STOCK PURCHASE AGREEMENT
AMONG
AMERICAN MEDICAL PROVIDERS, INC.,
XXXXXX X. XXXXXX, D.P.M., P.C.,
AND
THE OWNERS NAMED HEREIN
TABLE OF CONTENTS
PAGE
ARTICLE I Definitions..................................................... 1
Section 1.1. Definitions............................................... 1
ARTICLE II The Acquisition................................................ 7
Section 2.1. The Acquisition.......................................... 7
Section 2.2. The Closing.............................................. 7
Section 2.3. Acquisition Consideration................................ 7
Section 2.6 Subsequent Actions....................................... 8
ARTICLE III Representations and Warranties of the Company and the Owner... 8
Section 3.1. Organization and Good Standing; Qualification............ 8
Section 3.2. Capital Structure........................................ 9
Section 3.3. Transactions in Capital.................................. 9
Section 3.4. Continuity of Business Enterprise........................ 9
Section 3.5. Records.................................................. 9
Section 3.6. Authorization and Validity............................... 10
Section 3.7. No Violation............................................. 10
Section 3.8. Consents................................................. 10
Section 3.9. Financial Statements..................................... 10
Section 3.10. Liabilities and Obligations.............................. 11
Section 3.11. Employee Matters......................................... 11
Section 3.12. Aliens................................................... 12
Section 3.13. Employee Benefit and Other Compensation Plans............ 12
Section 3.14. Absence of Certain Changes............................... 13
Section 3.15. Title; Leased Assets..................................... 15
Section 3.16. Commitments.............................................. 15
Section 3.17. Insurance................................................ 16
Section 3.18. Proprietary Rights and Information....................... 17
Section 3.19. Taxes.................................................... 17
Section 3.20. Compliance with Laws..................................... 18
Section 3.21. Finder's Fee............................................. 18
Section 3.22. Litigation............................................... 19
Section 3.23. Condition of Fixed Assets................................ 19
Section 3.24. Distributions and Repurchases............................ 19
Section 3.25. Banking Relations........................................ 19
Section 3.26. Interested Persons; Affiliations......................... 20
Section 3.27. Environmental Matters.................................... 20
Section 3.28. Certain Payments......................................... 20
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Section 3.29. Medical Waste............................................ 20
Section 3.30. Medicare and Medicaid Programs........................... 21
Section 3.31. Fraud and Abuse.......................................... 21
Section 3.32. Payors................................................... 22
Section 3.33. Representations and Warranties not a Guarantee of Future
Performance............................................................ 22
ARTICLE IV Representations and Warranties of the Owners................... 22
Section 4.1. Validity; Owner's Capacity............................... 22
Section 4.2. No Violation............................................. 23
Section 4.3. Personal Holding Companies; Control of
Related Businesses....................................... 23
Section 4.4. Transfers of Ownership Interests......................... 23
Section 4.5. Consents................................................. 23
Section 4.6. Certain Payments......................................... 23
Section 4.7. Finder's Fee............................................. 23
Section 4.8. Interested Persons; Affiliations......................... 24
Section 4.9. Investments in Competitors............................... 24
ARTICLE V Representations and Warranties of AMP and AMP Subsidiary........ 24
Section 5.1. Organization and Good Standing........................... 24
Section 5.2. Capitalization of AMP.................................... 24
Section 5.3. Capitalization of AMP Subsidiary......................... 24
Section 5.4. Authorization and Validity............................... 25
Section 5.5. No Violation............................................. 25
Section 5.6. Finder's Fee............................................. 25
Section 5.7. Consents................................................. 25
Section 5.8. Liabilities and Obligations.............................. 25
Section 5.9. Employee Benefit Plans................................... 26
Section 5.10. Taxes.................................................... 26
Section 5.11. Compliance with Laws..................................... 26
Section 5.12. Litigation............................................... 27
ARTICLE VI Covenants of the Company and the Owners........................ 27
Section 6.1. Consummation of Agreement................................ 27
Section 6.2. Business Operations...................................... 27
Section 6.3. Access................................................... 28
Section 6.4. Tax Returns.............................................. 28
Section 6.5. Notification of Certain Matters.......................... 28
Section 6.6. Approvals of Third Parties............................... 28
Section 6.7. Employee Matters......................................... 29
Section 6.8. Contracts................................................ 29
Section 6.9. Capital Assets; Payments of Liabilities.................. 30
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Section 6.10. Mortgages, Liens and Guaranties.......................... 30
Section 6.11. Acquisition Proposals.................................... 30
Section 6.12. Distributions and Repurchases............................ 30
Section 6.13. Requirements to Effect Acquisition....................... 31
Section 6.14. Licenses and Permits..................................... 31
Section 6.15. Delivery of Schedules.................................... 31
ARTICLE VII Covenants of AMP and AMP Subsidiary........................... 31
Section 7.1. Consummation of Agreement................................ 31
Section 7.2. Requirements to Effect Acquisition....................... 31
Section 7.3. Notification of Certain Matters.......................... 31
Section 7.4. Approvals of Third Parties............................... 31
Section 7.5. Stock Option Plan for Advisors and Consultants........... 32
Section 7.6. Licenses and Permits..................................... 32
Section 7.7. Delivery of Schedules.................................... 32
Section 7.8. Professional Liability Insurance......................... 32
ARTICLE VIII Covenants of AMP, the Company and the Owners................. 32
Section 8.1. Filings; Other Action.................................... 32
Section 8.2. Amendment of Schedules................................... 33
Section 8.3. Proration of Costs and Rents............................. 33
ARTICLE IX Conditions Precedent of AMP.................................... 33
Section 9.1. Proceedings.............................................. 33
Section 9.2. No Material Adverse Effect............................... 33
Section 9.3. Government Approvals and Required Consents............... 34
Section 9.4. Securities Approvals..................................... 34
Section 9.5. Closing Deliveries....................................... 34
Section 9.6. Charter Amendment........................................ 34
ARTICLE X Conditions Precedent of the Company and the Owner............... 34
Section 10.1. Proceedings.............................................. 34
Section 10.2. Government Approvals and Required Consents............... 34
Section 10.3. Securities Approvals..................................... 34
ARTICLE XI Closing Deliveries............................................. 35
Section 11.1. Deliveries of the Company and the Owners................. 35
Section 11.2. Deliveries of AMP........................................ 36
ARTICLE XII Post Closing Matters.......................................... 38
Section 12.1. Further Instruments of Transfer.......................... 38
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ARTICLE XIII Remedies..................................................... 38
Section 13.1. Indemnification by the Owner............................ 38
Section 13.2. Indemnification by AMP and AMP Subsidiary............... 39
Section 13.3. Indemnification Procedures.............................. 39
Section 13.4. Indemnification Limitations............................. 41
Section 13.5. Remedies Not Exclusive.................................. 41
Section 13.6. Costs, Expenses and Legal Fees.......................... 42
ARTICLE XIV Termination................................................... 42
Section 14.1. Termination............................................. 42
Section 14.2. Effect of Termination................................... 42
ARTICLE XV Noncompetition................................................. 43
Section 15.1. Prohibited Activities................................... 43
Section 15.2. Damages................................................. 43
Section 15.3. Reasonable Restraint.................................... 43
Section 15.4. Severability; Reformation............................... 43
Section 15.5. Term.................................................... 44
ARTICLE XVI Nondisclosure of Confidential Information..................... 44
Section 16.1. Nondisclosure........................................... 44
Section 16.2. Damages................................................. 44
Section 16.3. Survival................................................ 45
ARTICLE XVII General...................................................... 45
Section 17.1. Amendment; Waivers...................................... 45
Section 17.2. Assignment.............................................. 45
Section 17.3. Parties in Interest; No Third Party Beneficiaries....... 45
Section 17.4. Entire Agreement........................................ 45
Section 17.5. Severability............................................ 45
Section 17.6. Survival of Representations, Warranties and Covenants... 46
Section 17.7. Governing Law........................................... 46
Section 17.8. Captions................................................ 46
Section 17.9. Gender and Number....................................... 46
Section 17.10. Reference to Agreement.................................. 46
Section 17.11. Confidentiality; Publicity and Disclosures.............. 46
Section 17.12. Notice.................................................. 47
Section 17.13. Choice of Forum......................................... 47
Section 17.14. No Waiver; Remedies..................................... 47
Section 17.15. Counterparts............................................ 48
Section 17.16. Defined Terms........................................... 48
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STOCK PURCHASE AGREEMENT
Stock Purchase Agreement (this "Agreement"), dated as of November _____,
1997, among Xxxxxx X. Xxxxxx, D.P.M., P.C., a Georgia professional corporation
and its nonprofessional successor entity ("the "Company"), Xxxxxx X. Xxxxxx,
D.P.M., (collectively the "Owners" and individually an "Owner"), and American
Medical Providers, Inc., a Delaware corporation, its affiliates, successors or
assigns ("AMP").
The Company and the Owners of the Company desire to sell, and AMP desires
to purchase, all of the issued and outstanding shares (the "Shares") of the
capital stock of the Company, and, accordingly, the Owners, the Company and AMP
desire to effect the Acquisition (defined below) upon the terms and subject to
the conditions contained herein.
In order to effectuate the Acquisition, the Company will convert from a
Georgia professional entity to a Georgia business corporation immediately before
the Closing.
The Owner and AMP will enter into a Real Estate Purchase Agreement
contemporaneously with this Agreement (the "Real Estate Purchase Agreement") for
the purchase by AMP of certain real property in Decatur, Georgia owned by Owner
and more particularly described as 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxx Xxxxxx,
Xxxxxxx (the "Decatur Property"). The Decatur Property is subject to a right of
first refusal and if that right is exercised will be purchased by another party,
not privy to this Agreement.
AMP will pay $10,000.00 to be applied to Owner's attorneys' fees for
negotiating the transactions contemplated by this Agreement. This xxxxxxx money
deposit will be non-refundable.
In consideration of the mutual representations, warranties and covenants
herein contained and such other good and valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, and on the terms and
subject to the conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. The following terms have the meanings set forth
below:
"Acquisition" has the meaning set forth in Section 2.1.
"Acquisition Consideration" has the meaning set forth in Section 2.3.
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"actual knowledge," "have no actual knowledge of," "do not actually know
of" and similar phrases mean (i) in the case of a natural person, the actual
conscious awareness, or not, as the context requires, of the particular fact by
such person or (ii) in the case of an entity, the actual conscious awareness, or
not, as the context requires, of the particular fact by any stockholder,
partner, owner, director or officer of such entity, altogether as a product of
inquiry, consistent with the knowledge of a prudent person in the operation of
their business and personal affairs.
"Advisors Plan" has the meaning set forth in Section 7.5.
"Affiliate," with respect to any person, means a person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with such person.
"AMP Common Stock" means the common stock, par value $0.01 per share, of
AMP.
"AMP Employee Benefit Plans" has the meaning set forth in Section 5.9.
"AMP Subsidiary" means the wholly-owned subsidiary of AMP formed prior to
Closing identified in Section 2.1.
"AMP Subsidiary Common Stock" means the common stock, par value $0.01 per
share, of AMP Subsidiary.
"Xxxxxx Xxxxxxxx" means Xxxxxx Xxxxxxxx LLP, independent certified public
accountants.
"Assets" means the Equipment and all properties and assets (tangible and
intangible, real and personal) of every kind and wherever situated that are
owned by the Company or the Owner or in which the Company has any right or
interest to the extent that such assets are used in the medical practice of the
Owner in Decatur, Georgia and in Griffin, Georgia (including all personal
property of every kind and character as used in connection with Equipment or
otherwise and its files, papers and records relating to the aforesaid properties
and assets), but excluding the Excluded Assets.
"Assignment and Assumption Agreement" has the meaning set forth in Section
11.1(m).
"Pre-Closing Liabilities" means those fixed and determinable liabilities
of the Company listed on Schedule 1.1. Except for the Pre-Closing Liabilities,
the Company shall, as of the Closing date not have (nor shall AMP assume or
agree to pay, perform or discharge) any liabilities or obligations of the
Company, whether accrued, absolute, contingent or otherwise.
"Balance Sheet" has the meaning set forth in Section 3.9.
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"Balance Sheet Date" has the meaning set forth in Section 3.9.
"best knowledge," "have no knowledge of," "do not know of" or "to the
knowledge of" and similar phrases mean (i) in the case of a natural person, the
particular fact was known, or not known, as the context requires, to such person
or (ii) in the case of an entity, the particular fact was known, or not known,
as the context requires, to any stockholder, partner, owner, director or officer
of such entity.
"Cash Compensation" has the meaning set forth in Section 3.11(a).
"Claim Notice" has the meaning set forth in Section 13.3.
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitments" has the meaning set forth in Section 3.16.
"Company" has the meaning set forth in the recitals hereto.
"Compensation Plans" has the meaning set forth in Section 3.11(b).
"Confidential Information" means all trade secrets and other confidential
and/or proprietary information of the particular person, including information
derived from reports and investigations, research, work in progress, codes,
marketing and sales programs, referral sources, patient lists, financial
projections, cost summaries, pricing formulae, contract analyses, financial
information, projections, confidential filings with any state or federal agency
and all other confidential concepts, methods of doing business, ideas, materials
or information prepared or performed for, by or on behalf of such person by such
person's stockholders, owners, partners, employees, officers, directors, agents,
representatives or consultants.
"Controlled Group" has the meaning set forth in Section 3.13(g).
"Damages" has the meaning set forth in Section 13.1.
"Decatur Property" has the meaning set forth in the recitals.
"Effective Date" means the date that the Registration Statement is
declared effective by the SEC.
"Election Period" has the meaning set forth in Section 13.3.
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"Employee Benefit Plans" has the meaning set forth in Section 3.13(a).
"Employee Policies and Procedures" has the meaning set forth in Section
3.11(d).
"Employment Agreements" has the meaning set forth in Section 3.11(c).
"Environmental Laws" means any laws or regulations pertaining to the
environment as in effect on the date hereof and the Closing Date, including
without limitation (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (42 U.S.C. xx.xx. 9601 et seq.), as amended (including
without limitation as amended pursuant to the Superfund Amendments and
Reauthorization Act of 1986) and any regulations promulgated thereunder, (ii)
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. xx.xx. 6901 et
seq.), as amended, and any regulations promulgated thereunder, and (iii) the
provisions contained in any similar federal, state or local statutes or
regulations relating to environmental matters applicable to the Company's assets
or operations.
"Equipment" means all equipment, machinery, tools and similar assets owned
by the Company and used by the Company in its business, including, without
limitation, all supplies of the Company related thereto.
"ERISA" has the meaning set forth in Section 3.13(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" means the following assets of the Company or the Owner:
bonds; cash (except for cash which Owner chooses to have Company retain at
Closing); accounts receivable; rights to payment for work performed by Owner
before Closing but not billed; stocks and bank accounts; employee benefit plans
and pension plans; 401(K) plans; HR10 plans; software programs (the "Kiss",
"UB92" and "Operative Notes" programs); any profit-sharing plan of any type or
nature (whether owned by the Company or the Owner); automobiles and personal
effects of Owner (including diplomas and art work).
"Financial Statements" has the meaning set forth in Section 3.9.
"Fixed Assets" has the meaning set forth in Section 3.23.
"Group Practice" means the Georgia professional entity that has entered
into a Management Services Agreement with AMP.
"Indemnified Party" has the meaning set forth in Section 13.3.
"Indemnifying Party" has the meaning set forth in Section 13.3.
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"Indemnity Notice" has the meaning set forth in Section 13.3.
"Initial Public Offering" means the initial underwritten public offering
of AMP Common Stock contemplated by the Registration Statement.
"Insurance Policies" has the meaning set forth in Section 3.17.
"IRS" means the Internal Revenue Service.
"Lease Assignments" has the meaning set forth in Section 11.1(m).
"Material Adverse Effect" means a material adverse effect on the business,
operations, condition (financial or otherwise), results of operations or
prospects of the Company in consideration of all relevant facts and
circumstances.
"Medical Waste" means (i) pathological waste, (ii) blood, (iii) sharps,
(iv) wastes from surgery or autopsy, (v) dialysis waste, including contaminated
disposable equipment and supplies, (vi) cultures and stocks of infectious agents
and associated biological agents, (vii) contaminated animals, (viii) isolation
wastes, (ix) contaminated equipment, (x) laboratory waste, (xi) any substance,
pollutant, material, or contaminant listed or regulated under any Medical Waste
Law and (xii) other biological waste and discarded materials contaminated with
or exposed to blood, excretion or secretions from human beings or animals.
"Medical Waste Laws" means the following, including regulations
promulgated and orders issued thereunder, as in effect on the date hereof and
the Closing Date: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 U.S.C.A. xx.xx. 2501 et seq., (iii) the Marine
Protection, Research and Sanctuaries Act of 1972, 33 U.S.C.A. xx.xx. 1401 et
seq., (iv) the Occupational Safety and Health Act, 29 U.S.C.A. xx.xx. 651 et
seq., (v) the United States Department of Health and Human Services, National
Institute for Occupational Safety and Health, Infectious Waste Disposal
Guidelines, Publication No. 88-119 and (vi) any other federal, state, regional,
county, municipal or other local laws, regulations and ordinances insofar as
they are applicable to the Company's assets or operations and purport to
regulate Medical Waste or impose requirements relating to Medical Waste.
"MWTA" means the Medical Waste Tracing Act of 1988, 42 U.S.C. xx.xx. 6992,
et seq.
"ordinary course of business" means the usual and customary way in which
the particular entity has conducted its business in the past, in all cases, in
compliance with law.
"Owner(s)" means those person(s), all of whom are identified in the first
paragraph of this Agreement, who own, beneficially and of record, all of the
ownership interests in the Company, whatever form those interests may take,
including, without limitation, capital stock, partnership interests, units,
shares in profit, membership interests or the like.
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"Payors" has the meaning set forth in Section 3.30.
"person" means any natural person, corporation, partnership, joint
venture, limited liability company, association, group, organization or other
entity.
"Physician Employee" means any physician of the Company executing a
Physician Employment Agreement.
"Physician Employment Agreements" has the meaning set forth in Section
11.1(n).
"Physician Engagement Agreements" has the meaning set forth in Section
11.1(m).
"Private Placement Memorandum" means the Confidential Private Placement
Memorandum, dated June, 1997, provided by AMP to the Owners and the Company.
"Real Estate Purchase Agreement" has the meaning set forth in the
recitals.
"Registration Statement" has the meaning set forth in Section 8.1(a).
"Related Acquisitions" means, collectively, the Acquisition and the
mergers and acquisitions of entities and assets contemplated by the Other
Agreements.
"Reorganization" has the meaning set forth in Section 12.2.
"Schedules" means the schedules attached hereto as of the date hereof or
otherwise delivered by any party hereto pursuant to the terms hereof, as such
may be amended or supplemented from time to time pursuant to the provisions
hereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning set forth in the recitals.
"Taxes" means all taxes, however denominated, including any interest,
penalties or other additions to tax that may become payable in respect thereof,
imposed by any federal, state, territorial, state, local or foreign government
or any agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes, real property gains taxes, payroll and employee withholding taxes,
unemployment insurance taxes, social security taxes, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, occupation
taxes, real and personal property taxes, stamp taxes, environmental taxes,
alternative minimum taxes, transfer taxes, workers compensation or Pension
Benefit Guaranty Corporation premiums, and other obligations of the
6
same or of a similar nature, which the Company is required to pay, withhold or
collect.
"Tax Returns" shall mean all reports, estimates, information statements
and returns relating to, or required to be filed in connection with, any Taxes,
including information returns or reports with respect to backup withholding and
other payments to third parties.
"Third Party Claim" has the meaning set forth in Section 13.3.
"Underwriter Representative" means the underwriter in the Initial Public
Offering who acts as the lead managing underwriter of the Initial Public
Offering.
ARTICLE II
THE ACQUISITION
SECTION 2.1. THE ACQUISITION. Subject to the terms and conditions of this
Agreement, on the Closing Date, the Owner shall transfer, assign, convey and
deliver the Shares to AMP or its subsidiary ("AMP Subsidiary"), free and clear
of all security interests, liens, claims and encumbrances and shall commit to
all post-closing obligations in Sections 2.4, 2.5 and Article XII, and AMP or
AMP Subsidiary shall accept and acquire from the Company the Shares and assume
the Assumed Liabilities (the "Acquisition"). Prior to the Acquisition, all the
Excluded Assets and all liabilities except for Assumed Liabilities shall be
transferred from the Company to the Owner and distributed in advance of Closing.
The Owner shall be responsible for any and all liabilities, including but not
limited to Tax liabilities and liabilities related to pension, employee
benefits, profit-sharing 401(K) or other plans arising out of such
distributions, spin-offs or sales.
SECTION 2.2. THE CLOSING. The Closing of the Acquisition will take place
at 10:00 a.m., local time, at the offices of Xxxxx & Xxxxxxxxx, Suite 2000, 1000
Louisiana, Houston, Texas on the day on which the transactions contemplated by
the Initial Public Offering are consummated. The date on which the Closing
occurs is the "Closing Date." AMP or Owner's counsel as necessary, will have all
closing documents prepared in advance and circulated for signature to Owner in
Atlanta, Georgia, such that Closing can be accomplished through an escrow
arrangement and Owner shall not physically be required to attend Closing. At
Closing, and as a condition thereof, all proceeds will be wired to a bank
account of Owner's choice in the Atlanta, Georgia area.
SECTION 2.3. ACQUISITION CONSIDERATION. The total consideration for the
shares and for the post-closing obligations in Sections 2.4 and 2.5 and Article
XII will be (i) cash in the amounts set forth on Annex I hereto (the
"Acquisition Consideration") and (ii) the assumption of the Assumed Liabilities,
if any.
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SECTION 2.4 OTHER ACTIONS. Promptly after the Closing, AMP shall change
the name of the Company. If necessary, AMP will collect sums related to the
Excluded Assets after the Closing and, to the extent such sums are identifiable
as Excluded Assets, will forward them to the Owner, less any collection
expenses. Prior to and following the Acquisition, the Owner, who has
distributed, liquidated or frozen the pension, employee benefit, profit-sharing,
401(K) and other plans will cause the funds that were invested for particular
employees to be rolled over to individual retirement accounts for such employees
in accordance with all applicable laws. The Company and AMP will cooperate with
Owner after Closing in completion of all such actions.
SECTION 2.5 OWNER COMMITMENT. Owner agrees to work at the pre-closing
offices of the Company for thirty (30) days after Closing, and if requested by
AMP for thirty (30) additional days, training AMP's successor podiatrist(s) and
familiarizing such person(s) with the patients and the facilities. Owner shall
undertake the first thirty (30) days of this work in consideration of the
Acquisition Consideration. The second thirty (30) days will be at a consulting
fee of $1,000.00. AMP agrees that it will not introduce any such successor
podiatrist at the pre-closing offices of the Company until consummation of the
Closing, unless otherwise requested by the Owner.
SECTION 2.6 SUBSEQUENT ACTIONS. If, at any time after the Closing, AMP
shall be advised that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary to vest, perfect or confirm of record or
otherwise in AMP Subsidiary its right, title or interest in, to or under any of
the rights, properties or assets of the Company acquired or to be acquired by
AMP Subsidiary as a result of, or in connection with, the Acquisition or
otherwise to carry out this Agreement, and to transfer the Shares in return for
the consideration set forth in this Agreement, the officers and directors of AMP
Subsidiary shall be authorized to execute and deliver, in the name and on behalf
of the Company, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of the Company, all such other actions
and things as may be necessary or desirable to vest, perfect or confirm any and
all right, title and interest in, to and under such rights, properties or assets
in AMP Subsidiary or otherwise to carry out this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OWNER
The Company and the Owner represent and warrant to AMP and AMP Subsidiary
that the following are true and correct as of the Closing Date:
SECTION 3.1. ORGANIZATION AND GOOD STANDING; QUALIFICATION. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of its state of organization with all requisite power and authority to
carry on the business in which it is
8
engaged, to own the properties it owns, to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The Company is not
qualified or licensed to do business in any other jurisdiction. The Company has
no assets, employees or offices in a state other than the state of its
organization. Except as set forth in Schedule 3.1, or as a passive investor
neither the Company, nor the Owner owns, directly or indirectly, any of the
capital stock of any other corporation or any entity or a profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity that is engaged in a business that is in or related to the
healthcare industry.
SECTION 3.2. CAPITAL STRUCTURE. The Owner owns all of the Company's issued
and outstanding common stock free and clear of all security interests, liens,
adverse claims, encumbrances, equities, proxies and shareholders' agreements,
except to the extent specifically disclosed in detail on Schedule 3.2. Each
outstanding share of common stock of the Company has been legally and validly
issued and is fully paid and nonassessable. No share of capital stock is owned
by the Company in treasury. No shares of capital stock of the Company have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of the Company's stockholders. The Company has
no bonds, debentures, notes or other obligations the holders of which have the
right to vote (or are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter.
SECTION 3.3. TRANSACTIONS IN CAPITAL. The Company has not acquired any of
its capital stock. Except as set forth in Schedule 3.3, there exist no options,
warrants, subscriptions or other rights to purchase, or securities convertible
into or exchangeable for, any of the authorized or outstanding securities of the
Company, and no option, warrant, call, conversion right or commitment of any
kind exists that obligates the Company to issue any of its authorized but
unissued capital stock. Except as set forth in Schedule 3.3, the Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof. Except as set forth in Schedule 3.3,
neither the equity structure of the Company nor the relative ownership of shares
among any of its stockholders has been altered or changed in contemplation of
the transactions contemplated hereby.
SECTION 3.4. CONTINUITY OF BUSINESS ENTERPRISE. Except as set forth in
Schedule 3.4 and except as contemplated by Section 2.1, there has not been any
sale, distribution or spin-off of assets of the Company or any of its
Affiliates, other than in the ordinary course of business within the five years
preceding the date of this Agreement.
SECTION 3.5. RECORDS. The copies of the Articles of Incorporation or
Articles of Association, as the case may be, and Bylaws, and all amendment
thereto, of the Company that have been or are to be delivered to AMP are true,
correct and complete copies thereof, as in effect on the date hereof. The minute
books of the Company, copies of which have been or are to be delivered to AMP,
contain or will contain materially accurate minutes of meetings of, and
9
accurate consents to all actions taken without meetings by, the Board of
Directors (and any committees thereof) and the stockholders of the Company to
the extent such minutes and consents exist or have been re-created since its
formation as to material matters reflected therein.
SECTION 3.6. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Company of this Agreement and the other agreements expressly
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been, or before December 15, 1997, will be duly
authorized by the Company. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. The
Company has obtained, or before December 15, 1997 will obtain in accordance with
applicable law and its Bylaws and its Articles of Incorporation the approval of
its stockholders necessary to consummate the transactions contemplated hereby.
SECTION 3.7. NO VIOLATION. Except as set forth specifically in detail in
Schedule 3.7 or Schedule 3.8, neither the execution, delivery or performance of
this Agreement or the other agreements contemplated hereby nor the consummation
of the transactions contemplated hereby or thereby will (a) conflict with,
result in a violation or breach of the terms, conditions or provisions of or
constitute a default under the Bylaws or the Articles of Incorporation of the
Company, (b) except as would not, individually or in the aggregate, result in a
Material Adverse Effect, conflict with, result in a violation or breach of the
terms conditions or provisions of or constitute a default under any agreement,
indenture or other instrument by which the Company is bound or to which any of
the assets of the Company is subject, or to the Company's or the Owner's
knowledge, result in the creation or imposition of any security interest, lien,
charge or encumbrance upon any assets of the Company or (c) except as would not,
individually or in the aggregate, result in a Material Adverse Effect, violate
or conflict with any judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body.
SECTION 3.8. CONSENTS. Except as set forth in Schedule 3.8, to the
Company's or the Owner's knowledge no consent, authorization, approval, permit
or license of, or filing with, any governmental or public body or authority, any
lender, any lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery or performance of this
Agreement or the agreements contemplated hereby; provided, however, AMP
acknowledges that a tenant of the real property has a right of first refusal as
to any sale of the Owner's real property to be purchased by AMP.
SECTION 3.9. FINANCIAL STATEMENTS. The Company has furnished AMP its
balance sheet and related statements of income, retained earnings and cash flows
for its prior three full fiscal years and its balance sheet dated as of June 30,
1997 (the "Balance Sheet," and the date thereof the "Balance Sheet Date") and
related statements of income, retained earnings and cash flows for the six (6)
months then ended (all such financial information, with the related notes
thereto, the "Financial Statements"). The Financial Statements fairly present
the financial condition and
10
results of operations of the Company as of the dates and for the periods
indicated and have been prepared on a consistent basis with prior periods,
except as otherwise specifically indicated in the Financial Statements.
SECTION 3.10. LIABILITIES AND OBLIGATIONS. The Financial Statements and
Schedule 3.10 reflect all material liabilities of the Company, except for
liabilities or obligations incurred in the ordinary course of business
consistent with reasonable past practice since the Balance Sheet Date. Except as
specifically set forth in the Financial Statements or Schedule 3.10, the Company
is not liable upon or with respect to, or obligated in any other way to provide
funds in respect of or to guarantee or assume in any manner, any debt,
obligation or dividend of any person, corporation, association, partnership,
joint venture, trust or other entity, and the Company does not know of any valid
basis for the assertion of any claims or liabilities of any nature or in any
amount.
SECTION 3.11. EMPLOYEE MATTERS.
(a) CASH COMPENSATION. Schedule 3.11(a) contains a complete and accurate
list of the names, titles and annual cash compensation as of June 30, 1997,
including, without limitation, wages, salaries, bonuses (discretionary and
formula) and other cash compensation (the "Cash Compensation"), of all full and
part-time employees of the Company. In addition, Schedule 3.11(a) contains a
complete and accurate description of (i) all increases in Cash Compensation of
employees of the Company during the current fiscal year and the immediately
preceding fiscal year and (ii) any promised increases in Cash Compensation of
employees of the Company that have not yet been effected.
(b) COMPENSATION PLANS. Schedule 3.11(b) contains a complete and accurate
list of all compensation plans, arrangements or practices (the "Compensation
Plans") sponsored by the Company or to which the Company contributes on behalf
of its employees, other than Employment Agreements listed in Schedule 3.11(c)
and Employee Benefit Plans listed in Schedule 3.13(a). The Compensation Plans
include, without limitation, plans, arrangements or practices that provide for
severance pay, deferred compensation, incentive, bonus or performance awards and
stock ownership or stock options. The Company has provided to AMP a copy of each
written Compensation Plan and a written description of each unwritten
Compensation Plan.
(c) EMPLOYMENT AGREEMENTS. Except as set forth in Schedule 3.11(c), the
Company is not a party to any employment agreement (the "Employment Agreements")
with respect to any of its employees. Employment Agreements include, without
limitation, employee leasing agreements, employee services agreements and
noncompetition agreements.
(d) EMPLOYEE POLICIES AND PROCEDURES. Schedule 3.11(d) contains a complete
and accurate list of all employee manuals and all policies, procedures and
work-related rules (the "Employee Policies and Procedures") that apply to
employees of the Company. The Company
11
has provided or made available to AMP, or will provide before December 15, 1997,
a copy of all written Employee Policies and Procedures and a written description
of all unwritten Employee Policies and Procedures.
(e) UNWRITTEN AMENDMENTS. Except as described in Schedule 3.11(b),
3.11(c), or 3.11(d), no unwritten material amendments have been made, whether by
oral communication, pattern of conduct or otherwise, with respect to any
Compensation Plans, Employment Agreements or Employee Policies and Procedures.
(f) LABOR COMPLIANCE. To its and the Owner's actual knowledge, the Company
has been and is in compliance with all applicable laws, rules, regulations and
ordinances respecting employment and employment practices, terms and conditions
of employment and wages and hours, except for any such failures to be in
compliance that, individually or in the aggregate, would not result in a
Material Adverse Effect, and the Company is not liable for any arrears of wages
or penalties for failure to comply with any of the foregoing. To its and the
Owner's actual knowledge, the Company has not engaged in any unfair labor
practice or discriminated on the basis of race, color, religion, sex, national
origin, age, disability or handicap in its employment conditions or practices.
Except as set forth in Schedule 3.11(f), there are no (i) unfair labor practice
charges or complaints or racial, color, religious, sex, national origin, age,
disability or handicap discrimination charges or complaints pending or, to the
knowledge of the Company, threatened against the Company before any federal,
state or local court, board, department, commission or agency (nor, to the
knowledge of the Company, does any valid basis therefor exist) or (ii) existing
or, to the knowledge of the Company, threatened labor strikes, disputes,
grievances, controversies or other labor troubles affecting the Company (nor, to
the knowledge of the Company, does any valid basis therefor exist).
(g) UNIONS. The Company has never been a party to any agreement with any
union, labor organization or collective bargaining unit. No employees of the
Company are represented by any union, labor organization or collective
bargaining unit. Except as set forth in Schedule 3.11(g), to the knowledge of
the Company, none of the employees of the Company has threatened to organize or
join a union, labor organization or collective bargaining unit.
SECTION 3.12. ALIENS. To the actual knowledge of the Company and the
Owner, all employees of the Company are citizens of, or are authorized in
accordance with federal immigration laws to be employed in, the United States.
SECTION 3.13. EMPLOYEE BENEFIT AND OTHER COMPENSATION PLANS. The Company
and the Owner have maintained all employee benefit plans, pension plans,
profit-sharing plans, 401(k) plans, HR 10 plans or any other such arrangement
whether covered under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or not (the "Employee Benefit Plans") in accordance with all
applicable laws. Prior to and after closing, the Owner will effect the
distribution, liquidation, freeze, rollover or other transition of the Employee
Benefit Plans with no liability to the Company or AMP. The Company and AMP will
reasonably cooperate
12
with Owner in such transition after Closing.
Except as set forth in Schedules 3.11(a), 3.11(b), 3.11(c), 3.11(d),
3.13(a) and 3.13(l), none of the Company, any Owner or any Physician Employee is
a party to any compensation or other arrangement with any person relating to the
provision of healthcare related services, other than arrangements with the
Company.
SECTION 3.14. ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule
3.14 since the Balance Sheet Date, the Company has not
(a) suffered a Material Adverse Effect, whether or not caused by any
deliberate act or omission of the Company or any Owner;
(b) contracted for the purchase of any capital asset having a cost in
excess of $5,000 or made any single capital expenditure in excess of $5,000;
(c) incurred any indebtedness for borrowed money (other than short-term
borrowings in the ordinary course of business consistent with reasonable past
practice) or issued or sold any debt securities;
(d) incurred or discharged any material liabilities or obligations, except
in the ordinary course of business consistent with reasonable past practice;
(e) paid any amount on any indebtedness prior to the due date, forgiven or
cancelled any claims or any debt in excess of $5,000 or released or waived any
rights or claims, except in the ordinary course of business consistent with
reasonable past practice;
(f) mortgaged, pledged or subjected to any security interest, lien, lease
or other charge or encumbrance any of its properties or assets (other than
statutory liens arising in the ordinary course of business consistent with
reasonable past practice or other liens that do not materially detract from the
value or interfere with the use of such properties or assets);
(g) suffered any damages or destruction to or loss of any assets (whether
or not covered by insurance) that has resulted, or might reasonably be expected
to result, individually or in the aggregate, in a Material Adverse Effect;
(h) acquired or disposed of any assets having an aggregate value in excess
of $5,000, except in the ordinary course of business consistent with reasonable
past practice or except as contemplated in this Agreement;
(i) written up or written down the carrying value of any of its assets,
other than accounts receivable in the ordinary course of business consistent
with reasonable past practice;
13
(j) changed the costing system or depreciation methods of accounting for
its assets;
(k) lost or terminated any employee, patient, customer or supplier that
has resulted, or might reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect;
(l) increased the compensation of any Owner, director, officer, key
employee or consultant;
(m) increased the compensation of any employee (except for increases in
the ordinary course of business consistent with reasonable past practice) or
hired any new employee who, in either case, is expected to receive annualized
compensation of $15,000 or more;
(n) made any payments of cash or assets to or loaned any money or assets
to any person or entity referred to in Section 3.26;
(o) formed, or acquired or disposed of any interest in, any corporation,
partnership, joint venture, limited liability company or other entity;
(p) redeemed, purchased or otherwise acquired, or sold, granted or
otherwise disposed of, directly or indirectly, any of its capital stock,
securities or other ownership interests or any rights to acquire such capital
stock, securities or other ownership interests, or agreed to change the terms
and conditions of any such capital stock, securities or other ownership
interests or rights;
(q) entered into any agreement providing for total payments in excess of
$5,000 in any 12 month period with any person or group, or modified or amended
in any material respect the terms of any such existing agreement, except in the
ordinary course of business consistent with reasonable past practice;
(r) entered into, adopted or amended any Employee Benefit Plan, except as
contemplated hereby; or
(s) entered into any commitment or transaction, or experienced any event,
that would materially interfere with its performance under this Agreement or any
other agreements or document executed or to be executed pursuant to this
Agreement or otherwise has resulted, or might reasonably be expected to result,
individually or in the aggregate, in a Material Adverse Effect.
14
SECTION 3.15. TITLE; LEASED ASSETS.
(a) REAL PROPERTY. The Company does not own any interest in any real
property, other than the leases provided or to be provided to AMP before
December 15, 1997 and identified in Schedule 3.15.
(b) PERSONAL PROPERTY. Except as set forth in Schedule 3.15, the Company
has good and marketable title to all the real and personal property, including
the Assets, owned by it, but excluding the Excluded Assets as of the Closing.
(c) LEASES. Copies of (i) all leases of real property and (ii) leases of
personal property involving rental payments within any 12-month period in excess
of $5,000, in either case to which the Company is a party, either as lessor or
lessee, have been or will be provided to AMP before December 15, 1997 and are
listed in Schedule 3.15. All such leases are valid and, to the knowledge of the
Company, enforceable in accordance with their respective terms.
SECTION 3.16. COMMITMENTS. Except as set forth in Schedule 3.16, the
Company is not a party to nor is it bound by, nor are any of its partnership
interests subject to, nor are the assets or the business of the Company bound
by, whether or not in writing, any of the following (collectively, the
"Commitments"):
(i) partnership or joint venture agreement;
(ii) guaranty or suretyship, indemnification or contribution
agreement or performance bond;
(iii) debt instrument, loan agreement or other obligation relating
to indebtedness for borrowed money or money lent or to be lent to another;
(iv) contract to purchase real property;
(v) agreement with dealers or sales or commission agents, public
relations or advertising agencies, accountants or attorneys (other than in
connection with this Agreement and the transactions contemplated hereby)
involving total payments within any 12-month period in excess of $5,000
and that is not terminable on 30 days' notice with or without penalty;
(vi) agreement relating to any matter or transaction involving more
than $5,000 in the aggregate;
(vii) powers of attorney;
(viii) contracts containing noncompetition covenants;
15
(ix) agreement providing for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular
product or service; or
(x) any other agreement or commitment not made in the ordinary
course of business or that is material to the Company's business,
operations, condition (financial or otherwise), results of operations or
prospects.
True, correct and complete copies of the written Commitments, and true, correct
and complete written descriptions of the oral Commitments, will be delivered to
AMP before December 15, 1997. Except as set forth in Schedule 3.16, there are no
existing or asserted defaults, events of default or events, occurrences, acts or
omissions that, with the giving of notice or lapse of time or both, would
constitute defaults by the Company or, to the best knowledge of the Company, any
other party to a material Commitment, and no penalties have been incurred nor
are amendments pending with respect to any material Commitment, except as
described in Schedule 3.16. The Commitments are in full force and effect and are
valid and enforceable obligations of the Company and, to the best knowledge of
the Company, the other parties thereto in accordance with their respective
terms, and no defenses, off-sets or counterclaims have been asserted or, to the
best knowledge of the Company, may be made by any party thereto (other than by
the Company) nor has the Company waived any rights thereunder, except as
described in Schedule 3.16. Except as disclosed specifically in Schedule 3.16,
(i) none of the Company or any Owner has received notice of any plan or
intention of any other party to any Commitment to exercise any right to cancel
or terminate any Commitment, and neither the Company nor any Owner knows of any
fact that would justify the exercise of such a right and (ii) none of the
Company or any Owner currently contemplates, or has a reason to believe any
other person currently contemplates, any amendment or change to any Commitment.
SECTION 3.17. INSURANCE. The Company and the Owner carry property,
liability, malpractice, workers' compensation and such other types of insurance
pursuant to the insurance policies listed and described in Schedule 3.17 (the
"Insurance Policies"). The Insurance Policies are all of the insurance policies
of the Company and the Owners relating to the Company. All of the Insurance
Policies are issued by insurers of recognized responsibility, and, to the best
knowledge of the Company, are valid and enforceable policies. All Insurance
Policies have been maintained in force without interruption up to and including
the Closing Date. True, complete and correct copies of all Insurance Policies
have been provided to AMP. Except as set forth in Schedule 3.17, neither the
Company, nor the Owner has received any notice or other communication from any
issuer of any Insurance Policy cancelling such policy, materially increasing any
deductibles or retained amounts thereunder or materially increasing the annual
or other premiums payable thereunder, and, to the acknowledge of the Company, no
such cancellation or increase of deductibles, retainages or premiums is
threatened. Except as set forth on Schedule 3.17, neither the Company, nor the
Owner has any outstanding claims, settlements or premiums owed against any
Insurance Policy, and the Company and the Owner have given all notices or has
presented all potential or actual claims under any Insurance Policy in a due and
timely fashion. Except as set forth on Schedule 3.17, neither the Company, nor
the Owner has
16
filed a written application for any professional liability insurance coverage
that has been denied by an insurance agency or carrier, and the Company, and the
Owner have been continuously insured for professional malpractice claims for at
least the past seven years (or such shorter periods of time that the Company has
been in existence or the Owner has been licensed to practice podiatry). Schedule
3.17 also sets forth a list of all claims under any Insurance Policy in excess
of $5,000 per occurrence filed by the Company or the Owner during the
immediately preceding five years.
SECTION 3.18. PROPRIETARY RIGHTS AND INFORMATION. The Company does not
own, and will not convey at Closing, any proprietary rights or information
necessary for the conduct of its business.
SECTION 3.19. TAXES.
(a) FILING OF TAX RETURNS. The Company has duly and timely filed (in
accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all material
Tax Returns and reports required to be filed in the United States, any state or
any political subdivision thereof or any foreign jurisdiction. All such Tax
Returns or reports are complete and accurate in all material respects and
properly reflect the Taxes of the Company for the periods covered thereby.
(b) PAYMENT OF TAXES. To the actual knowledge of the Company and the
Owner, except for such items as the Company may be disputing in good faith by
proceedings in compliance with applicable law, which are described in Schedule
3.19(b) and are adequately provided for, (i) the Company has paid all Taxes that
have become due (including those related to employment) and has properly
accounted for on its books and records for all of the same that have not yet
become due and (ii) the Company is not delinquent in the payment of any Tax.
(c) NO PENDING DEFICIENCIES, DELINQUENCIES, ASSESSMENTS OR AUDITS. Except
as set forth in Schedule 3.19(c), the Company has not received any notice that
any Tax deficiency or delinquency has been asserted against the Company. To the
actual knowledge of the Company and the Owner, there is no unpaid assessment,
proposal for additional Taxes, deficiency or delinquency in the payment of any
of the Taxes of the Company that could be asserted by any Taxing authority.
There is no Taxing authority audit of the Company pending, or, to the actual
knowledge of the Company, threatened, and the results of any completed audits
are properly reflected in the Financial Statements. To the actual knowledge of
the Company and the Owner, the Company has not violated in any material respect
any federal, state, local or foreign Tax law.
(d) NO EXTENSION OF LIMITATION PERIOD. The Company has not granted an
extension to any taxing authority of the limitation period during which any Tax
liability may be assessed or collected.
17
(e) ALL WITHHOLDING REQUIREMENTS SATISFIED. To the actual knowledge of the
Company and the Owner, all monies required to be withheld by the Company and
paid to governmental agencies for all income, social security, unemployment
insurance, sales, excise, use and other Taxes have been collected or withheld
and paid to the respective governmental agencies.
(f) FOREIGN PERSON. The Company is not a foreign person, as such term is
referred to in Section 1445(f)(3) of the Code.
(g) SAFE HARBOR LEASE. None of the Assets of the Company constitutes
property that the Company, AMP or any Affiliate of AMP will be required to treat
as being owned by another person pursuant to the "Safe Harbor Lease" provisions
of Section 168(f)(8) of the Code prior to repeal by the Tax Equity and Fiscal
Responsibility Act of 1982.
(h) TAX EXEMPT ENTITY. None of the Assets of the Company are subject to a
lease to a "tax exempt entity" as such term is defined in Section 168(h)(2) of
the Code.
SECTION 3.20. COMPLIANCE WITH LAWS. To the actual knowledge of the Company
and the Owner, the Company and the Owner have complied in all material respects
with, and are in compliance in all material respects with, all applicable laws,
regulations and licensing requirements and has filed with the proper authorities
all necessary statements and reports, except where the failure to so comply or
file would not, and is not reasonably expected to, individually or in the
aggregate, result in a Material Adverse Effect. To the actual knowledge of the
Company and Owner, there are no existing violations by the Company, or the Owner
of any federal, state or local law or regulation that could, individually or in
the aggregate, result in a Material Adverse Effect. To the actual knowledge of
the Company and the Owner, the Company possesses all materially necessary
licenses, franchises, permits and governmental authorizations for the conduct of
its, his or her business as now conducted, all of which are listed (with
expiration dates, if applicable) in Schedule 3.20. To the actual knowledge of
the Company and the Owner except as set forth in Schedule 3.20, the transactions
expressly contemplated by this Agreement will not result in a default under or a
breach or violation of, or adversely affect the rights and benefits afforded by,
any such licenses, franchises, permits or government authorizations, except for
any such default, breach or violation that would not, and is not reasonably
expected to, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth in Schedule 3.20, neither the Company, nor the Owner has
received any notice from any federal, state or other governmental authority or
agency having jurisdiction over its or his properties or activities, or any
insurance or inspection body, that its or his operations or any of its or his
properties, facilities, equipment or business practices fail to comply with any
applicable law, ordinance, regulation, building or zoning law or requirement of
any public or quasi-public authority or body, except where failure to so comply
would not, and is not reasonably expected to, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.21. FINDER'S FEE. Except as set forth in Schedule 3.21, none of
the
18
Company, any Owner or any of their Affiliates has incurred any obligation for
any finder's, broker's, agent's or similar fee in connection with the
transactions expressly contemplated hereby.
SECTION 3.22. LITIGATION. Except as described specifically in detail in
Schedule 3.22, there are no legal actions, administrative proceedings or
investigations instituted, or, to the actual knowledge of the Company,
threatened, affecting or that could affect the Company, any Owner, any Physician
Employee, the outstanding ownership interests in the Company, any of the assets
of the Company or the operations, business, condition (financial or otherwise),
results of operations or prospects of the Company which (i) if successful,
could, or might reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect or (ii) could adversely affect the ability of the
Company or any Owner to effect the transactions contemplated hereby. None of the
Company, any Owner or any Physician Employee is (a) subject to any court or
administrative order, judgment, writ, injunction or decree or that would cause a
Material Adverse Effect (b) in default with respect to any such order, judgment,
writ, injunction or decree that would cause a Material Adverse Effect. The
Company and the Owners have no actual knowledge of any valid basis for any such
action, proceeding or investigation. Except as set forth in Schedule 3.22, to
the actual knowledge of the Company, all medical malpractice claims asserted
against the Company or any of its Affiliates, general liability incidents and
incident reports have been submitted on a timely basis and in the proper manner
to the Company's insurer therefor. To the actual knowledge of the Company and
the Owner, all claims made or threatened against the Company in excess of its
deductible are covered under its Insurance Policies.
SECTION 3.23. CONDITION OF FIXED ASSETS. All of the facilities, structures
and equipment (the "Fixed Assets") regularly used by the Company in its business
are in good condition and repair, subject to normal wear and tear, and conform
in all material respects with all applicable ordinances, regulations and other
laws, and the Company and the Owners have no actual knowledge of any material
latent defects therein. Notwithstanding anything to the contrary herein, the
Fixed Assets will be as accepted by AMP at the Closing "as is".
SECTION 3.24. DISTRIBUTIONS AND REPURCHASES. Except as described in
Schedule 3.24, or contemplated by this Agreement, no distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
ownership interests since the Balance Sheet Date. No repurchase of any of the
Company's ownership interests has been approved or effected or is pending or
contemplated by the Board of Directors of the Company.
SECTION 3.25. BANKING RELATIONS. For information purposes for the Company
after the Closing, set forth in Schedule 3.25 is a complete and accurate list of
all borrowing and investing arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
19
SECTION 3.26. INTERESTED PERSONS; AFFILIATIONS. To the actual knowledge of
the Company and the Owner, except as set forth in Schedule 3.26, no Owner,
Physician Employee, officer, employee or director of the Company, or any of
their respective spouses, children or Affiliates, owns, directly or indirectly,
on an individual or joint basis, any interest in, has a compensation or other
financial arrangement with or serves as an officer or director of any customer
or supplier of the Company or any organization that has a contract or
arrangement with the Company. To the actual knowledge of the Company and the
Owner except as set forth in Schedule 3.26, none of the Company, any of its
directors, officers, employees or consultants, any Owner, any Physician Employee
or any Affiliate of any such person is, or within the last five years was, a
party to any contract, lease, agreement or arrangement, including, but not
limited to, any joint venture or consulting agreement, with any physician,
hospital, pharmacy, home health agency or other person that is in a position to
make or influence referrals to, or otherwise generate business for, the Company.
SECTION 3.27. ENVIRONMENTAL MATTERS.
(a) ENVIRONMENTAL LAWS. To the actual knowledge of the Company and the
Owner, neither the Company nor any of its assets is currently in violation of,
or subject to any existing, pending or, to the actual knowledge of the Company,
threatened investigation or inquiry by any governmental authority or to any
remedial obligations under, any Environmental Law.
(b) PERMITS. To its and the Owner's actual knowledge, the Company is not
required to obtain, by reason of any Environmental Law, any permits, licenses or
similar authorizations to occupy, operate or use any buildings, improvements,
fixtures or equipment owned or leased by the Company.
(c) SUPERFUND LIST. To its and the Owner's actual knowledge, none of the
assets owned or leased by the Company are on any federal or state "Superfund"
list or subject to any environmentally related liens.
SECTION 3.28. CERTAIN PAYMENTS. None of the Company, any director, officer
or employee of the Company, any Owner by his or her own act or any of their
respective Affiliates has paid, caused to be paid or received, directly or
indirectly:
(a) to or from any government or agency thereof or any agent of any
supplier or customer, any bribe, kick-back or other similar payment; or
(b) any contribution to any political party or candidate, other than from
personal funds not reimbursed by their respective employers or as otherwise
permitted by applicable law.
SECTION 3.29. MEDICAL WASTE. To the actual knowledge of the Company and
the Owner, with respect to the generation, transportation, treatment, storage,
disposal or other handling of Medical Waste, the Company has complied with all
Medical Waste Laws in all
20
material respects.
SECTION 3.30. MEDICARE AND MEDICAID PROGRAMS. The Company and the Owner,
to the extent necessary, are qualified for participation in the Medicare and
Medicaid programs and are parties to provider agreements for Medicaid programs
that are in full force and effect with no events of default having occurred
thereunder. The Company and the Owner require no other certification or
qualification under Medicare or Medicaid to lawfully conduct their podiatry
practice or to receive payment for their services, including the use of surgical
facilities. To its and the Owner's actual knowledge, the Company and the Owner
have timely filed all claims or other reports required to be filed prior to the
Effective Date with respect to the purchase of services by third-party payors
("Payors"), including but not limited to Medicare and Medicaid programs. To the
actual knowledge of the Company and the Owner, all such claims or reports are
complete and accurate in all material respects. The Company and the Owner have
paid or have properly recorded on the Financial Statements all actually known
and undisputed refunds, discounts or adjustments that have become due pursuant
to such claims, and neither of the Company, nor the Owner has any material
liability to any Payor with respect thereto, except as has been reserved for in
the Balance Sheet. There are no pending appeals, overpayment determinations,
adjustments, challenges, audits, litigation or notices of intent to reopen
Medicare and/or Medicaid claims determinations or other reports required to be
filed by the Company or the Owner in order to be paid by a Payor for services
rendered. During the past six years, and without any continuing course of
action, none of the Company, any of its directors, officers or the Owner have
been convicted of, or pled guilty or nolo contendere to, patient abuse or
neglect or any other Medicare or Medicaid program-related offense. None of the
Company or any of its directors, officers, Owners or, to the best of the
Company's or the Owner's actual knowledge, its employees, consultants or any of
the aforesaid persons' respective Affiliates has committed any offense that may
serve as the basis for the Company's suspension or exclusion from the Medicare
and Medicaid programs, including, but not limited to, defrauding a government
program, loss of a license to provide health care services or failure to provide
quality care.
SECTION 3.31. FRAUD AND ABUSE. None of the Company, the Owner, nor any
other person or entity providing professional services on their behalf have been
subject to a "final adverse action" as defined in 42 U.S.C. 1128E(g)(1). During
the past six years, and without any continuing course of action, the Company,
the Owner and all other persons and entities providing professional services for
or on behalf of the Company, to their actual knowledge, have not engaged in any
activities that are prohibited under 42 U.S.C. xx.xx. 1320a-7, 7a or 7b or 42
U.S.C. ss. 1395nn (subject to the exceptions set forth in such legislation) or
the regulations promulgated thereunder or pursuant to similar state or local
statutes or regulations or that are prohibited by rules of professional conduct,
including, but not limited to, 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;
21
(b) knowingly and willfully making or causing to be made a false statement
or representation of a material fact for use in determining rights to any
benefit or payment;
(c) failure to disclose knowledge by a Medicare or Medicaid claimant of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on their own behalf or on behalf of another with intent to
fraudulently secure such benefit or payment;
(d) knowingly and willfully offering, paying or soliciting or receiving
any remuneration (including any kickback, bribe or rebate), directly or
indirectly, overtly or covertly, in cash or in kind (i) in return for referring
an individual to a person for the furnishing or arranging for the furnishing of
any item or service for which payment may be made in whole or in part by
Medicare or Medicaid or (ii) in return for purchasing, leasing or ordering or
arranging 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; or
(e) referring a patient for designated health services (as defined in 42
U.S.C. ss. 1395nn) to or providing designated health services to a patient upon
a referral from an entity or person with which the physician or an immediate
family member has a financial relationship and to which no exception under 42
U.S.C. ss. 1395nn applies.
SECTION 3.32. PAYORS. Schedule 3.32 sets forth a true, correct and
complete list of the names and addresses of each Payor, including any private
pay patient as a single payor, of the Company's services that accounted for more
than 5% of the aggregate revenues of the Company in the five previous fiscal
years. Except as set forth in Section 3.32, the Company has good relations with
such Payors, and none of such Payors has notified the Company that it intends to
discontinue its relationship with the Company or to deny any claims submitted to
such Payor for payment.
SECTION 3.33. REPRESENTATIONS AND WARRANTIES NOT A GUARANTEE OF FUTURE
PERFORMANCE. It is understood between the Company, the Owner, and AMP, that the
representations and warranties of the Owner and/or the Company hereunder are not
intended to be a guarantee of how the Company or the Assets will perform in the
future.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE OWNERS
The Owner represents and warrants to AMP and AMP Subsidiary that the
following are true and correct as of the Closing Date:
SECTION 4.1. VALIDITY; OWNER'S CAPACITY. This Agreement and each other
agreement contemplated hereby has been or will be, as the case may be, as of the
Closing Date duly
22
executed and delivered by the Owner and constitute or will constitute, as the
case may be, legal, valid and binding obligations of the Owner, enforceable
against the Owner in accordance with their respective terms. The Owner has legal
capacity to enter into and perform this Agreement and the other such agreements
to which the Owner is a party.
SECTION 4.2. NO VIOLATION. To the actual knowledge of the Owner, neither
the execution, delivery or performance of this Agreement or the other agreements
of the Owner contemplated hereby nor the consummation of the transactions
contemplated hereby or thereby will (a) conflict with, result in a violation or
breach of the terms, conditions or provisions of or constitute a default under
any agreement, indenture or other instrument by which any Owner is bound or to
which any of the ownership interests in the Company are subject, or result in
the creation or imposition of any security interest, lien, charge or encumbrance
upon any of the ownership interests in the Company or (b) to the actual
knowledge of each Owner, violate or conflict with any judgment, decree, order,
statute, rule or regulation of any court or any public, governmental or
regulatory agency or body.
SECTION 4.3. PERSONAL HOLDING COMPANIES; CONTROL OF RELATED BUSINESSES.
The Owner owns no ownership interests in the Company, directly or indirectly,
beneficially or of record, through a personal holding company. Except as set
forth in Schedule 4.3, the Owner controls no other business that is in the same
or similar line of business as the Company or that has or is engaged in a
transaction with the Company.
SECTION 4.4. TRANSFERS OF OWNERSHIP INTERESTS. Set forth in Schedule 4.4
is a list of all transfers or other transactions involving ownership interests
in the Company. All such transfers by the Owner were made for valid business
reasons and not in anticipation or contemplation of the consummation of the
transactions contemplated by this Agreement.
SECTION 4.5. CONSENTS. Except as specifically disclosed pursuant to
Article III, no consent, authorization or approval of any person is required to
authorize, or is required in connection with, the Owner's execution, delivery
and performance of this Agreement or the agreements contemplated hereby.
SECTION 4.6. CERTAIN PAYMENTS. Owner has not paid, caused to be paid or
received, directly or indirectly, in connection with the business of the
Company:
(a) to or from any government or agency thereof or any agent of any
supplier or customer, any bribe, kick-back or similar payment; or
(b) any contribution to any political party or candidate, other than from
personal funds not reimbursed by the Company or as otherwise permitted by
applicable law.
SECTION 4.7. FINDER'S FEE. Except as set forth in Schedule 4.7, Owner has
not incurred any obligation for any finder's, broker's, agent's or similar fee
in connection with the
23
transactions contemplated hereby.
SECTION 4.8. INTERESTED PERSONS; AFFILIATIONS. Except as set forth in
Schedule 4.8, no Owner and no Owner's spouse, children or Affiliates owns,
directly or indirectly, on an individual or joint basis, any interest in, has a
compensation or other financial arrangement with or serves as an officer or
director of, any customer or supplier of the Company or any organization that
has a contract or arrangement with the Company. No Owner or any of such Owner's
Affiliates is, or within the last five years was, a party to any contract,
lease, agreement or arrangement, including, but not limited to, any joint
venture or consulting agreement, with any physician, hospital, pharmacy, home
health agency or other person that is in a position to make or influence
referrals to, or otherwise generate business for, the Company.
SECTION 4.9. INVESTMENTS IN COMPETITORS. Except as disclosed in Schedule
4.9, Owner does not own, directly or indirectly, any interests or has any
investment in any person that is a competitor of the Company; provided, however,
Owner is landlord and Owner of the premises for the Decatur Property.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AMP AND AMP SUBSIDIARY
AMP and AMP Subsidiary each represent and warrant to the Company and the
Owners that the following are true and correct as of the Closing Date:
SECTION 5.1. ORGANIZATION AND GOOD STANDING. AMP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to carry on the
business in which it is engaged, to own the properties it owns, to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Prior to the Closing, neither AMP nor AMP Subsidiary will have had any
operations, other than in connection with its formation and capitalization and
the transactions contemplated by this Agreement and the Other Agreements.
SECTION 5.2. CAPITALIZATION OF AMP. The authorized and outstanding capital
stock of AMP are as disclosed in the Registration Statement.
SECTION 5.3. CAPITALIZATION OF AMP SUBSIDIARY. AMP owns all of the
outstanding capital stock of AMP Subsidiary. AMP Subsidiary does not have any
bonds, debentures, notes or other obligations the holders of which will have the
right to vote (or will be convertible into or exercisable for securities having
the right to vote) with the stockholders of AMP Subsidiary on any matter. There
exist no options, warrants, subscriptions or other rights to purchase, or
securities convertible into or exchangeable for, any of the authorized or
outstanding securities of AMP Subsidiary, and no option, warrant, call,
conversion right or commitment of any kind
24
will exist that obligates AMP Subsidiary to issue any of its authorized but
unissued capital stock. AMP Subsidiary has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity securities
or any interests therein or to pay a dividend or make any distribution in
respect thereof. No stockholder of AMP Subsidiary has granted options or other
rights to purchase any shares of AMP Subsidiary Common Stock from such
stockholder.
SECTION 5.4. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by AMP and AMP Subsidiary of this Agreement and the other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by AMP and AMP Subsidiary. This
Agreement and each other agreement contemplated hereby to be executed by AMP and
AMP Subsidiary have been or will be, as the case may be, as of the Closing Date
duly executed and delivered by AMP and AMP Subsidiary and constitute or will
constitute, as the case may be, legal, valid and binding obligations of AMP and
AMP Subsidiary.
SECTION 5.5. NO VIOLATION. Neither the execution, delivery or performance
of this Agreement or the other agreements contemplated hereby nor the
consummation of the transactions contemplated hereby or thereby will (a)
conflict with, result in a violation or breach of the terms, conditions and
provisions of or constitute a default under the Certificate of Incorporation or
Bylaws of AMP or AMP Subsidiary or any agreement, indenture or other instrument
by which AMP or AMP Subsidiary is or will be, as of the Closing, bound or (b)
except as would not, individually or in the aggregate, have a material adverse
effect on the business, operations, condition (financial or otherwise) or
results of operations of AMP or AMP Subsidiary, violate or conflict with any
judgment, decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over AMP or AMP
Subsidiary or the properties or assets of AMP or AMP Subsidiary.
SECTION 5.6. FINDER'S FEE. To their actual knowledge, neither AMP nor AMP
Subsidiary has incurred any obligation for any finder's, broker's, agent's or
similar fee in connection with the transactions contemplated hereby.
SECTION 5.7. CONSENTS. Except as have been obtained or as may be required
by the exchange or automated quotation system on which the AMP Common Stock may
be listed or under the applicable state Business Corporation Act, the Exchange
Act, the Securities Act or state securities laws, no consent, authorization,
approval, permit or license of, or filing with, any governmental or public body
or authority, any lender, any lessor or any other person is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement or the agreements contemplated hereby on the part
of AMP or AMP Subsidiary.
SECTION 5.8. LIABILITIES AND OBLIGATIONS. To the actual knowledge of AMP,
the Registration Statement will reflect material liabilities of AMP, except for
liabilities or obligations incurred in the ordinary course of business
consistent with reasonable past practice. To its
25
actual knowledge, AMP is not liable upon or with respect to, or obligated in any
other way to provide a material amount of funds in respect of or to guarantee or
assume in any manner, any debt, obligation or dividend of any person,
corporation, association, partnership, joint venture, trust or other entity, and
AMP does not know of any valid basis for the assertion of any claims or
liabilities of any nature or in any amount.
SECTION 5.9. EMPLOYEE BENEFIT PLANS. Schedule 5.9 contains a complete and
accurate list of all employee benefit plans (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
sponsored by AMP or to which AMP contributes on behalf of its employees and all
employee benefit plans previously sponsored or contributed to on behalf of its
employees within the five years preceding the date hereof (the "AMP Employee
Benefit Plans").
SECTION 5.10. TAXES.
(a) FILING OF TAX RETURNS. To its actual knowledge, AMP has duly and
timely filed (in accordance with any extensions duly granted by the appropriate
governmental agency, if applicable) with the appropriate governmental agencies
all material Tax Returns and reports required to be filed in the United States,
any state or any political subdivision thereof or any foreign jurisdiction. All
such Tax Returns or reports are complete and accurate in all material respects
and properly reflect the Taxes of AMP for the periods covered thereby.
(b) PAYMENT OF TAXES. To its actual knowledge, except for such items as
AMP may be disputing in good faith by proceedings in compliance with applicable
law, (i) AMP has paid all Taxes, penalties, assessments and interest that have
become due with respect to any Tax Return that it has filed (including those
related to employment) and has properly accrued on its books and records for all
of the same that have not yet become due and (ii) AMP is not delinquent in the
payment of any Tax, assessment or governmental charge.
(c) NO PENDING DEFICIENCIES, DELINQUENCIES, ASSESSMENTS OR AUDITS. To its
actual knowledge, AMP has not received any notice that any Tax deficiency or
delinquency has been asserted against AMP. There is no unpaid assessment,
proposal for additional Taxes, deficiency or delinquency in the payment of any
of the Taxes of AMP that could be asserted by any Taxing authority. There is no
Taxing authority audit of AMP pending, or, to the actual knowledge of AMP,
threatened, and the results of any completed audits are properly reflected in
the Financial Statements. AMP has not violated in any material respect any
federal, state, local or foreign Tax law.
(d) NO EXTENSION OF LIMITATION PERIOD. AMP has not granted an extension to
any taxing authority of the limitation period during which any Tax liability may
be assessed or collected.
SECTION 5.11. COMPLIANCE WITH LAWS. Except as set forth in Schedule 5.11
and to the
26
actual knowledge of AMP, AMP and its predecessors have complied in all material
respects with, and are in compliance in all material respects with, all
applicable laws, regulations (including applicable state and federal securities
laws) and licensing requirements and has filed with the proper authorities all
necessary statements and reports, except where the failure to so comply or file
would not, and is not reasonably expected to, individually or in the aggregate,
result in a Material Adverse Effect. There are no existing violations by AMP of
any federal, state or local law or regulation that could, individually or in the
aggregate, result in a Material Adverse Effect. To its actual knowledge, AMP has
not received any notice from any federal, state or other governmental authority
or agency having jurisdiction over its, his or her properties or activities, or
any insurance or inspection body, that its, his or her operations or any of its,
his or her properties, facilities, equipment or business practices fail to
comply with any applicable law, ordinance, regulation, building or zoning law or
requirement of any public or quasi-public authority or body, except where
failure to so comply would not, and is not reasonably expected to, individually
or in the aggregate, have a Material Adverse Effect.
SECTION 5.12. LITIGATION. Except as set forth on Schedule 5.12 and to the
actual knowledge of AMP, there are no material legal actions, administrative
proceedings or investigations instituted, or, to the actual knowledge of AMP,
threatened, against AMP. AMP is not (a) subject to any material court or
administrative order, judgment, writ, injunction or decree or (b) in default
with respect to any such order, judgment, writ, injunction or decree. AMP has no
actual knowledge of any valid basis for any such material action, proceeding or
investigation. To the actual knowledge of AMP, all material claims asserted
against AMP, general liability incidents and incident reports have been
submitted on a timely basis and in the proper manner to AMP's insurer therefor.
To AMP's knowledge, all material claims made or threatened against AMP in excess
of its deductible would be covered under insurance policies.
ARTICLE VI
COVENANTS OF THE COMPANY AND THE OWNERS
The Company and the Owners agree that between the date hereof and the
Closing:
SECTION 6.1. CONSUMMATION OF AGREEMENT. The Company and the Owners will
use their commercially reasonable best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions.
SECTION 6.2. BUSINESS OPERATIONS. The Company will operate its business in
the ordinary course. The Company and the Owners will use their commercially
reasonable best efforts to preserve the businesses of the Company intact.
Neither the Company nor any Owners will knowingly take any action that would,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. Except as set forth in Schedule 6.2, the Company will use its
commercially reasonable best efforts to preserve intact its relationships
27
with Payors, referral sources, customers, suppliers, patients, employees and
others having significant business relations with it, unless doing so would
impair its goodwill or, individually or in the aggregate, result in a Material
Adverse Effect. The Company will collect its receivables and pay its trade
payables in the ordinary course of business consistent with reasonable past
practice.
SECTION 6.3. ACCESS. The Company and the Owners will, at reasonable times
as agreed upon with Owner, and in each instance outside of normal business hours
and on reasonable notice, permit AMP and its authorized representatives
reasonable access to, and make available for inspection, all of the assets and
business of the Company, including its employees, if expressly permitted by
Owner, and permit AMP and its authorized representatives to inspect and make
copies of all documents, records (other than confidential portions of patient
medical records) and information with respect to the affairs of the Company as
AMP and its representatives may reasonably request, all for the sole purpose of
permitting AMP to become familiar with the businesses and assets and liabilities
of the Company. AMP shall not have any contact or access to the premises or
business of the Company during regular office hours, will instruct its employees
and agents not to call, mail, or deliver any materials or communications
regarding this transaction to the business location, will prohibit any
communication with employees of the Company but with the express consent in each
instance of Owner, and shall direct all communications regarding this
transaction solely through the private telephone service of Owner (telephone
000-000-0000), the address for Owner set forth below, or through legal counsel
of Owner as set forth below. However, Owner agrees that at AMP's authorized
visits as provided for above, that Owner will be present to produce the
requested documentation and information.
SECTION 6.4. TAX RETURNS. The Owner will file a tax return for the Company
for the period from January 1, 1998 to the Closing Date. AMP will have the right
to review the tax returns of the Company for years prior to 1998 and for the
period from January 1, 1998 to the Closing Date.
SECTION 6.5. NOTIFICATION OF CERTAIN MATTERS. The Company and the Owners
will promptly inform AMP in writing of (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by the Company or any Owner subsequent to the
date of this Agreement and prior to Closing under any Commitment material to the
Company's condition (financial or otherwise), operations, assets, liabilities,
business or prospects and to which it is subject, (b) any event or information
that would cause the Company or any Owner to believe reasonably that any of
their respective representations and warranties under this Agreement to be
untrue or (c) any material adverse change in the Company's condition (financial
or otherwise), operations, assets, liabilities, business or prospects.
SECTION 6.6. APPROVALS OF THIRD PARTIES. The Company and the Owners will
use their commercially reasonable best efforts to secure, or will cooperate with
AMP to obtain, as soon
28
as practicable after the date hereof, all necessary approvals and consents of
third parties to the consummation of the acquisition transactions contemplated
hereby, including, without limitation, all necessary approvals and consents
required under any real property and personal property leases.
SECTION 6.7. EMPLOYEE MATTERS. Except as set forth in Schedule 6.7 or as
otherwise specifically contemplated by this Agreement, the Company will not,
without the prior written approval of AMP, which approval shall not be delayed
or unreasonably withheld, except as required by law:
(a) increase the Cash Compensation of any Owner or other employee of the
Company;
(b) adopt, amend or terminate any Compensation Plan;
(c) adopt, amend or terminate any Employment Agreement;
(d) adopt, amend or terminate any Employee Policies and Procedures;
(e) adopt, amend or terminate any Employee Benefit Plan;
(f) take any action that could deplete the assets of any Employee Benefit
Plan, other than payment of benefits in the ordinary course to participants and
beneficiaries;
(g) fail to pay any premium or contribution due or with respect to any
Employee Benefit Plan;
(h) fail to file any return or report with respect to any Employee Benefit
Plan;
(i) institute, settle or dismiss any employment litigation, except as
could not, individually or in the aggregate, result in a Material Adverse
Effect;
(j) enter into, modify, amend or terminate any agreement with any union,
labor organization or collective bargaining unit; or
(k) take or fail to take any action with respect to any past or present
employee of the Company that would, individually or in the aggregate, result in
a Material Adverse Effect.
SECTION 6.8. CONTRACTS. Except with AMP's prior written consent, which
consent shall not be delayed or unreasonably withheld, the Company will not
assume or enter into any contract, lease, license, obligation, indebtedness,
commitment, purchase or sale that is material to the Company's business nor will
it waive any material right or cancel any material contract, debt or claim,
except as contemplated by this Agreement.
29
SECTION 6.9. CAPITAL ASSETS; PAYMENTS OF LIABILITIES. The Company will
not, without the prior written approval of AMP (a) acquire or dispose of any
capital asset having a fair market value of $5,000 or more or acquire or dispose
of any capital asset outside of the ordinary course of business or (b) discharge
or satisfy any lien or encumbrance or pay or perform any obligation or
liability, other than (i) liabilities and obligations reflected in the Financial
Statements or (ii) current liabilities and obligations incurred in the usual and
ordinary course of business since the Balance Sheet Date and, in either case (i)
or (ii) above, only as required by the express terms of the agreement or other
instrument pursuant to which the liability or obligation was incurred.
SECTION 6.10. MORTGAGES, LIENS AND GUARANTIES. The Company will not,
without the prior written approval of AMP, which consent shall not be delayed or
unreasonably withheld, enter into or assume any mortgage, pledge, conditional
sale or other title retention agreement, permit any security interest, lien,
encumbrance or claim of any kind to attach to any of its assets (other than
statutory liens and contractual liens of landlords arising in the ordinary
course of business and other liens that do not materially detract from the value
or interfere with the use of such assets), whether now owned or hereafter
acquired, or guarantee or otherwise become contingently liable for any
obligation of another, except obligations arising by reason of enforcement for
collection and other similar transactions in the ordinary course of business, or
make any capital contribution or investment in any person.
SECTION 6.11. ACQUISITION PROPOSALS. From the date of this Agreement
through January 31, 1998 (a) no Owner nor the Company nor any of their
respective officers, directors or partners will, and the Owners and the Company
will direct and use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets, any equity securities or partnership interests of the Company (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal") or
engage in any negotiations concerning, or provide any confidential information
or data to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal; (b) each Owner and the Company will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing, and each
will take the necessary steps to inform the individuals or entities referred to
in the first sentence hereof of the obligations undertaken in this Section; and
(c) the Owners and the Company will notify AMP immediately if any such inquiries
or proposals are received by, any such information is requested from or any such
negotiations or discussions are sought to be initiated or continued with the
Company or any Owner.
SECTION 6.12. DISTRIBUTIONS AND REPURCHASES. Except as set forth on
Schedule 6.12 or as contemplated by this Agreement, no distribution, payment or
dividend of any kind will be declared or paid by the Company in respect of its
shares of capital stock nor will any repurchase
30
of any equity interests of the Company be approved or effected.
SECTION 6.13. REQUIREMENTS TO EFFECT ACQUISITION. The Company and the
Owners will use their best efforts to take, or cause to be taken, or will
cooperate with AMP in taking all actions necessary to effect the Acquisition
under applicable law, including, without limitation, the filing with the
appropriate government officials of all necessary documents in form approved by
counsel for the parties to this Agreement.
SECTION 6.14. LICENSES AND PERMITS. The Company and the Owners will use
their best efforts to transfer, or will cooperate with AMP to obtain, all
licenses, permits, approvals or other authorizations required under any law,
statute, rule, regulation or ordinance, or otherwise necessary or desirable, for
the Company to conduct its business after the Closing.
SECTION 6.15. DELIVERY OF SCHEDULES. The Company and the Owners will
deliver to AMP all schedules required to be delivered by them prior to the
Closing.
ARTICLE VII
COVENANTS OF AMP AND AMP SUBSIDIARY
AMP and AMP Subsidiary agree that between the date hereof and the Closing:
SECTION 7.1. CONSUMMATION OF AGREEMENT. AMP will use its commercially
reasonable efforts to cause the consummation of the transactions contemplated
hereby in accordance with their terms and conditions and take all corporate and
other action necessary to approve the Acquisition.
SECTION 7.2. REQUIREMENTS TO EFFECT ACQUISITION. AMP will use its best
efforts to take, or cause to be taken, all actions necessary to effect the
Acquisition under applicable law, including, without limitation, the filing with
the appropriate government officials of all necessary documents in form approved
by counsel for the parties to this Agreement.
SECTION 7.3. NOTIFICATION OF CERTAIN MATTERS. AMP will promptly inform the
Company and the Owners in writing of any material adverse change in AMP's
prospects, proposed public offering, condition (financial or otherwise),
operations, assets, liabilities or business or (b) any event or information that
would cause AMP to believe reasonably that any of its respective representations
and warranties under this Agreement to be untrue.
SECTION 7.4. APPROVALS OF THIRD PARTIES. AMP will use its best efforts to
secure, as soon as practicable after the date hereof, all necessary approvals
and consents of third parties to the consummation of the transactions
contemplated hereby.
31
SECTION 7.5. STOCK OPTION PLAN FOR ADVISORS AND CONSULTANTS. Prior to
Closing, AMP will adopt a non-statutory stock option plan for the benefit of
advisors and consultants to AMP (the "Advisors Plan"). Physician Employees who
agree to and serve as advisors or consultants to AMP may be eligible to receive
non-statutory options under the Advisors Plan.
SECTION 7.6. LICENSES AND PERMITS. AMP will use its best efforts to obtain
all licenses, permits, approvals or other authorizations required under any law,
statute, rule, regulation or ordinance, or otherwise necessary or desirable, to
consummate the transactions or provide the services contemplated by the
Management Agreement and to conduct the intended businesses of AMP and AMP
Subsidiary.
SECTION 7.7. DELIVERY OF SCHEDULES. AMP will deliver to the Company and
the Owners all schedules required to be delivered by it prior to the Closing.
SECTION 7.8. PROFESSIONAL LIABILITY INSURANCE. AMP will use commercially
reasonable methods to obtain professional liability insurance for Owner after
the Closing Date but only so long as Owner is providing services or consulting
to the Company or AMP. Owner agrees to pay the portion of any premium
attributable to the period after the termination of such service or consulting
relationship within thirty (30) days after such termination. AMP will cooperate
with Owner in obtaining the tail insurance at Owner's cost.
ARTICLE VIII
COVENANTS OF AMP, THE COMPANY AND THE OWNERS
AMP, the Company and the Owners agree as follows:
SECTION 8.1. FILINGS; OTHER ACTION.
(a) AMP will promptly prepare and file with the SEC the Registration
Statement on Form S-1 (or other appropriate Form) to be filed by AMP in
connection with its Initial Public Offering (including the prospectus
constituting a part thereof, the "Registration Statement"). AMP will obtain all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. The Company and the
Owners will cooperate as may be reasonably requested in connection with any such
action.
(b) The Company and the Owner will, upon request, furnish AMP with all
information concerning itself, its subsidiaries, directors, officers, partners
and stockholders and such other matters as may be reasonably requested by AMP in
connection with the preparation of the Registration Statement and each amendment
or supplement thereto, or any other statement, filing, notice or application
made by or on behalf of each such party or any of its subsidiaries to any
governmental entity in connection with the Acquisition and the other
32
transactions contemplated by this Agreement.
SECTION 8.2. AMENDMENT OF SCHEDULES. Each party hereto agrees that, with
respect to the representations and warranties of such party contained in this
Agreement, such party will have the continuing obligation until the Closing to
supplement or amend promptly the Schedules with respect to any matter that would
have been or would be required to be set forth or described in the Schedules in
order to not materially breach any representation, warranty or covenant of such
party contained herein; provided, that no amendment or supplement to a Schedule
that constitutes or reflects a material adverse change to the Company may be
made unless AMP consents to such amendment or supplement, and no amendment or
supplement to a Schedule that constitutes or reflects a material adverse change
to AMP may be made unless the Company and the Owners consent to such amendment
or supplement. If either AMP or the Owner and the Company do not consent to such
amendments, this Agreement (including the Acquisition Consideration) may be
modified in order to obtain such consent or this Agreement may be terminated in
accordance with Section 14.1(c). For all purposes of this Agreement, including,
without limitation, for purposes of determining whether the conditions set forth
herein have been fulfilled, the Schedules hereto will be deemed to be the
Schedules as completed, amended or supplemented with consent pursuant to this
Section.
SECTION 8.3. PRORATION OF COSTS AND RENTS. All rents, personal property
taxes and other sums actually paid under the lease agreements between the
Company and its lessors pertaining to the Assets (but not the Excluded Assets),
all expenses and costs related to the Assets (but not the Excluded Assets), and
the premiums on Owner's malpractice insurance for the month of Closing will be
prorated as of the Closing Date.
SECTION 8.4. EMPLOYEES. AMP shall cause the Company to retain all current
Employees (excluding Owner), as listed on Schedule 3.11(a), at their current
positions and rates of pay for at least ninety (90) days after the Closing Date.
ARTICLE IX
CONDITIONS PRECEDENT OF AMP
Except as may be waived in writing by AMP, or if this Agreement is
terminated pursuant to Article XIV, the obligations of AMP hereunder are subject
to the fulfillment at or prior to the Effective Date of each of the following
conditions:
SECTION 9.1. PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency will have been threatened, orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 9.2. NO MATERIAL ADVERSE EFFECT. No Material Adverse Effect will
have
33
occurred, whether or not such effect shall have been caused by the deliberate
act or omission of the Company or any Owner.
SECTION 9.3. GOVERNMENT APPROVALS AND REQUIRED CONSENTS. The Company, the
Owners, the Group Practice and AMP will have obtained all necessary government
and other third-party approvals and consents.
SECTION 9.4. SECURITIES APPROVALS. The Registration Statement will have
become effective under the Securities Act, and no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceedings for that purpose will have been initiated or threatened by the SEC.
At or prior to the Effective Date, AMP will have received all state securities
and "Blue Sky" permits necessary to consummate the transactions contemplated
hereby. The AMP Common Stock will have been approved for listing on The Nasdaq
Stock Market, subject only to official notification of issuance.
SECTION 9.5. CLOSING DELIVERIES. AMP will have received all documents and
agreements, duly executed and delivered in form satisfactory to AMP, referred to
in Section 11.1.
SECTION 9.6. CHARTER AMENDMENT. The Company will have amended its charter
or other constitutive documents simultaneously with the Closing so that the
Company is no longer a "professional" corporation or other such "professional"
legal entity.
ARTICLE X
CONDITIONS PRECEDENT OF THE COMPANY AND THE OWNER
Except as may be waived in writing by the Company and the Owner, or if
this Agreement is terminated pursuant to Article XIV, the obligations of the
Company and the Owners hereunder are subject to fulfillment at or prior to the
Effective Date of each of the following conditions:
SECTION 10.1. PROCEEDINGS. No action, proceeding or order by any court or
governmental body or agency will have been threatened, orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
SECTION 10.2. GOVERNMENT APPROVALS AND REQUIRED CONSENTS. The Company, the
Owners, the Group Practice and AMP will have obtained all necessary government
and other third-party approvals and consents.
SECTION 10.3. SECURITIES APPROVALS. The Registration Statement will have
become effective under the Securities Act, and no stop order suspending the
effectiveness of the
34
Registration Statement will have been issued and no proceedings for that purpose
will have been initiated or threatened by the SEC. At or prior to the Effective
Date, AMP will have received all state securities and "Blue Sky" permits
necessary to consummate the transactions contemplated hereby. At or prior to the
Effective Date, the AMP Common Stock will have been approved for listing on The
Nasdaq Stock Market, subject only to official notification of issuance.
SECTION 10.4. SALE OF DECATUR PROPERTY. The obligations of Owner to
perform hereunder and to convey the Shares are conditioned upon a
contemporaneous closing of the sale of the Decatur Property.
ARTICLE XI
CLOSING DELIVERIES
SECTION 11.1. DELIVERIES OF THE COMPANY AND THE OWNERS. At or prior to the
Closing Date, the Company and the Owners will deliver to AMP c/o Baker &
Xxxxxxxxx LLP, counsel to AMP, the following, all of which will be in a form
reasonably satisfactory to AMP and Owner and will be held by Xxxxx & Xxxxxxxxx
in escrow pending Closing, pursuant to an escrow agreement in form and substance
mutually acceptable to the parties hereto:
(a) a copy of resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements and consummation of the Acquisition, certified
by the Secretary of the Company as being true and correct copies of the
originals thereof subject to no modification or amendment;
(b) a certificate of the President of the Company and each Owner, dated
the Closing Date, as to the truth and correctness of the representations and
warranties of the Company and the Owners contained herein on and as of the
Closing Date;
(c) a certificate of the President, of the Company and the Owner, dated
the Closing Date, (i) as to the performance of and compliance in all material
respects by the Company and the Owners with all covenants contained herein on
and as of the Closing Date and (ii) certifying that all conditions precedent of
the Company and the Owner to the Closing Date have been satisfied;
(d) a certificate of the Secretary of the Company certifying as to the
incumbency of the directors and officers of the Company and as to the signatures
of such directors and officers who have executed documents delivered at Closing
on behalf of the Company;
(e) a certificate, dated within five days prior to the Closing Date, of
the Secretary of State of the respective states of organization or qualification
of the Company establishing that
35
such corporation is in existence, has paid all franchise or similar taxes, if
any, and, if applicable, otherwise is in good standing to transact business in
its state of organization;
(f) certificates, dated within five days prior to the Closing Date, of the
Secretaries of State of the states in which the Company is qualified to do
business, to the effect that such corporation is validly existing and qualified
to do business and, if applicable, is validly existing as foreign corporation,
as the case may be, in each of such states;
(g) an opinion of counsel to the Company and the Owner, dated as of the
Closing Date;
(h) all authorizations, consents, approvals, permits and licenses
referenced in Section 3.8;
(i) the resignations of the officers and directors of the Company as
requested by AMP;
(j) a nonforeign affidavit, as such affidavit is referred to in Section
1445(b)(2) of the Code, of the Owner, signed under a penalty of perjury and
dated as of the Closing Date, to the effect that the Owner is a United States
citizen or a resident alien (and thus not a foreign person) and providing such
Owner's United States taxpayer identification number;
(k) an executed stock transfer conveying the Shares to AMP Subsidiary in
substantially the form attached hereto as Exhibit 11.1(l);
(l) an executed Assignment and Assumption Agreement in the form attached
hereto as Exhibit 11.1(m) with respect to the Assumed Liabilities (the
"Assignment and Assumption Agreement");
(m) an assignment to AMP or AMP Subsidiary of each lease for real
property, in form and substance reasonably satisfactory to AMP (the "Lease
Assignments"); and
(n) such other instrument or instruments as may be necessary or
appropriate, as AMP or its counsel will reasonably request, to carry out and
effect the purpose and intent of this Agreement.
SECTION 11.2. DELIVERIES OF AMP. At or prior to the Closing Date, AMP will
deliver to the Company and the Owners c/o Baker & Xxxxxxxxx LLP, counsel to AMP,
the following, all of which will be in a form reasonably satisfactory to the
Company, the Owner and AMP and will be held by Xxxxx & Xxxxxxxxx in escrow
pending Closing, pursuant to an escrow agreement in form and substance mutually
acceptable to the parties hereto:
(a) a copy of the resolution of the Board of Directors of AMP authorizing
the
36
execution, delivery and performance of this Agreement, and all related documents
and agreements, certified by AMP's Secretary as being true and correct copies of
the originals thereof subject to no modifications or amendments;
(b) a copy of resolutions of the Board of Directors of AMP authorizing the
execution, delivery and performance of the Management Agreement, certified by
the Secretary of AMP as being true correct copies of the originals thereof
subject to no modification or amendments;
(c) a certificate of an officer of AMP dated the Closing Date as to the
truth and correctness of the representations and warranties of AMP contained
herein on and as of the Closing Date;
(d) a certificate of an officer of AMP dated the Closing Date (i) as to
the performance and compliance by AMP with all covenants contained herein on and
as of the Closing Date and (ii) certifying that all conditions precedent of AMP
to the Closing have been satisfied;
(e) a certificate of the Secretary of AMP certifying as to the incumbency
of the officers of AMP who have executed documents delivered at the Closing on
behalf of AMP;
(f) a certificate, dated within five days prior to the Closing Date, of
the Secretary of State of the respective states of incorporation of AMP and AMP
Subsidiary establishing that such corporation is in existence, has paid all
franchise or similar taxes, if any, and, if applicable, otherwise is in good
standing to transact business in its state of incorporation;
(g) certificates, dated within five days prior to the Closing Date, of the
Secretaries of State of the states in which AMP is qualified to do business, to
the effect that AMP is qualified to do business and, if applicable, is in good
standing as a foreign corporation in such state;
(h) an opinion of Xxxxx & Xxxxxxxxx, counsel to AMP, dated as of the
Closing Date;
(i) the Acquisition Consideration in accordance with Article II and Annex
I hereof;
(j) the executed Assignment and Assumption Agreement;
(k) the executed Lease Assignments;
(l) such other instrument or instruments as may be necessary or
appropriate, as the Company, the Owners or their counsel may reasonably request,
to carry out and effect the purpose and intent of this Agreement.
37
ARTICLE XII
POST CLOSING MATTERS
SECTION 12.1. FURTHER INSTRUMENTS OF TRANSFER. Following the Closing, at
the request of AMP, the Owners and the Company will deliver any further
instruments of transfer and take all reasonable action as may be necessary or
appropriate to carry out the purpose and intent of this Agreement.
SECTION 12.2. POST-CLOSING AGREEMENTS. AMP agrees to take all actions
necessary or appropriate to effect its obligations in Section 2.4 and Owner
agrees to the transition commitment in Section 2.5. After Closing, AMP agrees to
respond to all reasonable requests by Owner for information retained by the
Company that Owner needs for tax returns or other necessary filings.
ARTICLE XIII
REMEDIES
SECTION 13.1. INDEMNIFICATION BY THE OWNER. Subject to the terms and
conditions of this Article XIII, Owner agrees to indemnify, defend and hold AMP,
AMP Subsidiary and their respective directors, officers, members, managers,
employees, agents, attorneys and affiliates harmless from and against all
losses, claims, obligations, demands, assessments, penalties, liabilities,
costs, damages, reasonable attorneys' fees and expenses (collectively,
"Damages"), as incurred, asserted against or incurred by such indemnities
arising out of or resulting from:
(a) a breach of any representation, warranty or covenant of the Company or
any Owner contained herein or in any schedule or certificate delivered
hereunder;
(b) any and all liabilities, including Tax and ERISA, related to the
Company's and the Owner's pre-closing actions regarding any Employee Benefit
Plans or other arrangements; or
(c) any violation (or alleged violation) by the Owners, the Company and/or
any of their past or present directors, officers, members, partners, managers,
shareholders, employees (including, without limitation, Physician Employees),
agents, consultants and Affiliates of state or federal laws governing healthcare
fraud and abuse (including, but not limited to, fraud and abuse in the Medicare
and Medicaid programs) occurring on or before the Closing Date, or any
overpayment or obligation (or alleged overpayment or obligation) arising out of
or resulting from claims submitted to any third party payor (including the
Medicare and Medicaid programs) on or before the Closing Date.
38
SECTION 13.2. INDEMNIFICATION BY AMP AND AMP SUBSIDIARY. Subject to the
terms and conditions of this Article XIII, AMP and AMP Subsidiary hereby agree
to indemnify, defend and hold the Owners and their respective agents, attorneys
and Affiliates harmless from and against all Damages, as incurred, asserted
against or incurred by such indemnities arising out of or resulting from:
(a) a breach by AMP and AMP Subsidiary of any representation, warranty or
covenant of AMP or AMP Subsidiary contained herein or in any schedule or
certificate delivered hereunder; or
(b) all claims, demands, causes of action, loses, damages, liabilities,
costs and expenses (including, without limitation, attorneys' fees and
disbursements) asserted against or incurred by Owner (except in cases of Owner's
negligence or willful misconduct), against, in connection with or arising out of
(i) the ownership, maintenance or operation of the Real Property and
attributable to events occurring after the Closing and during AMP's ownership of
the Real Property; (ii) any of the Leases of the Real Property as to any matters
or obligations of lessor from and after the date of Closing during AMP's tenure
as lessor; (iii) the operations, business and activities of the Company from and
after the date of Closing.
SECTION 13.3. INDEMNIFICATION PROCEDURES. All claims for indemnification
under this Agreement will be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an "Indemnified
Party") shall promptly (and, in any event, at least 10 days prior to the due
date for any responsive pleadings, filings or other documents) (i) notify the
party from whom indemnification is sought (the "Indemnifying Party") of any
third-party claim or claims asserted against the Indemnified Party ("Third Party
Claim") that could give rise to a right of indemnification under this Agreement
and (ii) transmit to the Indemnifying Party a written notice ("Claim Notice")
describing in reasonable detail the nature of the Third Party Claim, a copy of
all papers served with respect to such claim (if any), an estimate of the amount
of damages attributable to the Third Party Claim and the basis of the
Indemnified Party's request for indemnification under this Agreement. The
failure to promptly deliver a Claim Notice shall not relieve the Indemnifying
Party of its obligations to the Indemnified Party with respect to the related
Third Party Claim.
Within 30 days after receipt of any Claim Notice (the "Election Period"),
the Indemnifying Party shall notify the Indemnified Party (i) whether the
Indemnifying Party disputes its potential liability to the Indemnified Party
under this Article XIII with respect to such Third Party Claim or (ii) whether
the Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend the Indemnified Party against such Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party within the
Election Period that the Indemnifying Party elects to assume the defense of the
Third Party Claim, then the
39
Indemnifying Party shall have the right to defend, at its sole cost and expense,
such Third Party Claim by all appropriate proceedings, which proceedings shall
be prosecuted diligently by the Indemnifying Party to a final conclusion or
settled, with the consent of the Indemnified Party. The Indemnifying Party is
hereby authorized, at the sole cost and expense of the Indemnifying Party (but
only if the Indemnified Party is entitled to indemnification hereunder), to
file, during the Election Period, any motion, answer or other pleadings that the
Indemnifying Party shall deem necessary or appropriate to protect its interests
or those of the Indemnified Party and not prejudicial to the Indemnified Party.
If requested by the Indemnifying Party, the Indemnified Party agrees, at the
sole cost and expense of the Indemnifying Party, to cooperate with the
Indemnifying Party and its counsel in contesting any Third Party Claim that the
Indemnifying Party elects to contest, including, without limitation, the making
of any related counterclaim against the person asserting the Third Party Claim
or any cross-complaint against any person. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this Section 13.3(b) and shall
bear its own costs and expenses with respect to such participation; provided,
however, that if the named parties to any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnifying Party and the
Indemnified Party has been advised by counsel that there may be one or more
legal defenses available to it that are different from or additional to those
available to the Indemnifying Party, then the Indemnified Party may employ
separate counsel at the expense of the Indemnifying Party, and, upon written
notification thereof, the Indemnifying Party shall not have the right to assume
the defense of such action on behalf of the Indemnified Party; provided further,
that the Indemnifying Party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Party, which firm shall be designated in writing by the
Indemnified Party.
(c) If the Indemnifying Party fails to notify the Indemnified Party within
the Election Period that the Indemnifying Party elects to defend the Indemnified
Party pursuant to Section 13.3(b), or if the Indemnifying Party elects to defend
the Indemnified Party pursuant to Section 13.3(b) but fails diligently and
promptly to prosecute or settle the Third Party Claim, then the Indemnified
Party shall have the right to defend, at the sole cost and expense of the
Indemnifying Party (if the Indemnified Party if entitled to indemnification
hereunder), the Third Party Claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified Party
to a final conclusion or settled. The Indemnified Party shall have full control
of such defense and proceedings, provided, however, that the Indemnified Party
may not enter into, without the Indemnifying Party's consent, which shall not be
unreasonably withheld, any compromise or settlement of such Third Party Claim.
The Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 13.3(c),
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation; provided, however, that if the named parties to any such
action (including any impleaded parties) include both the Indemnifying Party and
the Indemnified Party, and the Indemnifying Party has been advised by counsel
that there may be
40
one or more legal defenses available to it that are different from or additional
to those available to the Indemnified Party, then the Indemnified Party may
employ separate counsel and, upon written notification thereof, the Indemnified
Party shall not have the right to assume the defense of such action on behalf of
the Indemnifying Party.
(d) If any Indemnified Party should have a claim against any Indemnifying
Party hereunder that does not involve a Third Party Claim, the Indemnified Party
shall transmit to the Indemnifying Party a written notice (the "Indemnity
Notice") describing in reasonable detail the nature of the claim, an estimate of
the amount of damages attributable to such claim and the basis of the
Indemnified Party's request for indemnification under this Agreement. If the
Indemnifying Party does not notify the Indemnified Party within 60 days from its
receipt of the Indemnity Notice that the Indemnifying Party disputes such claim,
the claim specified by the Indemnified Party in the Indemnity Notice shall be
deemed a liability of the Indemnifying Party hereunder. If the Indemnifying
Party has timely disputed such claim, as provided above, such dispute shall be
resolved by litigation in an appropriate court of competent jurisdiction if the
parties do not reach a settlement of such dispute.
(e) Payments of all amounts owing by an Indemnifying Party pursuant to
this Article XIII relating to a Third Party Claim shall be made within 30 days
after the latest of (i) the settlement of such Third Party Claim, (ii) the
expiration of the period for appeal of a final adjudication of such Third Party
Claim or (iii) the expiration of the period for appeal of a final adjudication
of the Indemnifying Party's liability to the Indemnified Party under this
Agreement. Payments of all amounts owing by an Indemnifying Party pursuant to
Section 13.3(d) shall be made within 30 days after the later of (i) the
expiration of the 60-day Indemnity Notice period or (ii) the expiration of the
period for appeal of a final adjudication of the Indemnifying Party's liability
to the Indemnified Party under this Agreement.
SECTION 13.4. INDEMNIFICATION LIMITATIONS. All claims for indemnification
under this Agreement shall be subject to the following limitations:
(a) The initial Claim Notice for indemnification must have been
transmitted to the Indemnifying Party within two (2) years of the Closing Date,
unless the subject matter upon which the claim for indemnification is based
involves income tax, environmental or ERISA matters, in which event the initial
Claim Notice must have been transmitted within the applicable statute of
limitations; and
(b) Any amounts paid under this Article XIII shall be for actual costs or
liabilities incurred by the Indemnified Party.
SECTION 13.5. REMEDIES NOT EXCLUSIVE. The remedies provided in this
Agreement shall not be exclusive of any other rights or remedies available to
one party against the other, either at law or in equity.
41
SECTION 13.6. COSTS, EXPENSES AND LEGAL FEES. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (a) enforcing
any of the terms of this Agreement or (b) proving that another party breached
any of the terms of this Agreement; furthermore, that AMP agrees to pay
$10,000.00 toward Owner's attorneys' fees in negotiating this transaction which
amount shall not be refundable.
ARTICLE XIV
TERMINATION
SECTION 14.1. TERMINATION. This Agreement may be terminated:
(a) by the Owner, seventy-two hours after receipt of a fully executed copy
of this Agreement and the Real Estate Purchase Agreement;
(b) at any time prior to December 31, 1997, if, as a result of its due
diligence, AMP reasonably deems termination to be advisable;
(c) by AMP, the Owner or the Company, if such party does not consent to a
Schedule amendment under Section 14.1(c);
(d) if a party is in material breach of this Agreement, by the other party
not then in material breach of this Agreement;
(e) by AMP, the Owner or the Company if the Acquisition has not been
consummated due to the failure of the Initial Public Offering;
(f) prior to December 31, 1997, by the Owner if AMP or another party has
not contracted to purchase the Decatur Property.
SECTION 14.2. EFFECT OF TERMINATION. In the event of a termination of this
Agreement under the provisions of this Article, a party not then in material
breach of this Agreement shall stand fully released and discharged of any and
all obligations under this Agreement.
42
ARTICLE XV
NONCOMPETITION
SECTION 15.1. PROHIBITED ACTIVITIES. In order to protect AMP against the
unauthorized use or the disclosure of any of its Confidential Information
presently known or hereinafter obtained by the Owners, and other good and
valuable consideration, each Owner hereby agrees that, subject to adjustment
pursuant to Section 15.5, for a period of two years following the Closing Date,
neither the Owner nor any of his or her Affiliates, shall knowingly, directly or
indirectly, for himself or herself or on behalf of any other corporation,
person, firm, partnership, association or any other entity (whether as an
individual, agent, servant, employee, employer, officer, director, shareholder,
investor, principal, consultant or in any other capacity):
(a) establish, operate or provide physician services at any medical
office, clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in competition with the
business being conducted by AMP (unless the Owner participated in such business
(other than the practice of medicine) within the geographical area designated
below prior to the Closing Date or the date the Owner became aware of planning
for such business operations by AMP), anywhere within twenty (20) miles of the
pre-Closing offices of the Company in Decatur, Georgia or Griffin, Georgia;
(b) induce or attempt to influence any employee of the Group Practice or
AMP to terminate his or her employment or hire any such employee, whether or not
so induced or influenced; or
(c) induce or attempt to induce any patient of the Owner to seek podiatric
services at any location other than the facilities of the Company or Group
Practice locations or from any non-Group Practice podiatrist.
SECTION 15.2. DAMAGES. Because of the difficulty of measuring economic
losses to AMP as a result of the breach of the foregoing covenant and because of
the immediate and irreparable damage that would be caused to AMP for which it
would have no other adequate remedy, each Owner agrees that, in the event of a
breach by him or her of the foregoing covenant, the covenant may be enforced by
AMP by injunctions and restraining orders.
SECTION 15.3. REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Article XV impose a reasonable restraint on the
Owners in light of the activities and businesses of the Company on the date of
the execution of this Agreement and the future plans of the Group Practice.
SECTION 15.4. SEVERABILITY; REFORMATION. The covenants in this Article XV
are
43
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
SECTION 15.5. TERM. It is specifically agreed that the period of two years
stated above shall be computed by excluding from such computation any time
during which an Owner is in violation of any provision of this Article XV. The
covenants contained in this Article XV shall have no effect if the transactions
contemplated by this Agreement are not consummated for any reason (including
termination pursuant to Section 14.1(b)), but otherwise shall not be affected by
any breach of any other provision hereof by any party hereto.
ARTICLE XVI
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 16.1. NONDISCLOSURE. Each of the parties hereto recognize and
acknowledge that they had in the past, currently have and in the future may
possibly have access to certain Confidential Information of the other that is
valuable, special and a unique asset. Each of the parties hereto agree that they
will not disclose such Confidential Information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
except (a) to authorized representatives of the other and (b) to counsel and
other advisors, respectively, provided that such advisors (other than counsel)
agree to the confidentiality provisions of this Section, unless (i) such
information becomes available to or known by the public generally through no
fault of any party, (ii) disclosure is required by law or the order of any
governmental authority, provided, that, prior to disclosing any information
pursuant to this clause, (iii), each party, as the case may be, shall, if
possible, give prior written notice thereof to the other and provide the other
with the opportunity to contest such disclosure, (iv) the disclosing party
reasonably believes that such disclosure is required in connection with the
defense of a lawsuit against the disclosing party or (iv) the disclosing party
is the sole and exclusive owner of such Confidential Information as a result of
the Acquisition. In the event of a breach or threatened breach by any party of
the provisions of this Section, the other parties shall be entitled to an
injunction restraining such party from disclosing, in whole or in part, such
Confidential Information. In the event this Agreement is not consummated by
January 31, 1998, all documented Confidential Information of one party that has
been delivered to the other party shall be returned. Nothing herein shall be
construed as prohibiting any party from pursuing any other available remedy for
such breach or threatened breach, including the recovery of damages.
Confidential Information shall not include the medical knowledge of the Owner or
the general practice management skills known to and utilized by the Owner.
SECTION 16.2. DAMAGES. Because of the difficulty of measuring economic
losses as a
44
result of the breach of the foregoing covenants and because of the immediate and
irreparable damage that would be caused for which no other adequate remedy would
exist, the parties agree that, in the event of a breach by any of them of the
foregoing covenant, the covenant may be enforced against them by injunctions or
restraining orders.
SECTION 16.3. SURVIVAL. The obligations of the parties under this Article
XVI shall survive the termination of this Agreement.
ARTICLE XVII
GENERAL
SECTION 17.1. AMENDMENT; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of any terms and conditions hereof must be in writing signed
by the parties hereto. The waiver of any of the terms and conditions of this
Agreement shall not be construed as a waiver of any other terms and conditions
hereof.
SECTION 17.2. ASSIGNMENT. Neither this Agreement nor any right created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby shall be assignable by any party hereto, except by AMP to a
wholly owned subsidiary of AMP; provided, that any such assignment shall not
relieve AMP of its obligations hereunder.
SECTION 17.3. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and permitted assigns of the parties hereto. Neither
this Agreement nor any other agreement contemplated hereby shall be deemed to
confer upon any person not a party hereto or thereto, except AMP Subsidiary, any
rights or remedies hereunder or thereunder.
SECTION 17.4. ENTIRE AGREEMENT. This Agreement and the agreements
contemplated hereby, including the Real Estate Purchase Agreement, constitute
the entire agreement of the parties regarding the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
SECTION 17.5. SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effecting
during the term hereof, such provisions shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such
45
illegal, invalid or unenforceable provision, there shall be added automatically
as part of this Agreement a provision as similar in its terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
SECTION 17.6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants contained herein shall survive the
Closing but only as provided herein. All statements contained in any
certificate, exhibit or other instrument delivered by or on behalf of the
Company, any Owner or AMP pursuant to this Agreement shall be deemed to have
been an integral part of this Agreement by such Company, such Owner or AMP, as
the case may be.
SECTION 17.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF
LAWS) OF THE STATE OF TEXAS.
SECTION 17.8. CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
SECTION 17.9. GENDER AND NUMBER. When the context requires, the gender of
all words used herein shall include the masculine, feminine and neuter and the
number of all words shall include the singular and plural.
SECTION 17.10. REFERENCE TO AGREEMENT. Use of the words "herein,"
"hereof," "hereto" and the like in this Agreement shall be construed as
references to this Agreement as a whole and not to any particular Article,
Section or provision of this Agreement, unless otherwise noted.
SECTION 17.11. CONFIDENTIALITY; PUBLICITY AND DISCLOSURES. Each party
shall keep this Agreement and its terms confidential, and shall make no press
release or public disclosure, either written or oral, regarding the transactions
contemplated by this Agreement without the prior knowledge and consent of the
other parties hereto; provided that the foregoing shall not prohibit any
disclosure (a) by press release, filing or otherwise that AMP has determined in
its good faith judgment to be required by federal securities laws or the rules
of the National Association of Securities Dealers, (b) to attorneys,
accountants, investment bankers or other agents of the parties assisting the
parties in connection with the transactions contemplated by this Agreement and
(c) by AMP in connection with the conduct of its Initial Public Offering and
conducting an examination of the operations and assets of the Company. In the
event that the transactions contemplated hereby are not consummated for any
reason whatsoever, the parties hereto agree not to disclose or use any
Confidential Information they may have concerning the affairs of the other
parties, except for information that is required by law to be disclosed;
provided, that should the transactions contemplated hereby not be consummated,
nothing contained in this
46
Section shall be construed to prohibit the parties hereto from operating
businesses in competition with each other.
SECTION 17.12. NOTICE. Whenever this Agreement requires any notice,
request or demand from one party to another, the notice, request or demand must
be in writing to be effective and shall be deemed to be delivered and received
when actually received by the party to whom notice is sent, addressed to the
appropriate party or parties, at the address of such party set forth below (or
at such other address as such party may designate by written notice to all other
parties in accordance herewith):
If to AMP: American Medical Providers, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxx X. XxXxxxx
with a copy to: Xxxxx & Xxxxxxxxx LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxx, Esq.
If to the Company
or any Owner: Xxxxxx X. Xxxxxx, D.P.M., P.C.
000 Xx. Xxxxxx Xxxxxxx X.X.
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx, D.P.M.
with a copy to: Xxxxxx, Xxxxxx & Xxxxxxx
A Professional Corporation
Suite 615
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx Xxxxxx
SECTION 17.13. CHOICE OF FORUM. The parties hereto agree that should any
suit, action or proceeding arising out of this Agreement be instituted by any
party hereto (other than a suit, action or proceeding to enforce or realize upon
any final court judgment arising out of this Agreement), such suit, action or
proceeding shall be instituted only in a state or federal court in DeKalb
County, Georgia. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in DeKalb County, Georgia and waives
any objection to the venue of any such suit, action or proceeding.
SECTION 17.14. NO WAIVER; REMEDIES. No party hereto shall by any act
(except by written instrument pursuant to Section 17.1 hereof), delay,
indulgence, omission or otherwise
47
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any default in or breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of any party hereto, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. No remedy set forth in this Agreement or otherwise conferred upon
or reserved to any party shall be considered exclusive of any other remedy
available to any party, but the same shall be distinct, separate and cumulative
and may be exercised from time to time as often as occasion may arise or as may
be deemed expedient.
SECTION 17.15. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
SECTION 17.16. DEFINED TERMS. Terms used in Annex I and the Schedules
attached hereto with their initial letter capitalized and not otherwise defined
therein shall have the meanings assigned to such terms in this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first written above.
AMERICAN MEDICAL PROVIDERS, INC.:
By: /s/ Xxxxx X. Xxxxxxx
THE COMPANY:
XXXXXX X. XXXXXX, D.P.M., P.C.
By: /s/ Xxxxxx X. Xxxxxx, D.P.M.
THE OWNERS:
By: /s/ Xxxxxx X. Xxxxxx, D.P.M.
48
ANNEX I
ACQUISITION CONSIDERATION
$922,799.00 plus XX(1) as consideration for the Shares
1,000.00 as consideration for the Owner Commitment in Section 2.5
-----------
$923,799.00 plus XX Aggregate Consideration
-------
Initial
----------------
(1)XX is the amount of cash on hand and which remains with the Company at, and
immediately after, the Closing.
1
