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Governance Council, the function of which was to oversee the day-
to-day operations of the group medical practices in SWMG's
service area and to provide advice to SMF's board of directors
with respect to all policy matters affecting that service area.
Finally, SMF agreed under the PSA to include the SWMG member
physicians' clinic locations among its clinic locations and to
refrain from making changes in clinic locations during the term
of the agreement without the approval of SWMG.
3. Physician Employment Agreements (PEAs) and Asset
Purchase Agreements (APAs)
The concluding steps of the affiliation of the UHMG
physicians with Sutter Health were effected during the latter
half of October 1994 and consisted of the purchase of a share of
SWMG's stock by each affiliating physician (including
petitioners) coupled with his or her execution, effective
November 1, 1994, of a Physician Employment Agreement (PEA) with
SWMG and an Asset Purchase Agreement (APA) with SMF. SMF's
obligation to purchase, and each affiliating physician's
obligation to sell, his or her medical practice pursuant to an
APA was preconditioned upon the physician's having become a
shareholder and employee of SWMG, and the PSA between SWMG and
SMF having become effective.
As noted, a precondition to the PSA's becoming effective was
the requirement that at least 25 of the UHMG physicians become
shareholders of SWMG. This had occurred by the end of October
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