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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 9, 1998
-------------------------------
UCI Medical Affiliates, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-13265 59-2225346
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(Commission File Number) (I.R.S. Employer Identification No.)
1901 Main Street, Suite 1200, Columbia, SC 29201
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(Address of Principal Executive Offices) (Zip Code)
(803) 252-3661
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
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This Form 8-K/A amends the Form 8-K filed with the Securities and
Exchange Commission on February 17, 1998 by UCI Medical Affiliates, Inc., a
Delaware corporation ("UCI"), and that certain Form 8-K/A filed with the
Securities and Exchange Commission on April 20, 1998, and is filed to disclose a
second amendment to the Agreement reported in the initial filing of this Form
8-K, and to include revised pro forma financial information.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to the terms of an Acquisition Agreement and Plan of
Reorganization dated February 9, 1998 (the "Agreement"), by and among UCI
Medical Affiliates of Georgia, Inc., a South Carolina corporation (the
"Company"); UCI Medical Affiliates, Inc., a Delaware corporation ("UCI");
MainStreet Healthcare Corporation, a Delaware corporation (the "Seller");
MainStreet Healthcare Medical Group, P.C., a Georgia professional corporation
(the "MainStreet Georgia PC"); MainStreet Healthcare Medical Group, PC, a
Tennessee professional corporation (the "MainStreet Tennessee PC"); Prompt Care
Medical Center, Inc., a Georgia corporation ("Prompt Care"); Michael J. Dare
("Dare"); A. Wayne Johnson ("Johnson"); PENMAN Private Equity and Mezzanine
Fund, L.P., a Delaware limited partnership ("PENMAN"); and Robert G. Riddett,
Jr. ("Riddett"), the Company (a wholly-owned subsidiary of UCI) acquired
substantially all of the assets of Seller associated with Seller's business for
a purchase price of $8,050,000, plus the assumption of $594,184.51 of Seller's
line of credit, all as described in the Agreement. The Agreement was amended
pursuant to that certain First Amendment To Acquisition Agreement and Plan of
Reorganization dated April 15, 1998 (the "First Amendment"), by and among the
Company; UCI; Seller; MainStreet Georgia PC; MainStreet Tennessee PC; Prompt
Care; Dare; Johnson; PENMAN; and Riddett, and further amended pursuant to that
certain Second Amendment To Acquisition Agreement and Plan of Reorganization
dated May 7, 1998 (the "Second Amendment"), by and among the Company; UCI;
Seller; MainStreet Georgia PC; MainStreet Tennessee PC; Prompt Care; Dare;
Johnson; PENMAN; and Riddett. The closing of the acquisition was completed on
May 13, 1998, effective for accounting purposes as of May 1, 1998.
The purchase price consisted in part of a cash payment by the Company
at closing of $450,000 to an escrow agent appointed by Seller and the delivery
of a promissory note in the original principal amount of $800,000 executed by
the Company in favor of the escrow agent. Such promissory note bears interest at
a rate of 6.5% per annum and is due and payable on August 1, 1998. UCI
guaranteed the promissory note. The purchase price received by the escrow agent
shall be used to pay certain creditors of the Seller identified to the escrow
agent by the Seller.
The consideration payable by the Company in connection with this
acquisition was determined by arms-length negotiations between the Company and
the Seller. The funds used for the cash portion of the purchase price under the
Agreement, as amended, were provided from a cash distribution to the Company
from its parent company, UCI, out of a portion of the net proceeds received by
UCI from the sale by UCI of 1,200,000 shares of UCI common stock in a private
placement which closed on May 12, 1998. The net proceeds to UCI of the private
placement were $1,074,000.
2
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The balance of the purchase price of the acquisition consisted of the
delivery to the Seller at the closing of the acquisition of a Conditional
Delivery Agreement (the "Conditional Delivery Agreement") by and between UCI,
UCI of GA and the Seller which requires UCI to issue to the Seller 2,091,396
shares of the common stock of the UCI after the approval of the shareholders of
UCI. Pursuant to the Agreement, the price per share utilized to determine the
number of shares of UCI common stock to be issued to the Seller was $2.375.
The issuance of the shares to the Seller requires the prior approval of
the shareholders of UCI of (i) a proposed amendment to UCI's Certificate of
Incorporation to increase the number of authorized shares of the UCI common
stock from 10,000,000 to 30,000,000 shares, and (ii) the issuance of the shares
to the Seller as provided in the Agreement, as amended. The shareholders of UCI
will vote on these proposed resolutions at the next meeting of the shareholders
of UCI which is presently scheduled to be held on or about June 25, 1998. The
Conditional Delivery Agreement states that in the event the shareholders of UCI
fail to approve any of the required resolutions necessary to issue the shares to
the Seller as provided in the Agreement, as amended, the transactions
contemplated in the Agreement, as amended, shall be unwound and each of the
parties to the extent possible shall be restored to its position held prior to
the closing.
Seller provides non-medical management and administrative functions for
nine medical facilities in the State of Georgia and two medical facilities
located in the State of Tennessee. The medical services of the Georgia
facilities are provided by the MainStreet Georgia PC, and the medical services
of the Tennessee facilities are provided by the MainStreet Tennessee PC.
Pursuant to the Agreement, a Georgia professional corporation affiliated with
the Company was incorporated to purchase substantially all of the assets
(including patient records) of the MainStreet Georgia PC for a purchase price of
one hundred dollars. Similarly, pursuant to the Agreement, a Tennessee
professional corporation affiliated with the Company was incorporated to
purchase substantially all of the assets (including patient records) of the
MainStreet Tennessee PC for a purchase price of one hundred dollars.
Pursuant to the Agreement, the Company also assumed all of the Seller's
equipment and real property leases related to such facilities. The Company
expects to continue the operations at such facilities in substantially the same
manner as they were conducted prior to the acquisition.
All descriptions of the Agreement, First Amendment, Second Amendment,
and the other documents noted herein are qualified in their entirety by
reference to such documents filed as Exhibits to this Current Report on Form
8-K/A.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The consolidated financial statements for MainStreet
Healthcare Corporation, the business acquired by a wholly-owned
subsidiary of UCI Medical Affiliates, Inc., was included in this report
as an attachment to that certain Form 8-K/A filed with the Securities
and Exchange Commission on April 20,1998
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(b) PRO FORMA FINANCIAL INFORMATION.
The revised unaudited pro forma financial information prepared
to give effect to the acquisition and the private placement described
under Item 2 of this report on Form 8- K is included in this report
beginning on page 6.
(C) EXHIBITS.
Exhibit 2 Acquisition Agreement and Plan of Reorganization
dated February 9, 1998, by and among UCI Medical
Affiliates of Georgia, Inc., a South Carolina
corporation; UCI Medical Affiliates, Inc., a Delaware
corporation; MainStreet Healthcare Corporation, a
Delaware corporation; MainStreet Healthcare Medical
Group, P.C., a Georgia professional corporation;
MainStreet Healthcare Medical Group, PC, a Tennessee
professional corporation; Prompt Care Medical Center,
Inc., a Georgia corporation; Michael J. Dare; A.
Wayne Johnson; PENMAN Private Equity and Mezzanine
Fund, L.P., a Delaware limited partnership; and
Robert G. Riddett, Jr. (Previously filed with the
initial filing of this Report on Form 8-K).
Exhibit 2.1 First Amendment To Acquisition Agreement and Plan
of Reorganization dated April 15, 1998, by and among
UCI Medical Affiliates of Georgia, Inc., a South
Carolina corporation; UCI Medical Affiliates, Inc., a
Delaware corporation; MainStreet Healthcare
Corporation, a Delaware corporation; MainStreet
Healthcare Medical Group, P.C., a Georgia
professional corporation; MainStreet Healthcare
Medical Group, PC, a Tennessee professional
corporation; Prompt Care Medical Center, Inc., a
Georgia corporation; Michael J. Dare; A. Wayne
Johnson; PENMAN Private Equity and Mezzanine Fund,
L.P., a Delaware limited partnership; and Robert G.
Riddett, Jr (Previously filed with the filing of this
Report on Form 8-K/A filed on April 20,1998).
Exhibit 2.2 Second Amendment To Acquisition Agreement and
Plan of Reorganization dated May 7, 1998, by and
among UCI Medical Affiliates of Georgia, Inc., a
South Carolina corporation; UCI Medical Affiliates,
Inc., a Delaware corporation; MainStreet Healthcare
Corporation, a Delaware corporation; MainStreet
Healthcare Medical Group, P.C., a Georgia
professional corporation; MainStreet Healthcare
Medical Group, PC, a Tennessee professional
corporation; Prompt Care Medical Center, Inc., a
Georgia corporation; Michael J. Dare; A. Wayne
Johnson; PENMAN Private Equity and Mezzanine Fund,
L.P., a Delaware limited partnership; and Robert G.
Riddett, Jr.
Exhibit 99 News release of UCI Medical Affiliates, Inc. dated
February 13, 1998. (Previously filed with the initial
filing of this Report on Form 8-K).
4
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UCI MEDICAL AFFILIATES, INC.
Contents
<TABLE>
<CAPTION>
<S> <C>
Page
------
UCI Medical Affiliates Pro Forma Combined Financial Statements..............................7
Combined Condensed Balance Sheet at March 31, 1998....................................8
Combined Condensed Statements of Operations and Accumulated Deficit for
six months ended March 31, 1998.....................................................9
Combined Condensed Statement of Operations and Accumulated Deficit for
fiscal year ended September 30, 1997...............................................10
Notes to Combined Statements of Operations ...........................................11
</TABLE>
5
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PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed financial statements
(the "Condensed Statements") have been prepared to give effect to the
acquisition and the private placement described under Item 2 of this report on
Form 8-K. The purchase method of accounting was used to give effect to all
transactions.
The Condensed Statements reflect certain assumptions regarding the
acquisition (the "Acquisition") and the private placement (the "Private
Placement") and are based on the historical consolidated financial statements of
the respective entities. The Condensed Statements, including the notes thereto,
are qualified in their entirety by reference to, and should be read in
conjunction with, the audited financial statements and the unaudited interim
financial statements, including the notes thereto, of UCI, which are
incorporated by reference in this report from the Form 10-KSB/A of UCI for the
year ended September 30, 1997 and the Form 10-QSB of UCI for the quarter ended
March 31, 1998, and the unaudited financial statements of MainStreet Healthcare
Corporation, a Delaware corporation ("MHC") as of and for the twelve months
ended September 30, 1997 and the unaudited interim financial statements of MHC
for the six months ended March 31, 1998, as presented in the pro forma combined
condensed financial statements.
The pro forma combined condensed balance sheet as of March 31, 1998 gives
effect to the Acquisition and the Private Placement as if they had occurred on
March 31, 1998 and combines the unaudited balance sheets of UCI and MHC as of
that date.
The pro forma combined condensed statements of operations combine UCI's
historical results of operations for the six months ended March 31, 1998 and the
fiscal year ended September 30, 1997 with MHC's historical results of operations
for the six months ended March 31, 1998 and the twelve months ended September
30, 1997, respectively, giving effect to the Acquisition and the Private
Placement as if they had occurred on October 1, 1996.
After the consummation of the Acquisition, UCI will determine the fair
value of significant assets, liabilities and business operations acquired, which
may include the use of independent appraisals. In connection with finalizing the
purchase price allocation, UCI is currently evaluating the fair value of assets
acquired and liabilities assumed. Using this information, UCI will make a final
allocation of the excess purchase price, including allocation to the intangibles
other than goodwill. Accordingly, the purchase accounting information is
preliminary and has been made solely for the purpose of developing such
unaudited pro forma combined condensed financial information.
The Condensed Statements are presented for illustrative purposes only and
are not necessarily indicative of the financial position or results of
operations which would have actually been reported had the Acquisition occurred
as of March 31, 1998, or for the six months ended March 31, 1998, or for the
fiscal year ended September 30, 1997, nor are the Condensed Statements
necessarily indicative of future financial position or results of operations.
6
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UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
UCI MHC ADJUSTMENTS COMBINED
-------------- --------------- --------------- --------------
Assets
Cash and cash equivalents $ --- $ 57,603 $ (450,000) (a)
(57,603) (b)
1,074,000 (c) $ 624,000
Accounts receivable, net 6,789,279 1,755,558 (94,789) (b) 8,450,048
Medical supplies inventory 544,396 26,750 --- 571,146
Deferred taxes 334,945 --- --- 334,945
Prepaids and other assets 902,526 74,750 --- 977,276
-------------- --------------- --------------- --------------
Total current assets 8,571,146 1,914,661 471,608 10,957,415
Property, plant and equipment, net 4,468,271 1,520,504 (271,909) (b) 5,716,866
Deferred taxes 1,417,237 --- --- 1,417,237
Goodwill 8,513,467 1,383,611 3,956,740 (d) 13,853,818
Other assets 263,999 597,442 --- 861,441
-------------- --------------- --------------- --------------
Total assets $ 23,234,120 $ 5,416,218 $ 4,156,439 $ 32,806,777
============== =============== =============== ==============
Liabilities and Capital
Current portion - long-term debt $ 908,374 $ 537,150 $ 800,000 (a)
(477,095) (b) $ 1,768,429
Current debt to employees 220,508 --- --- 220,508
Accounts payable 2,817,692 1,381,330 (1,381,330) (b) 2,817,692
Accrued payroll 1,017,226 286,714 (286,714) (b) 1,017,226
Other accrued liabilities 447,786 1,375,132 (710,256) (b) 1,112,662
-------------- --------------- --------------- --------------
Total current liabilities 5,411,586 3,580,326 (2,055,395) 6,936,517
Long-term debt, net of current 7,882,309 440,976 (358,066) (b) 7,965,219
Non-current debt to employees 598,676 --- --- 598,676
-------------- --------------- --------------- --------------
Total liabilities 13,892,571 4,021,302 (2,413,461) 15,500,412
-------------- --------------- --------------- --------------
Preferred stock --- 4,779,000 (4,779,000) (b) ---
Common stock 304,230 760,620 (760,620) (b)
145,070 (a)
60,000 (c) 509,300
Paid-in capital 16,322,924 26,050 (26,050) (b)
6,745,746 (a)
1,014,000 (c) 24,082,670
Accumulated deficit (7,285,605) (4,170,754) 4,170,754 (b) (7,285,605)
Total capital 9,341,549 1,394,916 6,569,900 17,306,365
-------------- --------------- --------------- --------------
Total liabilities and capital $ 23,234,120 $ 5,416,218 $ 4,156,439 $ 32,806,777
============== =============== =============== ==============
</TABLE>
7
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT
FOR THE SIX MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
UCI MHC ADJUSTMENTS COMBINED
--------------- ------------------ --------------- ----------------
Revenue $ 16,692,563 $ 3,260,012 $ --- $ 19,952,575
Operating costs 16,312,823 3,308,737 (157,500) (e)
(75,000) (f) 19,389,060
Operating margin 379,740 (48,725) 232,500 563,515
General and administrative expenses 46,088 688,245 --- 734,333
Depreciation and amortization 828,014 122,327 131,891 (g)
5,000 (h) 1,087,232
Income (loss) from operations (494,362) (859,297) 95,609 1,258,050
Interest expense, net (555,960) (231,523) --- (787,483)
Gain (loss) on equipment (439) --- --- (439)
--------------- ------------------ --------------- ----------------
Income (loss) before income tax (1,050,761) (1,090,820) 95,609 (2,045,972)
Income tax benefit (558) --- --- (558)
--------------- ------------------ --------------- ----------------
Net income (loss) $ (1,051,319) $ (1,090,820) $ 95,609 $ (2,046,530)
=============== ================== =============== ================
Basic earnings (loss) per share $ (0.17) --- (i) --- $ (0.20)
=============== ================== =============== ================
Basic weighted average common shares
outstanding 6,052,540 --- (i) --- 10,153,936
=============== ================== =============== ================
Diluted earnings (loss) per share $ (0.17) --- (i) --- $ (0.20)
=============== ================== =============== ================
Diluted weighted average common shares
outstanding 6,069,465 --- (i) --- 10,470,861
=============== ================== =============== ================
</TABLE>
8
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UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PRO FORMA PRO FORMA
UCI MHC ADJUSTMENTS COMBINED
----------------- --------------- ------------------ ---------------
Revenue $ 27,924,772 $ 6,008,442 $ --- $ 33,933,214
Operating costs 26,466,294 6,790,444 (315,000) (e)
(150,000) (f) 32,791,738
----------------- --------------- ------------------ ---------------
Operating margin 1,458,478 (782,002) 465,000 1,141,476
General and administrative expenses 153,445 1,420,580 --- 1,574,025
Depreciation and amortization 1,250,349 335,499 263,783 (g)
20,000 (h) 1,869,631
----------------- --------------- ------------------ ---------------
Income (loss) from operations 54,684 (2,538,081) 181,217 (2,302,180)
Interest expense, net (812,749) (273,721) --- (1,086,470)
Gain (loss) on equipment 8,809 (130,990) --- (122,181)
----------------- --------------- ------------------ ---------------
Income (loss) before income tax (749,256) (2,942,792) 181,217 (3,510,831)
Income tax benefit 665,530 --- --- 665,530
----------------- --------------- ------------------ ---------------
Net income (loss) $ (83,726) $ (2,942,792) $ 181,217 $ (2,845,301)
================= =============== ================== ===============
Net income (loss) per common and
common equivalent share $ (.02) --- (i) --- $ (0.30)
================= =============== ================== ===============
Weighted average common shares and
common share equivalents outstanding 5,005,081 --- (i) --- 9,406,477
================= =============== ================== ===============
</TABLE>
9
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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(a) The pro forma combined condensed balance sheet as of March 31, 1998 has
been prepared to give effect to the Acquisition as if it had occurred
on March 31, 1998 at an aggregate purchase price of $8,948,657. Pro
forma adjustments reflect the following components of the purchase
price and its preliminary allocation:
<TABLE>
<CAPTION>
<S> <C>
PURCHASE PRICE COMPONENTS: PURCHASE PRICE PRELIMINARY ALLOCATION:
Common Stock valued at $6.89 million
allocated as follows:
Stated capital
(2,901,396 shares, $0.05 par value)......$ 145,070 Accounts receivable......................$1,660,769
Additional paid-in capital................6,745,746 Inventory....................................26,750
Liabilities assumed............................807,841 Furniture and equipment...................1,248,595
Note payable delivered at closing..............800,000 Prepaids and other assets...................672,192
Cash paid..................................... 450,000 Goodwill..................................5,245,562
-------- ---------
$8,948,657 $8,948,657
========= =========
</TABLE>
The number of shares of Common Stock was calculated using a share price
of $2.375 in the share price formula of the Acquisition Agreement
(resulting in 2,901,396 shares issued).
(b) Not included in the assets and liabilities of MHC acquired in the
Acquisition are the following: certain deposits ($57,603), employee
receivables ($94,789), certain furniture and equipment ($271,909),
accounts payable ($1,381,330), long-term debt ($835,161), payroll and
other accrued liabilities ($996,970) and MHC stockholders' equity
($1,394,916).
(c) The pro forma financial statements reflect the $1.2 million Private
Placement, resulting in net proceeds to UCI of $1,074,000 after payment
of placement agent commissions and expenses. The Private Placement
resulted in the sale of 1,200,000 shares of Common Stock at a price of
$1.00 per share, and the issuance of Common Stock purchase warrants for
the purchase of 300,000 shares of Common Stock. The earnings per share
computation includes the shares issuable under these warrants.
The following reflects the effects of the Private Placement on the pro
forma financial statements:
<TABLE>
<CAPTION>
<S> <C>
$ 60,000 Common Stock (1,200,000 shares, par value $0.05 per share)
1,014,000 Additional paid-in capital
-----------
$ 1,074,000 Net increase in cash
===========
</TABLE>
(d) Excess of acquisition cost over the fair values of net assets acquired
represents goodwill of $5,340,351, which when reduced by acquired
goodwill of $1,383,611 results in a $3,956,740 adjustment to goodwill.
(e) Net decrease in salaries paid to former corporate officers is $157,500
for six months and $315,000 annually.
10
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NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(f) Net decrease in salaries for clinic based administrative personnel is
$75,000 for six months and $150,000 annually.
(g) Amortization of goodwill on a straight line basis over 15 years is
$131,891 for six months and $263,783 annually.
(h) Net increase in amortization expense related to building improvements
in leased real estate is $5,000 for six months and $20,000 annually.
(i) As a privately held corporation, MHC was not required to, and did not,
compute earnings per share.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UCI MEDICAL AFFILIATES, INC.
By: /S/ M. F. MCFARLAND III, M.D.
------------------------------
M. F. McFarland III, M.D.
President
Date: May 28, 1998 By: /S/ JERRY F. WELLS, JR., C.P.A.
-------------------------------
Jerry F. Wells, Jr., C.P.A.
Executive Vice President of Finance and
Chief Financial Officer
12
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EXHIBIT INDEX
Exhibit 2 Acquisition Agreement And Plan of Reorganization dated
February 9, 1998, by and among UCI Medical Affiliates of
Georgia, Inc., a South Carolina corporation; UCI Medical
Affiliates, Inc., a Delaware corporation; MainStreet
Healthcare Corporation, a Delaware corporation; MainStreet
Healthcare Medical Group, P.C., a Georgia professional
corporation; MainStreet Healthcare Medical Group, PC, a
Tennessee professional corporation; Prompt Care Medical
Center, Inc., a Georgia corporation; Michael J. Dare; A. Wayne
Johnson; PENMAN Private Equity and Mezzanine Fund, L.P., a
Delaware limited partnership; and Robert G. Riddett, Jr.
(Previously filed with the initial filing of this Report on
Form 8-K).
Exhibit 2.1 First Amendment to Acquisition Agreement And Plan of
Reorganization dated April 15, 1998, by and among UCI Medical
Affiliates of Georgia, Inc., a South Carolina corporation; UCI
Medical Affiliates, Inc., a Delaware corporation; MainStreet
Healthcare Corporation, a Delaware corporation; MainStreet
Healthcare Medical Group, P.C., a Georgia professional
corporation; MainStreet Healthcare Medical Group, PC, a
Tennessee professional corporation; Prompt Care Medical
Center, Inc., a Georgia corporation; Michael J. Dare; A. Wayne
Johnson; PENMAN Private Equity and Mezzanine Fund, L.P., a
Delaware limited partnership; and Robert G. Riddett, Jr.
(Previously filed with the filing of this Report on Form 8-K/A
on April 20, 1998)
Exhibit 2.2 Second Amendment to Acquisition Agreement And Plan of
Reorganization dated May 7, 1998, by and among UCI Medical
Affiliates of Georgia, Inc., a South Carolina corporation; UCI
Medical Affiliates, Inc., a Delaware corporation; MainStreet
Healthcare Corporation, a Delaware corporation; MainStreet
Healthcare Medical Group, P.C., a Georgia professional
corporation; MainStreet Healthcare Medical Group, PC, a
Tennessee professional corporation; Prompt Care Medical
Center, Inc., a Georgia corporation; Michael J. Dare; A. Wayne
Johnson; PENMAN Private Equity and Mezzanine Fund, L.P., a
Delaware limited partnership; and Robert G. Riddett, Jr.
Exhibit 99 News release of UCI Medical Affiliates, Inc. dated February
13, 1998 (Previously filed with the initial filing of this
Report on Form 8-K).
13
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Exhibit 2.2
Second Amendment to Acquisition Agreement And Plan of Reorganization
dated May 7, 1998, by and among UCI Medical Affiliates of Georgia,
Inc., a South Carolina corporation; UCI Medical Affiliates, Inc., a
Delaware corporation; MainStreet Healthcare Corporation, a Delaware
corporation; MainStreet Healthcare Medical Group, P.C., a Georgia
professional corporation; MainStreet Healthcare Medical Group, PC, a
Tennessee professional corporation; Prompt Care Medical Center, Inc., a
Georgia corporation; Michael J. Dare; A. Wayne Johnson; PENMAN Private
Equity and Mezzanine Fund, L.P., a Delaware limited partnership; and
Robert G. Riddett, Jr.
14
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SECOND AMENDMENT
TO
ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
This Second Amendment To Acquisition Agreement and Plan of
Reorganization ("Second Amendment") is made as of this 7th day of May, 1998, by,
between and among UCI Medical Affiliates, Inc., a Delaware corporation ("UCI");
UCI Medical Affiliates of Georgia, Inc., a South Carolina corporation ("UCI of
GA"); MainStreet Healthcare Corporation, a Delaware corporation ("MainStreet");
MainStreet Healthcare Medical Group, P.C., a Georgia professional corporation
("MHMG-GA"); MainStreet Healthcare Medical Group, PC, a Tennessee professional
corporation ("MHMG-TN"); Prompt Care Medical Center, Inc., a Georgia corporation
("Prompt Care"); Michael J. Dare ("Dare"); A. Wayne Johnson ("Johnson"); PENMAN
Private Equity and Mezzanine Fund, L.P., a Delaware limited partnership
("PENMAN"); and Robert G. Riddett, Jr. ("Riddett").
INTRODUCTION.
-------------
Pursuant to that certain Acquisition Agreement and Plan of
Reorganization ("Agreement") dated February 9, 1998, by and among UCI, UCI of
GA, MainStreet, MHMG-GA, MHMG-TN, Prompt Care, Dare, Johnson, PENMAN, and
Riddett, MainStreet has agreed to sell substantially all of its assets to UCI of
GA. As set forth in that certain First Amendment to Acquisition Agreement and
Plan of Reorganization dated April 15, 1998, the closing of the transactions
described in the Agreement was scheduled to be held on April 24, 1998.
The Parties desire to enter into this Second Amendment to reflect a
change in the date of Closing and certain other amendments to the Agreement as
reflected herein. Defined terms herein shall have the meanings ascribed to them
in the Agreement unless otherwise defined herein.
AGREEMENT.
----------
NOW, THEREFORE, in consideration of these premises and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Section 7.1.2 of the Agreement is hereby deleted and the following
substituted in lieu thereof:
7.1.2 In addition, UCI of GA at Closing will pay to an escrow
account established by the Parties (the "Escrow Account"), the sum of
Four Hundred Fifty Thousand and No/100 ($450,000) Dollars. The Escrow
Account will be established with an escrow agent ("Escrow
15
<PAGE>
Agent") appointed by MainStreet pursuant to an escrow agreement
acceptable to MainStreet and UCI of GA which shall provide that the
escrowed funds shall be paid directly to certain creditors of
MainStreet as directed by MainStreet.
2. The first paragraph of Section 7.1.3 of the Agreement is hereby
deleted and the following substituted in lieu thereof:
7.1.3 In addition, the sum of Eight Hundred Thousand and
No/100 ($800,000) Dollars shall be due and payable by UCI of GA to
Escrow Agent on or before August 1, 1998, pursuant to the promissory
note substantially in the form attached hereto as Exhibit 7.1.3 (the
"Promissory Note").
3. Section 8.1 of the Agreement is hereby deleted and the following
substituted in lieu thereof:
8.1 Date of Closing. Subject to the terms and conditions of
this Agreement, the closing of the sale and purchase of the Assets and
related transactions shall take place on May 8, 1998, to be effective
as of 12:01 a.m. on May 1, 1998, and shall take place at the offices of
Nexsen Pruet Jacobs & Pollard, LLP, 1441 Main Street, Suite 1500,
Columbia, South Carolina (the "Closing") or such other time and place
as may be mutually agreed upon in writing by MainStreet and UCI of GA.
In the event Closing set forth in this Section 8 is changed to a
different date, all references in this Agreement to Closing shall be
deemed to refer to the time and date agreed upon by MainStreet and UCI
of GA, in the manner set forth herein.
4. Section 13 of the Agreement is hereby amended to add the following
section:
13.9 Set Off and Recoupment. In addition to any other remedies
available to UCI or any Transferee against the Transferors under this
Agreement, until such time as the Promissory Note is paid in full, UCI
and the Transferees before seeking a monetary recovery against any
Class B Shareholder shall first set off or recoup against amounts
coming due to Escrow Agent under the Promissory Note in the event any
right of indemnification arises in favor of UCI or any Transferee under
this Agreement subject to the applicable limitations set forth in this
Agreement. If the Note is satisfied, UCI and the Transferees may seek
monetary recovery against the Class B Shareholders subject to the
applicable limitations set forth in the Agreement. Escrow Agent,
Transferees and Class B Shareholders retain the right to lawfully
contest any such set off or recoupment in an action to collect any
amounts due under the Note, Agreement or such other ancillary
instruments.
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<PAGE>
Notwithstanding any provision to the contrary in this Agreement, such
set off rights and limitations set forth in this Section shall not
impair the rights of UCI or any Transferee to seek non-monetary
equitable relief, including (without limitation) specific performance
or injunctive relief to redress any default or breach of this Agreement
or any document executed in connection therewith.
5. Sections 16.1.1.2 and 16.1.1.3 of the Agreement are hereby deleted
and the following substituted in lieu thereof:
16.1.1.2 By UCI of GA. In the event that Closing has not been
completed by May 31, 1998 as a result of the non-satisfaction or
non-fulfillment in any material respect of any of the conditions upon
Transferees' obligations specified in Section 11.1 (which has not been
previously waived by Transferees), then UCI of GA shall be entitled at
its option to terminate this Agreement by notice to the other Parties;
provided however, that UCI of GA shall not be entitled to terminate
this Agreement if the non-satisfaction or non-fulfillment of any such
condition resulted from or was proximately caused by UCI or any
Transferee's breach of this Agreement or was frustrated or made
impossible by the wrongful act or failure to act of UCI or any
Transferee.
16.1.1.3 By MainStreet. In the event that Closing has not been
completed by May 31, 1998 as a result of the non-fulfillment or
non-satisfaction in any material respect of any of the conditions upon
Transferors' obligations specified in Section 11.2 (which has not been
previously waived by Transferors), then MainStreet shall be entitled at
its option to terminate this Agreement by notice to the other Parties;
provided however, that MainStreet shall not be entitled to terminate
this Agreement if the non-satisfaction or non-fulfillment of any such
condition resulted from or was proximately caused by any Class B
Shareholder or Transferor's breach of this Agreement or was frustrated
or made impossible by the wrongful act or failure to act of any Class B
Shareholder or Transferor.
6. Exhibit 7.1.3 of the Agreement, as amended, is hereby deleted, and
Exhibit 7.1.3 attached hereto shall be substituted in lieu thereof.
7. Except as otherwise modified hereby, the terms and provisions of the
Agreement shall remain in full force and effect. This Second Amendment may be
executed in any number of counterparts, all of which taken together shall
constitute one Amendment, and any party hereto may execute this Second Amendment
by signing any such counterpart. The authorized attachment of counterpart
signature pages shall constitute execution by the Parties. This Second Amendment
shall be governed by and construed in accordance with the laws of
17
<PAGE>
the State of South Carolina. No provision of this Second Amendment shall be
interpreted against any Party because such Party or its legal representative
drafted such provision.
[SIGNATURE PAGE ATTACHED HERETO]
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Second Amendment To
Acquisition Agreement and Plan of Reorganization under seal with the corporate
parties acting by and through their duly authorized officers, effective as of
the date first above written.
UCI MEDICAL AFFILIATES, INC. MAINSTREET HEALTHCARE
CORPORATION
By: /S/ JERRY F. WELLS, JR. By: /S/ ROBERT G. RIDDETT, JR.
--------------------------- ---------------------------
Its: Executive Vice President of Finance Its: President
and Chief Financial Officer
UCI MEDICAL AFFILIATES OF MAINSTREET HEALTHCARE MEDICAL
GEORGIA, INC. GROUP, P.C., a Georgia corporation
By: /S/ JERRY F. WELLS, JR. By: /S/ ROBERT G. RIDDETT, JR.
--------------------------- ---------------------------
Its: Executive Vice President of Finance Its: Vice President
and Chief Financial Officer
PENMAN PRIVATE EQUITY AND MAINSTREET HEALTHCARE
MEZZANINE FUND, L.P. MEDICAL GROUP, PC, a Tennessee
corporation
By: PENMAN Asset Management, L.P.
Its: General Partner By: /S/ ROBERT G. RIDDETT, JR.
By: /S/ KEVIN J. PENNINGTON ---------------------------
--------------------------- Its: Vice President
Kelvin J. Pennington
Its: General Partner
PROMPT CARE MEDICAL CENTER, INC.
/S/ ROBERT G. RIDDETT, JR. By: /S/ ROBERT G. RIDDETT, JR.
- ------------------------------- ---------------------------
Robert G. Riddett, Jr. Its: Vice President
/S/ MICHAEL J. DARE
- -------------------------------
Michael J. Dare
/S/ A. WAYNE JOHNSON
- -------------------------------
A. Wayne Johnson
19
<PAGE>
Exhibit 7.1.3
Promissory Note
[See Attached]
20
<PAGE>
PROMISSORY NOTE
$800,000.00 Columbia, S.C.
Subject to Setoff as of May 1, 1998
FOR VALUE RECEIVED, UCI Medical Affiliates of Georgia, Inc., a South
Carolina corporation (the "Borrower"), hereby promises to pay, in lawful money
of the United States of America, to the order of S. Friedman & Associates, P.C.
("Escrow Agent") as escrow agent under that certain Escrow Agreement by and
between MainStreet Healthcare Corporation ("MHC"), Borrower and Escrow Agent
dated the hereof, the principal sum of Eight Hundred Thousand and No/100
($800,000.00) Dollars, subject to setoff as provided hereunder.
Interest shall accrue from the date hereof on the principal balance
outstanding hereunder from time to time until paid in full at the fixed simple
rate per annum equal to six and one-half (6.5%) percent calculated based upon a
360-day year and the actual number of days elapsed. All principal and interest
payable hereunder shall be due and payable on August 1, 1998. Payments hereunder
shall be made to the Escrow Agent at Suite 1550, 1050 Crown Pointe Pkwy.,
Atlanta, Georgia 30338, or at such other place as the Escrow Agent may designate
from time to time in writing.
Notwithstanding the foregoing, upon the occurrence of a default in the
payment when due of any amount at any time owed hereunder, the interest rate
applicable hereunder shall be increased by an additional four percentage points
(4.0%); provided, however, that in no event shall the interest accruing under
this Note exceed the highest lawful rate.
The occurrence of the following shall constitute an "Event of Default"
under the Note: Borrower fails to pay when due any principal or interest payment
hereunder. Upon the occurrence of an Event of Default as hereinabove defined,
then at any time thereafter the Escrow Agent may declare the entire remaining
principal balance due hereunder, together with all accrued interest thereon,
immediately due and payable.
This Note is executed pursuant to, and is subject to, that certain
Acquisition Agreement and Plan of Reorganization dated February 9, 1998, by and
between among others Borrower and MHC, as amended (the "Acquisition Agreement").
Borrower may prepay this Note at any time without fee or penalty. Anything
contained in this Note to the contrary notwithstanding, subject to the terms and
conditions of Section 13.9 of the Acquisition Agreement, Borrower shall have the
right of set off and recoupment against amounts coming due hereunder in the
event that any Transferor and/or Class B Shareholder (each as defined in the
Acquisition Agreement) breaches the Acquisition Agreement or any document
executed in connection therewith. In the event Borrower elects to exercise the
right of set off and recoupment set forth herein, upon notice to the Escrow
Agent the principal amount hereof shall be deemed reduced by the amount of any
set off or recoupment to which the Borrower is entitled, and all interest and
payments accruing thereafter shall be calculated based upon such reduced
principal amount. The Escrow Agent's right to lawfully contest such set off or
recoupment in any action to collect this Note shall not be impaired by
Borrower's exercise of such set off or recoupment rights.
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<PAGE>
The invalidity of any provision of this Note shall not affect the
validity of any other provision hereof. The acceptance after maturity of any
payment with respect to this Note shall not constitute a waiver of the right of
Escrow Agent to demand the payment in full of any unpaid balance. No delay or
failure on the part of the Escrow Agent in the exercise of any right or remedy
shall operate as a waiver thereof, and no single exercise of any right or remedy
shall preclude Escrow Agent from the exercise of any other or further rights or
remedies.
In the event this Note is placed in the hands of an attorney for
collection (but not for resolution of any disputes of set off or recoupment of
the amount due hereunder), all expenses of the Escrow Agent incurred in
connection with the repayment of this Note, including reasonable attorneys'
fees, shall be added to the principal amount of this Note and collected as a
part hereof. This Note shall be governed by and construed in accordance with the
laws of the State of South Carolina. Jurisdiction and venue for the enforcement
of this Note shall be exclusively in the courts for the State of South Carolina.
Borrower expressly waives demand, presentment, protest and notice of
non-payment or dishonor and all other notices or demands whatsoever (except for
notices expressly set forth herein), and such parties agree to remain bound
hereby until all amounts due hereunder are paid in full, notwithstanding any
extension of time for payment which may be granted, even though the period of
extension be indefinite.
EXECUTED as of May 8, 1998, to be effective as of 12:01 a.m. on this
1st day of May, 1998.
UCI MEDICAL AFFILIATES OF GEORGIA,
INC. (SEAL)
By: ___________________________________________
Jerry F. Wells, Jr.
Its: Executive Vice President of Finance
and
Chief Financial Officer
Notice Address for Borrower:
1901 Main Street, Suite 1200
Columbia, South Carolina 29201
Attn: Jerry F. Wells, Jr.
[GUARANTY ATTACHED HERETO]
22
<PAGE>
GUARANTY
The undersigned UCI Medical Affiliates, Inc., a Delaware corporation
("UCI"), hereby irrevocably and unconditionally guarantees the proper and timely
performance and/or full and timely payment of each and every term and obligation
of UCI Medical Affiliates of Georgia, Inc., a South Carolina corporation ("UCI
of GA"), contained in the foregoing Promissory Note in the original principal
amount of Eight Hundred Thousand and No/100 ($800,000.00) Dollars dated
effective as of May 1, 1998 (the "Note") executed by UCI of GA in favor of S.
Friedman & Associates, P.C. ("Escrow Agent") as escrow agent under that certain
Escrow Agreement by and between MainStreet Healthcare Corporation, UCI of GA,
and Escrow Agent dated May 1, 1998. This guaranty is a guarantee of payment and
not of collection and shall not be changed or affected by any act or statement
of UCI of GA, the invalidity or unenforceability of the Note, or any amendment
or termination of the Note. The holder of the Note shall not be required to seek
enforcement against UCI of GA or resort to any other remedy and may proceed
directly against the undersigned. The undersigned waives any right of
subrogation with respect to any payments made under this Guaranty. Except as
expressly set forth in the Note, the undersigned hereby waives presentment,
demand, protest, notice of non-payment, notice of default, notice of compromise
or surrender, any other demand or notice whatsoever in connection with this
Guaranty, and any other right which would release the undersigned at law or
equity from its obligations under the Guaranty. In the event this Guaranty is
placed in the hands of an attorney for collection, all expenses of the
prevailing party, including reasonable attorney's fees, shall be added to this
Guaranty and collected as a part hereof. This Guaranty shall be governed by and
construed in accordance with the laws of the State of South Carolina.
IN THE PRESENCE OF: UCI MEDICAL AFFILIATES, INC.
_______________________ By: ____________________________________________
(Witness) Jerry F. Wells, Jr.
Its: Executive Vice President of Finance and
Chief Financial Officer
_______________________
(Witness)
23
