in the Company, directly or indirectly,
beneficially or of record, through a personal holding company. Except as set
forth in Schedule 4.3, no Owner controls another business that is in the same or
similar line of business as the Company or that has or is engaged in a
transaction with the Company.
SECTION 4.4. TRANSFERS OF OWNERSHIP INTERESTS. Set forth in Schedule 4.4
is a list of all
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transfers or other transactions involving ownership interests in the Company.
All such transfers were made for valid business reasons and not in anticipation
or contemplation of the consummation of the transactions contemplated by this
Agreement.
SECTION 4.5. ACCREDITED INVESTOR STATUS. Except as set forth in Schedule
4.5, each Owner is an "accredited investor" as defined in Rule 501(a) under the
Securities Act.
SECTION 4.6. CONSENTS. Except as specifically disclosed pursuant to
Article III, no consent, authorization or approval of any person is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the agreements contemplated hereby.
SECTION 4.7. INTENTIONALLY OMITTED.
SECTION 4.8. INTENTIONALLY OMITTED.
SECTION 4.9. INTERESTED PERSONS; AFFILIATIONS. Except as set forth in
Schedule 3.13(L), no Owner and no Owner's spouse, children or Affiliates owns,
directly or indirectly, on an individual or joint basis, any interest in, has a
compensation or other financial arrangement with or serves as an officer or
director of, any customer or supplier of the Company or any organization that
has a contract or arrangement with the Company. No Owner or any of such Owner's
Affiliates is, or within the last five years was, a party to any contract,
lease, agreement or arrangement, including, but not limited to, any joint
venture or consulting agreement, with any physician, hospital, pharmacy, home
health agency or other person that is in a position to make or influence
referrals to, or otherwise generate business for, the Company.
SECTION 4.10. INVESTMENTS IN COMPETITORS. Except as disclosed in Schedule
4.10, no Owner owns, directly or indirectly, any interests or has any investment
in any person that is a competitor of the Company.
SECTION 4.11. DISPOSITION OF AMP SHARES. No Owner presently intends to
dispose of any shares of AMP Common Stock received pursuant hereto or is a party
to any plan, arrangement or agreement for the disposition of such shares, other
than this Agreement and the Registration Rights Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AMP
AMP represents and warrants to the Company and the Owners that the
following are true and correct as of the date hereof and the Closing:
SECTION 5.1. ORGANIZATION AND GOOD STANDING. AMP Subsidiary will be a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, with all
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requisite corporate power and authority to carry on the business in which it is
engaged, to own the properties it owns, to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Prior to the Closing,
AMP Subsidiary will not have had any operations, other than in connection with
it formation and capitalization and the transactions contemplated by this
Agreement and the Other Agreements.
SECTION 5.2. CAPITALIZATION. The authorized capital stock of AMP
Subsidiary will consist of one-thousand shares of AMP Subsidiary Common Stock,
of which 1000 shares will be issued and outstanding and will be held by AMP, AMP
Subsidiary will not have any bonds, debentures, notes or other obligations the
holders of which will have the right to vote (or will be convertible into or
exercisable for securities having the right to vote) with the stockholders of
AMP Subsidiary on any matter. There will exist no options, warrants,
subscriptions or other rights to purchase, or securities convertible into or
exchangeable for, any of the authorized or outstanding securities of AMP
Subsidiary, and no option, warrant, call, conversion right or commitment of any
kind will exist that obligates AMP Subsidiary to issue any of its authorized but
unissued capital stock. AMP Subsidiary will have no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay a dividend or make any distribution in
respect thereof. No stockholder of AMP Subsidiary will have granted options or
other rights to purchase any shares of AMP Subsidiary Common Stock from such
stockholder.
SECTION 5.3. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by AMP of this Agreement and the other agreements expressly
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by AMP. This Agreement and each
other agreement expressly contemplated hereby to be executed by AMP have been or
will be, as the case may be, as of the Closing Date duly executed and delivered
by AMP and constitute or will constitute, as the case may be, legal, valid and
binding obligations of AMP enforceable against AMP in accordance with its terms
except for the lack of effectiveness or enforceability because of the Bankruptcy
Code, or any other provision of law relating to fraudulent conveyances,
transfers or obligations or the pursuit of equitable remedies generally.
SECTION 5.4. NO VIOLATION. Neither the execution, delivery or performance
of this Agreement or the other agreements expressly contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (a)
conflict with, result in a violation or breach of the terms, conditions and
provisions of or constitute a default under the Certificate of Incorporation or
Bylaws of AMP or AMP Subsidiary or any agreement, indenture or other instrument
by which AMP or AMP Subsidiary is or will be, as of the Closing, bound or (b)
except as would not, individually or in the aggregate, have a Material Adverse
Effect on the business, operations, condition (financial or otherwise) or
results of operations of AMP or AMP Subsidiary, violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over AMP or AMP
Subsidiary or the properties or Assets of AMP or AMP Subsidiary.
SECTION 5.5. FINDER'S FEE. Except as disclosed in Schedule 5.5, AMP has
not incurred any obligation for any finder's, broker's, agent's or similar fee
in connection with the transactions
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contemplated hereby.
SECTION 5.6. CAPITAL STOCK. The issuance and delivery by AMP of shares of
AMP Common Stock in connection with the Acquisition will be duly and validly
authorized by all necessary corporate action on the part of AMP. The shares of
AMP Common Stock to be issued in connection with the Acquisition, when issued in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable and will not have been issued in violation of any preemptive
rights, rights of first refusal o similar rights of any AMP stockholders.
SECTION 5.7. CONSENTS. Except as have been obtained or as may be required
by the exchange or automated quotation system on which the AMP Common Stock may
be listed or under the Delaware Business Corporation Act, the Exchange Act, the
Securities Act or state securities laws, no consent, authorization, approval,
permit or license of, or filing with, any governmental or public body or
authority, any lender, any lessor or any other person is required to authorize,
or is required in connection with, the execution, delivery and performance of
this Agreement or the agreements contemplated hereby on the part of AMP or AMP
Subsidiary.
ARTICLE VI
COVENANTS OF THE COMPANY AND THE OWNERS
The Company and the Owners, jointly and severally, agree that between the
date hereof and the Closing:
SECTION 6.1. CONSUMMATION OF AGREEMENT. The Company and the Owners will
use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
SECTION 6.2. BUSINESS OPERATIONS. The Company will operate its business in
the ordinary course. The Company and the Owners will use their best efforts to
preserve the business of the Company intact. Neither the Company nor any Owners
will take any action that would, individually or in the aggregate, result in a
Material Adverse Effect. Except as set forth in Schedule 6.2, the Company will
use its best efforts to preserve intact its relationships with Payors, referral
sources, customers, suppliers patients, employees and others having significant
business relations with it, unless doing so would impair its goodwill or,
individually or in the aggregate, result in a Material Adverse Effect. The
Company will collect its receivables and pay its trade payables in the ordinary
course of business consistent with reasonable past practice.
SECTION 6.3. ACCESS. The Company and the Owners will, at reasonable times
during normal business hours and on reasonable notice, permit AMP and its
authorized representatives reasonable access to, and make available for
inspection, all of the Assets and business of the Company, including its
employees, customers and suppliers, and permit AMP and its authorized
representatives to inspect and make copies of all documents, records (other than
confidential portions of patient medical records)
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and information with respect to the affairs of the Company as AMP and its
representatives may reasonably request, all for the sole purpose of permitting
AMP to become familiar with the businesses and Assets and liabilities of the
Company.
SECTION 6.4 NOTIFICATION OF CERTAIN MATTERS. The Company and the Owners
will promptly inform AMP in writing of (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by the Company or any Owner subsequent to the
date of this Agreement and prior to Closing under any Commitment material to the
Company's condition (financial or otherwise), operations, Assets, liabilities,
business or prospects and to which it is subject, (b) any event that would cause
any of their respective representations and warranties under this Agreement to
be untrue or (c) any material adverse change in the Company's condition
(financial or otherwise), operations, Assets, liabilities, business or
prospects.
SECTION 6.5. TAX RETURNS. AMP will have the right to review the tax
returns of the Company at least thirty (30) days before March 15th, or other
relevant filing deadlines.
SECTION 6.6. APPROVALS OF THIRD PARTIES. The Company and the Owners will
use their best efforts to obtain all licenses, permits, approvals or other
authorizations required to be delivered by them and required under any law,
statute, rule, regulation or ordinance, or otherwise necessary or desirable, to
consummate the transactions, to provide the services and to conduct the intended
business of AMP and AMP Subsidiary.
SECTION 6.7. EMPLOYEE MATTERS. Except as set forth in Schedule 6.7 or as
otherwise specifically contemplated by this Agreement, the Company will not,
without the prior written approval of AMP, except as required by law or in the
ordinary course of business, consistant with past practices of the Company:
(a) increase the Cash Compensation of any Owner or other employee of the
Company;
(b) adopt, amend or terminate any Compensation Plan;
(c) adopt, amend or terminate any Employment Agreement;
(d) adopt, amend or terminate any Employee Policies and Procedures;
(e) adopt, amend or terminate any Employee Benefit Plan;
(f) take any action that could deplete the assets of any Employee Benefit
Plan, other than payment of benefits in the ordinary course to participants and
beneficiaries;
(g) fail to pay any premium or contribution due or with respect to any
Employee Benefit Plan;
(h) fail to file any return or report with respect to any Employee Benefit
Plan;
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(i) institute, settle or dismiss any employment litigation, except as
could not, individually or in the aggregate, result in a Material Adverse
Effect;
(j) enter into, modify, amend or terminate any agreement with any union,
labor organization or collective bargaining unit; or
(k) take or fail to take any action with respect to any past or present
employee of the Company that would, individually or in the aggregate, result in
a Material Adverse Effect.
SECTION 6.8. CONTRACTS. Except with AMP's prior written consent, the
Company will not assume or enter into any contract, lease, license, obligation,
indebtedness, commitment, purchase or sale that is material to the Company's
business nor will it waive any material right or cancel any material contract,
debt or claim, other than in the ordinary course of business of the Company.
SECTION 6.9. CAPITAL ASSETS; PAYMENTS OF LIABILITIES. The Company will
not, without the prior written approval of AMP (a) acquire or dispose of any
capital asset having a fair market value of $15,000.00 or more or acquire or
dispose of any capital asset outside of the ordinary course of business or (b)
discharge or satisfy any lien or encumbrance or pay or perform any obligation or
liability, other than (i) liabilities and obligations reflected in the Financial
Statements or (ii) current liabilities and obligations incurred in the usual and
ordinary course of business since the Balance Sheet Date and, in either case (i)
or (ii) above, only as required by the express terms of the agreement or other
instrument pursuant to which the liability or obligation was incurred.
SECTION 6.10. MORTGAGES, LIENS AND GUARANTIES. The Company will not,
without the prior written approval of AMP, enter into or assume any mortgage,
pledge, conditional sale or other title retention agreement, permit any security
interest, lien, encumbrance or claim of any kind to attach to any of its Assets
(other than statutory liens arising in the ordinary course of business and other
liens that do not materially detract from the value or interfere with the use of
such Assets), whether now owned or hereafter acquired, or guarantee or otherwise
become contingently liable for any obligation of another, except obligations
arising by reason of enforcement for collection and other similar transactions
in the ordinary course of business, or make any capital contribution or
investment in any person.
SECTION 6.11. ACQUISITION PROPOSALS. From the date of this Agreement
through January 31, 1998 (a) no Owner nor the Company nor any of their
respective officers, directors or partners will, and the Owners and the Company
will direct and use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
Assets, any equity securities or partnership interests of the Company (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition
-27-
Proposal; (b) each Owner and the Company will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing, and each will take
the necessary steps to inform the individuals or entities referred to in the
first sentence hereof of the obligations undertaken in this Section; and (c) the
Owners and the Company will notify AMP immediately if any such inquiries or
proposals are received by any such information is requested from or any such
negotiations or discussions are sought to be initiated or continued with the
Company or any Owner.
SECTION 6.12. DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company in respect of its
capital stock, nor will any repurchase of any capital stock of the Company be
approved or effected; provided, however, that nothing contained herein shall be
construed to prohibit the distribution to Owners of all cash of the Company
available for such distribution to the extent consistent with past practice.
SECTION 6.13. REQUIREMENTS TO EFFECT ACQUISITION. The Company and the
Owners will use their best efforts to take, or cause to be taken, all actions
necessary to effect the Acquisition under applicable law, including, without
limitation, the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
SECTION 6.14. ACCESS. The Company and the Owners will, at reasonable times
during normal business hours and on reasonable notice, permit AMP and its
authorized representatives reasonable access to, and make available for
inspection, all of the Assets and records of the Company, including tax returns
and related information, and permit AMP and its authorized representatives to
inspect and make copies of all such documents, records (other than confidential
portions of patient medical records) and information with respect to the affairs
of the Company as AMP and its representatives may request.
SECTION 6.15. EMPLOYEE. AMP will offer all existing employees of Company
employment with AMP or AMP Subsidiary at their existing salary levels, subject
to the standard 90 days probationary period.
SECTION 6.16. NEW EMPLOYMENT AGREEMENTS. The Company and the Owners will
use their best efforts to cause, at or immediately prior to Closing, employees
of the Company (i) to terminate his or her employment agreement, if any, with
the Company by mutual consent without any liability therefor on the part of the
Company and (ii) to enter into new employment with AMP (and, in the case of
certain employees indentified on Schedule 6.16, to enter into a written
employment agreement with AMP or AMP Subsidiar ("New Employment Agreement").
SECTION 6.17. DELIVERY OF SCHEDULES. The Company and the Owners will
deliver to AMP all schedules required to be delivered by them prior to the
Closing.
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ARTICLE VII
COVENANTS OF AMP
AMP agrees that between the date hereof and the Closing:
SECTION 7.1. CONSUMMATION OF AGREEMENT. AMP will use its best efforts to
cause the consummation of the transactions contemplated hereby in accordance
with their terms and conditions and take all corporate and other action
necessary to approve the Acquisition.
SECTION 7.2. REQUIREMENTS TO EFFECT ACQUISITION. AMP will use its best
efforts to take, or cause to be taken, all actions necessary to effect the
Acquisition under applicable law, including, without limitation, the filing with
the appropriate government officials of all necessary documents in form approved
by counsel for the parties to this Agreement.
SECTION 7.3. NOTIFICATION OF CERTAIN MATTERS. AMP will promptly inform the
Company and the Owners in writing of any material adverse change in AMP's
condition (financial or otherwise), operations, assets, liabilities or business.
SECTION 7.4. APPROVALS OF THIRD PARTIES. AMP will use its best efforts to
secure, as soon as practicable after the date hereof, all necessary approvals
and consents of third parties to the consummation of the transactions
contemplated hereby.
SECTION 7.5. LICENSES AND PERMITS. AMP will use its best efforts to obtain
all licenses, permits, approvals or other authorizations required under any law,
statute, rule, regulation or ordinance, or otherwise necessary or desirable, to
consummate the transactions, provide the services and to conduct the intended
businesses of AMP and AMP Subsidiary.
ARTICLE VIII
COVENANTS OF AMP, THE COMPANY AND THE OWNERS
AMP, the Company and the Owners agree as follows:
SECTION 8.1. FILINGS; OTHER ACTION.
(a) AMP, the Company and the Owners will cooperate to promptly prepare and
file with the SEC the Registration Statement on Form S-1 (or other appropriate
Form) to be filed by AMP in connection with its Initial Public Offering
(including the prospectus constituting a part thereof, the "Registration
Statement"). AMP will obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement. The Company and the Owners wil cooperate as may be reasonably
requested in connection with any such action.
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(b) Each of the Company, each Owner and AMP represents and warrants that
none of the information or documents supplied or to be supplied by it for
inclusion in the Registration Statement, by exhibit or otherwise, will, at the
time the Registration Statement and each amendment and supplement thereto, if
any, becomes effective under the Securities Act, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of circumstances under
which they were made, not misleading.
(c) Each Owner and the Company will, upon request, furnish AMP with all
information concerning itself, its subsidiaries, directors, officers, partners
and stockholders and such other matters as may be reasonably requested by AMP in
connection with the preparation of the Registration Statement and each amendment
or supplement thereto, or any other statement, filing, notice or application
made by or on behalf of each such party or any of its subsidiaries to any
governmental entity in connection with the Acquisition and the other
transactions contemplated by this Agreement.
SECTION 8.2. AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party will have the continuing obligation until the Closing to
supplement or amend promptly the Schedules with respect to any matter that would
have been or would be required to be set forth or described in the Schedules in
order to not materially breach any representation, warranty or covenant of such
party contained herein; provided, that no amendment or supplement to a Schedule
that constitutes or reflects a material adverse change to the Company may be
made unless AMP consents to such amendment or supplement, and no amendment or
supplement to a Schedule that constitutes or reflects a material adverse change
to AMP may be made unless the Company and the Owners consent to such amendment
or supplement. For all purposes of this Agreement, including, without
limitation, for purposes of determining whether the conditions set forth herein
have been fulfilled, the Schedules hereto will be deemed to be the Schedules as
amended or supplemented pursuant to this Section.
SECTION 8.3. PRORATION OF COSTS AND RENTS. All rents, personal property
taxes and other sums actually paid under the lease agreements listed on Schedule
2.7 pertaining to the Assets and all expenses and costs related to the Assets
for the month of Closing will be prorated as of the Closing Date.
ARTICLE IX
CONDITIONS PRECEDENT OF AMP
Except as may be waived in writing by AMP, the obligations of AMP
hereunder are subject to the fulfillment at or prior to the Closing Date of each
of the following conditions:
SECTION 9.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and each Owner contained herein will have been true
and correct when initially made and will be true and correct as of the Closing
Date.
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SECTION 9.2. COVENANTS. The Company and each Owner will have performed and
complied with all covenants required by this Agreement to be performed and
complied with by the Company or such Owner prior to the Closing Date.
SECTION 9.3. LEGAL OPINION. Counsel to the Company and the Owners will
have delivered to AMP their opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to AMP.
SECTION 9.4. PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency will have been threatened, orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 9.5. NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect will
have occurred, whether or not such effect shall have been caused by the
deliberate act or omission of the Company or any Owner.
SECTION 9.6. GOVERNMENT APPROVALS AND REQUIRED CONSENTS. The Company, the
Owners, and AMP will have obtained all necessary government and other
third-party approvals and consents.
SECTION 9.7. SECURITIES APPROVALS. The Registration Statement will have
become effective under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or threatened by the SEC.
At or prior to the Effective Date, AMP will have received all state securities
and "Blue Sky" permits necessary to consummate the transactions contemplated
hereby. The AMP Common Stock will have been approved for listing on The Nasdaq
Stock Market, subject only to official notification of issuance.
SECTION 9.8. CLOSING DELIVERIES. AMP will have received all documents and
agreements, duly executed and delivered in form satisfactory to AMP, referred to
in Section 11.1.
ARTICLE X
CONDITIONS PRECEDENT OF THE COMPANY AND THE OWNERS
Except as may be waived in writing by the Company and the Owners, the
obligations of the Company and the Owners hereunder are subject to fulfillment
at or prior to the Closing Date of each of the following conditions:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES. The representation and
warranties of AMP contained herein will be true and correct when initially made
and will be true and correct as of the Closing Date.
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SECTION 10.2 COVENANTS. AMP will have performed and complied in all
material respects with all covenants and conditions required by this Agreement
to be performed and complied with by it prior to the Closing Date.
SECTION 10.3 LEGAL OPINION. Counsel to AMP will have delivered to the
Company and the Owners their opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Company and the Owners.
SECTION 10.4 PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency will have been threatened, orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 10.5 GOVERNMENT APPROVALS AND REQUIRED CONSENTS. The Company, the
Owners, and AMP will have obtained all necessary government and other
third-party approvals and consents.
SECTION 10.6 SECURITIES APPROVALS. The Registration Statement will have
become effective under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or threatened by the SEC.
At or prior to the Effective Date, AMP will have received all state securities
and "Blue Sky" permits necessary to consummate the transactions contemplated
hereby. At or prior to the Effective Date, th AMP Common Stock will have been
approved for listing on The Nasdaq Stock Market, subject only to official
notification of issuance.
SECTION 10.7 CLOSING DELIVERIES. The Company will have received all
documents and agreements, duly executed and delivered in form satisfactory to
the Company, referred to in Section 11.2.
ARTICLE XI
CLOSING DELIVERIES
SECTION 11.1 DELIVERIES OF THE COMPANY AND THE OWNERS. At or prior to the
Closing Date, the Company and the Owners will deliver to AMP c/o Baker &
Xxxxxxxxx, counsel to AMP, the following, all of which will be in a form
satisfactory to AMP and will be held by Xxxxx & Xxxxxxxxx in escrow pending
Closing, pursuant to an escrow agreement in form and substance mutually
acceptable to the parties hereto:
(a) a copy of resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements and consummation of the Acquisition, certified
by the Secretary of the Company as being true and correct copies of the
originals thereof subject to no modification or amendment;
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(b) a certificate of the President of the Company and each Owner, dated
the Closing Date, as to the truth and correctness of the representations and
warranties of the Company and the Owners contained herein on and as of the
Closing Date;
(c) a certificate of the President of the Company and each Owner, dated
the Closing Date, (i) as to the performance of and compliance in all material
respects by the Company and the Owners with all covenants contained herein on
and as of the Closing Date and (ii) certifying that all conditions precedent of
the Company and the Owners to the Closing Date have been satisfied;
(d) a certificate of the Secretary of the Company certifying as to the
incumbency of the directors and officers of the Company and as to the signatures
of such directors and officers who have executed documents delivered at Closing
on behalf of the Company;
(e) a certificate, dated within five days prior to the Closing Date, of
the Secretary of State of the respective states of organization of the Company
establishing that such corporation is in existence, has paid all franchise or
similar taxes, if any, and, if applicable, otherwise is in good standing to
transact business in its state of organization;
(f) certificates, dated within five days prior to the Closing Date, of the
Secretaries of State of the states in which the Company is qualified to do
business, to the effect that such corporation is qualified to do business and,
if applicable, is in good standing as foreign corporation or partnership, as the
case may be, in each of such states;
(g) an opinion of Glass, XxXxxxxxxx, Xxxxxxxx & Xxxxxxx, LLP, counsel to
the Company and the Owners, dated as of the Closing Date, pursuant to Section
9.3;
(h) all authorizations, consents, approvals, permits and licenses
referenced in Section 3.8; (i) Intentionally Omitted
(j) an executed New Employment Agreement between AMP and each employee of
the Company listed in Schedule 6.16. in form satisfactory to AMP;
(k) an executed Registration Rights Agreement among AMP, the Owners and
the Company in substantially the form attached hereto as Exhibit 11.1(k) (the
"Registration Rights Agreement");
(l) a nonforeign affidavit, as such affidavit is referred to in Section
1445(b)(2) of the Code, of each Owner, signed under a penalty of perjury and
dated as of the Closing Date, to the effect that such Owner is a United States
citizen or a resident alien (and thus not a foreign person) and providing such
Owner's United States taxpayer identification number;
(m) an executed Xxxx of Sale conveying the Assets to AMP Subsidiary in
substantially the form attached hereto as Exhibit 11.1(m);
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(n) an assignment to AMP or AMP Subsidiary of each lease for real
property, in form and substance satisfactory to AMP (the "Lease Assignments");
and
(o) such other instrument or instruments as may be necessary or
appropriate, as AMP or its counsel will reasonably request, to carry out and
effect the purpose and intent of this Agreement.
SECTION 11.2 DELIVERIES OF AMP. At or prior to the Closing Date, AMP will
deliver to the Company and the Owners c/o Baker & Xxxxxxxxx, counsel to AMP, the
following, all of which will be in a form satisfactory to the Company and the
Owners and will be held by Xxxxx & Xxxxxxxxx in escrow pending Closing, pursuant
to an escrow agreement in form and substance mutually acceptable to the parties
hereto:
(a) a copy of the resolution of the Board of Directors of AMP authorizing
the execution, delivery and performance of this Agreement, and all related
documents and agreements, certified by AMP's Secretary as being true and correct
copies of the originals thereof subject to no modifications or amendments;
(b) a certificate of an officer of AMP dated the Closing Date as to the
truth and correctness of the representations and warranties of AMP contained
herein on and as of the Closing Date;
(c) a certificate of an officer of AMP dated the Closing Date (i) as to
the performance and compliance by AMP with all covenants contained herein on and
as of the Closing Date and (ii) certifying that all conditions precedent of AMP
to the Closing have been satisfied;
(d) a certificate of the Secretary of AMP certifying as to the incumbency
of the officers of AMP who have executed documents delivered at the Closing on
behalf of AMP;
(e) a certificate, dated within five days prior to the Closing Date, of
the Secretary of State of the respective states of incorporation of AMP and AMP
Subsidiary establishing that such corporation is in existence, has paid all
franchise or similar taxes, if any, and, if applicable, otherwise is in good
standing to transact business in its state of incorporation;
(f) certificates, dated within five days prior to the Closing Date, of the
Secretaries of State of the states in which AMP is qualified to do business, to
the effect that AMP is qualified to do business and, if applicable, is in good
standing as a foreign corporation in such state;
(g) an opinion of Xxxxx & Xxxxxxxxx, counsel to AMP, dated as of the
Closing Date, pursuant to Section 10.3;
(h) the executed Registration Rights Agreement;
(i) the Acquisition Consideration in accordance with Article II and Annex
I hereof;
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(j) the executed Lease Assignments; and
(k) such other instrument or instruments as may be necessary or
appropriate, as the Company, the Owners or their counsel may reasonably request,
to carry out and effect the purpose and intent of this Agreement.
(l) an executed new Employment Agreement between AMP and each employee of
the Company listed in Schedule 6.16 in form satisfactory to the Company.
ARTICLE XII
POST CLOSING MATTERS
SECTION 12.1 FURTHER INSTRUMENTS OF TRANSFER. Following the Closing, at
the request of AMP, the Owners and the Company will deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to carry out the purpose and intent of this Agreement.
ARTICLE XIII
REMEDIES
SECTION 13.1 INDEMNIFICATION BY THE OWNERS AND THE COMPANY. Subject to the
terms and conditions of this Article XIII, the Owners and the Company, jointly
and severally, agree to indemnify, defend and hold AMP, AMP Subsidiary and their
respective directors, officers, members, managers, employees, agents, attorneys
and affiliates harmless from and against all losses, claims, obligations,
demands, assessments, penalties, liabilities, costs, damages, reasonable
attorneys' fees and expenses (collectively "Damages"), as incurred, asserted
against or incurred by such indemnities arising out of or resulting from:
(a) a breach of any representation, warranty or covenant of the Company or
any Owner contained herein or in any schedule or certificate delivered
hereunder;
(b) any violation (or alleged violation) by the Owners, the Company and/or
any of their past or present directors, officers, members, partners, managers,
shareholders, employees, agents, consultants and Affiliates of state or federal
laws governing healthcare fraud and abuse (including, but not limited to, fraud
and abuse in the Medicare and Medicaid programs) occurring on or before the
Closing Date, or any overpayment or obligation (or alleged overpayment or
obligation) arising out of or resultin from claims submitted to any third party
payor (including the Medicare and Medicaid programs) on or before the Closing
Date; or
(c) any liability under the Securities Act, the Exchange Act or any other
federal or state "blue sky" or securities law or regulation, at common law or
otherwise, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact relating to any Owner or the
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Company (including its subsidiaries) and provided to AMP or its counsel by the
Company or the Owners specifically for inclusion in any preliminary prospectus,
the Registration Statement or any prospectus forming a part thereof, or any
amendment thereof or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact relating to any
Owner or the Company (including its subsidiaries) required to be stated therein
or necessary to make the statements therein not misleading and not provided to
AMP or its counsel by the Company or any Owner.
(d) any liability, obligation or Claims arising from events occurring
prior to the Closing and relating to the Assets.
SECTION 13.2 INDEMNIFICATION BY AMP. Subject to the terms and conditions
of this Article XIII, AMP hereby agrees to indemnify, defend and hold the Owners
and the Company and their respective agents, attorneys and Affiliates harmless
from and against all Damages, as incurred, asserted against or incurred by such
indemnities arising out of or resulting from:
(a) a breach by AMP of any representation, warranty or covenant of AMP
contained herein or in any schedule or certificate delivered hereunder; or
(b) any liability under the Securities Act, the Exchange Act or any other
federal or state "blue sky" or securities law or regulation, at common law or
otherwise, or arising out of or based upon any untrue statement or alleged
untrue statement of a material fact relating to AMP or its subsidiaries
contained in any preliminary prospectus, the Registration Statement or any
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact relating to AMP (including its subsidiaries)
required to be stated therein or necessary to make the statements therein not
misleading.
SECTION 13.3 INDEMNIFICATION PROCEDURES. All claims for indemnification
under this Agreement will be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an "Indemnified
Party") shall promptly (and, in any event, at least 10 days prior to the due
date for any responsive pleadings, filings or other documents) (i) notify the
party from whom indemnification is sought (the "Indemnifying Party") of any
third-party claim or claims asserted against the Indemnified Party ("Third Party
Claim") that could give rise to a right of indemnification under this Agreement
and (ii) transmit to the Indemnifying Party a written notice ("Claim Notice")
describing in reasonable detail the nature of the Third Party Claim, a copy of
all papers served with respect to such claim (if any), an estimate of the amount
of damages attributable to the Third Party Claim and the basis of the
Indemnified Party's request for indemnification under this Agreement. The
failure to promptly deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related
Third Party Claim.
Within 30 days after receipt of any Claim Notice (the "Election Period"),
the Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability
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to the Indemnified Party under this Article XIII with respect to such Third
Party Claim or (ii) whether the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against such
Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the Indemnifying Party shall have the right to defend,
at its sole cost and expense, such Third Party Claim by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the
Indemnifying Party to a final conclusion or settled, with the consent of the
Indemnified Party. The Indemnifying Party is hereby authorized, at the sole cost
and expense of the Indemnifying Party (but only if the Indemnified Party is
entitled to indemnification hereunder), to file, during the Election Period, any
motion, answer or other pleadings that the Indemnifying Party shall deem
necessary or appropriate to protect its interests or those of the Indemnified
Party and not prejudicial to the Indemnified Party. If requested by the
Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense
of the Indemnifying Party, to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, the making of any related
counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 15.3(b) and shall bear its
own costs and expenses with respect to such participation; provided, however,
that if the named parties to any such action (including any impleaded parties)
include both the Indemnifying Party and the Indemnifying Party and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and, upon written
notification thereof, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the Indemnified Party; provided further,
that the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by the
Indemnified Party.
(c) If the Indemnifying Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to Section 13.3(b), or if the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 13.3(b) but fails diligently and
promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party is entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings, provided, however, that the Indemnified Party
may not enter into, without the Indemnifying Party's consent, which shall not be
unreasonably withheld, any compromise or settlement of such Third Party Claim.
The Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 13.3(c),
and the Indemnifying Party shall
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bear its own costs and expenses with respect to such participation; provided,
however, that if the named parties to any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party, and the
Indemnifying Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnified Party, then the Indemnified Party may employ
separate counsel and, upon written notification thereof, the Indemnified Party
shall not have the right to assume the defense of such action on behalf of the
Indemnifying Party.
(d) If any Indemnified Party should have a claim against any Indemnifying
Party hereunder that does not involve a Third Party Claim, the Indemnified Party
shall transmit to the Indemnifying Party a written notice (the "Indemnity
Notice") describing in reasonable detail the nature of the claim, an estimate of
the amount of damages attributable to such claim and the basis of the
Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within 60 days from its
receipt of the Indemnity Notice that the Indemnifying Party disputes such claim,
the claim specified by the Indemnified Party in the Indemnity Notice shall be
deemed a liability of the Indemnifying Party hereunder. If the Indemnifying
Party has timely disputed such claim, as provided above, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction if the
parties do not reach a settlement of such dispute.
(e) Payments of all amounts owing by an Indemnifying Party pursuant to
this Article XIII relating to a Third Party Claim shall be made within 30 days
after the latest of (i) the settlement of such Third Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of such Third Party
Claim or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement. Payments of all amounts owing by an Indemnifying Party pursuant to
Section 13.3(d) shall be made within 30 days after the later of (i) the
expiration of the 60-day Indemnity Notice period or (ii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's liability
to the Indemnified Party under this Agreement.
SECTION 13.4 REMEDIES NOT EXCLUSIVE. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against the other, either at law or in equity.
SECTION 13.5 COSTS, EXPENSES AND LEGAL FEES. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (a) enforcing
any of the terms of this Agreement or (b) proving that another party breached
any of the terms of this Agreement.
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ARTICLE XIV
TERMINATION
SECTION 14.1 TERMINATION. This Agreement may be terminated:
(a) at any time prior to the Effective Date by mutual agreement of all
parties;
(b) at any time prior to the Effective Date by AMP, if any material
representation or warranty of the Company or any Owner contained in this
Agreement or in any certificate or other document executed and delivered by the
Company or any Owner pursuant to this Agreement is or becomes untrue or breached
in any material respect or if the Company or any Owner fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within seven days after receipt of written notice thereof;
(c) at any time prior to the Effective Date by the Company, if any
representation or warranty of AMP contained in this Agreement or in any
certificate or other document executed and delivered by AMP pursuant to this
Agreement is or becomes untrue in any material respect or if AMP fails to comply
in any material respect with any covenant or agreement contained herein, and any
such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within seven days after receipt of writte notice thereof;
(d) at any time prior to the Effective Date by AMP, if, as a result of its
due diligence, AMP deems termination to be advisable; or
(e) by AMP or the Company if the Acquisition has not been consummated by
January 31, 1998.
SECTION 14.2 EFFECT OF TERMINATION. In the event this Agreement is
terminated pursuant to Sections 14.1(b) or 14.1(c) above, AMP, the Company and
the Owners shall each be entitled to pursue, exercise and enforce any and all
remedies, rights, powers and privileges available at law or in equity. In the
event of a termination of this Agreement under the provisions of this Article, a
party not then in material breach of this Agreement shall stand fully released
and discharged of any and all obligations under this Agreement, except as noted
below. In the event this Agreement is terminated by AMP as a result of its due
diligence for reason not related to (a), (b) or (e), then AMP shall as
liquidated damages reimburse the Company and Owners for their costs incurred in
connection with legal and accounting fees for this transaction up to a maximum
of $50,000.00.
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ARTICLE XV
NONCOMPETITION
SECTION 15.1 PROHIBITED ACTIVITIES. In order to protect AMP against the
unauthorized use or the disclosure of any of its Confidential Information
presently known or hereinafter obtained by the Owners, and other good and
valuable consideration, each Owner hereby agrees that, subject to adjustment
pursuant to Section 15.5, and except for the activities discribed in Schedule
15.1, for a period of five years following the Closing Date, neither the Owner
nor any of his or her Affiliates, shall knowingly directly or indirectly, for
himself or herself or on behalf of any other corporation, person, firm,
partnership, association or any other entity (whether as an individual, agent,
servant, employee, employer, officer, director, shareholder, investor,
principal, consultant or in any other capacity):
(a) establish, operate or provide services at or for any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Group Practice or engage or
participate in or finance any business which engages in competition with the
business being conducted by AMP (unless the Owner participated in such business
(other than the practice of medicine) within the geographical area designated
below prior to the Closing Date or the date the Owner became aware of planning
for such business operations by AMP), anywhere within twenty (20) miles of any
location of the Group Practice designated by AMP or at which Owner has worked in
the prior year; or
(b) induce or attempt to influence any employee of the Group Practice or
AMP to terminate his or her employment or hire any such employee, whether or not
so induced or influenced.
SECTION 15.2 DAMAGES. Because of the difficulty of measuring economic
losses to AMP as a result of the breach of the foregoing covenant and because of
the immediate and irreparable damage that would be caused to AMP for which it
would have no other adequate remedy, each Owner agrees that, in the event of a
breach by him or her of the foregoing covenant, the covenant may be enforced by
AMP by injunctions and restraining orders.
SECTION 15.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Article XV impose a reasonable restraint on the
Owners in light of the activities and businesses of the Company on the date of
the execution of this Agreement and the future plans of the Group Practice.
SECTION 15.4 SEVERABILITY; REFORMATION. The covenants in this Article XV
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
SECTION 15.5 TERM. It is specifically agreed that the period of five years
stated above shall
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be computed by excluding from such computation any time during which an Owner is
in violation of any provision of this Article XV. The covenants contained in
this Article XV shall have no effect if the transactions contemplated by this
Agreement are not consummated for any reason (including termination pursuant to
Section 14.1(b)), but otherwise shall not be affected by any breach of any other
provision hereof by any party hereto.
SECTION 15.6 OWNER ACTIVINotwithstanding the above if this Agreement is
terminated for any reason, the Employees listed on Schedule 6.16 shall not be
prohibited from being employed as or acting as a Certified Nurse Anesthetist,
but shall not otherwise participate during the term as managers of other
Certified Anesthetist.
ARTICLE XVI
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 16.1 NONDISCLOSURE. The Owners and the Company recognize and
acknowledge that they had in the past, currently have and in the future may
possibly have access to certain Confidential Information of AMP that is
valuable, special and a unique asset of AMP. The Owners and the Company agree
that they will not disclose such Confidential Information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of AMP and (b) to counsel and other
advisers to AMP, respectively, provided that such advisers (other than counsel)
agree to the confidentiality provisions of this Section, unless (i) such
information becomes available to or known by the public generally through no
fault of any Owner or the Company, (ii) disclosure is required by law or the
order of any governmental authority, provided, that, prior to disclosing any
information pursuant to this clause, (iii), each Owner and the Company, as the
case may be, shall, if possible, give prior written notice thereof to AMP and
provide AMP with the opportunity to contest such disclosure, (iv) the disclosing
party reasonably believes that such disclosure is required in connection with
the defense of a lawsuit against the disclosing party or (iv) the disclosing
party is the sole and exclusive owner of such Confidential Information as a
result of the Acquisition. In the event of a breach or threatened breach by any
Owner or the Company of the provisions of this Section, AMP shall be entitled to
an injunction restraining the Owner or the Company from disclosing, in whole or
in part, such Confidential Information. Nothing herein shall be construed as
prohibiting AMP from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
SECTION 16.2 DAMAGES. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants and because of the
immediate and irreparable damage that would be caused for which no other
adequate remedy would exist, the Owners and the Company agree that, in the event
of a breach by any of them of the foregoing covenant, the covenant may be
enforced against them by injunctions or restraining orders.
SECTION 16.3 SURVIVAL. The obligations of the Owners and the Company under
this Article XVI shall survive the termination of this Agreement.
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SECTION 16.4 AMP NONDISCLOSURE.Section 16.1 hereof shall apply with equal
force and effect to AMP, its agents, officers, directors, employees and
Affiliates with respect to the Confidential Information of Company and Owners.
ARTICLE XVII
TRANSFER RESTRICTIONS
SECTION 17.1 TRANSFER RESTRICTIONS. For a period of one year following the
Closing, unless the minimum holding period under Rule 144 promulgated under the
Securities Act is shortened, in which case, for such shortened period, except
pursuant to the Registration Rights Agreement, no Owner shall voluntarily (a)
sell, assign, exchange, transfer, encumber, pledge, distribute, appoint, or
otherwise dispose of (i) any shares of AMP Common Stock received by the Company
in the Acquisition, or (ii) any interest (including, without limitation, an
option to buy or sell) in any such shares of AMP Common Stock, in whole or in
part, and no such attempted transfer shall be treated as effective for any
purpose or (b) engage in any transaction, whether or not with respect to any
shares of AMP Common Stock or any interest therein, the intent or effect of
which is to reduce the risk of owning shares of AMP Common Stock. The
certificates evidencing the AMP Common Stock delivered to the Company pursuant
to this Agreement will bear a legend substantially in the form set forth below
and containing such other information as AMP may deem necessary or appropriate:
Except pursuant to the terms of the Registration Rights Agreement
and the Business Purchase Agreement among the issuer, the holder of
this certificate and the other parties thereto, the shares
represented by this certificate may not be voluntarily sold,
assigned, exchanged, transferred, encumbered, pledged, distributed,
appointed or otherwise disposed of, and the issuer shall not be
required to give effect to any attempted voluntary sale, assignment,
exchange, transfer, encumbrance, pledge, distribution, appointment
or other disposition prior to _______________ [date that is one year
after the Closing]. Upon the written request of the holder of this
certificate, the issuer agrees to remove this restrictive legend
(and any stop order placed with the transfer agent) after the date
specified above.
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ARTICLE XVIII
FEDERAL SECURITIES LAW RESTRICTIONS ON AMP COMMON STOCK
SECTION 18.1 INVESTMENT REPRESENTATION. The Company acknowledges that the
shares of AMP Common Stock to be delivered to the Company pursuant to this
Agreement have not been and will not be registered under the Securities Act and
may not be resold without compliance with the Securities Act. The AMP Common
Stock to be acquired by the Company pursuant to this Agreement is being acquired
solely for its own account, for investment purposes only and with no present
intention of distributing, selling or otherwise disposing of it in connection
with a distribution; provided, however, that the Company intends and shall be
permitted to distribute the AMP Stock to the Owners.
SECTION 18.2 COMPLIANCE WITH LAW. The Company covenants, warrants and
represents that none of the shares of AMP Common Stock issued to the Company
will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act and the rules and regulations of the SEC and applicable
state securities laws and regulations. All certificates evidencing shares of AMP
Common Stock shall bear the following legend, in addition to the legends under
Article X7:
The shares represented hereby have not been registered under the
Securities Act of 1933 (the "Act") and may only be sold or otherwise
transferred if the holder hereof complies with the Act and
applicable state securities law.
In addition, certificates evidencing shares of AMP Common Stock shall bear any
legend required by the securities or blue sky laws of the state of the Company's
formation or incorporation.
SECTION 18.3 ECONOMIC RISK; SOPHISTICATION. The Company is able to bear
the economic risk of an investment in AMP Common Stock acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment and therefore has the
capacity to protect his, her or its own interests in connection with the
acquisition of the AMP Common Stock The Company or its purchaser representatives
have had an adequate opportunity to ask questions and receive answers from the
officers of AMP concerning any and all matters relating to the transactions
described in the Registration Statement, including, without limitation, the
background and experience of the officers and directors of AMP, the plans for
the operations of the business of AMP and any plans for additional acquisitions
and the like. The Company or its purchaser representatives have asked any and
all questions in the nature described in the preceding sentence and all
questions have been answered to his, her or their satisfaction.
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ARTICLE XIX
COVENANT OF CONTINUED USE
INTENTIONALLY OMITTED
ARTICLE XX
GENERAL
SECTION 20.1 AMENDMENT; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of any terms and conditions hereof must be in writing signed
by the parties hereto. The waiver of any of the terms and conditions of this
Agreement shall not be construed as a waiver of any other terms and conditions
hereof.
SECTION 20.2 ASSIGNMENT. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by AMP to a
wholly owned subsidiary of AMP; provided, that any such assignment shall not
relieve AMP of its obligations hereunder.
SECTION 20.3 PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and permitted assigns of the parties hereto. Neither
this Agreement nor any other agreement contemplated hereby shall be deemed to
confer upon any person not a party hereto or thereto, except AMP Subsidiary, any
rights or remedies hereunder or thereunder.
SECTION 20.4 ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof.
SECTION 20.5 SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effecting
during the term hereof, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
SECTION 20.6 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
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representations, warranties and covenants contained herein shall survive the
Closing. All statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of the Company, any Owner or AMP pursuant
to this Agreement shall be deemed to have been representations and warranties by
such Company, such Owner or AMP, as the case may be. All such representations,
warranties and covenants shall survive unti the expiration of any applicable
limitations period.
SECTION 20.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF
LAWS) OF THE STATE OF TEXAS.
SECTION 20.8 CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
SECTION 20.9 GENDER AND NUMBER. When the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
SECTION 20.10. REFERENCE TO AGREEMENT. Use of the words "herein,"
"hereof," "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
SECTION 20.11. PUBLICITY AND DISCLOSURES. Each party shall keep this
Agreement and its terms confidential, and shall make no press release or public
disclosure, either written or oral, regarding the transactions contemplated by
this Agreement without the prior knowledge and consent of the other parties
hereto; provided that the foregoing shall not prohibit any disclosure (a) by
press release, filing or otherwise that AMP has determined in its good faith
judgment to be required by federal securitie laws or the rules of the National
Association of Securities Dealers, (b) to attorneys, accountants, investment
bankers or other agents of the parties assisting the parties in connection with
the transactions contemplated by this Agreement and (c) by AMP in connection
with the conduct of its Initial Public Offering and conducting an examination of
the operations and Assets of the Company. In the event that the transactions
contemplated hereby are not consummated for any reason whatsoever, the parties
hereto agree not to disclose or use any Confidential Information they may have
concerning the affairs of the other parties, except for information that is
required by law to be disclosed; provided, that should the transactions
contemplated hereby not be consummated, nothing contained in this Section shall
be construed to prohibit the parties hereto from operating businesses in
competition with each other.
SECTION 20.12. NOTICE. Whenever this Agreement requires any notice,
request or demand from one party to another, the notice, request or demand must
be in writing to be effective and shall be deemed to be delivered and received
when actually received by the party to whom notice is sent, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
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If to AMP: ___________________________
___________________________
___________________________
with a copy to: Xxxxx & Xxxxxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xx. Xxxx Xxxx
If to the Company
or any Owner: ___________________________
___________________________
___________________________
with a copy to: ___________________________
___________________________
___________________________
SECTION 20.13. CHOICE OF FORUM. The parties hereto agree that should any
suit, action or proceeding arising out of this Agreement be instituted by any
party hereto (other than a suit, action or proceeding to enforce or realize upon
any final court judgment arising out of this Agreement), such suit, action or
proceeding shall be instituted only in a state or federal court in ________
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in _______ County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside ________ County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside ________ County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant to
institute such proceeding only in a state or federal court in ________ County,
Texas, including without limitation any additional expenses incurred as a result
of litigating in another jurisdiction, such as reasonable fees and expenses of
local counsel and travel and lodging expenses for parties, witnesses, experts
and support personnel.
SECTION 20.14. NO WAIVER; REMEDIES. No party hereto shall by any act
(except by written instrument pursuant to Section 20.1 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in this
Agreement or otherwise conferred upon or reserved to any party shall be
considered exclusive of any other remedy available to any party, but the same
shall be distinct, separate and cumulative and may be exercised from time to
time as often as occasion may arise or as may be deemed expedient.
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SECTION 20.15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
SECTION 20.16. DEFINED TERMS. Terms used in Annex I and the Schedules
attached hereto with their initial letter capitalized and not otherwise defined
therein shall have the meanings assigned to such terms in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first written above.
AMERICAN MEDICAL PROVIDERS, INC.:
By: ______________________________
Name: ____________________________
Title: ___________________________
THE COMPANY:
PYRAMID ANESTHESIOLOGY GROUP, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
THE OWNERS:
By: ______________________________
Xxxxx Xxxxxx
By: ______________________________
Xxxxx XxXxxxxxx
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ANNEX I
ACQUISITION CONSIDERATION
The aggregate Acquisition Consideration estimated to be received by the Company
is:
NUMBER OF VALUE OF
AMP TOTAL
CASH SHARES CONSIDERATION*(1)
---- ------ ---------------
$6,000,000.00 $500,000.00 $6,500,000.00
* The number of AMP shares delivered at Closing will be the Cash Value of
AMP shares divided by the Initial Public Offering Price.
(1) The formula used to determine the Acquisition consideration is as follows:
X-4 multiplied by 5, where X equals the agreed to operating income for the
most recent twelve months and Y equals X multiplied by 5, with the result
and reduced by the value of the Assets on the Company's books and records
and such amount is divided by 25.
A-1
