1
Exhibit 10.13
__________________________________________________________________
STOCK PURCHASE AGREEMENT
BY AND AMONG
AMERIPATH, INC.,
XXXXX X. XXXXXX, M.D., INC.,
XXXX X. XXXXXX, M.D.
AND
XXXXX X. XXXXXX, M.D.
EFFECTIVE AS OF SEPTEMBER 30, 1996
__________________________________________________________________
2
TABLE OF CONTENTS
PAGE NO.
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ARTICLE I
PURCHASE OF CAPITAL STOCK
-------------------------
1.1 Purchase and Sale of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 The Contingent Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Contingent Issuance of AmeriPath Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND RICHFIELD
-----------------------------------------------------------
2.1 Corporate Organization, Qualification, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 Corporate Record Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.5 Title to Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Options and Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.8 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.10 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 True and Complete Copies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.14 Title and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.15 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.16 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.17 Compliance with Law and Applicable Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.18 ERISA and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.21 Dealings with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.22 Banking Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.24 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.25 Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.26 Accounts Receivable; Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.27 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.28 Improper and Other Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.29 Participation in Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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2.30 Health Care Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.31 Financial Condition at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.32 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
3.1 Corporate Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.3 Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.5 Governmental Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.6 Issuance of AmeriPath Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.7 Health Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.8 Cincinnati Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV
COVENANTS OF THE SELLERS
------------------------
4.1 Regular Course of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3 Capital Changes; Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.5 Capital and Other Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.6 Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7 Other Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.8 Amendments to Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.9 Interim Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.10 Full Access and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.12 Breach of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.13 Fulfillment of Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE V
COVENANTS OF THE PURCHASER
--------------------------
5.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.2 Full Access and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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ARTICLE VI
OTHER AGREEMENTS
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2 Agreement to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4 No Solicitation or Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.5 No Termination of Sellers' Obligations by Subsequent Incapacity, Etc. . . . . . . . . . . . . . . . . . . . 34
6.6 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.7 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Deliveries After Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.9 Non-Competition Covenant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.10 Non-disclosure; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.11 Rule 144 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.12 Physician Incentive Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.13 Richfield Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.14 338(h)(10) Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.15 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.16 Miscellaneous Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.17 Structural Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
----------------------------------------------
7.1 Representations and Warranties; Covenants and Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.3 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.4 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6 Opinion of Sellers' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.7 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.8 Delivery of Richfield Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.9 Shareholders' Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.10 Subordination Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.11 Richfield Charter Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.12 Creditor Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.13 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
--------------------------------------------
8.1 Representations and Warranties; Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.2 No Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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8.3 Purchase Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4 Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX
CLOSING
-------
9.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.2 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
TERMINATION AND ABANDONMENT
---------------------------
10.1 Methods of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.2 Procedure Upon Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION
----------------------------------
11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 Indemnification by the Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3 Indemnification by the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.4 Third-Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
12.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.3 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
12.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.5 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.7 Consent to Jurisdiction; Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.8 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.11 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.12 Delays or Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.14 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.15 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.16 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
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SCHEDULES
1.1 Sellers; Consideration
1.3 Contingent Stock
2.9(a) Additional Liabilities
2.9(b) Liabilities covered by Insurance
2.9(c) Accounts Payable
2.11 Certain Changes
2.12 Contracts
2.14 Real and Personal Property
2.17(a) Permits and Licenses
2.17(b) Jurisdictions Licensed to Provide Health Care
2.18 ERISA, Benefit Plans and Other Matters
2.19 Intellectual Property
2.19(d) Software
2.20 Environmental Matters
2.21 Affiliated Transactions
2.22 Banking Arrangements
2.23 Insurance
2.24 Consents
2.26 Accounts Receivable
2.28 Improper Payments
2.29 Participation in Audits
2.30(a) Fraud and Abuse
2.30(b) Third-Party Payors
2.30(c) Medicare and Medicaid Compliance
2.30(d) Rate Limitations and Rates
3.2 Subsidiaries of AmeriPath
6.15 Optionees
7.3 Third Party Consents
7.4 Regulatory Approvals
7.12 Creditor Consents
EXHIBITS
1.2(A) Form of 7% Non-Negotiable Subordinated Contingent Promissory Note
(Xxxxxx)
1.2(B) Form of 7% Non-Negotiable Subordinated Contingent Promissory Note
(Xxxxxx)
2.1 Richfield's Articles of Incorporation, as amended, and By-laws
2.9 Financial Statements
6.6 Form of Employment Agreement for the Sellers
6.15 Grant Agreements
7.6 Opinion of Sellers' Counsel
7.10 Subordination Agreement
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the " Agreement") effective as of 11:59pm
on September 30, 1996, by and among AMERIPATH, INC., a Delaware corporation, or
its permitted assigns ("AmeriPath" or the "Purchaser"), XXXXX X. XXXXXX, M.D.,
INC. (d/b/a Richfield Laboratory of Dermatopathology), an Ohio corporation
("Richfield"), XXXX X. XXXXXX, M.D., and XXXXX X. XXXXXX, M.D., who, together
hold FIFTY (50) shares, without par value, of Richfield (Xx. Xxxxxx and Xx.
Xxxxxx shall be referred to herein as the "Sellers" and individually as a
"Seller").
WHEREAS, the Sellers own all of the issued and outstanding shares of
capital stock of Richfield; Richfield, although presently organized as a
professional service corporation under Section 1785.01 of the Revised Code of
Ohio, will, immediately prior to the closing of the transactions contemplated
by this Agreement, upon the terms and subject to the conditions set forth
herein, convert itself to a regular business corporation organized under
Section 1701 of the Revised Code of Ohio;
WHEREAS, AmeriPath desires to purchase and acquire from each Seller,
and each Seller desires to sell, transfer and deliver to AmeriPath, all of the
issued and outstanding shares of capital stock of Richfield, pursuant to an
election in accordance with Sections 338(g) and 338(h)(10) of the Internal
Revenue Code of 1986, as amended and the regulations thereunder (the "Code"),
upon the terms and subject to the conditions set forth herein;
WHEREAS, although the parties hereto have agreed as to the minimum
value of Richfield, they are not able to agree as to the total value of
Richfield, and thus the parties hereto have agreed to certain additional
contingent purchase price consideration based upon the results of operations of
Richfield as more fully set forth herein; and
WHEREAS, either (i) prior to the closing of the transactions
contemplated by this Agreement, Richfield's articles of incorporation shall be
amended to change the name of the corporation to AmeriPath Ohio, Inc.
("AmeriPath Ohio"), and AmeriPath Ohio, upon the closing of the transactions
contemplated by this Agreement, shall be and become a wholly-owned subsidiary
of AmeriPath; or (ii) following the closing of the transactions contemplated by
this Agreement, Richfield will be merged with and into AmeriPath Ohio, Inc.
which, prior to the closing of the transactions contemplated by this Agreement,
shall be and have become a wholly-owned subsidiary of AmeriPath;
NOW, THEREFORE, for and in consideration of the mutual benefits to be
derived hereby and the premises, representations, warranties, covenants and
agreements herein contained, AmeriPath, the Sellers and Richfield hereby agree,
intending to be legally bound, as follows:
8
ARTICLE I
PURCHASE OF CAPITAL STOCK
1.1 Purchase and Sale of Capital Stock.
(a) Subject to the terms and conditions of this
Agreement, the Sellers agree to sell, transfer and deliver to the
Purchaser, and the Purchaser agrees to purchase, acquire and accept
delivery from the Sellers all of the issued and outstanding capital
stock of Richfield (the " Richfield Shares").
(b) Upon the sale, transfer and delivery to the Purchaser
by the Sellers of the Richfield Shares at the Closing (as such term is
defined in Section 9.1 hereof), and in consideration therefor,
AmeriPath shall deliver to the Sellers (as set forth on Schedule 1.1
hereto) the following consideration in the aggregate (the "Purchase
Price"):
(i) FOURTEEN MILLION DOLLARS ($14,000,000.00), by
cashier's check or by wire transfer;
(ii) Certificates evidencing 153,333 shares of
Common Stock, par value $.01 per share, of AmeriPath (the
"AmeriPath Stock");
(iii) 7% Non-Negotiable Subordinated Contingent
Promissory Notes, in the form attached hereto as Exhibit
1.2(A) (with respect to Xx. Xxxxxx) and Exhibit 1.2(B) (with
respect to Xx. Xxxxxx) (the "Contingent Notes"), in the
aggregate maximum principal amount of THREE MILLION SIX
HUNDRED FIFTY THOUSAND DOLLARS ($3,650,000.00), the issuance
and certain terms and conditions of which Contingent Notes are
set forth in Section 1.2 below; and
(iv) Up to 200,000 shares of AmeriPath Stock,
issuable over five years subject to the satisfaction of
certain contingencies, subject to and in accordance with
Section 1.3 hereof.
1.2 The Contingent Notes.
(a) Principal Amounts; Issuance. The aggregate maximum
principal amount of the Contingent Notes to be issued and delivered by
the Purchaser to the Sellers pursuant to Section 1.1(b)(iii) hereof at
the Closing shall be THREE MILLION SIX HUNDRED FIFTY THOUSAND DOLLARS
($3,650,000.00). At the Closing, the Purchaser shall deliver to each
of the Sellers a Contingent Note, due on March 31, 2002, which
Contingent Note shall be in the form of Exhibit 1.2(A) (with respect
to Xx. Xxxxxx) and Exhibit 1.2(B) (with respect to Xx. Xxxxxx) hereto.
The Contingent Notes shall be due and payable in the applicable
principal amount specified in or calculated pursuant to the Contingent
Notes and the Annexes to such Contingent Notes (the "Appropriate
Principal
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Amount") corresponding to a target range of Operating Earnings (as
defined below) or Cumulative Operating Earnings (as defined below),
as the case may be, specified in the Contingent Notes and the Annexes
thereto, with respect to the fourth quarter of 1996 and each of the
five years ending December 31, 1997 through December 31, 2001, if, and
only if, (i) with respect to the fourth quarter of 1996, Operating
Earnings for such period exceeding $600,000 (the "Quarter Target"), or
(ii) with respect to the year ending December 31, 1997, Operating
Earnings for such year equal or exceed the specified minimum target
amount of $2,400,000.00 (the "Year-1 Minimum Target") or, (ii) with
respect to the periods ending December 31, 1998, 1999, 2000 and 2001,
Cumulative Operating Earnings for such periods equal or exceed
$4,800,000.00, $7,200,000.00, $9,600,000.00 and $12,000,000.00,
respectively (together with the Quarter Target and the Year-1 Minimum
Target, as relevant to the applicable period, the " Minimum Targets").
For the fourth quarter of 1996 and each of the years ending December
31, 1997 through December 31, 2001 for which Operating Earnings or
Cumulative Operating Earnings, as the case may be, are less than the
applicable Minimum Target, no principal payment(s) shall be required,
due or made under the Contingent Notes, with respect to that period,
and any and all interest with respect thereto or accrued thereon,
which otherwise would have become due or payable had the applicable
Minimum Target been achieved for such period, shall be canceled and
voided. Notwithstanding anything to the contrary herein or in the
Contingent Notes, the aggregate maximum principal amount due or
payable under the Contingent Notes shall not exceed $3,650,000.00.
(b) "Operating Earnings"; "Cumulative Operating
Earnings".
(i) Definition of "Operating Earnings". For
purposes hereof (and Section 1.3 and the Contingent Notes),
the term "Operating Earnings", with respect to any period,
shall mean the income of or attributable to Richfield, which
following the Closing shall be a wholly-owned subsidiary of
AmeriPath, for the fourth quarter of 1996 or such full twelve
month period (i.e., January 1 through December 31), before
deduction for (in each case, with respect to Richfield) (i)
interest paid in such year, (ii) income tax payable for such
year, (iii) charges for amortization of goodwill, including
without limitation any amortization of goodwill recorded in
connection with this transaction or amortization of any
payments made under the Contingent Notes, (iv) deferred
compensation payments to Xxxxxx X. Richfield, M.D. and (v) any
fees or expenses incurred by Richfield in connection with the
transactions contemplated by this Agreement. All such
calculations shall be determined in accordance with GAAP (as
defined in Section 12.3 hereof). For purposes hereof (the
Contingent Notes and the Stock Rights), the Operating Earnings
of Richfield shall mean and include the business, operations,
contracts, assets and liabilities of Richfield (as such is
constituted immediately prior to the Closing), which following
the Closing shall consist of the business, operations,
contracts, assets and liabilities of, and the results of
operations, revenues and expenses associated with, (i) the
contracts with hospitals and out-patient facilities in effect
from time to time, to which Richfield, prior to
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the Closing, and the Cincinnati Division (as such term is
defined below), following the Closing, is a party, and/or
which are serviced by the physicians who from time to time are
employed by AmeriPath Ohio and who report to the medical
director (the "Medical Director") for AmeriPath Ohio's
Cincinnati Division (collectively, such physicians being
referred to herein as the "Richfield Pathologists"), and (ii)
AmeriPath Ohio's employment of, and employment agreements
with, any and all Richfield Pathologists. For purposes hereof
(the Contingent Notes and the Stock Rights), the term
"Cincinnati Division" shall mean and include the business and
operations of AmeriPath Ohio (i.e., the wholly-owned
subsidiary of AmeriPath which is the successor in interest, by
merger, to Richfield) which, prior to consummation of the
transactions contemplated by this Agreement, constituted the
business and operations of Xxxxx X. Xxxxxx, M.D., Inc.
(ii) Calculation of Operating Earnings. A
statement of the Operating Earnings, prepared by AmeriPath
senior management, will be delivered to the Sellers as soon as
practicable following the end of each period, but in all
events within 90 days after the end of each such period. If
the Sellers wishes to challenge the calculation of Operating
Earnings, he may do so by giving written notice of such
objection (the "Objection Notice") to AmeriPath, signed by
each Seller, within 20 days after receipt of such statement of
Operating Earnings. The Objection Notice shall set forth in
reasonable detail the Sellers' calculation of Operating
Earnings (or Cumulative Operating Earnings, as the case may
be). If an Objection Notice is so timely delivered to
AmeriPath, AmeriPath and the Sellers shall use their best
efforts to resolve as soon as practicable any difference of
opinion. If they are unable to resolve such difference within
20 days after receipt by AmeriPath of the Objection Notice
from the Sellers, the matter shall be referred to the
independent public accounting firm who then audits the annual
financial statements of AmeriPath, whose decision shall be
final and binding on all parties; provided, however, the
Sellers, at their own expense, may refer the matter to another
independent public accounting firm knowledgeable in the
auditing of medical practices, and the average of the
decisions of the two firms shall be the final and binding
resolution of the matter. If an Objection Notice is not
timely delivered to AmeriPath, and if the statement of
Operating Earnings prepared by AmeriPath senior management
indicates that the Minimum Target has been met for a given
period, then the Appropriate Principal Amount (together with
accrued and unpaid interest thereon) of the Contingent Notes
with respect to such period shall be paid within five (5) days
after the earlier of the end of the 20-day period within which
the Sellers are entitled to deliver an Objection Notice, or
receipt by AmeriPath of notice from each Seller that she or he
accepts the calculation of Operating Earnings. If the Sellers
object to the calculation of Operating Earnings for the
purpose of determining compliance with this Section, the
Appropriate Principal Amount of the Contingent Notes for such
period shall be paid within five (5) days after resolution of
the dispute with respect to such
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calculation to the extent, and solely to the extent, that such
resolution indicates that the Minimum Target has been exceeded
for such period.
(iii) Cumulative Operating Earnings. For purposes
hereof, the term "Cumulative Operating Earnings" shall mean
and include, with respect to the periods ending December 31,
1998, 1999, 2000 and 2001, the Operating Earnings of
Richfield, on a cumulative basis, from January 1, 1997 through
the end of such period (e.g., the Cumulative Operating
Earnings for the period ending December 31, 1998 shall equal
the Operating Earnings, on a cumulative basis, from January 1,
1997 through December 31, 1998 (i.e., two full years of
Operating Earnings would be included)).
(iv) Adjustments; Limitations. For purposes of
calculating Operating Earnings (and, as relevant, Cumulative
Operating Earnings) hereunder, the expenses associated with
Richfield may include costs, expenses and charges relating to
management, billing or other services provided by AmeriPath or
its Affiliates (as such term is defined in Section 12.3
hereof) to the extent both (i) such services are provided to
or for the benefit of the Cincinnati Division and (ii) the
price or amount charged or allocated with respect to such
services is based upon the fair market value thereof and is
competitive with the price or amount that would be charged for
such services by a Person not affiliated with the Purchaser on
an arms'-length, negotiated basis.
(v) Reports. Within thirty (30) days following
the end of each calendar month during each of the five (5)
annual periods to which the Contingent Notes relate,
AmeriPath, at its sole cost and expense, shall send or cause
to be sent to each of the Sellers unaudited profit and loss
statements for each such calendar month and the annual period
to date then ended evidencing the calculation of the Operating
Earnings (and, with respect to each annual period beginning
after December 31, 1997, the Cumulative Operating Earnings, as
the case may be, with respect to such month and such annual
period to date and the period commencing on October 1, 1996,
and ending on the last day of such calendar month.
(c) Effect of Sale on Contingent Notes. Should any
Person (as such term is defined in Section 12.3 hereof) acquire
AmeriPath, whether by means of a merger with or into AmeriPath in
which AmeriPath does not survive or the acquisition of all or
substantially all of the stock or assets of AmeriPath (an " AmeriPath
Acquisition "), then, with respect to the Contingent Notes, as a
condition to consummation of the AmeriPath Acquisition, the acquiring
Person shall be required, at the Sellers' option, to either (i)
acknowledge and guarantee AmeriPath's on-going obligations under the
Contingent Notes or (ii) assume the obligations under the Contingent
Notes.
(d) Effect of Acquisitions on Contingent Notes. In the
event that AmeriPath acquires one or more Persons or businesses after
the Closing Date, Operating Earnings
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will be calculated without including (i) the income generated by, or
expenses incurred in connection with, the acquisition or the acquired
Person or business, and (ii) any selling, general or administrative
expenses which do not relate to Richfield or its business.
(e) Interest. The Contingent Notes shall bear interest
from the date of issuance until maturity, computed on the basis of a
360-day year and the actual number of days elapsed, on the unpaid
Appropriate Principal Amount thereof at the rate of seven percent
(7.0%) per annum. Interest shall accrue and compound annually, and
shall be payable only upon payment of principal, if any. In the event
Operating Earnings or Cumulative Operating Earnings are less than the
applicable Minimum Target for any given year, interest on the
principal amount of the Contingent Notes for such year shall be
canceled and voided.
(f) Maturity, Redemption and Prepayments. For each
period for which Operating Earnings or Cumulative Operating Earnings
equal or exceed the applicable Minimum Target, the Appropriate
Principal Amount of the Contingent Notes, together with interest
accrued on such Appropriate Principal Amount, shall become due and
payable and shall be paid as provided in subparagraph (a) above. If,
in the reasonable judgment of a majority of the full Board of
Directors of AmeriPath (which judgment is made based upon the advice
of counsel), it is determined that the Contingent Notes, or the
holding of the Contingent Notes by the Sellers, may violate any
Regulation or Order of any Authority (as such terms are defined in
Section 12.3), then, at AmeriPath's sole discretion (as recommended by
counsel to Ameripath), the Contingent Notes may be canceled and voided
and the Board of Directors of AmeriPath, in their sole and absolute
discretion acting in good faith, shall provide the Sellers a
reasonably equivalent economic and financial substitute consideration
therefor. In its sole and absolute discretion, AmeriPath may prepay
the Contingent Notes by paying, in the aggregate, $350,000.00 for each
year remaining under the Contingent Notes. AmeriPath shall give the
Sellers irrevocable written notice of any prepayment permitted
hereunder not less than three (3) business days prior to the
prepayment date, specifying such prepayment and the amount of the
Contingent Notes proposed to be prepaid on such date, whereupon such
principal amount of the Contingent Notes specified in such notice,
together with accrued interest thereon, shall become due and payable
on the prepayment date.
(g) Payments. All payments of principal (including any
prepayments or redemptions), and interest under the Contingent Notes
shall be made by AmeriPath in lawful money of the United States of
America in immediately available funds (or at the written request of
the holders thereof, by cashier's or bank check) not later than twelve
o'clock noon, Miami, Florida time, on the date each such payment is
due. To the extent calculation of any payment amounts (whether
principal, interest or otherwise) results in fractions of a cent, the
amount shall be rounded down to the nearest whole cent.
(h) Subordination; Subordination Agreement. The
Contingent Notes shall be subordinate and junior in right of payment
to certain senior indebtedness pursuant to a
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subordination agreement (the "Subordination Agreement"), by and among
AmeriPath's senior lenders and each of the Sellers. As a condition to
AmeriPath's obligations under the Contingent Notes, each Seller agrees
to execute and deliver appropriate documents and agreements evidencing
the subordination of the Contingent Notes to such senior indebtedness
of AmeriPath.
(i) Notes Non-negotiable. The Contingent Notes shall be
non-transferable and non-negotiable other than by will or the laws of
intestate succession.
(j) Right of Set-Off on Sellers' Contingent Notes. With
respect to the Contingent Notes, AmeriPath shall have the right,
following prior written notice to the Sellers, to set-off against
principal or interest payable under the Contingent Notes the amount of
any indemnification payment owed under Article XI hereof. Such notice
shall state with reasonable specificity the good faith basis for
AmeriPath's right to such indemnification payment, and a copy of such
notice shall also be sent to each director of AmeriPath. Each Seller
shall have the right to respond to such notice, and if a Seller
requests that the exercise of such right of set-off be considered and
approved by the Board of Directors, then such right shall not be
exercised unless considered and approved by a majority of the full
Board of Directors. If within 10 days after receipt of such notice of
set-off, a Seller contests in writing (sent to AmeriPath) AmeriPath's
claim that of indemnification under Article XI hereof, then the amount
which AmeriPath would otherwise have paid to the Seller but for the
exercise of such right of set-off shall be paid into an interest
bearing escrow account maintained by a bank selected by AmeriPath, to
be held in such account until AmeriPath and the Seller have reached
agreement as to the amount, if any, of such indemnification payment
and set-off, or until there has been a judicial resolution of such
matter, at which time the amount held in such segregated account,
together with any interest accrued thereon, shall be released to the
prevailing party, as appropriate and/or instructed. AmeriPath and the
Sellers agree that they will use their best efforts to resolve any
such dispute within 30 days of receipt of notice by AmeriPath of the
Seller's objection to the set-off.
(k) Defaults. The Sellers shall be entitled to the
benefit of the Events of Default set forth in the form of Contingent
Notes.
(l) Conflict. To the extent there is any conflict or
inconsistency between the terms of this Agreement and the terms
specified in the Contingent Notes, the terms specified in the
Contingent Notes shall govern and prevail.
(m) Conversion. If the Purchaser fails to make a payment
under the Contingent Notes due to the restrictions, terms or
conditions of the Subordination Agreement and such failure to pay
continues for thirty (30) days after notice from the Sellers, then the
Sellers shall have the right and option to elect to receive AmeriPath
Stock in an amount equal to the amount due and payable under the
Contingent Notes divided by the fair market value of the AmeriPath
Stock at the date of the election.
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1.3 Contingent Issuance of AmeriPath Stock. As additional
purchase price consideration, the Purchaser shall issue to the Sellers, subject
to the conditions and restrictions set forth in this Section 1.3 (the "Stock
Rights"), up to an aggregate maximum of 200,000 shares of AmeriPath Stock.
Upon achieving the range (the "Applicable Range") of Operating Earnings or
Cumulative Operating Earnings, as the case may be, set forth on Schedule 1.3
hereto, with respect to each period commencing the year ending December 31,
1997 through the 5 year period ending December 31, 2001, AmeriPath shall
deliver, in the aggregate, certificates evidencing the corresponding number of
shares of AmeriPath Stock indicated on Schedule 1.3 hereto (the "Applicable
Stock Amount") to each Seller as so indicated, which shares shall be subject to
the terms, conditions and restrictions set forth in this Section 1.3.
(a) Delivery; Right to Contingent Issuance Subject to
Cancellation. Certificates for shares representing the Applicable
Stock Amount shall be delivered on or before each March 15 following
each period that the Applicable Range of Operating Earnings or
Cumulative Operating Earnings, as the case may be, has been achieved,
if, and only if, (i) with respect to the year ending December 30,
1997, Operating Earnings equal or exceed a minimum target amount of
$2,400,000.00 (the "First Year Minimum Stock Target") or, (ii) with
respect to the years ending December 30, 1998, 1999, 2000 and 2001,
Cumulative Operating Earnings for such periods equal or exceed
$4,800,000.00, $7,200,000.00, $9,600,000.00 and $12,000,000.00,
respectively (together with the First Year Minimum Stock Target, as
relevant to the applicable period, the "Minimum Stock Targets").
(b) Effect of Sale on Stock Rights. In the event of an
AmeriPath Acquisition (as such term is defined in Section 1.2(c)),
then, with respect to such Stock Rights that have not theretofore been
canceled or voided because the Minimum Stock Target was not or has not
been met for the period in question, as a condition to consummation of
the AmeriPath Acquisition, the acquiring Person shall be required
either to (i) acknowledge and guarantee AmeriPath's on-going
obligations under the Stock Rights, (ii) assume the obligations under
the Stock Rights or (iii) convert the rights to receive AmeriPath
Stock into rights to receive stock in the acquiring Person (of
substantially equivalent value, based upon the acquisition value, as
determined in good faith by the Board of Directors of AmeriPath).
(c) Effect of Acquisitions on Stock Rights. In the event
that AmeriPath acquires one or more Persons or businesses after the
Closing Date, Operating Earnings will be calculated without including
(i) the income generated by, or expenses incurred in connection with,
the acquisition or the acquired Person or business, and (ii) any
selling, general or administrative expenses which do not relate to
Richfield or its business.
(d) Termination of Stock Rights; Call on AmeriPath Stock.
For each period for which Richfield's Operating Earnings, or
Cumulative Earnings, as the case may be, exceed the Minimum Stock
Target, the corresponding Applicable Stock Amount shall become earned
and shall be delivered as provided in subparagraph (a) above. If, in
the
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reasonable judgment of a majority of the full Board of Directors of
AmeriPath, it is determined that the Stock Rights, or the holding of
the AmeriPath Stock by the Sellers, may violate any Regulation or
Order of any Authority, then, at AmeriPath's sole discretion and
option (as recommended by counsel to Ameripath), (i) the Stock Rights
may be canceled and voided (and the parties will endeavor in good
faith to arrive at a reasonably equivalent substitute consideration
therefor), and (ii) all outstanding shares of AmeriPath Stock issued
to or held by the Sellers may be redeemed or purchased by AmeriPath
(the "Call"), and the Sellers hereby irrevocably and unconditionally
agree to sell such stock to AmeriPath upon any such Call, at its then
fair market value (as determined in good faith by AmeriPath's Board of
Directors). AmeriPath shall give the holders of the AmeriPath Stock
irrevocable written notice of any cancellation of the Stock Rights and
any Call of the AmeriPath Stock permitted hereunder not less than
three (3) business days prior to the date of such event, specifying
such termination and/or Call and the amount to be paid for the
AmeriPath Stock on the closing date specified therein, whereupon such
amount specified in such notice, upon receipt by AmeriPath of the
certificates therefor at the closing thereof, shall be paid to the
Sellers.
(e) Payments; Certificates. All payments for AmeriPath
Stock which is "called" by AmeriPath pursuant to Section 1.3(d) shall
be made by AmeriPath in lawful money of the United States of America
in immediately available funds (or at the written request of the
Sellers, by certified or bank check) after proper tender by each
Seller of certificates representing all of the AmeriPath Stock owned
by such Seller, duly endorsed for transfer to the Purchaser, together
with stock powers duly executed in blank. Any and all liens, claims,
encumbrances or other restrictions with respect to the AmeriPath Stock
so called shall be satisfied and released, to the satisfaction of
AmeriPath, prior to closing on the purchase thereof. To the extent
calculation of any payment amounts results in fractions of a cent, the
amount shall be rounded down to the nearest whole cent.
(f) Transferability; Shareholders' Agreement. The
AmeriPath Stock and the Stock Rights are not transferable other than
by will or the laws of intestate succession. All shares of AmeriPath
Stock issued at Closing or pursuant to the Stock Right shall be
subject to the Purchaser's Shareholders' Agreement (as defined in
Section 7.9) relating to the AmeriPath Stock and related and other
matters, including, but not limited to, any restrictions on
transferability, any rights of first refusal and any option of the
Purchaser to purchase such shares. As a condition to the issuance of
shares of AmeriPath Stock in connection with any Stock Right (and at
AmeriPath's option, at each issuance), each Seller shall execute and
deliver to the Purchaser a counterpart to the Shareholders' Agreement,
and each Seller shall make such representations and execute such
certificates as AmeriPath may reasonably require, including
representations similar to those made in Section 2.25 hereof.
(g) Legend. Each and every stock certificate
representing shares of AmeriPath Stock issued to the Sellers at
Closing or pursuant to the Stock Right shall bear the
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following (or similar) restrictive legend, together with such other
legend(s) as the Purchaser shall in its discretion deem appropriate:
"The shares represented by this certificate (the "Shares") are
subject to each and every one of the terms, conditions and
restrictions set forth in the Shareholders' Agreement dated
February 29, 1996 (the "Shareholders' Agreement"), as amended,
including, but not limited to, any restrictions on
transferability, any rights of first refusal and any option of
the Purchaser to "call" or purchase such Shares, and may not,
in whole or in part, be sold, transferred, pledged, gifted,
hypothecated or otherwise disposed of in any manner other than
in accordance with the terms of the Shareholders' Agreement, a
copy of which is on file and available for inspection at the
principal offices of the Issuer presently located at 000
Xxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxxxxxx, Xxxxxxx
00000."
(h) Antidilution; Adjustments Upon Changes in
Capitalization or Merger. Subject to any required action by the
stockholders of the Purchaser, the number of shares of AmeriPath Stock
covered by the Stock Right, the price per share and the aggregate
number of shares which have been authorized for issuance hereunder,
shall be proportionately adjusted for any increase or decrease in the
number of issued shares of AmeriPath Stock resulting from a stock
dividend or through any recapitalization, reclassification, stock
split-up, combination or exchange of shares (other than any such
combination or exchange of AmeriPath Stock through which shares are
issued to effect an acquisition of another Person). Such adjustment
shall be made by the Board of Directors of AmeriPath, whose
determination in that respect shall be final, binding and conclusive
unless clearly erroneous. Except as expressly provided herein, no
issuance by the Purchaser of shares of stock of any class, or
securities convertible into shares of stock of any class (whether in
connection with an acquisition, employee benefit, stock or stock
option plan, private or public offering of securities, or otherwise),
shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of AmeriPath Stock subject to this
Stock Right. Price per share calculations used in this Agreement
shall also be adjusted to reflect changes in the capitalization of the
Purchaser such that (on an aggregate basis) the value of such shares
before the adjustment event shall equal the value of such shares
immediately after such adjustment event.
(i) Reservation of Shares. The Purchaser will at all
times reserve for issuance and delivery all shares of AmeriPath Stock
from time to time receivable hereunder. All such shares shall be duly
authorized and, when issued, shall be validly issued, fully paid and
non-assessable and free of all preemptive rights.
(j) Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued hereunder, but the
Purchaser shall round down to the nearest whole
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number the number of shares of AmeriPath Stock required to be issued
and delivered in accordance with Schedule 1.3.
(k) Rights of the Sellers. The Sellers shall not, solely
by virtue of the Stock Rights, be entitled to any rights of a
stockholder in the Company, either at law or in equity, until
AmeriPath Stock is issued and delivered to the Seller and the rights
of the Sellers are limited to those expressed in this Agreement.
(l) Failure to Deliver. If a Seller becomes obligated to
sell any AmeriPath Stock to the Purchaser as a result of the exercise
of a Call under this Agreement or otherwise, and fails to deliver such
stock (or the certificates evidencing such stock) in accordance with
the terms of this Agreement, the Purchaser may, at the sole and
absolute discretion of the Board of Directors of AmeriPath, in
addition to all other remedies available to the Purchaser, tender to
the Seller the purchase price for such shares as is herein specified.
Upon tender of such purchase price to the Seller, the Purchaser, upon
written notice to such Seller, may cancel on its books the certificate
or certificates evidencing the shares of AmeriPath Stock so called,
and thereupon all of the Seller's rights in and to such AmeriPath
Stock shall terminate.
(m) Put Option of Seller. Notwithstanding anything to
the contrary set forth in this Agreement, the Sellers shall have an
exclusive and irrevocable option, exercisable by notice to the
Purchaser given after the fifth anniversary of the Closing Date, to
sell to the Purchaser for $15.00 per share (and thus to require the
Purchaser to purchase) all the AmeriPath Stock owned or held by the
Sellers, if, and only if, the Purchaser has not, prior to such date,
consummated the registration and public sale of AmeriPath Common Stock
(of the same class as the Sellers) with the Securities and Exchange
Commission (the " SEC") pursuant to a registration statement under the
Securities Act of 1933, as amended (the "Securities Act"). The
Purchaser hereby irrevocably agrees to purchase and acquire such
AmeriPath Stock on the terms and subject to the conditions set forth
herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND RICHFIELD
Each Seller hereby makes the following representations and warranties
to the Purchaser, each of which shall be deemed material (and the Purchaser, in
executing, delivering and consummating this Agreement, has relied and will rely
upon the correctness and completeness of each of such representations and
warranties notwithstanding any independent investigation):
2.1 Corporate Organization, Qualification, etc. Richfield is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Ohio with full corporate power and authority to carry on
its business as it is now being conducted and proposed to be conducted, and to
own, operate and lease its properties and assets. Richfield is duly qualified
or licensed to do business in good standing in the State of Ohio that being the
only
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jurisdiction in which the conduct of Richfield's business, the ownership or
lease of its properties, the proposed conduct of its business or ownership or
lease of its properties, or the transactions contemplated by this Agreement,
require it to be so qualified or licensed and the failure to be so qualified or
licensed would have a Material Adverse Effect (as defined in Section 12.3).
Except as provided herein, Richfield's articles of incorporation have not been
amended or supplemented since April 15, 1993, and are in full force and effect
as of the date hereof. True, complete and correct copies of Richfield's
articles of incorporation and by-laws, as presently in effect, are attached
hereto as Exhibit 2.1.
2.2 Subsidiaries. Richfield has no Subsidiaries (as defined in
Section 12.3) nor any investment or other interest in, or any outstanding loan
or advance to or from, any Person, including any officer, director or
shareholder.
2.3 Capital Stock. As of the date hereof, the authorized capital
stock of Richfield consists of Five Hundred (500) shares, without par value.
The stock record book of Richfield has been delivered to the Purchaser for
inspection prior to the date hereof and is complete and correct, and all
requisite Federal and State documentary stamps have been affixed thereon and
canceled. The Richfield Shares constitute all of the issued and outstanding
shares of capital stock of Richfield, and all of the Richfield Shares are owned
beneficially and of record by the Sellers.
2.4 Corporate Record Books. The corporate minute books of
Richfield have been made available to the Purchaser, are complete and correct
and contain all of the proceedings of the shareholders and directors of
Richfield.
2.5 Title to Stock. All of the issued and outstanding shares of
the capital stock of Richfield that are, and at the Closing will be, owned by
the Sellers are duly authorized, validly issued, fully paid and nonassessable,
and are free of all Liens (as defined in Section 12.3). Upon delivery of the
Purchase Price to the Sellers at the Closing, each Seller will convey, and the
Purchaser will own and hold, good and marketable title to the Richfield Shares,
free and clear of all Liens or contractual restrictions or limitations
whatsoever.
2.6 Options and Rights. There are no outstanding subscriptions,
options, warrants, rights, securities, contracts, commitments, understandings
or arrangements under which Richfield is bound or obligated to issue any
additional shares of its capital stock or rights to purchase shares of its
capital stock. There are no agreements, arrangements or understandings between
any Seller and/or Richfield and any other Person regarding the Richfield Shares
(or the transfer, disposition, holding or voting thereof).
2.7 Authorization, Etc. Richfield has full power and authority
and each Seller has full capacity to enter into this Agreement and the
agreements and documents contemplated hereby and perform their respective
obligations hereunder and thereunder. The execution, delivery and performance
of this Agreement and all other agreements and transactions contemplated hereby
have been duly authorized by the Board of Directors of Richfield and no other
corporate proceedings on its part are necessary to authorize this Agreement and
the transactions contemplated hereby. Each Seller is entering into this
Agreement on such Seller's own volition, free from any undue influence or
coercion. Upon execution and delivery of this Agreement by the parties hereto
this Agreement and all other agreements contem-
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19
plated hereby shall constitute the legal, valid and binding obligation of each
of Richfield and each Seller party thereto, enforceable against each such party
in accordance with their respective terms.
2.8 No Violation. The execution and delivery by Richfield and the
Sellers of this Agreement, and any and all other agreements contemplated
hereby, and the fulfillment of and compliance with the respective terms hereof
and thereof by Richfield and the Sellers do not and will not, (a) conflict with
or result in a breach of the terms, conditions or provisions of, (b) constitute
a default or event of default under (with due notice, lapse of time or both),
(c) result in the creation of any Lien upon the capital stock or assets of
Richfield pursuant to, (d) give any third party the right to accelerate any
obligation under, (e) result in a violation of, or (f) require any
authorization, consent, approval, exemption or other action by or notice to any
court or Authority pursuant to, the articles of incorporation or by-laws of
Richfield or any Regulation, Order or Contract (as defined in Section 12.3) to
which Richfield or the Sellers are subject. Richfield and the Sellers will
comply with all applicable Regulations and Orders in connection with the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.
2.9 Financial Statements. Attached as Exhibit 2.9 hereto are the
following financial statements of Richfield: (i) Statements of Assets and
Liabilities (prepared on a modified cash basis) for the fiscal years ended
December 31, 1995 and December 31, 1994 (the "Statements of Assets and
Liabilities"), (ii) statements of revenues collected and expenses paid and
related schedules thereto (prepared on a modified cash basis) for the fiscal
years ended December 31, 1995 and December 31, 1994 (the "Statements of
Revenues Collected and Expenses Paid"), (iii) statements of cash flows for
fiscal years ended December 31, 1995 and December 31, 1994 (the "Statements of
Cash Flows") and (iv) the statement of assets and liabilities, the statement of
revenues collected and expenses paid and the statement of cash flows (prepared
on a cash basis) for the six months ended June 30, 1996 (collectively, together
with the Statements of Assets and Liabilities, the Statements of Revenues
Collected and Expenses Paid, and the Statements of Cash Flows, the "Financial
Statements"). The statements of assets and liabilities included in the
Financial Statements fairly present the financial position of Richfield on a
modified cash basis as at the respective dates thereof, and the statements of
revenues collected and expenses paid included in the Financial Statements (x)
fairly present the results of operations for the periods therein referred to,
on a modified cash basis (except as stated therein or in the notes or schedules
thereto) applied on a consistent basis, and (y) fairly present the financial
condition of Richfield at the respective date of on a modified cash basis, and
for the period covered by, such statements. Richfield has no liability in
excess of $500, whether accrued, absolute or contingent, of a type required to
be reflected on a balance sheet or described in the notes thereto in accordance
with GAAP, other than (i) liabilities incurred since June 30, 1996, disclosed
on Schedule 2.9(a) attached hereto, and (ii) liabilities covered by insurance
or reinsurance (a complete and detailed description of which is provided in
Schedule 2.9(b)). Schedule 2.9(c) contains a complete list of the accounts
payable of Richfield.
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20
2.10 Employees. Richfield has been for the past four years, and
currently is, in compliance with all Federal, State and local Regulations and
Orders affecting employment and employment practices of Richfield (including
those Regulations promulgated by the Equal Employment Opportunity Commission),
including terms and conditions of employment and wages and hours. Richfield
maintains a "pension" or "welfare" benefit plan within the respective meanings
of sections 3(2) and 3(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
2.11 Absence of Certain Changes. Except as set forth on Schedule
2.11, since December 31, 1995, there has not been (a) any Material Adverse
Change (as defined in Section 12.3) in the business, prospects, financial
condition, revenues, expenses, accounts receivable, accounts payable or
operations of Richfield; (b) any damage, destruction or loss, whether covered
by insurance or not, having a Material Adverse Effect, with regard to
Richfield's properties and business; (c) other than S Corporation distributions
prior to Closing, any declaration, setting aside or payment of any dividend or
distribution (whether in cash, stock or property) in respect of Richfield's
capital stock, or any redemption or other acquisition of such capital stock by
Richfield; (d) any increase in the rate of compensation or in the benefits
payable or to become payable by Richfield to its directors, officers, employees
or consultants which remains an obligation after the Closing; (e) any
amendment, modification or termination of any existing, or entering into any
new, contract, agreement, arrangement or plan relating to any salary, bonus,
insurance, pension, health or other employee welfare or benefit plan for or
with any directors, officers, employees or consultants of Richfield other than
the agreements for Doctors Xxxxxx Xxxxxxxx and Xxxxx Xxxxxx; (f) any entry into
any material Contract not in the ordinary course of business, including without
limitation relating to any borrowing or capital expenditure; (g) any
disposition by Richfield of any asset; or (h) any change by Richfield in
accounting methods or principles.
2.12 Contracts.
(a) Except as set forth in Schedule 2.12 hereto,
Richfield is neither a party to nor subject to any written or oral:
(i) pension, profit sharing, bonus, retirement,
stock option, stock purchase or other plan providing for
deferred or other compensation to employees or any other
employee benefit plan (other than as set forth in Schedule
2.18 hereto), or any Contract with any labor union;
(ii) employment or consultation agreement, or
other compensation Contract, commitment or arrangement, which
is not terminable on notice of 30 days' or less by Richfield
without penalty or other financial obligation (and, except as
set forth on Schedule 2.12, no officer or employee of
Richfield receives total salary, bonus and other compensation
from Richfield of $30,000.00 or more per annum).
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21
(iii) Contract containing covenants or agreements
limiting the freedom of Richfield or any of its employees to
compete in any line of business presently conducted by
Richfield with any Person or to compete in any such line of
business in any area;
(iv) Contract with a Seller or with any affiliate
or relative of a Seller (except for any Contract disclosed in
Schedule 2.12 pursuant to clauses (ii) or (iii) of this
Section 2.12(a);
(v) Contract relating to or providing for loans
to officers, directors, employees or Affiliates;
(vi) Contract under which Richfield has advanced
or loaned, or is obligated to advance or loan, funds to any
Person;
(vii) Contract relating to the incurrence,
assumption or guarantee of any indebtedness, obligation or
liability (in respect of money or funds borrowed), or
otherwise pledging, granting a security interest in or placing
a Lien on any asset of Richfield;
(viii) guarantee or endorsement of any obligation;
(ix) Contract under which Richfield is lessee of
or holds or operates any property, real or personal, owned by
any other party, except for any lease of real or personal
property under which the aggregate annual rental payments do
not exceed $7,500.00;
(x) Contract pursuant to which Richfield is
lessor of or permits any third party to hold or operate any
property, real or personal, owned or controlled by Richfield;
(xi) assignment, license, indemnification or
Contract with respect to any intangible property (including,
without limitation, any Proprietary Rights (as defined in
Section 12.3));
(xii) warranty Contract with respect to its
services rendered (or to be rendered) or its products sold or
leased;
(xiii) Contract which prohibits, restricts or limits
in any way the payment of dividends or distributions by
Richfield;
(xiv) Contract under which it has granted any
Person any registration rights (including piggyback rights)
with respect to any securities;
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22
(xv) Contract for the purchase, acquisition or
supply of inventory and other property and assets, whether for
resale or otherwise in excess of $7,500.00;
(xvi) Contracts with independent agents, brokers,
dealers or distributors;
(xvii) sales, commissions, advertising or marketing
Contracts;
(xviii) Contracts providing for "take or pay" or
similar unconditional purchase or payment obligations;
(xix) Contracts with Persons with which, directly
or indirectly, a Seller also has a Contract;
(xx) Contract with a hospital, physician or other
health care provider or Person pursuant to which the cost of
providing health care services to the patients covered by such
Contract is assumed in whole or in part by such provider; or
(xxi) any other Contract which is material to
Richfield's operations or business prospects, except those
which (x) were made in the ordinary course of business, (y)
are terminable on 30 days' or less notice by Richfield without
penalty or other financial obligation, and (z) in each case,
involve aggregate payments by or to Richfield of $7,500.00 or
less.
(b) No consent of any party to any Contract is required
in connection with the execution, delivery or performance of this
Agreement, or the consummation of the transactions contemplated
hereby.
(c) Richfield has performed in all material respects all
obligations required to be performed by it and is not in default in
any respect under or in breach of nor in receipt of any claim of
default or breach under any material Contract to which Richfield is
subject (including without limitation all performance bonds, warranty
obligations or otherwise); no event has occurred which with the
passage of time or the giving of notice or both would result in a
default, breach or event of non-compliance under any material Contract
to which Richfield is subject (including without limitation all
performance bonds, warranty obligations or otherwise); Richfield does
not have any present expectation or intention of not fully performing
all such obligations; Richfield does not have any knowledge of any
breach or anticipated breach by the other parties to any such Contract
to which it is a party.
2.13 True and Complete Copies. Copies of all Contracts and
documents delivered and to be delivered hereunder by the Sellers or Richfield
are and will be true and complete copies of such agreements, contracts and
documents.
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23
2.14 Title and Related Matters.
(a) Richfield has good and marketable title to all of the
properties and assets reflected in the statement of assets and
liabilities for the fiscal year ended December 31, 1995 included in
the Financial Statements or acquired after the date thereof and for
properties sold or otherwise disposed of since the date thereof in the
ordinary course of business, free and clear of all Liens, except (i)
statutory Liens not yet delinquent, (ii) such imperfections or
irregularities of title, Liens, easements, charges or encumbrances as
do not detract from or interfere with the present use of the
properties or assets subject thereto or affected thereby, otherwise
impair present business operations at such properties; or do not
detract from the value of such properties and assets, taken as a
whole, or (iii) as reflected in the statement of assets and
liabilities for the fiscal year ended December 31, 1995 included in
Financial Statements or the notes thereto.
(b) Richfield owns, and will on the Closing Date own,
good and marketable title to all the personal property and assets,
tangible or intangible, used in its business except as to those assets
leased all of which leases are in good standing and no party is in
default thereunder. None of the assets belonging to or held by
Richfield is or will be on the Closing Date subject to any (i)
Contracts of sale or lease, or (ii) Liens. Except for normal
breakdowns and servicing requirements, all machinery and equipment
regularly used by Richfield in the conduct of its business is in good
operating condition and repair, ordinary wear and tear excepted.
(c) There has not been since December 31, 1995, and will
not be prior to the Closing Date, any sale, lease, or any other
disposition or distribution by Richfield of any of its assets or
properties and any other assets now or hereafter owned by it, except
transactions in the ordinary and regular course of business or as
otherwise consented to by the Purchaser. After the Closing,
Richfield, as the wholly-owned subsidiary of the Purchaser, will own,
or have the unrestricted right to use, all properties and assets that
are currently used in connection with the business of the Sellers.
(d) Schedule 2.14 attached hereto sets forth a
description of all real and personal property owned or leased by
Richfield.
2.15 Litigation. There is no Claim (as defined in Section 12.3)
pending or, to the best knowledge of the Sellers and Richfield, threatened
against either of the Sellers or Richfield which, if adversely determined,
would have a Material Adverse Effect on Richfield. Nor is there any Order
outstanding against either the Sellers or Richfield having, or which, insofar
as can reasonably be foreseen, in the future may have, a Material Adverse
Effect on Richfield.
2.16 Tax Matters.
(a) Richfield has filed all federal, state, and local tax
reports, returns, information returns and other documents
(collectively, the " Tax Returns") required to be
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24
filed with any federal, state, local or other taxing authorities
(each a "Taxing Authority", collectively, the "Taxing Authorities") in
respect of all relevant taxes, including without limitation income,
premium, gross receipts, net proceeds, alternative or add-on minimum,
ad valorem, value added, turnover, sales, use, property, personal
property (tangible and intangible), stamp, leasing, lease, user,
excise, duty, franchise, transfer, license, withholding, payroll,
employment, fuel, excess profits, occupational and interest
equalization, windfall profits, severance, and other charges
(including interest and penalties) (collectively, the "Taxes") and in
accordance with all tax sharing agreements to which a Seller or
Richfield may be a party. All Taxes required or anticipated to be
paid for all periods prior to and including the Closing Date have
been paid, including any of Richfield's Taxes that may be due or
claimed to be due as a result of the consummation of the transactions
contemplated by this Agreement. All Taxes which are required to be
withheld or collected by Richfield have been duly withheld or
collected and, to the extent required, have been paid to the proper
Taxing Authority or properly segregated or deposited as required by
applicable laws. There are no Liens for Taxes upon any property or
assets of Richfield except for liens for Taxes not yet due and
payable. Neither any Seller nor Richfield has executed a waiver of
the statute of limitations on the right of the Internal Revenue
Service or any other Taxing Authority to assess additional Taxes or to
contest the income or loss with respect to any Tax Return. The basis
of any depreciable assets, and the methods used in determining
allowable depreciation (including cost recovery), is correct and in
compliance with the Code.
(b) No audit of Richfield or Richfield's Tax Returns by
any Taxing Authority is currently pending or threatened, and no issues
have been raised by any Taxing Authority in connection with any Tax
Returns. No material issues have been raised in any examination by
any Taxing Authority with respect to Richfield which reasonably could
be expected to result in a proposed deficiency for any other period
not so examined, and there are no unresolved issues or unpaid
deficiencies relating to such examinations. The items relating to the
business, properties or operations of Richfield on the Tax Returns
filed by or on behalf of Richfield for all taxable years (including
the supporting schedules filed therewith), available copies of which
have been supplied to the Purchaser, state accurately the information
requested with respect to Richfield and such information was derived
from the books and records of Richfield.
(c) Richfield has not made nor has become obligated to
make, nor will as a result of any event connected with the Closing
become obligated to make, any "excess parachute payment" as defined in
Section 280G of the Code (without regard to subsection (b)(4)
thereof).
(d) The Sellers shall cause Richfield to file all Tax
Returns and reports with respect to Taxes which are required to be
filed for Tax periods ending on or before the Closing Date (a
"Pre-Closing Tax Return"), and Richfield shall pay all Taxes due in
respect of such Pre-closing Tax Returns to the appropriate Taxing
Authority; and Richfield shall pay all costs associated with the
preparation thereof.
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25
2.17 Compliance with Law and Applicable Government Regulations.
Richfield is presently complying in respect of its operations, equipment,
practices, real property, plants, laboratories, structures, and other property,
and all other aspects of its business and operations, with all applicable
Regulations and Orders, including, but not limited to, Health Care Laws (as
defined in Section 12.3), all Regulations relating to the safe conduct of
business, environmental protection, quality and labeling, antitrust, Taxes,
consumer protection, equal opportunity, discrimination, health, sanitation,
fire, zoning, building and occupational safety where such failure or failures
would individually or in the aggregate have a Material Adverse Effect. There
are no Claims pending, nor to the best knowledge of Richfield are there any
Claims threatened, nor has any Seller received any written notice, regarding
any violations of any Regulations and Orders enforced by any Authority claiming
jurisdiction over Richfield, including any requirement of OSHA or any pollution
and environmental control agency (including air and water).
(a) Schedule 2.17(a) attached hereto sets forth all
permits, licenses, provider numbers, orders, franchises and approvals
(collectively, " Permits") from all Federal, state, local and foreign
governmental regulatory bodies held by Richfield. The Permits listed
on Schedule 2.17(a) are the only Permits that are required for
Richfield to conduct its business as presently conducted, except for
those the absence of which would not have any Material Adverse Effect
on the assets, financial condition, results of operations or future
prospects of Richfield. Each such Permit is in full force and effect
and, to the best of the knowledge of Richfield, no suspension or
cancellation of any such Permit is threatened and there is no basis
for believing that such Permit will not be renewable upon expiration.
(b) Richfield has licenses to provide health care
services in the jurisdictions set forth in Schedule 2.17(b) hereto,
which such licenses are all those necessary to conduct the business of
Richfield in the jurisdictions in which Richfield presently operates.
Schedule 2.17(b) also sets forth a true and complete description of
the status of each such license. Except as set forth on Schedule
2.17(b), neither any Seller nor Richfield is aware of any event,
transaction, correspondence or circumstance which would have, or could
foreseeably have, a Material Adverse Effect on one or more of such
licenses.
2.18 ERISA and Related Matters.
(a) Benefit Plans; Obligations to Employees. Except as
set forth in Schedule 2.18 hereto, neither Richfield, nor any ERISA
Affiliate of Richfield, is a party to or participates in or has any
liability or contingent liability with respect to:
(i) any "employee welfare benefit plan" or
"employee pension benefit plan" or "multi- employer plan" (as
those terms are respectively defined in Sections 3(1), 3(2)
and 3(37) of ERISA);
(ii) any retirement or deferred compensation plan,
incentive compensation plan, stock plan, unemployment
compensation plan, vacation pay,
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26
severance pay, bonus or benefit arrangement, insurance
or hospitalization program or any other fringe benefit
arrangements for any employee, director, consultant or agent,
whether pursuant to contract, arrangement, custom or informal
understanding, which does not constitute an "employee benefit
plan" (as defined in Section 3(3) of ERISA); or
(iii) any employment agreement not terminable on 30
days' or less written notice, without further liability.
For purposes of this Section, the term " ERISA
Affiliate" shall mean any trade or business, whether or not
incorporated, that together with Richfield would be deemed a
"single employer" within the meaning of Section 4001(b)(i) of
ERISA.
(b) Plan Documents and Reports. A true and correct copy
of each of the Benefit Plans listed on Schedule 2.18, and all
contracts relating thereto, or to the funding thereof, including,
without limitation, all trust agreements, insurance contracts,
investment management agreements, subscription and participation
agreements and record keeping agreements, each as in effect on the
date hereof, has been supplied to the Purchaser. In the case of any
Benefit Plan that is not in written form, the Purchaser has been
supplied with an accurate description of such Benefit Plan as in
effect on the date hereof. A true and correct copy of the three most
recent annual reports and accompanying schedules, the three most
recent actuarial reports, and the most recent summary plan description
and Internal Revenue Service determination letter with respect to each
such Benefit Plan, to the extent applicable, and a current schedule of
assets (and the fair market value thereof assuming liquidation of any
asset which is not readily tradeable) held with respect to any funded
Benefit Plan has been supplied to the Purchaser by Richfield, and
there have been no material changes in the financial condition in the
respective Plans from that stated in the annual reports and actuarial
reports supplied.
(c) Compliance with Laws; Liabilities. As to all Benefit
Plans, except as otherwise specified on Schedule 2.18, Richfield is in
compliance in all material respects with the terms of all Benefit
plans and every Benefit Plan is in compliance with all of the
requirements and provisions of ERISA and all other laws and
regulations applicable thereto, including without limitation the
timely filing of all annual reports or other filings required with
respect to such Benefit Plans. None of the assets of any Benefit Plan
are invested in employer securities or employer real property, as
those terms are defined in Section 407(d) of ERISA. There have been
no "prohibited transactions" (as described in Section 406 of ERISA or
Section 4975 of the Code) with respect to any Benefit Plan and neither
Richfield nor any ERISA Affiliate of Richfield has otherwise engaged
in any prohibited transaction. There has been no "accumulated funding
deficiency" as defined in Section 302 of ERISA, nor has any reportable
event as defined in Section 4043(b) of ERISA occurred with respect to
any Benefit Plan. Actuarially adequate accruals for all obligations
or contingent obligations under the Benefit Plans are reflected in
Richfield's statement of assets and liabilities for the fiscal year
ended December 31, 1995 included
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27
in Financial Statements provided to the Purchaser and such obligations
include a pro rata amount of the contributions which would otherwise
have been made in accordance with past practices for the plan years
which include the closing date.
2.19 Intellectual Property.
(a) Except as set forth on Schedule 2.19, Richfield has
no trade name, service xxxx, patent, copyright or trademark related to
its business.
(b) Richfield has the right to use each Proprietary Right
listed in Schedule 2.19, and except as otherwise set forth therein,
each of such Proprietary Rights is, and will be on the Closing Date,
free and clear of all royalty obligations and Liens. There are no
Claims pending, or to the best knowledge of each Seller, threatened,
against any Seller that its use of any of the Proprietary Rights
listed on Schedule 2.19 infringes the rights of any Person. Each
Seller has no knowledge of any conflicting use of any of such
Proprietary Rights.
(c) Richfield is not a party in any capacity to any
franchise, license or royalty agreement respecting any Proprietary
Right and there is no conflict with the rights of others in respect to
any Proprietary Right now used in the conduct of its business.
(d) Internal Software Applications.
(i) Owned Software. The current software
applications used by Richfield in the operation of its
business, as set forth and described on Schedule 2.19(d)
hereto (the "Software"), to the extent it has been designed or
developed by Richfield's management information or development
staff or by consultants on Richfield's behalf, is original and
capable of copyright protection in the United States, and
Richfield has complete rights to and ownership of such
Software. No part of any such Software is an imitation or
copy of, or infringes upon, the software of any other Person
or violates or infringes upon any common law or statutory
rights of any other Person, including, without limitation,
rights relating to defamation, contractual rights, copyrights,
trade secrets, and rights of privacy or publicity. Richfield
has not sold, assigned, licensed, distributed or in any other
way disposed of or encumbered the Software.
(ii) Licensed Software. The Software, to the
extent it is licensed from any third party licensor or
constitutes "off-the-shelf" software, is held by Richfield
legitimately and is fully transferable to the Purchaser
without any third party consent. All of Richfield's computer
hardware has legitimately-licensed software installed therein.
(iii) No Errors; Nonconformity. Richfield warrants
that the Software is free from any significant software defect
or programming or documentation
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28
error, operates and runs in a reasonable and efficient
business manner, conforms to the specifications thereof, and,
with respect to owned Software, the applications can be
recreated from their associated source code.
2.20 Environmental Matters. Except as disclosed in Schedule 2.20:
(a) neither Richfield's business nor the operation thereof violates any
applicable Environmental Law (as defined in Section 12.3) in effect as of the
date hereof and no condition or occurrence (any accident, happening or event
which occurs or has occurred at any time prior to the Closing Date, which
results in or could result in a Claim against Richfield or the Purchaser or
creates or could create a liability or loss for Richfield or the Purchaser)
which, with notice or the passage of time or both, would constitute a violation
of any Environmental Law; (b) Richfield is in possession of all Environmental
Permits (as defined in Section 12.3) required under any applicable
Environmental Law for the conduct or operation of Richfield's business (or any
part thereof), and Richfield is in full compliance with all of the requirements
and limitations included in such Environmental Permits; (c) Richfield has not
stored or used any pollutants, contaminants or hazardous or toxic wastes,
substances or materials on or at any of its property or facilities except for
inventories of chemicals which are used or to be used in the ordinary course of
Richfield's business (which inventories have been sorted or used in accordance
with all applicable Environmental Permits and all Environmental Laws, including
all so-called "Right to Know" laws); (d) Richfield has not received any notice
from any Authority or any private Person that Richfield's business or the
operation of any of its facilities is in violation of any Environmental Law or
any Environmental Permit or that it is responsible (or potentially responsible)
for the cleanup of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any of Richfield's property, or at,
on or beneath any land adjacent thereto or in connection with any waste or
contamination site; (e) Richfield is not the subject of any Federal, state,
local, or private Claim involving a demand for damages or other potential
liability with respect to a violation of Environmental Laws or under any common
law theories relating to operations or the condition of any facilities or
property (including underlying groundwater) owned, leased, or operated by
Richfield; (f) Richfield has not buried, dumped, disposed, spilled or released
any pollutants, contaminants or hazardous or wastes, substances or materials
on, beneath or adjacent to any of its property or any property adjacent
thereto; (g) no by-products of any manufacturing or mining process employed in
the operation of Richfield's business which may constitute pollutants,
contaminants or hazardous or toxic wastes, substances or materials under any
Environmental Law are currently stored or otherwise located on any of
Richfield's property; (h) no property now or previously owned, leased or
operated by Richfield, is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any other federal or
state list of sites requiring investigation or clean-up; (i) there are no
underground storage tanks, active or abandoned, including petroleum storage
tanks, on or under any property now or previously owned, leased or operated by
Richfield; (j) Richfield has not directly transported or directly arranged for
the transportation of any Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any federal or state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
material Claims against Richfield for any remedial work, damage to natural
resources or personal injury, including Claims
- 22 -
29
under CERCLA; and (k) there are no polychlorinated biphenyls, radioactive
materials or friable asbestos present at any property now or previously owned
or leased by Richfield. Richfield has timely filed all reports required to be
filed with respect to all of its property and facilities and has generated and
maintained all required data, documentation and records under all applicable
Environmental Laws.
2.21 Dealings with Affiliates. Schedule 2.21 hereto sets forth a
complete list, including the parties, of all oral or written agreements and
arrangements to which Richfield is, will be or has been a party, at any time
from January 1, 1994 to the Closing Date, and to which any one or more
Affiliates is also a party.
2.22 Banking Arrangements. Schedule 2.22 attached hereto sets
forth the name of each bank in or with which Richfield has an account, credit
line or safety deposit box, and a brief description of each such account,
credit line or safety deposit box, including the names of all Persons currently
authorized to draw thereon or having access thereto. Richfield has no
liability or obligation relating to funds or money borrowed by or loaned to
Richfield (whether under any credit facility, line of credit, loan, indenture,
advance, pledge or otherwise).
2.23 Insurance. Schedule 2.23 attached hereto sets forth a list
and brief description, including dollar amounts of coverage, of all policies of
fire, liability, professional liability and other forms of insurance held by
Richfield as of the date hereof. Such policies are valid, outstanding and
enforceable policies, as to which premiums have been paid currently. Neither
Richfield nor any Seller knows of any state of facts, or of the occurrence of
any event which might reasonably (a) form the basis for any Claim against
Richfield not fully covered by insurance for liability on account of any
express or implied warranty or tortious omission or commission, or (b) result
in material increase in insurance premiums of Richfield.
2.24 Consents. Schedule 2.24, annexed hereto, sets forth a
complete list of consents of governmental and other regulatory agencies or
authorities, foreign or domestic, required to be received by or on the part of
Richfield and each Seller to enable Richfield or the Sellers to enter into and
carry out this Agreement in all material respects. All such requisite consents
have been, or prior to the Closing will have been, obtained.
2.25 Investment Representations. In the event, in connection with
this Agreement or any agreement or transaction contemplated hereby, AmeriPath
offers or sells, or is deemed to offer or sell, any securities of AmeriPath to
the Sellers (including AmeriPath Stock pursuant to Section 1.3), then each
Seller hereby represents and warrants to AmeriPath as follows:
(a) Each Seller has been offered, and up to the Closing
Date and the time(s) of issuance of the AmeriPath Stock shall be
offered, the opportunity to ask questions of, and receive answers
from, AmeriPath and its Subsidiaries, and each Seller has been given
full and complete access to all available information and data
relating to the business and assets of AmeriPath and its Subsidiaries,
has obtained such additional information about AmeriPath and its
Subsidiaries which each Seller has deemed necessary in order to
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evaluate the opportunities, both financial and otherwise, with respect
to AmeriPath and, except as set forth herein, has not relied on any
representation, warranty or other statement concerning the Purchaser
and its Subsidiaries in his evaluation of the decision to consummate
the transactions contemplated herein. On the basis of the foregoing,
each Seller is familiar with the operations, business plans and
financial condition of AmeriPath.
(b) Each Seller understands, agrees and acknowledges that
the AmeriPath Stock has not been registered under the Securities Act
or the Securities Act of Ohio in reliance upon exemption provisions
contained therein which AmeriPath believes are available based upon
representations made by each Seller.
(c) Each Seller understands that he must bear the
economic risk of the AmeriPath Stock, if and when issued to each
Seller, for an indefinite period of time because, except as provided
in this Agreement, (i) each Seller understands that AmeriPath proposes
to issue and deliver the shares of AmeriPath Stock issuable in
accordance with this Agreement, without compliance with the
registration requirements of the Securities Act, that for such purpose
AmeriPath will rely upon the representations, warranties, covenants
and agreements contained herein, as well as any additional
representations, warranties, covenants, agreements and certifications
requested by AmeriPath to be delivered by each Seller at such time(s)
of issuance of the AmeriPath Stock; and that such noncompliance with
registration is not permissible unless such representations and
warranties are correct and such covenants and agreements are performed
at and as of the time of issuance; (ii) each Seller understands that,
under existing rules of the SEC, there are substantial restrictions in
the transferability of his shares of AmeriPath Stock; his shares of
AmeriPath Stock may be transferred only if registered under the
Securities Act or if an exemption from such registration is available;
each Seller may not be able to avail himself of the provisions of Rule
144 promulgated by the SEC under the Securities Act with respect to
the transfer of such shares; (iii) the AmeriPath Stock may not be
sold, transferred, pledged, or otherwise disposed of without the
consent of AmeriPath and an opinion of counsel for or satisfactory to
AmeriPath that registration under the Securities Act or any applicable
state securities laws is not required; and (iv) AmeriPath neither has
an obligation to register a sale of the AmeriPath Stock held by each
Seller nor has it agreed to do so in the future.
(d) Each Seller is an "accredited investor", as such term
is defined in Rule 501 of Regulation D promulgated under the
Securities Act in that, as of the date of this Agreement, he either
(a) (either individually or jointly with his spouse) has a net worth
in excess of $1,000,000; or (b) had an individual income in excess of
$200,000 in each of the two most recent years or joint income with his
spouse in excess of $300,000 in each of those years, and reasonably
expects reaching the same income level in the current year.
(e) Each Seller is a sophisticated investor familiar with
the type of risks inherent in the acquisition of securities such as
the shares of AmeriPath Stock and each
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Seller's financial position is such that each Seller can afford to
retain his shares of AmeriPath Stock for an indefinite period of time
without realizing any direct or indirect cash return on each Seller's
investment.
(f) Each Seller is acquiring her or his shares of
AmeriPath Stock for each Seller's own account and not with a view to,
or for sale in connection with, the distribution thereof within the
meaning of the Securities Act.
(g) Each Seller understands that the certificates
evidencing her or his shares of AmeriPath Stock, when and if issued,
will bear appropriate restrictive legends.
2.26 Accounts Receivable; Inventories. The accounts receivable of
Richfield reflected on Schedule 2.26 attached hereto on the date hereof are
good and collectible consistent with prior practices. All such accounts
receivable (except to the extent so reserved against) are valid, genuine and
subsisting, arise out of bona fide sales and deliveries of goods, performance
of services or other business transactions and are not subject to defenses,
set-offs or counterclaims. The inventories reflected on the statement of
assets and liabilities included in the Financial Statements, and the
inventories held by Richfield on the date hereof, (i) do not include any items
which are not usable or saleable in the ordinary course of business of
Richfield, and (ii) have been reflected on such statement of assets and
liabilities at the lower of cost or market value (taking into account the
usability or salability thereof), in accordance with GAAP. All such
inventories are owned free and clear and are not subject to any Lien except to
the extent reserved against or reflected in the Financial Statements. Since
December 31, 1995, inventories of raw materials and supplies have been
purchased by Richfield in the ordinary course of business, consistent with
anticipated seasonal requirements, and the volumes of purchases thereof and
orders therefor have not been reduced or otherwise changed in anticipation of
the transactions contemplated by this Agreement. Richfield is not aware of any
material adverse conditions affecting the supply of materials available to
Richfield, and, to the best knowledge of Richfield, the consummation of the
transactions contemplated hereby will not adversely affect any such supply.
2.27 Brokerage. Neither Richfield nor the Sellers have employed
any broker, finder, advisor, consultant or other intermediary in connection
with this Agreement or the transactions contemplated by this Agreement who is
or might be entitled to any fee, commission or other compensation from
Richfield or the Sellers, or from the Purchaser or its Affiliates, upon or as a
result of the execution of this Agreement or the consummation of the
transactions contemplated hereby.
2.28 Improper and Other Payments. Except as set forth on Schedule
2.28 hereto, (a) neither Richfield, any director, officer, employee thereof,
nor, to Richfield's knowledge, any agent or representative of Richfield nor any
Person acting on behalf of any of them, has made, paid or received any unlawful
bribes, kickbacks or other similar payments to or from any Person or Authority,
(b) no contributions have been made, directly or indirectly, to a domestic or
foreign political party or candidate, (c) no improper foreign payment (as
defined in the Foreign Corrupt
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Practices Act) has been made, and (d) the internal accounting controls of
Richfield are believed by Richfield's management to be adequate to detect any
of the foregoing under current circumstances.
2.29 Participation in Audits. Except as set forth in Schedule
2.29, Richfield has not been informed of any Recoupment Claims (as hereinafter
defined) arising in connection with audits or reviews conducted by Medicaid,
Medicare or private insurance companies. To the best of the knowledge of
Richfield and each Seller there is no basis for any Recoupment Claims based
upon cost reports, claims or bills submitted or to be submitted in connection
with services rendered by Richfield. For purposes of this Section 2.29 the
term "Recoupment Claim" shall mean any recoupment or overpayment, set-off,
penalty or fine, pending or, to the knowledge of Richfield and each Seller,
threatened by any third-party payor or governmental authority having
jurisdiction over Richfield for amounts arising from or related to payments to
Richfield for services rendered prior to the Closing.
2.30 Health Care Laws & Regulations.
(a) Fraud and Abuse. Except as set forth on Schedule
2.30(a), to the best of each Seller's and Richfield's knowledge,
Richfield and its officers, directors, employees, shareholders and
providers, have not engaged in any activities which are prohibited
under federal Medicaid statues, 42 U.S.C. Section 1320a-7a and 7b, or
the regulations promulgated pursuant to such statutes or related state
or local statutes or regulations or which are prohibited by rules of
professional conduct or which otherwise could constitute fraud,
including but not limited to the following: (i) making or causing to
be made a false statement or representation of a material fact in any
application for any benefit or payment; (ii) 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; (iii) failing to
disclose knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment on
its behalf or on behalf of another, with intent to secure such benefit
or payment fraudulently; and (iv) soliciting, paying 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
such enumeration (a) in return for referring an individual to a Person
for the furnishing or arranging for the furnishing of any item or
service for which payment may be made in whole or in part by Medicare
or Medicaid, or (b) 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 Medicaid; subject, in the case of (iv) to the lack
of clarity in the law relating to the marketing of Medicare risk
products by brokers.
(b) Third-Party Payors. All Contracts with third-party
payors were entered into by Richfield in the ordinary course of
business. Richfield will have made available to the Purchaser, as of
the Closing Date, an accurate and complete list of all third-party
payors which have agreements with Richfield (as set forth on Schedule
2.30(b)), together with
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accurate and complete copies of all such Contracts. Except as
set forth on Schedule 2.30(b), Richfield is in compliance with each
third-party payor's Contract, and Richfield has properly charged and
billed in accordance with the terms of those Contracts, including,
where applicable, billing and collection of all deductibles and
co-payments.
(c) Compliance with Medicare and Medicaid Programs.
Richfield has timely and accurately filed all requisite claims and
other reports required to be filed in connection with all state and
federal Medicare and Medicaid programs in which Richfield participates
due on or before the Closing Date except to the extent that the
failure to file such claims and reports would not result in a Material
Adverse Effect on Richfield. Except as set forth on Schedule 2.30(c)
hereto, there are no Claims pending or, to Richfield's knowledge,
threatened or scheduled before any Authority, including without
limitation, any intermediary, carrier, the Administrator of the Health
Care Financing Administration, the Florida Department of Health and
Rehabilitative Services, the Agency for Health Care Administration or
any other state or federal agency with respect to any Medicare and
Medicaid claim filed by Richfield on or before the Closing Date, or
program compliance matters, which would have a Material Adverse Effect
on Richfield, or its assets, the operations or utility thereof, or the
consummation of the transactions contemplated hereby. Richfield has
delivered to the Purchaser accurate and complete copies of any Claims,
actions or appeals listed on Schedule 2.30(c). Except for routinely
scheduled reviews pursuant to Richfield's Medicare and Medicaid
Contracts, no valid review or program integrity review related to
Richfield has been conducted by any Authority in connection with the
Medicare or Medicaid programs and no such review is scheduled, or to
Richfield's knowledge, pending or threatened against or affecting
Richfield, its business, assets, or the consummation of the
transactions contemplated hereby.
(d) Rate Limitations and Rates. Each facility currently
operated by Richfield charges rates and accordingly bills for services
which are legal and proper, and Richfield's standard and Medicare
rates are set forth on Schedule 2.30(d). Certain reimbursement rates
established by third-party payors are subject to retrospective
adjustment, which adjustments are set forth on said Schedule 2.30(d).
(e) Reimbursement Documentation. Richfield has filed
when due any and all cost reports and other documentation and reports,
if any, required to be filed by third-party payors and governmental
agencies in compliance with applicable contractual provisions and/or
laws, regulations and rules.
(f) Patient Referrals. No Person having a "financial
relationship" with Richfield, as that term is defined in 42 U.S.C.
Section 1395nn, is in a position, directly or indirectly, to refer
patients or services to Richfield, other than referrals which comply
with the requirements of 42 U.S.C. Section 1395nn and the regulations
promulgated pursuant thereto.
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2.31 Financial Condition at Closing. At and as of Closing,
Richfield shall have (a) cash and cash equivalents of not less than
$150,000.00, and (b) positive working capital (current assets (including
accounts receivable less allowances) less liabilities) (all calculated and
fairly presented in accordance with GAAP).
2.32 Disclosure. Neither this Agreement nor any of the exhibits,
attachments, written statements, documents, certificates or other items
prepared for or supplied to the Purchaser by or on behalf of the Sellers or
Richfield with respect to the transactions contemplated hereby contains any
untrue statement of a material fact or omits a material fact necessary to make
each statement contained herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
3.1 Corporate Organization, etc. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation with full corporate power and authority to carry
on its business as it is now being conducted and to own, operate and lease its
properties and assets. The Purchaser is duly qualified or licensed to do
business in good standing in every jurisdiction in which the conduct of its
business, the ownership or lease of its properties, require it to be so
qualified or licensed and the failure to be so qualified or licensed would have
a material adverse effect on its business.
3.2 Subsidiaries. Other than the Subsidiaries of the Purchaser
listed in Schedule 3.2 hereto, the Purchaser has no Subsidiaries.
3.3 Authorization, Etc. The Purchaser has full corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of the Purchaser has duly
authorized the execution, delivery and performance of this Agreement, the
Contingent Notes and the other agreements and transactions contemplated hereby,
and no other corporate proceedings on its part are necessary to authorize this
Agreement and the transactions contemplated hereby. Upon execution and
delivery of this Agreement by the parties hereto this Agreement shall, and upon
issuance of the Contingent Notes in accordance with the provisions hereof the
Contingent Notes shall, constitute legal, valid and binding obligations of the
Purchaser, enforceable against the Purchaser in accordance with their
respective terms.
3.4 No Violation. The execution, delivery and performance by the
Purchaser of this Agreement, and all other agreements contemplated hereby, and
the fulfillment of and compliance with the respective terms hereof and thereof
by the Purchaser, do not and will not (a) conflict with or result in a breach
of the terms, conditions or provisions of, (b) result in a violation of, or (c)
require any authorization, consent, approval, exemption or other action by or
notice to any Authority pursuant to, the certificate of incorporation or
by-laws of the Purchaser, or any
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Regulation to which the Purchaser is subject, or any Contract or Order to which
the Purchaser or its properties are subject. The Purchaser will comply with
all applicable Regulations and Orders in connection with its execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
3.5 Governmental Authorities. The Purchaser has complied in all
material respects with all applicable Regulations in connection with its
execution, delivery and performance of this Agreement and the agreements and
transactions contemplated hereby. The Purchaser is not required to submit any
notice, report, or other filing with any governmental authority in connection
with its execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby. No authorization, consent, approval,
exemption or notice is required to be obtained by the Purchaser in connection
with the execution, delivery, and performance of this Agreement and the
agreements and transactions contemplated hereby.
3.6 Issuance of AmeriPath Stock. All shares of AmeriPath Stock
required to be issued by AmeriPath to the Sellers, in accordance with the terms
and subject to the conditions set forth in this Agreement, shall, upon issuance
and delivery, be duly authorized, validly issued, fully paid and
non-assessable.
3.7 Health Coverage. AmeriPath agrees that it shall not change
health plans which would cause a gap in coverage to the employees of Richfield.
3.8 Cincinnati Operations. AmeriPath agrees that it shall keep
the Richfield operations in or around Cincinnati, Ohio at least through
December 31, 2001.
ARTICLE IV
COVENANTS OF THE SELLERS
From the date hereof until the Closing, except as otherwise consented
to or approved by the Purchaser in writing, Richfield covenants and agrees that
it shall act, and the Sellers shall cause Richfield to so act or refrain from
acting where required hereinafter, to comply with the following:
4.1 Regular Course of Business. Richfield shall operate its
business diligently and in good faith and in the ordinary and usual course,
consistent with past management practices; shall maintain all of its respective
properties in good order and condition, shall maintain (except for expiration
due to lapse of time) all leases and Contracts in effect without change except
as expressly provided herein; shall comply with the provisions of all
Regulations and Orders applicable to Richfield and the conduct of its
respective business; shall not cancel, release, waive or compromise any debt,
Claim or right in its favor; shall not alter the rate or basis of compensation
of any of its officers, directors, employees or consultants which shall be an
obligation after the Closing; shall maintain insurance and reinsurance coverage
as in effect on the date hereof up to
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the Closing Date; and shall preserve the business of Richfield intact, and use
its best efforts to keep available for Richfield and the Purchaser the services
of the officers and employees of Richfield, and to preserve the good will of
clients, patients, suppliers and others having business relations with
Richfield.
4.2 Amendments. Except as provided in Section 4.8 of this
Agreement, no change or amendment shall be made in the articles of
incorporation or by-laws of Richfield. Richfield shall not merge with or into
or consolidate with any other corporation or Person, acquire substantially all
of the assets of any Person or change the character of its business.
4.3 Capital Changes; Pledges. Except as contemplated under this
Agreement, Richfield shall not issue or sell any shares of its capital stock of
any class or issue or sell any securities convertible into, or options,
warrants to purchase or rights to subscribe to, any shares of its capital stock
and Richfield shall not pledge or otherwise encumber any shares of its capital
stock.
4.4 Dividends. Richfield shall not declare or set aside for
payment any dividend or other distribution in respect of its capital stock
which becomes payable after Closing, nor shall Richfield, directly or
indirectly, redeem, purchase or otherwise acquire any shares of its capital
stock.
4.5 Capital and Other Expenditures. Richfield shall not make any
capital expenditures, or commitments with respect thereto.
4.6 Borrowing. Richfield shall not incur, assume or guarantee any
indebtedness, obligations or liabilities not reflected on the Financial
Statements (or the balance sheets included therein) except in the ordinary
course of business or for purposes of consummation of the transactions
contemplated by this Agreement and in any case only after consultation with the
Purchaser.
4.7 Other Commitments. Except as set forth in this Agreement,
incurred or transacted in the ordinary course of business, or permitted in
writing by the Purchaser, Richfield shall not enter into any transaction or
make any commitment or incur any obligation (including entering into any real
property leases).
4.8 Amendments to Charter. Prior to the Closing, the Sellers
shall cause Richfield's articles of incorporation to be amended, among other
things, to (i) change the company's name to AmeriPath Ohio, Inc; (ii) provide
that the company shall be a business corporation, and not a professional
service corporation, and delete any inconsistent references, and (iii) provide
that the company may operate for any lawful purpose which will allow Persons
other than those licensed to practice pathology in the State of Ohio to own
shares of Richfield's capital stock. All of such amendments (together, the
"Richfield Charter Amendments") shall be in form and substance satisfactory to
AmeriPath.
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4.9 Interim Financial Information. To the extent available,
Richfield shall supply the Purchaser with unaudited financial statements
(including, without limitation, statement of assets and liabilities and
statements of revenues collected and expenses paid) and information for each
calendar month, promptly following the conclusion of such month, and as
Richfield may otherwise reasonably request.
4.10 Full Access and Disclosure.
(a) Richfield shall afford to the Purchaser and its
counsel, accountants and other authorized representatives reasonable
access during business hours to Richfield's facilities, properties,
books and records in order that the Purchaser may have full
opportunity to make such reasonable investigations as it shall desire
to make of the affairs of Richfield; and the Sellers shall cause
Richfield's officers, employees and auditors to furnish such
additional financial and operating data and other information as the
Purchaser shall from time to time reasonably request including,
without limitation, any internal control recommendations applicable to
Richfield made by Richfield's independent auditors in connection with
any examination of Richfield's Financial Statements and books and
records.
(b) From time to time prior to the Closing Date,
Richfield shall promptly supplement or amend information previously
delivered to the Purchaser with respect to any matter hereafter
arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth herein or disclosed.
(c) In connection with any "due diligence" examination
performed by the Purchaser with respect to the business of Richfield,
each Seller shall fully cooperate and the results of such "due
diligence" examination shall be satisfactory to the Purchaser.
4.11 Confidentiality. Each Seller and Richfield shall, and shall
cause its principals, officers and other personnel and authorized
representatives to, hold in confidence, and not disclose to any other party
without the Purchaser's prior consent, all written and oral information
furnished or disclosed by or received from the Purchaser or its officers,
directors, employees, agents, counsel and auditors in connection with the
transactions contemplated hereby except as may be required by applicable law or
as otherwise contemplated herein.
4.12 Breach of Agreement. Neither the Sellers nor Richfield shall
take any action which, if taken on or prior to the Closing Date, would
constitute a breach of this Agreement.
4.13 Fulfillment of Conditions Precedent. Richfield and each
Seller shall use their best efforts to obtain at their expense, on or prior to
the Closing Date, all such waivers, Permits, consents, approvals or other
authorizations from third parties and Authorities, and to do all things as may
be necessary or desirable in connection with the transactions contemplated by
this Agreement in order to fully and expeditiously consummate the transactions
contemplated by this Agreement.
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ARTICLE V
COVENANTS OF THE PURCHASER
The Purchaser hereby covenants and agrees with Richfield and each
Seller that prior to the Closing or the termination of this Agreement:
5.1 Confidentiality. The Purchaser shall, and shall cause its
principals, officers and other personnel and authorized representatives to,
hold in confidence, and not disclose to any other party without the Sellers'
prior consent, all information received by it from the Sellers or Richfield's
officers, directors, employees, agents, counsel and auditors in connection with
the transactions contemplated hereby except as may be required by applicable
law or as otherwise contemplated herein.
5.2 Full Access and Disclosure.
(a) The Purchaser shall afford to Richfield and each
Seller, and their counsel, accountants and other authorized
representatives reasonable access during business hours to the
Purchaser's facilities, properties, books and records in order that
each Seller may have full opportunity to make such reasonable
investigations as they shall desire to make of the affairs of the
Purchaser; and the Purchaser shall cause its officers, employees and
auditors to furnish such additional financial and operating data and
other information as each Seller shall from time to time reasonably
request including, without limitation, any internal control
recommendations applicable to the Purchaser made by the Purchaser's
independent auditors in connection with any examination of the
Purchaser's financial statements and books and records.
(b) From time to time prior to the Closing Date, the
Purchaser shall promptly supplement or amend information previously
delivered to Richfield and/or each Seller with respect to any matter
hereafter arising which, if existing or occurring at the date of this
Agreement, would have been required to be set forth herein or
disclosed.
(c) The Purchaser shall fully cooperate in connection
with any "due diligence" examination performed by Richfield or each
Seller with respect to the business of the Purchaser. For purposes of
this Section 5.2, "Purchaser" shall mean and include AmeriPath and its
Subsidiaries.
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ARTICLE VI
OTHER AGREEMENTS
The parties hereto further agree, on or before the Closing Date, as
follows:
6.1 Further Assurances. Subject to the terms and conditions of
this Agreement, each of the parties hereto shall use its best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Regulations to consummate and
make effective the transactions contemplated by this Agreement. In furtherance
and not in limitation of the preceding sentence, the parties hereto shall use
their best efforts to cause the Closing to take place on or before October 4,
1996. If at any time after the Closing Date the Purchaser shall consider or be
advised that any further deeds, assignments or assurances in law or in any
other things are necessary, desirable or proper to vest, perfect or confirm, of
record or otherwise, in the Purchaser (or Richfield, as appropriate), the title
to any property or rights of the Sellers acquired or to be acquired by reason
of, or as a result of, the acquisition, the Sellers agree that each Seller
shall execute and deliver all such proper deeds, assignments and assurances in
law and do all things reasonably necessary, desirable or proper to vest,
perfect or confirm title to such property or rights in Richfield and otherwise
to carry out the purpose of this Agreement. If after the Closing, the Sellers
determine that further actions, deeds or documents are necessary on the part of
the Purchaser to carry out the intent of this Agreement, the Purchaser agrees
to execute and deliver such further documents or instruments to effectuate the
intent of this Agreement.
6.2 Agreement to Defend. In the event any action, suit,
proceeding or investigation of the nature specified in Sections 7.2 or 8.2 is
commenced, whether before or after the Closing Date, all the parties hereto
agree to cooperate and use their best efforts to defend against and respond
thereto.
6.3 Consents. Without limiting the generality of Section 6.1,
each of the parties hereto shall use their best efforts to obtain all permits,
authorizations, consents and approvals of all Persons and governmental
authorities necessary, proper or advisable in connection with the consummation
of the transactions contemplated by this Agreement prior to the Closing Date.
6.4 No Solicitation or Negotiation. Unless and until this
Agreement is terminated, neither any Seller nor Richfield through its
directors, officers, employees, representatives, agents, advisors, accountants
and attorneys shall initiate, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal with respect to, or engage in
negotiations concerning, or provide any confidential information or data to any
Person with respect to, or have any discussions with any Persons relating to,
any acquisition, business combination or purchase of all or any significant
asset of, or any equity interest in, Richfield, or otherwise facilitate any
effort or attempt to do or seek any of the foregoing, and shall immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Should Richfield or any Seller be contacted with
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respect to any offer, inquiry or proposal, Richfield and the Seller shall
immediately advise the Purchaser in writing of the name, address and phone
number of the contact and the nature of the inquiry.
6.5 No Termination of Sellers' Obligations by Subsequent
Incapacity, Etc. Each Seller specifically agrees that the obligations of the
Sellers hereunder, including, without limitation, obligations pursuant to
Article XI and Section 6.4 shall not be terminated by his death or incapacity.
6.6 Employment Agreements. Richfield and each Seller shall, at or
prior to the Closing, terminate the existing employment agreements between
Richfield and each of the Sellers, and the Sellers shall enter into Employment
Agreements with AmeriPath Ohio in the form of Exhibit 6.6 attached hereto (the
"Employment Agreements").
6.7 Public Announcements. Neither any Seller nor Richfield nor
any Affiliate, representative or shareholder of either of such Persons, shall
disclose any of the terms of this Agreement to any third party (other than the
Purchaser's advisors and senior lending group and each Seller's advisors)
without the other party's prior written consent unless required by any
applicable law. The form, content and timing of any and all press releases,
public announcements or publicity statements (except for any disclosures under
or pursuant to Federal or State securities laws in connection with the
registration of AmeriPath's securities or otherwise) with respect to this
Agreement or the transactions contemplated hereby shall be subject to the prior
approval of the Purchaser. No press releases, public announcements or
publicity statements shall be released by either party without prior mutual
agreement.
The parties hereto further agree, from and after the Closing Date, as
follows:
6.8 Deliveries After Closing. From time to time after the
Closing, at the Purchaser's request and without expense to Richfield and
without further consideration from the Purchaser or Richfield, each Seller
shall execute and deliver such other instruments of conveyance and transfer and
take such other action as the Purchaser reasonably may require to convey,
transfer to and vest in the Purchaser, and to put the Purchaser in possession
of, any rights or property to be sold, conveyed, transferred or delivered
hereunder.
6.9 Non-Competition Covenant.
(a) As a material and valuable inducement for the
Purchaser to enter into this Agreement, pay and deliver the Purchase
Price consideration and consummate the transactions provided for
herein, during the "Restricted Period" (as hereinafter defined), each
Seller agrees that he shall not, directly or indirectly, alone or as a
partner, officer, director, employee, consultant, agent, independent
contractor, member or stockholder of any Person:
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(i) engage in the practice of pathology within a
100 mile radius of any facility in which (x) Richfield is
doing business or providing services as of the date of this
Agreement or (y) AmeriPath Ohio or an AmeriPath Affiliate in
the State of Ohio is then doing business under the management
or direction of any Seller (the "Restricted Territory"); or
(ii) from any facility or location, whether within
or without the Restricted Territory, (x) perform pathology
services for any patient, laboratory or health care provider
located in the Restricted Territory or (y) perform pathology
services for any patient, laboratory or health care provider
who was or is a customer, client or patient of an AmeriPath
Affiliate or who is a prospective customer, client or patient
of an AmeriPath Affiliate; except that it shall not be a
violation of this Section 6.9 for either Seller to perform
pathology services in the Restricted Territory during the
Restricted Period (a) as an employee of a local, federal or
state government or agency; (b) in performing each Seller's
duties as a member of the United States military services or
the National Guard; or (c) on a locum tenens basis.
(b) As used in this Agreement, the term "Restricted
Period" shall mean and include the longer of (x) a period of five (5)
years, from the Closing to the fifth (5th) anniversary of the Closing,
and (y) during such time as each Seller is employed by an AmeriPath
Affiliate and a period of two (2) years thereafter; provided, however,
if the Purchaser fails to make a payment hereunder or under the
Contingent Notes and such failure to pay continues for a period of
thirty (30) days following notice by the Sellers then the Restricted
Period shall be reduced to a period of 3.5 years from the date of the
Closing.
(c) Each Seller further agrees that during the Restricted
Period, each Seller will not knowingly, directly or indirectly, (a)
solicit the employment of any employee, agent or consultant of any
AmeriPath Affiliate who was such at any time during the twelve (12)
months preceding such Seller's termination of employment with the
AmeriPath Affiliate, or (b) induce any employee of an AmeriPath
Affiliate to leave the employ of any such AmeriPath Affiliate, unless
in each case each Seller obtains the prior written consent of
AmeriPath.
(d) Each Seller covenants and agrees that the
restrictions set forth in this Section 6.9 are fair, reasonable and
necessary to protect the interests of AmeriPath and its Affiliates,
such restrictions were negotiated and bargained for and the
consideration delivered in connection with this Agreement reflects and
assumes each Seller's strict compliance with, and the enforceability
by the Purchaser of, these restrictions.
(e) Each Seller acknowledges and agrees that the
provisions of Section 6.9 and Section 6.10 are material and of the
essence to this Agreement. In addition, if the scope of any
restriction or covenant contained in either such Section should be or
become too
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broad or extensive to permit enforcement thereof to its fullest
extent, then such restriction or covenant shall be enforced to the
maximum extent permitted by law, and each Seller hereby consents and
agrees that (a) it is the parties intention and agreement that the
covenants and restrictions contained herein be enforced as written,
and (b) in the event a court of competent jurisdiction should
determine that any restriction or covenant contained herein is too
broad or extensive to permit enforcement thereof to its fullest
extent, the scope of any such restriction or covenant may be modified
accordingly in any judicial proceeding brought to enforce such
restriction or covenant, but should be modified to permit enforcement
of the restrictions and covenants contained herein to the maximum
extent the court, in its judgment, will permit.
6.10 Non-disclosure; Confidentiality.
(a) Confidential Information. By virtue of each Seller's
employment, association or involvement with an AmeriPath Affiliate,
each Seller may obtain confidential or proprietary information
developed, or to be developed, by an AmeriPath Affiliate.
"Confidential Information" means all proprietary or business-sensitive
information, whether in oral, written, graphic, machine-readable or
tangible form, and whether or not registered, and including all notes,
plans, records, documents and other evidence thereof, including but
not limited to all: patents, patent applications, copyrights,
trademarks, trade names, service marks, service names, "know-how,"
patient lists, details of client or consulting contracts, pricing
policies, operational methods, marketing plans or strategies, product
development techniques or plans, procurement and sales activities,
promotion and pricing techniques, credit and financial data concerning
customers, business acquisition plans or any portion or phase of any
scientific or technical information, discoveries, computer software or
programs used or developed in whole or in part by any AmeriPath
Affiliate (including source or object codes), processes, procedures,
formulas or improvements of any AmeriPath Affiliate; algorithms;
computer processing systems and techniques; price lists; customer
lists; procedures; improvements, concepts and ideas; business plans
and proposals; technical plans and proposals; research and
development; budgets and projections; technical memoranda, research
reports, designs and specifications; new product and service
developments; comparative analyses of competitive products, services
and operating procedures; and other information, data and documents
now existing or later acquired by an AmeriPath Affiliate, regardless
of whether any of such information, data or documents qualify as a
"trade secret" under applicable Federal or State law. "Confidential
Information" shall not include (a) any information which is in the
public domain during the period of service by each Seller or becomes
public thereafter, provided such information is not in the public
domain as a consequence of disclosure by each Seller in violation of
this Agreement, and (b) any information not considered confidential
information by similar enterprises operating in the clinical or
anatomical laboratory industry or otherwise in the ordinary course.
(b) Non-Disclosure. Each Seller agrees that, except as
directed by each Seller's employer (which employer is an AmeriPath
Affiliate), as required or otherwise
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contemplated under this Agreement or the Employment Agreement or as
otherwise required by law, he will not at any time (during the term of
each Seller's employment by an AmeriPath Affiliate or at any time
thereafter), except as may be expressly authorized by the AmeriPath
Affiliate in writing, disclose to any Person or use any Confidential
Information whatsoever for any purpose whatsoever, or permit any
Person whatsoever to examine and/or make copies of any reports or any
documents or software (whether in written form or stored on magnetic,
optical or other mass storage media) prepared by him or that come into
his possession or under his control by reason of his employment by an
AmeriPath Affiliate or by reason of any consulting or software
development services he has performed or may in the future perform for
an AmeriPath Affiliate which contain or are derived from Confidential
Information. Each Seller further agrees that while employed at an
AmeriPath Affiliate, no Confidential Information shall be removed from
the AmeriPath Affiliate's business premises, without the prior written
consent of such AmeriPath Affiliate.
(c) AmeriPath Group Property. As used in this Agreement,
the term "AmeriPath Group Property" means all documents, papers,
computer printouts and disks, records, customer or patient lists,
files, manuals, supplies, computer hardware and software, equipment,
inventory and other materials that have been created, used or obtained
by any AmeriPath Affiliate, or otherwise belonging to any AmeriPath
Affiliate, as well as any other materials containing Confidential
Information as defined above. Each Seller recognizes and agrees that:
(i) All the AmeriPath Group Property shall be and
remain the property of the AmeriPath Affiliate to which such
belongs;
(ii) Each Seller will preserve, use and hold the
AmeriPath Group Property only for the benefit of AmeriPath and
its Affiliates and to carry out the business of the AmeriPath
Affiliate, AmeriPath and its Affiliates; and
(iii) When each Seller's employment is terminated,
each Seller will immediately deliver and surrender to the
AmeriPath Affiliate all the AmeriPath Group Property,
including all copies, extracts or any other types of
reproductions, which each Seller has in his possession or
control.
6.11 Rule 144 Best Efforts. Following such time, if any, that
AmeriPath is or may become, and solely while AmeriPath is, a public company
with its securities registered under the Securities Act, and listed or quoted
for trading by a national securities exchange or inter-dealer quotation system,
AmeriPath will use its best efforts to see that AmeriPath is in compliance with
the requirements of Rule 144 under the Securities Act applicable to the issuer
of securities, so as to facilitate non-registered sales of AmeriPath Stock by
each Seller who then own AmeriPath Stock consistent with the requirements and
limitations of Rule 144. Nothing in this Section 6.11 shall be deemed as
either (i) any representation or warranty that Ameripath will become or remain
a public company with securities registered under the Securities Act, or (ii)
any covenant
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or agreement by AmeriPath to register, under federal or state securities laws
or otherwise, any AmeriPath securities issued to, or held by, the Sellers.
6.12 Physician Incentive Program. Each year following Closing
through December 31, 2001, AmeriPath and the Sellers shall prepare a budget of
the compensation expenses (including salaries and bonuses) for the Richfield
Pathologists (the "Compensation Budget"). If, and only if, Operating Earnings
equal or exceed $3,000,000.00 in any one year for which a Compensation Budget
was or should have been prepared (a "Budget Year"), then AmeriPath shall pay to
the Richfield Pathologists (to be allocated among the Richfield Pathologists as
Xx. Xxxxxx shall determine) the amount, if any, by which the Compensation
Budget exceeds the actual compensation expense; provided, however:
(a) the Compensation Budget for the initial Budget Year
shall be $1,250,000;
(b) the Compensation Budget for Budget Years 2-5 shall be
determined based upon the operating budget prepared by AmeriPath with
respect to the Richfield Pathologists; but in no event shall it be
less than the Compensation Budget for the previous year;
(c) the Compensation Budget shall be determined assuming
an expense of $250,000 for the salary and bonuses for each additional
Richfield Pathologist hired after the fifth Richfield Pathologist has
been hired.
6.13 Richfield Facility. At Closing, AmeriPath Ohio and Xxxxxx
shall execute a lease (the "Lease") for the Richfield facility pursuant to
which AmeriPath Ohio shall lease the Richfield facility for five (5) years
(with an option to lease the facility for at least two additional five-year
periods, with the rental for each additional term increasing proportionally
with the increase in the Consumer Price Index), on the same terms and
conditions as the existing lease for the Richfield facility, except for the
rent which shall be fixed at $7,500 per month for the first five (5) years.
From and after the time that AmeriPath Ohio hires and employs its sixth
Richfield Pathologist AmeriPath Ohio agrees to authorize Xx. Xxxxxx to expand
the Richfield facility by adding an additional 3,000 square feet at the same
rental per square foot as the Lease at that time.
6.14 338(h)(10) Election. The parties hereto agree that (i) the
acquisition of the Richfield Shares will be in accordance with Section 338 of
the Code, (ii) a Statement of Election (the "Election") on Form 8023-A under
Section 338(h)(10) of the Code shall be made and filed with the appropriate
authority and (iii) the Sellers shall be solely responsible for paying any
taxes which may result from the Election and out of or as a consequence of the
transactions contemplated hereby. For purposes of allocation under Section
1060 of the Code for purposes of the Election, property, plant and equipment
shall be assigned a value of their adjusted tax basis; accounts receivable will
be valued net of any bad debts and contractual allowances to be determined by
AmeriPath's independent auditors consistent with GAAP; and the balance shall be
attributed to goodwill or other intangible assets. The Sellers shall indemnify
AmeriPath (and its Affiliates) and hold AmeriPath (and its Affiliates) harmless
from any loss, charge or expense
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resulting from the Election and the payment of the taxes due in connection
therewith and herewith.
6.15 Stock Options. Upon the Closing, AmeriPath shall grant
non-statutory options (the "Options") to purchase an aggregate of 18,000 shares
of AmeriPath Stock to the persons set forth on Schedule 6.15 attached hereto
(the "Optionees") (with the number of shares of AmeriPath Stock which each
Optionee is entitled to purchase upon exercise of such Optionee's Option as set
forth on such Schedule 6.15). As a condition to such grant and issuance, each
Optionee shall be required to enter into a Non-Qualified Stock Option Agreement
in the form of Exhibit 6.15 hereto (the "Grant Agreement"). The Options shall
vest as equally as possible over a five-year period from the date of grant and
shall have an exercise price set at the fair market value of such shares at the
date of grant. The Options shall be granted pursuant to and in accordance with
the AmeriPath Stock Option Plan and each Grant Agreement and shall be subject
to the terms and conditions of such plan and agreement.
6.16 Miscellaneous Employee Matters. AmeriPath agrees
that up to $30,000 in fringe benefits shall be provided for each Richfield
Pathologist; and the Sellers agree that an additional Richfield Pathologist may
only be hired by AmeriPath Ohio once Operating Earnings for any Budget Year
have increased or are projected to increase by at least $500,000.
6.17 Structural Changes. The parties hereto intend that
the form and substance of this Agreement and the transactions contemplated
hereby comply with, and not be inconsistent with, federal and Ohio Health Care
Laws. Accordingly, notwithstanding any other term or provision of this
Agreement in the event that AmeriPath, upon the advice of counsel, determines
at any time following the Closing that the transactions contemplated by this
Agreement do not comply with, or are inconsistent with, federal or Ohio Health
Care Laws, then the Sellers hereby irrevocably agree, upon AmeriPath's request
and at AmeriPath's sole cost and expense, to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper and
advisable in AmeriPath's judgment and at AmeriPath's request to restructure the
agreements and transactions contemplated by this Agreement (the
"Restructuring") so that such agreements and transactions will be in compliance
with, and/or not inconsistent with, federal and Ohio Health Care Laws, while
preserving, to the maximum extent practicable, the economic and business
substance of such agreements and transactions. In furtherance and not in
limitation of the preceding sentence, the Sellers specifically agree that any
such Restructuring at AmeriPath's request may include (i) the organization by
Sellers of a professional corporation, partnership, grantor trust or similar
entity owned by such Sellers (the "Entity"), the organization and form of which
Entity shall be satisfactory in all respects to AmeriPath, (ii) the assignment
to such Entity of (a) AmeriPath Ohio's obligations under all Employment
Agreements (the performance of which obligations shall be guaranteed by
AmeriPath Ohio) and (b) all contracts under which AmeriPath Ohio was required
to provide or deliver professional pathology services, (iii) the execution and
delivery by the Entity of a Management Agreement with AmeriPath Ohio, which
Management Agreement shall be in form and substance satisfactory to AmeriPath,
pursuant to which AmeriPath Ohio will provide certain management and other
services to the Entity in consideration of management fees and the
reimbursement of expenses, and (iv) the execution and
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delivery by each Seller of a buy/sell agreement with AmeriPath, in form and
substance satisfactory to AmeriPath Ohio, pursuant to which AmeriPath Ohio may,
at its option, cause each Seller to transfer his or her ownership interest or
trusteeship in the Entity to a person designated by AmeriPath Ohio and
qualified to own and hold such interest or trusteeship.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER
Each and every obligation of the Purchaser under this Agreement shall
be subject to the satisfaction, on or before the Closing Date, of each of the
following conditions, unless waived in writing by the Purchaser:
7.1 Representations and Warranties; Covenants and Agreements. The
representations and warranties of the Sellers contained in Article II and
elsewhere in this Agreement and all information contained in any exhibit,
certificate, schedule or attachment hereto or in any writing delivered by, or
on behalf of, the Sellers or Richfield to the Purchaser, shall be true and
correct when made and shall be true and correct in all material respects on the
Closing Date as though then made, except as expressly provided herein. The
Sellers and Richfield shall have performed and complied with all agreements,
covenants and conditions and shall have made all deliveries required by this
Agreement to be performed, delivered and complied with by them prior to the
Closing Date. The Sellers and the president of Richfield shall have executed
and delivered to the Purchaser a certificate, dated the Closing Date,
certifying to the foregoing.
7.2 No Injunction. No preliminary or permanent injunction or
other Order, decree or ruling issued by any Authority, or any Regulation
promulgated or enacted by any Authority shall be in effect, which would prevent
the consummation of the transactions contemplated hereby.
7.3 Third Party Consents. The Purchaser, each Seller and
Richfield shall have obtained all consents, approvals, waivers or other
authorizations with respect to the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, such
that the contracts and leases listed in Schedule 7.3 hereto shall remain in
effect (without default, acceleration, termination, assignment, right of
termination or assignment, payment, increase in rates or compensation payable,
penalty, interest or other adverse effect) from and after the Closing Date as
such contracts and leases operated and were in effect before the Closing Date.
7.4 Regulatory Approvals. The Federal and State regulatory
agencies or authorities listed in Schedule 7.4 hereto shall have approved the
applications listed in such Schedule with respect to the change of control
represented by the transactions contemplated by this Agreement, and such
approval shall not impose financial obligations on the Purchaser that are
objectionable to it.
7.5 No Material Adverse Change. There shall have been no Material
Adverse Change since the date of this Agreement. The Purchaser shall have
received a certificate (which shall be
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addressed to the Purchaser), dated the Closing Date, of the president and chief
financial officer of Richfield, certifying to the foregoing.
7.6 Opinion of Sellers' Counsel. The Purchaser shall have
received an opinion of counsel to the Sellers and Richfield (which will be
addressed to the Purchaser and its senior lenders), dated the Closing Date, in
the form of Exhibit 7.6 hereto.
7.7 Employment Agreements. Each Seller shall have terminated his
existing employment agreement with Richfield and shall have executed and
delivered to the Purchaser an Employment Agreement with AmeriPath Ohio in the
form of Exhibit 6.6.
7.8 Delivery of Richfield Share Certificates. Each Seller shall
have executed and delivered to AmeriPath this Agreement, or a counterpart
hereof, and shall have delivered at the Closing stock certificates representing
all of the Richfield Shares, duly endorsed for transfer to the Purchaser,
together with stock powers duly executed in blank.
7.9 Shareholders' Agreement. At the Closing, each Seller shall
have executed and delivered to AmeriPath a counterpart signature page to that
certain Shareholders' Agreement, dated as of February 29, 1996, by and among
AmeriPath and each of the stockholders of AmeriPath (the "Shareholders'
Agreement"), pursuant to which each Seller agrees to be bound by all of the
provisions of the Shareholders' Agreement, in accordance with their terms, to
the same extent as if he had been an original signatory thereto.
7.10 Subordination Agreement. At the Closing, each Seller shall
have executed and delivered the Subordination Agreement, attached hereto as
Exhibit 7.10, pursuant to which each Seller agrees to be bound by all of the
provisions of the Subordination Agreement in accordance with their terms.
7.11 Richfield Charter Amendments. Richfield, which as of the date
hereof is organized as a professional service corporation under the Revised
Code of Ohio, shall have taken all appropriate and required board of director
and shareholder action to approve, and shall have filed with the Secretary of
State of the State of Ohio in form acceptable for filing, an amendment to
Richfield's articles of incorporation, which amendment (i) shall be in form and
substance satisfactory to AmeriPath, and (ii) shall include the Richfield
Charter Amendments (as such term is defined in Section 4.8 hereof).
7.12 Creditor Consents. The creditors set forth on Schedule 7.12
hereto shall have agreed in writing with Richfield as to the amounts owed in
order for such creditors to have been paid in full and to release all Liens in
favor of such creditors. Richfield shall have obtained from the creditors set
forth on Schedule 7.12 and shall provide to the Purchaser at Closing, such UCC
termination statements, releases of mortgages and other releases of Liens as
shall be required by the Purchaser and its lenders.
7.13 Lease. At the Closing, the Sellers shall deliver the executed
Lease to AmeriPath.
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE SELLERS
Each and every obligation of the Sellers under this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by the Sellers:
8.1 Representations and Warranties; Performance. The
representations and warranties of the Purchaser contained in Article III and
elsewhere in this Agreement and all information contained in any exhibit,
schedule or attachment hereto, delivered by or on behalf of the Purchaser to
the Sellers, shall be true and correct in all material respects when made and
shall be true and correct in all material respects on the Closing Date as
though then made, except as expressly provided herein. The Purchaser shall
have performed and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be performed and
complied with by them prior to the Closing Date. The Chief Operating Officer
of the Purchaser shall have delivered to the Sellers a certificate, dated the
Closing Date, certifying to the foregoing.
8.2 No Injunction. No preliminary or permanent injunction or
other Order, decree or ruling issued by any Authority, or any Regulation
promulgated or enacted by any Authority shall be in effect, which would prevent
the consummation of the transactions contemplated hereby.
8.3 Purchase Consideration. Each Seller shall have received the
consideration (in the form of cash, AmeriPath Stock and Contingent Notes)
required to be delivered at Closing and to which each Seller is entitled
pursuant to Section 1.1 hereof in accordance with Schedule 1.1 hereto.
8.4 Employment Agreements. AmeriPath Ohio shall have executed and
delivered to each of the Sellers the Employment Agreements.
ARTICLE IX
CLOSING
9.1 Closing. Unless this Agreement shall have been terminated or
abandoned pursuant to the provisions of Article X hereof, a closing of the
transactions contemplated by this Agreement (the "Closing") shall be held on or
before October 4, 1996, or on such other date which is mutually agreed upon in
writing following the satisfaction or waiver of the conditions to closing set
forth in Article VII and Article VIII hereof (the "Closing Date").
9.2 Closing Deliveries. At the Closing,
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(a) the Sellers and Richfield shall deliver or cause to
be delivered to the Purchaser:
(i) a certificate or certificates evidencing all
of the Richfield Shares, duly endorsed for transfer with all
necessary transfer stamps affixed;
(ii) the Officer's Certificates required by
Sections 7.1 and 7.5;
(iii) copies of all consents and approvals required
by Sections 7.3, 7.4 and 7.12;
(iv) the Opinion of Counsel required by Section
7.6;
(v) the Employment Agreements required by Section
7.7;
(vi) the counterpart signature page to the
Shareholders' Agreement required by Section 7.9;
(vii) the Subordination Agreement required by
Section 7.10;
(viii) the Lease (executed by the landlord);
(ix) a certificate, signed by the secretary of
Richfield, as to the articles of incorporation and by-laws of
Richfield, the resolutions adopted by the board of directors
and shareholders of Richfield in connection with this
Agreement, the incumbency of certain officers of Richfield and
the jurisdictions in which Richfield is qualified to conduct
business, in form acceptable to the Purchaser;
(x) certificates issued by the appropriate
governmental authorities evidencing the good standing, with
respect to both the conduct of business and the payment of all
franchise taxes, of Richfield as of a date not more than ten
(10) days prior to the Closing Date, as a corporation
organized under the laws of the State of Ohio and as a foreign
corporation authorized to do business under the laws of the
various jurisdictions where it is so qualified.
(xi) such other certified resolutions, documents
and certificates as are required to be delivered by the
Sellers or Richfield pursuant to the provisions of this
Agreement.
(b) The Purchaser shall deliver to the Sellers:
(i) the consideration (in the form of cash,
AmeriPath Stock and Contingent Notes) required to be paid or
delivered to each Seller at Closing in accordance with Section
1.1 (and Schedule 1.1 hereto).
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(ii) the Officer's Certificate required by Section
8.1; and
(iii) the Employment Agreements required by Section
8.4;
(iv) the Lease (executed by AmeriPath Ohio);
(v) such other certified resolutions, documents
and certificates as are required to be delivered by the
Purchaser pursuant to the provisions of this Agreement.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination. This Agreement may be terminated and
the transactions herein contemplated may be abandoned at any time:
(a) by mutual consent of the Purchaser, the Sellers and
Richfield;
(b) by the Purchaser or both of the Sellers if this
Agreement is not consummated on or before October 4, 1996; provided,
however, that if any party has breached or defaulted with respect to
its respective obligations under this Agreement on or before such
date, such party may not terminate this Agreement pursuant to this
Section 10.1(b), and each other party to this Agreement shall at its
option enforce its rights against such breaching or defaulting party
and seek any remedies against such party, in either case as provided
hereunder and by applicable law; or
(c) by the Purchaser if as of the Closing Date (including
any extensions) any of the conditions specified in Article VII hereof
shall not have been satisfied or if Richfield or the Sellers are
otherwise in default under this Agreement.
10.2 Procedure Upon Termination. In the event of termination and
abandonment pursuant to Section 10.1 hereof, and subject to the proviso
contained in Section 10.1(b), this Agreement shall terminate and shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
(a) each party shall redeliver all documents and other
material of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the
party furnishing the same;
(b) all information received by any party hereto with
respect to the business of any other party or Richfield (other than
information which is a matter of public knowledge or which has
heretofore been or is hereafter published in any publication for
public distribution or filed as public information with any
governmental authority) shall
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not at any time be used for the advantage of, or disclosed to third
parties by, such party to the detriment of the party furnishing such
information; and
(c) no party hereto shall have any further liability or
obligation to any other party under or in connection with this
Agreement; provided, however, the non-breaching or non-defaulting
party shall not be foreclosed from bringing a Claim or cause of action
or otherwise recovering from the breaching or defaulting party.
ARTICLE XI
SURVIVAL OF TERMS; INDEMNIFICATION
11.1 Survival. All of the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, shall survive the execution of this Agreement and the Closing
notwithstanding any investigation heretofore or hereafter made by or on behalf
of any party hereto; provided, however, that (a) the agreements and covenants
set forth in this Agreement shall survive and continue until all obligations
set forth therein shall have been performed and satisfied; and (b) all
representations and warranties shall survive and continue until:
(1) with respect to the representations and
warranties in Sections 2.16 (tax matters), 2.18 (ERISA
matters), 2.20 (environmental matters) and 2.30 (health care
regulatory matters), until sixty (60) days following the
expiration of the applicable statute of limitations;
(2) with respect to the representations and
warranties in Sections 2.3 (capitalization), 2.4 (title to the
Richfield Shares) and 2.6 (options and rights on capital
stock), these representations shall survive and continue
forever and without limitation; and
(3) with respect to all other representations and
warranties, the date upon which AmeriPath receives from its
outside auditors the audited financial statements for
AmeriPath's fiscal year ending December 31, 1998 (the "1998
Audit Date"), except for representations, warranties and
indemnities for which an indemnification Claim shall be
pending as of the 1998 Audit Date, in which event such
indemnities shall survive with respect to such Claim until the
final disposition thereof.
11.2 Indemnification by the Sellers. Subject to this Article XI,
the Purchaser and its officers, directors, employees, shareholders,
representatives and agents shall be indemnified and held harmless by each
Seller, at all times after the date of this Agreement, against and in respect
of any and all damage, loss, deficiency, liability, obligation, commitment,
cost or expense
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(including the fees and expenses of counsel) resulting from, or in respect of,
any of the following:
(a) Any misrepresentation, breach of warranty, or
non-fulfillment of any obligation on the part of the Sellers or
Richfield under this Agreement, any document relating thereto or
contained in any schedule or exhibit to this Agreement or from any
misrepresentation in or omission from any certificate, schedule, other
agreement or instrument by the Sellers or Richfield hereunder;
(b) Any and all known liabilities of Richfield of any
nature whether accrued, absolute, contingent or otherwise, existing at
the Closing Date to the extent not reflected and reserved against in
the statement of assets and liabilities for the year ended December
31, 1995 included in the Financial Statements or not otherwise
adequately disclosed in this Agreement or the schedules or exhibits
thereto, including, without limitation:
(i) All Tax liabilities of Richfield, together
with any interest or penalties thereon or related thereto,
through the Closing Date and any Tax liability of Richfield
arising in connection with the transactions contemplated
hereby. Any Taxes, penalties or interest attributable to the
operations of Richfield payable as a result of an audit of any
tax return shall be deemed to have accrued in the period to
which such Taxes, penalties or interest are attributable;
(ii) All environmental liabilities relating to any
of Richfield's properties, including federal, state and local
environmental liability, together with any interest or
penalties thereon or related thereto, through the Closing
Date, but excluding any amount for which there is an adequate
accrual and reserve on the statement of assets and liabilities
for the year ended December 31, 1995 included in the Financial
Statements;
(iii) All claims by Medicare, Medicaid, or any
other third party payor relating to reimbursement for services
provided by Richfield prior to the Closing Date
("Reimbursement Claims"). Indemnification by each Seller for
Reimbursement Claims shall include all costs incurred by
Purchaser for such claims, including, but not limited to,
applicable investigative and audit expenses, attorneys fees,
reimbursement costs, and any fines and penalties levied
against Richfield; and
(c) All demands, assessments, judgments, costs and
reasonable legal and other expenses arising from, or in connection
with any Claim incident to any of the foregoing.
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(d) All other Claims of the Purchaser shall be resolved
in accordance with Section 11.4.
11.3 Indemnification by the Purchaser. Subject to this Article XI,
each Seller and her or his heirs, assigns, representatives and agents shall be
indemnified and held harmless by the Purchaser, at all times after the date of
this Agreement, against and in respect of any and all damage, loss, deficiency,
liability, obligation, commitment, cost or expense (including the fees and
expenses of counsel) resulting from, or in respect of, any misrepresentation,
breach of warranty, or non-fulfillment of any obligation on the part of the
Purchaser under this Agreement, any document relating thereto or contained in
any schedule or exhibit to this Agreement or from any misrepresentation in or
omission from any certificate, schedule, other agreement or instrument by the
Purchaser hereunder.
11.4 Third-Party Claims. Except as otherwise provided in this
Agreement, the following procedures shall be applicable with respect to
indemnification for third-party Claims. Promptly after receipt by the party
seeking indemnification hereunder (hereinafter referred to as the "indemnitee")
of notice of the commencement of any (a) Tax audit or proceeding for the
assessment of Tax by any taxing authority or any other proceeding likely to
result in the imposition of a Tax liability or obligation or (b) any action or
the assertion of any Claim, liability or obligation by a third party (whether
by legal process or otherwise), against which Claim, liability or obligation
the other party to this Agreement (hereinafter the "indemnitor") is, or may be,
required under this Agreement to indemnify such indemnitee, the indemnitee
will, if a Claim thereon is to be, or may be, made against the indemnitor,
notify the indemnitor in writing of the commencement or assertion thereof and
give the indemnitor a copy of such Claim, process and all legal pleadings. The
indemnitor shall have the right to participate in the defense of such action
with counsel of reputable standing. The indemnitor shall have the right to
assume the defense of such action unless such action (i) may result in
injunctions or other equitable remedies in respect of the indemnitee or its
business; (ii) may result in liabilities which, taken with other then existing
Claims under this Article XI, would not be fully indemnified hereunder; or
(iii) may have an adverse impact on the business or financial condition of the
indemnitee after the Closing Date (including an effect on the Tax liabilities,
earnings or ongoing business relationships of the indemnitee). The indemnitor
and the indemnitee shall cooperate in the defense of such Claims. In the case
that the indemnitor shall assume or participate in the defense of such audit,
assessment or other proceeding as provided herein, the indemnitee shall make
available to the indemnitor all relevant records and take such other action and
sign such documents as are necessary to defend such audit, assessment or other
proceeding in a timely manner. If the indemnitee shall be required by judgment
or a settlement agreement to pay any amount in respect of any obligation or
liability against which the indemnitor has agreed to indemnify the indemnitee
under this Agreement, the indemnitor shall promptly reimburse the indemnitee in
an amount equal to the amount of such payment plus all reasonable expenses
(including legal fees and expenses) incurred by such indemnitee in connection
with such obligation or liability subject to this Article XI.
Prior to paying or settling any Claim against which an
indemnitor is, or may be, obligated under this Agreement to indemnify an
indemnitee, the indemnitee must first supply the
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indemnitor with a copy of a final court judgment or decree holding the
indemnitee liable on such claim or failing such judgment or decree, and must
first receive the written approval of the terms and conditions of such
settlement from the indemnitor. An indemnitor shall have the right to settle
any Claim against it, subject to the prior written approval of the indemnitee,
which approval shall not be unreasonably withheld.
An indemnitee shall have the right to employ its own counsel
in any case, but the fees and expenses of such counsel shall be at the expense
of the indemnitee unless (a) the employment of such counsel shall have been
authorized in writing by the indemnitor in connection with the defense of such
action or Claim, (b) the indemnitor shall not have employed, or is prohibited
under this Section 11.4 from employing, counsel in the defense of such action
or Claim, or (c) such indemnitee shall have reasonably concluded that there may
be defenses available to it which are contrary to, or inconsistent with, those
available to the indemnitor, in any of which events such fees and expenses of
not more than one additional counsel for the indemnified parties shall be borne
by the indemnitor.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by a written agreement
signed by Richfield, the Purchaser and each Seller.
12.2 Entire Agreement. This Agreement, including the schedules and
exhibits hereto and the documents, annexes, attachments, certificates and
instruments referred to herein and therein, embodies the entire agreement and
understanding of the parties hereto in respect of the agreements and
transactions contemplated by this Agreement and supersedes all prior
agreements, representations, warranties, promises, covenants, arrangements,
communications and understandings, oral or written, express or implied, between
the parties with respect to such transactions. There are no agreements,
representations, warranties, promises, covenants, arrangements or
understandings between the parties with respect to such transactions, other
than those expressly set forth or referred to herein.
12.3 Certain Definitions.
"Affiliate" means, with regard to any Person, (a) any Person,
directly or indirectly, controlled by, under common control of, or
controlling such Person, (b) any Person, directly or indirectly, in
which such Person holds, of record or beneficially, five percent or
more of the equity or voting securities, (c) any Person that holds, of
record or beneficially, five percent or more of the equity or voting
securities of such Person, (d) any Person that, through Contract,
relationship or otherwise, exerts a substantial influence on the
management of such Person's affairs, (e) any Person that, through
Contract,
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relationship or otherwise, is influenced substantially in the
management of their affairs by such Person, or (f) any director,
officer, partner or individual holding a similar position in respect
of such Person.
"Authority" means any governmental, regulatory or
administrative body, agency, arbitrator or authority, any court or
judicial authority, any public, private or industry regulatory agency,
arbitrator authority, whether international, national, federal, state
or local.
"Claim" means any action, claim, obligation, liability,
expense, lawsuit, demand, suit, inquiry, hearing, investigation,
notice of a violation, litigation, proceeding, arbitration, or other
dispute, whether civil, criminal, administrative or otherwise, whether
pursuant to contractual obligations or otherwise.
"Contract" means any agreement, contract, commitment,
instrument or other binding arrangement or understanding, whether
written or oral.
"Environmental Law" means any Regulation, Order, settlement
agreement or governmental requirement, which relates to or otherwise
imposes liability or standards of conduct concerning mining or
reclamation of mined land, discharges, emissions, releases or
threatened releases of noises, odors or any pollutants, contaminants
or hazardous or toxic wastes, substances or materials, whether as
matter or energy, into ambient air, water, or land, or otherwise
relating to the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, cleanup, transport or handling of
pollutants, contaminants, or hazardous wastes, substances or
materials, including (but not limited to) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Toxic
Substances Control Act of 1976, as amended, the Federal Water
Pollution Control Act Amendments of 1972, the Clean Water Act of 1977,
as amended, any so-called "Superlien" law, and any other similar
Federal, state or local statutes.
"Environmental Permit" shall mean Permits, certificates,
approvals, licenses and other authorizations relating to or required
by Environmental Law and necessary or desirable for the Corporation's
business.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis.
"Health Care Laws" means any Federal, state, or local
Regulation or Order, of any Authority, which relates to or otherwise
imposes liability or standards of conduct concerning the licensure,
certification, qualification, or operation of a health maintenance
organization, pharmacy, home health agency or other aspect of a
Corporation's business subject to such Health Care Laws, including but
not limited to Chapter 400, Florida
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Statutes, governing home health agencies; The Health Maintenance
Organization Act; the Ohio Pharmacy Act; the Ohio Drug and Cosmetic
Act; the Ohio Comprehensive Drug Abuse Prevention and Control Act; the
Patient Self-Referral Act; the Employee Health Care Access Act; 21
U.S.C. Section 301-392, the Federal Food Drug and Cosmetic Act; 21
U.S.C. Section 821 et seq., the Federal Drug Abuse Act; Section 1128B
of the Social Security Act; The Clinical Laboratory Improvement
Amendments of 1988; 42 U.S.C. Section 1320a-7b, 42 C.F.R. Part 1001,
42 CFR Chapter IV, Subchapter C; Sections 1876 or 1903 of the Social
Security Act; 45 CFR, Part 74; 45 CFR, Part 92; 42 CFR 455.109 Section
306 of the Clean Air Act; 42 U.S.C. Section 1857(h) et seq., Section
508 of the Clean Water Act; 33 U.S.C. Section 1368 et seq., Executive
Order 11738 and Environmental Protection Agency regulations; 40 CFR
Part 15, Title VI of the Civil Rights Act of 1964; 42 U.S.C. Section
2000 d et seq., Section 504 of the Rehabilitation Act of 1933; 29
U.S.C. Section 7940; Title IX of the Education Amendments of 1972, 20
U.S.C. Section 1681 et seq., the Age Discrimination Act of 1975; 42
U.S.C. Section 6101 et seq., Section 654 of OBRA '81; 42 U.S.C.
Section 9849 and the Americans with Disabilities Act of 1990; P.L.
101-336, OBRAs 1986 through 1993, as amended, and any other similar
Federal, state or local Regulations.
"Lien" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, restriction or interest
of another Person of any kind or nature.
"Material Adverse Change" means any development or change
which has, had or would have a Material Adverse Effect.
"Material Adverse Effect" means any circumstances, state of
facts or matters which has, or might reasonably be expected to have, a
material adverse effect in respect of Richfield's business,
operations, properties, assets, condition (financial or otherwise),
results, plans, strategies or prospects.
"Order" means any decree, judgment, award, order, injunction,
rule, consent of or by an Authority.
"Person" means any corporation, partnership, joint venture,
company, syndicate, organization, association, trust, entity,
Authority or natural person.
"Proprietary Rights" means any patent, patent application,
copyright, trademark, trade name, service xxxx, service name, trade
secret, know-how, confidential information or other intellectual
property or proprietary rights.
"Regulation" means any law, statute, rule, regulation,
ordinance, requirement, announcement or other binding action of or by
an Authority.
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"Subsidiary" means any Person which the Purchaser or
Richfield, as the case may be, owns, directly or indirectly, 50% or
more of the outstanding stock or other equity interests.
12.4 Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered by hand or mailed, first class
certified mail with postage paid or by overnight receipted courier service:
(a) If to the Sellers or Richfield, to:
Xxxxx X. Xxxxxx, M.D., Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, M.D., President
with a copy to:
Xxxxxxxx, Xxxxx & Xxxx
2900 Xxxxx Tower
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
or to such other person or address as each Seller or
Richfield shall furnish by notice to the Purchaser in writing.
(b) If to the Purchaser to:
AmeriPath, Inc.
000 Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. New, President
with a copy to:
Greenberg, Traurig, Hoffman,
Lipoff, Xxxxx & Xxxxxxx, P.A.
000 X. Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
or to such other person or address as the Purchaser
shall furnish by notice to Seller in writing.
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12.5 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that the Purchaser may assign its rights, interests and obligations
hereunder to any wholly-owned Subsidiary, and may grant Liens or security
interests in respect of its rights and interests hereunder, without the prior
approval of the Sellers.
12.6 Governing Law. The Agreement shall be governed by the laws of
the State of Florida as to all matters, including but not limited to matters of
validity, construction, effect and performance.
12.7 Consent to Jurisdiction; Service of Process. Richfield and
each Seller hereby irrevocably submit to the jurisdiction of the state or
federal courts located in Broward County, Florida in connection with any suit,
action or other proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby, and hereby agree not to assert, by way of
motion, as a defense, or otherwise in any such suit, action or proceeding that
the suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or that this Agreement or
the subject matter hereof may not be enforced by such courts.
12.8 Injunctive Relief. The parties hereto agree that in the event
of a breach of any provision of this Agreement, the aggrieved party or parties
may be without an adequate remedy at law. The parties therefore agree that in
the event of a breach of any provision of this Agreement, the aggrieved party
or parties may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages for breach of
this Agreement. By seeking or obtaining any such relief, the aggrieved party
shall not be precluded from seeking or obtaining any other relief to which it
may be entitled.
12.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.10 Headings. The article, section and subsection headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement (or any
provision hereof).
12.11 Binding Effect. This Agreement shall not be construed so as
to confer any right or benefit upon any Person other than the signatories to
this Agreement and each of their respective successors and permitted assigns.
12.12 Delays or Omissions; Waiver. No delay or omission to exercise
any right, power or remedy accruing to any party hereto, upon any breach or
default of any other party under this
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Agreement, shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of, or estoppel with respect to, any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions,
obligations, covenants, agreements or conditions of this Agreement must be made
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing.
12.13 Severability. Unless otherwise provided herein, if any
provision of this Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
12.14 Expenses. All fees, costs and expenses (including, without
limitation, legal, auditing and accounting fees, costs and expenses) incurred
in connection with considering, pursuing, negotiating, documenting or
consummating this Agreement and the transactions contemplated hereby shall be
borne and paid solely by the party incurring such fees, costs and expenses.
12.15 Arbitration. Other than a dispute over the Operating Earnings
or Cumulative Operating Earnings (which dispute will be governed and handled in
accordance with the provisions of Section 1.2(b)(ii)), any controversy,
dispute, disagreement or claim arising out of or relating to this Agreement, or
any alleged breach hereof, or the subject matter hereof, shall be resolved
exclusively by binding arbitration, which shall be conducted in Dade or Broward
County, Florida in accordance with the National Health Lawyer's Association,
Alternative Dispute Resolution Service, Rules of Procedure for Arbitration, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction over the matter.
12.16 Attorneys' Fees. If any party to this Agreement seeks to
enforce the terms and provisions of this Agreement, then the prevailing party
in such action shall be entitled to recover from the losing party all costs in
connection with such action, including without limitation reasonable attorneys'
fees, expenses and costs incurred at the trial court and all appellate levels.
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IN WITNESS WHEREOF, the parties hereto have made and entered into this
Agreement the date first hereinabove set forth.
PURCHASER:
AMERIPATH, INC.,
By: /s/ Xxxxxx X. Xxxx
------------------------------------------
Xxxxxx X. Xxxx, Chief Financial Officer
SELLERS:
/s/ Xxxxx X. Xxxxxx
---------------------------------------------
XXXXX X. XXXXXX, M.D.
/s/ Xxxx X. Xxxxxx
---------------------------------------------
XXXX X. XXXXXX, M.D.
XXXXX X. XXXXXX, M.D., INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx, M.D., President
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