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ASSET PURCHASE AGREEMENT
dated as of
January 23, 1998
by and among
AMERICAN PHYSICIAN PARTNERS, INC.
(a Delaware corporation),
VALLEY IMAGING PARTNERS, INC.
(a California corporation),
PAL IMAGING CORP.
(a California corporation)
and
THE PRINCIPAL STOCKHOLDERS
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rules of Interpretation . . . . . . . . . . . . . . . . . 5
ARTICLE II Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Subsequent Actions . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Assumed Liabilities . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV Purchase Price and Closing . . . . . . . . . . . . . . . . . . . 8
Section 4.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.2 Closing and Effective Time . . . . . . . . . . . . . . . . 8
Section 4.3 Closing Deliveries . . . . . . . . . . . . . . . . . . . . 9
Section 4.4 Certain Prorations . . . . . . . . . . . . . . . . . . . . 9
Section 4.5 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.6 Closing Expenses . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE V Representations and Warranties of Seller and Stockholders . . . 9
Section 5.1 Organization and Good Standing; Qualification . . . . . . 9
Section 5.2 Authorization and Validity . . . . . . . . . . . . . . . . 10
Section 5.3 Title to Purchased Assets . . . . . . . . . . . . . . . . 10
Section 5.4 Condition of Tangible Assets . . . . . . . . . . . . . . . 10
Section 5.5 Consents and Approvals . . . . . . . . . . . . . . . . . . 10
Section 5.6 Governmental Authorization . . . . . . . . . . . . . . . . 10
Section 5.7 Continuity of Business Enterprise . . . . . . . . . . . . 10
Section 5.8 Subsidiaries and Investments . . . . . . . . . . . . . . . 10
Section 5.9 Absence of Conflicting Agreements or Required Consents . . 11
Section 5.10 Seller Financial Statements . . . . . . . . . . . . . . . 11
Section 5.11 No Undisclosed Liabilities . . . . . . . . . . . . . . . . 11
Section 5.12 Litigation and Claims . . . . . . . . . . . . . . . . . . 11
Section 5.13 No Violation of Law . . . . . . . . . . . . . . . . . . . 12
Section 5.14 Contracts and Commitments . . . . . . . . . . . . . . . . 12
Section 5.15 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.16 No Other Agreements to Sell the Assets of the
Seller's Business . . . . . . . . . . . . . . . . . . . . 13
Section 5.17 Employee Matters . . . . . . . . . . . . . . . . . . . . . 13
Section 5.18 Labor Relations . . . . . . . . . . . . . . . . . . . . . 13
Section 5.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . 14
Section 5.20 Lease Agreements . . . . . . . . . . . . . . . . . . . . . 15
Section 5.21 Real and Personal Property . . . . . . . . . . . . . . . . 15
Section 5.22 Environmental Matters . . . . . . . . . . . . . . . . . . 16
Section 5.23 Filing Reports . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.24 Insurance Policies . . . . . . . . . . . . . . . . . . . . 17
Section 5.25 Accounts Receivable; Payors . . . . . . . . . . . . . . . 17
Section 5.26 Accounts Payable; Suppliers . . . . . . . . . . . . . . . 18
Section 5.27 Inventory . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.28 Licenses, Authorization and Provider Programs . . . . . . 18
Section 5.29 Inspections and Investigations . . . . . . . . . . . . . . 19
Section 5.30 Proprietary Rights and Information . . . . . . . . . . . . 19
Section 5.31 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.32 Related Party Arrangements . . . . . . . . . . . . . . . . 21
Section 5.33 Banking Relations . . . . . . . . . . . . . . . . . . . . 21
Section 5.34 Fraud and Abuse and Self Referral . . . . . . . . . . . . 21
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Section 5.35 Restrictions on Business Activities . . . . . . . . . . . 21
Section 5.36 Agreements in Full Force and Effect . . . . . . . . . . . 21
Section 5.37 Statements True and Correct . . . . . . . . . . . . . . . 21
Section 5.38 Schedules . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI Representations and Warranties of Buyer and APP . . . . . . . . 22
Section 6.1 Organization and Good Standing; Qualification . . . . . . 22
Section 6.2 Authorization and Validity . . . . . . . . . . . . . . . 22
Section 6.3 Governmental Authorization . . . . . . . . . . . . . . . . 22
Section 6.4 Capitalization . . . . . . . . . . . . . . . . . . . . . 22
Section 6.5 Absence of Conflicting Agreements or Required Consents . . 22
Section 6.6 Statements True and Correct . . . . . . . . . . . . . . . 23
Section 6.7 Schedules . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.8 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII Pre-Closing Covenants of Seller [Intentionally Omitted] . . . . 23
ARTICLE VIII Pre-Closing Covenants of APP and Buyer [Intentionally Omitted] . 23
ARTICLE IX Conditions Precedent of APP and Buyer [Intentionally Omitted] . 23
ARTICLE X Conditions Precedent of Seller [Intentionally Omitted] . . . . . 23
ARTICLE XI Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . 23
Section 11.1 Deliveries of Seller . . . . . . . . . . . . . . . . . . . 23
Section 11.2 Deliveries of APP . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XII Certain Additional Agreements of the Parties
[Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XIII Post Closing Matters . . . . . . . . . . . . . . . . . . . . . . 25
Section 13.1 Further Instruments of Transfer . . . . . . . . . . . . . 25
ARTICLE XIV Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14.1 Indemnification by Seller and the Principal
Stockholders . . . . . . . . . . . . . . . . . . . . . . . 25
Section 14.2 Indemnification by APP and Buyer . . . . . . . . . . . . . 25
Section 14.3 Conditions of Indemnification . . . . . . . . . . . . . . 25
Section 14.4 Remedies Exclusive . . . . . . . . . . . . . . . . . . . . 27
Section 14.5 Costs, Expenses and Legal Fees . . . . . . . . . . . . . . 27
Section 14.6 Tax Benefits; Insurance Proceeds . . . . . . . . . . . . 27
ARTICLE XV Termination [Intentionally Omitted] . . . . . . . . . . . . . . 28
ARTICLE XVI Nondisclosure of Confidential Information . . . . . . . . . . . 28
Section 16.1 Non-Disclosure Covenant . . . . . . . . . . . . . . . . . 28
Section 16.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 16.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XVII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.1 Amendment; Waivers . . . . . . . . . . . . . . . . . . . . 28
Section 17.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.3 Parties in Interest; No Third Party Beneficiaries . . . . 29
Section 17.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 29
Section 17.5 Severability . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.6 Survival of Representations, Warranties and Covenants . . 29
Section 17.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.9 Gender and Number . . . . . . . . . . . . . . . . . . . . 29
Section 17.10 Reference to Agreement . . . . . . . . . . . . . . . . . . 29
Section 17.11 Confidentiality; Publicity and Disclosures . . . . . . . . 29
Section 17.12 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17.13 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . 30
Section 17.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17.15 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 30
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SCHEDULES
Schedule 3.1 Organization and Good Standing; Qualification
Schedule 3.3 Governmental Authorization
Schedule 3.5 Transactions in Capital Stock
Schedule 3.6 Continuity of Business Enterprise
Schedule 3.7 Subsidiaries and Investments
Schedule 3.8 Absence of Conflicting Agreements or Required Consents
Schedule 3.9 Seller Financial Statements
Schedule 3.10 Absence of Changes
Schedule 3.11 No Undisclosed Liabilities
Schedule 3.12 Litigation and Claims
Schedule 3.14 Lease Agreements
Schedule 3.15 Real and Personal Property
Schedule 3.15(a) Real and Personal Property
Schedule 3.15(b) Real and Personal Property
Schedule 3.16 Indebtedness for Borrowed Money
Schedule 3.17 Contracts and Commitments
Schedule 3.18 Employee Matters
Schedule 3.19 Labor Relations
Schedule 3.20 Employee Benefit Plans
Schedule 3.20(a) Employee Benefit Plans
Schedule 3.20(c) Employee Benefit Plans
Schedule 3.20(e) Employee Benefit Plans
Schedule 3.20(g) Employee Benefit Plans
Schedule 3.20(l) Employee Benefit Plans
Schedule 3.21 Environmental Matters
Schedule 3.21(b) Environmental Matters
Schedule 3.21(d) Environmental Matters
Schedule 3.23 Insurance Policies
Schedule 3.24 Accounts Receivable Payors
Schedule 3.24(a) Accounts Receivable Payors
Schedule 3.24(b) Accounts Receivable Payors
Schedule 3.25 Accounts Payable Suppliers
Schedule 3.25(a) Accounts Payable Suppliers
Schedule 3.25(b) Accounts Payable Suppliers
Schedule 3.27 Licenses, Authorization and Provider Programs
Schedule 3.27(a) Licenses, Authorization and Provider Programs
Schedule 3.27(b) Licenses, Authorization and Provider Programs
Schedule 3.28 Inspections and Investigations
Schedule 3.29 Proprietary Rights and Information
Schedule 3.29(a) Proprietary Rights and Information
Schedule 3.29(b) Proprietary Rights and Information
Schedule 3.29(c) Proprietary Rights and Information
Schedule 3.30 Taxes
Schedule 3.30(b) Taxes (Seller)
Schedule 3.30(c) Taxes (Seller)
Schedule 3.31 Related Party Arrangements
Schedule 3.33 Banking Relations
Schedule 3.34 Investments in Competitors
Schedule 3.40 Finders' Fees (Seller)
Schedule 4.3 Personal Holding Companies; Control of Related
Businesses
Schedule 4.4 Transfers of Stock
Schedule 4.8 Finder's Fee (Stockholder)
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Schedule 4.9 Ownership of Interested Persons; Affiliations
Schedule 4.10 Investments in Competitors
Schedule 5.1 Organization and Good Standing; Qualification
Schedule 5.3 Governmental Authorization
Schedule 5.5 Subsidiaries and Investments
Schedule 5.6 Absence of Conflicting Agreements or Required Consents
Schedule 5.7 APP Financial Statements
Schedule 5.8 Absence of Changes
Schedule 5.9 No Undisclosed Liabilities
Schedule 5.10 Litigation and Claims
Schedule 5.12 Employee Matters
Schedule 5.13 Taxes
Schedule 5.14 Related Party Arrangements
Schedule 6.1 Organization and Good Standing; Qualification
Schedule 14.2 Preservation of Tax and Accounting Treatment
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), dated as of January
23, 1998, is by and among AMERICAN PHYSICIAN PARTNERS, INC., a Delaware
corporation ("APP"), Valley Imaging Partners, Inc., a California corporation
and a wholly-owned subsidiary of APP ("Buyer"), and PAL Imaging Corp., a
California corporation ("Seller") and the Principal Stockholders.
RECITALS
A. Seller owns and operates two diagnostic imaging centers; one
located at 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx, and one
located at 00 Xxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx (the "Centers").
B. APP is engaged in the business of owning, operating and acquiring
the assets of, and managing the non-medical aspects of, radiology practices and
diagnostic imaging centers.
C. Buyer desires to purchase from Seller, and Seller desires to sell
to Buyer, certain of the assets and other rights related to Seller's business,
and to assume certain liabilities of Seller relating thereto, as set forth
herein, on the terms and conditions in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" with respect to any person shall mean a person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such person.
"Agreement" shall have the meaning set forth in the preamble to this
Agreement.
"APP" shall have the meaning set forth in the preamble to this
Agreement.
"Appraised Value" shall have the meaning set forth in Section 12.1.
"Assumed Liabilities" shall have the meaning set forth in Section 3.1.
"Best knowledge" or "to the knowledge of" and similar phrases shall mean
(i) in the case of a natural person, the particular fact was known, or not
known, as the context requires, to such person after diligent investigation and
inquiry by such person, and (ii) in the case of an entity, the particular fact
was known, or not known, as the context requires, to any Stockholder, director
or executive officer of such entity after diligent investigation and inquiry by
the executive officers of such entity.
"Xxxx of Sale" shall have the meaning set forth in Section 4.3(a).
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Centers" shall have the meaning set froth in the preamble to this
Agreement.
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"Claim Notice" shall have the meaning set forth in Section 14.3(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Article IV.
"Closing Date" shall have the meaning set forth in Section 4.2.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Confidential Information" shall mean all trade secrets and other
confidential and/or proprietary information of the particular person,
including, but not limited to, information derived from reports, processes,
data, know-how, software programs, improvements, inventions, strategies,
compensation structures, reports, investigations, research, work in progress,
codes, marketing and sales programs and plans, financial projections, cost
summaries, formulae, contract analyses, financial information, forecasts,
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 its
employees, officers, directors, agents, representatives, or consultants.
"Controlled Group" shall have the meaning set forth in Section 5.19(g).
7 "Current Policies" shall have the meaning set forth in Section 5.24.
"Damages" shall have the meaning set forth in Section 14.1.
"Deposits" shall have the meaning set forth in Section 2.1(d)(v).
"Effective Time" shall have the meaning set forth in Section 4.2.
"Election Period" shall have the meaning set forth in Section 14.3(a).
"Employee Benefit Plans" shall have the meaning set forth in Section
5.19(a).
"Encumbrance" shall mean any charge, claim, community property interest,
condition equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership.
"Environmental Laws" shall have the meaning set forth in Section
5.22(e).
"Environmental Liabilities" shall have the meaning set forth in Section
5.22(e).
"ERISA" shall have the meaning set forth in Section 5.17.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Government Licenses and Permits" shall have the meaning set forth in
Section 2.1(d)(iii).
"Government Programs" shall have the meaning set forth in Section
5.28(a).
"Hazardous Substances" shall have the meaning set forth in Section
5.22(e).
"Indemnified Party" shall have the meaning set forth in Section 14.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
14.3(a).
"Indemnity Notice" shall have the meaning set forth in Section 14.3(d).
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"Insurance Policies" shall have the meaning set forth in Section 5.24.
"Intangible Assets" shall have the meaning set forth in Section 2.1(d).
"Intellectual Property" shall have the meaning set forth in Section 2.1.
"Inventory" shall have the meaning set forth in Section 2.1(c).
"IRS" shall mean the Internal Revenue Service.
"Lease Assignments" shall have the meaning set forth in Section 11.1(k).
"Lease Agreements" shall have the meaning set forth in Section 5.20.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations, condition (financial or otherwise),
liabilities or results of operations of the Person or Persons being referred
to, taken as a whole, in consideration of all relevant facts and circumstances.
"Medical Waste" shall mean (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" shall mean the following, including regulations
promulgated and orders issued thereunder, as in effect of the date hereof and
the Closing Date: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste Anti-
Dumping Act of 1988, 33 USCA Sections 2501 et seq., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA Sections 1401 et
seq., (iv) The Occupational Safety and Health Act, 29 USCA Sections 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 any Seller's assets or operations and purport
to regulate Medical Waste or impose requirements related to Medical Waste.
"Medicare and Medicaid Programs" shall have the meaning set forth in
Section 5.28(a).
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
Sections 6992, et seq.
"Non-Payor Contract Assignments" shall have the meaning set forth in
Section 11.1(k).
"Other Agreement" shall have the meaning set forth in Section 9.9.
"Payor Contract Assignments" shall have the meaning set forth in Section
11.1(k).
"Payors" shall mean any and all third-party payors including, but not
limited to, Medicare and Medicaid Programs insurance companies, health
maintenance organizations, preferred provider organizations, independent
practice associations, hospitals, hospital systems, integrated delivery
systems, CHAMPUS, and any and all other private or governmental entity
rendering payment to Seller for professional medical or technical services.
"PBGC" shall have the meaning set forth in Section 5.19(j).
"Person" shall mean any natural person, corporation, partnership, joint
venture, limited liability company, association, group, organization or other
entity.
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"Personal Property" shall have the meaning set forth in Section 2.1(b).
"Prepaids" shall have the meaning set forth in Section 2.1(d)(vi).
"Principal Stockholders" shall mean Xxxxxx Xxxxxx and Xxxxxxx X. Xxxxxx.
"Private Programs" shall have the meaning set forth in Section 5.28(a).
"Property Rights" shall have the meaning set forth in Section 5.30(a).
"Purchased Assets" shall have the meaning set forth in Section 2.1.
"Purchased Contracts" shall have the meaning set forth in Section
2.1(e).
"Purchase Price" shall have the meaning set forth in Section 4.1(a).
"Purchased Prepaids" shall have the meaning set forth in Section
2.1(d)(vi).
"Real Estate" shall have the meaning set forth in Section 2.1(a).
"Real Property" shall have the meaning set forth in Section 2.1(a).
"Regulated Activity" shall have the meaning set forth in Section
5.22(e).
"Schedules" shall mean 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.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller Financial_Statements" shall have the meaning set forth in
Section 5.10.
"Seller Current Balance Sheet" shall have the meaning set forth in
Section 5.10.
"Seller Current Financial Statements" shall have the meaning set forth
in Section 5.10.
"Seller Financial Statements" shall have the meaning set forth in
Section 5.10.
"Seller Subsidiaries" shall have the meaning set forth in Section 5.8.
"Stockholders" shall mean the stockholders of Seller.
"Tax Returns" shall include all federal, state, local or foreign income,
excise, corporate, franchise, property, sales, use, payroll, withholding,
provider, environmental, duties, value added and other tax returns (including
information returns).
"Third Party Claim" shall have the meaning set forth in Section 14.3(a).
"Title Policy" shall have the meaning set forth in Section 12.1.
"Title Seller" shall have the meaning set forth in Seller 12.1.
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Section 1.2 Rules of Interpretation. The definitions set forth in
Section 1.1 shall be equally applicable to both the singular and the plural
forms of the terms therein defined and shall cover both genders.
Unless otherwise indicated "herein," "hereby," "hereunder," "hereof,"
"hereinabove," "hereinafter" and other equivalent words refer to this Agreement
and not solely to the particular Article, Section or subdivision hereof in
which such word is used.
This Agreement occasionally omits the modifying words "all" and "any"
and the articles "the" and "an," but the fact that a modifier or an article is
absent from one statement and appears in another is not intended to affect the
interpretation of either statement.
Unless otherwise indicated, reference herein to an Article number (e.g.,
Article IV) or a Section number (e.g., Section 6.2) shall be construed to be a
reference to the designated Article number of Section number of this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Purchased Assets. On the Closing Date, Seller shall,
sell, assign, transfer, convey and deliver to Buyer, and Buyer shall acquire,
all right, title and interest of Seller in and to, the following assets, rights
and interests used in the operation of the Seller's assets at the Centers, of
every kind and description, wherever located, whether tangible or intangible,
real, personal or mixed, excluding the Excluded Assets, including, without
limitation, the following assets, rights and interests (collectively, the
"Purchased Assets"):
(a) Real Property and Leasehold Improvements. All real
property including, without limitation, the real property more particularly
described in Schedule 2.1(a) (collectively, the "Real Estate"), and all
buildings, improvements, other constructions, construction-in-progress and
fixtures (collectively, the "Improvements") now or hereafter located on the
Real Estate or owned by Seller and located on the real property subject to the
Lease Agreements (the Real Estate and Improvements are hereinafter collectively
referred to as the "Real Property"), which includes, without limitation, all
real property used in connection with the Business together with, as they
relate to the Real Property, all right, title and interest of Seller in all
options, easements, servitudes, rights-of-way and other rights associated
therewith;
(b) Personal Property. All tangible personal property
(collectively, the "Personal Property") of every kind and nature (other than
items of tangible personal property that are consumed, disposed of or held for
sale or is inventoried in the ordinary course of business), including, without
limitation, all furniture, fixtures, machinery, vehicles, owned or licensed
computer systems, and equipment, including, without limitation, the Personal
Property listed in Schedule 2.1(b) attached hereto;
(c) Inventory. All inventories of supplies, drugs, food,
janitorial and office supplies, maintenance and shop supplies, and other
disposables which are existing as of the Closing Date (the "inventory"). A
list of Inventory is attached as Schedule 2.1(c);
(d) Intangible Assets. All intangible property
(collectively, the "Intangible Assets") of every kind and nature, including,
without limitation, the following:
(i) All patents, trademarks, trade names, business
names (including all names associated with specialty programs or services
operated by Seller), service marks, logos, trade secrets, copyrights, and all
applications and registrations therefor that are owned by Seller, and licenses
thereof pursuant to which Seller has any right to the use or benefit of, or
other rights with respect to, any of the foregoing (the "Intellectual
Property"), including, without limitation, the items identified in Schedule
2.1(d)(i) attached hereto;
(ii) All telephone numbers;
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(iii) All licenses, permits, certificates, franchises,
registrations, authorizations, filings, consents, accreditations, approvals and
other indicia of authority relating to the operation of the Business as
presently conducted by Seller, and relating to any renovation or construction
on the Real Property, or the Leased Real Estate (collectively, the
"Governmental Licenses and Permits"), which Governmental Licenses and Permits
are listed in Schedule 2.1(d)(iii) attached hereto. In the event the sale,
transfer, assignment, or conveyance of any of the Governmental Licenses and
Permits is unlawful or is not permissible under any agreement, or federal,
state, or local law, rule, or regulation, then the terms "sale, transfer or
assignment", for the purposes of this Agreement with respect to any such
Governmental Licenses and Permits, shall be deemed to mean and require (i)
Seller's relinquishment of all of its right, title and interest in, to and
under such Governmental Licenses and Permits as of the Closing Date to the
fullest extent necessary or appropriate to enable Buyer to acquire such
Governmental Licenses and Permits, and (ii) the issuance or grant to Buyer by
the appropriate third party, federal, state, or local governmental authority of
all right, title and interest in, to and under such Governmental Licenses and
Permits as of the Closing Date reasonably equivalent to that relinquished by
Seller, including, but not limited to, the right, authority, and approval for
Buyer to provide services at the Centers from and after the Closing Date in a
reasonably equivalent manner as Seller prior to the Closing Date;
(iv) All benefits, proceeds or any other amounts payable
under any policy of insurance maintained by Seller with respect to destruction
of, damage to or loss of use of any of the Purchased Assets;
(v) All deposits (the "Deposits") held by Seller in
connection with future services to be rendered by Seller, delivered under the
Leases;
(vi) Those advance payments, prepayments, prepaid expenses,
deposits and the like (collectively, the "Prepaids") which are existing as of
the Closing Date, including real property taxes and assessments and utility
deposits and payments (subject to the prorations provided for in this Agreement
in Section 4.4), which were made by Seller solely with respect to its operation
of the Business (collectively, the "Purchased Prepaids"), the current
categories and amounts of which are set forth in Schedule 2.1(d)(vi) attached
hereto;
(vii) Seller's goodwill associated with the Purchased Assets;
(viii) All interests in joint ventures, partnerships,
corporations and limited liability companies, other than the marketable and
investment securities identified in Schedule 2.2 attached hereto as Excluded
Assets (provided that the failure of Seller to list publicly-traded securities
in such exhibit shall not cause same to be among the Purchased Assets),
including, without limitation, the interests identified in Schedule
2.1(d)(viii) attached hereto; and
(ix) to the extent assignable, all warranties, guarantees and
covenants not to compete with respect to the Centers including, without
limitation, the arrangements identified in Schedule 2.1(d)(ix).
(e) Purchased Contracts. All right, title and interest of Seller in,
to and under the leases, contracts and agreements to which Seller is a party or
a beneficiary and which relate to or are necessary for the Centers
(collectively, the "Purchased Contracts"). Schedule 2.1(e) attached hereto
contains a list of all leases, contracts and agreements to which Seller is a
party or a beneficiary, which relate to or are necessary for the Centers and
which either (i) involve the payment or receipt by Seller of any form of
services or consideration in any 12-month period in excess of $5,000.00, or
(ii) which will extend beyond the Closing and that are not terminable or
cancelable upon 60 days notice;
(f) Books and Records. Seller shall make available to Buyer, and at
the Closing Date Buyer shall take possession of, all operating data and records
pertaining to the assets, properties, business, operations, accounts, financial
condition, customers or suppliers of the Centers, including all of Seller's
books, records, papers, computer tapes, disks or data and instruments related
to the Centers or the Purchased Assets or which are required or necessary in
order for Buyer to operate the Centers from and after the Closing Date,
including, without limitation, the following:
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(i) patient and medical records and all other medical
and financial information regarding patients of the Centers;
(ii) patient lists;
(iii) employment and personnel records relating to
Retained Employees;
(iv) personnel policies and manuals, electronic data
processing materials, books of account, accounting books, financial records,
sales records, sales and payroll tax returns, customer data, journals and
ledgers; and
(v) all material, documents, and information relating
to the Real Property, the Personal Property and the Lease Agreements, all title
information (including but not limited to all title insurance policies,
commitments, acts of sale, covenants, conditions, restrictions, leases,
licenses, occupancy agreements, easements, servitudes, and other items of
record), all environmental studies, reports and information, all property use
and operational material, plans and specifications, contracts, site plans,
plats, surveys, zoning material, correspondence, and governmental material
(i.e., licenses, permits, notices, and other matters with respect to
governmental authorities), information and notices.
Upon consent of Buyer, Seller shall be entitled to retain copies of such
books and records. Seller shall be responsible for all charges and expenses
relating to such copies.
(g) Accounts Receivable. Accounts receivable existing as of or
arising on or subsequent to the Closing Date arising from the Centers; and
(h) Residual Assets. All other assets of Seller related to and
reasonably necessary for the Centers' operation other than the Excluded Assets.
Section 2.2 Excluded Assets. Notwithstanding Section 2.1(a), the
definition of "Purchased Assets" shall exclude all assets, rights and interests
identified on Schedule 2.2 attached hereto (collectively, the "Excluded
Assets"). The Excluded Assets shall not be transferred by Seller to Buyer.
Section 2.3 Subsequent Actions. If, during a reasonable time
following the Closing Date, APP or Buyer shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm of record or otherwise
in APP or Buyer its right, title or interest in, to or under any of the
Purchased Assets or otherwise to carry out the transactions described in this
Agreement, Seller shall, at the sole cost and expense of Seller, be authorized
to execute and deliver all such deeds, bills of sale, assignments and
assurances and to take and do 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 the Purchased Assets or otherwise to carry out the
transactions described in this Agreement.
ARTICLE III
ASSUMED LIABILITIES
Section 3.1 Assumed Liabilities. As of the Closing, Buyer hereby
agrees to assume, satisfy or perform when due only those liabilities and
obligations of Seller relating to operation of the Centers as set forth on
Schedule 3.1 attached hereto (collectively, the "Assumed Liabilities"). Other
than the Assumed Liabilities, Buyer shall not assume, nor shall APP, Buyer or
any of their respective affiliates or subsidiaries be deemed to have assumed,
guaranteed, agreed to perform or otherwise be bound by, or be responsible or
otherwise liable for, any liability or obligation of any nature of Seller
(whether or not related to the Centers), or claims for such liability or
obligation, whether accrued, matured or unmatured, liquidated or unliquidated,
fixed or contingent, known or unknown (collectively, the "Unassumed
Liabilities"). Specifically, and without limiting the generality of the
foregoing, other than the Assumed Liabilities, neither APP, Buyer nor any of
their respective affiliates or subsidiaries shall have any liability or
obligation with respect to or
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arising out of: (a) acts or omissions of Seller, its partners, agents or
employees whether prior to or subsequent to the Closing Date, whether or not in
the ordinary course of business; (b) liabilities or obligations relating to or
secured by any portion of or act of either the Purchased Assets or the Centers
prior to the Closing; (c) employee related liabilities (including accrued
wages, vacation, employee-related insurance or deferred compensation claimed by
any person in connection with his or her employment by, or termination of
employment with, Seller or payroll taxes payable or liabilities arising under
any employee benefit plan maintained by Seller); (d) liabilities or obligations
of Seller, including those for attorneys' fees, arising out of any litigation
or other proceeding pending as of the Closing Date in connection with the
Centers or any claim, whether or not asserted and whether or not liquidated or
contingent, with respect to the Centers arising from acts or the failure to
take any action by Seller or any of its partners, agents or employees prior to
the Closing Date; (e) liabilities for any income or other tax, whether disputed
or not, attributable to Seller and/or the Centers for any period or transaction
through the Closing; (f) except as set forth on Schedule 3.1, trade payables
which arise prior to the Closing; (g) claims by any third party payor
(including Medicare or Medi-Cal) or patient with respect to any matter or
billing occurring prior to the Closing; and (h) any other liability or
obligation of Seller. Notwithstanding the foregoing, Buyer shall be
responsible for all refunds required by Payors in the event such refund relates
to the accounts receivable purchased by Buyer; provided, Seller shall remain
responsible for all other refunds which relate to revenue collected prior to
the Closing. All employment tax liabilities of Seller shall remain Seller's
responsibility for collection, remittance and tax filing purposes for the
period through the Closing. Seller shall supply confirmation that all past and
current employment taxes through the Closing have been remitted to the
appropriate agencies in a timely manner.
ARTICLE IV
PURCHASE PRICE AND CLOSING
Section 4.1
(a) Purchase Price. The aggregate purchase price (the "Purchase
Price") for the sale, transfer, assignment, conveyance and delivery of the
Purchased Assets from Seller to Buyer shall consist of all of the following:
(i) Three Million Five Hundred Thousand Dollars
($3,500,000.00) by cashier's check or wire transfer of immediately available
funds to one or more accounts designated by Seller, and to be paid by Buyer to
Seller at the Closing; and
(ii) The assumption by Buyer of the Assumed Liabilities.
(b) Allocation of Purchase Price. The Purchase Price shall be
allocated by Buyer and Seller in accordance with Schedule 4.1(b) attached
hereto.
Section 4.2 Closing and Effective Time. The closing of the
transactions contemplated under this Agreement (the "Closing") shall take place
at the offices of American Physician Partners, Inc., Dallas, Texas at 10:00
a.m. local time on January 23, 1998, or such other date as the parties may
mutually agree in writing.
The transfer of the Purchased Assets by Seller to Buyer and Buyer's
assumption of the Assumed Liabilities shall be deemed effective as of 12:01
a.m. on the day of the Closing (the "Effective Time"). The obligations and
proceeds from the operations of the Centers shall be deemed to be the property
of Buyer from and after the Effective Time, and Buyer and Seller shall take any
and all actions reasonably necessary to carry out the intent of this Section
4.2.
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Section 4.3 Closing Deliveries.
(a) Seller. At the Closing, Seller shall execute and deliver
to Buyer: (i) a Xxxx of Sale substantially in the form attached as Exhibit A
hereto ("Xxxx of Sale"); (ii) the documents required to be delivered pursuant
to Section 11.1 hereof; and (iii) such other instruments as shall be reasonably
requested by Buyer to vest in Buyer title in and to the Purchased Assets.
Buyer shall have possession at the Centers of the tangible Purchased Assets and
the books and records immediately upon Closing.
(b) Buyer. At the Closing, Buyer shall deliver to Seller: (i)
the cash portion of the Consideration; (ii) the documents required to be
delivered pursuant to Section 11.2 hereof; and (iii) such other instruments as
shall be reasonably requested by Seller to complete the assumption of the
Assumed Liabilities by Buyer.
Section 4.4 Certain Prorations.
(a) The items set forth on Schedule 4.4(a) attached hereto
shall be prorated or adjusted between the parties hereto as of the Effective
Time.
(b) At Closing, each party shall pay or credit to the other
party all sums required to effectuate the prorations and adjustments
contemplated by the provisions of this Section 4.4.
Section 4.5 Inventory. Seller shall cause an inventory to be taken of
the Inventory as near in time as possible to the Closing with the results
extended and adjusted through the Closing Date. Such inventory process shall
be subject to audit.
Section 4.6 Closing Expenses.
(a) Seller shall be responsible for the following expenses (i)
obtaining, filing and recording any and all releases, satisfactions, deeds, UCC
termination statements and similar documents required in order to cause title
to the Purchased Assets to be free, clear and unencumbered; and (ii) all sales,
use, transfer and other taxes, if any, required by or imposed as a result of
the transactions contemplated hereby.
(b) Seller shall pay all prepayment penalties and all other
costs of any kind whatsoever associated with the payment of the mortgages on
the properties referenced in Schedule 2.1(a).
(c) Each party shall be responsible for its own attorneys',
accountants' and other advisory fees associated with the closing of the
transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND STOCKHOLDERS
As an inducement to APP and to Buyer to enter into this Agreement,
Seller and each Principal Stockholder represents and warrants to APP and to
Buyer as of the Closing Date as follows:
Section 5.1 Organization and Good Standing; Qualification. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, with all requisite corporate power and
authority to own, operate and lease, its assets and properties and to carry on
its business as currently conducted and as now contemplated, to execute and
deliver this Agreement and to consummate the transactions contemplated by this
Agreement. Seller is not qualified to do business in any foreign jurisdiction.
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Section 5.2 Authorization and Validity. Seller has all requisite
corporate power to enter into this Agreement and all other agreements entered
into in connection with the transactions contemplated hereby and to consummate
the transactions contemplated hereby. The execution, delivery and, [subject to
approval of this Agreement by the Stockholders,] performance by Seller of this
Agreement and the agreements contemplated herein, and the consummation by
Seller of the transactions contemplated hereby and thereby are within Seller's
respective corporate powers and have been duly authorized by all necessary
action on the part of Seller's Board of Directors. This Agreement has been
duly executed by Seller, and this Agreement and all other agreements and
obligations entered into and undertaken in connection with the transactions
contemplated hereby to which Seller is a party constitute, or upon execution
will constitute, valid and binding agreements of Seller, enforceable against it
in accordance with their respective terms, except as enforceability may be
limited by bankruptcy or other laws affecting the enforcement of creditors'
rights generally, or by general equity principles, or by public policy.
Section 5.3 Title to Purchased Assets.
(a) Schedule 5.3(a) attached hereto sets forth a true, correct
and complete list of all claims, liabilities, liens, pledges, options, charges,
adverse claims, leases, licenses, rights to use or occupancy, security
interests, restrictions and encumbrances of any kind affecting the Purchased
Assets (collectively, the "Encumbrances").
(b) Seller shall immediately prior to the Closing have good,
clear, record and marketable title to, or valid leasehold interests in, all of
the Purchased Assets, free and clear of all Encumbrances, except as set forth
in Schedule 5.3(b) attached hereto (the "Permitted Encumbrances"), and, subject
to the Permitted Encumbrances, Seller shall, at the time of the Closing have
full power and right to sell, assign and deliver the Purchased Assets in
accordance with the terms of this Agreement. The delivery to the Buyer of the
instruments of transfer of ownership contemplated by this Agreement shall vest
valid and marketable title to the Purchased Assets in the Buyer, free and clear
of all Encumbrances, except for the Permitted Encumbrances. Except for
Excluded Assets, there are no material assets used in the Business which are
not Purchased Assets.
Section 5.4 Condition of Tangible Assets. Except as set forth on
Schedule 5.4 attached hereto, the tangible Personal Property and any other
tangible Purchased Assets are in reasonable operating condition and are
sufficient for the operation of the Centers as presently conducted and are in
conformity in all material respects with all applicable laws, ordinances,
orders, regulations and other requirements (including, without limitation,
applicable occupational safety and health laws and regulations) relating
thereto currently in effect.
Section 5.5 Consents and Approvals. Except as set forth on Schedule
5.5 attached hereto, no consent, approval or authorization of, notice to, or
declaration, filing or registration with, any governmental entity or any other
person or entity is required to be made or obtained by Seller in connection
with its execution, delivery and performance of this Agreement and its
consummation of the transactions contemplated hereby.
Section 5.6 Governmental Authorization. Except as expressly set forth
in Schedule 5.6 attached hereto, and other than consents, filings or
notifications required to be made or obtained by Buyer or APP, the execution,
delivery and performance by Seller of this Agreement and the agreements
provided for herein, and the consummation of the transactions contemplated
hereby and thereby by Seller require no action by or in respect of, or filing
with, any governmental body, agency, official or authority.
Section 5.7 Continuity of Business Enterprise. Except as set forth in
Schedule 5.7 attached hereto, there has not been any sale, distribution or
spin-off of significant assets of Seller other than in the ordinary course of
business within the (2) two years preceding the date of this Agreement.
Section 5.8 Subsidiaries and Investments. Except as set forth in
Schedule 5.8 attached hereto, Seller does not own, directly or indirectly, any
capital stock or other equity, ownership or proprietary interest in any
corporation, partnership, association, trust, joint venture or other entity
(each a "Seller Subsidiary").
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Section 5.9 Absence of Conflicting Agreements or Required Consents.
Subject to approval of this Agreement by the Stockholders of Seller, the
execution, delivery and performance by Seller of this Agreement and any other
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) except as set forth in Schedule 5.6 and Schedule 5.9
attached hereto, does not require the consent of any governmental or regulatory
body or authority or any other third party; (ii) will not conflict with or
result in a violation of any provision of Seller's articles or certificate of
incorporation or bylaws, (iii) will not conflict with, result in a violation
of, or constitute a default under any law, rule, ordinance, regulation or any
ruling, decree, determination, award, judgment, order or injunction of any
court or governmental instrumentality which is applicable to Seller or by which
Seller or its properties are subject to or bound; (iv) except as set forth in
Schedule 5.9, will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a default under, require any notice under, or
accelerate or modify, or permit any person to accelerate or modify, any
performance required by the terms of any agreement, instrument, license or
permit, to which Seller is a party or by which Seller or any of its properties
are subject to or bound; and (v) will not create any Encumbrance or restriction
upon any of the assets or properties of Seller.
Section 5.10 Seller Financial Statements. Attached hereto as Schedule
5.10 are (i) the unaudited consolidated balance sheet of Seller as of December
31, 1996 and the related statements of income, stockholders' equity and
statements of cash flows of Seller and its Subsidiaries for the year ended
December 31, 1996 (collectively, the "Seller Annual Financial Statements") and
(ii) the unaudited consolidated balance sheet of Seller and its subsidiaries as
of December 31, 1997 (the "Seller Current Balance Sheet") and the related
statements of income, stockholders' equity and statements of cash flows of
Seller and the Subsidiaries for the eleven (11) month period then ended
(collectively, the "Seller Current Financial Statements"). Seller Financial
Statements and Seller Current Financial Statements are sometimes collectively
referred to herein as the "Seller Financial Statements". Seller Annual
Financial Statements (a) have been prepared in accordance with generally
accepted accounting principles consistently applied (except as may be indicated
therein or in the notes thereto), (b) present fairly the financial position of
Seller as of the dates indicated and present fairly the results of Seller's
operations for the periods then ended, and (c) are in accordance with the books
and records of Seller, which have been properly maintained and are complete and
correct in all material respects. Seller Current Financial Statements present
fairly the financial position of Seller and its subsidiaries as at the dates
thereof and the results of its operations and changes in financial position for
the periods then ended, subject to normal year-end audit adjustments (the
effect of which will not individually or in the aggregate result in a Material
Adverse Effect on Seller) and lack of footnotes thereto.
Section 5.11 No Undisclosed Liabilities. Except as listed in Schedule
5.11 attached hereto, Seller does not have any liabilities or obligations of
any nature, whether known or unknown and whether accrued, absolute, contingent
or otherwise, asserted or unasserted except for liabilities or obligations
reflected or reserved against in Seller's Current Balance Sheet.
Section 5.12 Litigation and Claims. Except as listed in Schedule 5.12
attached hereto, there are no claims, lawsuits, actions, arbitrations,
administrative or other proceedings, governmental investigations or inquiries
pending, or affecting, or to the knowledge of Seller threatened against, or
affecting Seller, any Seller Subsidiary, any Stockholder, or any other licensed
professional or other individual affiliated with Seller affecting or that could
affect the operations, business condition, (financial or otherwise), or results
of operations or the prospects of Seller which (i) if successful, may,
individually or in the aggregate, have a Material Adverse Effect on Seller or
(ii) could adversely affect the ability of Seller or any Seller Subsidiary to
effect the transactions contemplated hereby, and there is no basis for any such
action or any state of facts or occurrence of any event which might give rise
to the foregoing. There are no unsatisfied judgments against Seller or any
Seller Subsidiary or any licensed professional or other individual affiliated
with Seller or any Seller Subsidiary relating to services provided on behalf of
Seller or any Seller Subsidiary or any consent decrees to which any of the
foregoing is subject. Except as set forth in Schedule 5.12, each of the
matters, if any, set forth in Schedule 5.12 is fully covered by policies of
insurance of Seller or any Seller Subsidiary as in effect on the date hereof.
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Section 5.13 No Violation of Law. Neither Seller nor any Seller
Subsidiary has been, nor shall be as of the Closing Date (by virtue of any
action, omission to act, contract to which it is a party or any occurrence or
state of facts whatsoever), in violation of any applicable local, state or
federal law, ordinance, regulation, order, injunction or decree, or any other
requirement of any governmental body, agency, authority or court binding on it,
or relating to its properties, assets or business or its advertising, sales or
pricing practices, except for violations which reasonably, individually or in
the aggregate, would not have a Material Adverse Effect on Seller.
Section 5.14 Contracts and Commitments.
(a) Schedule 5.14 attached hereto contains a true, accurate
and complete list, and Seller has delivered to APP true and complete copies, of
each contract, agreement and other instrument (other than insurance contracts
identified in Schedule 5.24 or Lease Agreements identified in Schedule 5.20 to
which Seller is a party or by which it or any of its properties or assets are
bound including, without limitation, (i) all agreements between Seller, on the
one hand, and any Payor, government entity, provider, hospital, health
maintenance organization, other managed care organization or other third-party
provider, on the other hand, relating to the provision of medical, diagnostic
imaging or consulting services, treatments, patient referrals or other similar
activities, (ii) all indentures, mortgages, notes, loan or credit agreements
and other agreements and obligations relating to the borrowing of money or to
the direct or indirect guarantee or assumption of obligations of third parties
requiring Seller to make, or setting forth conditions under which Seller would
be required to make, aggregate future payments in excess of $5,000 in any
fiscal year or $10,000 in the aggregate, (iii) all agreements for capital
improvements or acquisitions involving an amount of $5,000 in any fiscal year
or $10,000 in the aggregate, (iv) all agreements containing a covenant limiting
the freedom of Seller (or any provider employee of Seller) to compete in any
line of business with any person or entity or in any geographic area or (v) all
written contracts and commitments to which aggregate future payments by Seller
in excess of $5,000 in any fiscal year or $10,000 in the aggregate and that are
not cancelable by providing notice of sixty (60) days or less. Except as noted
in Schedule 5.24, all such contracts, agreements or other instruments are in
full force and effect, there has been no threatened cancellation thereof, there
are no outstanding disputes thereunder, each is with unrelated third parties
and was entered into on an arms-length basis in the ordinary course of business
and, assuming the receipt of the appropriate consents, each constituting an
Purchased Contract will continue to be binding in accordance with their terms
after consummation of the transaction contemplated herein; except as noted in
Schedule 5.24, there are no contracts, agreements or other instruments to which
Seller is a party or is bound (other than physician employment contracts and
insurance policies) which could either singularly or in the aggregate have a
Material Adverse Effect on the value to Buyer of the Purchased Assets, or which
could inhibit or prevent Seller from transferring to or vesting in Buyer good
and sufficient title to the Purchased Assets. For each of the Assumed
Liabilities, in every instance where consent is necessary, Seller shall, on or
before the Closing Date, obtain and deliver to Buyer in writing, effective as
of the Closing Date, such consents as are necessary to effect a valid and
binding transfer or assignment so as to enable Buyer to enjoy all of the rights
now enjoyed by Seller under such contracts. Said consent shall be in a form
acceptable to Buyer and shall contain an acknowledgment by the consenting party
that Seller has fully complied with and is not in default under any provision
of the particular contract or agreement. Notwithstanding the foregoing, Seller
shall not transfer to Buyer any contracts or agreements relating to the
provision of professional medical services or other such agreements and
contracts that Buyer consents to in writing to be retained by Seller. Except
as set forth in Schedule 5.14, no contract with a health care provider or Payor
has been materially amended or terminated within the last twelve (12) months.
(b) Except as disclosed in Schedule 5.14, (i) Seller has not
received notice of any plan or intention of any other party to exercise any
right to cancel or terminate such contract, agreement or instrument, and Seller
is not aware of any fact(s) that would justify the exercise of such a right;
and (ii) Seller does not currently contemplate, or have reason to believe any
other Person currently contemplates, any amendment or change to any such
contract, agreement or instrument.
Section 5.15 No Brokers. Seller has not entered into and will not
enter into any agreement, arrangement or understanding with any person or firm
which will result in the obligation of Buyer to pay any finder's fee, brokerage
commission or similar payment.
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Section 5.16 No Other Agreements to Sell the Assets of the Seller's
Business. Seller does not have any legal obligation, absolute or contingent,
to any other individual or entity to sell any of the Purchased Assets (other
than agreements for the sale of Inventory in the ordinary course), or to effect
any sale of the Centers or to enter into any agreement with respect thereto.
Section 5.17 Employee Matters.
(a) Employment Contracts. Except as set forth in Schedule
5.17 attached hereto, Seller is not currently a party to any employment
contract (except for oral employment agreements which are terminable at will),
consulting or collective bargaining contracts, deferred compensation, pension
(as defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended, and all rules and regulations from time to time promulgated
thereunder ("ERISA")), profit sharing, bonus, stock option, stock purchase or
other nonqualified benefit or compensation commitments, benefit plans,
arrangements or plans (whether written or oral), including all welfare plans
(as defined in Section 3.1 of ERISA) of or pertaining to Seller and any of its
present or former employees, or any predecessors in interest.
(b) Employees. As of December 15, 1997, Seller employed a
collective total of one (1) part-time and two (2) full-time employees.
Schedule 5.17 lists each employee of, or consultant to, Seller who received
combined salary, benefits and bonuses for 1996 in excess of $25,000 or who is
expected to receive combined salary, benefits and bonuses in 1997 in excess of
$25,000. Seller is not delinquent in payment to any of its employees or
Physician Employees for wages, salaries, bonuses or other direct compensation
for any services performed for it to the date hereof or amounts required to be
reimbursed to such employees.
(c) Severance Arrangements. Except as set forth on Schedule
5.17(c) attached hereto, upon termination of employment of any employee, no
severance or other payments will become due and Seller has no policy, past
practice or plan of paying severance on termination of employment.
Section 5.18 Labor Relations. Except to the extent set forth in
Schedule 5.18 attached hereto:
(a) To the knowledge of Seller, no executive, key employee or
group of employees has any plans to terminate employment with Seller, except by
reason of terminating such relationship by becoming an employee of Buyer in
connection with Buyer's purchase of the Centers pursuant hereto;
(b) There is no unfair labor practice, charge or complaint or
any other employment-related matter against or involving Seller pending or
threatened before the National Labor Relations Board or any federal, state or
local agency, authority or court;
(c) There are no charges, investigations, administrative
proceedings or formal complaints of discrimination (including discrimination
based upon sex, age, marital status, race, national origin, the making of
workers' compensation claims, sexual preference, handicap or veteran status)
pending or threatened before the Equal Employment Opportunity Commission or any
federal, state or local agency or court against Seller. There have been no
governmental audits of the equal employment opportunity practices of Seller and
no basis for any such audit exists which, if conducted would result in a
Material Adverse Effect on Seller; and
(d) There are no inquiries, investigations or monitoring
activities of any licensed, registered, or certified professional personnel
employed or retained by, credentialed or privileged, or otherwise affiliated
with Seller pending or threatened by any state professional board or agency
charged with regulating the professional activities of health care
practitioners.
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Section 5.19 Employee Benefit Plans.
(a) Identification. Schedule 5.19(a) attached hereto contains
a complete and accurate list of all employee benefit plans (within the meaning
of Section 3(3) of ERISA) sponsored by Seller or to which Seller contributes on
behalf of its employees and all employee benefit plans previously sponsored or
contributed to on behalf of its employees within the three years preceding the
date hereof (the "Employee Benefit Plans"). Seller has provided to Buyer
copies of all plan documents (as they may have been amended to the date
hereof), determination letters, pending determination letter applications,
trust instruments, insurance contracts or policies related to an Employee
Benefit Plan, administrative services contracts, annual reports, actuarial
valuations, summary plan descriptions, summaries of material modifications,
administrative forms and other documents that constitute a part of or are
incident to the administration of the Employee Benefit Plans. In addition,
Seller has provided or made available to Buyer a written description of all
existing practices engaged in by Seller that constitute Employee Benefit Plans.
Except as set forth in Schedule 5.19(a) subject to the requirements of ERISA,
each of the Employee Benefit Plans can be terminated or amended at will by
Seller without any further liability or obligation on the part of such entity
to make further contributions or payments in connection therewith following
such termination. Except as set forth in Schedule 5.19(a), no unwritten
amendment exists with respect to any Employee Benefit Plan.
(b) Administration. Each Employee Benefit Plan has been
administered and maintained in compliance with all applicable laws, rules and
regulations, except where the failure to be in compliance would not,
individually or in the aggregate, result in a Material Adverse Effect.
(c) Examinations. Except as set forth in Schedule 5.19(c)
attached hereto, Seller has not received any notice that any Employee Benefit
Plan is currently the subject of an audit, investigation, enforcement action or
other similar proceeding conducted by any state or federal agency or authority.
(d) Prohibited Transactions. No prohibited transactions
(within the meaning of Section 4975 of the Code or Section 406 of ERISA) have
occurred with respect to any Employee Benefit Plan. There has been no breach
of any duty under ERISA or applicable law (including, without limitation, any
health care contractor requirements or any other tax law requirements, or
conditions to favorable tax treatment, applicable to such plan), which could
result, directly or indirectly, (including through any obligation of
indemnification or contribution), in any taxes, penalties or other liability to
APP or any of its Affiliates.
(e) Claims and Litigation. Except as set forth in Schedule
5.19(e) attached hereto, no pending or threatened, claims, suits or other
proceedings exist with respect to any Employee Benefit Plan other than normal
benefit claims filed by participants or beneficiaries.
(f) Qualification. Seller has received a favorable
determination letter or ruling from the IRS for each of the Employee Benefit
Plans intended to be qualified within the meaning of Section 401(a) or
501(c)(9) of the Code and/or tax-exempt within the meaning of Section 501(a) of
the Code and, to the best knowledge of Seller and each Stockholder, has been
continually qualified under the applicable Section of the Code since the
effective date of such Employee Benefit Plan. No proceedings exist or have
been threatened that could result in the revocation of any such favorable
determination letter or ruling.
(g) Funding Status. Except as set forth in Schedule 5.19(g)
attached hereto, no accumulated funding deficiency (within the meaning of
Section 412 of the Code), whether waived or unwaived, exists with respect to
any Employee Benefit Plan or any plan sponsored by any member of a controlled
group (within the meaning of Section 412(n)(6)(B) of the Code) in which Seller
is a member (a "Controlled Group"). Except as set forth in Schedule 5.19(g),
with respect to each Employee Benefit Plan subject to Title IV of ERISA, the
assets of each such plan are at least equal in value to the present value of
accrued benefits determined on an ongoing basis as of the date hereof. With
respect to each Employee Benefit Plan described in Section 501(c)(9) of the
Code, the assets of each such plan are at least equal in value to the present
value of accrued benefits, based upon the most recent actuarial valuation as of
a date no more than ninety (90) days prior to the date hereof. Schedule
5.19(g) contains a complete and accurate statement of all actuarial assumptions
applied to determine the present value of accrued benefits under all Employee
Benefit Plans subject to actuarial assumptions.
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(h) Excise Taxes. Neither Seller nor any member of a Controlled
Group has any liability to pay excise taxes with respect to any Employee
Benefit Plan under applicable provisions of the Code or ERISA.
(i) Multiemployer Plans. Neither Seller nor any member of a
Controlled Group is or ever has been obligated to contribute to a multiemployer
plan within the meaning of Section 3(37) of ERISA or any other Employee Benefit
Plan which has been subject to Title IV of ERISA or Section 412 of the Code.
(j) PBGC. No facts or circumstances exist that would result
in the imposition of liability against APP, Buyer or any of its Affiliates by
the Pension Benefit Guaranty Corporation ("PBGC") as a result of any act or
omission by Seller or any member of a Controlled Group. No reportable event
(within the meaning of Section 4043 of ERISA) for which the notice requirement
has not been waived has occurred with respect to any Employee Benefit Plan
subject to the requirements of Title IV of ERISA.
(k) Retirees. Seller has no obligation or commitment to
provide medical, dental or life insurance benefits to or on behalf of any of
its employees who may retire or any of its former employees who have retired
except as may be required pursuant to the continuation of coverage provisions
of Section 4980B of the Code and the applicable provisions of ERISA.
(l) Other Compensation Arrangements. Except as set forth in
Schedule 5.19(e), neither Seller nor any Stockholder or physician employee of
Seller is a party to any compensation or debt arrangement with any person
relating to the provision of health care related services other than
arrangements with Seller.
Section 5.20 Lease Agreements. Schedule 5.20 attached hereto, contains
a true, accurate and complete list of all the lease agreements and license
agreements to which Seller or any Seller Subsidiary is a party and pursuant to
which Seller or any Seller Subsidiary leases (whether as lessor or lessee) or
licenses (whether as licensor or licensee) any real or personal property
related to the operation of the Centers and which requires payments in excess
of $10,000 per year (the "Lease Agreements"). Seller has delivered to Buyer
true and complete copies of all of the Lease Agreements. Each Lease Agreement
is valid, effective and in full force in accordance with its terms, and there
is not under any such lease (i) any existing or claimed material default by
Seller [or any Seller Subsidiary (as applicable)] or event of material default
or event which with notice or lapse of time, or both, would constitute a
material default by Seller or any Seller Subsidiary (as applicable) and,
individually or in the aggregate, may reasonably result in a Material Adverse
Effect on the Centers, or (ii) any existing material default by any other party
under any of the Lease Agreements or, to the knowledge of Seller, any event of
material default or event which with notice or lapse of time, or both, would
constitute a material default by any such party. There is no pending or
threatened reassessment of any property covered by the Lease Agreements.
Seller or any Seller Subsidiary has obtained the consent of each landlord or
lessor whose consent is required to the assignment of the Lease Agreements and
has delivered to Buyer in writing such consents as are necessary to effect a
valid and binding transfer or assignment of Seller's or any Seller Subsidiary's
rights thereunder. Seller has a good, clear, valid and enforceable leasehold
interest under each of the Lease Agreements. The Lease Agreements are in
compliance with all applicable safe harbor provisions promulgated by the
Department of Health and Human Services in connection with the enforcement of
the federal Fraud and Abuse Xxxxxxx, 00 XXX Part 1001 and any similar
applicable state law safe harbor or other exemption provisions.
Section 5.21 Real and Personal Property.
(i) Except as set forth in Schedule 2.1(a), neither
Seller nor any Seller Subsidiary owns any interest (other than the Lease
Agreements) in real property.
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(ii) Except as set forth in Schedule 5.3(b), Seller and
any Seller Subsidiary (i) has good and marketable title to all of its
properties and assets (real, personal and mixed, tangible and intangible) and
any rights or interests therein which it purports to own including, without
limitation, all the property and assets reflected in Seller Financial
Statements; and (ii) owns such rights, interests, assets and property free and
clear of all Encumbrances, title defects or objections (except for taxes not
yet due and payable). Seller Financial Statements reflect all personal
property used in connection with the operation of the business subject to
disposition in the ordinary course of business and such personal property are
the necessary assets to continue operation of Seller and any Seller Subsidiary.
Section 5.22 Environmental Matters.
(a) Neither Seller nor any Seller Subsidiary has, within the
five (5) years preceding the date hereof, through the Effective Time, received
from any federal, state or local governmental body, agency, authority or
entity, or any other Person, any written notice, demand, citation, summons,
complaint or order or any notice of any penalty, lien or assessment, and no
investigation or review is pending by any governmental entity, with respect to
any (i) alleged violation by Seller of any Environmental Law (as defined in
subsection (e) below) (ii) alleged failure by Seller to have any environmental
permit, certificate, license, approval, registration or authorization required
pursuant to any Environmental Law in connection with the conduct of its
business; or (iii) alleged illegal Regulated Activity (as defined in subsection
(f) below) by Seller.
(b) Neither Seller nor any Seller Subsidiary has used,
transported, disposed of or arranged for the disposal of (as those terms are
defined in and construed under the Comprehensive Environmental Response,
Compensation and Liability Act) any Hazardous Substance (as defined herein)
that would give rise to any Environmental Liabilities (as defined in subsection
(e) below) for Seller under any applicable Environmental Law that had, or could
likely have, a Material Adverse Effect on Seller. Neither Seller nor any
Seller Subsidiary has engaged in any activity or failed to undertake any
activity which action or failure to act has given, or could likely give, rise
to any Environmental Liabilities or enforcement action by any federal, state or
local regulatory agency or authority, or has resulted, or could likely result,
in any fine or penalty imposed pursuant to any Environmental Law. Schedule
5.22(b) attached hereto discloses any known presence of asbestos in or on
Seller's or any Seller Subsidiary's owned or leased premises. There is no
friable asbestos in or on Seller's or any Seller Subsidiary's owned or leased
premises.
(c) No soil or water in or under any assets currently or
formerly held for use or sale by Seller or any Seller Subsidiary is or has been
contaminated by any Hazardous Substance while such assets or premises were
owned, leased, operated or managed, directly or indirectly by Seller or any
Seller Subsidiary where such contamination had, or could likely have, a
Material Adverse Effect on Seller.
(d) Schedule 5.22(d) attached hereto, contains a list of all
environmental audits and other similar reports which have been prepared by, for
or concerning Seller or any Seller Subsidiary within the five (5) years
preceding the date hereof through the Effective Time with respect to any real
property now or previously owned or leased by Seller, any Seller Subsidiary or
any of its predecessors, true and complete copies of which have been provided
to Buyer.
(e) For the purposes of this Section 5.22, the following terms
have the following meanings:
"Environmental Laws" shall mean any and all domestic federal,
state and local laws (including case law), regulations, ordinances,
rules, judgments, orders, decrees, codes, injunctions and permits
relating to the environment or to emissions, discharges or releases of
Hazardous Substances into the environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances or the clean-up
or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities of Seller
or any Seller Subsidiary, whether contingent or fixed, which (i) have
arisen, or could likely arise, under Environmental Laws
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and (ii) relate to actions occurring or conditions existing on or prior
to the date hereof or the Effective Time.
"Hazardous Substances" shall mean any air pollution, toxic,
radioactive, caustic or otherwise hazardous substance regulated by any
Environmental Law, (including but not limited to, (i) Medical Waste and
(ii) petroleum, its derivatives, by-products and other hydrocarbons),
and any material constituent elements thereof displaying any of the
foregoing characteristics.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Substances.
Section 5.23 Filing Reports. All returns, reports, plans and filings
of any kind or nature necessary to be filed by Seller with any governmental
agency or authority have been properly completed and timely filed in compliance
with all applicable requirements, except where failure to so file would not
have a Material Adverse Effect on Seller.
Section 5.24 Insurance Policies. Schedule 5.24 attached hereto lists
and briefly describes Seller's policies of insurance to which Seller or any
Affiliate is a party or under which Seller or any Affiliate, officer or
director thereof is or has been covered at any time during the last five (5)
years preceding the date of this Agreement relating to the business of Seller
or any of its Affiliates (the "Insurance Policies"). Except as set forth in
Schedule 5.24, all of the Insurance Policies are issued by insurers that are
financially sound and reputable, and are valid, outstanding and enforceable
policies, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies and all premiums with respect thereto are currently paid.
All Insurance Policies currently maintained by Seller or any Affiliate thereof
("Current Policies") taken together, (i) provide adequate insurance coverage
for the assets, properties and operations of Seller and its Affiliates for all
risks normally insured against by a Person carrying on a substantially similar
business or businesses as Seller and its Affiliates, (ii) are sufficient for
compliance with legal and contractual requirements to which Seller or any of
its Affiliates is a party or by which any of them may be bound, and (iii) shall
be maintained in force (including the payment of all premiums and compliance
with their terms without interruption) up to and including the Closing Date.
True, complete and correct copies of all Insurance Policies have been provided
to APP. Except as set forth in Schedule 5.24, neither Seller nor any of its
Affiliates nor any officer or director thereof has received any notice or other
communication from any issuer of any Current Policy canceling such policy,
materially increasing any deductibles or retained amounts thereunder, or
materially increasing the annual or other premiums payable thereunder and, to
the knowledge of Seller and the Stockholders, no such cancellation or increase
of deductibles, retainages or premiums is threatened. Except as set forth in
Schedule 5.24, there are no outstanding claims, settlements or premiums owed
against any Insurance Policy, and all have been given and all potential or
actual claims under any Insurance Policy have been presented in due and timely
fashion. Except as set forth in Schedule 5.24, since January 1, 1993, neither
Seller nor any Affiliate thereof has filed a written application for any
professional liability insurance coverage which has been denied by an insurance
agency or carrier. Schedule 5.24 also sets forth a list of all claims under
any Insurance Policy in excess of $10,000 per occurrence filed by Seller or any
Affiliate thereof during the immediately preceding three-year period.
Section 5.25 Accounts Receivable; Payors.
(a) Schedule 5.25(a) attached hereto is a list and aging of
all accounts receivable of Seller as of December 15, 1997, which list is
complete, true and accurate in all material respects. All such accounts
receivable arose in the ordinary course of business and have not been
previously written off as bad debts and, are, to the extent still uncollected,
collectible in the ordinary course of business, net of reserves for doubtful
and uncollectible accounts shown in Seller Financial Statements or on the
accounting records of Seller (which reserves are adequate and calculated
consistent with past practice). Nothing contained in this Section 5.25 shall
be construed as a guarantee of collectibility of the accounts receivable.
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(b) Schedule 5.25(b) attached hereto sets forth a true, correct and
complete list of the names and addresses of each Payor including, but not
limited to, all private-pay patients as a single Payor, of Seller which
accounted for more than 5% of the revenues of Seller in the fiscal year ended
December 31, 1996, or which is reasonably expected to account for more than 5%
of the revenues of Seller for the fiscal year to end December 31, 1997. Except
as set forth in Schedule 5.25(b), Seller has satisfactory relations with such
Payors and none of such Payors has notified Seller that it intends to
discontinue its relationship with Seller or to deny any payments due from, or
any claims for payment submitted to any such party.
Section 5.26 Accounts Payable; Suppliers.
(a) Attached hereto as Schedule 5.26(a) attached hereto is a
true and complete (i) list of the accounts payable of Seller as of December 15,
1997, and (ii) list of each individual indebtedness of $2,500 or more, setting
forth the payee and the amount of indebtedness.
(b) Schedule 5.26(b) attached hereto sets forth a true,
correct and complete list of the names and addresses of each of the
providers/suppliers of products or services to Seller (including, without
limitation all non-Physician Employee providers of care to patients) which
accounted for a dollar volume of purchases paid for by Seller in excess of
$2,500 for the fiscal year ended December 31, 1996, or which is reasonably
expected to account for a dollar volume of purchases paid for by Seller in
excess of $2,500 for the fiscal year to end December 31, 1997.
Section 5.27 Inventory. All items of inventory on Seller Current
Balance Sheet contained in Seller Financial Statements consisted, and all such
items on hand on the date of this Agreement consist, and all such items on hand
at the Effective Time will consist of items of a quality and a quantity usable
and saleable in the ordinary course of Seller's business and conform to
generally accepted standards in the industry of which Seller is a part. The
value of the inventories reflected on Seller Current Balance Sheet contained in
Seller Financial Statements. Purchase commitments of Seller for inventory are
not materially in excess of normal requirements, and none of such purchase
commitments are at prices in excess of prevailing market prices at the time of
such purchase commitment.
Section 5.28 Licenses, Authorization and Provider Programs.
(a) Except as listed in Schedule 5.28(a) attached hereto,
Seller, and each other licensed employee or independent contractor of Seller
(i) is the holder of all valid licenses, approvals, orders, consents, permits,
registrations, qualifications and other rights and authorizations required by
law, ordinance, regulation or ruling of any governmental regulatory authority
necessary to operate its/his/her business and (ii) is certified for
participation under Titles XVIII and XIX of the Social Security Act (the
"Medicare and Medicaid Programs") (Medicare and Medicaid Programs and such
other similar federal, state or local reimbursement or governmental programs
for which Seller is eligible are hereinafter referred to collectively as the
"Governmental Programs") and has current provider numbers for such Governmental
Programs and with such private non-governmental programs (including without
limitation any private insurance program) under which Seller is presently
receiving payments directly or indirectly from any Payor for patient care (such
non-governmental programs herein referred to as "Private Programs"). A true,
correct and complete list of such licenses, permits and other authorizations,
and provider agreements, is set forth in Schedule 3.27(a), true, complete and
correct copies of which have been provided to APP. No violation, default,
order or deficiency exists with respect to any of the items listed in Schedule
5.28(a) except for such violations, defaults, orders or deficiencies which
would not be reasonably likely to have a Material Adverse Effect on Seller, and
there is no action pending or recommended by any state or federal agencies
having jurisdiction over the items listed in Schedule 5.28(a), either to
revoke, withdraw or suspend any material license or to terminate the
participation of Seller in any Governmental Program or Private Program, and no
event has occurred which, with or without notice or lapse of time, or both,
would constitute grounds for a violation, order or deficiency with respect to
any of the items listed in Schedule 5.28(a) or to revoke, withdraw or suspend
any material license to operate its business as is presently being conducted by
it. To the knowledge of Seller, there has been no decision not to renew any
existing agreement with any provider or Payor relating to the Centers as
presently being conducted by it. Except as set forth in Schedule 5.28(a) or
Schedule 5.12 hereof, neither Seller nor either Center (i) has had his/her/its
professional license, Drug Enforcement Agency number, Medicare/Medicaid
provider status or staff privileges at any hospital or
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diagnostic imaging center suspended, relinquished, terminated or revoked, (ii)
has been reprimanded, sentenced, or disciplined by any licensing board, state
agency, regulatory body or authority, hospital, Payor or specialty board, or
(iii) has had a final judgment or settlement entered against him/her/its in
connection with a malpractice or similar action.
(b) Except as set forth in Schedule 5.28(b) attached hereto,
Seller is not required, or for the 72-month period prior to the Effective Time
was not required, to file any cost reports or other reports with any
Governmental Program or Private Program.
Section 5.29 Inspections and Investigations. Neither the right of
Seller nor the right of any licensed professional or other individual
affiliated with Seller to receive reimbursements pursuant to any Governmental
Program or Private Program has been terminated or otherwise materially and
adversely affected as a result of any investigation or action whether by any
federal or state governmental regulatory authority or other third party.
Except as set forth and described in Schedule 5.29 attached hereto, to the best
knowledge of Seller no licensed professional or other individual affiliated
with the Centers has, during the past three (3) years prior to the Closing had
their license suspended or revoked by any governmental regulatory authority or
agency, hospital, integrated delivery system, trade association, professional
review organization, accrediting organization or certifying agency. True,
correct and complete copies of all reports, correspondence, notices and other
documents relating to any matter described or referenced in Schedule 5.29 have
been provided to Buyer.
Section 5.30 Proprietary Rights and Information.
(a) Set forth in Schedule 5.30(a) attached hereto is a
complete and accurate list and summary description of the following: (i) all
trademarks (registered and unregistered), trade-names, service marks and other
trade designations, including common law rights, registrations and applications
therefor, currently owned in whole or part, or used by Seller or any of its
affiliates, (ii) all patents and applications therefor and inventories and
discoveries that may be patentable currently owned, in whole or in part, or
used by Seller or any of its affiliates, (iii) all licenses, royalties, and
assignments thereof to which Seller or any of its Affiliates are a party (iv)
all copyrights (for published and unpublished works) currently owned in whole
or part, or used by Seller or any of its Affiliates and (v) other similar
agreements relating to the foregoing to which Seller or any of its affiliates
is a party (including expiration date if applicable) (collectively, the
"Proprietary Rights").
(b) Schedule 5.30(b) attached hereto contains a complete and
accurate list and summary description of all agreements relating to technology,
trade secrets, know-how or processes that Seller is licensed or authorized to
use by others (other than technology, know-how or processes generally available
to other health care providers) or which it licenses or authorizes others to
use, true, correct and complete copies of which have been provided to Buyer or
APP. There are no outstanding and, to Seller's knowledge, any threatened
disputes or disagreements with respect to any such agreement.
(c) Seller owns or has the legal right to use the Proprietary
Rights without conflicting with, infringing or violating the rights of any
other person. Except as disclosed in Schedule 5.30(c) attached hereto, no
consent of any person will be required for the use thereof by Buyer or APP upon
consummation of the transactions contemplated hereby and the Proprietary Rights
are freely transferable. No claim has been asserted by any person to the
ownership of or for infringement by Seller of any Proprietary Right of any
other Person, and neither Seller nor any Stockholder is aware of any valid
basis for any such claim. To the best knowledge of Seller, no proceedings have
been threatened which challenge the Proprietary Rights of Seller. Seller has
the right to use, free and clear of any adverse claims or rights of others all
trade secrets, customer lists and proprietary information required for the
performance and marketing of all merchandise and services formerly or presently
sold or marketed by them.
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Section 5.31 Taxes.
(a) Filing of Tax Returns. Seller has duly and timely filed
(in accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all Tax
Returns and reports required to be filed by the United States or 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 Seller for the periods covered thereby.
(b) Payment of Taxes. Except for such items as Seller may be
disputing in good faith by proceedings in compliance with applicable law, which
are described in Schedule 5.31(b) attached hereto, (i) Seller has paid all
taxes, penalties, assessments and interest that have become due with respect to
any Tax Returns that it has filed and has properly accrued on its books and
records in accordance with generally accepted accounting principles for all of
the same that have not yet become due and payable and (ii) Seller is not
delinquent in the payment of any tax, assessment or governmental charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or
Audits. Except as set forth in Schedule 5.31(c) attached hereto, Seller has
not received any notice that any tax deficiency or delinquency has been
asserted against Seller or to the best knowledge of Seller, there is no threat
of such assertion. There is no unpaid assessment, proposal for additional
taxes, deficiency or delinquency in the payment of any of the taxes of Seller
that could be asserted by any taxing authority. There is no taxing authority
audit of Seller pending, or to the actual knowledge of Seller, threatened
within the last five (5) years, and the results of any completed audits are
properly reflected in Seller Financial Statements. Seller has not violated any
applicable federal, state, local or foreign tax law. There are no security
interests or liens on any assets of Seller or any Seller Subsidiary which have
resulted from any failure to pay (or alleged failure to pay) taxes.
(d) No Extension of Limitation Period. Seller has not granted
an extension to any taxing authority of the statute of limitation period during
which any tax liability may be assessed or collected.
(e) All Withholding Requirements Satisfied. All monies
required to be withheld by Seller and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and paid to the respective governmental
agencies.
(f) Foreign Person. Neither Seller nor any Stockholder is a
foreign person, as such term is referred to in Section 1445(f)(3) of the Code
and Treasury Regulations Section 1.1445-2.
(g) Safe Harbor Lease. None of the properties or assets of
Seller constitutes property that Seller, APP, Buyer or any Affiliate of APP,
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 or properties of
Seller are subject to a lease to a "tax exempt entity" as such term is defined
in Section 168(h)(2) of the Code.
(i) Collapsible Corporation. Seller has not at any time
consented to have the provisions of Section 341(f)(2) of the Code apply to it.
(j) Boycotts. Seller has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the
Code.
(k) Parachute Payments. No payment required or contemplated
to be made by Seller will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
(l) S Corporation. Seller has made an election to be taxed as
an "S" corporation under Section 1362(a) of the Code.
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(m) Personal Holding Companies. Seller is not or has been a
personal holding company within the meaning of Section 542 of the Code.
Section 5.32 Related Party Arrangements. Schedule 5.32 attached hereto
sets forth a description of any interest held, directly or indirectly, by any
officer, director or other Affiliate of Seller in any property, real or
personal or mixed, tangible or intangible, used in or pertaining to the Centers
and any arrangement or agreement with any such person concerning the provision
of goods or services or other matters pertaining to the Centers. There are no
commitments to, and no income reflected in Seller Financial Statements that has
been derived from an Affiliate, and following the Closing shall not have any
obligation of any kind or designation to any such Affiliate.
Section 5.33 Banking Relations. Set forth in Schedule 5.33 attached
hereto is a complete and accurate list of all borrowing and investing
arrangements that Seller has with any bank or other financial institution,
indicating with respect to each relationship the type of arrangement maintained
(such as checking account, borrowing arrangements, safe deposit box, etc.) and
the Person or Persons authorized in respect thereof.
Section 5.34 Fraud and Abuse and Self Referral. Neither Seller nor any
Seller Subsidiary has engaged and, to the knowledge of Seller, neither Seller's
officers and directors nor other Persons and entities providing professional
services for or on behalf of Seller have engaged, in any activities which are
prohibited under 42 U.S.C. Sections 1320a 7, 7a or 7b or 42 U.S.C. Section
1395nn or (subject to the exceptions or safe harbor provisions set forth in
such legislation), or the regulations promulgated thereunder or pursuant to
similar state or local statutes or regulations, or which are prohibited by
applicable rules of professional conduct.
Section 5.35 Restrictions on Business Activities. Except as disclosed
in Schedule 5.14 or Schedule 5.35, there is no material agreement, judgment,
injunction, order or decree binding upon Seller, any Seller Subsidiary or
officer, director or key employee of Seller or Seller Subsidiary, which has or
reasonably could be expected to have the effect of prohibiting or materially
impairing any current or future business practice of Seller or any Seller
Subsidiary, any acquisition of property by Seller, any Seller Subsidiary or the
conduct of business by Seller or any Seller Subsidiary.
Section 5.36 Agreements in Full Force and Effect. Except as expressly
set forth in Seller's Schedules to this Agreement, all contracts, agreements,
plans, leases, policies and licenses referred to, or required to be referred
to, in Seller's Schedules delivered hereunder are valid and binding, and are in
full force and effect and are enforceable in accordance with their terms,
except to the extent that the validity or enforceability thereof may be limited
by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, or by general equity principles, or by public policy. There is no
pending or, to the knowledge of Seller, threatened bankruptcy, insolvency or
similar proceeding with respect to any other party to such agreements, and no
event has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default
thereunder by Seller or any other party thereto. Seller has not received any
termination notice regarding a contract with a health care provider in the last
twelve (12) months.
Section 5.37 Statements True and Correct. No representation or
warranty made herein by Seller or any Stockholder, nor any statement,
certificate, exhibit or instrument to be furnished by Seller or any Stockholder
to APP or Buyer pursuant to this Agreement, contains or will contain as of the
Closing any untrue statement of material fact or omits or will omit to state a
material fact necessary to make the statements contained herein and therein not
misleading.
Section 5.38 Schedules. All Schedules required by Article V hereof and
attached hereto are true, correct and complete in all material respects as of
the date of this Agreement.
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Section 5.39 Finders' Fees. Except as set forth in Schedule 5.39
attached hereto, no investment banker, broker, finder or other intermediary has
been retained by or is authorized to act on behalf of any of the Stockholders
or Seller who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or referred to herein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER AND APP
Buyer and APP each represents and warrants to Seller as follows:
Section 6.1 Organization and Good Standing; Qualification. Each of
Buyer and APP is a corporation duly organized, validly existing and in good
standing under the laws of the state of California and Delaware, respectively,
with all requisite corporate power and authority to own, operate and lease its
assets and properties and to carry on its business as currently conducted.
Each of Buyer and APP is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except where such failure to be so qualified or in
good standing would not have a Material Adverse Effect on Buyer or APP. Copies
of the certificate of incorporation and all amendments thereto of Buyer and APP
and the bylaws of Buyer and APP, as amended, and copies of the corporate
minutes of Buyer and APP regarding this transaction, all of which have been or
will be made available to Seller for review, are true, correct and complete as
in effect on the date of this Agreement and accurately reflect all material
proceedings of the Stockholders and directors of Buyer and APP (and all
committees thereof) regarding this transaction.
Section 6.2 Authorization and Validity. Each of Buyer and APP has all
requisite corporate power to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Buyer and APP of this Agreement and the agreements provided for
herein, and the consummation by Buyer and APP of the transactions contemplated
hereby and thereby are within Buyer and APP's respective corporate powers and
have been duly authorized by all necessary action on the part of Buyer and
APP's Board of Directors. This Agreement has been duly executed by Buyer and
APP. This Agreement and all other agreements and obligations entered into and
undertaken in connection with the transactions contemplated hereby to which
Buyer and APP is a party constitute, or upon execution will constitute, valid
and binding agreements of Buyer and APP, enforceable against it in accordance
with their respective terms, except as may be limited by bankruptcy or other
laws affecting creditors' rights generally, or by general equity principles, or
by public policy.
Section 6.3 Governmental Authorization. Except as expressly set forth
in Schedule 6.3 attached hereto, and other than consents, filings or
notifications required to be made or obtained by Buyer and APP, the execution,
delivery and performance by Buyer and APP of this Agreement and the agreements
provided for herein, and the consummation of the transactions contemplated
hereby and thereby by Buyer and APP, to the best knowledge of Buyer and APP,
requires no action by or in respect of, or filing with, any governmental body,
agency, official or authority.
Section 6.4 Capitalization. The authorized capital stock of APP
consists of 50,000,000 shares of APP Common Stock, of which [18,000,000] shares
are issued and outstanding and 10,000,000 shares of APP Preferred Stock, none
of which are outstanding.
Section 6.5 Absence of Conflicting Agreements or Required Consents.
To the best knowledge of Buyer and APP, the execution, delivery and performance
of this Agreement by Buyer and/or APP and any other documents contemplated
hereby (with or without the giving of notice, the lapse of time, or both): (i)
except as set forth in Schedule 6.3 and Schedule 6.5 attached hereto, does not
require the consent of any governmental or regulatory body or authority or any
other third party; (ii) will not conflict with any provision of Buyer's or
APP's certificate of incorporation or bylaws; (iii) will not conflict with,
result in a violation of, or constitute a default under any law, ordinance,
regulation, ruling, judgment, order or injunction of any court or governmental
instrumentality to which Buyer or APP is a party or by which Buyer or APP or
their or its properties are subject to or bound; and (iv) except as set forth
in Schedule 6.5, will not
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conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, require any notice under, or accelerate or permit
the acceleration of any performance required by the terms of any agreement,
instrument, license or permit, material to this transaction, to which Buyer or
APP is a party or by which APP or any of its respective properties are bound.
Section 6.6 Statements True and Correct. No representation or
warranty made herein by Buyer or APP, nor any statement, certificate or
instrument to be furnished by Buyer or APP to Seller or a Stockholder pursuant
to this Agreement, contains or will contain as of the Effective Time any untrue
statement of material fact or omits or will omit to state a material fact
necessary to make the statements contained herein and therein not misleading.
Section 6.7 Schedules. All Schedules required by Article VI hereof
and attached hereto are true, correct and complete in all material respects as
of the date of this Agreement.
Section 6.8 Finder's Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of
Buyer or APP who is entitled to any fee or commission upon consummation of the
transactions contemplated by this Agreement or referred to herein.
ARTICLE VII
PRE-CLOSING COVENANTS OF APP AND BUYER
[Intentionally Omitted]
ARTICLE VIII
CONDITIONS PRECEDENT OF APP AND BUYER
[Intentionally Omitted]
ARTICLE IX
CONDITIONS PRECEDENT OF SELLER
[Intentionally Omitted]
ARTICLE X
CLOSING DELIVERIES
Section 10.1 Deliveries of Seller. At or prior to the Closing Date,
Seller shall deliver to Buyer the following, all of which shall be in a form
satisfactory to Buyer and APP:
(a) a copy of resolutions of the Board of Directors of Seller
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements and consummation of the Acquisition, each
certified by the Secretary of such Corporation 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 Seller
authorizing the execution, delivery and performance of the Non-Compete
Agreement each certified by the Secretary of Seller as being true and correct
copies of the originals thereof subject to no modifications or amendments;
(c) intentionally omitted;
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(d) intentionally omitted;
(e) a certificate of the Secretary of Seller certifying as to
the incumbency of the directors and officers of Seller and as to the signatures
of such directors and officers who have executed documents delivered at the
Closing on behalf of Seller;
(f) a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of California for Seller establishing
that Seller is in existence, has paid all franchise or similar taxes, if any,
and, if applicable, otherwise is in good standing to transact business in the
state of California;
(g) certificates, dated within ten (10) days prior to the
Closing Date, of the Secretaries of State of the states in which Seller is
qualified to do business, to the effect that each such corporation is qualified
to do business and, if applicable, is in good standing as a foreign corporation
in each of such states;
(h) all authorizations, consents, approvals, permits and
licenses referenced in Section 5.28;
(i) the executed Non-Compete Agreement in substantially the
form attached hereto as Exhibit B and executed employment letter for Xxxxxxx X.
Xxxxx in substantially the form attached hereto as Exhibit C.
(j) a non-foreign affidavit, as such affidavit is referred to
in Section 1445(b)(2) of the Code, of each Seller, signed under a penalty of
perjury and dated as of the Closing Date, to the effect that Seller is a United
States citizen resident (and thus not a foreign person) and providing Seller's
United States taxpayer identification number;
(k) an assignment to Buyer of (i) each lease for real or
personal property described on Schedule 5.20 (the "Lease Assignments") and (ii)
all contracts described on Schedule 5.14 which can be assigned to Buyer ("Non-
Payor Contract Assignments"); and
(l) such other instrument or instruments of transfer prepared
by Buyer as shall be necessary or appropriate, as Buyer or its counsel shall
reasonably request, to carry out and effect the purpose and intent of this
Agreement.
Section 10.2 Deliveries of APP. At or prior to the Closing Date, APP
shall deliver to Seller the following, all of which shall be in a form
satisfactory to Seller:
(a) a copy of resolutions of the Board of Directors of APP
authorizing the execution, delivery and performance of this Agreement, and all
related documents and agreements, certified by APP's Secretary as being true
and correct copies of the originals thereof subject to no modifications or
amendments;
(b) the Purchase Price in accordance with Article IV hereof;
(c) intentionally omitted;
(d) intentionally omitted;
(e) a certificate of the Secretary of Buyer certifying as to
the incumbency of the officers of Buyer who have executed documents delivered
at the Closing on behalf of Buyer;
(f) a certificate, dated within ten (10) days prior to the
Closing Date, of the Secretary of State of Delaware establishing that APP and
Buyer, respectively, are in existence, have paid all franchise or similar
taxes, if any, and, if applicable, otherwise are in good standing to transact
business in the state of Delaware and California, respectively; and
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(g) certificates (or photocopies thereof), dated within ten
(10) days prior to the Closing Date, of the Secretaries of State of the states
in which Buyer and APP are qualified to do business, to the effect that Buyer
and APP are qualified to do business and, if applicable, are in good standing
as foreign corporations in such state.
ARTICLE XI
CERTAIN ADDITIONAL AGREEMENTS OF THE PARTIES
Intentionally omitted.
ARTICLE XII
POST CLOSING MATTERS
Section 12.1 Further Instruments of Transfer. Following the Closing,
at the request of Buyer and at Buyer's sole cost and expense, the Stockholders
and Seller shall deliver any further instruments of transfer and take all
reasonable action as may be necessary or appropriate to carry out the purpose
and intent of this Agreement.
ARTICLE XIII
REMEDIES
Section 13.1 Indemnification by Seller and the Principal Stockholders.
Subject to the terms and conditions of this Article XIV, Seller and the
Principal Stockholders jointly and severally agree to indemnify, defend and
hold APP and Buyer 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") asserted against or incurred by such indemnities arising out of or
resulting from:
(a) a breach of any representation or warranty (without giving
effect to any Material Adverse Effect qualifier contained as part of any such
representation or warranty) of Seller contained herein or in any Schedule or
certificate delivered hereunder; and
(b) any violation (or alleged violation) by Seller and/or any
of its past or present directors, officers, partners, shareholders, employees,
agents, consultants and Affiliates of state or federal laws governing health
care 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 Payor on or before the Closing Date.
Section 13.2 Indemnification by APP and Buyer. Subject to the terms
and conditions of this Article XIV, APP and Buyer jointly and severally hereby
agree to indemnify, defend and hold Seller and its respective agents, attorneys
and Affiliates harmless from and against all Damages asserted against or
incurred by such indemnities arising out of or resulting from (a) a breach by
APP or Buyer of any representation or warranty (without giving effect to any
Material Adverse Effect qualifier contained as part of any such representation
or warranty) of APP or Buyer contained herein or in any schedule or certificate
delivered hereunder.
Section 13.3 Conditions of Indemnification. All claims for
indemnification under this Agreement shall be asserted and resolved as follows:
(a) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (and, in the event, at least ten (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
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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. Except as set forth
in Section 14.3 attached hereto, 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 except to the extent that
the resulting delay is materially prejudicial to the defense of such claim.
Damages awarded shall be reduced by the costs incurred as a result of such
delays.
Within thirty (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 XIV with respect to such Third Party
Claim and (ii) whether the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend the Indemnified Party against such
Third Party Claim.
(b) If the Indemnifying Party notifies the Indemnified Party
within the Election Period that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend, at its sole cost and expense, such Third Party Claim by all
appropriate proceedings, which proceedings shall be prosecuted diligently by
the Indemnifying Party to a final conclusion or settled at the discretion of
the Indemnifying Party in accordance with this Section 14.3(b). The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof. The Indemnified 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 Indemnified Party shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party and not prejudicial to the
Indemnifying Party (it being understood and agreed that if an Indemnified Party
takes any such action that is prejudicial and causes a final adjudication that
is adverse to the Indemnifying Party, the Indemnifying Party shall be relieved
of its obligations hereunder with respect to such Third Party Claim). 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 14.3(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 Indemnified 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 14.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 14.3(b) but fails
diligently and promptly to prosecute or settle the Third Party Claim, then the
Indemnified Party shall have the right to defend, at the sole cost and expense
of the Indemnifying Party (if the Indemnified Party is entitled to
indemnification hereunder), the Third Party Claim by all appropriate
proceedings, which proceedings shall be promptly and vigorously prosecuted by
the Indemnified Party to a final conclusion or settled. The Indemnified Party
shall have full control of such defense and proceedings, provided, however,
that the Indemnified Party may not enter into, without the Indemnifying Party's
consent, which shall not be unreasonably withheld, any compromise or settlement
of such Third Party Claim. Notwithstanding the
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foregoing, if the Indemnifying Party has delivered a written notice to the
Indemnified Party to the effect that the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article XIV and if such
dispute is resolved in favor of the Indemnifying Party, the Indemnifying Party
shall not be required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this Section or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the Indemnified Party shall
reimburse the Indemnifying Party in full for all costs and expenses of such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 14.3(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 one or more legal defenses
available to it that are different from or additional to those available to the
Indemnified Party, then the Indemnifying 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) In the event 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 sixty (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 within thirty (30) days after notice of a dispute is given.
(e) Payments of all amounts owing by an Indemnifying Party
pursuant to this Article XIV relating to a Third Party Claim shall be made
within thirty (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 14.3(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.
(f) Notwithstanding any provision herein to the contrary, the
obligation of APP or Buyer on the one hand, or Seller or the Principal
Stockholders, on the other hand, to provide indemnification for breach of any
representation or warranty as provided in Section 14.1(a) or 14.2(a) hereof
shall not take effect unless and until the Damages asserted against or incurred
in the aggregate and on a collective basis by APP or Buyer, on the one hand, or
Seller or the Principal Stockholders, on the other hand, as a result of such a
breach or breaches exceeds $10,000.
Section 13.4 Remedies Exclusive. The remedies provided in this
Agreement shall be the exclusive rights or remedies available to one party
against the other, either at law or in equity except in the case of fraud.
Section 13.5 Costs, Expenses and Legal Fees. Whether or not the
transactions contemplated hereby are consummated, each party hereto shall bear
its own costs and expenses (including attorneys' fees), except that each party
hereto agrees to pay the costs and expenses (including reasonable attorneys'
fees and expenses) incurred by the other parties in successfully (a) enforcing
any of the terms of this Agreement or (b) proving that another party breached
any of the terms of this Agreement.
Section 13.6 Tax Benefits; Insurance Proceeds. The total amount of any
indemnity payments owed by one party to another party to this Agreement shall
be reduced by any correlative tax benefit received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
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respect to recovery from third parties or insurance proceeds, and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claim.
ARTICLE XIV
TERMINATION
[Intentionally Omitted]
ARTICLE XV
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
Section 15.1 Non-Disclosure Covenant. Seller recognizes and
acknowledges that it has in the past, currently has, and in the future may
possibly have, access to certain Confidential Information of APP that is
valuable, special and unique assets of APP's businesses. APP and Buyer
acknowledge that they had in the past, currently have, and in the future may
possibly have, access to certain Confidential Information of Seller that is
valuable, special and unique assets of Seller's business. Seller and APP 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 APP and (b) to counsel and other
advisers to APP provided that such advisers (other than counsel) agree to the
confidentiality provisions of this Section 16.1, unless (i) such information
becomes available to or known by the public generally through no fault of
Seller or APP, as the case may be, (ii) disclosure is required by law or the
order of any governmental authority under color of law, provided, that prior to
disclosing any information pursuant to this clause (ii) Seller or APP, as the
case may be, shall, if possible, give prior written notice thereof to Seller
and APP and provide Seller and APP with the opportunity to contest such
disclosure, (iii) 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 or otherwise. In the
event of a breach or threatened breach by Seller or APP of the provisions of
this Section, APP and Seller shall be entitled to an injunction restraining the
other party, as the case may be, from disclosing, in whole or in part, such
Confidential Information. Nothing herein shall be construed as prohibiting APP
and Seller from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
Section 15.2 Damages. Because of the difficulty of measuring economic
losses as a result of the breach of the foregoing covenants, and because of the
immediate and irreparable damage that would be caused for which they would have
no other adequate remedy, APP and Seller 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 and restraining orders.
Section 15.3 Survival. The obligations of the parties under this
Article XVI shall survive the termination of this Agreement.
ARTICLE XVI
MISCELLANEOUS
Section 16.1 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, and 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 16.2 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 APP to a
wholly owned subsidiary of APP; provided that any such assignment shall not
relieve APP of its obligations hereunder.
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Section 16.3 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 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 any rights or remedies hereunder
or thereunder.
Section 16.4 Entire Agreement. This Agreement and the agreements
contemplated hereby constitute the entire agreement of the parties regarding
the subject matter hereof, and supersede all prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
Section 16.5 Severability. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
Section 16.6 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants contained herein shall survive
the Closing and all statements contained in any certificate, exhibit or other
instrument delivered by or on behalf of Seller, any Stockholder, APP or Buyer
pursuant to this Agreement shall be deemed to have been representations and
warranties by such Seller, such Stockholder, APP or Buyer and, notwithstanding
any provision in this Agreement to the contrary, the representations and
warranties contained herein shall survive the Closing.
Section 16.7 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 CALIFORNIA.
Section 16.8 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 16.9 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 16.10 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 16.11 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 APP 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 APP in connection with conducting an examination of the
operations and assets of Seller; provided that APP shall reasonably promptly
provide notice of any release. In the event that the transactions contemplated
hereby are not consummated for any reason whatsoever, the parties hereto agree
not to disclose or use any Confidential Information they may have concerning
the affairs of the other parties, except for information that is required by
law to be disclosed; provided that should the transactions contemplated hereby
not be consummated, nothing contained in this Section shall be construed to
prohibit the parties hereto from operating businesses in competition with each
other.
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Section 16.12 Notice. Whenever this Agreement requires or permits 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 (i) if personally delivered or if delivered by telex, telegram,
facsimile or courier service, when actually received by the party to whom
notice is sent or (ii) if delivered by mail (whether actually received or not),
at the close of business on the third business day next following the day when
placed in the mail, postage prepaid, certified or registered, 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 APP and Buyer: American Physician Partners, Inc.
000 Xxxx Xxxxxx
0000 XxxxxxxXxxx Xxxxx
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, President
Xxxx X. Xxxxx, Esq., General
Counsel and Sr. V.P.
with a copy to: XxXxxxxxx, Will & Xxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxx, Esq.
If to Seller
or any Stockholder: Xxxxxx Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Fax No. (000) 000-0000
Section 16.13 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 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 16.14 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 16.15 Defined Terms. Terms used in the attached Exhibits and
the Schedules attached hereto with their initial letter capitalized and not
otherwise defined therein shall have the meanings as assigned to such terms in
this Agreement.
30
36
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the date first written above.
APP:
AMERICAN PHYSICIAN PARTNERS, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxx, President
Buyer:
VALLEY IMAGING PARTNERS, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxx
Seller:
PAL IMAGING CORP.
By: /s/ XXXXXX XXXXXX
------------------------------------
Its: President
------------------------------------
Principal Stockholders:
/s/ XXXXXX XXXXXX
-----------------------------------------
Xxxxxx Xxxxxx
/s/ XXXXXXX X. XXXXXX
-----------------------------------------
Xxxxxxx X. Xxxxxx
