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EXHIBIT 2.51
STOCK PURCHASE AGREEMENT
by and among
American Physician Partners, Inc.
(a Delaware corporation),
WB&A Imaging Partners, Inc.
(a Maryland corporation)
(f/k/a Drs. Xxxxx, Xxxxx & Associates, P.A.,
a Maryland professional corporation),
and
Xxxxx Xxxxxxxx, M.D.
Xxxx X. XxXxxxxx, M.D.
Xxxxx Xxxxxxxxx, M.D.
Xxxx X. Xxxxx, M.D.
Xxxxxx X. Xxxxxxxxx, M.D.
Xxxxxxx X. X'Xxxxx, M.D.
Xxxxxx X. Xxxxxxxx, M.D.
Xxxxxxx X. Perl, M.D.
Xxxxxxx X. Xxxxx, M.D.
Xxxx X. Xxxxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D.
Xxxxx X. Xxxxxxxx
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September 1, 1998
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of
this 1st day of September, 1998, by and among American Physician Partners,
Inc., a Delaware corporation ("APPM"), WB&A Imaging Partners, Inc., a Maryland
corporation (formerly known as Drs. Xxxxx, Xxxxx & Associates, P.A., a Maryland
professional corporation) (the "Company"), and Xxxxx Xxxxxxxx, M.D., Xxxx X.
XxXxxxxx, M.D., Xxxxx Xxxxxxxxx, M.D., Xxxx X. Xxxxx, M.D., Xxxxxx X.
Xxxxxxxxx, M.D., Xxxxxxx X. X'Xxxxx, M.D., Xxxxxx X. Xxxxxxxx, M.D., Xxxxxxx X.
Perl, M.D., Xxxxxxx X. Xxxxx, M.D., Xxxx X. Xxxxxxxx, M.D., Xxxxxx X. Xxxxxx,
M.D., Xxxxxx X. Xxxxxx, M.D. and Xxxxx X. Xxxxxxxx (collectively
"Shareholders"). Capitalized terms not otherwise defined when first used herein
shall have the meanings ascribed to them in Article XIII of this Agreement.
RECITALS
A. Shareholders own 11,548 shares of common stock (the "Company Common
Stock"), $.01 par value per share, of Company, which shares constitute all of
the issued and outstanding capital stock of Company (the "Shares").
B. Shareholders, other than Xxxxx X. Xxxxxxxx, are radiologists
holding active licenses from the State of Virginia, the State of Maryland,
and/or the District of Columbia to practice radiology within the respective
States or the District of Columbia.
C. Shareholders desire to sell to APPM and APPM desires to purchase
from Shareholders the Shares.
D. In connection with the transactions effected pursuant to this
Agreement, and prior to the Closing Date (as defined in Section 1.4 hereof),
Company and Shareholders shall have effected the following transactions (such
transactions, including those effected pursuant hereto and together with the
purchase and sale of the Shares, the "Transactions"): (i) each of the
Shareholders shall have entered into an employment agreement with WB&A Imaging,
P.C., a Maryland professional corporation; (ii) Company shall have transferred
all of its Professional Assets to WB&A Imaging, P.C.; and (iii) WB&A Imaging,
P.C., and Ormond Imaging Partners, Inc., a Delaware corporation and
wholly-owned subsidiary of APPM ("Ormond"), shall have entered into the Service
Agreement of even date pursuant to which Ormond will manage and administer the
non-medical aspects of the practice of radiology engaged in by WB&A Imaging,
P.C.
AGREEMENT
NOW, THEREFORE, in consideration of the preceding recitals and the
mutual representations, warranties, covenants and agreements set forth herein,
and other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
SALE AND PURCHASE OF STOCK
Section 1.1 Agreement to Sell and Purchase Stock. For the
consideration hereinafter provided and subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 1.4 hereof) Shareholders
shall sell, assign, transfer, convey and deliver to APPM, free and clear of all
liens, charges, claims or encumbrances, and APPM shall purchase and acquire
from Shareholders, the Shares of Shareholders. At the Closing, Shareholders
shall cause to be delivered to APPM certificates representing the Shares,
together with accompanying signed stock powers or instruments of assignment,
duly endorsed in blank for the transfer of the Shares to APPM with all
necessary transfer taxes paid or other revenue stamps affixed thereto.
Section 1.2 Purchase Price. At the Closing, subject to the terms and
conditions of this Agreement, APPM agrees to pay to Shareholders, as the
purchase price (the "Purchase Price") for the Shares, the consideration set
forth in Exhibit A.
Section 1.3 Certain Prorations.
The items set forth on Schedule 1.3 hereto shall be prorated or
adjusted among APPM and the other parties hereto as of the Closing Date.
At the Closing, Shareholders shall pay or credit to APPM all sums
required to effectuate the prorations and adjustments contemplated by the
provisions of this Section 1.3. If final figures have not been calculated on
any of the adjustments, prorations or reimbursements as of the Closing Date,
then the parties to this Agreement shall close this transaction using estimated
adjustments, prorations and reimbursements which shall be subject to later
readjustment when such final figures have been calculated, but in no event
later than six months after the Closing Date.
Any difference between the actual and estimated sums under Section 1.3
hereof may be offset by APPM against the Purchase Price at the Closing if not
paid prior to such time.
Section 1.4 Closing. The closing of the sale and purchase of the
Shares under and in accordance with this Agreement (the "Closing") shall take
place at the offices of Sherman, Meehan, Xxxxxx & Ain, 0000 X Xxxxxx, X.X.,
Xxxxx 000, Xxxxxxxxxx, X.X. 00000, on September 22, 1998, effective as of
September 1, 1998 (the "Effective Date"), or such later date as may be mutually
agreed to in writing by the parties hereto (the "Closing Date"). Each party
shall be responsible for its own attorneys' fees, and accountants' and other
advisory fees associated with the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS
As an inducement to APPM to enter into this Agreement and to purchase
the Shares and except as set forth and referenced in the Schedules, each
Shareholder and Company, jointly and severally (subject to the terms and
conditions hereof), represent and warrant to APPM as follows:
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Section 2.1 Capitalization; Ownership of Company Shares. The
authorized capital stock of Company consists solely of 100,000 shares of
Company Common Stock of which 11,548 shares are issued and outstanding.
Shareholders are the owners of all right, title and interest (legal, record and
beneficial) in and to the Shares described in Schedule 2.1 hereto, free and
clear of any and all liens, charges, claims, encumbrances or restrictions of
any nature whatsoever (except for any restrictions on transfer imposed by any
federal securities laws or state blue sky laws) and the Shares described in
Schedule 2.1 are all of the issued and outstanding Company Common Stock. The
delivery to APPM of the Shares pursuant to and in accordance with the
provisions of this Agreement will transfer to APPM good and marketable title in
and to all such Shares free and clear of any and all liens, charges, claims,
encumbrances or restrictions of any kind or nature whatsoever (except for any
restrictions on transfer imposed by any federal securities laws or state Blue
Sky laws). Except as specifically contemplated in this Agreement, no Person or
entity has any interest, agreement, option, right, participation, or privilege
(whether preemptive or contractual) capable of becoming an agreement or option,
for the purchase of any of the Shares, or any interest therein, from
Shareholders. Each of the Shares of Company Common Stock has been legally and
validly issued and is fully paid and nonassessable, and was issued pursuant to
a valid exemption from registration under (i) the Securities Act and (ii) all
applicable state securities laws. No Shares of Company Common Stock have been
issued or disposed of in violation of any preemptive rights, rights of first
refusal, or similar rights of Shareholders or any interest holder of Company.
Other than Company Common Stock, Company has no securities, bonds, debentures,
notes or other obligations the holders of which have the right to vote (or are
convertible into or exercisable for securities having the right to vote) with
Shareholders on any matter.
Section 2.2 Transactions in Capital Stock. There exist no Company
Rights. Company has no obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any of its equity securities or any interests therein or
to pay any dividend or make any distribution in respect thereof, except as set
forth in that certain Stockholders Agreement dated November 21, 1993, which
Stockholders Agreement will be terminated and canceled contemporaneously with
the Closing.
Section 2.3 Organization and Good Standing; Qualification. Company 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. Company 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 Company. Copies of the Articles of Incorporation of Company,
as amended or restated, and the Bylaws of Company, as amended or restated, and
copies of the corporate minutes of Company for the 24 months immediately
preceding the date of this Agreement, all of which have been or will be made
available to APPM for review, are true and complete as in effect on the date of
this Agreement, and in the case of the corporate minutes, accurately reflect
all material proceedings of the Shareholders and directors of Company (and all
committees thereof) for the subject time period. The stock record books of
Company, which have been or will be made available to APPM for review, contain
true, complete and accurate records of the stock ownership of record of Company
and the transfer record of the shares of its capital stock.
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Section 2.4 Authorization and Validity. Company and the Shareholders
have all requisite corporate and individual 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 and
thereby. The execution, delivery, and performance by Company of this Agreement
and the agreements contemplated herein, and the consummation by Company of the
Transactions contemplated hereby and thereby, are within Company's corporate
powers and have been duly authorized by all necessary action on the part of
Company's Board of Directors and Shareholders. This Agreement has been duly
executed by Company and Shareholders, and this Agreement, and all other
agreements and obligations entered into and undertaken in connection with the
Transactions contemplated hereby to which Company and Shareholders are a party,
constitute, or upon execution will constitute, valid and binding agreements of
Company and Shareholders, enforceable against them 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 2.5 Governmental Authorization. Other than consents, filings
or notifications required to be made or obtained by APPM and except as
disclosed on Schedule 2.5 hereto and in Section 4.1 hereof, the execution,
delivery and performance by Company and Shareholders of this Agreement and the
agreements provided for herein, and the consummation of the transactions
contemplated hereby and thereby by Company and Shareholders, to the best
knowledge of Company and Shareholders require no action by or in respect of, or
filing with, any governmental body, agency, official or authority.
Section 2.6 Absence of Conflicting Agreements or Required Consents.
The execution, delivery and performance by Company and each of the Shareholders
of this Agreement and any other documents contemplated hereby (with or without
the giving of notice, the lapse of time, or both): (i) other than consents,
filings or notifications required to be made or obtained by APPM and except as
may be disclosed on Schedule 2.5 and in Section 4.1 hereof do not require the
consent of any governmental or regulatory body or authority or any other third
party except for such consents for which the failure to obtain would not
reasonably be expected to result in a Material Adverse Effect on Company or a
Shareholder; (ii) will not conflict with any provision of Company's Articles of
Incorporation, as amended or restated, or Bylaws, as amended or restated; (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 Company or a Shareholder is a
party or by which Company or a Shareholder or any of their properties are
subject or bound except for such conflict, violation or default the occurrence
of which would not reasonably be expected to result in a Material Adverse
Effect on Company or Shareholders; (iv) except as is disclosed in Schedule
2.18, 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 permit the acceleration of, any performance required by the terms
of any agreement, instrument, license or permit, material to this transaction,
to which Company or a Shareholder is a party or by which Company or a
Shareholder or any of their properties are bound except for such conflict,
termination, breach or default, the occurrence of which would not reasonably be
expected to result in a Material Adverse Effect on Company or Shareholders; and
(v) will not create any Encumbrance or restriction upon any of the assets or
properties of Company or Shareholders.
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Section 2.7 Subsidiaries and Investments. Except as is disclosed in
Schedule 2.7 hereto, Company 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.
Section 2.8 Absence of Changes. Except as permitted or contemplated by
this Agreement, since September 1, 1996, Company has conducted its business
only in the ordinary course and has not:
(a) suffered any change (whether or not covered by insurance)
that, individually or in the aggregate, has had or would reasonably be expected
to have a Material Adverse Effect on Company;
(b) paid, discharged or satisfied any material liability,
other than the payment, discharge or satisfaction of liabilities in the
ordinary course of business;
(c) written off as uncollectible any receivable, except for
write-offs in the ordinary course of business;
(d) except in the ordinary course of business and consistent
with past practice, canceled or compromised any debts, or waived or permitted
to lapse any claims or rights, or sold, transferred or otherwise disposed of
any of its properties or assets;
(e) entered into any commitment or transaction not in the
ordinary course of business that is material to Company, taken as a whole, or
made any capital expenditure or commitment in excess of $5,000 individually or
$10,000 in the aggregate;
(f) made any material change in any method of accounting or
accounting practice, credit practices, collection policies, or payment
policies;
(g) except in the ordinary course of business consistent with
past practice, incurred any liabilities or obligations (absolute, accrued or
contingent) in excess of $5,000 individually or $10,000 in the aggregate;
(h) mortgaged, pledged, subjected, or agreed to subject, any
of its assets, tangible or intangible, to any claim or Encumbrance, except for
liens for current personal property taxes not yet due and payable or for
mechanics, landlords, materialmen, and other statutory liens, purchase money
security interests, sale-leaseback interests granted, and all other
Encumbrances granted in similar transactions;
(i) sold, redeemed, acquired or otherwise transferred any
equity or other interest in itself other than with respect to the purchase of
1,000 shares of Company Common Stock by each of Xxxx X. Xxxxxxxx and Xxxxxx X.
Xxxxxxxx, 688 shares of Company Common Stock by Xxxxxx X. Xxxxxx, and 430
shares of Company Common Stock by Xxxxxx X. Xxxxxx and 430 shares of Company
Common Stock by Xxxxx X. Xxxxxxxx;
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(j) increased any salaries, wages or any employee benefits
for any employee of Company, or paid any bonus, except in the ordinary course
of business and consistent with past practice;
(k) hired, committed to hire, or terminated any employee
except in the ordinary course of business;
(l) declared, set aside, or made any payments, dividends or
other distributions to Shareholders in their capacities as Shareholders, or any
other holder of capital stock of Company (except as expressly contemplated
herein); or
(m) agreed, whether in writing or otherwise, to take any
action described in this Section 2.8.
Section 2.9 Litigation and Claims. Except as is disclosed in Schedule
2.9 hereto, there are no claims, lawsuits, actions, arbitrations,
administrative or other proceedings, governmental investigations or inquiries
pending or, to the best knowledge of Company and Shareholders, threatened,
against Company, Shareholders, any Physician Employees, or, to the best
knowledge of Company and Shareholders, any other licensed professional or other
individual affiliated with Company which (i) if successful, individually or in
the aggregate, reasonably would be expected to have a Material Adverse Effect
on Company or Shareholders or (ii) if successful, reasonably would be expected
to materially adversely affect the ability of Company or Shareholders to effect
the Trans actions contemplated hereby. There are no unsatisfied judgments
against Company or Shareholders or any Physician Employee, or any consent
decrees to which any of the foregoing is subject, relating to services provided
on behalf of Company. Each of the matters, if any, disclosed in Schedule 2.9
(collectively, the "Litigation") is fully covered by policies of insurance of
Company or Shareholders as in effect on the date hereof.
Section 2.10 No Violation of Law. Neither Company nor any Shareholder
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 Company or any
Shareholder.
Section 2.11 Employee Matters. Except as listed in Schedule 2.11
hereto and in Schedule 2.13 hereto, Company 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,
profit sharing, bonus, stock option, stock purchase or other nonqualified
benefit or compensation commitments, benefit plans, arrangements or plans
(whether written or oral), of or pertaining to Company and any of its present
or former employees, or any predecessors in interest. Schedule 2.11 lists each
employee or contractor of, or consultant to, Company who received any salary,
benefit or bonus for 1997 in excess of $50,000, or who is expected to receive
any salary, benefit or bonus in 1998 in excess of $50,000. Company is not
delinquent in payment
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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. Upon termination of
employment of any employee or Physician Employee, no severance or other
payments will become due, and Company has no policy, past practice, or plan of
paying severance on termination of employment, except for the deferred
compensation provisions contained in the employment agreements with the
Shareholders specified in Schedule 2.11 (which employment agreements are being
terminated or assumed as of the Effective Date by WB&A Imaging, P.C.).
Section 2.12 Labor Relations.
(a) Company is in material compliance with all applicable
laws respecting employment and employment practices, terms and conditions of
employment, wages and hours, occupational safety and health, and is not engaged
in any unfair labor practice within the meaning of Section 8 of the National
Labor Relations Act;
(b) There is no unfair labor practice, charge or complaint or
any other employment-related matter against or involving Company pending, or,
to the best knowledge of Company or Shareholders, threatened, before the
National Labor Relations Board or any other 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, to the best knowledge of Company and Shareholders, threatened,
before the Equal Employment Opportunity Commission or any other federal, state
or local agency or court against Company. There have been no governmental
audits of the equal employment opportunity practices of Company, and, to the
best knowledge of Company and Shareholders, no basis for any such audit exists
which, if conducted, would reasonably be expected to result in a Material
Adverse Effect on Company;
(d) To the best knowledge of Company and Shareholders,
Company is in compliance with the Immigration Reform and Control Act of 1986,
as amended, and all applicable regulations promulgated thereunder; and
(e) There are no inquiries, investigations or monitoring
activities of any licensed, registered, or certified professional personnel
employed or retained by Company pending, or, to the best knowledge of Company
and Shareholders, threatened, by any state professional board or agency charged
with regulating the professional activities of radiology care practitioners.
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Section 2.13 Employee Benefit Plans.
(a) Identification. Schedule 2.13 hereto contains a complete
and accurate list of all employee benefit plans (within the meaning of Section
3(3) of ERISA) sponsored by Company or to which Company 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"). Company has provided to APPM copies
of all current 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 for immediately
preceding three (3) years, 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. Subject to the requirements of ERISA, each of the
Employee Benefit Plans can be terminated or amended at will by Company without
any further liability or obligation on the part of Company to make further
contributions or payments in connection therewith following such termination,
except to the extent of any benefits accrued through the date of termination
which accrued benefits shall be paid by Company. 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, reasonably be expected to result in a
Material Adverse Effect.
(c) Examinations. Company has not received any written 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 would be
reasonably likely to result, directly or indirectly (including through any
obligation of indemnification or contribution), in any taxes, penalties or
other liability to APPM or any of its Affiliates.
(e) Claims and Litigation. No pending, or, to the best
knowledge of Company and Shareholders, 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. Except as noted on Schedule 2.13, Company
has received a favorable determination letter or ruling from the IRS for each
of the Employee Benefit Plans intended to be qualified within the meaning of
Section 401(a) 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 Company and
Shareholders, each such Employee Benefit Plan has been continually qualified
under the applicable Section of the Code since the effective date of such
Employee Benefit Plan. No proceedings are pending, or, to the best knowledge of
Company and Shareholders, have been threatened, that could result in the
revocation of any such favorable determination letter or ruling.
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(g) Funding Status. 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 Company is a member (a "Controlled Group"). Neither Company nor any
member of a Controlled Group maintains or has ever maintained an Employee
Benefit Plan subject to Title IV of ERISA or an Employee Benefit Plan described
in Section 501(c)(9) of the Code.
(h) Excise Taxes. Neither Company nor any member of a
Controlled Group has any liability to pay excise taxes with respect to any
Employee Benefit Plan under applicable provisions of the Code or ERISA.
(i) Multi-employer Plans. Neither Company nor any member of a
Controlled Group is or ever has been obligated to contribute to a
multi-employer 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 are known to Company or
Shareholders that would be reasonably likely to result in the imposition of
liability against APPM or any of its Affiliates by the Pension Benefit Guaranty
Corporation ("PBGC") as a result of any act or omission by Company or any
member of a Controlled Group. To the best knowledge of Company and
Shareholders, 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. Except as noted on Schedule 2.13, Company has
no obligation or commitment to provide medical, dental or life insurance
benefits to or on behalf of any of its employees who may retire or any of its
former employees who have retired except as may be required pursuant to the
continuation of coverage provisions of Section 4980B of the Code and the
applicable provisions of ERISA.
(l) Labor Unions. Neither Company nor Shareholders, nor, to
the best knowledge of Company and Shareholders, Physician Employees are members
of any labor union or parties to any agreement or contract with any labor
union.
(m) Other Compensation Arrangements. Neither Company nor
Shareholders, nor, to the best knowledge of Company and Shareholders, Physician
Employees are a party to any compensation or debt arrangement with any Person
relating to the provision of health care related services other than
arrangements with Company or to which Company is a party.
Section 2.14 Environmental Matters.
(a) Company has not within the five years preceding the date
hereof, through the Closing Date, 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 written
notice of any penalty, lien or assessment, and to the best knowledge of Company
and
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Shareholders, no investigation or review is pending by any governmental entity,
with respect to any (i) alleged violation by Company of any Environmental Law
(as defined in subsection (e) below); (ii) alleged failure by Company 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 (e) below) by Company.
(b) Company has not 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) in a manner that would be reasonably
likely to give rise to any Environmental Liabilities (as defined in subsection
(e) below) for Company under any applicable Environmental Law that had, or
would reasonably be likely to have, a Material Adverse Effect on Company.
Company has not engaged in any activity, or failed to undertake any activity,
which action or failure to act has given, or would reasonably be likely to
give, rise to any Environmental Liabilities or enforcement action by any
federal, state or local regulatory agency or authority, or has resulted, or
would reasonably be likely to result, in any fine or penalty imposed pursuant
to any Environmental Law which, in any such instance, had, or would reasonably
be likely to have, a Material Adverse Effect on Company. To the best knowledge
of Company and Shareholders, there is no known presence of asbestos in or on
Company's owned or leased premises. To the best knowledge of Company, there is
no friable asbestos in or on Company's owned or leased premises.
(c) To the best knowledge of Company and Shareholders, no
soil or water in or under any assets currently or formerly held for use or sale
by Company is or has been contaminated by any Hazardous Substance while such
assets or premises were owned, leased, operated or managed, directly or
indirectly, by Company, and where such contamination had, or would be
reasonably likely to have, a Material Adverse Effect on Company.
(d) There have been no environmental audits or other similar
reports which have been prepared by, for or, to the best knowledge of Company
and Shareholders, concerning, Company within the five years preceding the date
hereof through the Closing Date with respect to any real property now or
previously owned or leased by Company or any of its predecessors.
(e) For the purposes of this Section 2.14, the following
terms have the following meanings:
"Environmental Laws" shall mean any domestic, federal, state
or local laws, ordinances, codes, regulations, rules, policies and
orders (including without limitation, Medical Waste Laws) that are
intended to assure the protection of the environment, or that
classify, regulate, call for the remediation of, require reporting
with respect to, or list or define air, water, groundwater, solid
waste, hazardous, toxic, or radioactive substances, materials, wastes,
pollutants or contaminants, or which are intended to assure the safety
of employees, workers or other persons, including the public in each
case as in effect on the date hereof.
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"Environmental Liabilities" shall mean all liabilities of
Company, whether contingent or fixed, which (i) have arisen, or would
reasonably be likely to arise, under Environmental Laws and (ii)
relate to actions occurring or conditions existing on or prior to the
date hereof or the Closing Date.
"Hazardous Substances" shall mean any toxic or hazardous
substances, material or waste, including Medical Waste, or any
pollutant or contaminant, or infectious or radioactive substance or
material, including without limitation those substances, materials and
wastes defined in or regulated under any Environmental Laws.
"Regulated Activity" shall mean any generation, treatment,
storage, recycling, transportation, disposal or release of any
Hazardous Substances.
Section 2.15 Filing Reports. All returns, reports, plans and filings
of any kind or nature necessary to be filed by Company 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 Company.
Section 2.16 Lease Agreements. Schedule 2.16 hereto contains a true,
accurate and complete list of all the lease agreements and license agreements
to which Company is a party and pursuant to which Company leases (whether as
lessor or lessee) or licenses (whether as licensor or licensee) any real or
personal property related to the operation of its business and which requires
payments in excess of $12,000 per year (the "Lease Agreements"). Company has
delivered to APPM true and complete copies of all of the Lease Agreements.
There is not under any Lease Agreement (i) any existing or claimed material
default by Company or event which, with notice or lapse of time, or both, would
constitute a material default by Company, which, individually or in the
aggregate, may reasonably be expected to result in a Material Adverse Effect on
Company, or (ii) to the best knowledge of Company, any existing material
default by any other party under any of the Lease Agreements or any event
which, with notice or lapse of time, or both, would constitute a material
default by any such party. There is no pending or, to the best knowledge of
Company and Shareholders, threatened reassessment of any property covered by
the Lease Agreements. Company has a good, clear, valid and enforceable, 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, 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 safe harbor or other exemption provisions. Neither
Company nor, to the best knowledge of Company and Shareholders, any other party
thereto, has challenged the validity or effectiveness of any Lease Agreement.
Section 2.17 Insurance Policies. Schedule 2.17 hereto lists and
briefly describes Company's policies of insurance to which Company is a party
or under which Company or any officer or director thereof is or has been
covered at any time during the last five years preceding the date of this
Agreement relating to the business of Company (the "Insurance Policies"). All
premiums with respect to the Insurance Policies are currently paid. All
Insurance Policies currently maintained by Company ("Current Policies"), taken
together, (i) are sufficient for compliance with
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legal and contractual requirements to which Company is a party or by which
Company may be bound, and (ii) 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
Current Policies have been provided to APPM. Neither Company nor any officer or
director thereof has received any notice or other written 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 best knowledge of
Company and Shareholders, no such cancellation or increase of deductibles,
retainers or premiums is threatened. There are no outstanding claims,
settlements or premiums owed against any Insurance Policy, and all required
notices have been given and all known potential or actual claims under any
Insurance Policy have been presented in due and timely fashion. Within the five
years preceding the Agreement, neither Company nor Shareholders have filed a
written application for any professional liability insurance coverage which has
been denied by an insurance agency or carrier. Schedule 2.17 also sets forth a
list of all claims under any Insurance Policy in excess of $2,500 per
occurrence filed by Company or Shareholders during the immediately preceding
three-year period. Each Physician Employee has, at all times while a Physician
Employee, maintained or been covered by professional malpractice insurance in
such types and amounts as are customary for such a physician practicing the
same type of radiology in the same geographic area.
Section 2.18 Contracts and Commitments.
Schedule 2.18 hereto contains a true, accurate and complete list, and
Company has delivered to APPM true and complete copies, of each contract,
agreement and other instrument (other than insurance contracts identified in
Section 2.17 or Lease Agreements identified in Section 2.16) to which Company
is a party or by which it or any of its properties or assets are bound
including, without limitation, (i) all agreements between Company, 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, then in effect 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 Company to make, or setting forth conditions under which Company
would be required to make, aggregate future payments in excess of $10,000 in
any fiscal year or $25,000 in the aggregate, (iii) all agreements for capital
improvements or acquisitions involving an amount of $75,000 in any fiscal year
or $75,000 in the aggregate, (iv) all agreements containing a covenant limiting
the freedom of Company (or any provider employee of Company) to compete in any
line of business with any person or entity or in any geographic area, or (v)
all written contracts and commitments providing for future payments by Company
in excess of $10,000 in any fiscal year or $25,000 in the aggregate and that
are not cancelable by providing notice of sixty (60) days or less. Company has
not challenged the validity or effectiveness of any such contract, agreement or
other instrument, and has not received written notification from any other
party thereto challenging its validity or effectiveness or indicating any plan
or intention of any other party to exercise any right to cancel or terminate
any contract, agreement or instrument required to be disclosed pursuant to
Section 2.18, and to the best knowledge of Company and Shareholders, there are
no fact(s) that would justify the exercise of such a right. To the best
knowledge of Company and
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Shareholders, none of the parties to any such contract, agreement or instrument
contemplates any amendment or change thereto; there has been no threatened
cancellation thereof; there are no outstanding disputes thereunder; each such
contract, agreement and instrument is with unrelated third parties and was
entered into on an arms-length basis with the exception of the agreement with
Diagnostic Management Associates, Inc.; and, subject to the provisions and
qualifications of Schedule 2.18, and assuming the receipt of the appropriate
consents, all will continue to be binding in accordance with their terms after
consummation of the transaction contemplated herein except as enforceability
may be limited by bankruptcy or other laws affecting the enforcement of
creditor's rights generally, or by general equity principles, or by public
policy; there are no contracts, agreements or other instruments to which
Company is a party or is bound (other than physician employment contracts,
Insurance Policies, the agreements specified on Schedule 2.18, and the Lease
Agreements) which either singularly or in the aggregate could reasonably be
expected to have a Material Adverse Effect on the value of the assets and
properties of Company. Notwithstanding the foregoing, Company shall not possess
at Closing any contracts or agreements relating to the provision of
professional medical services and other such agreements and contracts that APPM
consents to in writing to be transferred to WB&A Imaging, P.C.
Section 2.19 Licenses, Authorization and Provider Programs. Each of
Company, and each Physician Employee, and, to the best knowledge of Company and
Shareholders, each other licensed employee or independent contractor of Company
(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 eligible to participate
in and to receive reimbursement under programs funded in whole or in part by
federal, state or local entities for which Company is eligible ("Governmental
Programs"). Each of Company, each Shareholder, and each Physician Employee has
a current provider number for such Governmental Programs and with such private
non-governmental programs (including without limitation any private insurance
program) under which Company is presently receiving payments directly or
indirectly from any Payor for patient care provided by such Physician Employee,
licensed employee or independent contractor (such non-governmental programs
herein referred to as "Private Programs"). A true, correct and complete list of
such licenses, permits and other authorizations (including, but not limited to,
verification of Medicare and Medicaid provider numbers (if any)), and provider
agreements, is set forth in Schedule 2.19 hereto. No violation, default, order
or deficiency exists with respect to any of the items listed in Schedule 2.19
hereto except for such violations, defaults, orders or deficiencies which would
not be reasonably likely to have a Material Adverse Effect on Company, and,
except as disclosed in Schedule 2.19 hereof, there is no action pending, or, to
the best knowledge of Company and Shareholders, threatened, by any state or
federal agencies having jurisdiction over the items listed in Schedule 2.19,
either to revoke, withdraw or suspend any material license or to terminate the
participation of Company in any Governmental Program or Private Program, and,
to the best knowledge of Company and Shareholders, 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 2.19 or to revoke, withdraw or suspend any material license of Company
to operate its business as is presently being conducted by it. No contract with
a health care provider or Payor has been materially amended or terminated
within the last twelve (12) months. To the best knowledge of Company and
Shareholders, there has been no decision by either party not to renew any
existing agreement with any provider or Payor relating to Company's business as
presently being conducted by it.
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Section 2.20 Inspections and Investigations. Neither the right of
Company, nor any Physician Employee, nor, to the best knowledge of Company and
the Shareholders, any licensed professional or other individual affiliated with
Company, 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. No Physician
Employee, or, to the best knowledge of Company and Shareholders, licensed
professional or other individual affiliated with the business, has, during the
past three years prior to the Closing Date, had his professional license or
privileges limited, suspended or revoked by any governmental regulatory
authority or agency, trade association, professional review organization,
accrediting organization or certifying agency (including orders that have been
entered by any such entities but stayed). True, correct and complete copies of
all reports, correspondence, notices and other documents relating to any matter
described or referenced in this Section 2.20 have been provided to APPM.
Section 2.21 Proprietary Rights and Information.
(a) Set forth in Schedule 2.21 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 Company, (ii) all
patents and applications therefor, and inventions and discoveries that may be
patentable, currently owned, in whole or in part, or used by Company, (iii) all
licenses, royalties, and assignments thereof to which Company is a party, (iv)
all copyrights (for published and unpublished works) currently owned, in whole
or part, or used by Company, and (v) other similar agreements relating to the
foregoing to which Company is a party (including expiration date if applicable)
(collectively, the "Proprietary Rights").
(b) Schedule 2.21 hereto contains a complete and accurate
list and summary description of all agreements relating to technology, trade
secrets, know-how or processes that Company is licensed or authorized to use by
others (other than technology, know-how or processes generally available to
other health care providers) or which it licenses or authorizes others to use,
and true, correct and complete copies of which have been provided to APPM.
There are no outstanding or, to the best knowledge of Company and Shareholders,
threatened, disputes or disagreements with respect to any such agreement.
(c) Company owns or has the legal right to use the
Proprietary Rights without conflicting with, infringing or violating the rights
of any other Person. No consent of any Person will be required for the use
thereof by Company upon consummation of the Transactions contemplated hereby,
and the Proprietary Rights are freely transferable. To the best knowledge of
Company and Shareholders, no claim has been asserted by any Person to the
ownership of, or for infringement by Company of, any Proprietary Right of any
other Person, and neither Company nor Shareholders is aware of any valid basis
for any such claim. To the best knowledge of Company and Shareholders, no
proceedings have been threatened which challenge the Proprietary Rights of
Company. Company has the right to use, free and clear of any adverse claims or
rights of others, all trade secrets, customer lists and proprietary information
required for the performance and marketing of all medical services.
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Section 2.22 Accounts Receivable; Payors.
(a) Schedule 2.22 hereto sets forth a list and aging of all
accounts receivable of Company as of August 31, 1998, 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, to the best knowledge of
Company and Shareholders, collectible in the ordinary course of business, net
of reserves for doubtful and uncollectible accounts shown in Company Financial
Statements or on the accounting records of Company (which reserves are
calculated consistent with generally accepted accounting principles and past
practice). Nothing contained herein shall be deemed a guarantee of collection
with respect to the accounts receivable.
(b) Schedule 2.22 hereto sets forth (i) a true, correct and
complete list of the names and addresses of each Payor of Company as of such
date, which accounted for more than 5% of the revenues of Company in the fiscal
year ended December 31, 1997, or which is reasonably expected to account for
more than 5% of the revenues of Company for the fiscal year to end December 31,
1998, and (ii) a single line item listing for all private-pay patients in the
aggregate of Company. Company has satisfactory relations with such Payors set
forth in (i) above, and to the best knowledge of Company and Shareholders none
of such Payors has notified Company in writing that it intends to discontinue
its relationship with Company or to deny any payments due from, or any claims
for payment submitted to, any such party.
Section 2.23 Accounts Payable; Suppliers.
(a) Schedule 2.23 hereto sets forth a true and complete (i)
list of the accounts payable of Company as of August 31, 1998, and (ii) list of
each individual indebtedness owed by Company of $5,000 or more, setting forth
the payee and the amount of indebtedness.
(b) Schedule 2.23 sets forth a true, correct and complete
list of the names and addresses of each of the providers/suppliers of products
or services to Company (including without limitation all non-Physician Employee
providers of care to patients) which accounted for a dollar volume of purchases
paid for by Company in excess of $25,000 for the fiscal year ended December 31,
1997, or which is reasonably expected to account for a dollar volume of
purchases paid for by Company in excess of $25,000 for the fiscal year to end
December 31, 1998.
Section 2.24 Taxes.
(a) Filing of Tax Returns. Company has duly and timely filed
(in accordance with any extensions duly granted by the appropriate governmental
agency, if applicable) with the appropriate governmental agencies all Tax
Returns required to be filed with the United States or any state or any
political subdivision thereof or any foreign jurisdiction. All such Tax Returns
are complete and accurate in all material respects and properly reflect the
taxes of Company for the periods covered thereby.
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(b) Payment of Taxes. Except for such items as Company may be
disputing in good faith by proceedings in compliance with applicable law, which
are described in Schedule 2.24, (i) Company has paid all taxes, penalties,
assessments and interest that have become due with respect to any Tax Returns
that it has filed, and has made appropriate estimated tax payments, if any, for
all of the same that have not yet become due and payable ("Taxes"), and (ii)
Company is not delinquent in the payment of any tax, assessment or governmental
charge.
(c) No Pending Deficiencies, Delinquencies, Assessments or
Audits. Company has not received any notice that any tax deficiency or
delinquency has been asserted against Company, and, to the best knowledge of
Company and Shareholders, 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 Company that could reasonably be likely to
be asserted by any taxing authority. There is no taxing authority audit of
Company pending, or, to the best knowledge of Company and Shareholders,
threatened, and the results of any completed audits are properly reflected in
Company Financial Statements. Company has not violated any applicable federal,
state, local or foreign tax law. There are no security interests or liens on
any assets of Company which have resulted from any failure to pay (or alleged
failure to pay) taxes.
(d) No Extension of Limitation Period. Company 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 Company and paid to governmental agencies for all
income, social security, unemployment insurance, sales, excise, use, and other
taxes have been collected or withheld and paid to the respective governmental
agencies.
(f) Foreign Person. Neither Company nor any Shareholder 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
Company constitutes property that Company, APPM, Ormond or any Affiliate of
APPM, 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
Company are subject to a lease to a "tax exempt entity" as such term is defined
in Section 168(h)(2) of the Code.
(i) Collapsible Corporation. Company has not at any time
consented to have the provisions of Section 341(f)(2) of the Code apply to it.
(j) Boycotts. Company has not at any time participated in or
cooperated with any international boycott as defined in Section 999 of the
Code.
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(k) Parachute Payments. No payment required or contemplated
to be made by Company will be characterized as an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.
(l) S Corporation. Company has not made an election to be
taxed as an "S" corporation under Section 1362(a) of the Code.
(m) Personal Holding Companies. Company is not or has not
been a personal holding company within the meaning of Section 542 of the Code.
Section 2.25 Fraud and Abuse and Self Referral. Neither Company nor
any of the Shareholders has engaged, and, to the best knowledge of Company, no
Persons or entities providing professional services for or on behalf of Company
have engaged, in any activities which are prohibited under 42 U.S.C. 1320a 7,
7a or 7b, or 42 U.S.C. 1395nn, or (subject to the exceptions or safe harbor
provisions set forth in such legislation) the regulations promulgated
thereunder or pursuant to any similar state or local statutes or regulations,
or which are prohibited by applicable rules of professional conduct.
Section 2.26 Continuity of Business Enterprise. There has not been any
sale, distribution or spin-off of significant assets of Company other than in
the ordinary course of business within the two years preceding the date of this
Agreement.
Section 2.27 Company Financial Statements. Attached hereto as Schedule
2.27 are (i) the compiled statements of assets, liabilities, and Shareholders'
equity, income tax basis, of the Company as of December 31, 1997 and the
accompanying supplementary information, income tax basis (collectively, the
"Company Annual Financial Statements") and (ii) the compiled consolidated
assets, liabilities, and Shareholders' equity of the Company as of June 30,
1998, and the related statements of income, and statements of cash flows of
Company for the six (6) month period then ended (collectively, the "Company
Current Financial Statements"). Company Annual Financial Statements and Company
Current Financial Statements are sometimes collectively referred to herein as
the "Company Financial Statements." Company 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 Company as of the dates
indicated and present fairly the results of Company's operations for the
periods then ended, and (c) are in accordance with the books and records of
Company, which have been properly maintained and are complete and correct in
all material respects. Company Current Financial Statements present fairly the
financial position of Company 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 adjustments (the effect of which will not
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Company) and lack of footnotes thereto.
Section 2.28 No Undisclosed Liabilities. Company 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 Company's Current
Balance Sheet.
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Section 2.29 Schedules. All Schedules required by this Article II and
attached hereto are true, correct, and complete in all material respects as of
the date of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF APPM
As an inducement to Company and Shareholders to enter into this
Agreement and to sell the Shares, APPM hereby represents and warrants as
follows:
Section 3.1 Organization and Good Standing; Qualification. APPM is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Delaware, with all requisite corporate power and authority
to own, operate and lease its assets and properties and to carry on its
business as currently conducted. APPM 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 APPM.
Copies of the Articles of Incorporation of APPM as amended or restated, and the
bylaws of APPM, as amended, and copies of the corporate minutes of APPM
regarding this Agreement and the Transactions contemplated hereby and thereby,
all of which have been or will be made available to Company 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 APPM (and all committees thereof) regarding this Agreement and the
Transactions contemplated hereby and thereby.
Section 3.2 Authorization and Validity. APPM has all requisite
corporate power to execute and deliver this Agreement and all other agreements
entered into in connection with the Transactions contemplated hereby and to
consummate the Transactions contemplated hereby and thereby. The execution,
delivery and performance by APPM of this Agreement and the agreements provided
for herein, and the consummation by APPM of the Transactions contemplated
hereby and thereby, are within APPM's corporate powers and have been duly
authorized by all necessary action on the part of APPM's Board of Directors.
This Agreement has been duly executed by APPM. This Agreement and all other
agreements and obligations entered into and undertaken in connection with the
Transactions contemplated hereby and thereby to which APPM is a party
constitute, or upon execution will constitute, valid and binding agreements of
APPM 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 3.3 Absence of Conflicting Agreements or Required Consents.
The execution, delivery and performance of this Agreement by APPM and any other
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (i) other than consents, filings or notifications required
to be made or obtained by Company or Shareholders, do not require the consent
of any governmental or regulatory body or authority or any other third party
except for such consents for which the failure to obtain would not result in a
Material Adverse Effect on APPM; (ii) will not conflict with any provision of
APPM's Articles of Incorporation, as amended or restated, or Bylaws, as
amended; (iii) will not conflict with, result in a violation of, or constitute
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a default under any law, ordinance, regulation, ruling, judgment, order or
injunction of any court or governmental instrumentality to which APPM is a
party or by which APPM or its properties are subject or bound except for such
conflict, violation or default the occurrence of which would not reasonably be
expected to result in a Material Adverse Effect on APPM; (iv) 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 permit the
acceleration of any performance required by the terms of, any agreement,
instrument, license or permit, material to this transaction, to which APPM is a
party or by which APPM or any of its properties are bound except for such
conflict, termination, breach or default, the occurrence of which would not
result in a Material Adverse Effect on APPM; and (v) will not create any
Encumbrance or restriction upon any of the assets or properties of APPM.
Section 3.4 Finder's Fees. No investment banker, broker, finder or
other intermediary has been retained by or is authorized to act on behalf of
APPM who is entitled to any fee or commission upon consummation of the
Transactions contemplated by this Agreement or referred to herein.
Section 3.5 Governmental Authorizations. Other than consents, filings
or notifications required to be made or obtained by Company or Shareholders,
the execution, delivery and performance by Company of this Agreement and the
agreements provided for herein, and the consummation of the Transactions
contemplated hereby and thereby by APPM, to the best knowledge of APPM, require
no action by or in respect of, or filing with, any governmental body, agency,
official or authority.
Section 3.6 Litigation and Claims. There are no claims, lawsuits,
actions, arbitrations, administrative or other proceedings, governmental
investigations or inquiries pending, or, to the best knowledge of APPM,
threatened against APPM which could adversely materially affect the ability of
APPM to effect the Transactions contemplated hereby.
Section 3.7 No Violation of Law. APPM has not been, and shall not 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, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on APPM.
Section 3.8 APPM Common Stock. The APPM Common Stock issued to the
Shareholders pursuant hereto, has been validly issued by APPM, is fully paid
and non-assessable, and to APPM's best knowledge, based on representations made
by the Shareholders to APPM, is exempt from registration under federal
securities laws.
ARTICLE IV
COVENANTS OF COMPANY AND SHAREHOLDERS
Section 4.1 Spin-Off Transaction. Each of Company, the Shareholders
and APPM acknowledges and agrees that in order to effect the Transactions
contemplated hereby in accordance with the applicable law of the State of
Maryland, including without limitation Section 5-111 of the
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Corporations and Associations Volume of the Maryland Annotated Code, it will be
necessary, immediately prior to or contemporaneously with the Closing, (i) to
convert Company from a professional corporation to a business corporation under
Maryland law, and (ii) to transfer to WB&A Imaging, P.C. all of those certain
assets of the Company (the "Professional Assets") specified in Schedule 4.1
hereto, which by law cannot be either acquired or used by Company as a business
corporation because they relate to the professional practice of radiology.
Accordingly, the parties hereto agree that the following steps should be taken
immediately prior to or contemporaneously with the Closing, and that the
parties will reasonably cooperate therein:
(a) Company and Shareholders shall file, or cause to be
filed, with the Maryland State Department of Assessments and Taxation ("MSDAT")
appropriate amendments to Company's Articles of Incorporation to effect a
conversion of Company from a professional corporation to a business corporation
under the laws of the State of Maryland, which amendments, among other things,
shall delete all references in the Articles of Incorporation to the rendering
of professional services and shall adopt the name "WB&A Imaging Partners,
Inc."; and
(b) Company and Shareholders shall transfer, or cause to be
transferred, to WB&A Imaging, P.C. all of Company's right, title and interest
in and to all of the Professional Assets.
Section 4.2 New Leases. Each of the parties hereto acknowledges and
confirms that Company presently leases certain offices (the "Offices") at which
it conducts its business and which are located at 0000 Xxxxxxxx Xxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx, and 0000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, from Duke
Associates Limited Partnership, a Virginia limited partnership under separate
office leases (the "Existing Office Leases"). Each of the parties additionally
acknowledges and confirms its understanding that Ormond has agreed to and shall
enter directly into new leases (the "New Office Leases") with Duke Associates
Limited Partnership for the continued leasing of the Offices. Accordingly,
notwithstanding any provision in this Agreement to the contrary, the parties
agree that contemporaneously with, and as a condition to the Closing, (a) the
Existing Office Leases shall be terminated and canceled and the New Office
Leases shall be executed, and (b) Ormond shall enter into a new office lease
with Magnetic Resonance Imaging Associates Limited Partnership for the leasing
of the MRI Facility located at 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (the
"Branch Avenue Lease").
Section 4.3 Transfer of Stock Ownership Interests. As reflected on
Schedule 2.7 hereto, Company (a) owns 1,000 shares of common stock (the "MIN
Stock") in Medical Imaging Network, Inc. ("MIN"), and is a party to that
certain Third Amended Stockholders Agreement for Medical Imaging Network, Inc.
(the "MIN Stockholders Agreement"), dated as of January 23, 1995, by and among,
inter alia, MIN and Company, and to that certain Participation Agreement for
Physician Services (the "Participation Agreement"), dated as of January 1,
1992, by and between MIN and Company; and (b) is a party to that certain
Agreement Concerning Virginia's Physicians Network Inc. (the "VPN Agreement"),
dated January 14, 1997, by and among Company and each physician employee of the
Company specified therein (collectively, the "VPN Physicians"), pursuant to
which Company is deemed to be the equitable owner of all shares of stock in the
Virginia's Physician's Network, Inc. ("VPN") now held by each of the VPN
Physician. Each of the parties hereto (i) agrees
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that, immediately prior to the Closing, Company shall transfer, set over, and
assign to WB&A Imaging, P.C. ("WBA") (1) the MIN Stock, and (2) all of
Company's right, title, and interest under the MIN Stockholders Agreement and
the Participation Agreement (the "MIN Transfers"), and (ii) acknowledges and
confirms that the MIN Transfers are subject to the consent and approval of MIN
and the other stockholders of MIN, and that the MIN Transfers shall be binding
upon the parties hereto regardless of whether the required consent and approval
of MIN and the other stockholders of MIN are received. APPM also acknowledges
and agrees that receipt, after the Closing, of the consent and approval of MIN
and its other stockholders to the MIN Transfers is not assured, and that
neither Company, WBA nor any of the Shareholders shall have any liability if
and in the event such approval and consent is not received. APPM shall
cooperate reasonably with WBA and the Shareholders, after the Closing, in
securing the required consent of MIN and its other stockholders to the MIN
Transfers. Each of the parties hereto additionally agrees that, immediately
prior to the Closing, Company, together with the VPN Physicians and WBA, shall
enter into an amendment to the VPN Agreement pursuant to which WBA shall be
designated as, and shall be deemed to be, the equitable owner of all of the VPN
Stock owned by the VPN Physicians.
Section 4.4 WBA Fees. In connection with the assignment by Company to
WBA of the Payor Contracts as part of the Professional Assets identified on
Schedule 4.1 hereto, each of the parties hereto acknowledges and agrees that it
is likely that Company will receive, after the Closing, fees for services
rendered after the Closing by WBA and to which WBA shall be entitled
(collectively, the "WBA Fees"). The parties agree that, subject to the terms
and conditions of the Service Agreement, promptly after its receipt of any WBA
Fees, APPM shall take, or shall cause Company to take, any and all action
necessary to transfer, assign, set over, and deliver to WBA all of such WBA
Fees.
Section 4.5 Company Bank Accounts. Each of the parties agrees that the
account balances existing as of the Closing in each of the bank accounts of
Company (collectively, the "Bank Accounts") shall be deemed to be the property
of the Shareholders and may be distributed to the Shareholders immediately
prior to or contemporaneously with the Closing.
Section 4.6 Third Party Consents. Notwithstanding anything to the
contrary contained herein, including, without limitation, the representation
and warranty of Company and Shareholders in Section 2.6 hereof, each of APPM,
Company, and Shareholders acknowledges and agrees that, as of the Closing, the
necessary consents will not have been received from the other parties to the
transfer by Company to WBA of all right, title, and interest of Company under
the "Third Party Payor Contracts" which term is defined on Schedule 4.1 hereto
and which contracts constitute a part of the Professional Assets. Each of the
parties hereto acknowledges and confirms that it has reviewed Schedule 2.18
hereto, the provisions of which shall be deemed in substitution of any and all
other representations and warranties by Company or Shareholders in this
Agreement regarding the assignability of the Third Party Payor Contracts. Each
of the parties hereto agrees that it will cooperate reasonably with each other
in undertaking and completing the steps specified in Schedule 2.18 hereto
regarding the assignment or other transfer of the benefits of each Third Party
Payor Contract from Company to WBA. APPM confirms and agrees that neither
Company nor any of the Shareholders shall be deemed to be in breach of any
representation, warranty or covenant of or under this Agreement if and in the
event the assignment of any Third Party Payor Contract cannot be effected or
any such Third Party Payor Contract is canceled as a result of or in connection
with the Transactions under this Agreement.
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ARTICLE V
Intentionally Omitted
ARTICLE VI
POST-CLOSING COVENANTS OF APPM
Section 6.1 Removal of Xxxx X. Xxxxx as Guarantor. APPM will use
commercially reasonable efforts to cause Prime Leasing, Inc. to remove and
release Xxxx X. Xxxxx as a guarantor for and with respect to the equipment
lease entered in by Company, as lessee, and Prime Leasing, as lessor.
ARTICLE VII
Intentionally Omitted
ARTICLE VIII
CLOSING DELIVERIES BY THE PARTIES
Section 8.1 Deliveries of Shareholders and Company. At or prior to the
Closing Date, Shareholders and Company shall deliver to APPM the following, all
of which shall be in a form reasonably satisfactory to APPM:
(a) a copy of resolutions of the Board of Directors of
Company authorizing the execution, delivery and performance of this Agreement,
the Transactions to which Company is a party, and all related documents and
agreements in consummation of the Transactions, each certified by the Secretary
of Company as being true and correct copies of the originals thereof subject to
no modifications or amendments;
(b) Articles of Incorporation of Company certified by MSDAT;
(c) Bylaws of Company certified by the Secretary of Company;
(d) stock certificates representing the Shares, together with
accompanying signed stock powers or instruments of assignment, duly endorsed in
blank for the transfer of the Shares to APPM with all necessary transfer taxes
paid or other revenue stamps affixed thereto;
(e) Intentionally Omitted;
(f) Intentionally Omitted;
(g) Intentionally Omitted;
(h) Intentionally Omitted;
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(i) a certificate of the Secretary of Company certifying the
incumbency of the directors and officers of Company and as to the signatures of
such directors and officers who have executed documents delivered at the
Closing on behalf of Company;
(j) a certificate, dated within thirty days prior to the
Closing Date, of MSDAT for Company establishing that Company is in existence,
has paid all franchise or similar taxes, if any, and is in good standing to
transact business in the State of Maryland;
(k) all authorizations, consent, approvals, permits and
licenses referenced in Section 2.16 of this Agreement;
(l) the Service Agreement in substantially the form attached
hereto as Exhibit B (the "Service Agreement");
(m) an executed Shareholders' Release by Shareholders in
substantially the form attached hereto as Exhibit E (the "Shareholders'
Release");
(n) Employment Agreements in substantially the form attached
hereto as Exhibit C (the "Employment Agreements") executed by each of the
Shareholders;
(o) legal opinion of counsel to Company in substantially the
form attached hereto as Exhibit D;
(p) Intentionally Omitted;
(q) resignations effective on September 22, 1998 of all
officers and directors of Company;
(r) minute book and all other books and records, including
all accounting records, of the Company;
(s) such other instrument or instruments prepared by Company
or Shareholders as shall be necessary or appropriate, as APPM or its counsel
shall reasonably request, to carry out and effect the purpose and intent of
this Agreement and the Transactions, provided, however, that the same do not
increase the obligations or liabilities of Company or Shareholders beyond those
created by this Agreement; and
(t) the New Office Leases and the Branch Avenue Lease.
Section 8.2 Deliveries of APPM. At or prior to the Closing Date, APPM
shall deliver to Shareholders and Company the following, all of which shall be
in a form reasonably satisfactory to Shareholders and Company:
(a) a copy of resolutions of the Board of Directors of APPM
authorizing the execution, delivery and performance of this Agreement, the
Transactions to which APPM is a party, and all related documents and agreements
in consummation of the Transactions, each certified by the Secretary of APPM as
being true and correct copies of the originals thereof subject to no
modifications or amendments;
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(b) Articles of Incorporation of APPM, certified by the
Secretary of APPM;
(c) Bylaws of APPM as they exist on the Closing Date,
certified by the Secretary of APPM;
(d) Intentionally Omitted;
(e) Intentionally Omitted;
(f) a certificate of the Secretary of APPM certifying the
incumbency of the directors and officers of APPM and as to the signatures of
such directors and officers who have executed documents delivered at the
Closing on behalf of APPM;
(g) a certificate, dated within ten days prior to the Closing
Date, of the Secretary of the State of Delaware for APPM establishing that APPM
is in existence, has paid all franchise or similar taxes, if any, and is in
good standing to transact business in the State of Delaware.
(h) Intentionally Omitted;
(i) the Service Agreement;
(j) the Purchase Price; and
(k) such other instrument or instruments prepared by APPM as
shall be necessary or appropriate, as Company or its counsel shall reasonably
request, to carry out and effect the purpose and intent of this Agreement and
the Transactions, provided, however, that the same do not increase the
obligations or liabilities of Company or Shareholders beyond those created by
this Agreement.
Section 8.3 Intentionally Omitted.
ARTICLE IX
POST-CLOSING MATTERS
Section 9.1 Further Instruments of Transfer. During a reasonable
period following the Closing, at the request of APPM, Shareholders and Company
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 and the Transactions. During a reasonable period following
the Closing, at the request of Company, APPM and Ormond 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
and the Transactions.
Section 9.2 Survival of Article X. Notwithstanding any other provision
of this Agreement to the contrary, Article X of this Agreement shall survive
the Closing.
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ARTICLE X
INDEMNIFICATION
Section 10.1 Indemnification by Company and Shareholders. Subject to
the terms and conditions of this Article X, Company and Shareholders jointly
and severally agree to indemnify, defend and hold harmless APPM and its
directors, officers, shareholders, employees, agents, attorneys, consultants,
Affiliates, legal representatives, and heirs from and against all losses,
claims, obligations, demands, assessments, penalties, liabilities, costs,
damages, reasonable attorneys' fees and expenses (including, without
limitation, all reasonable costs of experts and all reasonable costs incidental
to or in connection with any appellate process) (collectively, "Damages")
asserted against or incurred by such individuals and/or entities arising out
of, in connection with or resulting from:
(a) a breach by Company or Shareholders of any representation
or warranty or covenant of Company or Shareholders contained in this Agreement
or in any schedule, exhibit, certificate or other instrument delivered pursuant
to or as a part of this Agreement; or
(b) any violation (or alleged violation) by Company and/or
any of its past or present directors, officers, partners, shareholders,
employees (including, without limitation, Physician Employees), agents,
attorneys, consultants, Affiliates, legal representatives, and heirs of any
state or federal law governing health care fraud and abuse or prohibition on
referral of patients to any Person or entity in which a licensed professional
has a financial or other form of interest occurring on 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 and for which Company received payment on or before the Effective Date
("Healthcare Fraud").
Section 10.2 Indemnification by APPM. Subject to the terms and
conditions of this Article X, APPM agrees to indemnify, defend and hold
harmless Company and Shareholders, and, as applicable, their respective
directors, officers, shareholders, employees, agents, attorneys, consultants,
Affiliates, legal representatives, and heirs from and against all Damages
asserted against or incurred by such individuals and/or entities arising out
of, in connection with or resulting from a breach by APPM of any representation
or warranty or covenant of APPM contained in this Agreement or in any schedule,
exhibit, certificate or other instrument delivered pursuant to or as a part of
this Agreement.
Section 10.3 Claims. All claims for indemnification pursuant to this
Article X shall be asserted and resolved as follows:
(a) Any party claiming indemnification pursuant to this
Article X (an "Indemnified Party") shall promptly (and, in any event at least
ten 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 (a "Third Party Claim") that could give rise to a right of
indemnification pursuant to this Article X 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
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Claim, and the basis of the Indemnified Party's request for indemnification
under this Agreement. Except as provided in Section 10.5, the failure to
promptly deliver a Claim Notice shall not relieve any Indemnifying Party of its
obligations to any 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. Any damages ultimately awarded shall be reduced
by the costs incurred as a result of such delay. Within 30 days after receipt
of any Claim Notice (the "Election Period"), the Indemnifying Party shall
notify the Indemnified Party (x) whether the Indemnifying Party disputes its
potential liability to the Indemnified Party under this Article X with respect
to such Third Party Claim and (y) whether the Indemnifying Party desires, at
the sole cost and expense of such 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, with counsel reasonably
acceptable to such Indemnified Party, 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 10.3(b). Except as set forth
in Section 10.3(f) hereof, 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 reasonably shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and not prejudicial to the Indemnifying Party. If requested by the
Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense
of the Indemnifying Party, to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim that the Indemnifying Party elects
to contest, including, without limitation, the making of any related
counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 10.3(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. Notwithstanding the foregoing, the
Indemnifying Party shall be prohibited from confessing or settling any criminal
allegations brought against the Indemnified Party without the express written
consent of the Indemnified Party.
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(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 10.3(b), or if the Indemnifying Party
elects to defend the Indemnified Party pursuant to Section 10.3(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 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 X 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 10.3(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 any Indemnifying Party
pursuant to this Article X 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 the Indemnifying
Party pursuant to Section 10.3(d) shall be made
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within thirty (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) The Indemnifying Party shall provide the Indemnified
Party with written notice of any firm offer that is made to settle or
compromise a Third Party Claim against an Indemnified Party. If a firm offer is
made to settle such a claim solely by the payment of money damages, and such
offer is contingent only upon the acceptance by the Indemnifying Party, and the
Indemnifying Party notifies the Indemnified Party in writing that the
Indemnifying Party agrees to such settlement, but the Indemnified Party elects
not to accept and agree to it, the Indemnified Party may continue to contest or
defend such Third Party Claim and, in such event, the total maximum liability
of the Indemnifying Party to indemnify or otherwise reimburse the Indemnified
Party hereunder with respect to such a claim shall be limited to and shall not
exceed the amount of such settlement offer, plus reasonable out-of-pocket costs
and reasonable expenses (including reasonable attorneys' fees and
disbursements) to the date of notice that the Indemnifying Party desired to
accept such settlement.
(g) Notwithstanding any provision herein to the contrary, the
obligation of an Indemnifying Party to provide indemnification to an
Indemnified Party for breach of any representation or warranty as provided in
Sections 10.1(a) or 10.2 hereof shall not take effect unless and until the
Damages asserted against or incurred in the aggregate and on a collective basis
by the Indemnified Parties pursuant to either Section 10.1 or 10.2 (as
applicable) as a result of such a breach or breaches exceeds $15,000 (but
expressly excluding any claims involving fraud, intentional misrepresentation,
title to the Shares, Taxes, Litigation and Healthcare Fraud).
(h) Notwithstanding any provision herein to the contrary,
APPM shall have the right to offset against a Shareholder and/or Company
amounts due and payable by APPM to such Person or entity as payment for any
indemnification obligation of Company or Shareholders pursuant to this Article
X.
(i) The remedies provided in this Agreement shall be
exclusive of any other rights or remedies available to one party against the
other, either at law or in equity, except that this section shall not limit
either party's right to equitable relief, to the extent and as appropriate,
with respect to fraud, intentional misrepresentations, title to the Purchased
Assets, Taxes, Litigation or Healthcare Fraud.
Section 10.4 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 10.5 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 benefits received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
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.
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Section 10.6 Breach by Shareholder. The parties agree that,
notwithstanding any other provision of this Agreement to the contrary, if and
in the event a right of indemnification under this Agreement arises in favor of
APPM as a result of a breach by a specific Shareholder of a representation,
warranty, or covenant particular to that Shareholder, then APPM shall first
seek to enforce its rights of indemnification against, and indemnification
from, the Shareholder who is in breach, and second, seek to enforce its rights
of indemnification against, and indemnification from, the other Shareholders.
Section 10.7 Survival.
(a) All of the respective obligations of the parties
contained in this Agreement or in any other document delivered in accordance
with and pursuant to this Agreement, including without limitation all
covenants, agreements, indemnities, representations (other than with respect to
the due authority of a party), and warranties (other than with respect to the
due authority of a party), shall survive Closing for a period of twenty-four
(24) months; provided, however, that the limitation of this clause (a) shall
not apply to claims involving fraud, intentional misrepresentations, title to
the Shares, Taxes, Litigation and Healthcare Fraud, for which the period for
making such claims shall expire on the date which is six (6) months after the
termination of the applicable statute of limitations relating thereto.
(b) If, within such twenty-four (24) month period (or longer
period, if applicable), no written notice is given by one party to the other
party of any alleged breach of a covenant, agreement, indemnification,
representation, or warranty of the other party under this Agreement, then all
liability of the other party, except as otherwise provided in this Agreement,
shall terminate. If written notice of any alleged breach of a covenant,
agreement, indemnification, warranty, or obligation is given to the other party
within such twenty-four (24) month period (or longer period, if applicable),
then the liability of the other party shall survive as to the matter(s) in
question in such notice, and the liability of the other party as to all other
matters shall cease, except as otherwise provided in this Agreement.
Section 10.8 Release. Notwithstanding anything in this Agreement to
the contrary, from and after the Closing, Buyer and APPM shall be deemed, for
all purposes, to have released each of the Shareholders from, and to have
waived with respect to each of the Shareholders, all losses, claims,
obligations, demands, assessments, penalties, liabilities, costs, damages,
reasonable attorneys' fees and expenses arising out of, in connection with, or
resulting from any breach of fiduciary duty claim against any Shareholder in
their capacity as a director or an officer of Company.
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ARTICLE XI
Intentionally Omitted
ARTICLE XII
MISCELLANEOUS
Section 12.1 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 12.2 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 an
assignment by APPM to a wholly-owned subsidiary of APPM; provided that any such
assignment shall not relieve APPM of its obligations hereunder. Notwithstanding
the foregoing provision or any other provision in this Agreement, APPM's right
to assign, transfer, convey, hypothecate or otherwise dispose of the Shares
immediately after the Closing and at any time thereafter shall be unrestricted
other than as required by federal and state securities laws for compliance
therewith.
Section 12.3 Parties In Interest; No Third Party Beneficiaries. Except
as otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and permitted assigns of the parties hereto. Except
as otherwise expressly provided herein, neither this Agreement nor any other
agreement contemplated hereby or by the Transactions shall be deemed to confer
upon any Person not a party hereto or thereto any rights or remedies hereunder
or thereunder.
Section 12.4 Schedules and Exhibits. Company Disclosure Schedules and
Exhibits attached to this Agreement are by this reference incorporated herein
and made a part hereof.
Section 12.5 Entire Agreement. Except as is expressly provided in
writing, this Agreement and Transactions contemplated hereby and thereby
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 12.6 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 12.7 Survival of Representations, Warranties and Covenants.
The representations, warranties and covenants contained herein shall survive
the Closing in accordance with the provisions of Section 10.7, and all
statements contained in any certificate, exhibit or other instrument delivered
by or on behalf of Company, Shareholders or APPM pursuant to this Agreement
shall be deemed to have been representations and warranties by Company, each
Shareholder or APPM.
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SECTION 12.8 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF MARYLAND, WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAWS RULES OF THE STATE OF MARYLAND.
Section 12.9 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 12.10 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 12.11 Construction. The parties to this Agreement have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. Any
reference to federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The parties to this Agreement intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any party hereto has breached any representation, warranty or
covenant contained in this Agreement in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which the party has
not breached shall not detract from or mitigate the fact that the party is in
breach of the first representation, warranty or covenant.
Section 12.12 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 except (a) to authorized representatives of
said party and (b) to counsel, other advisers and immediate family members to
said party provided that such advisers and immediate family members (other than
counsel) agree to the confidentiality provisions of this Section 12.12, unless
(i) such information becomes available to or known by the public generally
through no fault of the Company, Shareholders or APPM, 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) the Company, Shareholders or APPM, as the case may be, shall,
if possible, give prior written notice thereof to the other parties and provide
the other parties 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 transactions hereunder; provided that the
foregoing shall not prohibit any disclosure by press release, filing or
otherwise that APPM has determined in its good faith judgment and after advice
of legal counsel to be required by federal securities laws or the rules of the
National Association of Securities Dealers.
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Section 12.13 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, when delivered to the party to whom
notice is sent, (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, or (iii) if
delivered by nationally recognized overnight courier, at the close of the next
business day following delivery to said overnight courier, 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 APPM : American Physician Partners, Inc.
3600 Chase Tower
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxx, President and CEO
Xxxx X. Xxxxx, General Counsel and Sr. VP
with a copy to: Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to Company
or Shareholders: Drs. Xxxxx, Xxxxx & Associates, P.A.
0000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx, M.D.
with a copy to : Sherman, Meehan, Xxxxxx & Ain
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx X. Xxxxxxxx, Esq.
Section 12.14 No Waiver. No party hereto shall by any act (except by
written instrument pursuant to Section 12.1 of this Agreement), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default in or breach of any of the terms
and conditions hereof. No failure to exercise, nor any delay in exercising, on
the part of any party hereto, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No remedy set forth in
this Agreement or otherwise conferred upon or reserved to any party shall be
considered exclusive of any other remedy available to any party, but the same
shall be distinct, separate and cumulative and may be exercised from time to
time as often as occasion may arise or as may be deemed expedient.
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Section 12.15 Intentionally Omitted.
Section 12.16 Time of Essence. Time is of the essence of this
Agreement.
Section 12.17 Remedies Not Exclusive. No remedy conferred by any of
the specific provisions of this Agreement is intended to be exclusive of any
other remedy, and each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter existing at
law or in equity or by statute or otherwise. The election of anyone or more
remedies by any party hereto shall not constitute a waiver of the right to
pursue other available remedies.
Section 12.18 Execution. Other than original stock certificates, this
Agreement and any other documents related hereto, including exhibits and/or
certificates, may be executed by facsimile signature page if promptly followed
by delivery of an executed original.
Section 12.19 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.
ARTICLE XIII
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.
"APPM" shall have the meaning set forth in the preamble to this
Agreement.
"Best knowledge of APPM" and similar phrases shall mean with respect
to APPM, the knowledge of Xxxx X. Xxxxx, in his capacity as Senior Vice
President of APPM, and with respect to Ormond, the knowledge of Xxxx X. Xxxxx,
in his capacity as Senior Vice President of Ormond, with the obligation to
investigate and review the records and files pertaining to APPM and Ormond, as
may be the case, but without further investigation.
"Best knowledge of Company" and similar phrases shall mean the
knowledge of Xxxx X. Xxxxx, M.D., in his capacity as President of the Company,
and Xxxxx X. Xxxxxxxx, in his capacity as General Manager of Company, with the
obligation and duty to investigate and review the records and files pertaining
to Company, but without further investigation.
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"Best knowledge of Shareholders" and similar phrases shall mean the
knowledge of each respective Shareholder, without further investigation.
"Claim Notice" shall have the meaning set forth in Section 10.3(a).
"Closing" shall mean the closing of the transactions contemplated by
this Agreement as set forth in Section 1.4.
"Closing Date" shall have the meaning set forth in Section 1.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock of APPM, $.0001 par value.
"Company" shall have the meaning set forth in the preamble to this
Agreement.
"Company Common Stock" shall have the meaning set forth in the
preamble to this Agreement.
"Company Current Balance Sheet" shall mean the unaudited balance sheet
of Company as of June 30, 1998.
"Company Current Financial Statements" shall mean the related
statements of income, stockholders' equity and statements of cash flows of
Company for the period ended June 30, 1998, and Company Current Balance Sheet.
"Company Financial Statements" shall mean, collectively, Company
Annual Financial Statements and Company Current Financial Statements.
"Company Rights" shall mean all arrangements, calls, commitments,
agreements, options, rights to subscribe to, scrips, understandings, warrants,
or other binding obligations of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of Company
Common Stock, or by which Company is or may be bound to issue additional shares
of Company Common Stock or other Company Rights.
"Company Annual Financial Statements" shall mean the unaudited balance
sheet of Company as of December 31, 1997, and the related statements of income,
stockholders' equity and statements of cash flows of Company for the year ended
December 31, 1997.
"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.
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"Controlled Group" shall have the meaning set forth in Section
2.13(g).
"Current Policies" shall have the meaning set forth in Section 2.15.
"Damages" shall have the meaning set forth in Section 10.1.
"Election Period" shall have the meaning set forth in Section 10.3(a).
"Employment Agreements" shall have the meaning set forth in Section
8.1(a).
"Employee Benefit Plans" shall have the meaning set forth in Section
2.13.
"Encumbrance" shall mean any charge, claim, community property
interest, 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
2.14(e).
"Environmental Liabilities" shall have the meaning set forth in
Section 2.14(e).
"ERISA" shall have the meaning set forth in Section 2.11.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Governmental Programs" shall have the meaning set forth in Section
2.19.
"Hazardous Substances" shall have the meaning set forth in Section
2.14(e).
"Indemnified Party" shall have the meaning set forth in Section
10.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
10.3(a).
"Indemnity Notice" shall have the meaning set forth in Section
10.3(d).
"Insurance Policies" shall have the meaning set forth in Section 2.17.
"IRS" shall mean the Internal Revenue Service.
"Material Adverse Effect" shall mean a material adverse effect on the
assets, properties, business, operations, condition (financial or otherwise),
liabilities, results of operations or prospects of the Person or Persons being
referred to, taken as a whole (including its consolidated subsidiaries, if
any), in consideration of all relevant facts and circumstances.
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"Medical Waste" shall mean (i) pathological waste, (ii) blood, (iii)
sharps, (iv) wastes from surgery, (v) 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 on the date hereof and
the Closing Date: (i) the MWTA, (ii) the U.S. Public Vessel Medical Waste
Anti-Dumping Act of 1988, 33 USCA xx.xx. 2501 et seq., (iii) the Marine
Protection, Research, and Sanctuaries Act of 1972, 33 USCA xx.xx. 1401 et seq.,
(iv) The Occupational Safety and Health Act, 29 USCA xx.xx. 651 et seq., (v)
the United States Department of Health and Human Services, National Institute
for Occupational Safety and Health, Infectious Waste Disposal Guidelines,
Publication No. 88-119, and (vi) any other federal, state, regional, county,
municipal, or other local laws, regulations, and ordinances insofar as they are
applicable to any of Company's assets or operations and purport to regulate
Medical Waste or impose requirements related to Medical Waste.
"MWTA" shall mean the Medical Waste Tracking Act of 1988, 42 U.S.C.
xx.xx. 6992, et seq.
"Ordinary course of business" shall mean the usual and customary way
in which the particular entity has conducted its business in the past.
"Ormond" shall have the meaning set forth in the recitals to this
Agreement.
"Payors" shall mean any and all private or governmental Persons,
obligated by contract or by law to render payment to Company in consideration
of the performance of professional medical services 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 and
CHAMPUS.
"Person" shall mean any natural person, corporation, partnership,
joint venture, limited liability company, association, group, organization or
other entity.
"Physician Employee" shall mean each physician employed by Company.
"Private Programs" shall have the meaning set forth in Section 2.19.
"Professional Assets" shall have the meaning set forth in Section 4.10
and described in Schedule 4.10.
"Proprietary Rights" shall have the meaning set forth in Section 2.21.
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"Purchase Price" shall have the meaning set forth in Section 1.2
hereof.
"Regulated Activity" shall have the meaning set forth in Section
2.14(e).
"Schedules" shall mean the schedules attached hereto as of the date of
this Agreement or otherwise delivered by Company pursuant to the terms hereof,
as such may be amended or supplemented from time to time pursuant to the
provisions hereof.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Service Agreement" shall have the meaning set forth in Section
8.1(l).
"Shareholder" shall have the meaning set forth in the recitals to this
Agreement.
"Shareholders" shall have the meaning set forth in the recitals to
this Agreement.
"Shareholders' Release" shall have the meaning set forth in Section
8.1(m).
"Spin-Off Transaction" shall have the meaning set forth in Section
4.1.
"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
10.3(a).
* * * * *
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representative to sign, or has signed, this Stock Purchase Agreement
as of the date first written above.
APPM:
AMERICAN PHYSICIAN PARTNERS, INC.
By:
--------------------------------------
Xxxx X. Xxxxx, Senior Vice President
COMPANY:
WB&A IMAGING PARTNERS, INC.,
a Maryland corporation
By:
--------------------------------------
President
SHAREHOLDERS:
-----------------------------------------
Xxxxx Xxxxxxxx, M.D.
-----------------------------------------
Xxxx X. XxXxxxxx, M.D.
-----------------------------------------
Xxxxx Xxxxxxxxx, M.D.
-----------------------------------------
Xxxx X. Xxxxx, M.D.
-----------------------------------------
Xxxxxx X. Xxxxxxxxx, M.D.
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-----------------------------------------
Xxxxxxx X. X'Xxxxx, M.D.
-----------------------------------------
Xxxxxx X. Xxxxxxxx, M.D.
-----------------------------------------
Xxxxxxx X. Perl, M.D.
-----------------------------------------
Xxxxxxx X. Xxxxx, M.D.
-----------------------------------------
Xxxx X. Xxxxxxxx, M.D.
-----------------------------------------
Xxxxxx X. Xxxxxx, M.D.
-----------------------------------------
Xxxxxx X. Xxxxxx, M.D.
-----------------------------------------
Xxxxx X. Xxxxxxxx
39
