MERGER AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
XXXXXXXXX X. XXXXXX, M.D., P.A.,
AND
XXXXXXXXX X. XXXXXX, M.D.
July 3, 1997
TABLE OF CONTENTS
Page
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1. Definitions...................................................................................................1
2. Basic Transaction.............................................................................................4
(a) The Merger..........................................................................................4
(b) The Closing.........................................................................................4
(c) Actions at the Closing..............................................................................4
(d) Effect of Merger....................................................................................4
(e) No Fractional Shares................................................................................5
3. Representations and Warranties of AIG and AIG Stockholder.....................................................5
(a) Organization, Qualification, and Corporate Power....................................................5
(b) AIG Stockholder Interests and Capitalization........................................................5
(c) Authorization of Transaction........................................................................5
(d) Noncontravention....................................................................................5
(e) Subsidiaries and Investments........................................................................6
(f) Financial Statement.................................................................................6
(g) Undisclosed Liabilities.............................................................................6
(h) Brokers' Fees.......................................................................................6
(i) Material Contracts..................................................................................6
(j) Insurance; Malpractice..............................................................................7
(k) No Changes Prior to Closing Date....................................................................7
(l) Title; Condition....................................................................................8
(m) Litigation..........................................................................................8
(n) Permits and Licenses................................................................................8
(o) Tax Matters.........................................................................................8
(p) Employee Benefit Plans..............................................................................8
(q) Third-Party Relations...............................................................................9
(r) Compliance with Applicable Laws.....................................................................9
(s) Employee Compensation..............................................................................10
(t) Environmental Matters..............................................................................10
(u) Healthcare Compliance..............................................................................10
(v) Fraud and Abuse....................................................................................11
(w) Practice Compliance................................................................................11
(x) Rates and Reimbursement Policies...................................................................11
(y) Accounts Receivable................................................................................11
(z) Guaranties.........................................................................................11
(aa) Powers of Attorney................................................................................12
(bb) Tangible Assets...................................................................................12
(cc) SCN Share Ownership; Investment Intent............................................................12
(dd) Full Disclosure...................................................................................13
4. Representations and Warranties of SCN........................................................................13
(a) Organization.......................................................................................13
(b) Capitalization.....................................................................................13
(c) Authorization of Transaction.......................................................................13
(d) Noncontravention...................................................................................13
(e) Brokers' Fees......................................................................................14
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5. Covenants....................................................................................................14
(a) General............................................................................................14
(b) Notices and Consents...............................................................................14
(c) Regulatory Matters and Approvals...................................................................14
(d) Operation of Business..............................................................................14
(e) Further Acts and Assurances........................................................................15
(f) Full Access........................................................................................15
(g) Notice of Developments.............................................................................15
(h) Exclusivity........................................................................................15
(i) Collection of Accounts Receivable..................................................................15
(j) Payment of Expenses................................................................................15
(k) Corporate Authorization............................................................................16
(l) Malpractice Insurance..............................................................................16
(m) Distribution of Excluded Assets....................................................................16
(n) Satisfaction of Indebtedness.......................................................................16
(o) Conversion into Business Corporation...............................................................16
(p) Employee Benefit Plans.............................................................................16
(q) Securities Laws Compliance.........................................................................16
6. Conditions to Obligation to Close............................................................................18
(a) Conditions to Obligation of SCN....................................................................18
(b) Conditions to Obligation of AIG....................................................................19
7. Items to be Delivered at or Prior to Closing.................................................................19
(a) By the AIG Stockholder or AIG......................................................................19
(b) By SCN.............................................................................................20
8. Termination..................................................................................................20
(a) Termination of Agreement...........................................................................20
(b) Effect of Termination..............................................................................21
9. Indemnification..............................................................................................21
(a) Indemnification by the AIG Stockholder.............................................................21
(b) Notice to the AIG Stockholder; Opportunity to Defend...............................................21
(c) General Indemnification by SCN.....................................................................21
(d) Notice to SCN; Opportunity to Defend...............................................................21
(e) Right of Setoff....................................................................................21
10. Miscellaneous...............................................................................................22
(a) Survival...........................................................................................22
(b) No Third-Party Beneficiaries.......................................................................22
(c) Entire Agreement...................................................................................22
(d) Succession and Assignment..........................................................................22
(e) Counterparts.......................................................................................22
(f) Headings...........................................................................................22
(g) Notices............................................................................................22
(h) Governing Law; Venue...............................................................................23
PH02/184266.1
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(i) Amendments and Waivers.............................................................................23
(j) Severability.......................................................................................23
(k) Expenses...........................................................................................23
(l) Construction.......................................................................................24
(n) Incorporation of Exhibits and Schedules............................................................24
EXHIBIT 1 AGREEMENT AND PLAN OF MERGER.................................................Exhibit 1-1
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EXHIBIT 2(a)(1) CERTIFICATE OF MERGER..................................................Exhibit 2(a)(1)-1
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EXHIBIT 2(a)(2) TEXAS ARTICLES OF MERGER...............................................Exhibit 2(a)(2)-1
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EXHIBIT 7(a)(iv) SERVICE AGREEMENT.............................................................7(a)(iv)-1
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EXHIBIT 7(a)(vi) AIG OPINION LETTER....................................................Exhibit 7(a)(vi)-1
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EXHIBIT 7(b)(iii) SCN OPINION LETTER...................................................Exhibit 7(b)(iii)-1
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MERGER AGREEMENT
----------------
THIS MERGER AGREEMENT (this "Agreement") is entered into this the 3rd
day of July, 1997, by and among SPECIALTY CARE NETWORK, INC., a Delaware
corporation ("SCN"), XXXXXXXXX X. XXXXXX, M.D., P.A., a Texas professional
association ("AIG"), and XXXXXXXXX X. XXXXXX, M.D. (the "AIG Stockholder"). SCN,
AIG and the AIG Stockholder are referred to collectively herein as the
"Parties."
W I T N E S S E T H:
--------------------
WHEREAS, SCN and AIG have determined that it is desirable and in the
best interests of their respective corporations and stockholders that AIG merge
with and into SCN, with SCN as the surviving corporation, on the terms and
subject to the conditions set forth in this Agreement and the corresponding
Agreement and Plan of Merger in the form attached hereto as Exhibit 1 (the
"Agreement and Plan of Merger");
WHEREAS, SCN and AIG intend that the transaction contemplated by this
Agreement shall qualify as a tax-free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code") and intend that
this Agreement along with the Agreement and Plan of Merger shall constitute a
"plan of reorganization" within the meaning of Section 368 of the Code;
WHEREAS, the Parties do not intend for this Agreement to be a binding
obligation of any Party unless and until the provisions of Section 6 are
satisfied or waived by the appropriate party; and
WHEREAS, the Parties desire to set forth in writing the terms and
conditions under which said transaction will be consummated.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Parties, and in accordance with the applicable
provisions of the Delaware General Corporation Law and the Professional
Association Act, the parties hereby agree as follows:
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preface above.
"Agreement and Plan of Merger" has the meaning set forth in the first
recital above.
"Applicable Laws" has the meaning set forth in Section 3(r).
"Texas Articles of Merger" has the meaning set forth in Section 2(a)
below.
"Texas Professional Association Act" means the Professional Association
Act of the State of Texas, as amended.
"Closing Date" has the meaning set forth in Section 2(b) below.
"Closing" has the meaning set forth in Section 2(b) below.
"Code" has the meaning set forth in the recitals above.
"Conversion Ratio" has the meaning set forth in Section 2(d)(v) below.
"Delaware Certificate of Merger" shall have the meaning set forth in
Section 2(a) below.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"AIG" has the meaning set forth in the preface above.
"AIG Share" means any share of the issued and outstanding common stock
of AIG at the date of this Agreement.
"AIG Stockholder" has the meaning set forth in the preface above.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Employee Benefit Plans" has the meaning set forth in Section 3(p)(i)
below.
"Environmental Laws" means all federal, state, and local laws, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder and other governmental requirements relating to pollution,
control of chemicals, storage and handling of petroleum products, management of
waste (including biohazardous or biomedical waste), discharges of materials into
the environment, health, safety, natural resources, and the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" has the meaning set forth in Section 3(p)(i) below.
"Excluded Assets" has the meaning set forth in Section 5(m) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Materials" has the meaning set forth in Section 3(t) below.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable investigation.
"Medical Waste" includes, but is not limited to, pathological waste,
blood, sharps, wastes from surgery or autopsy, dialysis waste, including
contaminated disposable equipment and supplies, cultures and stock of infectious
agents and associated biological agents, contaminated animals, isolation wastes,
contaminated equipment, laboratory waste, various other biological waste and
discarded materials contaminated with or exposed to blood, excretion or
secretion from human beings or animals, and any substance, pollutant, material
or contaminant listed or regulated under the Medical Waste Tracking Act of 1988,
42 U.S.C. xx.xx. 6992, et seq.
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"Medical Waste Law" means the Medical Waste Tracking Act of 1988, as
amended, the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33
U.S.C.A. xx.xx. 2501, et seq., the Marine Protection, Research and Sanctuaries
Act of 1972, 33 U.S.C.A. xx.xx. 1401, et seq., the Occupational Safety and
Health Act, 29 U.S.C.A. xx.xx. 651, et seq., the United States Department of
Health and Human Services, National Institute for Occupational Self-Safety and
Health Infectious Waste Disposal Guidelines, Publication No. 88-119, all
regulations and orders issued pursuant to any of the foregoing, and any other
federal, state, regional, county, municipal or other local laws, regulations and
ordinances insofar as they purport to regulate Medical Waste or impose
requirements relating to Medical Waste.
"Merger" has the meaning set forth in Section 2(a) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Parties" has the meaning set forth in the preface above.
"PBGC" has the meaning set forth in Section 3(p)(ii) below.
"PCBs" has the meaning set forth in Section 3(t) below.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Practice Assets" has the meaning set forth in Section 3(l) below.
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"SCN" has the meaning set forth in the preface above.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Service Agreement" shall mean that certain Service Agreement dated as
of the Closing Date by and among SCN, Associated Orthopaedics & Sports Medicine,
P.A., Xxxx X. Small, M.D., and the AIG Stockholder to be executed and delivered
at the Closing.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section
2(a) below.
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2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, AIG will merge with and into SCN (the "Merger") at the Effective
Time. SCN shall enter into the Agreement and Plan of Merger upon adoption of the
Agreement and Plan of Merger by the Board of Directors of SCN and the
satisfaction or waiver of the conditions precedent to SCN's obligations set
forth in this Agreement. AIG shall enter into the Agreement and Plan of Merger
upon adoption of the Agreement and Plan of Merger by the Board of Directors of
AIG and the AIG Stockholder and the satisfaction or waiver of the conditions
precedent to AIG's obligation set forth in this Agreement. Upon all other
conditions herein being satisfied or waived in accordance with the terms of this
Agreement, a Certificate of Merger in substantially the form attached hereto as
Exhibit 2(a)(1) (the "Delaware Certificate of Merger") shall be executed and
filed with the Secretary of State of the State of Delaware and Secretary of
State of the State of Texas in substantially the form attached hereto as Exhibit
2(a)(2) (the "Texas Articles of Merger")shall be executed and filed with the
Secretary of State of the State of Texas , together with all certificates or
documents as may be required to be filed under the laws of the State of Delaware
and the State of Texas to effect the Merger. Thereafter, the separate corporate
existence of AIG shall cease and AIG shall be merged with and into SCN (the
"Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of AIG, 0000 Xxxx
Xxxxx Xxxxxxx, Xxxxx, Xxxxx 00000 commencing at 9:00 A.M. local time on the
second business day following the day on which the last of the conditions set
forth in Section 6 have been fulfilled or waived, or such other date or place as
the Parties may mutually determine (the "Closing Date"). Time is of the essence
for this Agreement.
(c) Actions at the Closing. At the Closing, (i) AIG will deliver to SCN
the various certificates, instruments, and documents referred to in Section 7(a)
below, (ii) SCN will deliver to AIG the various certificates, instruments, and
documents referred to in Section 7(b) below, (iii) SCN and AIG will file with
the Secretary of State of the State of Delaware the Delaware Certificate of
Merger, and (iv) SCN and AIG will file with the Secretary of State of the State
of Texas the Texas Articles of Merger.
(d) Effect of Merger.
(i) General. The Merger shall become effective at the time
(the "Effective Time") SCN and AIG file the Delaware Certificate of
Merger with the Secretary of State of the State of Delaware and file
the Texas Articles of Merger with the Secretary of State of the State
of Texas. The Merger shall have the effect set forth in the Delaware
General Corporation Law and the Texas Professional Association Act. The
Surviving Corporation may, at any time after the Effective Time, take
any action (including executing and delivering any document) in the
name and on behalf of either SCN or AIG in order to carry out and
effectuate the transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of SCN in effect at and as of the Effective Time will
remain the Certificate of Incorporation of the Surviving Corporation
without any modification or amendment as a result of the Merger.
(iii) Bylaws. The Bylaws of SCN in effect at and as of the
Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment as a result of the Merger.
(iv) Directors and Officers. The directors and officers of SCN
in office at and as of the Effective Time will remain the directors and
officers of the Surviving Corporation (retaining their respective
positions and terms of office).
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(v) Conversion of AIG Shares. At and as of the Effective Time,
each of the issued and outstanding AIG Shares shall be converted into
(A) the right to receive 90.78 SCN Shares (the ratio of 90,780 SCN
Shares divided by the total number of AIG Shares outstanding is
referred to herein as the "Conversion Ratio") and (B) the right to
receive a cash payment of $403.125. The Conversion Ratio shall be
subject to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, or other change in the number of AIG
Shares or SCN Shares outstanding.
(vi) SCN Shares. Each SCN Share issued and outstanding at and
as of the Effective Time will remain issued and outstanding and shall
be unaffected by the Merger.
(e) No Fractional Shares. No fractional SCN Shares shall be issued
pursuant to the Merger. In lieu of the issuance of any such fractional SCN
Shares, cash adjustments will be paid to holders in respect of any fractional
SCN Shares that would otherwise be issuable. The amount of such adjustment shall
be the product of such fraction of a SCN Share multiplied by $11.75.
3. Representations and Warranties of AIG and AIG Stockholder. AIG and
the AIG Stockholder, jointly and severally, represent and warrant to SCN that
the statements contained in this Section 3 are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Section 3), except as set forth in the
disclosure schedule (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
(a) Organization, Qualification, and Corporate Power. AIG is a
professional association duly organized, validly existing, and in good standing
under the laws of the State of Texas. AIG is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the character or location of the properties owned or the business conducted by
AIG makes such qualification necessary. AIG has the full corporate power and
authority to carry on the business in which it is engaged and to own and use the
properties owned and used by it.
(b) AIG Stockholder Interests and Capitalization. The capital stock of
AIG is owned in the manner set forth in Section 3(b) of the Disclosure Schedule.
All of the issued and outstanding AIG Shares have been duly authorized and are
validly issued, fully paid, and nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require AIG
to issue, sell or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to AIG. As of the date of
this Agreement, the authorized capital stock of AIG consists of 1,000 shares of
AIG common stock, of which 1,000 shares were issued and outstanding.
(c) Authorization of Transaction. AIG has the full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of AIG and the AIG Stockholder, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which AIG
is subject or any provision of the charter or bylaws of AIG or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which AIG is a party or by which it is bound
or to which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). AIG is not required to give any
notice to, make any filing
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with, or obtain any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(e) Subsidiaries and Investments. AIG does not own, directly or
indirectly, any capital stock or other equity ownership or proprietary interest
in any other corporation, partnership, association, limited liability company,
trust, joint venture or other entity.
(f) Financial Statements. AIG has furnished SCN with unaudited balance
sheets dated December 31, 1995 and 1996 and May 31, 1997 and unaudited income
statements for the twelve (12) month periods ending December 31, 1996, 1995 and
1994 and the five (5) months ended May 31, 1997. Such financial statements,
including the notes thereto, except as indicated therein, were prepared on a
basis consistent with past accounting practices of AIG and fairly present the
results of operations for the periods noted therein. The balance sheets of AIG
delivered by AIG to SCN fairly present the financial condition of AIG at the
date thereof, and except as indicated therein, reflect all claims against and
all debts and liabilities of AIG, fixed or contingent, as of the date thereof.
(g) Undisclosed Liabilities. AIG has no uninsured liability (whether
known or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to become due),
including any liability for taxes, except for (i) liabilities set forth on the
face of the balance sheet dated as of December 31, 1996 and (ii) liabilities
which have arisen after December 31, 1996 in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(h) Brokers' Fees. AIG does not have any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(i) Material Contracts. Section 3(i) of the Disclosure Schedule lists
the following contracts and other material agreements to which AIG is a party:
(i) any agreement (or group of related agreements) for the
lease of real or personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services;
(iii) any agreement concerning a partnership, limited
liability company or joint venture;
(iv) any agreement (or group of related agreements) under
which AIG has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation
pursuant to which it has imposed a Security Interest in respect of any
of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of AIG's current or former directors,
officers, and employees;
(vii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000 or providing severance benefits;
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(viii) any agreement pursuant to which AIG has advanced or
loaned any amount to any of its directors, officers, and employees;
(ix) any agreement pursuant to which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of AIG;
(x) any third-party provider agreement; or
(xi) any other agreement (or group of related agreements)
outside the ordinary course of AIG's business or operations the
performance of which involves consideration in excess of $15,000.
AIG has delivered or given SCN access to a correct and complete copy of each
written agreement listed in Section 3(i) of the Disclosure Schedule (as amended
through the Closing Date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3(i) of the Disclosure
Schedule. With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B) except as set
forth in Section 3(i) of the Disclosure Schedule, no notice of this Agreement or
consent of any third party is required in order for AIG to execute and deliver
this Agreement or to consummate the transactions contemplated hereby, and, after
assignment to SCN at Closing, the agreement will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms; (C) no
party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (D) no party has
repudiated any provision of the agreement.
(j) Insurance; Malpractice. Section 3(j) of the Disclosure Schedule
contains a list and brief description of all policies or binders of fire,
liability, product liability, workers compensation, health and other forms of
insurance policies or binders currently in force insuring against risks which
will remain in full force and effect at least through the Closing Date. Section
3(j) of the Disclosure Schedule contains a description of all current
malpractice liability insurance policies of AIG Stockholder, AIG and AIG's
professional employees and all predecessor policies in effect since February 1,
1990. Neither AIG, the AIG Stockholder, nor AIG's professional employees have,
in the last seven (7) years, filed a written application for any insurance
coverage relating to AIG's business or property which has been denied by an
insurance agency or carrier. AIG, AIG's professional employees and the AIG
Stockholder have been continuously insured for professional malpractice claims
during the same period. Section 3(j) of the Disclosure Schedule also sets forth
a list of all claims for any insured loss in excess of Five Thousand Dollars
($5,000.00) per occurrence filed by or against AIG, AIG's professional employees
or the AIG Stockholder during the three (3) year period immediately preceding
the date hereof, including workers compensation, general liability,
environmental liability and professional malpractice liability claims. None of
AIG, AIG's professional employees or the AIG Stockholder is in material default
with respect to any provision contained in any such policy and none of them has
failed to give any notice or present any claim under any such policy in due and
timely fashion.
(k) No Changes Prior to Closing Date. During the period from December
31, 1996 through the date hereof, AIG has not (i) incurred any liability or
obligation of any nature (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated and
whether due or to become due), except in the Ordinary Course of Business, (ii)
written off as uncollectible any notes or accounts receivable, except write-offs
in the Ordinary Course of Business charged to applicable reserves, none of which
individually or in the aggregate is material to AIG, (iii) conducted its
business in such a manner so as to materially increase its accounts payable or
so as to materially decrease its accounts receivable, (iv) granted any increase
in the rate of wages, salaries, bonuses, or other remunerations of any employee,
except in the Ordinary Course of Business, (v) canceled or waived any claims or
rights of substantial value, (vi) made any change in any method of accounting,
(vii) otherwise conducted its business or entered into any transaction, except
in the usual and ordinary manner and in the Ordinary Course of Business, (viii)
agreed,
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whether or not in writing, to do any of the foregoing, or (ix) disposed of its
assets other than in the Ordinary Course of Business.
(l) Title; Condition. Section 3(l) of the Disclosure Schedule contains
a complete, true and correct list of those assets which are material to the
business or operations of AIG (the "Practice Assets"). AIG has good and
marketable title to all of the Practice Assets subject to no mortgage, pledge,
lien, lease, conditional sales agreement, option, right of first refusal or any
other encumbrance or charge, including taxes. AIG agrees to remove all security
interests reflected on any search of public records, if any, prior to the
Effective Time and remove any other security interest filed with respect to the
Practice Assets between the date of such search of public records and the
Effective Time.
(m) Litigation. There is no suit, action, proceeding at law or in
equity, arbitration, administrative proceeding or other proceeding or
investigation by any governmental entity pending, or threatened against, or
affecting AIG or any of the Practice Assets, or any physician or other health
care professional engaged or employed by AIG, and there is no basis for any of
the foregoing. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 3(m) of the Disclosure Schedule could result
in any material adverse change in the operations, results of operations, or
future prospects of the business assets to be operated by SCN after the Closing.
(n) Permits and Licenses. AIG and all physicians and other health care
professionals engaged or employed by AIG have all permits and licenses required
by all applicable laws; have made all regulatory filings necessary for the
conduct of AIG's business; and are not in violation of any of said permitting or
licensing requirements.
(o) Tax Matters. All federal, state and other tax returns of AIG
required by law to be filed have been timely filed, and AIG has paid or
adequately provided for all taxes (including taxes on properties, income,
franchises, licenses, sales and payrolls) which have become due pursuant to such
returns or pursuant to any assessment, except for any taxes and assessments, the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which AIG has set aside on
its books adequate reserves. There are no tax liens on any of AIG's assets
except those with respect to taxes not yet due and payable. There are no pending
tax examinations of AIG's tax returns nor has AIG received a revenue agent's
report asserting a tax deficiency in the last twelve (12) months. There are not
and will not be at the Closing Date, any claims pending or asserted against AIG
for unpaid taxes by any federal, state or other governmental body. AIG has
withheld from each payment made to employees of AIG the amount of all taxes
(including, but not limited to, federal, state and local income taxes and
Federal Insurance Contribution Act taxes) required to be withheld therefrom and
all amounts customarily withheld therefrom, and has set aside all other employee
contributions or payments customarily set aside with respect to such wages and
has paid or will pay the same to, or has deposited or will deposit such payment
with, the proper tax receiving officers or other appropriate authorities.
(p) Employee Benefit Plans.
(i) List of Plans. Section 3(p) of the Disclosure Schedule
contains an accurate and complete list of all employee benefit plans
("Employee Benefit Plans") within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not any Employee Benefit Plans are otherwise exempt from the
provisions of ERISA, established, maintained or contributed to by AIG
(including all employers (whether or not incorporated) which by reason
of common control are treated together with AIG and/or the AIG
Stockholder as a single employer within the meaning of Section 414 of
the Code) since September 2, 1974.
(ii) Status of Plans. AIG has never maintained and does not
now maintain or contribute to any Employee Benefit Plan subject to
ERISA which is not in substantial compliance with ERISA, or which has
incurred any accumulated funding deficiency within the meaning of
Section 412 or 418B of the Code, or which has applied for or obtained a
waiver from the Internal Revenue Service of any minimum funding
requirement under Section 412 of the Code or which is subject to Title
IV of
- 8 -
ERISA. AIG has not incurred any liability to the Pension Benefit
Guaranty Corporation ("PBGC") in connection with any Employee Benefit
Plan covering any employees of AIG or ceased operations at any facility
or withdrawn from any such Plan in a manner which could subject it to
liability under Section 4062(f), 4063 or 4064 of ERISA, and knows of no
facts or circumstances which might give rise to any liability of AIG to
the PBGC under Title IV of ERISA which could reasonably be anticipated
to result in any claims being made against AIG by the PBGC. AIG has not
incurred any withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of Sections 4201 and
4202 of ERISA, to any Employee Benefit Plan which is a Multiemployer
Plan (as defined in Section 4001 of ERISA), and no event has occurred,
and there exists no condition or set of circumstances, which represent
a material risk of the occurrence of any withdrawal from or the
partition, termination, reorganization or insolvency of any
Multiemployer Plan which would result in any liability of AIG.
(iii) Contributions. Full payment has been made of all amounts
which AIG is required, under applicable law or under any Employee
Benefit Plan or any agreement relating to any Employee Benefit Plan to
which AIG is a party, to have paid as contributions thereto as of the
last day of the most recent plan year of such Employee Benefit Plan
ended prior to the date hereof. AIG has made adequate provision for
reserves to meet contributions that have not been made because they are
not yet due under the terms of any Employee Benefit Plan or related
agreements. Benefits under all Employee Benefit Plans are as
represented and have not been increased subsequent to the date as of
which documents have been provided.
(iv) Tax Qualification. Each Employee Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined to be
so qualified by the Internal Revenue Service and nothing has occurred
since the date of the last such determination which resulted or is
likely to result in the revocation of such determination.
(v) Transactions. AIG has not engaged in any transaction with
respect to the Employee Benefit Plans which would subject it to a
material tax, penalty or liability for prohibited transactions under
ERISA or the Code nor have any of its directors, officers or employees
to the extent they or any of them are fiduciaries with respect to such
plans, breached any of their responsibilities or obligations imposed
upon fiduciaries under Title I of ERISA which would result in any
material claim being made under or by or on behalf of any such plans by
any party with standing to make such claim.
(vi) Other Plans. AIG presently does not maintain any Employee
Benefit Plans or any other foreign pension, welfare or retirement
benefit plans other than those listed on Section 3(p) of the Disclosure
Schedule.
(vii) Documents. AIG has delivered or caused to be delivered
to SCN true and complete copies of (i) all Employee Benefit Plans as in
effect, together with all amendments thereto which will become
effective at a later date, as well as the latest IRS determination
letter obtained with respect to any such Employee Benefit Plan
qualified under Section 401 or 501 of the Code, and (ii) the most
recently filed Form 5500 for each Employee Benefit Plan required to
file such form.
(q) Third-Party Relations. AIG has not received any notice that any
material patient, supplier, employee or associated physician intends to cease
doing business with AIG.
(r) Compliance with Applicable Laws. AIG has operated in compliance
with all federal, state, county and municipal laws, constitutions, ordinances,
statutes, rules, regulations and orders applicable thereto ("Applicable Laws").
No item disclosed in Section 3(r) of the Disclosure Schedule could have a
material effect on SCN. Neither AIG nor any
- 9 -
physician associated with or employed by AIG has received payment or any
remuneration whatsoever to induce or encourage the referral of patients or the
purchase of goods and/or services as prohibited under 42 U.S.C. ss. 1320a-7b(b),
or otherwise perpetrated any Medicare or Medicaid fraud or abuse nor has any
fraud or abuse been alleged within the last five (5) years by any government
agency.
(s) Employee Compensation. AIG has paid or discharged or will pay or
discharge or assume all liabilities for compensation and benefits to which all
employees, including physician employees, are entitled through the Closing Date,
including but not limited to all salaries, wages, bonuses, incentive
compensation, payroll taxes, hospitalization and medical expenses, deferred
compensation, and vacation and sick pay, as well as any severance pay becoming
due as a result of the termination of AIG's employees.
(t) Environmental Matters.
(i) AIG is in full compliance with all applicable
Environmental Laws.
(ii) AIG has not authorized or conducted the disposal or
release, or other handling of any hazardous substance, Medical Waste,
hazardous waste, hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, asbestos, radon, polychlorinated
biphenyls ("PCBs"), petroleum product or waste (including crude oil or
any fraction thereof), natural gas, liquefied gas, synthetic gas,
biohazardous or biomedical material, or other material defined,
regulated controlled or potentially subject to any remediation
requirement under any Environmental Law (collectively "Hazardous
Materials"), on, in, under or affecting any property owned or leased by
AIG.
(iii) AIG has, and is in compliance with, all licenses,
permits, registrations, and government authorizations necessary to
operate under all applicable Environmental Laws. Section 3(t) of the
Disclosure Schedule lists all such licenses, permits, registrations and
government authorizations required by any Environmental Law.
(iv) AIG has not received any written or oral notice from any
governmental agency or entity or any other Person and there is no
pending or threatened claim, litigation or any administrative agency
proceeding that: (a) alleges a violation of any Environmental Law(s) by
AIG or, with respect to the Practice Assets or any property owned or
leased by AIG (b) alleges that AIG is a liable party or potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
analogous state law, (c) has resulted or could result in the attachment
of an environmental lien on any of the Practice Assets or property
owned or leased by AIG, or (d) alleges that AIG is liable for any
contamination of the environment, contamination of any property owned
or leased by AIG, damage to natural resources, property damage, or
personal injury based on its activities or the activities of any
predecessor or third parties involving Hazardous Materials, whether
arising under the Environmental Laws, common law principles, or other
legal standards.
(v) With respect to the generation, transportation, treatment,
storage and disposal or other handling of Medical Waste, AIG has
complied with all Medical Waste Laws.
(u) Healthcare Compliance. AIG is participating in or otherwise
authorized to receive reimbursement from Medicare and Medicaid and is a party to
other third-party payor agreements if any, discussed in Section 3(i) of the
Disclosure Schedule. All necessary certifications and contracts required for
participation in such programs are in full force and effect and have not been
amended or otherwise modified, rescinded, revoked or assigned, and no condition
exists or event has occurred which in itself or with the giving of notice or the
lapse of time or both would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such third-party payor program. AIG is in
compliance in all material respects with the requirements of all such
third-party payors. AIG, the AIG Stockholder, and
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AIG's physician employees do not have any financial relationship (whether
investment interest, compensation interest, or otherwise) with any entity to
which any of the foregoing refer patients, except for such financial
relationships that qualify for exceptions to state and federal laws restricting
physician referrals to entities in which they have a financial interest.
(v) Fraud and Abuse. AIG, the AIG Stockholder and persons and entities
providing professional services for AIG have not engaged in any activities which
are prohibited under 42 U.S.C. ss. 1320a-7b, or the regulations promulgated
thereunder pursuant to such statutes, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct, including
the following: (a) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment; (b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment; (c) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment on its own behalf or on behalf of another, with intent
to fraudulently secure such benefit or payment; or (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe, or
rebate), directly or indirectly, overtly or covertly, in cash or in kind or
offering to pay or receive such remuneration (1) in return for referring an
individual to a person for the furnishing or arranging for the furnishing or any
item or service for which payment may be made in whole or in part by Medicare or
Medicaid, or (2) in return for purchasing, leasing, or ordering or arranging for
or recommending purchasing, leasing, or ordering any good, facility, service or
item for which payment may be made in whole or in part by Medicare or Medicaid.
(w) Practice Compliance. AIG is duly licensed as a medical practice and
is lawfully operated in accordance with the requirements of all Applicable Laws
and has all necessary authorizations for the use and operation of a medical
practice, all of which are in full force and effect. There are no outstanding
notices of deficiencies relating to AIG issued by any governmental authority or
third-party payor requiring conformity or compliance with any applicable law or
condition for participation with such governmental authority or third-party
payor, and after reasonable and independent inquiry and due diligence and
investigation, AIG has neither received notice nor has any Knowledge or reason
to believe that such necessary authorizations may be revoked or not renewed in
the Ordinary Course of Business.
(x) Rates and Reimbursement Policies. The jurisdiction in which AIG is
located does not currently impose any restrictions or limitations on rates which
may be charged to private pay patients receiving services provided by AIG. AIG
does not have any rate appeal currently pending before any governmental
authority or any administrator of any third-party payor program. No Applicable
Law which affects rates or reimbursement procedures has been enacted,
promulgated or issued within the eighteen (18) months preceding the date of this
Agreement and no such legal requirement is proposed or currently pending in the
jurisdiction in which AIG is located, which could have a material adverse effect
on AIG or may result in the imposition of additional Medicaid, Medicare,
charity, free care, welfare, or other discounted or government assisted patients
at AIG or require AIG to obtain any necessary authorization which AIG does not
currently possess.
(y) Accounts Receivable. All accounts receivable, unbilled invoices and
other debts due or recorded in the respective records and books of account of
AIG, as being due to AIG, (i) are valid, existing and are collectible within one
hundred eighty (180) days following the date of this Agreement without resort to
legal proceedings or use of collection agencies, (ii) have arisen in the
Ordinary Course of Business, and (iii) none of such accounts receivable or other
debts is or will at the Closing Date be subject to any counterclaim or set-off
except to the extent of any such provision or reserve. There has been no
material adverse change since May 31, 1997, in the amount of accounts receivable
or other debts due AIG, the allowances with respect thereto, or accounts payable
of AIG from that reflected in the most recent balance sheet previously delivered
by AIG to SCN.
(z) Guaranties. AIG is not a guarantor and otherwise is not liable for
any liability or obligation (including indebtedness) of any other Person.
- 11 -
(aa) Powers of Attorney. There are no outstanding powers of attorney
executed by AIG, except as may be contained in financing documents or security
agreements listed in Section 3(i) of the Disclosure Schedule.
(bb) Tangible Assets. AIG owns or leases all land, buildings,
machinery, equipment, and other tangible assets necessary for the conduct of its
business as presently conducted. Each tangible asset is free from defects, has
been maintained in accordance with normal industry practice, and is in good
operating condition and repair (subject to normal wear and tear).
(cc) SCN Share Ownership; Investment Intent.
(i) Neither AIG nor the AIG Stockholder owns, beneficially or
otherwise, any SCN Shares.
(ii) SCN Shares issuable in the Merger are being acquired by
the AIG Stockholder solely for his own account for investment and not
with a view to the distribution thereof, and the AIG Stockholder
acknowledges and understands that the certificate(s) representing such
SCN Shares will bear a legend in substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES ACT AND CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
SUCH ACTS OR UNLESS EXEMPTIONS FROM REGISTRATION ARE
AVAILABLE.
(iii) The AIG Stockholder represents and warrants as follows:
(A) The AIG Stockholder is an "accredited investor"
as defined under Rule 501 of Regulation D promulgated under
the Securities Act.
(B) The AIG Stockholder confirms that SCN has made
available to him or to his representatives the opportunity to
ask questions of SCN officers and directors and to acquire
such information about the SCN Shares and the business and
financial condition of SCN as the AIG Stockholder requested,
which additional information has been received.
(C) In deciding to acquire SCN Shares pursuant to
this Agreement, the AIG Stockholder consulted with his legal,
financial, and tax advisors with respect to the Merger and the
nature of the investment together with any additional
information provided under subsection (B) above.
(D) The AIG Stockholder has adequate means of
providing for his current needs and personal contingencies and
has no need for liquidity in his investment in SCN. The AIG
Stockholder, either alone or with his representatives, has
such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and
risks of the Merger.
(E) The AIG Stockholder understands and acknowledges
that the investment in the SCN Shares is a speculative
investment which involves a high degree risk of loss of such
AIG Stockholder's investment therein; that there are
substantial restrictions on the transferability of the SCN
Shares under the applicable provisions of the Securities Act
and the rules and regulations promulgated thereunder and
applicable state securities or "blue sky" laws; and,
accordingly, that it may not be possible to liquidate an
investment in the SCN Shares.
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(F) The AIG Stockholder has been advised and
understands that (i) the offer and sale of the SCN Shares have
not been registered under the Securities Act; (ii) the SCN
Shares must held indefinitely and the AIG Stockholder must
continue to bear the economic risk of the investment in the
SCN Shares until the offer or sale of the SCN Shares is
subsequently registered under the Securities Act or any "blue
sky" laws or an exemption from such registration is available;
(iii) Rule 144 promulgated under the Securities Act is not
presently available with respect to the sale of any securities
of SCN, including the SCN Shares, and when and if the SCN
Shares may be disposed of without registration in reliance on
Rule 144, such disposition can be made only in accordance with
the terms and conditions of such Rule; (iv) the restrictive
legends described in Section 3(ac)(ii) shall be placed on the
certificates representing the SCN Shares; and (v) a notation
shall be made in the appropriate records of SCN indicating
that the SCN Shares are subject to restrictions on transfer
and appropriate stop-transfer instructions will be issued to
any transfer agent with respect to the SCN Shares.
(dd) Full Disclosure. No representation or warranty made by AIG in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not materially misleading.
4. Representations and Warranties of SCN. SCN represents and warrants
to AIG that the statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4).
(a) Organization. SCN is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
(b) Capitalization. As of the date of this Agreement, the entire
authorized capital stock of SCN consists of 50,000,000 SCN Shares, of which
14,662,575 SCN Shares are issued and outstanding and 2,000,000 shares of
preferred stock, none of which are issued and outstanding. All of the SCN Shares
to be issued in the Merger have been duly authorized and, upon consummation of
the Merger, will be validly issued, fully paid, and nonassessable.
(c) Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, to issue the SCN Shares and otherwise to perform its obligations
hereunder; provided, however, that SCN cannot consummate the transaction unless
and until the Merger receives the approval of the SCN Board of Directors. Except
as set forth in the preceding sentence, this Agreement constitutes the valid and
legally binding obligation of SCN, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which SCN
is subject or may become subject as a result of the transaction contemplated by
this Agreement, or any provision of the charter or bylaws of SCN or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which SCN is a party or by which it is bound
or to which any of its assets is subject. Other than state and federal filings
required by the Securities Act and similar state statutes, SCN does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
- 13 -
(e) Brokers' Fees. SCN does not have any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which SCN could become liable or
obligated.
(f) Securities Filings. All reports and statements filed with respect
to SCN pursuant to the Securities Act or the Securities Exchange Act conform to
the requirements of the Securities Act and the Securities Exchange Act and the
rules and regulations promulgated thereunder and did not include at the time of
filing such document any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 6 below) to be
satisfied by him or it. This paragraph shall not be construed to obligate any of
the Parties to waive any condition precedent to his or its obligations to
perform hereunder.
(b) Notices and Consents. AIG will give any notices to third parties,
and will use its best efforts to obtain any third party consents necessary or
required to consummate the Merger or that SCN reasonably may request in
connection with the matters referred to in Section 3(i) above.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any necessary authorizations, consents, and approvals of governments and
governmental agencies in connection with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing:
(i) Tax Reporting. The Merger is intended to qualify as a
reorganization under Code Section 368(a)(1)(A). Each of the parties
agrees to report this transaction for all purposes in accordance with
the foregoing.
(ii) Licenses and Permits. Each of the Parties shall have
obtained all licenses and permits necessary to operate their respective
businesses.
(d) Operation of Business. From the date of this Agreement through the
Closing Date, AIG will not engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Without limiting
the generality of the foregoing:
(i) AIG will not authorize or effect any change in its
charter documents or bylaws;
(ii) AIG will not grant any options, warrants, or other rights
to purchase or obtain any of its capital stock or issue, sell or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
(iii) AIG will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock in either case outside the Ordinary Course of Business without
the consent of SCN, which consent shall not be unreasonably withheld;
- 14 -
(iv) AIG will not issue any note, bond or other debt security
or create, incur, assume or guarantee any indebtedness for borrowed
money or capitalized lease obligation outside the Ordinary Course of
Business;
(v) AIG will not impose any Security Interest upon any of its
assets outside the Ordinary Course of Business;
(vi) AIG will not make any capital investment in, make any
loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii) AIG will not make any change in employment terms for any
of its directors, officers or employees outside the Ordinary Course of
Business; and
(viii) AIG will not commit to do any of the foregoing.
(e) Further Acts and Assurances. AIG and the AIG Stockholder shall, at
any time and from time to time at and after the Effective Time, upon request of
SCN, take any and all steps necessary to place SCN in possession and operating
control of the Practice Assets and to effectuate the Merger, and will do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, and assurances as may be required
for better transferring and confirming to SCN or its successors and assigns, or
for better reducing to possession, any or all of the Practice Assets or
consummating the Merger.
(f) Full Access. Upon three (3) days prior notice, AIG will permit
representatives of SCN to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to AIG during normal business hours. SCN will treat and hold as
such any confidential information it receives from AIG in the course of the
reviews contemplated by this Section 5(f), will not use any of the confidential
information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, agrees to return to AIG all tangible
embodiments (and all copies) thereof which are in its possession.
(g) Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 or Section 4 above, as
applicable. No disclosure by any Party pursuant to this Section 5(g), however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant.
(h) Exclusivity. Until the earlier of (i) July 31, 1997, or (ii) the
Effective Time, AIG will not solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of AIG (including any
acquisition structured as a merger, consolidation, or share exchange). AIG shall
notify SCN immediately if any Person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing.
(i) Collection of Accounts Receivable. The AIG Stockholder agrees to
cooperate with SCN in the collection of accounts receivable owned by AIG as of
the Effective Time acquired pursuant to this Agreement. SCN, at its option,
shall have the right to require the collection of said accounts receivable
through a lockbox or bank account sweep arrangement. In connection therewith,
the AIG Stockholder agrees to execute the necessary documents and follow the
necessary procedures as described in the Service Agreement to accommodate the
collection of the accounts receivable in such manner.
(j) Payment of Expenses. On or before the Effective Time, AIG shall
have paid or discharged any and all liabilities or charges for costs or fees
owed as a result of the transaction contemplated by this Agreement.
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(k) Corporate Authorization. By execution of this Agreement, the AIG
Stockholder agrees to take any and all steps necessary and will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such acts, deeds and assurances required in order to consummate
the Merger, including voting as directors of AIG in favor of the Merger and
voting as stockholders of AIG in favor of the Merger at any meetings (or in any
action by written consent) required by the Texas Professional Association Act.
(l) Malpractice Insurance. On or before the Effective Time, all
physicians and employees of AIG must be covered by medical malpractice insurance
and, if required by SCN, medical malpractice tail insurance to cover prior
occurrences shall be procured by AIG.
(m) Distribution of Excluded Assets. Prior to the Effective Time, AIG
shall have distributed to the AIG Stockholder all of the assets listed on
Schedule 5(m), which constitute the entirety of the assets owned by AIG not
being acquired by SCN (the "Excluded Assets").
(n) Satisfaction of Indebtedness. Prior to the Effective Time, AIG
shall have caused the payoff of all liabilities owed to third-parties and all
indebtedness owed to banks or other financial institutions or lenders or shall
have caused the assumption thereof by a new entity organized by the AIG
Stockholder; provided, however, that SCN shall assume payment for (i) all of
AIG's trade payables (rent, utilities, telephone, etc.) incurred by AIG during
the thirty day period prior to the Closing Date and in the Ordinary Course of
Business and (ii) AIG's state franchise tax liability not to exceed, in the
aggregate with the state franchise tax liabilities of Xxxx X. Small, M.D. &
Associates, P.A., Associated Arthroscopy Institute, Inc., Allied Health
Services, P.A., Xxxx X. Small, M.D., P.A., and Access Medical Supply, Inc. being
assumed by SCN pursuant to the agreements referred to in Section 6 (a)(ix)
below, $160,000. Notwithstanding any contrary provision contained herein, SCN
shall not be deemed to have assumed, nor shall SCN assume: (i) any liability
which may be incurred by reason of any breach of or default under such
contracts, leases, commitments or obligations which occurred prior to the
Closing Date; (ii) any liability for any employee benefits payable to employees
of AIG, including, but not limited to, liabilities arising under any Employee
Benefit Plan or accrued vacation or sick pay; (iii) any liability based upon or
arising out of a violation of any laws by AIG, including, without limiting the
generality of the foregoing, any such liability which may arise in connection
with agreements, contracts, commitments or provision of services by AIG; nor
(iv) any liability based upon or arising out of any tortious or wrongful actions
of AIG or any Physician Owner, or any liability for the payment of any taxes
imposed by law on AIG arising from or by reason of the transactions contemplated
by this Agreement. AIG shall establish a reserve for income, excise or other
taxes to be paid upon the collection of any cash basis accounts receivable
existing on the books of AIG at the Effective Time.
(o) Conversion into Business Corporation. If required by the Texas
Professional Association Act, prior to the Effective Time, the AIG Stockholder
shall have caused the conversion of AIG to a Texas business corporation.
(p) Employee Benefit Plans. Prior to the Effective Time, all Employee
Benefit Plans shall be terminated in accordance with, and to the extent required
by, Applicable Law.
(q) Securities Laws Compliance. No AIG Stockholder shall dispose of the
SCN Shares received as a result of the Merger except in accordance with the
provisions of the Securities Act, the provisions of any rule adopted by the
Securities and Exchange Commission pursuant to the Securities Act and the "blue
sky" laws of any applicable state.
(r) Piggyback Registration.
- 16 -
(i) Notice of Piggyback Registration and Inclusion of SCN
Shares.
If within one (1) year from the date of this Agreement SCN
shall elect to file a registration statement ("Registration Statement") on Form
S-2 or S-3 (or any successor form thereto) under the Act with respect to any of
its securities, either for its own account or the account of a security holder
or holders, other than a registration on Form S-4 (or its equivalent) in
connection with a reorganization, or a registration relating solely to employee
benefit plans (excluding the foregoing events, a "Registration"), SCN will: (i)
promptly give the AIG Stockholder written notice thereof (which shall include a
list of the jurisdictions in which SCN intends to attempt to qualify such
securities under the applicable Blue Sky or other state securities laws) and
(ii) include in such Registration (and any related registration and/or
qualification under Blue Sky laws or other compliance), and in any underwriting
involved therein, all the SCN Shares specified in a written request delivered to
SCN by the AIG Stockholder within 30 days after delivery of such written notice
from SCN.
(ii) Underwriting in Piggyback Registration.
A. Notice of Underwriting in Piggyback Registration.
If the Registration of which SCN gives notice is for a
Registered public offering involving an underwriting, SCN shall so advise the
AIG Stockholder as a part of the written notice given above. In such event, the
right of the AIG Stockholder to Registration shall be conditioned upon such
underwriting and the inclusion of such Stockholder's SCN Shares in such
underwriting to the extent provided in this Section. The AIG Stockholder shall
(together with SCN and any other holders distributing their securities through
such underwriting) enter into an underwriting agreement in customary form with
the representative of the Underwriter ("Underwriter's Representative") for such
offering. The AIG Stockholder shall have no right to participate in the
selection of underwriters for an offering pursuant to this Section.
B. Marketing Limitation in Piggyback Registration.
In the event the Underwriter's Representative advises the
AIG Stockholder in writing that market factors (including, without limitation,
the aggregate number of shares of Common Stock requested to be included in such
Registration, the general condition of the market, and the status of the persons
proposing to sell securities pursuant to the Registration) require a limitation
of the number of shares to be underwritten, the Underwriter's Representative
(subject to the allocation priority set forth in Section 5(r)(ii)C.) may limit
(or reduce to zero) the number of SCN Shares to be included in such Registration
and underwriting; provided however, that any SCN Shares so excluded shall retain
any and all Registration rights set forth in this Section.
C. Allocation of SCN Shares in Piggyback Registration.
In the event that the Underwriter's Representative limits
the number of shares to be included in a Registration pursuant to Section
5(r)(ii)C., the number of shares to be included in such Registration shall be
allocated in the following manner: Common Stock held by persons who are not
contractually entitled to include shares in such Registration shall be excluded
from such Registration and underwriting to the extent required by such
limitation. If a limitation of the number of shares is still required after such
exclusion, the number of shares of Common Stock that may be included in the
Registration and underwriting by all selling shareholders (including the AIG
Stockholder and all other persons contractually entitled to such registration)
shall be allocated among the AIG Stockholder and other holders of securities
other than SCN Shares requesting and contractually entitled to include shares in
such Registration, in proportion, as nearly as practicable, to the respective
amounts of securities (including SCN Shares) which the AIG Stockholder and such
other holders would otherwise be entitled to include in such Registration. No
SCN Shares or other securities excluded from the underwriting by reason of this
Section shall be included in the Registration Statement.
- 17 -
D. Withdrawal in Piggyback Registration.
If the AIG Stockholder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to SCN
and the underwriter delivered at least seven days prior to the effective date of
the Registration Statement. Any SCN Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such Registration.
(iii) Blue Sky in Piggyback Registration.
In the event of any Registration of SCN Shares pursuant to
this Section, SCN will use its best efforts to register and/or qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of such securities; provided, however, that notwithstanding
anything in this Agreement to the contrary, in the event any jurisdiction in
which the securities shall be qualified imposes a non-waivable requirement that
expenses incurred in connection with the qualification of the securities be
borne by selling Stockholders, the AIG Stockholder shall pay its pro rata share
of such expenses.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of SCN. The obligation of SCN to
consummate the Merger is subject to satisfaction of the following conditions or
before the Closing Date:
(i) AIG shall have procured all of the third party consents
specified in Section 5(b) above;
(ii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) AIG shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Surviving
Corporation to own the former assets or to operate the former business
of AIG;
(v) SCN shall have received the resignations, effective as of
the Closing, of each director and officer of AIG other than those whom
SCN shall have specified in writing prior to the Closing;
(vi) all actions to be taken by AIG and/or the AIG Stockholder
in connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby have been taken
or delivered to SCN and are satisfactory in form and substance to SCN;
(vii) the issuance of the SCN Shares to the AIG Stockholder
will not violate federal securities laws or the securities laws of any
state of the United States;
(viii) SCN shall have completed and be satisfied with its due
diligence review, including SCN's review of the Disclosure Schedule;
- 18 -
(ix) On or before the Closing Date, the transactions
contemplated by (i) the Merger Agreement between SCN, Xxxx X. Small,
M.D., P.A., and Xxxx X. Small, M.D. dated July 3, 1997, (ii) the Merger
Agreement between SCN, Xxxx X. Small, M.D. & Associates, P.A. and Xxxx
X. Small, M.D. dated July 3, 1997, (iii) the Asset Purchase Agreement
between SCN, Associated Arthroscopy Institute, Inc., Xxxxxxxxx X.
Xxxxxx, M.D. and Xxxx X. Small, M.D., dated July 3, 1997, (iv) the
Asset Purchase Agreement between SCN, Allied Health Services, P.A. and
Xxxx X. Small, M.D. dated July 3, 1997, and (v) the Asset Purchase
Agreement between SCN, Access Medical Supply, Inc., Xxxxxxxxx X.
Xxxxxx, M.D. and Xxxx X. Small, M.D., dated July 3, 1997, shall have
been consummated; and
(x) SCN's Board of Directors shall have approved the Merger in
their sole and absolute discretion.
SCN may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of AIG. The obligation of AIG to
consummate the Merger is subject to satisfaction of the following conditions:
(i) This Agreement and the Merger shall have received the AIG
director and AIG Stockholder's approval required by the Texas
Professional Association Act.
(ii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing; and
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Surviving
Corporation to own the former assets of AIG.
AIG may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Items to be Delivered at or Prior to Closing.
(a) By the AIG Stockholder or AIG. The AIG Stockholder or AIG, as
applicable, shall execute and deliver to SCN, prior to or at the Closing:
(i) Certified resolutions of the directors and stockholders of
AIG authorizing the execution of all documents and the consummation of
all transactions contemplated hereby;
(ii) The Texas Articles of Merger which shall be in the form
required by SCN's legal counsel;
(iii) Stock Certificates representing ownership of all shares
of AIG, duly endorsed to SCN;
(iv) A Service Agreement in the form attached hereto as
Exhibit 7(a)(iv);
- 19 -
(v) A certificate duly executed by the President of AIG and
the AIG Stockholder stating as of the Closing Date, all representations
and warranties are true, all covenants and agreements contained in the
Agreement to be performed by AIG and the AIG Stockholder have been
performed or complied with and all conditions to closing have been
complied with;
(vi) An opinion from AIG's counsel in substantially the form
attached hereto as Exhibit 7(a)(vi);
(vii) Such other instruments as may be reasonably requested by
SCN in order to effect to or carry out the intent of this Agreement.
(b) By SCN. SCN shall deliver to AIG at or prior to the Closing:
(i) Stock Certificates representing the SCN Shares being
issued to the AIG Stockholder pursuant to Section 2(d)(v);
(ii) The Delaware Certificate of Merger in substantially the
form attached hereto as Exhibit 2(a)(1);
(iii) An opinion from SCN's counsel in substantially the form
attached hereto as Exhibit 7(b)(iii);
(iv) A certificate, duly executed by the President of SCN,
stating as of the Closing Date, all representations and warranties of
SCN are true, all covenants and agreements contained in the Agreement
to be performed by SCN have been performed or complied with and all
conditions to Closing have been satisfied;
(v) A Service Agreement in the form attached hereto as Exhibit
7(a)(iv);
(vi) Certified resolutions of SCN authorizing the execution of
all documents and the consummation of all transactions contemplated
hereby;
(vii) the cash payment for any fractional SCN Shares pursuant
to Section 2(e); and
(viii) Such other instruments as may be reasonably requested
by AIG or the AIG Stockholder in order to effect to or carry out the
intent of this Agreement.
8. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) SCN may terminate this Agreement by giving written notice
to AIG at any time prior to the Effective Time (A) in the event AIG has
breached any representation, warranty, or covenant contained in this
Agreement in any material respect, SCN has notified AIG of the breach,
and the breach has continued without cure for a period of 30 days after
the notice of breach, (B) if the Closing shall not have occurred on or
before July 31, 1997 by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from SCN breaching any representation, warranty, or covenant
contained in this Agreement); or
- 20 -
(iii) AIG may terminate this Agreement by giving written
notice to SCN at any time prior to the Effective Time (A) in the event
SCN has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, AIG has notified SCN of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall not have
occurred on or before July 31, 1997 by reason of the failure of any
condition precedent under Section 6(b) hereof (unless the failure
results primarily from AIG breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any party to any other Party
(except for any liability of any Party then in breach).
9. Indemnification.
(a) Indemnification by the AIG Stockholder. The AIG Stockholder agrees
to and shall defend, indemnify and hold harmless SCN, its successors and
assigns, officers and directors against any and all losses, liabilities,
expenses (including, but without limitation, reasonable attorneys fees) and
damages resulting from or arising out of the breach, untruth or inaccuracy of
any representation, warranty or covenant of AIG or the AIG Stockholder set forth
in this Agreement. The AIG Stockholder shall not be liable to SCN for any claims
against the AIG Stockholder under this Section 9(a) unless and until the
aggregate of all claims against the AIG Stockholder exceeds the sum of
$25,000.00, whereupon SCN shall be entitled to recover the full amount of all
claims, including the initial $25,000.00.
(b) Notice to the AIG Stockholder; Opportunity to Defend. SCN agrees to
give prompt notice to the AIG Stockholder of the assertion of any claim, or the
commencement of any suit, action or proceeding, in respect of which indemnity
may be sought under Section 9(a). The AIG Stockholder may participate in and at
his election, or at the request of SCN, assumes the defense of any such suit,
action or proceeding at the AIG Stockholder's expense. The AIG Stockholder shall
not be liable under Section 9(a) for any settlement effected without his consent
of any claim, litigation or proceeding in respect of which indemnity may be
sought under Section 9(a) which consent shall not be unreasonably withheld.
(c) General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless the AIG Stockholder, his heirs and assigns against
any and all losses, liabilities, expenses (including, but without limitation,
reasonable attorneys fees) and damages resulting from the breach, untruth or
inaccuracy of any representation, warranty or covenant of SCN set forth in this
Agreement. SCN shall not be liable to the AIG Stockholder for any claims against
SCN under this Section 9(c) unless and until the aggregate of all claims against
SCN exceeds the sum of $25,000.00, whereupon the AIG Stockholder shall be
entitled to recover the full amount of all claims, including the initial
$25,000.00.
(d) Notice to SCN; Opportunity to Defend. The AIG Stockholder agrees to
give prompt notice to SCN of the assertion of any claim, or the commencement of
any suit, action or proceeding in respect of which indemnity may be sought under
Section 9(c). SCN may participate in and at its election, or at the request of
the AIG Stockholder, assume the defense of any such suit, action or proceeding
at SCN's expense. SCN shall not be liable under Section 9(c) for any settlement
effected without its consent of any claim, litigation or proceeding in respect
of which indemnity may be sought hereunder, which consent shall not be
unreasonably withheld.
(e) Right of Setoff. In the event of any breach of warranty,
representation, covenant or agreement by AIG or the AIG Stockholder giving rise
to indemnification to SCN under Section 9(a) hereof, SCN shall be entitled to
offset the amount of damages incurred by it as a result of such breach of
warranty, representation, covenant or agreement against the amounts payable to
the AIG Stockholder or Associated Orthopaedics & Sports Medicine, P.A. under the
Service Agreement. In the event that SCN determines that an amount is to be so
offset, as a condition precedent to such right of setoff, SCN shall give the AIG
Stockholder written notice of the amount of such proposed setoff and the basis
- 21 -
therefor within thirty (30) days after the date on which such amount is finally
determined. If SCN shall not have received written notice from the AIG
Stockholder contesting such setoff within twenty (20) days of their receipt of
such written notice from SCN, the setoff shall be deemed to have been consented
to by the AIG Stockholder, and SCN shall be entitled to deduct the entire amount
claimed as a setoff from the next succeeding amounts payable under the Service
Agreement. In the event that the AIG Stockholder shall object to the proposed
setoff by written notice received by SCN during such twenty (20) day period, the
entitlement of SCN to the claimed setoff shall be determined as set forth in
Section 10.4.3 of the Service Agreement.
10. Miscellaneous.
(a) Survival. The representations and warranties of the AIG
Stockholder, AIG and SCN contained in this Agreement and the indemnifications
contained herein shall survive the Closing. No claim for indemnification with
respect to any alleged misrepresentation or breach of warranty or covenant may
be made after three (3) years following the Closing Date. Any matter to which
indemnification pertains and with respect to which a claim has been asserted or
threatened following the Closing Date shall continue to be subject to the
indemnification under this Agreement until finally terminated, settled, resolved
or adjudicated; and all terms, conditions and stipulations of this Agreement
shall likewise continue to apply.
(b) No Third-Party Beneficiaries. Except as provided in Section 9(e),
this Agreement shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the parties and supersedes
any prior understandings, agreements, or representations by or between the
parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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If to AIG: Copy to:
Xxxxxxxxx X. Xxxxxx, M.D. Xxxxx Xxxxxxxxx
0000 Xxxx Xxxxx Xxxxxxx 0000 Xxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxx 00000 Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
If to SCN:
Copy to:
Xxxxx X. Xxxxx, President
Specialty Care Network, Inc. Xxxxx X. Xxxxxxx, Esq.
00 Xxxxx Xxxxxxxxx, Xxxxx 000 Baker, Donelson, Bearman & Xxxxxxxx
Xxxxxxxx, Xxxxxxxx 00000 000 Xxxxxxx Xxx, Xxxxx 0000
Facsimile: (000) 000-0000 Xxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
(h) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Texas without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas. Each of the parties
submits to the jurisdiction of any state or federal court sitting in Denver,
Colorado, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto.
(i) Amendments and Waivers. The parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to AIG stockholder approval will be
subject to the restrictions contained in the Texas Professional Association Act.
No amendment of any provision of this Agreement shall be valid unless the same
shall be in writing and signed by both of the parties. No waiver by any party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
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(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between the
parties and SCN that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant patients.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:_________________________________________
Title:______________________________________
XXXXXXXXX X. XXXXXX, M.D., P.A.
By:_________________________________________
Title:______________________________________
--------------------------------------------
XXXXXXXXX X. XXXXXX, M.D., Stockholder
Exhibit 1-1
