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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): September 1, 1997
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SPECIALTY CARE NETWORK, INC.
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(Exact Name of Registrant Specified in Charter)
Delaware 0-22019 62-1623449
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(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (303) 716-0041
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
Effective September 1, 1997, Specialty Care Network, Inc. (the
"Company") acquired, through merger (the "OAWF Merger"), substantially all of
the assets and certain liabilities of Orthopaedic Associates of West Florida,
P.A., a Florida professional service corporation ("OAWF"), pursuant to the terms
of a Merger Agreement, dated August 28, 1997, by and among the Company, OAWF,
Charles E. Abrahamsen, M.D., John E. Kilgore, M.D., William E. Kilgore, M.D.,
John M. McClure, M.D., Gary G. Moskovitz, M.D., Michael G. Rothberg, M.D.,
Thomas O. Schwab, M.D., Craig A. Schwartz, M.D. and Harry Steinman, M.D. (the
"OAWF Merger Agreement"). OAWF is a nine physician orthopaedics group with its
headquarters in Clearwater, Florida. In connection with the OAWF Merger, the
common stock of OAWF was exchanged for aggregate consideration of approximately
$7,591,000 consisting of approximately $3,799,000 in cash and 332,983 shares of
Company Common Stock valued at $11.3875 per share. The cash portion of the
consideration paid for the assets pursuant to the OAWF Merger Agreement was from
the Company's line of credit. The assets acquired from OAWF pursuant to the OAWF
Merger include certain equipment used by OAWF in the practice of medicine. In
connection with the OAWF Merger, the Company entered into a service agreement
with Orthopaedic Associates of West Florida, P.A., a new practice formed by the
former shareholders of OAWF, pursuant to which the Company has agreed to provide
management, administrative and development services to the new practice. The
Company will make available to the new practice the equipment it acquired in the
OAWF Merger.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information (unaudited).
To be filed on Form 8-K/A as soon as practicable, but not later than
60 days after this Form 8-K is filed.
(c) Exhibits.
2.1 Merger Agreement, dated August 28, 1997, by and among the Company,
OAWF, Charles E. Abrahamsen, M.D., John E. Kilgore, M.D., William
E. Kilgore, M.D., John M. McClure, M.D., Gary G. Moskovitz, M.D.,
Michael G. Rothberg, M.D., Thomas O. Schwab, M.D., Craig A.
Schwartz, M.D. and Harry Steinman, M.D.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPECIALTY CARE NETWORK, INC.
(Registrant)
By \s\ D. Paul Davis
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D. Paul Davis
Senior Vice President - Finance
Dated: September 16, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
2.1* Merger Agreement, dated August 28, 1997, by and among Specialty Care
Network, Inc., Orthopaedic Associates of West Florida, P.A., Charles E.
Abrahamsen, M.D., John E. Kilgore, M.D., William E. Kilgore, M.D.,
John M. McClure, M.D., Gary G. Moskovitz, M.D., Michael G. Rothberg,
M.D., Thomas O. Schwab, M.D., Craig A. Schwartz, M.D. and Harry
Steinman, M.D.
</TABLE>
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* The exhibits and schedules to this document (which are listed on the
table of contents included in the document) have been omitted. The
Company agrees to furnish supplementally a copy of any of the omitted
exhibits to the Securities and Exchange Commission upon request.
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MERGER AGREEMENT
BY AND AMONG
SPECIALTY CARE NETWORK, INC.,
ORTHOPAEDIC ASSOCIATES OF WEST FLORIDA, P.A.,
CHARLES E. ABRAHAMSEN, M.D.,
JOHN E. KILGORE, M.D.,
WILLIAM E. KILGORE, M.D.,
JOHN M. MCCLURE, M.D.,
GARY G. MOSKOVITZ, M.D.,
MICHAEL G. ROTHBERG, M.D.,
THOMAS O. SCHWAB, M.D.,
CRAIG A SCHWARTZ, M.D.,
and
HARRY STEINMAN, M.D.
August 28, 1997
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
1. Definitions...................................................................................................1
2. Basic Transaction.............................................................................................4
(a) The Merger..........................................................................................4
(b) The Closing.........................................................................................4
(c) Actions at the Closing..............................................................................4
(d) Effect of Merger....................................................................................4
(e) No Fractional Shares................................................................................5
3. Representations and Warranties of OAWF and OAWF Stockholders..................................................5
(a) Organization, Qualification, and Corporate Power....................................................5
(b) OAWF Stockholder Interests and Capitalization.......................................................5
(c) Authorization of Transaction........................................................................5
(d) Noncontravention....................................................................................5
(e) Subsidiaries and Investments........................................................................5
(f) Financial Statement.................................................................................6
(g) Undisclosed Liabilities.............................................................................6
(h) Brokers' Fees.......................................................................................6
(i) Material Contracts..................................................................................6
(j) Insurance; Malpractice..............................................................................7
(k) No Changes Prior to Closing Date....................................................................7
(l) Title; Condition....................................................................................7
(m) Litigation..........................................................................................8
(n) Permits and Licenses................................................................................8
(o) Tax Matters.........................................................................................8
(p) Employee Benefit Plans..............................................................................8
(q) Third-Party Relations...............................................................................9
(r) Compliance with Applicable Laws.....................................................................9
(s) Employee Compensation...............................................................................9
(t) Environmental Matters..............................................................................10
(u) Healthcare Compliance..............................................................................10
(v) Fraud and Abuse....................................................................................10
(w) Practice Compliance................................................................................11
(x) Rates and Reimbursement Policies...................................................................11
(y) Accounts Receivable................................................................................11
(z) Guaranties.........................................................................................11
(aa) Powers of Attorney................................................................................11
(bb) Tangible Assets...................................................................................11
(cc) SCN Share Ownership; Investment Intent............................................................11
(dd) Full Disclosure...................................................................................13
4. Representations and Warranties of SCN........................................................................13
(a) Organization.......................................................................................13
(b) Capitalization.....................................................................................13
(c) Authorization of Transaction.......................................................................13
(d) Noncontravention...................................................................................13
(e) Brokers' Fees......................................................................................13
(f) Securities Filings.................................................................................13
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(g) Litigation.........................................................................................14
(h) Permits and Licenses...............................................................................14
(i) Compliance with Applicable Laws....................................................................14
(j) Full Disclosure....................................................................................14
5. Covenants....................................................................................................14
(a) General............................................................................................14
(b) Notices and Consents...............................................................................14
(c) Regulatory Matters and Approvals...................................................................14
(d) Operation of Business..............................................................................14
(e) Further Acts and Assurances........................................................................15
(f) Full Access........................................................................................15
(g) Notice of Developments.............................................................................15
(h) Exclusivity........................................................................................15
(i) Collection of Accounts Receivable..................................................................15
(j) Payment of Expenses................................................................................16
(k) Corporate Authorization............................................................................16
(l) Malpractice Insurance..............................................................................16
(m) Distribution of Excluded Assets....................................................................16
(n) Satisfaction of Indebtedness.......................................................................16
(o) Conversion into Business Corporation...............................................................16
(p) Employee Benefit Plans.............................................................................16
(q) Securities Laws Compliance.........................................................................16
6. Conditions to Obligation to Close............................................................................16
(a) Conditions to Obligation of SCN....................................................................17
(b) Conditions to Obligation of OAWF...................................................................17
7. Items to be Delivered at or Prior to Closing.................................................................18
(a) By the OAWF Stockholders or OAWF...................................................................18
(b) By SCN.............................................................................................18
8. Termination..................................................................................................19
(a) Termination of Agreement...........................................................................19
(b) Effect of Termination..............................................................................19
9. Indemnification..............................................................................................19
(a) Indemnification by the OAWF Stockholders...........................................................19
(b) Notice to the OAWF Stockholders; Opportunity to Defend.............................................20
(c) General Indemnification by SCN.....................................................................20
(d) Notice to SCN; Opportunity to Defend...............................................................20
(e) Right of Setoff....................................................................................20
10. Miscellaneous...............................................................................................20
(a) Survival...........................................................................................20
(b) No Third-Party Beneficiaries.......................................................................21
(c) Entire Agreement...................................................................................21
(d) Succession and Assignment..........................................................................21
(e) Counterparts.......................................................................................21
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(f) Headings...........................................................................................21
(g) Notices............................................................................................21
(h) Governing Law; Venue...............................................................................22
(i) Amendments and Waivers.............................................................................22
(j) Severability.......................................................................................22
(k) Expenses...........................................................................................22
(l) Construction.......................................................................................22
(n) Incorporation of Exhibits and Schedules............................................................22
EXHIBIT 1 - AGREEMENT AND PLAN OF MERGER................................................................Exhibit 1-1
EXHIBIT 2(a)(1) - CERTIFICATE OF MERGER...........................................................Exhibit 2(a)(1)-1
EXHIBIT 2(a)(2) - FLORIDA ARTICLES OF MERGER......................................................Exhibit 2(a)(2)-1
EXHIBIT 7(a)(iv) - SERVICE AGREEMENT.....................................................................7(a)(iv)-1
EXHIBIT 7(a)(vi) - OAWF OPINION LETTER...........................................................Exhibit 7(a)(vi)-1
EXHIBIT 7(b)(iii) - SCN OPINION LETTER..........................................................Exhibit 7(b)(iii)-1
</TABLE>
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") is entered into this the 28th
day of August, 1997, by and among SPECIALTY CARE NETWORK, INC., a Delaware
corporation ("SCN"), ORTHOPAEDIC ASSOCIATES OF WEST FLORIDA, P.A., a Florida
professional association that will convert to a Florida Corporation t/b/k/a
OAWF, Inc. ("OAWF") and CHARLES E. ABRAHAMSEN, M.D., JOHN E. KILGORE, M.D.,
WILLIAM E. KILGORE, M.D., JOHN M. MCCLURE, M.D., GARY G. MOSKOVITZ, M.D.,
MICHAEL G. ROTHBERG, M.D., THOMAS O. SCHWAB, M.D., CRAIG A. SCHWARTZ, M.D., and
HARRY STEINMAN, M.D. (collectively, the "OAWF Stockholders"). SCN, OAWF and the
OAWF Stockholders are referred to collectively herein as the "Parties".
W I T N E S S E T H:
WHEREAS, SCN and OAWF have determined that it is desirable and in the
best interests of their respective corporations and stockholders that OAWF merge
with and into SCN, with SCN as the surviving corporation, on the terms and
subject to the conditions set forth in this Agreement and the corresponding
Agreement and Plan of Merger in the form attached hereto as Exhibit 1 (the
"Agreement and Plan of Merger");
WHEREAS, SCN and OAWF intend that the transaction contemplated by this
Agreement shall qualify as a tax-free reorganization under Section 368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code") and intend that
this Agreement along with the Agreement and Plan of Merger shall constitute a
"plan of reorganization" within the meaning of Section 368 of the Code;
WHEREAS, the Parties do not intend for this Agreement to be a binding
obligation of any Party unless and until the provisions of Section 6 are
satisfied or waived by the appropriate party; and
WHEREAS, the Parties desire to set forth in writing the terms and
conditions under which said transaction will be consummated.
NOW, THEREFORE, in consideration of the foregoing and of the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Parties, and in accordance with the applicable
provisions of the Delaware General Corporation Law and the Florida Business
Corporation Act, the parties hereby agree as follows:
1. Definitions.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Agreement" has the meaning set forth in the preface above.
"Agreement and Plan of Merger" has the meaning set forth in the first
recital above.
"Applicable Laws" has the meaning set forth in Section 3(r).
"Florida Articles of Merger" has the meaning set forth in Section 2(a)
below.
"Florida Business Corporation Act" means the Florida Business
Corporation Act of the State of Florida, as amended.
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"Closing Date" has the meaning set forth in Section 2(b) below.
"Closing" has the meaning set forth in Section 2(b) below.
"Code" has the meaning set forth in the recitals above.
"Conversion Ratio" has the meaning set forth in Section 2(d)(v) below.
"Delaware Certificate of Merger" shall have the meaning set forth in
Section 2(a) below.
"Delaware General Corporation Law" means the General Corporation Law of
the State of Delaware, as amended.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"OAWF" has the meaning set forth in the preface above.
"OAWF Share" means any share of the issued and outstanding common stock
of OAWF at the date of this Agreement.
"OAWF Stockholders" has the meaning set forth in the preface above.
"Effective Time" has the meaning set forth in Section 2(d)(i) below.
"Employee Benefit Plans" has the meaning set forth in Section 3(p)(i)
below.
"Environmental Laws" means all federal, state, and local laws, rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder and other governmental requirements relating to pollution,
control of chemicals, storage and handling of petroleum products, management of
waste (including biohazardous or biomedical waste), discharges of materials into
the environment, health, safety, natural resources, and the environment,
including laws relating to emissions, discharges, releases, or threatened
releases of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes into ambient air, surface water, ground water, or
lands or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes.
"ERISA" has the meaning set forth in Section 3(p)(i) below.
"Excluded Assets" has the meaning set forth in Section 5(m) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Hazardous Materials" has the meaning set forth in Section 3(t) below.
"IRS" means the Internal Revenue Service.
"Knowledge" means actual knowledge after reasonable investigation.
"Medical Waste" includes, but is not limited to, pathological waste,
blood, sharps, wastes from surgery or autopsy, dialysis waste, including
contaminated disposable equipment and supplies, cultures and stock of infectious
agents and associated biological agents, contaminated animals, isolation wastes,
contaminated equipment, laboratory waste, various other biological waste and
discarded materials contaminated with or exposed to blood, excretion or
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secretion from human beings or animals, and any substance, pollutant, material
or contaminant listed or regulated under the Medical Waste Tracking Act of 1988,
42 U.S.C. ss.6992, et seq.
"Medical Waste Law" means the Medical Waste Tracking Act of 1988, as
amended, the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33
U.S.C.A. ss.2501, et seq., the Marine Protection, Research and Sanctuaries
Act of 1972, 33 U.S.C.A. ss1401, et seq., the Occupational Safety and
Health Act, 29 U.S.C.A. ss.651, et seq., the United States Department of
Health and Human Services, National Institute for Occupational Self-Safety and
Health Infectious Waste Disposal Guidelines, Publication No. 88-119, all
regulations and orders issued pursuant to any of the foregoing, and any other
federal, state, regional, county, municipal or other local laws, regulations and
ordinances insofar as they purport to regulate Medical Waste or impose
requirements relating to Medical Waste.
"Merger" has the meaning set forth in Section 2(a) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Parties" has the meaning set forth in the preface above.
"PBGC" has the meaning set forth in Section 3(p)(ii) below.
"PCBs" has the meaning set forth in Section 3(t) below.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Practice Assets" has the meaning set forth in Section 3(l) below.
"SCN Share" means any share of the common stock, $.001 par value per
share, of SCN.
"SCN" has the meaning set forth in the preface above.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Service Agreement" shall mean that certain Service Agreement dated as
of the Closing Date by and among SCN, Orthopaedic Associates of West Florida,
P.A., a newly created Florida professional association ("OAWFII"), and the OAWF
Stockholders to be executed and delivered at the Closing.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Surviving Corporation" has the meaning set forth in Section 2(a)
below.
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2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, OAWF will merge with and into SCN (the "Merger") at the Effective
Time. SCN shall enter into the Agreement and Plan of Merger upon adoption of the
Agreement and Plan of Merger by the Board of Directors of SCN and the
satisfaction or waiver of the conditions precedent to SCN's obligations set
forth in this Agreement. OAWF shall enter into the Agreement and Plan of Merger
upon adoption of the Agreement and Plan of Merger by the Board of Directors of
OAWF and the OAWF Stockholders and the satisfaction or waiver of the conditions
precedent to OAWF's obligation set forth in this Agreement. Upon all other
conditions herein being satisfied or waived in accordance with the terms of this
Agreement, a Certificate of Merger in substantially the form attached hereto as
Exhibit 2(a)(1) (the "Delaware Certificate of Merger") shall be executed and
filed with the Secretary of State of the State of Delaware and Florida Articles
of Merger in substantially the form attached hereto as Exhibit 2(a)(2) (the
"Florida Articles of Merger")shall be executed and filed with the Florida
Department of State of the State of Florida , together with all certificates or
documents as may be required to be filed under the laws of the State of Delaware
and the State of Florida to effect the Merger. Thereafter, the separate
corporate existence of OAWF shall cease and OAWF shall be merged with and into
SCN (the "Surviving Corporation").
(b) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of OAWF, 1528 Lakeview
Road, Clearwater, Florida, 34616 commencing at 9:00 A.M. local time on the
second business day following the day on which the last of the conditions set
forth in Section 6 have been fulfilled or waived, or such other date or place as
the Parties may mutually determine (the "Closing Date"). Time is of the essence
for this Agreement.
(c) Actions at the Closing. At the Closing, (i) OAWF will deliver to
SCN the various certificates, instruments, and documents referred to in Section
7(a) below, (ii) SCN will deliver to OAWF the various certificates, instruments,
and documents referred to in Section 7(b) below, (iii) SCN and OAWF will file
with the Secretary of State of the State of Delaware the Delaware Certificate of
Merger, and (iv) SCN and OAWF will file with the Florida Department of State of
the State of Florida the Florida Florida Articles of Merger.
(d) Effect of Merger.
(i) General. The Merger shall become effective at 12:01 a.m.
on September 1, 1997 (the "Effective Time") The Merger shall have the
effect set forth in the Delaware General Corporation Law and the
Florida Florida Business Corporation Act. The Surviving Corporation
may, at any time after the Effective Time, take any action (including
executing and delivering any document) in the name and on behalf of
either SCN or OAWF in order to carry out and effectuate the
transactions contemplated by this Agreement.
(ii) Certificate of Incorporation. The Certificate of
Incorporation of SCN in effect at and as of the Effective Time will
remain the Certificate of Incorporation of the Surviving Corporation
without any modification or amendment as a result of the Merger.
(iii) Bylaws. The Bylaws of SCN in effect at and as of the
Effective Time will remain the Bylaws of the Surviving Corporation
without any modification or amendment as a result of the Merger.
(iv) Directors and Officers. The directors and officers of SCN
in office at and as of the Effective Time will remain the directors and
officers of the Surviving Corporation (retaining their respective
positions and terms of office).
(v) Conversion of OAWF Shares. At and as of the Effective
Time, each of the issued and outstanding OAWF Shares shall be converted
into (A) the right to receive 123.674 SCN Shares (the ratio of 332,983
SCN Shares divided by the total number of OAWF Shares outstanding is
referred to herein as the "Conversion Ratio") and (B) the right to
receive a cash payment of $1,408.3367. The Conversion Ratio shall be
subject
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to equitable adjustment in the event of any stock split, stock
dividend, reverse stock split, or other change in the number of OAWF
Shares or SCN Shares outstanding.
(vi) SCN Shares. Each SCN Share issued and outstanding at and
as of the Effective Time will remain issued and outstanding and shall
be unaffected by the Merger.
(e) No Fractional Shares. No fractional SCN Shares shall be issued
pursuant to the Merger. In lieu of the issuance of any such fractional SCN
Shares, cash adjustments will be paid to holders in respect of any fractional
SCN Shares that would otherwise be issuable. The amount of such adjustment shall
be the product of such fraction of a SCN Share multiplied by $11.3875, which is
the average closing price of an SCN Share from the ten (10) prior trading days.
3. Representations and Warranties of OAWF and OAWF Stockholders. OAWF
and the OAWF Stockholders, jointly and severally, represent and warrant to SCN
that the statements contained in this Section 3 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Section 3), except as set forth in
the disclosure schedule (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Section 3.
(a) Organization, Qualification, and Corporate Power. OAWF is a
Professional association duly organized, validly existing, and in good standing
under the laws of the State of Florida . OAWF is duly authorized to conduct
business and is in good standing under the laws of each jurisdiction in which
the character or location of the properties owned or the business conducted by
OAWF makes such qualification necessary. OAWF has the full corporate power and
authority to carry on the business in which it is engaged and to own and use the
properties owned and used by it.
(b) OAWF Stockholder Interests and Capitalization. The capital stock of
OAWF is owned in the manner set forth in Section 3(b) of the Disclosure
Schedule. All of the issued and outstanding OAWF Shares have been duly
authorized and are validly issued, fully paid, and nonassessable. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require OAWF to issue, sell or otherwise cause to become outstanding
any of its capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to OAWF. As of the date of this Agreement, the authorized capital stock
of OAWF consists of 10,000 shares of OAWF common stock, of which 2,692.4726
shares were issued and outstanding.
(c) Authorization of Transaction. OAWF has the full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of OAWF and the OAWF Stockholders, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which OAWF
is subject or any provision of the charter or bylaws of OAWF or (ii) conflict
with, result in a material breach of, constitute a material default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which OAWF is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). OAWF
is not required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(e) Subsidiaries and Investments. OAWF does not own, directly or
indirectly, any capital stock or other equity ownership or proprietary interest
in any other corporation, partnership, association, limited liability company,
trust, joint venture or other entity.
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(f) Financial Statements. OAWF has furnished SCN with unaudited balance
sheets dated December 31, 1995 and 1996 and June 30, 1997 and unaudited income
statements for the twelve (12) month periods ending December 31, 1996, 1995 and
1994 and the six (6) months ended June 30, 1997. Such financial statements,
including the notes thereto, except as indicated therein, were prepared on a
basis consistent with past accounting practices of OAWF and fairly present the
results of operations for the periods noted therein. The balance sheets of OAWF
delivered by OAWF to SCN fairly present the financial condition of OAWF at the
date thereof, and except as indicated therein, reflect all claims against and
all debts and liabilities of OAWF, fixed or contingent, as of the date thereof.
(g) Undisclosed Liabilities. OAWF has no uninsured liability (whether
known or unknown, asserted or unasserted, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, and whether due or to become due),
including any liability for taxes, except for (i) liabilities set forth on the
face of the balance sheet dated as of December 31, 1996 and (ii) liabilities
which have arisen after December 31, 1996 in the Ordinary Course of Business
(none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law).
(h) Brokers' Fees. OAWF does not have any liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
(i) Material Contracts. Section 3(i) of the Disclosure Schedule lists
the following contracts and other material agreements to which OAWF is a party:
(i) any agreement (or group of related agreements) for the
lease of real or personal property to or from any Person;
(ii) any agreement (or group of related agreements) for the
purchase or sale of supplies, products, or other personal property or
for the furnishing or receipt of services;
(iii) any agreement concerning a partnership, limited
liability company or joint venture;
(iv) any agreement (or group of related agreements) under
which OAWF has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation
pursuant to which it has imposed a Security Interest in respect of any
of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of OAWF's current or former directors,
officers, and employees;
(vii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $25,000 or providing severance benefits;
(viii) any agreement pursuant to which OAWF has advanced or
loaned any amount to any of its directors, officers, and employees;
(ix) any agreement pursuant to which the consequences of a
default or termination could have a material adverse effect on the
business, financial condition, operations, results of operations, or
future prospects of OAWF; or
(x) any other agreement (or group of related agreements)
outside the ordinary course of OAWF's business or operations the
performance of which involves consideration in excess of $15,000.
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OAWF has delivered or given SCN access to a correct and complete copy of each
written agreement listed in Section 3(i) of the Disclosure Schedule (as amended
through the Closing Date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in Section 3(i) of the Disclosure
Schedule. With respect to each such agreement: (A) to the knowledge of OAWF and
the OAWF Stockholders, the agreement is legal, valid, binding, enforceable, and
in full force and effect; (B) except as set forth in Section 3(i) of the
Disclosure Schedule, no notice of this Agreement or consent of any third party
is required in order for OAWF to execute and deliver this Agreement or to
consummate the transactions contemplated hereby, and, after assignment to SCN at
Closing, the agreement will continue to be legal, valid, binding, enforceable,
and in full force and effect on identical terms; (C) neither OAWF nor, to the
knowledge of OAWF and the OAWF Stockholders, any other party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) neither OAWF nor, to the knowledge of
OAWF and the OAWF Stockholders, any other party has repudiated any provision of
the agreement.
(j) Insurance; Malpractice. Section 3(j) of the Disclosure Schedule
contains a list and brief description of all policies or binders of fire,
liability, product liability, workers compensation, health and other forms of
insurance policies or binders currently in force insuring against risks which
will remain in full force and effect at least through the Closing Date. Section
3(j) of the Disclosure Schedule contains a description of all current
malpractice liability insurance policies of OAWF Stockholders, OAWF and OAWF's
professional employees and all predecessor policies in effect since February 1,
1990. Neither OAWF, the OAWF Stockholders, nor, to the knowledge of OAWF and the
OAWF Stockholders, OAWF's professional employees have, in the last seven (7)
years, filed a written application for any insurance coverage relating to OAWF's
business or property which has been denied by an insurance agency or carrier.
OAWF, OAWF's professional employees and the OAWF Stockholders have been
continuously insured for professional malpractice claims during the same period,
or such shorter period as any such person has been providing professional
services. Section 3(j) of the Disclosure Schedule also sets forth a list of all
claims for any insured loss in excess of Five Thousand Dollars ($5,000.00) per
occurrence filed by or against OAWF, OAWF's professional employees or the OAWF
Stockholders during the three (3) year period immediately preceding the date
hereof, including workers compensation, general liability, environmental
liability and professional malpractice liability claims. None of OAWF, OAWF's
professional employees or the OAWF Stockholders is in material default with
respect to any provision contained in any such policy and none of them has
failed to give any notice or present any claim under any such policy in due and
timely fashion.
(k) No Changes Prior to Closing Date. During the period from December
31, 1996 through the date hereof, OAWF has not (i) incurred any liability or
obligation of any nature (whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated and
whether due or to become due), except in the Ordinary Course of Business, (ii)
written off as uncollectible any notes or accounts receivable, except write-offs
in the Ordinary Course of Business charged to applicable reserves, none of which
individually or in the aggregate is material to OAWF, (iii) conducted its
business in such a manner so as to materially increase its accounts payable or
so as to materially decrease its accounts receivable, (iv) granted any increase
in the rate of wages, salaries, bonuses, or other remunerations of any employee,
except in the Ordinary Course of Business, (v) canceled or waived any claims or
rights of substantial value, (vi) made any change in any method of accounting,
(vii) otherwise conducted its business or entered into any transaction, except
in the usual and ordinary manner and in the Ordinary Course of Business, (viii)
agreed, whether or not in writing, to do any of the foregoing, or (ix) disposed
of its assets other than in the Ordinary Course of Business.
(l) Title; Condition. Section 3(l) of the Disclosure Schedule contains
a complete, true and correct list of those assets which are material to the
business or operations of OAWF (the "Practice Assets"), as well as a true and
correct list of liens on the Practice Assets. Except for those Practice Assets
which are leased (as indicated on Schedule 3(1) of the Disclosure Schedule, OAWF
has good and marketable title to all of the Practice Assets subject to no
mortgage, pledge, lien, lease, conditional sales agreement, option, right of
first refusal or any other encumbrance or charge, including taxes. OAWF agrees
to remove all security interests reflected on any search of public records, if
any, prior
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to the Effective Time and remove any other security interest filed with respect
to the Practice Assets between the date of such search of public records and the
Effective Time.
(m) Litigation. There is no suit, action, proceeding at law or in
equity, arbitration, administrative proceeding or other proceeding or
investigation by any governmental entity pending, or threatened against, or
affecting OAWF or any of the Practice Assets, or any physician or other health
care professional engaged or employed by OAWF, and, to the knowledge of OAWF and
the OAWF Stockholders, there is no basis for any of the foregoing. None of the
actions, suits, proceedings, hearings, and investigations set forth in Section
3(m) of the Disclosure Schedule could result in any material adverse change in
the operations, results of operations, or future prospects of the business
assets to be operated by SCN after the Closing.
(n) Permits and Licenses. OAWF and all physicians and other health care
professionals engaged or employed by OAWF have all permits and licenses required
by all applicable laws; have made all regulatory filings necessary for the
conduct of OAWF's business; and are not in violation of any of said permitting
or licensing requirements.
(o) Tax Matters. All federal, state and other tax returns of OAWF
required by law to be filed have been timely filed, and OAWF has paid or
adequately provided for all taxes (including taxes on properties, income,
franchises, licenses, sales and payrolls) which have become due pursuant to such
returns or pursuant to any assessment, except for any taxes and assessments, the
amount, applicability or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which OAWF has set aside on
its books adequate reserves. There are no tax liens on any of OAWF's assets
except those with respect to taxes not yet due and payable. There are no pending
tax examinations of OAWF's tax returns nor has OAWF received a revenue agent's
report asserting a tax deficiency in the last twelve (12) months. There are not
and will not be at the Closing Date up to and through the Effective Time, any
claims pending or asserted against OAWF for unpaid taxes by any federal, state
or other governmental body. OAWF has withheld from each payment made to
employees of OAWF the amount of all taxes (including, but not limited to,
federal, state and local income taxes and Federal Insurance Contribution Act
taxes) required to be withheld therefrom and all amounts customarily withheld
therefrom, and has set aside all other employee contributions or payments
customarily set aside with respect to such wages and has paid or will pay the
same to, or has deposited or will deposit such payment with, the proper tax
receiving officers or other appropriate authorities.
(p) Employee Benefit Plans.
(i) List of Plans. Section 3(p) of the Disclosure Schedule
contains an accurate and complete list of all employee benefit plans
("Employee Benefit Plans") within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not any Employee Benefit Plans are otherwise exempt from the
provisions of ERISA, established, maintained or contributed to by OAWF
(including all employers (whether or not incorporated) which by reason
of common control are treated together with OAWF and/or the OAWF
Stockholders as a single employer within the meaning of Section 414 of
the Code) since September 2, 1974.
(ii) Status of Plans. OAWF has never maintained and does not
now maintain or contribute to any Employee Benefit Plan subject to
ERISA which is not in substantial compliance with ERISA, or which has
incurred any accumulated funding deficiency within the meaning of
Section 412 or 418B of the Code, or which has applied for or obtained a
waiver from the Internal Revenue Service of any minimum funding
requirement under Section 412 of the Code or which is subject to Title
IV of ERISA. OAWF has not incurred any liability to the Pension Benefit
Guaranty Corporation ("PBGC") in connection with any Employee Benefit
Plan covering any employees of OAWF or ceased operations at any
facility or withdrawn from any such Plan in a manner which could
subject it to liability under Section 4062(f), 4063 or 4064 of ERISA,
and knows of no facts or circumstances which might give rise to any
liability of OAWF to the PBGC under Title IV of ERISA which could
reasonably be anticipated to result in any claims being made against
OAWF by the PBGC. OAWF
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<PAGE>
has not incurred any withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of Sections 4201 and
4202 of ERISA, to any Employee Benefit Plan which is a Multiemployer
Plan (as defined in Section 4001 of ERISA), and no event has occurred,
and there exists no condition or set of circumstances, which represent
a material risk of the occurrence of any withdrawal from or the
partition, termination, reorganization or insolvency of any
Multiemployer Plan which would result in any liability of OAWF.
(iii) Contributions. Full payment has been made of all amounts
which OAWF is required, under applicable law or under any Employee
Benefit Plan or any agreement relating to any Employee Benefit Plan to
which OAWF is a party, to have paid as contributions thereto as of the
last day of the most recent plan year of such Employee Benefit Plan
ended prior to the date hereof. OAWF has made adequate provision for
reserves to meet contributions that have not been made because they are
not yet due under the terms of any Employee Benefit Plan or related
agreements. Benefits under all Employee Benefit Plans are as
represented and have not been increased subsequent to the date as of
which documents have been provided.
(iv) Tax Qualification. Each Employee Benefit Plan intended to
be qualified under Section 401(a) of the Code has been determined to be
so qualified by the Internal Revenue Service and nothing has occurred
since the date of the last such determination which resulted or is
likely to result in the revocation of such determination.
(v) Transactions. OAWF has not engaged in any transaction with
respect to the Employee Benefit Plans which would subject it to a
material tax, penalty or liability for prohibited transactions under
ERISA or the Code nor have any of its directors, officers or employees
to the extent they or any of them are fiduciaries with respect to such
plans, breached any of their responsibilities or obligations imposed
upon fiduciaries under Title I of ERISA which would result in any
material claim being made under or by or on behalf of any such plans by
any party with standing to make such claim.
(vi) Other Plans. OAWF presently does not maintain any
Employee Benefit Plans or any other foreign pension, welfare or
retirement benefit plans other than those listed on Section 3(p) of the
Disclosure Schedule.
(vii) Documents. OAWF has delivered or caused to be delivered
to SCN true and complete copies of (i) all Employee Benefit Plans as in
effect, together with all amendments thereto which will become
effective at a later date, as well as the latest IRS determination
letter obtained with respect to any such Employee Benefit Plan
qualified under Section 401 or 501 of the Code, and (ii) the most
recently filed Form 5500 for each Employee Benefit Plan required to
file such form.
(q) Third-Party Relations. OAWF has not received any notice that any
material patient, supplier, employee or associated physician intends to cease
doing business with OAWF.
(r) Compliance with Applicable Laws. OAWF has operated in compliance
with all federal, state, county and municipal laws, constitutions, ordinances,
statutes, rules, regulations and orders applicable thereto ("Applicable Laws").
No item disclosed in Section 3(r) of the Disclosure Schedule could have a
material effect on SCN.
(s) Employee Compensation. OAWF has paid or discharged or will pay or
discharge or assume all liabilities for compensation and benefits to which all
employees, including physician employees, are entitled through the Closing Date,
including but not limited to all salaries, wages, bonuses, incentive
compensation, payroll taxes, hospitalization and medical expenses, any deferred
compensation, as well as any severance pay becoming due as a result of the
termination of OAWF's employees.
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<PAGE>
(t) Environmental Matters.
(i) OAWF is in full compliance with all applicable
Environmental Laws.
(ii) Other than Medical Waste, OAWF has not authorized or
conducted the disposal or release, or other handling of any hazardous
substance, hazardous waste, hazardous material, hazardous constituent,
toxic substance, pollutant, contaminant, asbestos, radon,
polychlorinated biphenyls ("PCBs"), petroleum product or waste
(including crude oil or any fraction thereof), natural gas, liquefied
gas, synthetic gas, biohazardous or biomedical material, or other
material defined, regulated controlled or potentially subject to any
remediation requirement under any Environmental Law (collectively
"Hazardous Materials"), on, in, under or affecting any property owned
or leased by OAWF.
(iii) OAWF has, and is in compliance with, all licenses,
permits, registrations, and government authorizations necessary to
operate under all applicable Environmental Laws. Section 3(t) of the
Disclosure Schedule lists all such licenses, permits, registrations and
government authorizations required by any Environmental Law.
(iv) OAWF has not received any written or oral notice from any
governmental agency or entity or any other Person and there is no
pending or threatened claim, litigation or any administrative agency
proceeding that: (a) alleges a violation of any Environmental Law(s) by
OAWF or, with respect to the Practice Assets or any property owned or
leased by OAWF (b) alleges that OAWF is a liable party or potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss. 9601, et seq., or any
analogous state law, (c) has resulted or could result in the attachment
of an environmental lien on any of the Practice Assets or property
owned or leased by OAWF, or (d) alleges that OAWF is liable for any
contamination of the environment, contamination of any property owned
or leased by OAWF, damage to natural resources, property damage, or
personal injury based on its activities or the activities of any
predecessor or third parties involving Hazardous Materials, whether
arising under the Environmental Laws, common law principles, or other
legal standards.
(v) With respect to the generation, transportation, treatment,
storage and disposal or other handling of Medical Waste, OAWF has
complied with all Medical Waste Laws.
(u) Healthcare Compliance. OAWF is participating in or otherwise
authorized to receive reimbursement from Medicare and Medicaid and is a party to
other third-party payor agreements if any, discussed in Section 3(i) of the
Disclosure Schedule. All necessary certifications and contracts required for
participation in such programs are in full force and effect and have not been
amended or otherwise modified, rescinded, revoked or assigned, and no condition
exists or event has occurred which in itself or with the giving of notice or the
lapse of time or both would result in the suspension, revocation, impairment,
forfeiture or non-renewal of any such third-party payor program. OAWF is in
compliance in all material respects with the requirements of all such
third-party payors. Except as disclosed in Section 3(u) of the Disclosure
Schedule, OAWF, the OAWF Stockholders, and OAWF's physician employees do not
have any financial relationship (whether investment interest, compensation
interest, or otherwise) with any entity to which any of the foregoing refer
patients, except for such financial relationships that qualify for exceptions to
state and federal laws restricting physician referrals to entities in which they
have a financial interest.
(v) Fraud and Abuse. OAWF, the OAWF Stockholders and persons and
entities providing professional services for OAWF have not engaged in any
activities which are prohibited under 42 U.S.C. ss.1320a-7b, or the regulations
promulgated thereunder pursuant to such statutes, or related state or local
statutes or regulations, or which are prohibited by rules of professional
conduct, including the following: (a) knowingly and willfully making or causing
to be made a false statement or representation of a material fact in any
application for any benefit or payment; (b) knowingly and willfully making or
causing to be made any false statement or representation of a material fact for
use in determining rights to any benefit or payment; (c) failing to disclose
knowledge by a claimant of the occurrence
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of any event affecting the initial or continued right to any benefit or payment
on its own behalf or on behalf of another, with intent to fraudulently secure
such benefit or payment; or (d) knowingly and willfully soliciting or receiving
any remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind or offering to pay or
receive such remuneration (1) in return for referring an individual to a person
for the furnishing or arranging for the furnishing or any item or service for
which payment may be made in whole or in part by Medicare or Medicaid, or (2) in
return for purchasing, leasing, or ordering or arranging for or recommending
purchasing, leasing, or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid. No government
agency has alleged that OAWF, any OAWF Stockholder or any professional employee
of OAWF has engaged in Medicare or Medicaid fraud or abuse in the last five
years.
(w) Practice Compliance. OAWF is lawfully operated in accordance with
the requirements of all Applicable Laws and has all necessary authorizations for
the use and operation of a medical practice, all of which are in full force and
effect. There are no outstanding notices of deficiencies relating to OAWF issued
by any governmental authority or third-party payor requiring conformity or
compliance with any applicable law or condition for participation with such
governmental authority or third-party payor, and OAWF has neither received
notice nor has any Knowledge or reason to believe that such necessary
authorizations may be revoked or not renewed in the Ordinary Course of Business.
(x) Rates and Reimbursement Policies. To the knowledge of OAWF and the
OAWF Stockholders, the jurisdiction in which OAWF is located does not currently
impose any restrictions or limitations on rates which may be charged to private
pay patients receiving services provided by OAWF. OAWF does not have any rate
appeal currently pending before any governmental authority or any administrator
of any third-party payor program. To the knowledge of OAWF and the OAWF
Stockholders, no Applicable Law which affects rates or reimbursement procedures
has been enacted, promulgated or issued within the eighteen (18) months
preceding the date of this Agreement and no such legal requirement is proposed
or currently pending in the jurisdiction in which OAWF is located, which could
have a material adverse effect on OAWF or may result in the imposition of
additional Medicaid, Medicare, charity, free care, welfare, or other discounted
or government assisted patients at OAWF or require OAWF to obtain any necessary
authorization which OAWF does not currently possess.
(y) Accounts Receivable. All accounts receivable, unbilled invoices and
other debts due or recorded in the respective records and books of account of
OAWF, as being due to OAWF, (i) are valid, existing and are collectible within
one hundred eighty (180) days following the date of this Agreement without
resort to legal proceedings or use of collection agencies (subject to
governmental or third party allowances and adjustments and reserves for bad
debts established in the Ordinary Course of Business), (ii) have arisen in the
Ordinary Course of Business, and (iii) none of such accounts receivable or other
debts is or will at the Closing Date be subject to any counterclaim or set-off
except to the extent of any such provision or reserve. There has been no
material adverse change since June 30, 1997, in the amount of accounts
receivable or other debts due OAWF, the allowances with respect thereto, or
accounts payable of OAWF from that reflected in the most recent balance sheet
previously delivered by OAWF to SCN.
(z) Guaranties. OAWF is not a guarantor and otherwise is not liable for
any liability or obligation (including indebtedness) of any other Person.
(aa) Powers of Attorney. There are no outstanding powers of attorney
executed by OAWF, except as may be contained in financing documents or security
agreements listed in Section 3(i) of the Disclosure Schedule.
(bb) Tangible Assets. OAWF owns or leases all land, buildings,
machinery, equipment, and other tangible assets necessary for the conduct of its
business as presently conducted. Each tangible asset is free from defects, has
been maintained in accordance with normal industry practice, and is in good
operating condition and repair (subject to normal wear and tear).
(cc) SCN Share Ownership; Investment Intent.
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(i) Except as disclosed in Section 3(cc) of the Disclosure
Schedule, neither OAWF nor the OAWF Stockholders owns, beneficially or
otherwise, any SCN Shares.
(ii) SCN Shares issuable in the Merger are being acquired by
the OAWF Stockholders solely for their own account for investment and
not with a view to the distribution thereof, and the OAWF Stockholders
acknowledge and understand that the certificate(s) representing such
SCN Shares will bear a legend in substantially the following form:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR UNDER ANY STATE SECURITIES ACT AND CANNOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
SUCH ACTS OR UNLESS EXEMPTIONS FROM REGISTRATION ARE
AVAILABLE.
(iii) The OAWF Stockholders represent and warrant as follows:
(A) Each OAWF Stockholder is an "accredited investor"
as defined under Rule 501 of Regulation D promulgated under
the Securities Act.
(B) The OAWF Stockholders confirm that SCN has made
available to them or to their representatives the opportunity
to ask questions of SCN officers and directors and to acquire
such information about the SCN Shares and the business and
financial condition of SCN as the OAWF Stockholders requested,
which additional information has been received.
(C) In deciding to acquire SCN Shares pursuant to
this Agreement, the OAWF Stockholders consulted with their
legal, financial, and tax advisors with respect to the Merger
and the nature of the investment together with any additional
information provided under subsection (B) above.
(D) Each OAWF Stockholder has adequate means of
providing for his current needs and personal contingencies and
has no need for liquidity in his investment in SCN. Each OAWF
Stockholder, either alone or with his representatives, has
such knowledge and experience in financial and business
matters that they are capable of evaluating the merits and
risks of the Merger.
(E) The OAWF Stockholders understand and acknowledge
that the investment in the SCN Shares is a speculative
investment which involves a high degree risk of loss of such
OAWF Stockholders' investment therein; that there are
substantial restrictions on the transferability of the SCN
Shares under the applicable provisions of the Securities Act
and the rules and regulations promulgated thereunder and
applicable state securities or "blue sky" laws; and,
accordingly, that it may not be possible to liquidate an
investment in the SCN Shares.
(F) The OAWF Stockholders have been advised and
understand that (i) the offer and sale of the SCN Shares have
not been registered under the Securities Act; (ii) the OAWF
Stockholders must bear the economic risk of the investment in
the SCN Shares until the offer or sale of the SCN Shares is
subsequently registered under the Securities Act or any "blue
sky" laws or an exemption from such registration is available;
(iii) Rule 144 promulgated under the Securities Act is not
presently available with respect to the sale of any securities
of SCN, including the SCN Shares, and when and if the SCN
Shares may be disposed of without registration in reliance on
Rule 144, such disposition can be made only in accordance with
the terms and conditions of such Rule; (iv) the restrictive
legends described in Section 3(ac)(ii) shall be placed on the
certificates representing the SCN Shares; and (v) a notation
shall be made in the appropriate records of SCN indicating
that the
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SCN Shares are subject to restrictions on transfer and
appropriate stop-transfer instructions will be issued to any
transfer agent with respect to the SCN Shares.
(dd) Full Disclosure. No representation or warranty made by OAWF in
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
4. Representations and Warranties of SCN. SCN represents and warrants
to OAWF that the statements contained in this Section 4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 4).
(a) Organization. SCN is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. SCN is
duly qualified and in good standing as a foreign corporation in the State of
Florida.
(b) Capitalization. As of the date of this Agreement, the entire
authorized capital stock of SCN consists of fifty million (50,000,000) SCN
Shares, of which 16,339,355 SCN Shares are issued and outstanding as of August
25, 1997 and two million (2,000,000) shares of preferred stock, none of which
are issued and outstanding, as of August 25, 1997. All of the SCN Shares to be
issued in the Merger have been duly authorized and, upon consummation of the
Merger, will be validly issued, fully paid, and nonassessable.
(c) Authorization of Transaction. SCN has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement, to issue the SCN Shares and otherwise to perform its obligations
hereunder; provided, however, that SCN cannot consummate the transaction unless
and until the Merger receives the approval of the SCN Board of Directors. Except
as set forth in the preceding sentence, this Agreement constitutes the valid and
legally binding obligation of SCN, enforceable in accordance with its terms and
conditions.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any government,
governmental agency, professional regulatory organization or court to which SCN
is subject or may become subject as a result of the transaction contemplated by
this Agreement, or any provision of the charter or bylaws of SCN or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which SCN is a party or by which it is bound
or to which any of its assets is subject. Other than state and federal filings
required by the Securities Act and similar state statutes, SCN does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(e) Brokers' Fees. SCN does not have any liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which SCN could become liable or
obligated.
(f) Securities Filings. All reports and statements filed with respect
to SCN pursuant to the Securities Act or the Securities Exchange Act conform to
the requirements of the Securities Act and the Securities Exchange Act and the
rules and regulations promulgated thereunder and did not include at the time of
filing such document any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
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<PAGE>
(g) Litigation. There is no suit, action, proceeding at law or in
equity, arbitration, administrative proceeding or other proceeding or
investigation by any governmental entity pending, or threatened against, or
affecting SCN, and, to the knowledge of SCN, there is no basis for any of the
foregoing, which could have a material adverse effect on SCN.
(h) Permits and Licenses. SCN has all permits and licenses required by
all Applicable Laws; has made all regulatory filings necessary for the conduct
of its business; and is not in violation of any of said permitting or licensing
requirements.
(i) Compliance with Applicable Laws. SCN has operated in compliance
with all Applicable Laws.
(j) Full Disclosure. No representation or warranty made by SCN in this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
5. Covenants. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.
(a) General. Each of the Parties will use its or his best efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction of the closing conditions set forth in Section 6 below) to be
satisfied by him or it. This paragraph shall not be construed to obligate any of
the Parties to waive any condition precedent to his or its obligations to
perform hereunder.
(b) Notices and Consents. OAWF will give any notices to third parties,
and will use its best efforts to obtain any third party consents necessary or
required to consummate the Merger or that SCN reasonably may request in
connection with the matters referred to in Section 3(i) above.
(c) Regulatory Matters and Approvals. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any necessary authorizations, consents, and approvals of governments and
governmental agencies in connection with the transactions contemplated by this
Agreement. Without limiting the generality of the foregoing:
(i) Tax Reporting. The Merger is intended to qualify as a
reorganization under Code Section 368(a)(1)(A). Each of the parties
agrees to report this transaction for all purposes in accordance with
the foregoing.
(ii) Licenses and Permits. Each of the Parties shall have
obtained all licenses and permits necessary to operate their respective
businesses.
(d) Operation of Business. From the date of this Agreement through the
Closing Date, OAWF will not engage in any practice, take any action, or enter
into any transaction outside the Ordinary Course of Business. Without limiting
the generality of the foregoing:
(i) OAWF will not authorize or effect any change in its
charter documents or bylaws;
(ii) OAWF will not grant any options, warrants, or other
rights to purchase or obtain any of its capital stock or issue, sell or
otherwise dispose of any of its capital stock (except upon the
conversion or exercise of options, warrants, and other rights currently
outstanding);
(iii) OAWF will not declare, set aside, or pay any dividend or
distribution with respect to its capital stock (whether in cash or in
kind), or redeem, repurchase, or otherwise acquire any of its capital
stock in either
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<PAGE>
case outside the Ordinary Course of Business without the consent of
SCN, which consent shall not be unreasonably withheld;
(iv) OAWF will not issue any note, bond or other debt security
or create, incur, assume or guarantee any indebtedness for borrowed
money or capitalized lease obligation outside the Ordinary Course of
Business;
(v) OAWF will not impose any Security Interest upon any of its
assets outside the Ordinary Course of Business;
(vi) OAWF will not make any capital investment in, make any
loan to, or acquire the securities or assets of any other Person
outside the Ordinary Course of Business;
(vii) Except with respect to distributing the Excluded Assets
pursuant to Section 5(m), OAWF will not make any change in employment
terms for any of its directors, officers or employees outside the
Ordinary Course of Business; and
(viii) OAWF will not commit to do any of the foregoing.
(e) Further Acts and Assurances. OAWF and the OAWF Stockholders shall,
at any time and from time to time at and after the Effective Time, upon request
and cost of SCN, take any and all steps necessary to place SCN in possession and
operating control of the Practice Assets and to effectuate the Merger, and will
do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney, and assurances as may be required
for better transferring and confirming to SCN or its successors and assigns, or
for better reducing to possession, any or all of the Practice Assets or
consummating the Merger.
(f) Full Access. Upon three (3) days prior notice, OAWF will permit
representatives of SCN to have full access to all premises, properties,
personnel, books, records (including tax records), contracts, and documents of
or pertaining to OAWF during normal business hours. SCN will treat and hold as
such any confidential information it receives from OAWF in the course of the
reviews contemplated by this Section 5(e), will not use any of the confidential
information except in connection with this Agreement, and, if this Agreement is
terminated for any reason whatsoever, agrees to return to OAWF all tangible
embodiments (and all copies) thereof which are in its possession.
(g) Notice of Developments. Each Party will give prompt written notice
to the other Parties of any material adverse development causing a breach of any
of its own representations and warranties in Section 3 or Section 4 above, as
applicable. No disclosure by any Party pursuant to this Section 5(f), however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation, breach of warranty, or breach of covenant.
(h) Exclusivity. Until the earlier of (i) October 31, 1997, or (ii) the
Effective Time, OAWF will not solicit, initiate, or encourage the submission of
any proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of OAWF (including any
acquisition structured as a merger, consolidation, or share exchange). OAWF
shall notify SCN immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(i) Collection of Accounts Receivable; Payment to OAWF Stockholders.
The OAWF Stockholders agree to cooperate with SCN in the collection of accounts
receivable owned by OAWF as of the Effective Time acquired pursuant to this
Agreement. SCN, at its option, shall have the right to require the collection of
said accounts receivable through a lockbox or bank account sweep arrangement. In
connection therewith, the OAWF Stockholders agree to execute the necessary
documents and follow the necessary procedures as described in the Service
Agreement to accommodate the collection of the accounts receivable in such
manner. During the twelve-month period following the
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Effective Time, in the event SCN receives payment on any accounts receivable
owned by OAWF as of the Effective Time and which, at such Effective Time, 120
days old or older, SCN shall pay to the OAWF Stockholder to whom such accounts
receivable is attributable an amount equal to the amount so collected. SCN's
obligation to make such payments shall terminate at the end of the aforesaid
twelve-month period.
(j) Payment of Expenses. On or before the Effective Time, OAWF shall
have paid or discharged any and all liabilities or charges for costs or fees
owed as a result of the transaction contemplated by this Agreement.
(k) Corporate Authorization. By execution of this Agreement, the OAWF
Stockholders agree to take any and all steps necessary and will do, execute,
acknowledge and deliver, or will cause to be done, executed, acknowledged and
delivered, all such acts, deeds and assurances required in order to consummate
the Merger, including voting as directors of OAWF in favor of the Merger and
voting as stockholders of OAWF in favor of the Merger at any meetings (or in any
action by written consent) required by the Florida Florida Business Corporation
Act.
(l) Malpractice Insurance. On or before the Effective Time, all
physicians and employees of OAWF must be covered by medical malpractice
insurance and, if required by SCN, medical malpractice tail insurance to cover
prior occurrences shall be procured by OAWF.
(m) Distribution of Excluded Assets. Prior to the Effective Time, OAWF
shall have distributed to the OAWF Stockholders all of the assets listed on
Schedule 5(m), which constitute the entirety of the assets owned by OAWF not
being acquired by SCN (the "Excluded Assets").
(n) Satisfaction of Indebtedness. Prior to the Effective Time, OAWF
shall have caused the payoff of all liabilities owed to third-parties and all
indebtedness owed to banks or other financial institutions or lenders or shall
have caused the assumption thereof by a new entity organized by the OAWF
Stockholders. Notwithstanding any contrary provision contained herein, SCN shall
not be deemed to have assumed, nor shall SCN assume: (i) any liability which may
be incurred by reason of any breach of or default under such contracts, leases,
commitments or obligations which occurred prior to the Closing Date; (ii) any
liability for any employee benefits payable to employees of OAWF, including, but
not limited to, liabilities arising under any Employee Benefit Plan (except one
week accrued vacation and one week accrued sick pay with respect to the persons
whose employment with SCN will continue after the Effective Time); (iii) any
liability based upon or arising out of a violation of any laws by OAWF,
including, without limiting the generality of the foregoing, any such liability
which may arise in connection with agreements, contracts, commitments or
provision of services by OAWF; nor (iv) any liability based upon or arising out
of any tortious or wrongful actions of OAWF or any Physician Owner, or any
liability for the payment of any taxes imposed by law on OAWF arising from or by
reason of the transactions contemplated by this Agreement. OAWF shall establish
a reserve for income, excise or other taxes owed by OAWF through the Effective
Time.
(o) Conversion into Business Corporation. If required by the Florida
Florida Business Corporation Act, prior to the Effective Time, the OAWF
Stockholders shall have caused the conversion of OAWF to a Florida business
corporation.
(p) Employee Benefit Plans. Prior to the Effective Time, all Employee
Benefit Plans shall be terminated or transferred to OAWFII in accordance with
Applicable Law.
(q) Securities Laws Compliance. No OAWF Stockholder shall dispose of
the SCN Shares received as a result of the Merger except in accordance with the
provisions of the Securities Act, the provisions of any rule adopted by the
Securities and Exchange Commission pursuant to the Securities Act and the "blue
sky" laws of any applicable state.
6. Conditions to Obligation to Close.
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<PAGE>
(a) Conditions to Obligation of SCN. The obligation of SCN to
consummate the Merger is subject to satisfaction of the following conditions or
before the Closing Date:
(i) OAWF shall have procured all of the third party consents
specified in Section 5(b) above;
(ii) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) OAWF shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Surviving
Corporation to own the former assets or to operate the former business
of OAWF;
(v) SCN shall have received the resignations, effective as of
the Effective Time, of each director and officer of OAWF other than
those whom SCN shall have specified in writing prior to the Closing;
(vi) all actions to be taken by OAWF and/or the OAWF
Stockholders in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments, and
other documents required to effect the transactions contemplated hereby
have been taken or delivered to SCN and are satisfactory in form and
substance to SCN;
(vii) the issuance of the SCN Shares to the OAWF Stockholders
will not violate federal securities laws or the securities laws of any
state of the United States;
(viii) SCN shall have completed and be satisfied with its due
diligence review, including SCN's review of the Disclosure Schedule;
and
(ix) SCN's Board of Directors shall have approved the Merger
in their sole and absolute discretion.
SCN may waive any condition specified in this Section 6(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of OAWF. The obligation of OAWF to
consummate the Merger is subject to satisfaction of the following conditions:
(i) This Agreement and the Merger shall have received the OAWF
director and OAWF Stockholders' approval required by the Florida
Florida Business Corporation Act.
(ii) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(iii) SCN shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (A) prevent consummation of any of
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<PAGE>
the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Surviving
Corporation to own the former assets of OAWF;
(v) all actions to be taken by SCN in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby have been taken or
delivered to OAWF and are satisfactory in form and substance to OAWF;
and
(vi) the issuance of the SCN Shares to the OAWF Stockholders
will not violate federal securities laws or the securities laws of any
state of the United States.
OAWF may waive any condition specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.
7. Items to be Delivered at or Prior to Closing.
(a) By the OAWF Stockholders or OAWF. The OAWF Stockholders or OAWF, as
applicable, shall execute and deliver to SCN, prior to or at the Closing:
(i) Certified resolutions of the directors and stockholders of
OAWF authorizing the execution of all documents and the consummation of
all transactions contemplated hereby;
(ii) The Florida Articles of Merger which shall be in the form
required by SCN's legal counsel;
(iii) Stock Certificates representing ownership of all shares
of OAWF, duly endorsed to SCN;
(iv) A Service Agreement in the form attached hereto as
Exhibit 7(a)(iv);
(v) A certificate duly executed by the President of OAWF and
the OAWF Stockholders stating as of the Closing Date, all
representations and warranties are true, all covenants and agreements
contained in the Agreement to be performed by OAWF and the OAWF
Stockholders have been performed or complied with and all conditions to
closing have been complied with;
(vi) An opinion from OAWF's counsel in substantially the form
attached hereto as Exhibit 7(a)(vi); and The Registration Rights
Agreement in substantially the form attached hereto as Exhibit
7(a)(vii);
(vii) Such other instruments as may be reasonably requested by
SCN in order to effect to or carry out the intent of this Agreement.
(b) By SCN. SCN shall deliver to OAWF at or prior to the Closing:
(i) Stock Certificates representing the SCN Shares being
issued to the OAWF Stockholders pursuant to Section 2(d)(v);
(ii) The Delaware Certificate of Merger in substantially the
form attached hereto as Exhibit 2(a)(1);
(iii) An opinion from SCN's counsel in substantially the form
attached hereto as Exhibit 7(b)(iii);
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<PAGE>
(iv) A certificate, duly executed by the President of SCN,
stating as of the Closing Date, all representations and warranties of
SCN are true, all covenants and agreements contained in the Agreement
to be performed by SCN have been performed or complied with and all
conditions to Closing have been satisfied;
(v) A Service Agreement in the form attached hereto as Exhibit
7(a)(iv);
(vi) Certified resolutions of the directors (or a committee)
of SCN authorizing the execution of all documents and the consummation
of all transactions contemplated hereby; and
(vii) Such other instruments as may be reasonably requested by
OAWF or the OAWF Stockholders in order to effect to or carry out the
intent of this Agreement.
8. Termination.
(a) Termination of Agreement. Either of the Parties may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after stockholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) SCN may terminate this Agreement by giving written notice
to OAWF at any time prior to the Effective Time (A) in the event OAWF
has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, SCN has notified OAWF of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach, or (B) if the Closing shall not have
occurred on or before October 31, 1997 by reason of the failure of any
condition precedent under Section 6(a) hereof (unless the failure
results primarily from SCN breaching any representation, warranty, or
covenant contained in this Agreement); or
(iii) OAWF may terminate this Agreement by giving written
notice to SCN at any time prior to the Effective Time (A) in the event
SCN has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, OAWF has notified SCN of the
breach, and the breach has continued without cure for a period of 30
days after the notice of breach or (B) if the Closing shall not have
occurred on or before October 31, 1997 by reason of the failure of any
condition precedent under Section 6(b) hereof (unless the failure
results primarily from OAWF breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any party to any other Party
(except for any liability of any Party then in breach).
9. Indemnification.
(a) Indemnification by the OAWF Stockholders. The OAWF Stockholders,
jointly and severally, agree to and shall defend, indemnify and hold harmless
SCN, its successors and assigns, officers and directors against any and all
losses, liabilities, expenses (including, but without limitation, reasonable
attorneys fees) and damages resulting from or arising out of the breach, untruth
or inaccuracy of any representation, warranty or covenant of OAWF or the OAWF
Stockholders set forth in this Agreement or from any loss, liability or expense
resulting from or related to OAWF's operation of its business prior to the
Effective Time. The OAWF Stockholders shall not be liable to SCN for any claims
against the OAWF Stockholders under this Section 9(a) unless and until the
aggregate of all claims against the OAWF Stockholders exceeds the sum of
$25,000.00, whereupon SCN shall be entitled to recover the full amount of all
claims,
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<PAGE>
including the initial $25,000.00. In addition, each OAWF Stockholder's liability
under this Section 9(a) shall be limited to the amount of consideration received
by that OAWF Stockholder pursuant to the Merger.
(b) Notice to the OAWF Stockholders; Opportunity to Defend. Subject to
the provisions of Section 10(a), SCN agrees to give prompt notice to the OAWF
Stockholders of the assertion of any claim, or the commencement of any suit,
action or proceeding, in respect of which indemnity may be sought under Section
9(a). The OAWF Stockholders may participate in and at their election, or at the
request of SCN, assume the defense of any such suit, action or proceeding at the
OAWF Stockholders' expense. The OAWF Stockholders shall not be liable under
Section 9(a) for any settlement effected without their consent of any claim,
litigation or proceeding in respect of which indemnity may be sought under
Section 9(a) which consent shall not be unreasonably withheld.
(c) General Indemnification by SCN. SCN agrees to and shall defend,
indemnify and hold harmless the OAWF Stockholders, their heirs and assigns
against any and all losses, liabilities, expenses (including, but without
limitation, reasonable attorneys fees) and damages resulting from the breach,
untruth or inaccuracy of any representation, warranty or covenant of SCN set
forth in this Agreement. SCN shall not be liable to the OAWF Stockholders for
any claims against SCN under this Section 9(c) unless and until the aggregate of
all claims against SCN exceeds the sum of $25,000.00, whereupon the OAWF
Stockholders shall be entitled to recover the full amount of all claims,
including the initial $25,000.00.
(d) Notice to SCN; Opportunity to Defend. Subject to the provisions of
Section 10(a), the OAWF Stockholders agree to give prompt notice to SCN of the
assertion of any claim, or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought under Section 9(c). SCN may participate
in and at its election, or at the request of the OAWF Stockholders, assume the
defense of any such suit, action or proceeding at SCN's expense. SCN shall not
be liable under Section 9(c) for any settlement effected without its consent of
any claim, litigation or proceeding in respect of which indemnity may be sought
hereunder, which consent shall not be unreasonably withheld.
(e) Right of Setoff. In the event of any breach of warranty,
representation, covenant or agreement by OAWF or the OAWF Stockholders giving
rise to indemnification to SCN under Section 9(a) hereof, SCN shall be entitled
to offset the amount of damages incurred by it as a result of such breach of
warranty, representation, covenant or agreement against the amounts payable to
the OAWF Stockholders or Orthopaedic Associates of West Florida II, P.A. under
the Service Agreement. In the event that SCN determines that an amount is to be
so offset, as a condition precedent to such right of setoff, SCN shall give the
OAWF Stockholders written notice of the amount of such proposed setoff and the
basis therefor within thirty (30) days after the date on which such amount is
finally determined. If SCN shall not have received written notice from the OAWF
Stockholders contesting such setoff within twenty (20) days of their receipt of
such written notice from SCN, the setoff shall be deemed to have been consented
to by the OAWF Stockholders, and SCN shall be entitled to deduct the entire
amount claimed as a setoff from the next succeeding amounts payable under the
Service Agreement. In the event that the OAWF Stockholders shall object to the
proposed setoff by written notice received by SCN during such twenty (20) day
period, the entitlement of SCN to the claimed setoff shall be determined as set
forth in Section 10.4.3 of the Service Agreement.
10. Miscellaneous.
(a) Survival. The representations and warranties of the OAWF
Stockholders, OAWF and SCN contained in this Agreement and the indemnifications
contained herein shall survive the Closing. Except as set forth in the following
sentence of this Agreement, no claim for indemnification with respect to any
alleged misrepresentation or breach of warranty or covenant may be made after
one (1) year following the Closing Date. SCN shall be entitled to
indemnification for claims for breaches of representations, warranties or
covenants relating to matters involving the payment of taxes, (including
penalties and interest thereon), compliance with Environmental Laws or
reimbursement of any amounts to Medicare, Medicaid or third-party payors
(including penalties or interest thereon) for so long as the applicable statute
of limitations for collection of such amounts continues. Any matter to which
indemnification pertains and with respect to which a claim has been asserted or
threatened following the Closing Date shall continue to be subject
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<PAGE>
to the indemnification under this Agreement until finally terminated, settled,
resolved or adjudicated; and all terms, conditions and stipulations of this
Agreement shall likewise continue to apply.
(b) No Third-Party Beneficiaries. Except as provided in Section 9(e),
this Agreement shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the parties and supersedes
any prior understandings, agreements, or representations by or between the
parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given upon receipt (or
refusal of receipt) if it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
If to OAWF:
President
Orthopaedic Associates of West Florida II, P.A.
1528 Lakeview Road
Clearwater, Florida 34616
Facsimile: 813-461-1492
If to SCN:
Kerry R. Hicks, President
Specialty Care Network, Inc.
44 Union Boulevard, Suite 600
Lakewood, Colorado 80228
Facsimile: (303) 716-1298
Copy to:
Don Weinbren, Esq.
Trenam, Kemker
101 East Kennnedy Boulevard, Suite 2700
Tampa, Florida 33602
Facsimile: 813-229-6553
Copy to:
David T. Popwell, Esq.
Baker, Donelson, Bearman & Caldwell
165 Madison Ave, Suite 2100
Memphis, Tennessee 38103
Facsimile: (901) 577-2303
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other party
notice in the manner herein set forth.
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<PAGE>
(h) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Florida without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Florida or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Florida. Each of the
parties submits to the jurisdiction of any court sitting in Pinellas County,
Florida or the United States District Court for the Middle District of Florida,
Tampa Division, in any action or proceeding arising out of or relating to this
Agreement and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each party also agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each of the parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety,
or other security that might be required of any other party with respect
thereto.
(i) Amendments and Waivers. The parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to OAWF stockholder approval will be
subject to the restrictions contained in the Florida Florida Business
Corporation Act. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by both of the parties. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
(m) No Referrals Required. The Parties agree that no part of this
Agreement shall be construed to induce or encourage the referral of patients or
the purchase of health care services or supplies. The Parties acknowledge that
there is no requirement under this Agreement or any other agreement between
OAWFII and SCN that any party refer any patients to any health care provider or
purchase any health care goods or services from any source. Additionally, no
payment under this Agreement is in return for the referral of patients, if any,
or in return for purchasing, leasing or ordering services from SCN or any of
SCN's affiliates. The Parties may refer patients to any company or person
providing services and will make such referrals, if any, consistent with
professional medical judgment and the needs and wishes of the relevant patients.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
SPECIALTY CARE NETWORK, INC.
By:
---------------------------------------------------
Title:
------------------------------------------------
ORTHOPAEDIC ASSOCIATES OF WEST FLORIDA, P.A.
By:
---------------------------------------------------
Title:
------------------------------------------------
------------------------------------------------------
Charles E. Abrahamsen, M.D. Stockholder
------------------------------------------------------
John E. Kilgore, M.D., Stockholder
------------------------------------------------------
William E. Kilgore, M.D., Stockholder
------------------------------------------------------
John M. McClure, M.D., Stockholder
------------------------------------------------------
Gary G. Moskovitz, M.D., Stockholder
------------------------------------------------------
Michael G. Rothberg, M.D., Stockholder
------------------------------------------------------
Thomas O. Schwab, M.D., Stockholder
------------------------------------------------------
Craig A. Schwartz, M.D., Stockholder
------------------------------------------------------
Harry Steinman, M.D., Stockholder
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