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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 30, 1996
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Physicians Resource Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-13778 76-0456864
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Three Lincoln Centre, Suite 1540, 5430 LBJ Freeway, Dallas, TX 75240
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 982-8200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Physicians Resource Group, Inc., a Delaware corporation (the
"Company") and various wholly-owned subsidiaries of the Company (each an
"Acquisition Sub"), entered into acquisition agreements (the "Acquisition
Agreements") with the following ophthalmological practices (the "Practices")
and physicians (the "Physicians"):
(i) (a) Cincinnati Eye Institute, Inc., John S. Cohen, M.D., James D.
Faulkner, M.D., William J. Faulker, M.D., Robert C. Kersten, M.D.,
Richard S. Kerstine, M.D., Robert H. Osher, M.D., Robert W. Nash,
M.D., Michael R. Petersen, M.D., Gary A. Varley, M.D., Linda J. Greff,
M.D., Robert J. Cionni, M.D., Kevin T. Corcoran, O.D., Corwin M.
Smith, M.D. and (b) CEI Realty Associates, Ltd., (the "Cincinnati Eye
Acquisition");
(ii) Houston Eye Associates, P.A., Malcom L. Mazow, M.D., Robert H.
Stewart, M.D., Robert B. Wilkins, M.D., Jeffrey D. Lanier, M.D.,
Michael A. Bloome, M.D., Paul C. Salmonsen, M.D., Richard L.
Kimbrough, M.D., Jack T. Holladay, M.D., Jeffrey B. Arnoult, M.D.,
William H. Quayle, M.D., John D. Goosey, M.D., John M. Lim, M.D.,
Kathryn H. Musgrove, M.D., Marsha F. Soechting, M.D., Marc N. Longo,
M.D., (the "Houston Eye Acquisition");
(iii) Gregory L. Henderson, M.D., P.A., Gregory L. Henderson, M.D.,
(the "Henderson Acquisition"); and
(iv) (a) William Reynolds, M.D., P.A., William Reynolds, M.D., (b)
Tampa Eye Clinic, P.A., J. Burns Creighton, M.D., Ronald Seeley, M.D.,
Lewis Lauring, M.D., William Reynolds, M.D., David Leach, M.D., P.A.,
Timothy Lorenzen, M.D., P.A.; (c) Timothy Lorenzen, M.D., P.A.,
Timothy Lorenzen, M.D.; (d) Ronald Seeley, M.D., P.A., Ronald Seeley,
M.D.; (e) J. Burns Creighton, M.D., P.A., J. Burns Creighton, M.D.;
(f) David Leach, M.D., P.A., David Leach, M.D.; and (g) Lewis Lauring,
M.D., P.A., Lewis Lauring, M.D., (the "Tampa Acquisition").
Pursuant to the Acquisition Agreements, the respective Acquisition
Subs would acquire (the "Acquisitions"), with certain limited exceptions, all
of the assets and properties, real and personal, tangible and intangible, and
certain liabilities of the Practices.
The Acquisitions were consummated on August 30, 1996.
As a result of the Acquisitions, the Company became the indirect
holder (through the respective Acquisition Subs) of, with certain limited
exceptions, all of the assets and properties, real and personal, tangible and
intangible, and certain liabilities of the Practices. The respective
Acquisition Subs intend to provide the use of such assets to the respective
ophthalmological practices from which they were acquired pursuant to the terms
of the management services agreements entered into at the time of the
Acquisitions.
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To the best knowledge of the Company, at the time of the Acquisitions
there was no material relationship between (i) the Practices and the
Physicians, on the one hand, and (ii) the Company, or any of its affiliates,
any director or officer of the Company, or any associate of such director or
officer on the other.
The aggregate consideration paid by the Company as a result of the
Acquisitions was approximately 3,360,000 shares of the common stock, par value
$.01 per share, of the Company ("Common Stock") and approximately $210,000 cash,
of which (i) approximately 1,540,000 shares of Common Stock were issued in
connection with the Cincinnati Eye Acquisition, (ii) approximately 840,000
shares of Common Stock were issued, and approximately $210,000 was paid, in
connection with the Houston Eye Acquisition, (iii) approximately 510,000 shares
were issued in connection with the Henderson Acquisition, and (iv) approximately
470,000 shares were issued in connection with the Tampa Acquisition. The
various acquisition considerations for such acquisitions were determined by
arms-length negotiations between the parties to the applicable acquisition
agreements.
The primary source of funds used in the Acquisitions was cash from the
Company's working capital.
ITEM 5. OTHER EVENTS.
The Company and various wholly-owned subsidiaries of the Company (each
an "Additional Acquisition Sub"), entered into acquisition agreements (the
"Additional Acquisition Agreements") with the following ophthalmological
practices (the "Additional Practices") and physicians (the "Additional
Physicians"):
(i) Eye Consultants of Cincinnati, Inc., Donald S. Jacobs, M.D.; (ii)
Middletown Ophthalmology, Inc., Tom F. Straus, M.D.; (iii) Stuart J.
Kaufman, M.D., P.A., Stuart J. Kaufman, M.D.; (iv) Frederick Hauber,
M.D., P.A., Frederick Hauber, M.D.; (v) Adolph A. Schonder, M.D.,
Ltd., Adolph A. Schonder, M.D., and (vi) The Eye Institute of West
Florida, P.A., Stephen M. Weinstock, M.D., Jeffrey S. Schwartz, M.D.,
Leonard S. Kirsch, M.D.
Pursuant to the Additional Acquisition Agreements, the respective
Additional Acquisition Subs would acquire (the "Additional Acquisitions"), with
certain limited exceptions, all of the assets and properties, real and
personal, tangible and intangible, and certain liabilities of the Additional
Practices.
The Additional Acquisitions were consummated on August 30, 1996.
As a result of the Additional Acquisitions, the Company became the
indirect holder (through the respective Additional Acquisition Subs) of, with
certain limited exceptions, all of the assets and properties, real and
personal, tangible and intangible, and certain liabilities of the Additional
Practices. The respective Additional Acquisition Subs intend to provide the
use of such assets to the respective ophthalmological practices from which they
were acquired pursuant to the terms of the management services agreements
entered into at the time of the Additional Acquisitions.
To the best knowledge of the Company, at the time of the Additional
Acquisitions there was no material relationship between (i) the Additional
Practices and the Additional Physicians,
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on the one hand, and (ii) the Company, or any of its affiliates, any director
or officer of the Company, or any associate of such director or officer on the
other.
The aggregate consideration paid by the Company as a result of the
Additional Acquisitions was approximately 820,000 shares of Common Stock. The
various acquisition considerations for such acquisitions were determined by
arms- length negotiations between the parties to the applicable acquisition
agreements.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) It is impractical for the registrant to file the otherwise
required historical financial statements of the businesses
acquired in the Acquisitions at this time. Such financial
statements will be filed under cover of Form 8-K/A as soon as
practicable, but no later than 60 days after the date by which
this report on Form 8-K was required to be filed.
(b) It is impractical for the registrant to file the otherwise
required pro forma financial statements relating to the
businesses acquired in the Acquisitions at this time. Such
financial statements will be filed under cover of Form 8-K/A
as soon as practicable, but no later than 60 days after the
date by which this report on Form 8-K was required to be
filed.
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(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C> <C>
2.1 - Agreement and Plan of Merger, dated August 13, 1996, between PRG Ohio III, Inc., Physicians
Resource Group, Inc., Cincinnati Eye Institute, Inc., John S. Cohen, M.D., James D. Faulkner,
M.D., William J. Faulker, M.D., Robert C. Kersten, M.D., Richard S. Kerstine, M.D., Robert H.
Osher, M.D., Robert W. Nash, M.D., Michael R. Petersen, M.D., Gary A. Varley, M.D., Linda J.
Greff, M.D., Robert J. Cionni, M.D., Kevin T. Corcoran, O.D. and Corwin M. Smith, M.D. (1)
2.2 - Agreement and Plan of Reorganization, dated August 13, 1996, between PRG HEA Acq. Corp.,
Physicians Resource Group, Inc., Houston Eye Associates, P.A., Malcom L. Mazow, M.D., Robert H.
Stewart, M.D., Robert B. Wilkins, M.D., Jeffrey D. Lanier, M.D., Michael A. Bloome, M.D., Paul
C. Salmonsen, M.D., Richard L. Kimbrough, M.D., Jack T. Holladay, M.D., Jeffrey B. Arnoult,
M.D., William H. Quayle, M.D., John D. Goosey, M.D., John M. Lim, M.D., Kathryn H. Musgrove,
M.D., Marsha F. Soechting, M.D. and Marc N. Longo, M.D. (1)
2.3 - Asset Purchase Agreement, dated August 13, 1996, between PRG Ohio III, Inc., Physicians
Resource Group, Inc. and CEI Realty Associates, Ltd. (1)
2.4 - Agreement and Plan of Merger, dated August 13, 1996, between PRG IV Acq. Corp., Physicians
Resource Group, Inc., Gregory L. Henderson, M.D., P.A. and Gregory L. Henderson, M.D. (1)
2.5 - Agreement and Plan of Merger, dated August 13, 1996, between PRG IX Acq. Corp., Physicians
Resource Group, Inc., William Reynolds, M.D., P.A. and William Reynolds, M.D. (1)
2.6 - Agreement and Plan of Merger, dated August 12, 1996, between PRG II Acq. Corp., Physicians
Resource Group, Inc., Tampa Eye Clinic, P.A., J. Burns Creighton, M.D., Ronald Seeley, M.D.,
Lewis Lauring, M.D., William Reynolds, M.D., David Leach, M.D., P.A. and Timothy Lorenzen,
M.D., P.A. (1)
2.7 - Agreement and Plan of Merger, dated August 13, 1996, between PRG XI Acq. Corp., Physicians
Resource Group, Inc., Timothy Lorenzen, M.D., P.A. and Timothy Lorenzen, M.D. (1)
2.8 - Agreement and Plan of Merger, dated August 13, 1996, between PRG VII Acq. Corp., Physicians
Resource Group, Inc., Ronald Seeley, M.D., P.A. and Ronald Seeley, M.D. (1)
2.9 - Agreement and Plan of Merger, dated August 13, 1996, between PRG VI Acq. Corp., Physicians
Resource Group, Inc., J. Burns Creighton, M.D., P.A. and J. Burns Creighton, M.D. (1)
</TABLE>
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<TABLE>
<S> <C> <C>
2.10 - Agreement and Plan of Merger, dated August 13, 1996, between PRG X Acq. Corp., Physicians
Resource Group, Inc., David Leach, M.D., P.A. and David Leach, M.D. (1)
2.11 - Agreement and Plan of Merger, dated August 13, 1996, between PRG VIII Acq. Corp., Physicians
Resource Group, Inc., Lewis Lauring, M.D., P.A. and Lewis Lauring, M.D. (1)
2.12 - Asset Purchase Agreement, dated August 13, 1996, between PRG Ohio, L.P., CEI Realty Associates, Ltd., and
Physicians Resource Group, Inc. (1)
4.1 - Restated Certificate of Incorporation of Physicians Resource Group, Inc.(2)
4.2 - Certificate of Designations, Preferences, Rights and Limitations of Class A Preferred Stock of
Physicians Resource Group, Inc.(2)
4.3 - Third Amended and Restated Bylaws of Physicians Resource Group, Inc.(3)
4.4 - Form of Warrant Certificate(2)
4.5 - Rights Agreement dated as of April 19, 1996 between Physicians Resource Group, Inc. and
Chemical Mellon Shareholder Services(4)
4.6 - Form of certificate evidencing ownership of Common Stock of Physicians Resource Group, Inc.(2)
23.1 - Consent of Arthur Andersen LLP *
</TABLE>
___________________
(1) - Filed herewith. Schedules and similar attachments to
this exhibit have not been filed herewith, but the
nature of their contents is described in the body of
this exhibit. The Company agrees to furnish a copy
of any such omitted schedules and attachments to the
Commission upon request.
(2) - Previously filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 33- 91440)
and incorporated herein by reference.
(3) - Previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by
reference.
(4) - Previously filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 333- 3852)
and incorporated herein by reference.
* - To be filed by amendment.
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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.
PHYSICIANS RESOURCE GROUP, INC.
Date: September 6, 1996 By: /s/ Richard J. D'Amico
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Richard J. D'Amico
Senior Vice President and
General Counsel
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
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<S> <C> <C>
2.1 - Agreement and Plan of Merger, dated August 13, 1996, between PRG Ohio III, Inc., Physicians
Resource Group, Inc., Cincinnati Eye Institute, Inc., John S. Cohen, M.D., James D. Faulkner,
M.D., William J. Faulker, M.D., Robert C. Kersten, M.D., Richard S. Kerstine, M.D., Robert H.
Osher, M.D., Robert W. Nash, M.D., Michael R. Petersen, M.D., Gary A. Varley, M.D., Linda J.
Greff, M.D., Robert J. Cionni, M.D., Kevin T. Corcoran, O.D. and Corwin M. Smith, M.D. (1)
2.2 - Agreement and Plan of Reorganization, dated August 13, 1996, between PRG HEA Acq. Corp.,
Physicians Resource Group, Inc., Houston Eye Associates, P.A., Malcom L. Mazow, M.D., Robert H.
Stewart, M.D., Robert B. Wilkins, M.D., Jeffrey D. Lanier, M.D., Michael A. Bloome, M.D., Paul
C. Salmonsen, M.D., Richard L. Kimbrough, M.D., Jack T. Holladay, M.D., Jeffrey B. Arnoult,
M.D., William H. Quayle, M.D., John D. Goosey, M.D., John M. Lim, M.D., Kathryn H. Musgrove,
M.D., Marsha F. Soechting, M.D. and Marc N. Longo, M.D. (1)
2.3 - Asset Purchase Agreement, dated August 13, 1996, between PRG Ohio III, Inc., Physicians
Resource Group, Inc. and CEI Realty Associates, Ltd. (1)
2.4 - Agreement and Plan of Merger, dated August 13, 1996, between PRG IV Acq. Corp., Physicians
Resource Group, Inc., Gregory L. Henderson, M.D., P.A. and Gregory L. Henderson, M.D. (1)
2.5 - Agreement and Plan of Merger, dated August 13, 1996, between PRG IX Acq. Corp., Physicians
Resource Group, Inc., William Reynolds, M.D., P.A. and William Reynolds, M.D. (1)
2.6 - Agreement and Plan of Merger, dated August 12, 1996, between PRG II Acq. Corp., Physicians
Resource Group, Inc., Tampa Eye Clinic, P.A., J. Burns Creighton, M.D., Ronald Seeley, M.D.,
Lewis Lauring, M.D., William Reynolds, M.D., David Leach, M.D., P.A. and Timothy Lorenzen,
M.D., P.A. (1)
2.7 - Agreement and Plan of Merger, dated August 13, 1996, between PRG XI Acq. Corp., Physicians
Resource Group, Inc., Timothy Lorenzen, M.D., P.A. and Timothy Lorenzen, M.D. (1)
2.8 - Agreement and Plan of Merger, dated August 13, 1996, between PRG VII Acq. Corp., Physicians
Resource Group, Inc., Ronald Seeley, M.D., P.A. and Ronald Seeley, M.D. (1)
2.9 - Agreement and Plan of Merger, dated August 13, 1996, between PRG VI Acq. Corp., Physicians
Resource Group, Inc., J. Burns Creighton, M.D., P.A. and J. Burns Creighton, M.D. (1)
</TABLE>
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<TABLE>
<S> <C> <C>
2.10 - Agreement and Plan of Merger, dated August 13, 1996, between PRG X Acq. Corp., Physicians
Resource Group, Inc., David Leach, M.D., P.A. and David Leach, M.D. (1)
2.11 - Agreement and Plan of Merger, dated August 13, 1996, between PRG VIII Acq. Corp., Physicians
Resource Group, Inc., Lewis Lauring, M.D., P.A. and Lewis Lauring, M.D. (1)
2.12 - Asset Purchase Agreement, dated August 13, 1996, between PRG Ohio, L.P., CEI Realty Associates, Ltd., and
Physicians Resource Group, Inc. (1)
4.1 - Restated Certificate of Incorporation of Physicians Resource Group, Inc.(2)
4.2 - Certificate of Designations, Preferences, Rights and Limitations of Class A Preferred Stock of
Physicians Resource Group, Inc.(2)
4.3 - Third Amended and Restated Bylaws of Physicians Resource Group, Inc.(3)
4.4 - Form of Warrant Certificate(2)
4.5 - Rights Agreement dated as of April 19, 1996 between Physicians Resource Group, Inc. and
Chemical Mellon Shareholder Services(4)
4.6 - Form of certificate evidencing ownership of Common Stock of Physicians Resource Group, Inc.(2)
23.1 - Consent of Arthur Andersen LLP *
</TABLE>
___________________
(1) - Filed herewith. Schedules and similar attachments to
this exhibit have not been filed herewith, but the
nature of their contents is described in the body of
this exhibit. The Company agrees to furnish a copy
of any such omitted schedules and attachments to the
Commission upon request.
(2) - Previously filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 33- 91440)
and incorporated herein by reference.
(3) - Previously filed as an exhibit to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by
reference.
(4) - Previously filed as an exhibit to the Company's
Registration Statement on Form S-1 (No. 333- 3852)
and incorporated herein by reference.
* - To be filed by amendment.
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CINCINNATI EYE INSTITUTE, INC.,
JOHN S. COHEN, M.D.,
JAMES D. FAULKNER, M.D.,
WILLIAM J. FAULKER, M.D.,
ROBERT C. KERSTEN, M.D.,
RICHARD S. KERSTINE, M.D.,
ROBERT H. OSHER, M.D.,
ROBERT W. NASH, M.D.,
MICHAEL R. PETERSEN, M.D.,
GARY A. VARLEY, M.D.,
LINDA J. GREFF, M.D.,
ROBERT J. CIONNI, M.D.
KEVIN T. CORCORAN, O.D.,
CORWIN M. SMITH, M.D.,
PRG OHIO III, INC.,
AND
PHYSICIANS RESOURCE GROUP, INC.
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG OHIO III, INC., an Ohio corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
CINCINNATI EYE INSTITUTE, INC., an Ohio corporation (the Company"), and JOHN S.
COHEN, M.D., JAMES D. FAULKNER, M.D., WILLIAM J. FAULKNER, M.D., ROBERT C.
KERSTEN,M.D., RICHARD S. KERSTINE, M.D., ROBERT H. OSHER, M.D., ROBERT W. NASH,
M.D., MICHAEL R. PETERSEN, M.D., GARY A. VARLEY, M.D., LINDA J. GREFF, M.D.,
and ROBERT J. CIONNI, M.D., all individual residents of the State of Ohio
(individually "Shareholder," and collectively "Shareholders"), and KEVIN T.
CORCORAN, O.D. ("Corcoran") and CORWIN M. SMITH, M.D. ("Smith"), individual
residents of the State of Ohio, Corcoran and Smith executing this Agreement
solely for the purposes of Section 13 hereof.
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Cincinnati,
Ohio;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of the Company with and into PRG Sub shall occur on the
31st day of August 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF THE COMPANY WITH AND INTO PRG SUB. On the Closing
Date, the Company shall be merged with and into the PRG Sub in accordance with
this Agreement and the separate corporate existence of the Company shall
thereupon cease (the "Merger"). PRG Sub shall be the surviving corporation in
the Merger (in such capacity, hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Ohio and the separate corporate existence of Surviving Corporation with all its
rights, privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Ohio Business Corporation Act.
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1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date a Certificate of Merger meeting the requirements of the Ohio Business
Corporation Act. The Merger shall become effective on the Closing Date.
1.3 ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. Effective
on the Closing Date, the Articles of Incorporation of PRG Sub shall be the
Articles of Incorporation of the Surviving Corporation.
1.4 CODE OF REGULATIONS OF THE SURVIVING CORPORATION. The Code of
Regulations of PRG Sub on the Closing Date shall be the Code of Regulations of
the Surviving Corporation, until duly amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Code of Regulations.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of shares of PRG common stock set forth on Annex I attached
hereto less the Escrowed Shares (in the aggregate, the "Merger Consideration").
As a result of the Merger and without any action on the part of the holder
thereof, all shares of the Company shall cease to be outstanding and shall be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall remain outstanding.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers,
with signatures guaranteed by a national bank, and with all necessary transfer
tax and other revenue stamps, acquired at the Shareholders' expense, affixed
and cancelled. The Shareholders agree to cure any deficiencies with
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respect to the endorsement of the certificates or other documents of conveyance
with respect to such Company common stock or with respect to the stock powers
accompanying any Company Common Stock. Upon such delivery, the Shareholder
shall be entitled to receive in exchange therefor a certificate representing
that number of shares of PRG common stock Shareholder is entitled to receive
pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow a number of shares of PRG
Common Stock equal to the number of shares of PRG common stock set forth as the
Escrowed Shares on Annex I (the "Escrowed Shares") pursuant to the terms of an
Escrow Agreement (the "Escrow Agreement") in the form attached hereto as
Exhibit 1.9, to be entered into among Shareholders, the Company, PRG Sub, PRG
and Jackson & Walker, L.L.P., , as escrow agent ("Escrow Agent"). The Escrowed
Shares shall be issued in the name of the Escrow Agent, as escrow agent. The
Escrowed Shares shall be released from escrow, after provision for any Damages
for which PRG or PRG Sub may be entitled to indemnification pursuant to Article
XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly and severally, hereby
represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional corporation duly organized, validly existing and in good standing
under the laws of the State of Ohio. The Company has all necessary corporate
powers to own all of its assets and to carry on its business as such business
is now being conducted. The Company does not own stock in or control, directly
or indirectly, any other corporation, association or business organization, nor
is the Company a party to any joint venture or partnership. The Shareholders
are the sole shareholders of the Company and own all outstanding shares of
capital stock free of all security interests, claims, encumbrances and liens in
the amounts set forth on Exhibit 2.1. The Shareholders have owned the equity
interests set forth on Exhibit 2.1 as of the dates set forth on Exhibit 2.1.
Each share of Company common stock has been legally and validly issued and
fully paid and nonassessable. No shares of capital stock of the Company are
owned by the Company in treasury. Except as set forth on Exhibit 2.1, the
Company has not acquired any treasury shares since January 1, 1994. There are
no outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the stockholders of the Company on any
matter, (b) securities of the Company convertible into equity interests in the
Company, or (c) commitments, options, rights or warrants to issue any such
equity interests in the Company, to issue securities of the Company convertible
into such equity interests, or to redeem any securities of the Company. No
shares of capital stock of the Company have been issued or disposed of in
violation of the preemptive rights, rights of first refusal or similar rights
of any of the Company's stockholders. The Company is not required to qualify
to do business as a foreign
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corporation in any other state or jurisdiction other than Kentucky by reason of
its business, properties or activities in or relating to such other state or
jurisdiction. The Company does not have any assets, employees or offices in
any state other than Ohio and Kentucky.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. On the date hereof, and prior to thirty
days prior to the date hereof, the Company and each Shareholder do not own any
stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Code of
Regulations or otherwise, to authorize the execution, delivery and performance
of this Agreement and such related documents. Each Shareholder has the legal
capacity to enter into and perform this Agreement and the other agreements to
be executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Code of
Regulations of the Company or any provisions of, or result in the acceleration
of, any obligation under any mortgage, lien, lease, agreement,, instrument,
order, arbitration award, judgment or decree to which the Company or any
Shareholder is a party or by which the Company or any Shareholder is bound, or
violate any material restrictions of any kind to which the Company is subject,
or result in any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Code of Regulations and minutes of the Company and all
amendments thereto of the Company have been delivered to PRG Sub. The minute
books of the Company contain all accurate minutes of the meetings of and
consents to actions taken without meetings of the Board of Directors and
stockholders of the Company since its formation. The books of account of the
Company have been kept accurately in all material respects in the ordinary
course of business and the revenues, expenses, assets and liabilities of the
Company have been properly recorded in such books.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with copies of financial information ("Financial
Statements") about the Company as set forth on Exhibit 2.6 attached hereto,
including the unaudited Balance Sheet ("Balance Sheet") as of June 30, 1996
("Balance Sheet Date"). All such financial statements have been prepared in
accordance with comprehensive basis of accounting principles consistently
followed
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<PAGE> 6
throughout the periods indicated (except for the absence of footnote
disclosures and normal year-end adjustments), reflect all liabilities of the
Company required to be disclosed under the Company's comprehensive basis of
accounting principles, as of their respective dates, and present fairly the
financial position of the Company as of such dates and the results of
operations and cash flows for the period or periods reflected therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
default by the Company, as lessor or lessee, or any condition or event of which
the Company or any Shareholder has knowledge which with notice or lapse of
time, or both, would constitute a default, in respect of which the Company has
not taken adequate steps to cure such default or to prevent a default from
occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are to be transferred to PRG Sub
free of liens, claims, judgments, tax liens and "as is" where is and with all
faults.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor
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<PAGE> 7
agreements (and all amendments thereto) to which the Company is a party, copies
of which have been delivered to PRG Sub, and (e) all employee manuals,
materials, policies, procedures and work-related rules, copies of which have
been delivered to PRG Sub. The Company is in compliance with all applicable
laws, rules, regulations and ordinances respecting employment and employment
practices. The Company has not engaged in any unfair labor practice. There
are no unfair labor practices charges or complaints pending or to the knowledge
of the Company or Shareholders, threatened against the Company, and the Company
has never been a party to any agreement with any union, labor organization or
collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Except as set forth on Exhibit 2.13,
neither the Company nor any Shareholder nor outstanding shares of the Company's
stock nor any of the Company's assets is subject to any pending, nor does the
Company or any Shareholder have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting the Company, any Shareholder, the outstanding shares
of the Company's stock, any of the assets of the Company, the operations,
business or prospects of the Company or the transactions contemplated by this
Agreement, and, to the knowledge of the Company and the Shareholders, no basis
for any such action exists, nor is there any legal impediment of which the
Company or any Shareholder has knowledge to the continued operation of its
business in the ordinary course, subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company ("Contracts"), all of which are
listed or incorporated by reference on Exhibit 2.7 (in the case of leases),
Exhibit 2.12 (in the case of employment agreements) and Exhibit 2.14 (in the
case of Contracts other than leases) attached hereto. Except as otherwise
indicated on such Exhibits, all of such Contracts are valid, binding and
enforceable in accordance with their terms and are in full force and effect,
and no defenses, offsets or counterclaims have been asserted or may be made by
any party thereto. Except as indicated on such Exhibits, there is not under
any such Contract any existing default by the Company, or any condition or
event of which the Company or any Shareholder has knowledge which with notice
or lapse of time, or both, would constitute a default. The Company and the
Shareholders have no knowledge of any default by any other party to such
Contracts. Neither the Company nor the Shareholders have received notice of
the intention of any party to any Contract to cancel or terminate any Contract
and have no reason to believe that any amendment or change to any Contract is
contemplated by any party thereto. Other than those contracts, obligations and
commitments of the Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit
2.14, the Company is not a party to any material written or oral agreement
contract, lease or arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of thirty (30) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to
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<PAGE> 8
another;
(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $25,000 or that terminate or can only be
terminated by the Company on more than 30 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course or business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Twenty Five Thousand and No/100 Dollars ($25,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Except as disclosed on Exhibit 2.1, within the two
years preceding the Closing Date, redeemed, purchased, sold or issued any
stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially
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<PAGE> 9
and adversely affecting any of its properties, assets or business, or
experienced any other material adverse change in its financial condition,
assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company;
(o) Except as set forth on Exhibit 2.1, repurchased,
approved any repurchase or agreed to repurchase any of the Company's capital
stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, to the best knowledge of the
Company and Shareholders, net of allowances for uncollectible and doubtful
amounts ("Accounts Receivable") and (ii) current accounts payable and current
accrued liabilities (other than the current portion of long-term debt)
("Accounts Payable"). The Company maintains its accounting records in
sufficient detail to substantiate the accounts receivable reflected on the
Balance Sheet and has given and will give to PRG Sub full and complete access
to those records, including the right to make copies therefrom. Since the
Balance Sheet Date, the Company has not changed any principle or practice with
respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated, to the best
knowledge of the Company and the Shareholders, to be net of contractual
allowances related to third-party payor arrangements. The Company is in
substantial compliance with the terms and conditions of such third-party payor
arrangements.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The unpaid taxes
of the Company did not, as of the Balance Sheet Date, exceed the reserve for
taxes (rather than any reserve for deferred taxes established to reflect timing
differences between book and income tax income) set forth on the face of the
Balance Sheet (rather than in any notes thereto), as adjusted for the passage
of time through the Closing Date (in accordance with the past custom and
practice of the Company). The Company and the Shareholders have not received
any notice that any tax deficiency or delinquency has been asserted against the
Company. There are no audits relating to taxes of the Company pending or in
process or to the knowledge of the Company or Shareholders, threatened. The
Company is not currently the beneficiary of any waiver of any statute of
limitations in respect of taxes nor of any extension of time within which to
file any tax return or to pay any tax assessment or deficiency. There are no
liens or encumbrances relating to taxes on or threatened against any of the
assets of the Company. The Company has withheld and paid all taxes required by
law to have been withheld and paid by it. Neither the Company nor any
predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
Notwithstanding the foregoing, there shall be no breach by the Company or any
of the Shareholders of this Agreement for any disclosed pre- closing tax
liabilities.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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<PAGE> 10
and whether due or to become due, which is required to be reflected or reserved
on a non-footnoted balance sheet under GAAP or of any material liability or
obligation, other than those incurred in the ordinary course of business. The
Company and the Shareholders do not know, or have reasonable grounds to know,
of any basis for the assertion against the Company as of the Balance Sheet
Date, of any claim or liability of any nature in any amount not fully reflected
or reserved against on the Balance Sheet which is required to be reflected or
reserved on a non-footnoted balance sheet under GAAP or any material claim. All
indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed and past due
against any insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.22 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and licensed employee of the Company is qualified for
participation in the Medicare and Medicaid programs and is party to provider
agreements for such programs which are in full force and effect with no
defaults having occurred thereunder. The Company, each Shareholder and each
physician and licensed employee of the Company has timely filed all claims or
other reports required to be filed with respect to the purchase of services by
third-party payors, and all such claims or reports are complete and accurate,
and has no liability to any payor with respect thereto. There are no pending
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<PAGE> 11
appeals, overpayment determinations, adjustments, challenges, audit, litigation
or notices of intent to open Medicare or Medicaid claim determinations or other
reports required to be filed by the Company, each Shareholder and each licensed
employee of the Company. Neither the Company, nor any Shareholder, nor any
physician or licensed employee of the Company has been convicted of, or pled
guilty or nolo contendere to, patient abuse or negligence, or any other
Medicare or Medicaid program related offense and to the knowledge of the
Company and the Shareholders, none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.23 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.24 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.25 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994 other than distributions, payments or
dividends in the ordinary course of business. No repurchase of any of the
Company's capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of the Company. No distributions of
cash or other assets have been made to any Shareholder (other than
distributions made in the ordinary course of business) since January 1, 1994.
2.26 SUPPLIERS. Set forth in Exhibit 2.26 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.27 BANKING RELATIONS. Set forth in Exhibit 2.27 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.28 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.28, no officer, employee, director or
stockholder of the Company, or their respective spouses, children or
affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement
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with, or serves as an officer or director of, any customer or supplier or
competitor of the Company or any organization that has a material contract or
arrangement with the Company. Neither the Company, nor any of its directors,
officers, employees, consultants or the Shareholders nor any affiliate of such
person is, or within the last three years was, a party to any contract, lease,
agreement or arrangement, including, but not limited to, any joint venture or
consulting agreement with any physician, hospital, pharmacy, home health agency
or other person or entity which is in a position to make or influence referrals
to, or otherwise generate business for, the Company or to provide services,
lease space, lease equipment or engage in any other venture or activity with
the Company.
2.29 PAYORS. Exhibit 2.29 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. To the knowledge of the Company and the Shareholders, the Company has
good relations with all such payors and other material payors of the Company
and none of such payors has notified the Company that it intends to discontinue
its relationship with the Company or to deny any claims submitted to such payor
for payment.
2.30 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any of the following actions that would
prevent PRG Sub or PRG from accounting for the business combination to be
effected by the Merger as a "pooling of interests" in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases issued
pursuant thereto and the pronouncements of the Securities and Exchange
Commission ("SEC"): (i) alteration of equity interests in contemplation of the
combination within the two years preceding the date hereof, (ii) abnormal
distributions to Shareholders within the two years preceding the date hereof,
(iii) unusual distributions of cash or other assets to Shareholders within the
two years preceding the date hereof, (iv) sales of significant assets or
spinoffs of assets within the two years preceding the date hereof, (v)
conveyance of the Merger Consideration other than in accordance with the pro
rata ownership of the Shareholders of the Company, (vi) hedge or sale of any
PRG common stock owned by the Shareholders within the thirty days prior to the
date hereof and within thirty days prior to the Closing.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Ohio, respectively.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement, and
has taken all actions required by law, its Certificate or Articles of
Incorporation, as applicable, its Bylaws or Code of Regulations, as applicable,
or otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation, as applicable, or Bylaws or Code of Regulations, as applicable,
of either PRG Sub or PRG or any provisions of, or result in the acceleration
of, any obligation under any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which PRG Sub or PRG is a party
or by which either of them is bound, or violate any restrictions of any kind to
which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the
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Merger, when issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 SECURITIES AND EXCHANGE FILINGS. As of the date hereof, PRG
has made all filings required to be made by it under the Securities and
Exchange Act and all such filings are true and complete in all material
respects.
3.6 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.7 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.8 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid, or (e)
referring a patient for designated health services to or providing designated
health services to a patient upon referral from an entity or person with which
the physician or an immediate family member has a financial relationship, and
to which no exception under Section 1395nn of Title 42 of the United States
Code applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
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4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. A
medical professional corporation has been formed by the Shareholders (the
"Clinic") and is duly organized, validly existing and in good standing under
the laws of the State of Ohio. The Clinic has all necessary corporate power to
own all of its assets and to carry on its business as such business is now
being conducted. The Shareholders, together with Smith, Tom F. Straus, M.D.
("Straus") and Donald S. Jacobs, M.D. ("Jacobs") are the sole shareholders of
the Clinic and own such interests free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 4.1. Each interest
of the Clinic has been legally and validly issued and fully paid and
nonassessable. There are no outstanding (a) bonds, debentures, notes or other
obligations the holders of which have the right to vote with the shareholders
of the Clinic on any matter, (b) securities of the Clinic convertible into
equity interests in the Clinic, or (c) commitments, options, rights or warrants
to issue any such equity interests in the Clinic, to issue securities of the
Clinic convertible into such equity interests, or to redeem any securities of
the Clinic. No interests of the Clinic have been issued or disposed of in
violation of the preemptive rights, rights of first refusal or similar rights
of any of the Clinic's shareholders. The Clinic is not required to qualify to
do business as a foreign entity in any other state or jurisdiction other than
Kentucky by reason of its business, properties or activities in or relating to
such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Ohio and Kentucky.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Code of Regulations and minutes of the Clinic and all amendments
thereto of the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement, or to be
executed and delivered on the Closing Date, and has taken all action required
by law, its Articles of Incorporation, Code of Regulation, or otherwise, to
authorize the execution, delivery and performance of such documents. The
Service Agreement and the other agreements contemplated hereby have been duly
executed and delivered by the Clinic and constitute or will constitute the
legal, valid and binding obligations of the Clinic enforceable against the
Clinic in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. The execution and
delivery of the Service Agreement and the other agreements contemplated hereby
will not violate any provision of the organizational documents of the Clinic or
any provisions of, or result in the acceleration of, any obligation under any
mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment or decree to which the Clinic is a party or by which the Clinic is
bound, or violate any material restrictions of any kind to which the Clinic is
subject, or result in any lien or encumbrance on any of the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Code of Regulations,
and as of the Closing Date, the Service Agreement, the Clinic is not a party to
or subject to any agreement, indenture or other instrument, other than certain
agreements with the Shareholders, Smith, Straus, Corcoran and Jacobs, copies of
which have been provided to PRG.
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly and severally, agree that
between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
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5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have a material adverse effect on the business or assets of
the Company, including without limitation, any action the primary purpose or
effect of which is to generate or preserve cash other than to operate in the
ordinary course of business consistent with past practices. The Company and
the Shareholders shall use their best efforts to preserve intact the
relationships with payors, customers, suppliers, patients and others having
significant business relations with the Company. The Company shall collect its
receivables and pay its trade payables in the ordinary course of business. The
Company shall not introduce any new method of management, operations or
accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives access to, and make
available for inspection, all of the assets and business of the Company and all
of its assets, including employees, customers and suppliers and permit PRG, PRG
Sub and their authorized representatives to inspect and make copies of all
documents, records and information with respect to the business or assets of
the Company as PRG, PRG Sub or their representatives may request. The Company
and the Shareholders shall promptly notify PRG Sub in writing of (a) any notice
or communication relating to a default or event that, with notice or lapse of
time or both, could become a default, under any contract, commitment or
obligation to which the Company is a party, and (b) any material adverse change
in the Company's business, financial condition or the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including, without any proposal or offer to the Shareholders, with
respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF PENSION BENEFITS. The Company hereby covenants and
agrees that it will take whatever steps are necessary to pay or fund any
accrued pension benefits, where applicable, or vested accrued benefits for
which the Company or any entity might have any liability whatsoever arising
from any pension plan allocable to services performed prior to the Closing
Date.
5.7 EMPLOYEE MATTERS. Except as set forth on Exhibit 5.7, the
Company shall not, without the prior written approval of PRG or PRG Sub, except
as required by law, increase the cash compensation of any Shareholder or other
employee or an independent contractor of the Company, adopt, amend or terminate
any compensation plan, employment agreement, independent contractor agreement,
employee policies and procedures or employee benefit plan, take any action that
could deplete the assets of any employee benefit plan, or fail to pay any
premium or contribution due or file any report with respect to any employee
benefit plan, or take any other actions with respect to its employees or
employee matters which would be expected to have a material adverse effect upon
the Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared
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or paid by the Company, nor will any repurchase of any of the Company's capital
stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Immediately prior to the Merger, the
Shareholders and the Company shall file with the Secretary of State of Ohio an
amendment to and/or a restatement of the Company's Articles of Incorporation
and shall take such other action as may be necessary to convert itself into a
general business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action described in Section 2.30.
SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date, and with respect to Sections 6.4 and 6.5, between
the date hereof and the time required for performance under such Sections:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
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6.4 REGISTRATION AGREEMENT. The shares of PRG common stock issued
in connection with the Merger shall be registered under an S-4 registration
statement dated July 25, 1996, as amended from time to time. PRG undertakes to
continue to file all necessary reports on a timely basis with the appropriate
securities authorities to permit the Shareholders to use Rule 145 of the
Securities and Exchange Act in connection with the resale of such shares by the
Shareholders.
6.5 OPTIONS. PRG shall reserve for issuance 129,995 options to
purchase the common stock of PRG. The Clinic shall be entitled to cause PRG to
grant such options from time to time, in its discretion; provided, however,
that the eighty percent (80%) of such options shall be granted to reward
productivity for physicians who, as of the date of grant, have provided
services to the Clinic for less than five years, provided, however, such
physicians shall specifically include Gary A. Varley, M.D., Linda J. Greff,
M.D., Robert W. Nash, M.D., Michael R. Petersen, M.D. and Robert J. Cionni,
M.D. The terms of such grants shall be in accordance with the provisions of
the stock option grant attached hereto as Exhibit 6.5, and the terms of the
1995 Health Care Professionals Stock Option Plan. Such terms include but are
not limited to (i) a five year vesting schedule (20%) per year , and (ii) an
exercise price defined as the price of the common stock on the date immediately
prior to the date of grant. The Clinic shall not be entitled to grant any of
such options to the following individuals: R.S. Kerstine, J.D. Faulkner, M.S.
Osher or R.H. Osher.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly and severally, agree that between the date
hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement, and to conduct the intended business of
the Clinic.
7.4 CORPORATE GOVERNANCE. The Clinic shall establish certain
governance provisions that are reasonably acceptable to PRG providing for (i) a
maximum length of employment for non-owner physicians who are intended to
become owners prior to their admission to ownership in the Clinic, (ii) terms
of ownership admission to the Clinic, (iii) a compensation structure for
ongoing owner physicians, (iv) retirement of physicians from the ownership of
the Clinic and (v) buy-out provisions for retiring or inactive owner
physicians.
7.5 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
7.6 PENSION AND RETIREMENT PLANS. Simultaneously with the
Closing, the Shareholders agree to cause the Company with respect to all
qualified retirement plans to change the plan sponsor, the plan administrator
and the employer from the Company to the Clinic.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall have been
true and correct in all material respects when initially made and shall be true
and correct in all material respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied in all material respects with all covenants
and conditions required by this Agreement to be performed and complied with by
the Company and the Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. On the Closing Date, the Clinic, the
Shareholders, PRG and Surviving Corporation shall execute and deliver a Service
Agreement (the "Service Agreement"), in substantially the form attached hereto
as Exhibit 8.7, pursuant to which the Clinic and Shareholders will provide
services to PRG and Surviving Corporation.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company will terminate, and will cause each physician employee of the Company
and other licensed employees that have existing employment agreements with the
Company to terminate his or her employment agreement with the Company and cause
each such employee to execute a separation and release agreement ("Separation
and Release Agreement").
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have used their best efforts as requested by PRG to obtain all necessary
government and other third-party approvals and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 CORPORATE GOVERNANCE. PRG shall have approved the governance
provisions of the Clinic, if applicable, adopted in accordance with Section
7.4.
8.12 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates.
8.13 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Ohio Business Corporation Act.
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8.14 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The transactions contemplated by those
certain (i) Asset Purchase Agreements dated the date hereof between
subsidiaries or affiliates of PRG and CEI Realty Associates, Ltd. shall be
closed simultaneously with the transactions contemplated hereby; provided, that
the transaction evidenced by that certain Asset Purchase Agreement dated the
date hereof between Physicians Resource Group Realty, Inc. and CEI Realty
Associates, Ltd. with respect to the purchase of the building need not be
consummated if such Agreement is terminated in accordance with its terms or
delayed due to existing consent or right of first refusal, (ii) Agreement and
Plan of Mergers dated the date hereof between PRG Sub and Eye Consultants of
Cincinnati, Inc. and Middletown Ophthalmology, Inc., respectively.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall have been true and correct
in all material respects when initially made and shall be true and correct in
all material respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed and complied with by PRG
Sub and PRG prior to the Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
The Merger Consideration shall be registered under the S-4 dated July 25, 1996,
as amended, or another registration statement filed with the Securities and
Exchange Commission.
9.6 CONSENTS AND APPROVALS. PRG and PRG Sub shall have used their
best efforts as requested by the Company and the Shareholders to obtain all
necessary government and other third-party approvals and consents.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
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(b) executed Separation and Release Agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement, each certified by the Secretary of the Clinic as being true
and correct copies of the original thereof;
(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Ohio establishing that the Company is in
existence and is in good standing to transact business in its state of
incorporation and a certificate establishing that the Company is authorized to
do business in Kentucky;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Ohio establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation and a certificate establishing that Clinic is authorized to do
business in Kentucky;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company, the enforceability of this Agreement and
the other agreements and documents to be executed in connection herewith, and
other matters reasonably requested by PRG Sub;
(k) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(l) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(m) a Shareholder Release in form attached hereto as
Exhibit 10.1(m) executed by each Shareholder;
(n) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(n);
(o) an executed Escrow Agreement;
(p) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
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10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and agreements each
certified by the Secretary as being true and correct copies of the original
thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Ohio and Delaware establishing that PRG
Sub and PRG are in existence and are in good standing to transact business in
the State of Ohio and Delaware, respectively, and authorized to do business in
the State of Kentucky;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) Affiliates Letters from each affiliate of PRG in the
form attached hereto as Exhibit 10.1(n);
(i) an executed Escrow Agreement; and
(j) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly and severally, or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be. Each party hereby releases, acquits and discharges the other
party from any and all claims and demands, actions and causes of action,
damages, costs, expenses and rights of setoff with respect to which the notices
required by Section 11.2, 11.3 or 11.4, as applicable, are not timely provided.
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11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND EXPENSES
(INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL
THROUGH APPEAL) ARISING FROM OR BY REASON OF OR RESULTING FROM ANY BREACH BY
INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN
THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE
OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND,
FROM AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY. IN CONNECTION WITH
INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE
EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH
INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO
REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS FINALLY
JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE SHAREHOLDERS. THE SHAREHOLDERS (FOR
PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE, SECTION 11.4,
"INDEMNITOR"), JOINTLY AND SEVERALLY, SHALL INDEMNIFY AND HOLD THE COMPANY, PRG
SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, AGENTS AND
EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB AND PRG, FOR PURPOSES OF
THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED
PERSON") HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, CLAIMS,
DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT
LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL)
("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING FROM ANY BREACH BY
INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN
THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE,
OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND,
WITH RESPECT TO ALL TIMES PRIOR TO THE CLOSING DATE, ARISING FROM OR BY REASON
OF OR RESULTING FROM THE INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP
OR OPERATION OF THE COMPANY AND FROM ANY ALLEGED ACT OR NEGLIGENCE OF
INDEMNITOR OR ITS EMPLOYEES, AGENTS AND INDEPENDENT CONTRACTORS IN OR ABOUT THE
COMPANY'S BUSINESS (OTHER THAN FOR LIABILITIES INCLUDED ON THE BALANCE SHEET
AND FOR TAXES ACCRUED FOR ON THE BALANCE SHEET AND LIABILITIES INCURRED AFTER
JUNE 30, 1996 IN THE ORDINARY COURSE OF BUSINESS), AND WITH RESPECT TO (I) ANY
VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR CONSULTANTS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR FEDERAL LAWS GOVERNING
HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR
RESULTING FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR, PRIOR TO THE CLOSING
DATE, (II) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY SHAREHOLDER)
ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
(NOT INCLUDING INCOME TAXES OF THE COMPANY), (III) ANY LIABILITY OF THE COMPANY
OR THE SHAREHOLDERS FOR COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION,
ATTORNEYS' FEES) INCURRED IN CONNECTION WITH THE NEGOTIATION, PREPARATION OR
CLOSING OF TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER DOCUMENTS
TO BE EXECUTED IN CONNECTION HEREWITH, AND (IV) ANY ACCRUED UNFUNDED RETIREMENT
OR PENSION PLAN LIABILITIES. IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO
INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR
ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON,
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PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO REFUND ALL SUCH
REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS FINALLY JUDICIALLY
DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO INDEMNIFICATION
HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and such indemnification shall be limited to recourse against
the Escrowed Shares only, and any indemnification by PRG and PRG Sub in favor
of the Company and Shareholders shall not exceed in all cases $2,633,176.00.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date. Notwithstanding the provisions hereof, the
Shareholder and the Company shall not be required to indemnify PRG or PRG Sub
unless, and to the extent that, the aggregate amount of damages, losses,
liabilities, costs and other sums ("Damages") incurred by PRG and PRG Sub shall
exceed an amount equal to $526,635.22. Notwithstanding the provisions hereof,
PRG and PRG Sub shall not be required to indemnify the Company and the
Shareholder unless, and to the extent that, the aggregate amount of Damages
incurred by the Shareholder shall exceed an amount equal to $526,635.22.
11.6 CERTAIN TAX MATTERS. Shareholders shall within fifteen (15)
days after payment thereof and receipt of notice of such payment, reimburse,
indemnify and hold harmless PRG and Surviving Corporation for all undisclosed
taxes, and all related interest, penalties, and additions to tax ("Taxes") with
respect to full or partial taxable periods of the Company ending on or before
the Closing Date (other than income taxes). For such purposes, the portion of
any Tax allocable to a partial taxable period ending on the Closing Date shall
be determined by apportioning the Tax for the entire taxable period based on
the number of days therein.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or
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any Shareholders fails to comply in any material respect with any covenant or
agreement contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within twenty (20) days after receipt
of written notice thereof;
(c) at any time by the Company if any representation or warranty
of PRG or PRG Sub contained in this Agreement or in any certificate or other
document executed and delivered by PRG or PRG Sub pursuant to this Agreement is
or becomes untrue or breached in any material respect or if PRG or PRG Sub
fails to comply in any material respect with any covenant or agreement
contained herein and such misrepresentation, noncompliance or bread is not
cured, waived or eliminated within twenty (20) days after receipt of written
notice thereof;
(d) by PRG, PRG Sub or the Company if the merger contemplated
hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In consideration of the amounts set
forth on Annex I hereto and in order to protect PRG, PRG Sub, the Surviving
Corporation and each of their affiliates (collectively, the "PRG Group")
against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders, Corwin
and Smith, and other good and valuable consideration, each Shareholder, Corwin
and Smith hereby agrees that, subject to adjustment pursuant to Section 13.5,
for a period of five (5) years following the Closing Date (provided, however,
that with respect to activities conducted in Kentucky, such period shall be
three hundred and sixty four days following the Closing Date), each
Shareholder, Corwin and Smith and his or her respective affiliates shall not
knowingly, directly or indirectly, for herself or himself or on or behalf of
any other corporation, person, firm, partnership, association or any other
entity (whether as an individual, agent, employee, offer director or in any
other capacity):
(a) establish, operate or provide physician services at
any medical office, clinic or out-patient and/or ambulatory treatment or
diagnostic facility providing services similar to those provided by the Company
or engage or participate in or finance any business which engages in direct
competition with the business being conducted by PRG, PRG Sub, Surviving
Corporation or any practice managed by PRG or any subsidiary of PRG anywhere
within 50 miles of any location of PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG; provided, however, that this
provision shall not prohibit each Shareholder, Corwin or Smith or any of his or
her affiliates from purchasing or holding an aggregate equity interest of up to
2%, so long as such Shareholder, Corwin and Smith and his or her affiliates
combined do not purchase or hold an aggregate equity interest of more than 5%,
in any business in direct competition with the PRG, PRG Sub, Surviving
Corporation or any practice managed by PRG or any subsidiary of PRG; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, other
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than as set forth below, each Shareholder, Corwin and Smith agrees that, in the
event of a breach by such Shareholder, Corwin or Smith of the foregoing
covenant, the covenant may be enforced by PRG, Surviving Corporation or PRG Sub
by injunctions and restraining orders. The foregoing right is in addition to
the right to receive liquidated damages set forth in subparagraph (b) below.
Notwithstanding the foregoing, in the event that Robert W. Nash, M.D. no longer
provides services to the Clinic within two years from the date hereof, PRG and
PRG Sub shall not be entitled to seek an injunction or restraining order
against Dr. Nash for the breach of Section 13.1 hereof; provided, however,
that in the event Dr. Nash breaches Section 13.1 hereof at any time during the
two years or during the five years following the Closing Date, Section 13.2(b)
shall be applicable to such breach.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder, Corwin or Smith of the
foregoing covenant, such Shareholder, Corwin and Smith agrees to that in the
event of a breach of Section 13.1, the breaching Shareholder, Corwin or Smith
shall be obligated to pay to PRG as liquidated damages an amount set forth on
Exhibit 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders, Corwin or Smith in light of the activities and business of PRG
and PRG Sub on the date of the execution of this Agreement and the future plans
of PRG and Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder, Corwin or Smith is in violation of any
provision of this Section 13. The covenants contained in this Section 13 shall
have no effect if the transactions contemplated by this Agreement are not
consummated for any reason but otherwise shall not be affected by any breach of
any other provision hereof by any party hereto. The covenants contained in
this Section 13 shall be of no further force and effect if the Service
Agreement is terminated pursuant to Section 9.3, 9.4(ii) or 10.6 thereof.
13.6 PAYMENT OF OBLIGATION. Subject to PRG's approval as set
forth below, each Shareholder, Smith and Corwin may satisfy his or her
obligation under Section 13.2(b) above by transferring to PRG or PRG Sub such
number of shares of PRG common stock owned by the Shareholder, Corwin or Smith
having an aggregate fair market value (based on the average of the last
reported sale price of PRG common stock on the NYSE or other exchange on which
PRG common stock is then listed or the last quoted ask price on any
over-the-counter market through which the PRG common stock is then quoted of
the ten business days ending three business days preceding the day on which the
Shareholder, Smith or Corwin transfers shares of PRG common stock to PRG
hereunder) equal to the obligation owing pursuant to Section 13.2; provided
that each of the following conditions are satisfied:
(a) The Shareholder, Corwin or Smith, as applicable, shall
transfer to PRG or PRG Sub, good, valid and marketable title to the shares of
PRG common stock, free and clear of all adverse claims, security interests,
liens, proxies, options, stockholder's agreements and encumbrances;
(b) The Shareholder, Corwin or Smith, as applicable, shall make
such representations and warranties as to title to the stock, absences of
security interests, liens, claims, proxies, options, stockholder's agreements
and other encumbrances and other matters as reasonably requested by PRG or PRG
Sub; and
(c) The other terms and conditions of any transaction contemplated
pursuant to this Section and the effects thereof, including any legal or tax
consequences, shall be reasonably satisfactory to PRG and PRG Sub.
SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they
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had in the past, currently have, and in the future may possibly have, access to
certain confidential information of PRG, Surviving Corporation or PRG Sub that
is valuable, special and unique assets of PRG's, Surviving Corporation's or PRG
Sub's businesses. The Shareholders agree that they will not disclose such
confidential information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, unless (i) such information
becomes available to or known by the public generally through no fault of the
Shareholders, (ii) disclosure is required by law or the order of any
governmental authority under color of law, provided, that prior to disclosing
any information pursuant to this clause (ii), the Shareholders shall, if
possible, give prior written notice thereof to the other parties hereto, and
provide such other parties hereto with the opportunity to contest such
disclosure, (iii) the Shareholders reasonably believe that such disclosure is
required in connection with the defense of a lawsuit against the disclosing
party, or (iv) the Shareholders are the sole and exclusive owner of such
confidential information as a result of the transactions contemplated hereunder
or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 ECONOMIC RISK; SOPHISTICATION. The Shareholders are able to
bear the economic risk of an investment in PRG common stock acquired pursuant
to this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the PRG common stock. The Shareholders or their respective
purchaser representatives have had an adequate opportunity to ask questions and
receive answers from the officers of PRG concerning any and all matters
relating to the background and experience of the officers and directors of PRG,
the plans for the operations of the business of PRG, and any plans for
additional acquisitions and the like. The Shareholders or their respective
purchaser representatives have asked any and all questions in the nature
described in the preceding sentence and all questions have been answered to
their satisfaction.
15.2 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. PRG Ohio III, Inc.
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
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with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
If to the Company or the Shareholders:
10494 Montgomery Road
Cincinnati, Ohio 45242
Facsimile: (513) 984-4240
Attn: Robert H. Osher, M.D.
with a copy to:
Robert E. Brant
Katz, Teller, Brant & Hild
255 E. Fifth Street
2400 Chemed Center
Cincinnati, Ohio 45202
Facsimile: (513) 721-7120
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any (a) fees and expenses of legal counsel, accountants, auditors or other
persons or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company, and (b) local, state and federal income taxes or other
similar charges on income or gain incurred by the Company, the Clinic or the
Shareholders as a result of the transactions contemplated hereby (other than
income taxes of the Company).
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
26
<PAGE> 28
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, AND THE CONFIDENTIALITY AGREEMENT EXECUTED BETWEEN
THE PARTIES HERETO, CONTAIN THE ENTIRE AGREEMENT OF THE PARTIES AND SUPERSEDES
ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES, WRITTEN OR
ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.12 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.13 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.14 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
27
<PAGE> 29
16.15 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
[End of Page]
28
<PAGE> 30
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG OHIO III, INC. CINCINNATI EYE INSTITUTE, INC.
By: By:
------------------------------- ------------------------------------
Its: Its:
------------------------------ -----------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By:
------------------------------- ---------------------------------------
Its: John S. Cohen, M.D.
------------------------------
---------------------------------------
James D. Faulkner, M.D.
---------------------------------------
William J. Faulkner, M.D.
---------------------------------------
Robert C. Kersten, M.D.
---------------------------------------
Richard S. Kerstine, M.D.
---------------------------------------
Robert H. Osher, M.D.
---------------------------------------
Robert W. Nash, M.D.
---------------------------------------
Michael R. Petersen, M.D.
---------------------------------------
Gary A. Varley, M.D.
---------------------------------------
Linda J. Greff, M.D.
---------------------------------------
Robert J. Cionni, M.D.
---------------------------------------
Kevin T. Corcoran, O.D.
---------------------------------------
Corwin M. Smith, M.D.
29
<PAGE> 31
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company and Dates of such Capitalization
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.13 Litigation
2.14 Contracts (other than Leases)
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.26 Suppliers
2.27 Banking Relations
2.28 Ownership Interests of Interested Persons; Competitors
2.29 Payors
4.1 Capitalization of Clinic
5.7 Employee Matters
6.5 Option Agreement
8.7 Form of Service Agreement
10.1(m) Shareholder Release
</TABLE>
30
<PAGE> 32
<TABLE>
<S> <C>
10.1(n) Affiliates Letter
13.2 Liquidated Damages
ANNEX I Merger Consideration
</TABLE>
31
<PAGE> 1
EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
HOUSTON EYE ASSOCIATES, P.A.,
MALCOLM L. MAZOW, M.D.,
ROBERT H. STEWART, M.D.,
ROBERT B. WILKINS, M.D.,
JEFFREY D. LANIER, M.D.,
MICHAEL A. BLOOME, M.D.,
PAUL C. SALMONSEN, M.D.,
RICHARD L. KIMBROUGH, M.D.,
JACK T. HOLLADAY, M.D.,
JEFFREY B. ARNOULT, M.D.,
WILLIAM H. QUAYLE, M.D.,
JOHN D. GOOSEY, M.D.,
JOHN M. LIM, M.D.,
KATHRYN H. MUSGROVE, M.D.,
MARSHA F. SOECHTING, M.D.,
MARC N. LONGO, M.D.,
PRG HEA ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. The Merger
--- ------
1.1 Merger of PRG Sub into HEA Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
------ -- --- --- ---- --- ----
1.2 Merger Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------ ------------
1.3 Articles of Incorporation of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------- -- ------------- -- --------- -----------
1.4 Bylaws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------ -- --- --------- -----------
1.5 Directors of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------- -- --- --------- -----------
1.6 Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-------- -- --- --------- -----------
1.7 Conversion of HEA Inc. Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
---------- -- --- ---- ------ -----
1.8 Exchange of Certificates Representing Shares of HEA Inc. Common Stock . . . . . . . . . . . . . . . . 2
-------- -- ------------ ------------ ------ -- --- ---- ------ -----
1.9 Subsequent Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------- -------
Section 2. Representations and Warranties of the Company and the Shareholders
--------------- --- ---------- -- --- ------- --- --- ------------
2.1 Corporate Existence; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------- ---------- ---- --------
2.2 Power and Authority for Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
----- --- --------- --- ------------
2.3 Permits, Licenses and Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------- -------- --- ------------ --------------
2.4 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------- -------
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--------
2.6 HEA PA's Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
--- ---- --------- -----------
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
------
2.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------- -- ------
2.9 Title to and Encumbrances on Property; ASC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----- -- --- ------------ -- --------- ---
2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------
2.11 Intellectual Property Rights; Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
------------ -------- ------- -----
2.12 Directors and Officers; Payroll Information; Employees . . . . . . . . . . . . . . . . . . . . . . . . 5
--------- --- --------- ------- ------------ ---------
2.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----- -----------
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------
2.15 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------- ------
2.16 Accounts Receivable/Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------- ------------------
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-----
2.18 Liabilities; Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------ ----
2.19 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------- --------
2.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------- ------- -----
2.21 [Intentionally left blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.22 Compliance with Laws in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------- ---- ---- -- -------
2.23 Medicare and Medicaid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------- --- -------- --------
2.24 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----- --- -----
2.25 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-- ------ ---------------
2.26 [Intentionally left blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.27 [Intentionally left blank] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.28 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------
2.29 Banking Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------- ---------
2.30 Ownership Interests of Interested Persons; Competitors . . . . . . . . . . . . . . . . . . . . . . . 10
--------- --------- -- ---------- -------- -----------
2.31 Payors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------
Section 3. Representations and Warranties of PRG Sub and PRG
--------------- --- ---------- -- --- --- --- ---
3.1 Corporate Existence: Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------- ---------- ---- --------
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----- --- ---------
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------- -----
3.4 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-- ------ ---------------
3.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
3.6 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--- ---------
Section 4. Closing Date Representations and Warranties of the Company and the Shareholders
------- ---- --------------- --- ---------- -- --- ------- --- --- ------------
4.1 Corporate Existence and Good Standing of the Clinic . . . . . . . . . . . . . . . . . . . . . . . . 12
--------- --------- --- ---- -------- -- --- ------
4.2 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------- -------
4.3 Power and Authority for Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----- --- --------- --- ------------
4.4 No Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-- --------
4.5 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
---------- ---- ----
Section 5. Covenants of the Company and the Shareholders
--------- -- --- ------- --- --- ------------
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------ -- ---------
5.2 Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------- ----------
5.3 Access and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------ --- ------
5.4 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 13
--------- -- ----- ------- --- ------- --- --------
5.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------- ---------
5.6 Funding of Accrued Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------- -- ------- -------- --------
5.7 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------- -------
5.8 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------- --- -----------
5.9 Requirements to Effect Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------ -- ------ ------
5.10 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------ -- ------
5.11 Accounting and Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------- --- --- -------
5.12 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------
Section 6. Covenants of PRG and PRG Sub
--------- -- --- --- --- ---
6.1 Consummation of Agreement; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------------ -- ---------- --------
6.2 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 15
--------- -- ----- ------- --- ------- --- --------
6.3 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------- -----------
6.4 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------
Section 7. Covenants of the Shareholders
--------- -- --- ------------
7.1 Formation of the Clinic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------- -- --- ------
7.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------
7.3 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------- --- -------
7.4 Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------- ----------
7.5 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------
Section 8. PRG Sub and PRG Conditions Precedent
--- --- --- --- ---------- ---------
8.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------- --- ----------
8.2 Covenants and Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------- --- ----------
8.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-----------
8.4 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-- -------- ------- ------
8.5 Due Diligence Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--- --------- ------
8.6 Approval by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------- -- --- ----- -- ---------
8.7 Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------- ---------
8.8 Employment Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------- ------------
8.9 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------- --- ---------
8.10 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------- ----------
8.11 Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------- ----------
8.12 Debt and Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---- --- -----------
8.13 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------- ------
8.14 Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----- -------------
8.15 No Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-- ------ -- ------- -------
Section 9. The Company's and the Shareholder's Conditions Precedent
--- --------- --- --- ------------- ---------- ---------
9.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------- --- ----------
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
9.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------- --- ----------
9.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-----------
9.4 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------- ----------
9.5 Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----- -------------
9.6 Consents, Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------- ---------
9.7 Securities Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------- ---------
Section 10. Closing Deliveries
------- ----------
10.1 Deliveries of the Company and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------- -- --- ------- --- --- ------------
10.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------- -- --- --- --- ---
Section 11. Nature and Survival of Representations and Warranties; Indemnification
------ --- -------- -- --------------- --- ----------- ---------------
11.1 Nature and Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------ --- --------
11.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------- -- --- --- --- ---
11.3 Indemnification by the Company and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------- -- --- ------- --- --- ------------
11.4 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------- ---------
11.5 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------- --- -------
11.6 Indemnification Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------- -----------
11.7 Tax Benefits; Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
--- --------- --------- --------
11.8 Payment of Indemnification Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------- -- --------------- ----------
Section 12. Termination; Remedies
------------ --------
12.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-----------
12.2 Exclusive Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
--------- ------ --- --------
Section 13. Noncompetition
--------------
13.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
---------- ----------
13.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
-------
13.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
---------- ---------
13.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------- -----------
13.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----
Section 14. Confidential Information
------------ -----------
14.1 Nondisclosure by Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------- -- -------------
14.2 Nondisclosure by PRG or PRG Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------- -- --- -- --- ----
Section 15. Investment Representations
---------- ---------------
Section 16. Miscellaneous
-------------
16.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------
16.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------- ----------
16.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---- ----- -- ---- -----
16.4 Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------ -----------
16.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------- ---
16.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------
16.7 Integration of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
----------- -- --------
16.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------ -------------------
16.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------
16.10 Binding Effect/Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------- -----------------
16.11 No Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-- ---- -- ------------
16.12 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----- -- -----------
16.13 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------- -------
16.14 Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------ -- -----
16.15 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------- -- -------
16.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
16.17 Affiliate of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------- -- --- -------
16.18 Post-Closing Matter; Disposal of Assets by PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
------------ ------- -------- -- ------ -- ---
16.19 Arbitration and Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------- --- ---------
</TABLE>
-iv-
<PAGE> 6
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, made and executed as of the
_______ day of August, 1996, is by and among PRG HEA ACQ. CORP., a Texas
corporation ("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); HOUSTON EYE ASSOCIATES, P.A., a Texas professional
association ("HEA PA or the "Company") and MALCOLM L. MAZOW, M.D., ROBERT H.
STEWART, M.D., ROBERT B. WILKINS, M.D., JEFFREY D. LANIER, M.D., MICHAEL A.
BLOOME, M.D., PAUL C. SALMONSEN, M.D., RICHARD L. KIMBROUGH, M.D., JACK T.
HOLLADAY, M.D., JEFFREY B. ARNOULT, M.D., [ROSA A. TANG, M.D.], WILLIAM H.
QUAYLE, M.D., JOHN D. GOOSEY, M.D., JOHN M. LIM, M.D., KATHRYN H. MUSGROVE,
M.D., MARSHA F. SOECHTING, M.D., MARC N. LONGO, M.D., all individual residents
of the State of Texas (individually "Shareholder," and collectively
"Shareholders").
WITNESSETH:
WHEREAS, HEA PA operates an ophthalmology practice in Houston, Texas;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and managing non-medical aspects of ophthalmology practices and is a
wholly-owned subsidiary of PRG; and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, immediately prior to the Merger, HEA, Inc. ("HEA Inc.")
shall be the successor by merger to HEA PA; provided, that following such
merger, "Company" as used herein shall refer jointly and severally to HEA PA
and HEA Inc.;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section
368(a)(1)(A), (a)(1)(B) and (a)(2)(E) of the Internal Revenue Code of 1986, as
amended.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into HEA Inc. shall occur on the 31st
day of August, 1996 ("Closing Date"), unless another date is mutually agreed
upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO HEA INC. On the Closing Date, PRG Sub
shall be merged with and into HEA Inc. in accordance with this Agreement and
the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Merger is intended to be a "tax-free reorganization" pursuant
to Section 368(a) of the Code and the parties hereto shall not report the
transaction in a manner inconsistent therewith or otherwise take any action
that would prevent the Merger from qualifying as such. HEA Inc. shall be the
surviving corporation in the Merger (in such capacity, hereinafter referred to
as the "Surviving Corporation") and shall continue to be governed by the laws
of the State of Texas and the separate corporate existence of Surviving
Corporation with all its rights, privileges, powers, immunities, purposes and
franchises shall continue unaffected by the Merger, except as set forth herein.
The Merger shall have the effects specified in the Texas Business Corporation
Act.
1
<PAGE> 7
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date a Certificate of Merger meeting the requirements of the Texas Business
Corporation Act. The Merger shall become effective on the Closing Date.
1.3 ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. Effective
on the Closing Date, the Articles of Incorporation of PRG Sub shall be the
Articles of Incorporation of the Surviving Corporation and to the extent the
foregoing is not permitted by law, the Articles of Incorporation of HEA Inc.
shall be the Articles of Incorporation of the Surviving Corporation and shall
immediately be amended to contain the terms and provisions of the Articles of
Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF HEA INC. COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of HEA Inc. common stock issued and
outstanding on the Closing Date shall cease to be outstanding and shall be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of HEA Inc. common stock shall
thereafter cease to have any rights with respect to such shares of HEA Inc.
common stock, except the right to receive, without interest, the consideration
specified in Annex I attached hereto (in the aggregate, the "Merger
Consideration").
(b) Each share of HEA Inc. common stock held in HEA
Inc.'s treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF HEA INC.
COMMON STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of HEA Inc.
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
HEA Inc. common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for HEA Inc.
common stock shall, for all purposes, be deemed to evidence ownership of PRG
common stock.
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing HEA Inc. common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers,
and with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such HEA Inc. common stock or with
respect to the stock powers accompanying any HEA Inc. common stock. Upon such
delivery, the Shareholders shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock and the
amount of any cash
2
<PAGE> 8
such Shareholder is entitled to receive pursuant to Section 1.7 hereof, after
giving effect to any required tax withholdings.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of HEA Inc. common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company and PRG Sub, to carry out all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of the
Company and PRG Sub, all such other actions and things as may be necessary or
desirable to vest, perfect or confirm any and all right, title and interest in,
to and under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
With respect to representations and warranties of the Company, the
Company and the Shareholders (in accordance with their pro rata amount of the
Merger Consideration being received by each Shareholder in connection with the
transaction contemplated hereby, as set forth on Annex I) hereby jointly and
severally make the following representations and warranties to PRG and PRG Sub,
and with respect to representations and warranties of the Shareholders, each
respective Shareholder individually (as opposed to jointly and/or severally)
makes the following representations and warranties to PRG and PRG Sub (it being
understood that no Shareholder shall have any liability or responsibility
whatsoever for representations and warranties made by other Shareholders in
this Agreement, including this Section 2, or in any agreements entered into in
connection with the transactions contemplated by this Agreement):
2.1 CORPORATE EXISTENCE; GOOD STANDING. HEA PA is a professional
association duly organized, validly existing and in good standing under the
laws of the State of Texas. HEA Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. The
Company has all necessary corporate powers to own all of its assets and to
carry on its business as such business is now being conducted. Other than the
ownership of the stock of HEA Inc. by HEA PA, and except as set forth on
Exhibit 2.1, the Company does not own stock in or control, directly or
indirectly, any other corporation, association or business organization, nor is
the Company a party to any joint venture or partnership. The Shareholders are
the sole shareholders of HEA PA and own all outstanding shares of capital stock
free of all security interests, claims, encumbrances and liens in the amounts
set forth on Exhibit 2.1. HEA PA is the sole shareholder of HEA Inc. and owns
all outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens. Each share of Company common stock has been legally
and validly issued and fully paid and nonassessable. Except as set forth on
Exhibit 2.1, no shares of capital stock of the Company are owned by the Company
in treasury. There are no outstanding (a) bonds, debentures, notes or other
obligations the holders of which have the right to vote with the stockholders
of the Company on any matter, (b) securities of the Company convertible into
equity interests in the Company, or (c) commitments, options, rights or
warrants to issue any such equity interests in the Company, to issue securities
of the Company convertible into such equity interests, or to redeem any
securities of the Company. No shares of capital stock of the Company have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of the Company's stockholders. The Company is
not required to qualify to do business as a foreign corporation in any other
state or jurisdiction by reason of its business, properties or activities in or
relating to such other state or jurisdiction. The Company does not have any
assets, employees or offices in any state other than Texas.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other
3
<PAGE> 9
agreements to be executed and delivered in connection herewith. The Company
has obtained the approval of its stockholders necessary to the consummation of
the transactions contemplated herein. This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by the Company and the
Shareholders, as appropriate, and constitute or will constitute the legal,
valid and binding obligations of the Company and the Shareholders, enforceable
against the Company and the Shareholders in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3, except to the extent that the failure to obtain or maintain such items
would not, individually or in the aggregate, result in a Material Adverse
Effect (as defined below). There are no proceedings pending or, to the
knowledge of the Company and the Shareholders, threatened, which may result in
the revocation, cancellation or suspension, or any adverse modification, of any
thereof. For purposes of this Agreement, the term "Material Adverse Effect"
shall mean a material adverse effect on the business, operations, condition
(financial or otherwise) or results of operations of the Company, taken as a
whole, in consideration of all relevant facts and circumstances.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as have been obtained or as may be required
under the Texas Business Corporation Act, the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and state securities laws, or as set forth on Exhibit
2.5, no consent, authorization, permit, license or filing with any governmental
authority, any lender, lessor, any manufacturer or supplier or any other person
or entity is required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement and the agreements and
documents contemplated hereby on the part of the Company or the Shareholders,
other than such consents as to which the failure to obtain would not,
individually or in the aggregate, result in a Material Adverse Effect.
2.6 HEA PA'S FINANCIAL INFORMATION. HEA PA has heretofore
furnished PRG Sub with copies of financial information ("Financial Statements")
about HEA PA as set forth on Exhibit 2.6 attached hereto, including the
unaudited Balance Sheet ("Balance Sheet") as of June 30, 1996 ("Balance Sheet
Date"). All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
periods indicated, and present fairly the financial position of HEA PA as of
such dates and the results of operations and cash flows for the period or
periods reflected therein (subject to normal year end adjustments and the
absence of notes for any unaudited Financial Statements), except as otherwise
indicated in the Financial Statements. HEA Inc. has no financial information
as of the date hereof.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, (i) real
property, or (ii) personal property involving rental payments within any
12-month period in excess of $5,000, used in operating the business of the
Company or otherwise. All such leases listed on Exhibit 2.7 are valid and
enforceable in accordance with their respective terms, and there is not under
any such lease any existing default by the Company, as lessor or lessee, or any
condition or event of which the Company or any Shareholder has knowledge which
with notice or lapse of time, or both, would constitute a default, in respect
of which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring, other than such defaults that would not,
individually or in the aggregate, result in a Material Adverse Effect. For
purposes of this Agreement, the Company shall
4
<PAGE> 10
be deemed to have "knowledge" of a particular fact or other matter if any
member of the Executive Committee of the Company, or any officer of the
Company, has actual conscious knowledge of the fact or other matter, and each
Shareholder shall be deemed to have "knowledge" of a particular fact or other
matter if such Shareholder has actual conscious knowledge of the fact or other
matter.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
in all material respects subject to normal wear and tear and conform, in all
material respects, with all applicable ordinances, regulations and other laws,
and the Company and the Shareholders have no actual knowledge of any latent
defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY; ASC. The Company does
not own any interest (other than leasehold interests referred to in Exhibit
2.7) in real property. The leased real property referred to in Exhibit 2.7
constitutes the only real property necessary for the conduct of the Company's
business. Except as set forth in Exhibit 2.9, the Company has good, valid and
marketable title to all the personal property owned by it ("Personal
Property"). The Personal Property and the leased personal property referred to
in Exhibit 2.7 constitute the only personal property necessary for the conduct
of the Company's business. Except as set forth on Exhibit 2.7, upon
consummation of the transactions contemplated hereby, such leasehold interests
in real property and such Personal Property and leasehold interests in personal
property shall be free and clear of all liens, security interests, claims and
encumbrances. HEA PA owns 21.5% of an outpatient surgery center that is
adjacent to its corporate headquarters and is majority owned and managed by
Columbia/HCA Healthcare.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective, other than as would not have a Material Adverse Effect.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions or copyrights and such items are
the only such items necessary for the conduct of its business. Set forth in
Exhibit 2.11 is a listing of all names of all predecessor companies of the
Company, including the names of any entities from whom the Company previously
acquired significant assets. Except for off-the-shelf software licenses and
except as set forth on Exhibit 2.11, the Company is not a licensee in respect
of any patents, trademarks, service marks, trade names, copyrights or
applications therefor, or manufacturing processes, formulas or trade secrets or
similar items and no such licenses are necessary for the conduct of its
business. To the best knowledge of the Company and Shareholders, no claim is
pending or has been made to the effect that the present or past operations of
the Company infringe upon or conflict with the asserted rights of others to any
patents, patent rights, manufacturing processes, trade names, trademarks,
service marks, inventions, licenses, specialized treatment protocols,
copyrights, formulas, know-how and trade secrets. The Company has the sole and
exclusive right to use all such proprietary rights without infringing or
violating the rights of any third parties and no consents of any third parties
are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG Sub,
and (e) all employee manuals, materials, policies, procedures and work-related
rules, copies of which have been delivered to PRG Sub. The Company is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. The Company has not engaged in
any unfair labor practice. There are no unfair labor practices charges or
complaints pending or threatened against the Company, and the Company has never
been a party to any agreement with any union, labor organization or collective
bargaining unit.
5
<PAGE> 11
2.13 LEGAL PROCEEDINGS. Except as described in Exhibit 2.13 or
otherwise disclosed pursuant to this Section 2, there are no legal actions or
administrative proceedings or investigations instituted, or to the actual
knowledge of the Company or any Shareholder, threatened, against the Company or
affecting or that could affect the outstanding shares of the Company's stock,
any of the assets of the Company, or the operations, business, condition
(financial or otherwise) or results of operations of the Company which (i) if
successful, could, individually or in the aggregate, have a Material Adverse
Effect, or (ii) could adversely affect the ability of the Company or any
Shareholder to effect the transactions contemplated hereby.
2.14 CONTRACTS. With the exception of contracts or agreements that
involve either an unperformed commitment of less than $10,000 or that can be
terminated by the Company without liability within 30 days of the date hereof,
the Company has delivered to PRG Sub true copies of all written, and disclosed
to PRG Sub all oral, outstanding contracts, obligations and commitments of the
Company ("Contracts"), all of which are listed or incorporated by reference on
Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case of employment
agreements) and Exhibit 2.14 (in the case of Contracts other than leases and
employment agreements) attached hereto. Except as otherwise indicated on such
Exhibits, all of such Contracts are valid, binding and enforceable in
accordance with their terms and are in full force and effect, and no defenses,
offsets or counterclaims have been asserted or may be made by any party
thereto, except as may be limited by applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally or the availability of
equitable remedies. Except as indicated on such Exhibits, there is not under
any such Contract any existing default by the Company, or any condition or
event of which the Company or any Shareholder has knowledge which with notice
or lapse of time, or both, would constitute a default, other than such defaults
which would not, individually or in the aggregate, result in a Material Adverse
Effect. The Company and the Shareholders have no knowledge of any default by
any other party to such Contracts, other than such defaults which would not,
individually or in the aggregate, result in a Material Adverse Effect. Neither
the Company nor the Shareholders have received written notice of the intention
of any party to any Contract to cancel or terminate any Contract, other than
terminations or cancellations that would not result in a Material Adverse
Effect. Other than those contracts, obligations and commitments of the Company
listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is not a
party to any material written or oral agreement contract, lease or arrangement,
including any:
(a) Contract related to the sale of any material assets
of the Company not made in the ordinary course of business other than this
Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell (i) real property, or (ii)
personal property in excess of $10,000,
(e) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the greater of $10,000, or the requirements
of its business now booked or for normal operating inventories, or (ii) which
is not terminable upon notice of thirty (30) days or less;
(f) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(g) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
(h) Contracts containing non-competition covenants; or
(i) Other contracts or agreements that involve either an
unperformed commitment in excess of $10,000 or that terminate or can only be
terminated by the Company on more than 30 days notice after the date hereof.
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2.15 SUBSEQUENT EVENTS. Except as disclosed on Exhibit 2.15, the
Company has not, since the Balance Sheet Date:
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any material
contract, lease, license or commitment, except in connection with the
performance of this Agreement, other than in the ordinary course of business or
incurred any indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a Material Adverse Effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the material assets used in the conduct of the
Company's business or cancelled any debts or claims or waived any material
rights, except in the ordinary course of business;
(i) Except in the ordinary course or business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment (other than pursuant to terms in place prior to the date
hereof, and disclosed to PRG), increased the compensation of any officer,
employee, consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Ten Thousand and No/100 Dollars ($10,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Except pursuant to this Agreement, redeemed,
purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other Material Adverse
Effect in its financial condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
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<PAGE> 13
(p) Suffered any Material Adverse Effect to the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by HEA
PA, of HEA PA's (i) accounts receivable, to the knowledge of the Company and
Shareholders, net of allowances for uncollectible and doubtful amounts
("Accounts Receivable") and (ii) current accounts payable and current accrued
liabilities (other than the current portion of long-term debt) ("Accounts
Payable"). To the knowledge of the Company and Shareholders, Exhibit 2.16
contains a true and accurate statement of the working capital ("Working
Capital") of HEA PA as of the Balance Sheet Date. HEA PA maintains its
accounting records in sufficient detail to substantiate the accounts receivable
reflected on the Balance Sheet and has given and will give to PRG Sub full and
complete access to those records, including the right to make copies therefrom.
Since the Balance Sheet Date, HEA PA has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance. Following Closing, the
administration of the collection of Accounts Receivable and the payment of
Accounts Payable shall be as set forth in Section 7.3(c) of the Service
Agreement.
2.17 TAXES. The Company has filed all tax returns (including tax
reports and other statements) required to be filed by it, and, except for such
items as the Company may be disputing in good faith and disclosed to PRG, made
all payments of taxes (including any interest, penalty or addition thereto)
required to be made by it, on or before the date of this Agreement, with
respect to income taxes, real and personal property taxes, sales taxes, use
taxes, employment taxes, excise taxes and other taxes. All such tax returns
are complete and accurate in all material respects and properly reflect the
relevant taxes for the periods covered thereby. The Company has paid all
taxes, penalties, assessments, and interest that have become due with respect
to any Tax Returns that it has filed, and the Company is not delinquent in the
payment of any tax, assessment or governmental charges, whether or not
reflected on the Tax Returns. The unpaid taxes of the Company did not, as of
the Balance Sheet Date, exceed the reserve for taxes (rather than any reserve
for deferred taxes established to reflect timing differences between book and
taxable income) set forth on the face of the Balance Sheet (rather than in any
notes thereto), as adjusted for the passage of time through the Closing Date
(in accordance with the past custom and practice of the Company). The Company
and the Shareholders have not received any notice that any tax deficiency or
delinquency has been asserted against the Company. Except as set forth on
Exhibit 2.17, there are no audits relating to taxes of the Company threatened,
pending or in process. The Company is not currently the beneficiary of any
waiver of any statute of limitations in respect of taxes nor of any extension
of time within which to file any tax return or to pay any tax assessment or
deficiency. There are no liens or encumbrances relating to taxes on or
threatened against any of the assets of the Company. The Company has withheld
and paid all taxes required by law to have been withheld and paid by it.
Neither the Company nor any predecessor of the Company is or has been a party
to any tax allocation or sharing agreement or a member of an affiliated group
of corporations filing a consolidated federal income tax return. The Company
has delivered to PRG Sub correct and complete copies of the Company's three
most recently filed annual state and federal income tax returns, together with
all examination reports and statements of deficiencies assessed against or
agreed to by the Company during the three calendar year period preceding the
date of this Agreement. The Company has neither made any payments, is
obligated to make any payments, or is a party to any agreement that under any
circumstance could obligate it to make any payments that will not be deductible
under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, other than
those incurred in the ordinary course of business, and other than liabilities
which would not, individually or in the aggregate, result in a Material Adverse
Effect. The Company and the Shareholders do not know of any basis for the
assertion against the Company, as of the Balance Sheet Date, of any claim or
liability of any nature in any amount not fully reflected or reserved against
on the Balance Sheet, other than those incurred since that date in the ordinary
course of business or contemplated by this Agreement. All indebtedness of the
Company (including without limitation, indebtedness for borrowed money,
guaranties and capital lease obligations) is described on Exhibit 2.18 attached
hereto.
8
<PAGE> 14
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance pursuant to the
policies described on Exhibit 2.19, true and correct copies of which have been
delivered to PRG Sub. Valid and enforceable policies of such types are
outstanding and duly in force and will remain duly in force through the Closing
Date. Neither the Company nor any Shareholder has received notice or other
communication from the issuer of any such insurance policy cancelling or
amending such policy or threatening to do so. Neither the Company, nor each
Shareholder nor any physician employee of the Company, has any outstanding
claims, settlements or premiums owed against any insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan that is a tax-qualified plan or a voluntary
employee benefit plan under Code Section 521(c), either (i) the value of plan
assets (including commitments under insurance contracts) is at least equal to
the value of plan liabilities or (ii) the value of plan liabilities in excess
of plan assets is disclosed on the Balance Sheet, all as of the Closing Date.
2.21 [Intentionally left blank]
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation, except to the extent that any
failure to comply would not, individually or in the aggregate, result in a
Material Adverse Effect. Neither the Company nor any Shareholder has received
any notice of a violation of any federal, state and local laws, regulations and
ordinances relating to the operations of the business and assets of the Company
and no notice of any pending inspection or violation of any such law,
regulation or ordinance has been received by the Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and licensed employee of the Company is qualified for
participation in the Medicare and Medicaid programs and is party to provider
agreements for such programs which are in full force and effect with no
defaults having occurred thereunder. The Company, each Shareholder and each
physician and licensed employee of the Company has timely filed all claims or
other reports required to be filed with respect to the purchase of services by
third-party payors, except where the failure to file would not individually or
in the aggregate, result in a Material Adverse Effect, and all such claims or
reports are complete and accurate in all material respects, and has no material
liability to any payor with respect thereto, except as has been reserved for in
the Balance Sheet. Except as set forth on Exhibit 2.23, there are no pending
appeals, overpayment determinations, adjustments, challenges, audit, litigation
or notices of intent to open Medicare or Medicaid claim determinations or other
reports required to be filed by the Company, each Shareholder and each licensed
employee of the Company. Neither the Company, nor any Shareholder, nor any
physician or licensed employee of the Company has been convicted of, or pled
guilty or nolo contendere to, patient abuse or negligence, or any other
Medicare or Medicaid program related offense, and none has committed any
offense which may serve as the basis for suspension or exclusion from the
Medicare and Medicaid programs.
9
<PAGE> 15
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, officers or directors of the Company or any Shareholder
and furnished or to be furnished to PRG Sub or PRG pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained therein not
misleading.
2.26 [Intentionally left blank]
2.27 [Intentionally left blank]
2.28 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for the last fiscal year and the current fiscal
year to date, showing, with respect to each, the name, address and aggregate
dollar volume of purchases from such supplier.
2.29 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.30 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.30, no officer, employee, director or
stockholder of the Company, or their respective spouses, children or
affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or serves
as an officer or director of, any customer or supplier or competitor of the
Company or any organization that has a material contract or arrangement with
the Company. Except as set forth on Exhibit 2.30, neither the Company, nor any
of its directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.31 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company in
writing that it intends to discontinue its relationship with the Company or to
deny any claims submitted to such payor for payment.
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<PAGE> 16
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Texas, respectively.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement, and
has taken all actions required by law, its Certificate or Articles of
Incorporation, as applicable, its Bylaws or otherwise, to authorize the
execution, delivery and performance of this Agreement and such related
documents. The execution and delivery of this Agreement and the agreements
related hereto executed and delivered pursuant to this Agreement do not and,
subject to the receipt of consents to assignments of leases and other contracts
where required and the receipt of regulatory approvals where required, the
consummation of the transactions contemplated hereby will not, violate any
provision of the Certificate or Articles of Incorporation, as applicable, or
Bylaws of either PRG Sub or PRG or any provisions of, or result in the
acceleration of, any obligation under any mortgage, lien, lease, agreement
instrument, order, arbitration award, judgment or decree to which PRG Sub or
PRG is a party or by which either of them is bound, or violate any restrictions
of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 CONSENTS. Except as have been obtained or as may be required
under the Texas Business Corporation Act, the Securities Act, the Securities
Exchange Act and state securities laws, or as set forth on Exhibit 3.5, no
consent, authorization, permit, license or filing with any governmental
authority, any lender, lessor, any manufacturer or supplier or any other person
or entity is required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement and the agreements and
documents contemplated hereby on the part of PRG and PRG Sub, other than such
consents as to which the failure to obtain would not, individually or in the
aggregate, result in a Material Adverse Effect.
3.6 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that is has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments). Except as disclosed in the SEC Documents, since March 31, 1995,
PRG has conducted its business only in the ordinary course of such business,
and there has not been (i) any material change in such business
11
<PAGE> 17
of which its executive officers have knowledge; (ii) any declaration, setting
aside or payment of any dividend or any distribution with respect to its
capital stock; or (iii) any material change in its accounting principles,
practices or methods.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND
THE SHAREHOLDERS.
With respect to representations and warranties of the Clinic, the
Company and the Shareholders (in accordance with their pro rata amount of the
Merger Consideration being received by each Shareholder in connection with the
transaction contemplated hereby, as set forth on Annex I) hereby jointly and
severally make the following representations and warranties to PRG and PRG Sub,
and with respect to representations and warranties of the Shareholders, each
Shareholder individually (as opposed to jointly and/or severally) makes the
following representations and warranties to PRG and PRG Sub:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. The
Shareholders have formed a professional entity (the "Clinic") which is duly
organized, validly existing and in good standing under the laws of the State of
Texas. The Clinic has all necessary corporate/partnership power to own all of
its assets and to carry on its business as such business is now being
conducted. The Shareholders are the sole [members/partners] of the Clinic and
own such interests free of all security interests, claims, encumbrances and
liens in the amounts set forth on Exhibit 4.1. Each interest of the Clinic has
been legally and validly issued and fully paid and nonassessable. There are no
outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the [members/partners] of the Clinic on any
matter, (b) securities of the Clinic convertible into equity interests in the
Clinic, or (c) commitments, options, rights or warrants to issue any such
equity interests in the Clinic, to issue securities of the Clinic convertible
into such equity interests, or to redeem any securities of the Clinic. No
interests of the Clinic have been issued or disposed of in violation of the
preemptive rights, rights of first refusal or similar rights of any of the
Clinic's [members/partners.] The Clinic is not required to qualify to do
business as a foreign entity in any other state or jurisdiction by reason of
its business, properties or activities in or relating to such other state or
jurisdiction. The Clinic does not have any assets, employees or offices in any
state other than Texas.
4.2 CORPORATE RECORDS. True and correct copies of the [Articles
of Organization/Partnership Agreement], [Regulations] and minutes of the Clinic
and all amendments thereto of the Clinic have been delivered to PRG and are in
form and substance satisfactory to PRG and PRG Sub. The minute books of the
Clinic contain all accurate minutes of the meetings of and consents to actions
taken without meetings of the [members and managers/partners] of the Clinic
since its formation.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate/partnership power to execute, deliver and perform its obligations
under all agreements and other documents to be executed and delivered by it
pursuant to this Agreement, including without limitation, the Service
Agreement, or to be executed and delivered on the Closing Date, and has taken
all action required by law, its [Organization/Partnership Agreement], its
[Regulations] or otherwise, to authorize the execution, delivery and
performance of such documents. The Service Agreement and the other agreements
contemplated hereby have been duly executed and delivered by the Clinic and
constitute or will constitute the legal, valid and binding obligations of the
Clinic enforceable against the Clinic in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of the Service Agreement and the other
agreements contemplated hereby will not violate any provision of the
organizational documents of the Clinic or any provisions of, or result in the
acceleration of, any obligation under any mortgage, lien, lease, agreement,
rent, instrument, order, arbitration award, judgment or decree to which the
Clinic is a party or by which the Clinic is bound, or violate any material
restrictions of any kind to which the Clinic is subject, or result in any lien
or encumbrance on any of the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its [Articles of Organization/Partnership Agreement],
[Regulations] and as of the Closing Date, the Service Agreement, the Clinic is
not a party to or subject to any agreement, indenture or other instrument. The
Clinic does not own any assets (tangible or intangible) other than (i) the
assets described on Exhibit 4.4 attached hereto, and (ii) the consideration
received upon the issuance of shares of its capital stock, and the Clinic does
not have any liabilities, accrued, contingent or otherwise (known or unknown
and asserted or unasserted).
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<PAGE> 18
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
With respect to covenants of the Company, the Company and the
Shareholders (in accordance with the pro rata amount of the Merger
Consideration being received by each Shareholder in connection with the
transactions contemplated hereunder as set forth on Annex I, hereby jointly and
severally make the following covenants to PRG and PRG Sub, and with respect to
covenants of the Shareholders, each respective Shareholder individually (as
opposed to jointly and/or severally) makes the following covenants to PRG and
PRG Sub (it being understood that no Shareholder shall have any liability or
responsibility whatsoever for covenants made by other Shareholders in this
Agreement, including in this Section 5, or in any agreements entered into in
connection with the transactions contemplated by this Agreement,:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their reasonable efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions,
provided, however, that this covenant shall not require the Company or the
Shareholders to make any expenditures that are not expressly set forth in this
Agreement or contemplated herein
5.2 BUSINESS OPERATIONS. Other than with respect to transactions
evidenced by this Agreement, the Company and the Shareholders shall operate the
Company's business in the ordinary course. The Company shall not enter into
any lease, contract, indebtedness, commitment, purchase or sale or acquire or
dispose of any capital asset except in the ordinary course of business. The
Company and the Shareholders shall use their reasonable efforts to preserve the
business and assets of the Company intact and shall not take any action that
would have a Material Adverse Effect, including without limitation, any action
the primary purpose or effect of which is to generate or preserve cash;
provided that the Company may continue to operate in the ordinary course of
business. The Company and the Shareholders shall use their reasonable efforts
to preserve intact the relationships with significant payors, customers,
suppliers, patients and others having significant business relations with the
Company. The Company shall collect its receivables and pay its trade payables
in the ordinary course of business consistent with past practices. The Company
shall not introduce any new method of management, operations or accounting. On
the Closing Date, the Company shall not be engaged in the practice of medicine
and shall not provide medical services.
5.3 ACCESS AND NOTICE. The Company and the Shareholders, upon
reasonable notice and at reasonable times, shall permit PRG and PRG Sub and
their authorized representatives access to, and make available for inspection,
all of the assets and business of the Company, including employees, customers
and suppliers, and permit PRG, PRG Sub and their authorized representatives to
inspect and make copies of all documents, records and information with respect
to the business or assets of the Company as PRG, PRG Sub or their
representatives may request. The Company and the Shareholders shall promptly
notify PRG Sub in writing of (a) any notice or communication relating to a
default or event that, with notice or lapse of time or both, could become a
default, under any contract, commitment or obligation to which the Company is a
party, and (b) any adverse change in the Company's business, financial
condition or the conditions of its assets, except to the extent such defaults
or adverse changes would not, individually or in the aggregate, result in a
Material Adverse Effect.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their reasonable efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their reasonable efforts to obtain
all licenses, permits, approvals or other authorizations required under any
law, rule, regulation or ordinance, or otherwise necessary to consummate the
transactions contemplated hereby and by the Services Agreement and to conduct
the business of the Clinic.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their reasonable efforts to cause the Company's employees,
agents and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person
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relating to such proposal or offer, and the Company and the Shareholders will
immediately cease any such activities, discussions or negotiations heretofore
conducted with respect to any of the foregoing. The Company and the
Shareholders shall immediately notify PRG Sub if any such inquiries or
proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take whatever steps are necessary to pay or
fund completely for any accrued benefits, where applicable, or vested accrued
benefits for which the Company or any entity might have any liability
whatsoever arising from any tax-qualified plan as required under applicable
law. The Company acknowledges that the purpose and intent of this covenant is
to assure that PRG Sub shall have no liability whatsoever at any time after the
Closing Date with respect to any such tax-qualified plan, unless such plan is
merged with a plan sponsored by PRG or PRG Sub.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company, other than pursuant to an obligation arising prior
to the Closing Date and disclosed to PRG, adopt, amend or terminate any
compensation plan, employment agreement, independent contractor agreement,
employee policies and procedures or employee benefit plan, take any action that
could materially deplete the assets of any employee benefit, or fail to pay any
premium or contribution due or file any report with respect to any employee
benefit plan, or take any other actions with respect to its employees or
employee matters which might have a material adverse effect upon the Company,
its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. Except as described on Exhibit
2.15, no distribution, payment or dividend of any kind will be declared or paid
by the Company, nor will any repurchase of any of the Company's capital stock
be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their reasonable efforts to take, or cause to be taken,
all actions necessary to effect the Merger under applicable law, including
without limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement, provided, however, that this covenant shall not require the Company
or the Shareholders to make any expenditures that are not expressly set forth
in this Agreement or contemplated herein.
5.10 VOTING OF SHARES. Each Shareholder agrees that until the
earlier of the Closing Date or the termination of this Agreement, each such
Shareholder shall vote all shares of Company common stock owned by the
Shareholders at any meeting of the stockholders of the Company or take action
by written consent for adoption of this Agreement, as hereby amended, and in
favor of the Merger and any other transactions contemplated by this Agreement,
and against any action, omission or agreement which would impede or interfere
with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 LEASES. PRG Sub shall have entered into a building lease (the
"Building Lease") with the owner of the property located at 2855 Gramercy
Street, Houston, Texas ("Gramercy Premises"), on terms and conditions
satisfactory to PRG and such owner, the terms and conditions of which shall
include, without limitation, (i) a term expiring April 30, 2007, (ii) a lease
rate equal to current lease rental as disclosed to PRG, (iii) a right of first
refusal to acquire such property upon any proposed sale thereof to related or
affiliated persons of the landlord of such property, and (iv) such other
provisions to be reasonably acceptable to PRG and such owner.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT; EXHIBITS. PRG and PRG Sub shall
use their reasonable efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and provisions. PRG and
PRG Sub will use their reasonable efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials all necessary
documents in form approved by counsel for the parties to this Agreement. PRG
and PRG Sub agree to provide Exhibit 3.5 to the Company on or before August 22,
1996.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their reasonable efforts to obtain all licenses, permits,
approvals or other authorizations required under any law, statute, rule,
regulation or ordinance, or otherwise necessary or desirable to consummate the
transactions contemplated hereby and by the Services Agreement.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Stock
Consideration and shall use its reasonable efforts to obtain approval for the
listing of the Stock Consideration upon official notice of issuance.
6.4 COMPLIANCE. PRG shall remain in compliance with (i) the
Securities Act, the Exchange Act and all of the rules and regulations
promulgated thereunder, and (ii) all rules and regulations promulgated by the
NYSE.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly and severally, agree that between the date
hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Texas, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders, upon reasonable notice and at
reasonable times, shall permit PRG, PRG Sub and their authorized
representatives full access to, and make available for inspection, all of the
assets and records of the Clinic, and permit PRG, PRG Sub and their authorized
representatives to inspect and make copies of all documents, records and
information with respect to the affairs of the Clinic as PRG, PRG Sub and their
representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their
reasonable efforts to obtain all licenses, permits, approvals or other
authorizations required under any law, statute, rule, regulation or ordinance,
or otherwise necessary or desirable to consummate the transactions or provide
the services contemplated by the Service Agreement, and to conduct the intended
business of the Clinic.
7.4 CORPORATE GOVERNANCE. Within six (6) months following the
Closing Date, the Clinic, if any, shall establish governance provisions that
are reasonably acceptable to PRG providing for (i) a maximum length of
employment for non-owner physicians prior to their admission to ownership in
the Clinic, (ii) terms of ownership admission to the Clinic, (iii) a
compensation structure for ongoing owner physicians, (iv) retirement of
physicians from the ownership of the Clinic and (v) buy-out provisions for
retiring or inactive owner physicians.
7.5 EXHIBITS. On or before August 22, 1996, the Exhibits marked
with an "*" on the Index to Exhibits attached hereto shall be provided in form
and substance satisfactory to PRG and PRG Sub.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall have been
true and correct in all respects when initially made and shall be true and
correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By August 22, 1996, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion; provided, however, that such date
shall be extended as necessary to the extent information is not timely provided
by the Company and the Shareholders.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. On the Closing Date, the Clinic, the
Shareholders, PRG and Surviving Corporation shall execute and deliver a Service
Agreement (the "Service Agreement"), in substantially the form attached hereto
as Exhibit 8.7, pursuant to which Surviving Corporation will provide management
services to the Shareholders and, if applicable, the Clinic.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company will cause the assignment of each employment agreement between the
Company and each such employee who is not a shareholder of the Company from the
Company to the Clinic. Prior to the Closing Date, PRG Sub and/or PRG and
Ronald Burgener shall have entered into an employment agreement (the
"Employment Agreement") mutually satisfactory to PRG, PRG Sub, the Company and
Ronald Burgener, and which agreement shall have a term not to exceed one year.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents; provided, however, that the obligations of PRG and PRG Sub
hereunder shall remain in effect if the failure to obtain such approvals and
consents is caused by PRG or PRG Sub.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 CORPORATE GOVERNANCE. PRG shall have approved the governance
provisions of the Clinic, if applicable, adopted in accordance with Section
7.4.
8.12 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, other than as reflected in the Financial
Statements or disclosed on the Exhibits hereto, that are not approved by PRG.
8.13 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Texas Business Corporation Act.
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8.14 STOCK CONSIDERATION. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
8.15 NO CHANGE IN WORKING CAPITAL. There shall have been no
material adverse change in the Working Capital since the date hereof.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall have been true and correct
in all respects when initially made and shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 STOCK CONSIDERATION. The stock consideration shall have been
approved for listing on the NYSE, subject only to official notice of issuance.
9.6 CONSENTS, APPROVALS. PRG Sub and PRG shall obtain all
necessary government and other third-party approvals and consents; provided,
however, that the Company and the Shareholders' obligations shall remain in
effect if the failure to obtain approvals and consents is caused by the Company
or any of the Shareholders.
9.7 SECURITIES APPROVALS. A Registration Statement on Form S-4 or
other applicable form ("S-4") shall be effective under the Securities Act and
no stop orders suspending the effectiveness of the S-4 shall have been issued,
and no proceedings for that purpose shall have been initiated or threatened by
the SEC. At or prior to the Closing Date, PRG shall have received all state
securities and "blue sky" permits necessary to consummate the transactions
contemplated hereby. At or prior to the Closing Date, the PRG common stock
shall have been approved for listing on the NYSE, subject only to official
notification of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Employment Agreement;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
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(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement, each certified by the Secretary of the Clinic as being true
and correct copies of the original thereof;
(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Texas establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Texas establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company, the enforceability of this Agreement and
the other agreements and documents to be executed in connection herewith, and
other matters reasonably requested by PRG Sub;
(k) executed Certificates of Merger necessary to effect
the Merger referred to in Section 1.1;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Section 2.5;
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) a Stockholder's Agreement in form attached hereto as
Exhibit 10.1(o) executed by each Shareholder and their spouses; and
(p) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and agreements each
certified by the Secretary as being true and correct copies of the original
thereof;
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(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware establishing that PRG Sub and
PRG are in existence and are in good standing to transact business in the State
of Delaware and the State of Texas, as applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) the Stockholder's Agreement;
(i) the Employment Agreement;
(j) executed Certificates of Merger necessary to effect
the Merger referred to in Section 1.1;
(k) a guarantee of the Building Lease executed by PRG in
form and substance satisfactory to PRG and the landlord of the Gramercy
Premises; and
(l) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly and severally or individually (as
specified in this Agreement or the other referenced agreements and
certificates), or of PRG Sub and PRG, jointly and severally, as the case may
be. All such representations and warranties, and all representations and
warranties expressly labeled as such in this Agreement, shall survive the date
of this Agreement and the Closing Date for a period of three (3) years
following the Closing Date, except that (i) the representations and warranties
set forth in Sections 2.23, 2.24 or 2.25 with respect to environmental and
medical waste laws and health care laws and matters shall survive for a period
of twelve (12) years and tax representations shall survive until ninety (90)
days after the expiration of the applicable statute of limitations. Each party
covenants with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be. Each party hereby releases, acquits and discharges the other
party from any and all claims and demands, actions and causes of action,
damages, costs, expenses and rights of setoff with respect to which the notices
required by Sections 11.2, 11.3 or 11.4, as applicable, are not timely
provided.
11.2 INDEMNIFICATION BY PRG SUB AND PRG. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AN "INDEMNIFIED PERSON"), HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, DAMAGES, ACTIONS,
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SUITS, COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO,
REASONABLE FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY
REASON OF OR RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION,
WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE
EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT FURNISHED
OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND, FROM AND AFTER THE CLOSING
DATE, (I) ARISING FROM OR BY REASON OF OR RESULTING FROM INDEMNITOR'S
MANAGEMENT AND CONDUCT OF THE OWNERSHIP OF THE SURVIVING COMPANY, AND (II) ANY
OBLIGATIONS OWING BY SURVIVING CORPORATION AFTER THE CLOSING DATE TO EMPLOYEES
OF THE COMPANY WHO ARE EMPLOYED BY SURVIVING CORPORATION AFTER THE CLOSING
DATE. SUBJECT TO THE PROVISIONS OF THIS SECTION 11, IN CONNECTION WITH
INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE
EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH
INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO
REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS FINALLY
JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY AND SEVERALLY OR
INDIVIDUALLY (AS SPECIFIED IN THIS AGREEMENT OR THE OTHER REFERENCED AGREEMENTS
AND CERTIFICATES), SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING,
INCLUDING PRG SUB AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT
APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST
ANY AND ALL LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER, AND, WITH RESPECT TO ALL TIMES PRIOR TO THE
CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM THE INDEMNITOR'S
MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE COMPANY AND FROM
ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND
INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS, AND WITH RESPECT TO
(I) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR CONSULTANTS,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR FEDERAL LAWS
GOVERNING HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT OR OBLIGATION ARISING
OUT OF OR RESULTING FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR, OCCURRING
PRIOR TO THE CLOSING DATE, (II) TAXES OF THE COMPANY OR ANY OTHER PERSON
(INCLUDING ANY SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, (III) ANY LIABILITY OF THE COMPANY OR THE
SHAREHOLDERS FOR COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS'
FEES) INCURRED IN CONNECTION WITH THE NEGOTIATION, PREPARATION OR CLOSING OF
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE
EXECUTED IN CONNECTION HEREWITH, (IV) ANY ACCRUED UNFUNDED RETIREMENT OR
PENSION PLAN LIABILITIES, AND (V) ANY DEBTS, LIABILITIES, CLAIMS, OR OTHER
CAUSES OF ACTION OR CONTROVERSIES OF ANY KIND OF ANY EMPLOYEES OF THE COMPANY
ATTRIBUTABLE TO THE PERIOD PRIOR TO THE CLOSING DATE. NOTWITHSTANDING THE
FOREGOING, WITH RESPECT TO INDEMNIFICATION OBLIGATIONS OF THE COMPANY, THE
COMPANY AND THE SHAREHOLDERS (IN ACCORDANCE WITH THE PRO RATA AMOUNT OF THE
MERGER CONSIDERATION BEING RECEIVED BY EACH SHAREHOLDER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREUNDER AS SET FORTH IN ANNEX I) WILL BE JOINTLY
AND SEVERALLY LIABLE FOR SUCH INDEMNIFICATION OBLIGATIONS, AND WITH RESPECT TO
INDEMNIFICATION OBLIGATIONS OF THE SHAREHOLDERS, EACH RESPECTIVE SHAREHOLDER
INDIVIDUALLY (AS OPPOSED TO JOINTLY AND/OR SEVERALLY) WILL BE LIABLE FOR SUCH
INDEMNIFICATION OBLIGATIONS (IT BEING UNDERSTOOD THAT NO SHAREHOLDER SHALL HAVE
ANY LIABILITY OR RESPONSIBILITY WHATSOEVER FOR
20
<PAGE> 26
INDEMNIFICATION OBLIGATIONS OF OTHER SHAREHOLDERS IN THIS AGREEMENT OR IN ANY
AGREEMENTS ENTERED INTO IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT). SUBJECT TO THE PROVISIONS OF THIS SECTION 11, IN CONNECTION
WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL
REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY
SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN
WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS
FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER.
Without limiting the generality of the foregoing, except with respect
to such remedies specifically set forth in this Section 11 and in this
Agreement, each of PRG and PRG Sub irrevocably waive and agrees not to sue the
Company and its Shareholders, officers, directors, affiliates, employees,
heirs, devisees, executors, personal representatives, agents or representatives
("Related Parties") for any and all claims, causes of action, rights of
contribution, cost recovery, losses, liabilities, suits, costs, fees, judgments
or expenses which may hereafter arise, REGARDLESS OF WHETHER CAUSED IN WHOLE OR
IN PART BY THE SOLE, CONTRIBUTORY, PASSIVE OR PARTIAL NEGLIGENCE OF ANY OF THE
RELATED PARTIES, in connection with (i) any material, waste or substance the
use, collection, handling, recycling, generation, treatment, storage, disposal,
release or transportation of which (a) by the Company or any of its
predecessors or (b) at, in, on , under or from any real or personal property of
the Company is or may become regulated or controlled by any governmental
authority, or the improper management or disposal of which may affect human
health or safety of the environment or (ii) the compliance by the Company, or
any of its predecessors or any real or personal property of the Company with
applicable environmental laws.
11.4 INDEMNIFICATION PROCEDURE. (a) As promptly as possible after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, but in any event at least ten (10) days prior to the due date
for any responsive pleadings, filings or other documents, such Indemnified
Person shall notify Indemnitor thereof. If any such action or other proceeding
shall be brought against any Indemnified Person, Indemnitor shall, upon written
notice given within a reasonable time following receipt by Indemnitor of such
notice from Indemnified Person, be entitled to assume the defense of such
action or proceeding with counsel chosen by Indemnitor and reasonably
satisfactory to Indemnified Person; provided, however, that any Indemnified
Person may at its own expense retain separate counsel to participate in such
defense. In the event Indemnitor assumes the defense of such action or
proceeding, Indemnitor shall have full control thereof, including any
compromise or settlement. Notwithstanding the foregoing, if the named parties
to any such action (including any impleaded parties) include both the
Indemnitor and Indemnified Person, and the Indemnified Person has been advised
by counsel that there may be one or more legal defenses available to it that
are different from or additional to those available to the Indemnitor, then the
Indemnified Person may employ separate counsel, reasonably acceptable to
Indemnitor, at the expense of the Indemnitor, and upon written notification
thereof, the Indemnitor shall not have the right to assume the defense of such
action on behalf of the Indemnified Person; provided, however, that the
Indemnitor shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys at any time for
the Indemnified Person, which firm shall be designated in writing by the
Indemnified Person.
(b) If the Indemnitor does not initially assume the defense of
such action or proceeding, then the Indemnified Person shall have the right of
defense thereof, at the sole cost and expense of the Indemnitor (if the
Indemnitor is entitled to indemnification hereunder); provided, however, that
the Indemnitor retains the right to assume the defense thereof at any time upon
delivery of written notice to the Indemnified Person. If the Indemnified
Person defends an action or proceeding pursuant to this Section 11.4(b), the
Indemnified Person may not enter into, without the Indemnitor's consent, any
compromise or settlement thereof, which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, if the Indemnitor has delivered a
written notice to the Indemnified Person to the effect that the Indemnitor
disputes its potential liability to the Indemnified Person under this Section
11 and if such dispute is resolved in favor of the Indemnitor, the Indemnitor
shall not be required to bear the costs and expenses of the Indemnified
Person's defense pursuant to this Section or of the Indemnitor's participation
therein at the Indemnified Person's request, and the Indemnified Person shall
reimburse the Indemnitor in full for all costs and expenses of such matter. The
Indemnitor may participate in, but not control, any defense or settlement
controlled by the Indemnified Person pursuant to this Section 11.4, and the
Indemnitor shall bear its own costs and expenses with respect to such
participation; provided, however, that if the named parties to any such action
(including any impleaded parties) include
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<PAGE> 27
both the Indemnitor and the Indemnified Person, and the Indemnitor has been
advised by counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the Indemnified
Person, then the Indemnitor may employ separate counsel, reasonably acceptable
to Indemnified Person, and upon written notification thereof, the Indemnified
Person shall not have the right to assume the defense of such action on behalf
of the Indemnitor.
11.5 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes, and all related interest, penalties and
additions to tax ("Taxes"), with respect to taxable periods of the Company
ending on or before the Closing Date. PRG agrees not to take any position with
respect to the Tax Returns that is inconsistent with the position taken by the
Company in prior periods.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
(d) The Company and the Shareholders shall have the right
to review and approve (such approval not to be unreasonably withheld) any Tax
Returns prepared by PRG or PRG Sub in accordance with this Section 11.5 to the
extent such returns relate to taxes arising on or prior to the Closing Date.
11.6 INDEMNIFICATION LIMITATIONS. Notwithstanding the provisions of
Section 11, (i) no parties shall be required to indemnify another party with
respect to a breach of a representation, warranty or covenant, unless the claim
for indemnification is brought within the time limits set forth in Section 11.1
hereof, (ii) the Shareholder on the one hand, and PRG and PRG Sub on the other
hand, shall not be required to indemnify PRG and PRG Sub, on the one hand, and
the Shareholders and the Company, on the other hand, with respect to a breach
of a representation, warranty or covenant, unless and to the extent that, the
aggregate amount of damages incurred by the Shareholders, on the one hand, or
PRG Sub and PRG, on the other hand, shall exceed $200,000. In no event shall
the Company or the Shareholders, with respect to indemnification owed by the
Company to PRG or PRG Sub, be required to indemnify PRG or PRG Sub in an amount
exceeding, in the aggregate, $20,000,000.00; provided, however, that the
indemnification owing by any Shareholder (and not the Company) to PRG or PRG
Sub shall not exceed, in the aggregate, the Merger Consideration received by
such Shareholder in connection with the transactions evidenced hereby and set
forth on Annex I; provided, however, notwithstanding anything contained herein,
the limitations set forth above for indemnification obligations shall not be
applicable to any Shareholder who commits malpractice or causes a breach of
Section 2.23 giving rise to an indemnification obligation in excess of
$20,000,000. In no event shall PRG or PRG Sub be required to indemnify the
Company or the Shareholders in an amount exceeding, in the aggregate,
$20,000,000.00.
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<PAGE> 28
11.7 TAX BENEFITS; INSURANCE PROCEEDS. The total amount of any
indemnity payments owed by one party to another party to this Agreement shall
be reduced by any correlative tax benefit received by the party to be
indemnified or the net proceeds received by the party to be indemnified with
respect to recovery from third parties or insurance proceeds, and such
correlative insurance benefit shall be net of the insurance premium, if any,
that becomes due as a result of such claims.
11.8 PAYMENT OF INDEMNIFICATION OBLIGATION. In the event any
Shareholder has an indemnification obligation to any Indemnified Person
hereunder, subject to the Indemnified Person's approval as set forth below,
such Shareholder may satisfy such obligation by transferring to such
Indemnified Person such number of shares of PRG common stock owned by the
Shareholder having an aggregate fair market value (based on the last reported
sale price of PRG common stock on the NYSE or other exchange on which PRG
common stock is then listed or the last quoted ask price on any
over-the-counter market through which the PRG common stock is then quoted on
the last trading day immediately preceding the day on which the Shareholder
transfers shares of PRG common stock to such Indemnified Person hereunder)
equal to the indemnification obligation; provided that each of the following
conditions are satisfied:
(a) The Shareholder shall transfer to such Indemnified Person
good, valid and marketable title to the shares of PRG common stock, free and
clear of all adverse claims, security interests, liens, proxies, options,
stockholder's agreements and encumbrances;
(b) The Shareholder shall make such representations and warranties
as to title to the stock, absences of security interests, liens, claims,
proxies, options, stockholder's agreements and other encumbrances and other
matters as reasonably requested by such Indemnified Person; and
(c) The other terms and conditions of any transaction contemplated
pursuant to this Section and the effects thereof, including any legal or tax
consequences, shall be reasonably satisfactory to such Indemnified Person.
SECTION 12. TERMINATION; REMEDIES.
12.1 TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
respect or if the Company or any Shareholders fails to comply in any respect
with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof; provided,
however, this shall not apply to any such misrepresentation, noncompliance or
breach that would not, individually or in the aggregate, result in a Material
Adverse Effect; provided that termination of this Agreement shall be PRG's and
PRG Sub's sole remedy prior to the Closing Date with respect to any such
misrepresentation, noncompliance or breach;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any respect or
if PRG or PRG Sub fails to comply in any respect with any covenant or agreement
contained herein and such misrepresentation, noncompliance or breach is not
cured, waived or eliminated within twenty (20) days after receipt of written
notice thereof; provided, however, this shall not apply to such
misrepresentation, noncompliance or breach that would not, individually or in
the aggregate, result in a Material Adverse Effect; provided that termination
of this Agreement shall be the Company's or the Shareholders' sole remedy prior
to the Closing Date with respect to any such misrepresentation, noncompliance
or breach;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996;
provided, further, that if the failure to consummate by such date is the result
of a party's breach of or noncompliance with this Agreement, then such party
shall not be entitled to terminate this Agreement pursuant to this Section
12.1(d); or
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<PAGE> 29
(e) by PRG at any time prior to August 22, 1996 if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
(f) by PRG, PRG Sub, the Company or any Shareholder if any court
of competent jurisdiction in the United States of America or other (federal or
state) governmental body shall have issued an order, decree or ruling, or taken
any other action restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become final and
non-appealable.
12.2 EXCLUSIVE RIGHTS AND REMEDIES. The remedies of PRG, PRG Sub,
the Company and each Shareholder under Section 11 of this Agreement shall be
each respective party's sole and exclusive remedies.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
(a) establish, operate or provide ophthalmological
physician services at any medical office, clinic or out-patient and/or
ambulatory treatment or diagnostic facility or other healthcare facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG at the time of the Closing, in
either case, anywhere within 25 miles of any location of PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
at the time of Closing that is located in a Standard Statistical Metropolitan
Area having a population of 1,000,000 or more or within 50 miles of any other
location of PRG, PRG Sub, Surviving Corporation or any practice managed by PRG
or any subsidiary of PRG at the time of Closing; provided, however, that this
provision shall not prohibit each Shareholder or any of his or her affiliates
from purchasing or holding an aggregate equity interest in any entity of up to
2%, so long as such Shareholder and his or her affiliates do not purchase or
hold an aggregate equity interest of more than 5%, in any business in direct
competition with the PRG, PRG Sub, Surviving Corporation or any practice
managed by PRG or any subsidiary of PRG; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent, which consent shall not be unreasonably
withheld.
Notwithstanding the foregoing, the investments or activities set forth
in Section 6.2(f) of the Service Agreement or on Exhibit 13.1, hereof shall not
be deemed to be a breach hereof. Provided, further that this Section 13 shall
be of no further force and effect if the Service Agreement is terminated
pursuant to Section 3.11 or 9.3 thereof.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
24
<PAGE> 30
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth below opposite the year following Closing in which
the breach occurs, times the pro rata amount of the Merger Consideration being
received by such Shareholder in connection with the transactions contemplated
hereby and as set forth on Annex I.
<TABLE>
<CAPTION>
Year Following
Closing in Which
Breach Occurs Damages
------ ------ -------
<S> <C>
1st $15,000,000.00
2nd $12,000,000.00
3rd $9,000,000.00
4th $6,000,000.00
5th $3,000,000.00
</TABLE>
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto.
SECTION 14. CONFIDENTIAL INFORMATION.
14.1 NONDISCLOSURE BY SHAREHOLDERS. The Shareholders recognize
and acknowledge that they had in the past, currently have, and in the future
may possibly have, access to certain confidential information of PRG, Surviving
Corporation or PRG Sub that is a valuable, special and unique asset of PRG's,
Surviving Corporation's or PRG Sub's businesses. Each Shareholder agrees that
it will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of such Shareholder, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholder shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholder reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, (iv) the Shareholder is the sole and exclusive owner of such
confidential information as a result of the transactions contemplated hereunder
or otherwise, (v) such information was in the possession of such Shareholder on
a non-confidential basis prior to its disclosure by PRG or PRG Sub, provided
that the source of such information was not bound to a confidentiality
agreement with PRG or PRG Sub or otherwise prohibited from transmitting such
information to the Shareholder by a contractual, legal or fiduciary obligation
of which PRG or PRG Sub had actual conscious knowledge, or (vii) such
information becomes available to such Shareholder on a non-confidential basis
from a source other than PRG or PRG Sub, provided that such source is not bound
by a confidentiality agreement with PRG or PRG Sub or otherwise prohibited from
transmitting such information to the Shareholder by any contractual, legal or
fiduciary obligation of which the Shareholder had actual conscious knowledge.
In the event of a breach or threatened breach by the
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<PAGE> 31
Shareholders of the provisions of this Section 14.1, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14.1 shall survive the termination of this Agreement.
14.2 NONDISCLOSURE BY PRG OR PRG SUB. PRG and PRG Sub recognize
and acknowledge that they had in the past, currently have, and in the future
may possibly have, access to certain confidential information of the Company or
the Shareholders that is a valuable, special and unique asset of the Company's
business. PRG and PRG Sub agree that they will not disclose such confidential
information to any person, firm, corporation, association or other entity for
any purpose or reason whatsoever, unless (i) such information becomes available
to or known by the public generally through no fault of PRG or PRG Sub, (ii)
disclosure is required by law or the order of any governmental authority under
color of law, provided, that prior to disclosing any information pursuant to
this clause (ii), PRG and PRG Sub shall, if possible, give prior written notice
thereof to the other parties hereto, and provide such other parties hereto with
the opportunity to contest such disclosure, (iii) PRG or PRG Sub reasonably
believes that such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, (iv) PRG or PRG Sub is the sole and
exclusive owner of such confidential information as a result of the
transactions contemplated hereunder or otherwise, (v) such information was in
the possession of PRG or PRG Sub on a non-confidential basis prior to its
disclosure by the Company or the Shareholder, provided that the source of such
information was not bound to a confidentiality agreement with the Company or
the Shareholders or otherwise prohibited from transmitting such information to
PRG or PRG Sub by a contractual, legal or fiduciary obligation of which the
Shareholder had actual conscious knowledge, or (vi) such information becomes
available to PRG or PRG Sub on a non-confidential basis from a source other
than the Company or the Shareholders that is not bound by a confidentiality
agreement with the Company or the Shareholders or otherwise prohibited from
transmitting such information to PRG or PRG Sub by any contractual, legal or
fiduciary obligation of which PRG or PRG Sub had actual conscious knowledge.
In the event of a breach or threatened breach by PRG or PRG Sub of the
provisions of this Section 14.2, the Company or any Shareholder shall be
entitled to an injunction restraining PRG or PRG Sub from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed
as prohibiting the Company or the Shareholders from pursuing any other
available remedy for such breach or threatened breach, including the recovery
of damages. The obligations of the parties under this Section 14.2 shall
survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS. The Shareholders are able to
bear the economic risk of an investment in PRG common stock acquired pursuant
to this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the PRG common stock. The Shareholders or their respective
purchaser representatives have had an adequate opportunity to ask questions and
receive answers from the officers of PRG concerning any and all matters
relating to the background and experience of the officers and directors of PRG,
the plans for the operations of the business of PRG, and any plans for
additional acquisitions and the like. The Shareholders or their respective
purchaser representatives have asked any and all questions in the nature
described in the preceding sentence and all questions have been answered to
their satisfaction.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
26
<PAGE> 32
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. PRG HEA Acq. Corp.
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
If to the Company or the Shareholders:
2855 Gramercy Street
Houston, Texas 77025
Facsimile: (713) 668-3823
Attn: President
with a copy to:
H. William Swanstrom
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Texas Commerce Tower
600 Travis, 35th Floor
Houston, Texas 77002
Facsimile: (713) 223-3717
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of Agreement.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any (a) fees and expenses of legal counsel, accountants, auditors or other
persons or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company, and (b) local, state and federal income taxes or other
similar charges on income or gain incurred by the Company, the Clinic or the
Shareholders as a result of the transactions contemplated hereby.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
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<PAGE> 33
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may, after the
Closing Date, assign its rights and obligations hereunder to an affiliate, and
prior to the Closing Date, PRG Sub may assign its rights and obligations to
another wholly owned subsidiary of PRG.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas or Harris County, Texas. Each of the parties hereto consents to
the in personam jurisdiction of any state or federal court in Dallas County,
Texas or Harris County, Texas and waives any objection to the venue of any such
suit, action or proceeding. The parties hereto recognize that courts outside
Dallas County, Texas or Harris County, Texas may also have jurisdiction over
suits, actions or proceedings arising out of this Agreement, and in the event
that any party hereto shall institute a proceeding involving this Agreement in
a jurisdiction outside Dallas County, Texas or Harris County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for
28
<PAGE> 34
any losses and expenses that may result from the breach of the foregoing
covenant to institute proceedings only in a state or federal court in Dallas
County, Texas or Harris County, Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 AFFILIATE OF THE COMPANY. The parties hereto agree and
acknowledge that the landlord under the Building Lease is not an affiliate of
the Company for purposes of this Agreement.
16.18 POST-CLOSING MATTER; DISPOSAL OF ASSETS BY PRG. After the
Closing Date, PRG and PRG Sub shall not and shall not permit any of its
affiliates to dispose of a significant part of the assets of the Company within
the two years following the Closing Date except (a) in the ordinary course of
business, or (ii) to affiliates of PRG or PRG Sub, or (iii) to eliminate
duplicate services or excess capacity.
16.19 ARBITRATION AND MEDIATION. The parties agree to utilize the
following procedure with regard to any contention or claim arising out of or
relating to this Agreement or any breach thereof (a "Dispute"). If any Dispute
cannot be settled through direct discussions, the parties hereto agree to
endeavor first to resolve the Dispute through mediation in accordance with
Section 16.19(a). If the Dispute cannot be resolved through such mediation,
the parties hereto agree to resolve such Dispute by arbitration in accordance
with Section 16.19(b).
(a) MEDIATION.
(i) INITIATION OF PROCEDURE. The initiating party shall
give written notice to the other parties, describing the nature of the
Dispute and its claim for relief and identifying one or more of the
individuals with authority to resolve the Dispute on such parties'
behalf. The other parties shall have five (5) business days from
receipt of such notice within which to designate in writing one or
more individuals with authority to resolve the Dispute on each such
party's behalf.
(ii) SELECTION OF MEDIATOR. Within ten (10) business days
from the date of designation by the non- initiating party, the parties
shall make a good faith effort to select a person to mediate the
Dispute. If no mediator has been selected under this procedure, the
parties shall jointly request a State or Federal District Judge of
their choosing (or if they cannot agree, the President of the Dallas
Bar Association) to supply within ten (10) business days a list of
potential qualified attorney-mediators in Dallas, Texas. Within five
(5) business days of receipt of the list, the parties shall rank the
proposed mediators in numerical order of preference, simultaneously
exchange such list and select as the mediator the individual receiving
the highest combined ranking. If such mediator is not available to
serve, they shall proceed to contact the mediator who was next highest
in ranking until they select a mediator.
(iii) TIME AND PLACE FOR MEDIATION; PARTIES REPRESENTED.
In consultation with the mediator selected, the parties shall promptly
designate a mutually convenient time in Dallas, Texas for the
mediation, such time to be no later than sixty (60) days after
selection of the mediator. In the mediation, each party shall be
represented by persons with authority and discretion to negotiate a
resolution of the Dispute, and may be represented by counsel.
(iv) CONDUCT OF MEDIATION. The mediator shall determine
the format for the meetings and the mediation sessions shall be in
private. The mediator will keep confidential all information learned
in private caucus with any party unless specifically authorized by
such party to make disclosure of the information to the
29
<PAGE> 35
other party. The parties agree that the mediation shall be governed
by the provisions of Chapter 154 of the Tex. Civ. Pract. & Rem. Code
and such other rules as the mediator shall reasonably prescribe.
(v) FEES OF MEDIATOR; DISQUALIFICATION. The fees and
expenses of the mediator shall be borne by the prevailing party. The
mediator shall be disqualified as a witness, consultant, expert or
counsel for any party with respect to the Dispute and any related
matters.
(vi) CONFIDENTIALITY. Mediation is a compromise
negotiation for purposes of federal and state Rules of Evidence and
constitutes privileged communications under Texas law. The entire
mediation process is confidential, and such conduct, statement,
promises, offers, views and opinions shall not be discoverable or
admissible in any proceeding for any purpose.
(b) ARBITRATION.
(i) Following the close of any unsuccessful mediation
proceeding with respect to a Dispute, such Dispute shall, at the
written request of any party, be determined and settled pursuant to
arbitration in Dallas, Texas, by three arbitrators, one to be
appointed by the Shareholders, and one by PRG, and a neutral
arbitrator to be appointed by such two-party arbitrators. The neutral
arbitrator shall be an attorney and shall act as chairman. Should (x)
any party fail to appoint an arbitrator as hereinabove contemplated
within ten (10) days after the party not requesting arbitration has
received such written request, or (y) the two arbitrators appointed by
or on behalf of the parties as contemplated in this Section 16.19(b)
fail to appoint a neutral arbitrator as hereinabove contemplated
within ten days after the date of appointment of the last arbitrator
appointed by or on behalf of the parties, then any person sitting as
Judge of the United States District Court for the Northern District of
Texas, Dallas, Division, upon application of the Shareholders or PRG,
shall appoint such arbitrator to fill such position with the same
force and effect as though such arbitrator had been appointed as
hereinabove contemplated.
(ii) The arbitration proceeding shall be conducted in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. A determination, award, or other action
shall be considered the valid action of the arbitrators if supported
by the affirmative vote of two or three of the three arbitrators. The
costs of arbitration (exclusive of attending the arbitration, and of
the fees and expenses of legal counsel to such party, all of which
shall be borne by such party) shall be borne by the prevailing party.
The arbitration award shall be final and conclusive and shall receive
recognition, and judgment upon such award may be entered and enforced
in any court of competent jurisdiction.
(iii) For purposes of this Section 16.19(b), the act of
Shareholders who are receiving a majority of the PRG common stock
being issued hereunder shall constitute the act of the Shareholders.
Upon the written request of any party initiating the applicability of
this Section 16.19(b), the parties shall discuss in good faith for a
period of five (5) days after the delivery of such request, whether to
adopt additional or different arbitration rules, different arbitrators
or a different venue than those set forth above. In the event that
the parties do not agree to any such changes within such ten-day
period, then the arbitration provisions of this Section 16.19(b) shall
be followed without amendment or further delay.
[End of Page]
30
<PAGE> 36
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG HEA ACQ. CORP. HOUSTON EYE ASSOCIATES, P.A.
By: By:
------------------------------- -----------------------------------
Its: Its:
------------------------------ ----------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By:
------------------------------- --------------------------------------
Its:
------------------------------ --------------------------------------
Malcolm L. Mazow, M.D.
--------------------------------------
Robert H. Stewart, M.D.
--------------------------------------
Robert B. Wilkins, M.D.
--------------------------------------
Jeffrey D. Lanier, M.D.
--------------------------------------
Michael A. Bloome, M.D.
--------------------------------------
Paul C. Salmonsen, M.D.
--------------------------------------
Richard L. Kimbrough, M.D.
--------------------------------------
Jack T. Holladay, M.D.
--------------------------------------
Jeffrey B. Arnoult, M.D.
--------------------------------------
William H. Quayle, M.D.
--------------------------------------
John D. Goosey, M.D.
--------------------------------------
John M. Lim, M.D.
--------------------------------------
Kathryn H. Musgrove, M.D.
--------------------------------------
Marsha F. Soechting, M.D.
--------------------------------------
Marc N. Longo, M.D.
31
<PAGE> 37
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
2.1 Capitalization of the Company
2.3* Permits and Licenses
2.5* Consents (Company; Shareholders)
2.6 Financial Statements
2.7* Leases
2.9* Real and Personal Property; Encumbrances
2.11* Patents and Trademarks; Names
2.12* Directors and Officers; Payroll Information
2.13 Legal Proceedings
2.14* Contracts (other than Leases)
2.15* Subsequent Events
2.16 Working Capital
2.17* Tax Audits
2.18 Debt
2.19* Insurance Policies
2.20* Employee Benefit Plans
2.28* Suppliers
2.29* Banking Relations
2.30* Ownership Interests
2.31* Payors
3.5* Consents (PRG; PRG Sub)
4.1* Capitalization of Clinic
4.4* Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Stockholder's Agreement
13.1* Exclusions for Non-Competition
ANNEX I Merger Consideration
</TABLE>
32
<PAGE> 1
EXHIBIT 2.3
ASSET PURCHASE AGREEMENT
BY AND AMONG
PRG OHIO III, INC.,
CEI REALTY ASSOCIATES, LTD.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
<TABLE>
<S> <C> <C>
Section 1. Terms of the Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------------------------------
1.1 Conveyance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
--------------------
1.2 Purchase Price; Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------------------------------------
1.3 Subsequent Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------
Section 2. Representations and Warranties of Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . 2
-------------------------------------------------------------
2.1 Existence; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------------
2.2 Power and Authority for Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------------------------
2.3 Permits, Licenses and Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------------------------------------
2.4 Partnership Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------
2.6 Seller's Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------------------
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------
2.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------
2.9 Title to and Encumbrances on Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------------------------
2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
2.11 Intellectual Property Rights; Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------------------------
2.12 Directors and Officers; Payroll Information; Employees . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------------------------------------
2.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------
2.15 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------
2.16 Accounts Receivable/Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------------
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----
2.18 Liabilities; Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------
2.19 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------
2.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------
2.21 Adverse Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------
2.22 Compliance with Laws in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------------
2.23 Medicare and Medicaid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------------------
2.24 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------
2.25 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------------------
2.26 Accredited Investor Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------------
2.27 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------------------
2.28 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------
2.29 Banking Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------
2.30 Ownership Interests of Interested Persons; Competitors . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------------------------------------
2.31 Payors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------
2.32 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------
Section 3. Representations and Warranties of PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------------------------------------
3.1 Corporate Existence: Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------------
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------
3.4 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
Section 4. Covenants of Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------------------------
4.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
4.2 Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------
4.4 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------------------------------------
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.6 Funding of Accrued Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------------------------
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------
4.8 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------
4.9 Requirements to Effect Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------------------------
4.10 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------------
4.12 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------
4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
4.14 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------
Section 5. Covenants of PRG and PRG Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------
5.2 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------------------------------------
5.3 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------
Section 6. PRG Sub and PRG Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------------------
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------------
6.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------
6.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------
6.4 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------
6.5 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------
6.6 Approval by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------------
6.7 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------
6.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------
6.9 Debt and Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------
6.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------
6.11 No Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------------
6.12 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------
6.13 Accounting Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
6.14 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------
Section 7. Seller's and the Shareholder's Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------------------------------------
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------------
7.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------
Section 8. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
8.1 Deliveries of Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------------------------------
8.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------------------------
Section 9. Nature and Survival of Representations and Warranties; Indemnification . . . . . . . . . . . . . . . 16
----------------------------------------------------------------------
9.1 Nature and Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------
9.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------------------------
9.3 Indemnification by Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------------------------------
9.4 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------------
9.5 Limitation on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------------------
Section 10. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------
Section 11. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------
11.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------
11.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
11.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
11.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------
11.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----
Section 12. Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------------------------
Section 13. Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------------
13.1 Economic Risk; Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------------------
13.2 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------
Section 14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------
14.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
14.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------
14.4 Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
14.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------
14.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------
14.7 Integration of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------
14.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------------
14.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------
14.10 Binding Effect/Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------------
14.11 No Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------
14.12 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------
14.13 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------
14.14 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------
14.15 Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---------------
14.16 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------
14.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------
</TABLE>
<PAGE> 5
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made and executed as
of the 13th day of August, 1996, is by and among PRG OHIO III, INC., an Ohio
corporation ("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); and CEI REALTY ASSOCIATES, LTD., an Ohio limited liability
company ("Seller").
WITNESSETH:
WHEREAS, Seller owns certain real estate and other assets used in the
operation of an ophthalmology practice in Cincinnati, Ohio;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
WHEREAS, Seller wishes to sell to PRG Sub, and PRG Sub wishes to
acquire from Seller, certain of the assets of Seller, all upon the terms and
subject to the conditions set forth herein; and
WHEREAS, it is intended that this transaction shall be accounting for
as a "pooling of interest" for financial accounting purposes.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. TERMS OF THE SALE AND PURCHASE OF ASSETS.
The sale of the assets of Seller which are to be sold hereunder and
the acquisition thereof by PRG Sub shall occur on the 31st day of August, 1996
("Closing Date"), unless another date is mutually agreed upon among the parties
hereto and shall be based on the respective representations, warranties and
agreements of the parties hereto, and shall be subject to the terms and
conditions herein stated.
1.1 CONVEYANCE OF ASSETS. Subject to and upon the terms and
conditions contained herein, on the Closing Date, Seller shall sell, convey,
transfer, deliver and assign to PRG Sub Seller's right, title and interest in
and to its properties and assets described on Exhibit 1.1 (individually,
"Asset", and collectively "Assets").
1.2 PURCHASE PRICE; ASSUMPTION OF LIABILITIES. As consideration
for the sale of the Assets by Seller, PRG Sub shall, on the Closing Date,
provide Seller with the following consideration:
(a) Purchase Price. Seller shall receive the
consideration specified in Annex I attached hereto, less the Escrowed Shares
(the "Acquisition Consideration"). The Acquisition Consideration shall be
allocated among the Assets as agreed among PRG Sub and Seller on the Closing
Date.
(b) Assumption of Liabilities. PRG Sub shall not assume
any liabilities of Seller hereunder.
(c) Escrowed Shares. In addition to the shares issuable
to the Seller at Closing, PRG shall deposit in escrow a number of shares of PRG
Common Stock equal to ten percent (10%) of the amount of shares of PRG common
stock set forth on Annex I hereto (the "Escrowed Shares") pursuant to the terms
of an Escrow Agreement (the "Escrow Agreement") in the form attached hereto as
Exhibit 1.2(c), to be entered into among Seller, PRG Sub, PRG and Jackson &
Walker, L.L.P., as escrow agent ("Escrow Agent"). The Escrowed Shares shall be
issued in the name of the Escrow Agent, as escrow agent. The Escrowed Shares
shall be released from escrow, after
1
<PAGE> 6
provision for any Damages for which PRG or PRG Sub may be entitled to
indemnification pursuant to Article XI in accordance with the terms of the
Escrow Agreement.
1.3 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
PRG Sub or PRG shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in PRG Sub its
right, title or interest in, to or under any of the Assets or otherwise to
carry out this Agreement, in return for the consideration set forth in this
Agreement, the officers and directors of PRG Sub shall be authorized to execute
and deliver, in the name and on behalf of Seller or otherwise, to carry out all
such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of PRG Sub or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under the Assets in PRG Sub or otherwise
to carry out this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to PRG Sub and PRG as follows:
2.1 EXISTENCE; GOOD STANDING. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Ohio. Seller has all necessary limited liability company power to
own all of its assets and to carry on its business as such business is now
being conducted. Seller does not own stock in or control, directly or
indirectly, any other corporation, association or business organization, nor is
Seller a party to any joint venture or partnership. The members ("Members")
set forth on Exhibit 2.1 are the sole members of Seller and own all outstanding
equity interests free of all security interests, claims, encumbrances and liens
in the amounts set forth on Exhibit 2.1. The Members own the equity interests
set forth in Exhibit 2.1 as of the dates set forth on Exhibit 2.1 in the
amounts set forth on such Exhibit. Each equity interest in Seller has been
legally and validly issued and fully paid and nonassessable. No units of
equity interests of the Seller are owned by the Seller in treasury. Seller has
not acquired any treasury shares since January 1, 1994. There are no
outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the members of Seller on any matter, (b)
securities of Seller convertible into equity interests in Seller, or (c)
commitments, options, rights or warrants to issue any such equity interests in
Seller, to issue securities of Seller convertible into such equity interests,
or to redeem any securities of Seller. No equity interests of Seller have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of Seller's members. Seller is not required
to qualify to do business as a foreign limited liability company in any other
state or jurisdiction other than the State of Kentucky by reason of its
business, properties or activities in or relating to such other state or
jurisdiction. Seller does not have any assets, employees or offices in any
state other than Ohio. Seller has not been a division or subsidiary of PRG or
any of its subsidiaries since January 1, 1994. On the date hereof and prior to
thirty days prior to the date hereof, neither the Seller nor any Member owned
or owns any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. Seller has the limited
liability company power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Organization, Operating Agreement
or otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Member has the legal capacity to
enter into and perform the agreements to be executed and delivered in
connection herewith. Seller has obtained the unanimous approval of its members
to the consummation of the transactions contemplated herein. This Agreement
and all agreements and documents executed and delivered in connection herewith
have been, or will be as of the Closing Date, duly executed and delivered by
Seller and the Members, as appropriate, and constitute or will constitute the
legal, valid and binding obligations of Seller and the Members, enforceable
against Seller and the Members in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of theArticles of Organization or Operating
Agreement of Seller or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, instrument, order, arbitration
award,
2
<PAGE> 7
judgment or decree to which Seller or any Member is a party or by which Seller
or any Member is bound, or violate any material restrictions of any kind to
which Seller is subject, or result in any lien or encumbrance on any of
Seller's assets or the Assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required for the conduct of the use of the Assets,
or waivers thereof, have been duly obtained and are in full force and effect
and are described on Exhibit 2.3. There are no proceedings pending or, to the
knowledge of Seller, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
2.4 LIMITED LIABILITY COMPANY RECORDS. True and correct copies of
the Articles of Organization, Operating Agreement and minutes of Seller and all
amendments thereto of Seller have been delivered to PRG Sub. The minute books
of Seller contain all accurate minutes of the meetings of and consents to
actions taken without meetings of the members of Seller since its formation.
The books of account of Seller have been kept accurately in all material
respects the ordinary course of business and the revenues, expenses, assets
and liabilities of Seller have been properly recorded in such books.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of Seller.
2.6 SELLER'S ASSET INFORMATION. Seller has heretofore furnished
PRG Sub with a true and correct copy of a schedule of its assets and
liabilities, including contingent liabilities.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which Seller leases, as lessor or lessee, real or personal
property related to the Assets or otherwise. All such leases listed on Exhibit
2.7 are valid and enforceable in accordance with their respective terms, and
there is not under any such lease any existing default by Seller, as lessor or
lessee, or any condition or event of which Seller has knowledge which with
notice or lapse of time, or both, would constitute a default, in respect of
which Seller has not taken adequate steps to cure such default or to prevent a
default from occurring.
2.8 CONDITION OF ASSETS. All of the Assets are to be transferred
to PRG Sub free of liens, claims, judgments, tax liens and "as is" where is and
with all faults.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by Seller is set forth on Exhibit
2.9. Seller has good, valid and marketable title to all of the Assets and its
property, including but not limited to, all items of property identified on
Exhibit 1.1 attached hereto, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibits 2.7 and 2.9 constitute the only real and personal property used in the
conduct of the Seller's business. Upon consummation of the transactions
contemplated hereby, such interest in personal property shall be free and clear
of all liens, security interests, claims and encumbrances provided, however,
that if the transactions contemplated by that certain Asset Purchase Agreement
("Building Asset Purchase Agreement") dated the date hereof among PRG,
Physicians Resource Group Realty, Inc. and Seller are consummated, such
interest in personal property shall be subject to the liens, security
interests, claims and encumbrances set forth on Exhibit 1.2 of the Building
Asset Purchase Agreement. No sales of significant assets and no spinoffs of
assets have occurred since January 1, 1994.
2.10 [INTENTIONALLY LEFT BLANK]
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, Seller has no right, title or interest in or to patents, patent
rights, corporate names, assumed names, manufacturing processes, trade names,
trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of the Business. Set forth in
Exhibit
3
<PAGE> 8
2.11 is a listing of all names of all predecessor companies of Seller,
including the names of any entities from whom Seller previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, Seller is not a licensee in respect of any patents,
trademarks, service marks, trade names, copyrights or applications therefor, or
manufacturing processes, formulas or trade secrets or similar items and no such
licenses are necessary for the conduct of the Business or the use of the
Assets. No claim is pending or has been made to the effect that the Assets or
the present or past operations of Seller in connection with the Assets infringe
upon or conflict with the asserted rights of others to any patents, patent
rights, manufacturing processes, trade names, trademarks, service marks,
inventions, licenses, specialized treatment protocols, copyrights, formulas,
know-how and trade secrets. Seller has the sole and exclusive right to use all
Assets constituting proprietary rights without infringing or violating the
rights of any third parties and no consents of any third parties are required
for the use thereof by PRG Sub.
2.12 MEMBERS; EMPLOYEES. Set forth on Exhibit 2.12 attached hereto
is a true and complete list, as of the date of this Agreement of the name of
each member and officer of Seller. Seller has never had, and current has, no
employees and no employment agreements.
2.13 LEGAL PROCEEDINGS. Except as set forth on Exhibit 2.13,
neither Seller nor any Member nor any of the Assets is subject to any pending,
nor does Seller have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to or
affecting Seller, any Member, the Business, the Assets or the transactions
contemplated by this Agreement, and, to the knowledge of Seller, no basis for
any such action exists, nor is there any legal impediment of which Seller has
knowledge to the continued operation of its business or the use of the Assets
in the ordinary course, subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. Seller has delivered to PRG Sub true copies of all
written, and disclosed to PRG Sub all oral, outstanding contracts, obligations
and commitments of Seller ("Contracts"), entered into in connection with and
related to the Assets, all of which are listed or incorporated by reference on
Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case of employment
agreements) and Exhibit 2.14 (in the case of Contracts other than leases)
attached hereto. Except as otherwise indicated on such Exhibits, all of such
Contracts are valid, binding and enforceable in accordance with their terms and
are in full force and effect, and no defenses, offsets or counterclaims have
been asserted or may be made by any party thereto. Except as indicated on such
Exhibits, there is not under any such Contract any existing default by Seller,
or any condition or event of which Seller has knowledge which with notice or
lapse of time, or both, would constitute a default. Seller has no knowledge
of any default by any other party to such Contracts. Neither Seller nor the
Members have received notice of the intention of any party to any Contract to
cancel or terminate any Contract and have no reason to believe that any
amendment or change to any Contract is contemplated by any party thereto.
Other than those contracts, obligations and commitments listed on Exhibit 2.7,
Exhibit 2.12 and Exhibit 2.14, Seller is not a party to any written or oral
agreement contract, lease or arrangement, including any:
(a) Contract related to the sale of the Assets not made
in the ordinary course other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of the Business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of thirty (30) days or less;
4
<PAGE> 9
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Business of a particular product
or service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $1,000 or that terminate or can only be
terminated by Seller on more than 30 days after the date hereof.
2.15 SUBSEQUENT EVENTS. Except as set forth on Exhibit 2.15,
Seller has not, since June 30, 1996 (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on the Business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of Seller since the Balance Sheet
Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the Assets, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the Assets or any other assets used in the
conduct of the Business, cancelled any debts or claims or waived any rights,
except in the ordinary course of business;
(i) Except in the ordinary course or business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Twenty Five Thousand and No/100 Dollars ($25,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Except as set forth on Exhibit 2.1, within the two
years preceding the Closing Date, redeemed, purchased, sold or issued any
equity interests, bonds or other securities;
5
<PAGE> 10
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business or the Business or the Assets, or experienced
any other material adverse change in its financial condition, assets,
prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the equity interests of Seller;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Seller's equity interests; or
(p) Suffered any material adverse change in the Business
or to the Assets.
2.16 [INTENTIONALLY LEFT BLANK]
2.17 TAXES. Seller has filed all tax returns required to be filed
by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. Seller has not
received any notice that any tax deficiency or delinquency has been asserted
against Seller. There are no audits relating to taxes of Seller pending or in
process, or to the knowledge of Seller, threatened. Seller is not currently
the beneficiary of any waiver of any statute of limitations in respect of taxes
nor of any extension of time within which to file any tax return or to pay any
tax assessment or deficiency. There are no liens or encumbrances relating to
taxes on or threatened against any of the assets of Seller. Seller has
withheld and paid all taxes required by law to have been withheld and paid by
it. Neither Seller nor any predecessor of Seller is or has been a party to any
tax allocation or sharing agreement or a member of an affiliated group of
corporations filing a consolidated federal income tax return. Notwithstanding
the foregoing, the Seller shall not be required to indemnify PRG or PRG Sub or
any disclosed pre-closing tax liabilities of the Seller.
2.18 LIABILITIES; DEBT. All indebtedness of Seller (including
without limitation, indebtedness for borrowed money, guaranties and capital
lease obligations) is described on Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. Seller carries property and liability and
such other types of insurance as is customary in the industry. Valid and
enforceable policies in such amounts are outstanding and duly in force and will
remain duly in force through the Closing Date. All such policies are described
in Exhibit 2.19 attached hereto and true and correct copies have been delivered
to PRG Sub. Seller has not received notice or other communication from the
issuer of any such insurance policy cancelling or amending such policy or
threatening to do so. Seller has no outstanding claims, settlements or
premiums owed and past due against any insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, Seller has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Seller Plan," and collectively
"Seller Plans") have been operated and administered in all material respects in
accordance with all applicable laws, rules and regulations, including without
limitation, ERISA, the Internal Revenue Code of 1986, as amended, Title VII of
the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as
amended, the Age Discrimination in Employment Act of 1967, as amended, and the
related rules and regulations adopted by those federal agencies responsible for
the administration of such laws. No act or failure to act by Seller has
resulted in a "prohibited transaction" (as defined in ERISA) with respect to
the Seller Plans. No "reportable event" (as defined in ERISA) has occurred
with respect to any of the Seller Plans. Seller has not previously made, is
not currently making, and is not obligated in any way to make, any
contributions to any multiemployer plan within the meaning of the
Multi-Employer Pension Plan Amendments Act of 1980. With respect to each
Seller Plan, either (i) the value of plan assets (including commitments under
insurance contracts) is at least
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equal to the value of plan liabilities or (ii) the value of plan liabilities in
excess of plan assets is disclosed on the Balance Sheet, all as of the Closing
Date.
2.21 [INTENTIONALLY LEFT BLANK]
2.22 COMPLIANCE WITH LAWS IN GENERAL. Seller, the Members, the
conduct of the Business and use of the Assets, have complied with all
applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by
Seller or any Member of any federal, state or local law or regulation. Seller
has not received any notice of a violation of any federal, state and local
laws, regulations and ordinances relating to the operations of the Business and
Assets and no notice of any pending inspection or violation of any such law,
regulation or ordinance has been received by Seller.
2.23 [INTENTIONALLY LEFT BLANK]
2.24 FRAUD AND ABUSE. Seller, the Members and all persons and
entities providing professional services for Seller's business, the Business or
relating to the Assets have not, to the knowledge of Seller and the Members,
engaged in any activities which are prohibited under Section 1320a-7b or
Section 1395nn of Title 42 of the United States Code or the regulations
promulgated thereunder, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct, including, but not
limited to, the following: (a) knowingly and willfully making or causing to be
made a false statement or representation of a material fact in any application
for any benefit or payment; (b) knowingly and willfully making or causing to be
made any false statement or representation of a material fact for use in
determining rights to any benefit or payment; (c) any failure by a claimant to
disclose knowledge of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with the intent to fraudulently secure such benefit or payment; and
(d) knowingly and willfully soliciting or receiving any remuneration (including
any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in
cash or in kind, or offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or
ordering or arranging for, or recommending, purchasing, leasing or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid, or (e) referring a patient for designated health
services to or providing designated health services to a patient upon referral
from an entity or person with which the physician or an immediate family member
has a financial relationship, and to which no exception under Section 1395nn of
Title 42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
Seller or any Member in this Agreement, and no Exhibit or certificate issued or
executed by, or information furnished by, officers or directors of Seller or
any Member and furnished or to be furnished to PRG Sub or PRG pursuant hereto,
or in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements or facts contained therein not
misleading.
2.26 [INTENTIONALLY LEFT BLANK]
2.27 DISTRIBUTIONS AND REPURCHASES. Except as set forth on Exhibit
2.15, no distribution, payment or dividend of any kind has been declared or
paid by Seller on any of its equity interests since January 1, 1994, other than
distributions, payments or dividends in the ordinary course of business. No
repurchase of any of Seller's equity interests has been approved, effected or
is pending, or is contemplated by the Board of Directors of Seller. Except as
set forth on Exhibit 2.15, no distributions of cash or other assets have been
made to any Member (other than distributions made in the ordinary course of
business) since January 1, 1994.
2.28 [INTENTIONALLY LEFT BLANK]
2.29 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that Seller has with any bank or other
financial institution, indicating with respect to each relationship the type of
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<PAGE> 12
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.30 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.30, no officer, employee, director or
stockholder of Seller, or their respective spouses, children or affiliates,
owns directly or indirectly, on an individual or joint basis, any interest in,
has a compensation or other financial arrangement with, or serves as an officer
or director of, any customer or supplier or competitor of Seller or any
organization that has a material contract or arrangement with Seller. Neither
Seller, nor any of its directors, officers, employees, consultants or the
Members nor any affiliate of such person is, or within the last three years
was, a party to any contract, lease, agreement or arrangement, including, but
not limited to, any joint venture or consulting agreement with any physician,
hospital, pharmacy, home health agency or other person or entity which is in a
position to make or influence referrals to, or otherwise generate business for,
Seller or to provide services, lease space, lease equipment or engage in any
other venture or activity with Seller.
2.31 [INTENTIONALLY LEFT BLANK]
2.32 ACCOUNTING MATTERS. The Company and the Members have not
taken, failed to take or agreed to take any of the following actions that would
prevent PRG Sub or PRG from accounting for the business combination to be
effected by the Merger as a "pooling of interests" in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases issued
pursuant thereto and the pronouncements of the Securities and Exchange
Commission ("SEC"): (i) alteration of equity interests in contemplation of the
combination within the two years preceding the date hereof, (ii) abnormal
distributions to Members within the two years preceding the date hereof, (iii)
unusual distributions of cash or other assets to Members within the two years
preceding the date hereof, (iv) sales of significant assets or spinoffs of
assets within the two years preceding the date hereof, (v) conveyance of the
Merger Consideration other than in accordance with the pro rata ownership of
the Members of the Company, (vi) hedge or sale of any PRG common stock owned by
the Members within the thirty days prior to the date hereof and within thirty
days prior to the Closing
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to Seller as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Ohio, respectively.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement, and
has taken all actions required by law, its Certificate of Incorporation, its
Bylaws or otherwise, to authorize the execution, delivery and performance of
this Agreement and such related documents. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate of Incorporation or
Bylaws of either PRG Sub or PRG or any provisions of, or result in the
acceleration of, any obligation under any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree to which PRG Sub or
PRG is a party or by which either of them is bound, or violate any restrictions
of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
acquisition contemplated hereby will be as of the Closing Date duly and validly
authorized by all necessary corporate action on the part of PRG. The shares of
PRG common stock to be issued in connection with the acquisition contemplated
hereby, when issued in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable.
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3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to
Seller pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
3.5 SECURITIES AND EXCHANGE FILINGS. As of the date hereof, PRG
has made all filings required to be made by it under the Securities and
Exchange Act and all such filings are true and complete in all material
respects.
3.6 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.7 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.8 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid, or (e)
referring a patient for designated health services to or providing designated
health services to a patient upon referral from an entity or person with which
the physician or an immediate family member has a financial relationship, and
to which no exception under Section 1395nn of Title 42 of the United States
Code applies.
SECTION 4. COVENANTS OF SELLER..
Seller agrees that between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT. Seller shall use its best efforts
to cause the consummation of the transactions contemplated hereby in accordance
with their terms and conditions.
4.2 BUSINESS OPERATIONS. Seller and the Members shall operate the
Business and use the Assets in the ordinary course. Seller and Members shall
not enter into any lease, contract, indebtedness, commitment, purchase or sale
or acquire or dispose of any capital asset relating to the Business or the
Assets except in the ordinary course
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of business. Seller and the Members shall use their best efforts to preserve
the Business and Assets intact and shall not take any action that would have a
material adverse effect on the Business or Assets, including without
limitation, any action the primary purpose or effect of which is to generate or
preserve cash other than to operate in the ordinary course of business
consistent with past practices. Seller and the Members shall use their best
efforts to preserve intact the relationships with payors, customers, suppliers,
patients and others having significant business relations with Seller. Seller
shall collect its receivables and pay its trade payables in the ordinary course
of business. Seller shall not introduce any new method of management,
operations or accounting.
4.3 ACCESS AND NOTICE. Seller and the Members shall permit PRG
and PRG Sub and their authorized representatives access to, and make available
for inspection, all of the assets and business of Seller, the Business and the
Assets, including employees, customers and suppliers and permit PRG, PRG Sub
and their authorized representatives to inspect and make copies of all
documents, records and information with respect to the business or assets of
Seller, the Business or the Assets as PRG, PRG Sub or their representatives may
request. Seller and the Members shall promptly notify PRG Sub in writing of
(a) any notice or communication relating to a default or event that, with
notice or lapse of time or both, could become a default, under any contract,
commitment or obligation to which Seller is a party or relating to the Business
or the Assets, and (b) any material adverse change in Seller's or the Business'
financial condition or the Assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. Seller
and the Members shall use their best efforts to secure all necessary approvals
and consents of third parties to the consummation of the transactions
contemplated hereby, including consents described on Exhibit 2.5. Seller and
the Members shall use their best efforts to obtain all licenses, permits,
approvals or other authorizations required under any law, rule, regulation, or
otherwise to conduct the intended business of Seller and operate the Business
and use the Assets.
4.5 ACQUISITION PROPOSALS. Seller and the Members shall not, and
shall use their best efforts to cause Seller's employees, agents and
representatives not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer,
including without limitation, any proposal or offer to the Members, with
respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of Seller or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to such proposal or offer, and Seller and the Members will
immediately cease any such activities, discussions or negotiations heretofore
conducted with respect to any of the foregoing. Seller and the Members shall
immediately notify PRG Sub if any such inquiries or proposals are received.
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. Seller hereby covenants
and agrees that it will take whatever steps are necessary to pay or fund any
accrued pension benefits, where applicable, or vested accrued benefits for
which Seller or any entity might have any liability whatsoever arising from any
pension plan allocable to services performed prior to the Closing Date.
4.7 [INTENTIONALLY LEFT BLANK]
4.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by Seller, nor will any
repurchase of any of Seller's equity interests be approved or effected.
4.9 REQUIREMENTS TO EFFECT ACQUISITION. Seller shall use its best
efforts to take, or cause to be taken, all actions necessary to effect the
acquisition contemplated hereby under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
4.10 VOTING OF UNITS. Seller shall cause each Member to vote all
equity interests of Seller owned by the Members at any meeting of the members
of Seller or take action by written consent for adoption of this Agreement, as
hereby amended, and in favor of the acquisition and any other transactions
contemplated by this Agreement, and against any action, omission or agreement
which would impede or interfere with, or have the effect of discouraging, the
acquisition contemplated hereby.
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<PAGE> 15
4.11 ACCOUNTING AND TAX MATTERS. Seller will not change in any
material respect the accounting methods or practices followed by Seller
(including any material change in any assumption underlying, or any method of
calculating, any bad debt, contingency or other reserve), except as may be
required by generally accepted accounting principles. Seller will not make any
material tax election except in the ordinary course of business consistent with
past practice, change any material tax election already made, adopt any tax
accounting method except in the ordinary course of business consistent with
past practice, change any tax accounting method, enter into any closing
agreement, settle any tax claim or assessment or consent to any tax claim or
assessment or any waiver of the statute of limitations for any such claim or
assessment. Seller will duly, accurately and timely (without regard to any
extensions of time) file all returns, information statements and other
documents relating to taxes of Seller required to be filed by it, and pay all
taxes required to be paid by it, on or before the Closing Date.
4.12 ACCOUNTING MATTERS. Seller and Members shall not take or
cause to be taken any action described in Section 2.30.
4.13 AFFILIATES. Seller and Members shall deliver to PRG and PRG
Sub a list of names and addresses of persons who were "affiliates" of Seller
within the meaning of Rule 145 (each such person, together with the persons
identified below, an "Affiliate") of the rules and regulations promulgated
under the Securities Act. There shall be added to such list the names and
addresses of any other person (within the meaning of Rule 145) which PRG and
PRG Sub reasonably identifies as being a person who may be deemed to be an
Affiliate of Seller within the meaning of Rule 145.
4.14 PENSION AND RETIREMENT PLANS. Simultaneously with the
Closing, Seller agrees, with respect to all qualified retirement plans, to
change the plan sponsor, the plan administrator and the employer from the
Seller to the Clinic.
SECTION 5. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date and with respect to Section 5.4, between the date
hereof and the time required for performance under such Section:
5.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
acquisition contemplated hereby under applicable law, including without
limitation the filing with the appropriate government officials all necessary
documents in form approved by counsel for the parties to this Agreement.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
5.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Acquisition
Consideration and shall use its best efforts to obtain approval for the listing
of the stock consideration upon official notice of issuance.
5.4 REGISTRATION AGREEMENT. The shares of PRG common stock issued
in connection with the Merger shall be registered under an S-4 registration
statement dated July 25, 1996, as amended from time to time. PRG undertakes to
continue to file all necessary reports on a timely basis with the appropriate
securities authorities to permit the Seller or the Members to use Rule 145 of
the Securities and Exchange Act in connection with the resale of such shares by
the Seller or the Members.
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SECTION 6. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained herein shall have been true and correct in all
material respects when initially made and shall be true and correct in all
material respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. Seller shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed and complied with by Seller prior to the Closing
Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
6.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of Seller shall have occurred since the Balance Sheet Date.
6.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of Seller, the Business and the Assets, the results of
which shall be satisfactory to PRG Sub and PRG in their sole discretion.
6.6 APPROVAL BY THE BOARD OF DIRECTORS. This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
6.7 CONSENTS AND APPROVALS. Seller shall have used its best
efforts as requested by PRG or PRG Sub to obtain all necessary government and
other third-party approvals and consents.
6.8 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 8.1.
6.9 NYSE LISTING. The Acquisition Consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
6.10 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the transactions contemplated hereby as
a pooling of interests under applicable accounting standards from Arthur
Andersen, L.L.P.
6.11 OTHER AGREEMENTS. The transactions contemplated by those
certain (i) Asset Purchase Agreements dated the date hereof between
subsidiaries or affiliates of PRG and CEI Realty Associates, Ltd. shall be
closed simultaneously with the transactions contemplated hereby; provided, that
the transaction evidenced by that certain Asset Purchase Agreement dated the
date hereof between Physicians Resource Group Realty, Inc. and CEI Realty
Associates, Ltd. with respect to the purchase of the building need not be
consummated if such Agreement is terminated in accordance with its terms or
delayed due to existing consent or right of first refusal, (ii) Agreement and
Plan of Mergers dated the date hereof between PRG Sub and Eye Consultants of
Cincinnati, Inc., Middletown Ophthalmology, Inc. And Cincinnati Eye Institute,
Inc., respectively.
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SECTION 7. SELLER'S CONDITIONS PRECEDENT.
The obligations of Seller hereunder are subject to fulfillment at or
prior to the Closing Date of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall have been true and correct
in all material respects when initially made and shall be true and correct in
all material respects as of the Closing Date.
7.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed and complied with by PRG
Sub and PRG prior to the Closing Date.
7.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 CLOSING DELIVERIES. Seller shall have received all documents,
duly executed in form satisfactory to Seller and its counsel, referred to in
Section 8.2.
7.5 NYSE LISTING. The Acquisition Consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
7.6 ACQUISITION CONSIDERATION. The Acquisition Consideration
shall be registered under the S-4 dated July 25, 1996, as amended, or another
registration statement filed with the Securities and Exchange Commission.
7.7 CONSENTS AND APPROVALS. PRG and PRG Sub shall have used its
best efforts as requested by Seller to obtain all necessary government and
other third-party approvals and consents.
SECTION 8. CLOSING DELIVERIES.
8.1 DELIVERIES OF SELLER. At or prior to the Closing, Seller
shall deliver to PRG Sub the following, all of which shall be in a form
satisfactory to counsel to PRG Sub and PRG:
(a) a copy of the resolutions of the members of Seller
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements each certified by the Secretary as being true
and correct copies of the original thereof;
(b) a bill of sale conveying the Assets to PRG Sub;
(c) an assignment of each contract, agreement and lease
being assigned to and assumed by PRG Sub;
(d) certificates of the President of Seller, dated as of
the Closing Date, (i) as to the truth and correctness of the representations
and warranties of Seller contained herein; (ii) as to the performance of and
compliance by Seller with all covenants contained herein; and (iii) certifying
that all conditions precedent of Seller to the Closing have been satisfied;
(e) a certificate of the Secretary of Seller certifying
as to the incumbency of the directors and officers of Seller and as to the
signatures of such directors and officers who have executed documents delivered
at the Closing on behalf of Seller;
(f) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Ohio establishing that Seller is in
existence and is in good standing to transact business in its state of
incorporation and a certificate establishing that the Seller is authorized to
do business in Kentucky;
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(g) an opinion of counsel to Seller opining as to the
execution and delivery of this Agreement and the other documents and agreements
to be executed pursuant hereto, the good standing and authority of Seller, the
enforceability of this Agreement and the other agreements and documents to be
executed in connection herewith, and other matters reasonably requested by PRG
Sub;
(h) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(i) a survey of the Real Property in form and substance
satisfactory to PRG Sub; and all other documentation related to the Real
Property as reasonably required by PRG Sub;
(j) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 8.1(k);
(k) an executed Escrow Agreement; and
(l) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
8.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to Seller the following, all of which shall be in
a form satisfactory to counsel to Seller or the Clinic, as applicable:
(a) the Acquisition Consideration;
(b) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and agreements each
certified by the Secretary as being true and correct copies of the original
thereof;
(c) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(d) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(e) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware establishing that PRG Sub and
PRG are in existence and are in good standing to transact business in the State
of Delaware and the State of Ohio, respectively, and authorized to do business
in the State of Kentucky;
(f) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by Seller;
(g) Affiliates Letters from each affiliate of PRG in the
form attached hereto as Exhibit 8.1(k);
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by Seller to carry out and effect the purpose and intent of this
Agreement.
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SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
9.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of
Seller, or of PRG Sub and PRG, jointly and severally, as the case may be. All
such representations and warranties, and all representations and warranties
expressly labeled as such in this Agreement shall survive the date of this
Agreement and the Closing Date for a period of one (1) year following the
Closing Date. Each party covenants with the other parties not to make any claim
with respect to such representations and warranties, against any party after
the date on which such survival period shall terminate. No party shall be
entitled to claim indemnity from any other party pursuant to Section 9.2 or 9.3
hereof, unless such party has timely given the notice required in Section 9.2,
9.3 or 9.4 hereof, as the case may be. Each party hereby releases, acquits and
discharges the other party from any and all claims and demands, actions and
causes of action, damages, costs, expenses and rights of setoff with respect to
which the notices required by Section 9.2, 9.3 or 9.4, as applicable, are not
timely provided.
9.2 INDEMNIFICATION BY PRG SUB AND PRG. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 9.2 AND, TO THE EXTENT APPLICABLE,
SECTION 9.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD SELLER, AND ITS AGENTS AND
EMPLOYEES (EACH OF THE FOREGOING, INCLUDING SELLER, FOR PURPOSES OF THIS
SECTION 9.2 AND, TO THE EXTENT APPLICABLE, SECTION 9.4, AN "INDEMNIFIED
PERSON"), HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES,
ACTIONS, SUITS, COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED
TO, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM
OR BY REASON OF OR RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND, FROM AND
AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND OWNERSHIP OF THE ASSETS. IN CONNECTION WITH
INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE
EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH
INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO
REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS FINALLY
JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER.
9.3 INDEMNIFICATION BY SELLER. SELLER (FOR PURPOSES OF THIS
SECTION 9.3 AND, TO THE EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"),, SHALL
INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT APPLICABLE,
SECTION 9.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF OR RESULTING FROM ANY
BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT
CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT,
CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR
HEREUNDER, AND, WITH RESPECT TO ALL TIMES PRIOR TO OR AFTER THE CLOSING DATE,
ARISING FROM OR BY REASON OF OR RESULTING FROM THE INDEMNITOR'S MANAGEMENT AND
CONDUCT OF THE OWNERSHIP OR OPERATION OF THE BUSINESS OR THE ASSETS AND FROM
ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND
INDEPENDENT CONTRACTORS IN OR ABOUT SELLER'S BUSINESS WHETHER ON OR AFTER THE
CLOSING DATE, AND WITH RESPECT TO (I) ANY VIOLATION BY SELLER OR THE MEMBERS OR
THEIR CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF
STATE OR FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT
OR OBLIGATION ARISING OUT OF OR RESULTING FROM CLAIMS SUBMITTED TO
15
<PAGE> 20
ANY THIRD PARTY PAYOR, WHETHER ON OR AFTER THE CLOSING DATE, (II) TAXES OF
SELLER OR ANY OTHER PERSON (INCLUDING ANY MEMBER) ARISING FROM OR AS A RESULT
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (NOT INCLUDING INCOME TAXES
OF SELLER), (III) ANY LIABILITY OF SELLER OR THE MEMBERS FOR COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED IN CONNECTION WITH
THE NEGOTIATION, PREPARATION OF CLOSING OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH
WHETHER BEFORE OR AFTER THE CLOSING DATE, (IV) ANY ACCRUED UNFUNDED RETIREMENT
OR PENSION PLAN LIABILITIES, (V) THE INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE
OWNERSHIP OR OPERATION OF SELLER'S BUSINESS AND FROM ANY ALLEGED ACT OR
NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND INDEPENDENT CONTRACTORS
IN OR ABOUT SELLER'S BUSINESS WHETHER ON OR AFTER THE CLOSING DATE. IN
CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR
SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE
INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON
AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT
THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT
ENTITLED TO INDEMNIFICATION HEREUNDER.
9.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
9.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by Seller in favor of PRG
or PRG Sub shall not exceed in all cases the Escrowed Shares, and such
indemnification shall be limited to recourse against the Escrowed Shares only,
and any indemnification by PRG and PRG Sub in favor of Seller shall not exceed
in all cases $92,925.90. Furthermore, no claim for Damages shall be made by any
party more than one (1) year after the Closing Date. Notwithstanding the
provisions hereof, Seller shall not be required to indemnify PRG or PRG Sub
unless, and to the extent that, the aggregate amount of damages, losses,
liabilities, costs and other sums ("Damages") incurred by PRG and PRG Sub shall
exceed an amount equal to $18,585.18. Notwithstanding the provisions hereof,
PRG and PRG Sub shall not be required to indemnify Seller unless, and to the
extent that, the aggregate amount of Damages incurred by the Seller shall
exceed an amount equal to $18,525.18.
SECTION 10. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
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<PAGE> 21
(b) at any time by PRG or PRG Sub if any representation or
warranty of Seller contained in this Agreement or in any certificate or other
document executed and delivered by Seller pursuant to this Agreement is or
becomes untrue or breached in any material respect or if Seller fails to comply
in any material respect with any covenant or agreement contained herein, and
any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
(c) at any time by Seller if any representation or warranty of PRG
or PRG Sub contained in this Agreement or in any certificate or other document
executed and delivered by PRG or PRG Sub pursuant to this Agreement is or
becomes untrue or breached in any material respect or PRG or PRG Sub fails to
comply in any material respect with any covenant or agreement contained herein
and such misrepresentation, noncompliance or bread is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
(d) by PRG, PRG Sub or by Seller if the merger contemplated hereby
shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to Seller, that such termination is desirable and in
the best interests of PRG.
SECTION 11. [INTENTIONALLY LEFT BLANK].
SECTION 12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Seller recognizes
and acknowledges that it had in the past, currently have, and in the future may
possibly have, access to certain confidential information of PRG or PRG Sub
that is valuable, special and unique assets of PRG's or PRG Sub's businesses.
Seller agrees that it will not disclose such confidential information to any
person, firm, corporation, association or other entity for any purpose or
reason whatsoever, unless (i) such information becomes available to or known by
the public generally through no fault of Seller, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), Seller
shall, if possible, give prior written notice thereof to the other parties
hereto, and provide such other parties hereto with the opportunity to contest
such disclosure, (iii) Seller reasonably believes that such disclosure is
required in connection with the defense of a lawsuit against the disclosing
party, or (iv) Seller is the sole and exclusive owner of such confidential
information as a result of the transactions contemplated hereunder or
otherwise. In the event of a breach or threatened breach by Seller of the
provisions of this Section 12, PRG or PRG Sub shall be entitled to an
injunction restraining Seller and from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting PRG
or PRG Sub from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. The obligations of the
parties under this Section 12 shall survive the termination of this Agreement.
SECTION 13. INVESTMENT REPRESENTATIONS.
13.1 ECONOMIC RISK; SOPHISTICATION. Seller is able to bear the
economic risk of an investment in PRG common stock acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and have
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the PRG common stock. Seller or its purchaser
representatives have had an adequate opportunity to ask questions and receive
answers from the officers of PRG concerning any and all matters relating to the
background and experience of the officers and directors of PRG, the plans for
the operations of the business of PRG, and any plans for additional
acquisitions and the like. Seller or its purchaser representatives has asked
any and all questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction.
17
<PAGE> 22
13.2 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 14. MISCELLANEOUS.
14.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. PRG Ohio III, Inc.
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
If to Seller:
10494 Montgomery Road
Cincinnati, OH 45242
Facsimile: (513) 984-4240
Attn: Robert H. Osher, M.D.
with a copy to:
Robert E. Brant
Katz, Teller, Brant & Hild
255 E. Fifth Street
2400 Chemed Center
Cincinnati, OH 45202
Facsimile: (513) 721-7120
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
14.2 FURTHER ASSURANCES. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of Agreement.
14.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub and PRG shall not be
18
<PAGE> 23
liable to or required to pay, either directly or indirectly, any (a) fees and
expenses of legal counsel, accountants, auditors or other persons or entities
retained by Seller for services rendered in connection with negotiating and
closing the transactions contemplated by this Agreement or the documents to be
executed in connection herewith, whether or not such costs or expenses are
incurred before or after the Closing Date, and (b) local, state and federal
income taxes or other similar charges on income or gain incurred by Seller as a
result of the transactions contemplated hereby (other than income taxes of the
Seller).
14.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
14.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
14.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
14.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
14.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
14.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
14.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub and PRG may assign its rights and obligations
hereunder to an affiliate and to their lender or lenders.
14.11 COSTS OF ENFORCEMENT. In the event that PRG Sub or PRG, on the
one hand, or Seller, on the other hand, file suit in any court against any
other party to enforce the terms of this Agreement against the other party or
to obtain performance by it hereunder, the prevailing party will be entitled to
recover all reasonable costs, including reasonable attorneys' fees, from the
other party as part of any judgment in such suit. The term "prevailing party"
shall mean the party in whose favor final judgment after appeal (if any) is
rendered with respect to the claims asserted in the Complaint. "Reasonable
attorneys' fees" are those reasonable attorneys' fees actually incurred in
obtaining a judgment in favor of the prevailing party.
14.12 PRORATIONS. Seller agrees to reimburse PRG Sub at Closing a
pro rata portion of all taxes levied upon the Assets for the calendar year in
which the Closing occurs. Such taxes shall be estimated, apportioned and
pro-rated among Seller and PRG Sub as of the Closing Date, and the prorated
amount due PRG Sub shall be credited to the Acquisition Consideration. Upon
payment by PRG Sub of such taxes actually assessed and paid on the Assets, PRG
Sub shall calculate the apportionment of such taxes and shall pay Seller or may
demand from Seller, and Seller agrees to pay, the amount necessary to correct
the estimate and proration made at Closing.
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<PAGE> 24
14.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
14.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
14.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
14.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
[End of Page _____]
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<PAGE> 25
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG OHIO III, INC. CEI REALTY ASSOCIATES, LTD.
By: [ILLEGIBLE] By: [ILLEGIBLE]
------------------------- -------------------------
Its: Vice President Its:
------------------------ ------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
-------------------------
Its: Senior VP
------------------------
21
<PAGE> 26
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.1 Assets to be Conveyed
1.2(c) Escrow Agreement
2.1 Corporate Existence; Good Standing; Capitalization and
Dates Thereof
2.3 Permits and Licenses
2.5 Consents
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.13 Legal Proceedings
2.14 Contracts (other than Leases)
2.15 Subsequent Events
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.29 Banking Relations
2.30 Ownership Interests
8.1(k) Affiliates Letter
ANNEX I Acquisition Consideration
</TABLE>
22
<PAGE> 1
EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GREGORY L. HENDERSON, M.D., P.A.,
GREGORY L. HENDERSON, M.D.,
PRG IV ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG IV ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
GREGORY L. HENDERSON, M.D., P.A., a Florida professional association (the
Company"), and GREGORY L. HENDERSON, M.D., an individual resident of the
State of Florida (the "Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Brandon,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
1
<PAGE> 3
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
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(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
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options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
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to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
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OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
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Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
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(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
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SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
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If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
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<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG IV ACQ. CORP. GREGORY L. HENDERSON, M.D., P.A.
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: Gregory L. Henderon, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG IV ACQ. CORP. GREGORY L. HENDERSON, M.D., P.A.
By: By: /s/ GREGORY L. HENDERSON, M.D.
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ GREGORY L. HENDERSON, M.D.
------------------------------- --------------------------------
Its: Gregory L. Henderson, M.D.
------------------------------
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.5
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
WILLIAM REYNOLDS, M.D., P.A.,
WILLIAM REYNOLDS, M.D.,
PRG IX ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG IX ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
WILLIAM REYNOLDS, M.D., P.A., a Florida professional association (the
Company"), and WILLIAM REYNOLDS, M.D., an individual resident of the State of
Florida (the "Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in
Zephyrhills, Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
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<PAGE> 3
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
2
<PAGE> 4
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
3
<PAGE> 5
options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
4
<PAGE> 6
to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
22
<PAGE> 24
OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
23
<PAGE> 25
Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
24
<PAGE> 26
(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
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<PAGE> 27
SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
26
<PAGE> 28
If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
27
<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
28
<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
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<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG IX ACQ. CORP. WILLIAM REYNOLDS, M.D., P.A..
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: William Reynolds, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreemnt as of the
day and year first above written.
WILLIAM D. REYNOLDS, MD., P.A.
By: /s/ WILLIAM D. REYNOLDS, M.D.
-----------------------------------
Name: William D. Reynolds, M.D.
Title: President 8/12/96
SHAREHOLDERS
/s/ WILLIAM D. REYNOLDS, M.D.
-----------------------------------
William D. Reynolds, M.D.
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.6
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TAMPA EYE CLINIC, P.A.,
J. BURNS CREIGHTON, M.D.,
RONALD SEELEY, M.D.,
LEWIS LAURING, M.D.,
WILLIAM REYNOLDS, M.D.,
DAVID LEACH, M.D., P.A.,
TIMOTHY LORENZEN M.D., P.A.,
PRG II ADQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 12th
day of August, 1996, is by and among PRG II ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
TAMPA EYE CLINIC, P.A., a Florida professional association (the Company"), and
J. BURNS CREIGHTON, M.D., RONALD SEELEY, M.D., LEWIS LAURING, M.D., WILLIAM
REYNOLDS, M.D., DAVID LEACH, M.D., P.A., and TIMOTHY LORENZEN, M.D., P.A., all
individual residents of the State of Florida (individually "Shareholder," and
collectively "Shareholders").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Tampa,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
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1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
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(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
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options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
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to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
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OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
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Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
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(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
25
<PAGE> 27
SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
26
<PAGE> 28
If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
27
<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
28
<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG II ACQ. CORP. TAMPA EYE CLINIC, P.A.
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: J. Burns Creighton, M.D.
------------------------------
--------------------------------
Ronald Seeley, M.D.
--------------------------------
Lewis Lauring, M.D.
--------------------------------
William Reynolds, M.D.
--------------------------------
David Leach, M.D., P.A.
--------------------------------
Timothy Lorenzen, M.D., P.A.
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TAMPA EYE CLINIC, P.A.
By: J. BURNS CREIGHTON, M.D.
-----------------------------
Name: J. Burns Creighton, M.D.
Title: President 8/12/96
SHAREHOLDERS
/s/ J. BURNS CREIGHTON, M.D.
--------------------------------
J. Burns Creighton, M.D.
/s/ LEWIS LAURING, M.D.
--------------------------------
Lewis M. Lauring, M.D.
/s/ DAVID H. LEACH, M.D.
--------------------------------
David H. Leach, M.D.
/s/ TIMOTHY R. LORENZEN, M.D.
--------------------------------
Timothy R. Lorenzen, M.D.
/s/ RONALD L. SEELEY, M.D.
--------------------------------
Ronald L. Seeley, M.D.
/s/ WILLIAM D. REYNOLDS, M.D.
--------------------------------
William D. Reynolds, M.D.
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.7
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TIMOTHY LORENZEN, M.D., P.A.,
TIMOTHY LORENZEN, M.D.,
PRG XI ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG XI ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
TIMOTHY LORENZEN, M.D., P.A., a Florida professional corporation (the
Company"), and TIMOTHY LORENZEN, M.D., an individual resident of the State of
Florida (the "Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Tampa,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
1
<PAGE> 3
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
2
<PAGE> 4
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
3
<PAGE> 5
options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
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to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
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OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
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Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
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(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
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SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
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If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
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16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
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<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG XI ACQ. CORP. TIMOTHY LORENZEN, M.D., P.A..
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: Timothy Lorenzen, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG XI ACQ. CORP. TIMOTHY LORENZEN, M.D., P.A..
By: By:/s/ TIMOTHY LORENZEN, M.D.
------------------------------- -----------------------------
Its: Its: President
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ TIMOTHY LORENZEN, M.D.
------------------------------- --------------------------------
Its: Timothy Lorenzen, M.D.
------------------------------ 8/12/96
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.8
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RONALD SEELEY, M.D., P.A.,
RONALD SEELEY, M.D.,
PRG VII ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG VII ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
RONALD SEELEY, M.D., P.A., a Florida professional corporation (the Company"),
and RONALD SEELEY, M.D., an individual resident of the State of Florida (the
"Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Tampa,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
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<PAGE> 3
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
2
<PAGE> 4
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
3
<PAGE> 5
options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
4
<PAGE> 6
to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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<PAGE> 7
Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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<PAGE> 8
(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
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OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
23
<PAGE> 25
Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
24
<PAGE> 26
(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
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<PAGE> 27
SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
26
<PAGE> 28
If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
27
<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
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<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG VII ACQ. CORP. RONALD SEELEY, M.D., P.A..
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: Ronald Seeley, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
RONALD L. SEELEY, M.D., P.A.
By: /s/ RONALD L. SEELEY, M.D.
-----------------------------------
Name: Ronald L. Seeley, M.D
Title: President 8/12/96
SHAREHOLDERS
/s/ RONALD L. SEELEY, M.D.
-----------------------------------
Ronald L. Seeley, M. D.
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.9
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
J. BURNS CREIGHTON, M.D., P.A.,
J. BURNS CREIGHTON, M.D.,
PRG VI ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th day
of August, 1996, is by and among PRG VI ACQ. CORP., a Delaware corporation ("PRG
Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG"); J.
BURNS CREIGHTON, M.D., P.A., a Florida professional corporation (the Company"),
and J. BURNS CREIGHTON, M.D., an individual resident of the State of
Florida (the "Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Tampa,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
1
<PAGE> 3
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
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(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
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options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
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to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
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OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
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Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
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(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
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SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
26
<PAGE> 28
If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
27
<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
28
<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG VI ACQ. CORP. J. BURNS CREIGHTON, M.D., P.A..
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: J. Burns Creighton, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG VI ACQ. CORP. J. BURNS CREIGHTON, M.D., P.A..
By: By: /s/ J. BURNS CREIGHTON, M.D.
------------------------------- -----------------------------
Its: Its: President
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ J. BURNS CREIGHTON, M.D.
------------------------------- --------------------------------
Its: J. Burns Creighton, M.D.
------------------------------ 8/12/96
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.10
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
DAVID LEACH, M.D., P.A.,
DAVID LEACH, M.D.,
PRG X ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG X ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
DAVID LEACH, M.D., P.A., a Florida professional corporation (the Company"), and
DAVID LEACH, M.D., an individual resident of the State of Florida (the
"Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Tampa,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
1
<PAGE> 3
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
2
<PAGE> 4
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
3
<PAGE> 5
options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
4
<PAGE> 6
to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
22
<PAGE> 24
OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
23
<PAGE> 25
Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
24
<PAGE> 26
(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
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<PAGE> 27
SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
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<PAGE> 28
If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
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<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
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<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
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<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG X ACQ. CORP. DAVID LEACH, M.D., P.A..
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: David Leach, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
DAVID H. LEACH M.D., P.A.
By: /s/ DAVID H. LEACH, M.D.
-----------------------------------
Name: David H. Leach, M.D.
Title: President 8/12/96
SHAREHOLDERS
/s/ DAVID H. LEACH, M.D.
--------------------------------
David H. Leach, M.D.
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.11
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LEWIS LAURING, M.D., P.A.,
LEWIS LAURING, M.D.,
PRG VIII ACQ. CORP.,
AND
PHYSICIANS RESOURCE GROUP, INC.
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 13th
day of August, 1996, is by and among PRG III ACQ. CORP., a Delaware corporation
("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG");
LEWIS LAURING, M.D., P.A., a Florida professional corporation (the Company"),
and LEWIS LAURING, M.D., an individual resident of the State of Florida (the
"Shareholder").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Tampa,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Sub with and into the Company shall occur on the
31st day of August, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto, shall be based on the respective
representations, warranties and agreements of the parties hereto, and shall be
subject to the terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Florida Business Corporation Law.
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1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation and to the
extent the foregoing is not permitted by law, the Articles of Incorporation of
the Surviving Corporation shall be the Articles of Incorporation of the Company
and shall immediately be amended to contain the terms and provisions of the
Articles of Incorporation of PRG Sub.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of fully registered shares of PRG common stock set forth on
Annex I attached hereto less the Escrowed Shares (in the aggregate, the "Merger
Consideration"). As a result of the Merger and without any action on the part
of the holder thereof, all shares of the Company shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and each holder of
a certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates, be entitled to
receive the Merger Consideration and (ii) until the certificates representing
Company common stock have been surrendered by Shareholders and replaced by
certificates representing PRG common stock, the certificates for Company common
stock shall, for all purposes, be deemed to evidence ownership of PRG common
stock.
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(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by them, duly
endorsed in blank by the Shareholders, or accompanied by blank stock powers and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholders agree to cure
any deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to such Company common stock or with
respect to the stock powers accompanying any Company Common Stock. Upon such
delivery, the Shareholder shall be entitled to receive in exchange therefor a
certificate representing that number of shares of PRG common stock Shareholder
is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow the number of shares of
PRG Common Stock set forth on Annex I (the "Escrowed Shares") pursuant to the
terms of an Escrow Agreement (the "Escrow Agreement") in the form attached
hereto as Exhibit 1.9, to be entered into among Shareholders, the Company, PRG
Sub, PRG and Jackson &Walker, L.L.P. , as escrow agent ("Escrow Agent"). The
Escrowed Shares shall be issued in the name of the Escrow Agent, as escrow
agent. The Escrowed Shares shall be released from escrow, after provision for
any Damages for which PRG or PRG Sub may be entitled to indemnification
pursuant to Article XI in accordance with the terms of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
The shareholders are the sole shareholders of the Company and own all
outstanding shares of capital stock free of all security interests, claims,
encumbrances and liens in the amounts set forth on Exhibit 2.1. The
Shareholders have owned the equity interests set forth on Exhibit 2.1 since
January 1, 1994 in the amounts set forth on such Exhibit. Each share of
Company common stock has been legally and validly issued and fully paid and
nonassessable. No shares of capital stock of the Company are owned by the
Company in treasury. The Company has not acquired any treasury shares since
January 1, 1994. There are no outstanding (a) bonds, debentures, notes or
other obligations the holders of which have the right to vote with the
stockholders of the Company on any matter, (b) securities of the Company
convertible into equity interests in the Company, or (c) commitments,
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options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Florida.
The Company has not been a division or subsidiary of PRG or any of its
subsidiaries since January 1, 1994. The Company and each Shareholder do not
own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with financial information about the Company,
which information is set forth in the financial statements on Exhibit 2.6
attached hereto (the "Financial Statements"), including the unaudited Balance
Sheet ("Balance Sheet") as of the date set forth therein ("Balance Sheet
Date"). The Financial Statements for the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
reflect all contingent liabilities of the Company required
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to be reported in accordance with GAAP, as of their respective dates, and
present fairly the financial position of the Company as of such dates and the
results of operations and cash flows for the period or periods reflected
therein.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which the Company leases, as lessor or lessee, real or
personal property used in operating the business of the Company or otherwise.
All such leases listed on Exhibit 2.7 are valid and enforceable in accordance
with their respective terms, and there is not under any such lease any existing
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and the Company and the Shareholders have no
knowledge of any latent defects therein.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Company is set forth on
Exhibit 2.9. The Company has good, valid and marketable title to all of its
personal and real property, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibit 2.9 and Exhibit 2.7 constitute the only real and personal property used
in the conduct of the Company's business. Upon consummation of the
transactions contemplated hereby, such interest in real and personal property
shall be free and clear of all liens, security interests, claims and
encumbrances and evidence of such releases of liens and claims shall be
provided to PRG Sub on the Closing Date. No sales of significant assets and
no spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. All of the inventory owned or used by the Company is in
good, current, standard and merchantable condition and is not obsolete or
defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG
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Sub, and (e) all employee manuals, copies of which have been delivered to PRG
Sub. The Company is in compliance with all applicable laws, rules, regulations
and ordinances respecting employment and employment practices. The Company has
not engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there any legal impediment of which the Company or any Shareholder has
knowledge to the continued operation of its business in the ordinary course,
subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case
of employment agreements) and Exhibit 2.14 (in the case of Contracts other than
leases) attached hereto. Except as otherwise indicated on such Exhibits, all
of such Contracts are valid, binding and enforceable in accordance with their
terms and are in full force and effect, and no defenses, offsets or
counterclaims have been asserted or may be made by any party thereto. Except
as indicated on such Exhibits, there is not under any such Contract any
existing default by the Company, or any condition or event of which the Company
or any Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default. The Company and the Shareholders have no
knowledge of any default by any other party to such Contracts. Neither the
Company nor the Shareholders have received notice of the intention of any party
to any Contract to cancel or terminate any Contract and have no reason to
believe that any amendment or change to any Contract is contemplated by any
party thereto. Other than those contracts, obligations and commitments of the
Company listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, the Company is
not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the sale of any assets of the
Company not made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Company of a particular product or
service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
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(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
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(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long- term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any principle or practice
with respect to the recordation of accounts receivable or the calculation of
reserves therefor, or any material collection, discount or write-off policy or
procedure. Accounts Receivable are recorded in amounts estimated to be net of
contractual allowances related to third-party payor arrangements. The Company
is in substantial compliance with the terms and conditions of such third-party
payor arrangements, and the reserves established by the Company are adequate to
cover any liability resulting from lack of compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
pending or in process, or to the knowledge of the Company and Shareholders,
threatened. The Company is not currently the beneficiary of any waiver of any
statute of limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or deficiency. There
are no liens or encumbrances relating to taxes on or threatened against any of
the assets of the Company. The Company has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Company nor
any predecessor of the Company is or has been a party to any tax allocation or
sharing agreement or a member of an affiliated group of corporations filing a
consolidated federal income tax return. The Company has delivered to PRG Sub
correct and complete copies of the Company's three most recently filed annual
state and federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by the Company during
the three calendar year period preceding the date of this Agreement. The
Company has neither made any payments, is obligated to make any payments, or is
a party to any agreement that under any circumstance could obligate it to make
any payments that will not be deductible under Code section 280G.
2.18 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Company did not have, as of the Balance Sheet
Date, and has not incurred since that date and will not have occurred as of the
Closing Date, any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise,
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and whether due or to become due, other than those incurred in the ordinary
course of business. The Company and the Shareholders do not know, or have
reasonable grounds to know, of any basis for the assertion against the Company
as of the Balance Sheet Date, of any claim or liability of any nature in any
amount not fully reflected or reserved against on the Balance Sheet, or of any
claim or liability of any nature arising since that date other than those
incurred in the ordinary course of business or contemplated by this Agreement.
All indebtedness of the Company (including without limitation, indebtedness for
borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. The Company, each Shareholder and each
physician employee of the Company carries property, liability, malpractice,
workers' compensation and such other types of insurance as is customary in the
industry. Valid and enforceable policies in such amounts are outstanding and
duly in force and will remain duly in force through the Closing Date. All such
policies are described in Exhibit 2.19 attached hereto and true and correct
copies have been delivered to PRG Sub. Neither the Company nor any Shareholder
has received notice or other communication from the issuer of any such
insurance policy cancelling or amending such policy or threatening to do so.
Neither the Company, nor each Shareholder nor any physician employee of the
Company has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Company Plan," and
collectively "Company Plans") have been operated and administered in all
material respects in accordance with all applicable laws, rules and
regulations, including without limitation, ERISA, the Internal Revenue Code of
1986, as amended, Title VII of the Civil Rights Act of 1964, as amended, the
Equal Pay Act of 1967, as amended, the Age Discrimination in Employment Act of
1967, as amended, and the related rules and regulations adopted by those
federal agencies responsible for the administration of such laws. No act or
failure to act by the Company has resulted in a "prohibited transaction" (as
defined in ERISA) with respect to the Company Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Company Plans. The
Company has not previously made, is not currently making, and is not obligated
in any way to make, any contributions to any multiemployer plan within the
meaning of the Multi-Employer Pension Plan Amendments Act of 1980. With
respect to each Company Plan, either (i) the value of plan assets (including
commitments under insurance contracts) is at least equal to the value of plan
liabilities or (ii) the value of plan liabilities in excess of plan assets is
disclosed on the Balance Sheet, all as of the Closing Date.
2.21 ADVERSE AGREEMENTS. The Company is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule or regulation that materially and adversely affects
the condition (financial or otherwise), operations, assets, liabilities,
business or prospects of the Company.
2.22 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.23 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and
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licensed employee of the Company is qualified for participation in the Medicare
and Medicaid programs and is party to provider agreements for such programs
which are in full force and effect with no defaults having occurred thereunder.
The Company, each Shareholder and each physician and licensed employee of the
Company has timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all such claims
or reports are complete and accurate, and has no liability to any payor with
respect thereto. There are no pending appeals, overpayment determinations,
adjustments, challenges, audit, litigation or notices of intent to open
Medicare or Medicaid claim determinations or other reports required to be filed
by the Company, each Shareholder and each licensed employee of the Company.
Neither the Company, nor any Shareholder, nor any physician or licensed
employee of the Company has been convicted of, or pled guilty or nolo
contendere to, patient abuse or negligence, or any other Medicare or Medicaid
program related offense and none has committed any offense which may serve as
the basis for suspension or exclusion from the Medicare and Medicaid programs.
2.24 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another, with the intent
to fraudulently secure such benefit or payment; and (d) knowingly and willfully
soliciting or receiving any remuneration (including any kickback, bribe or
rebate) directly or indirectly, overtly or covertly, in cash or in kind, or
offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or ordering or
arranging for, or recommending, purchasing, leasing or ordering any good,
facility, service or item for which payment may be made in whole or in part by
Medicare or Medicaid, or (e) referring a patient for designated health services
to or providing designated health services to a patient upon referral from an
entity or person with which the physician or an immediate family member has a
financial relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.26 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company on any of its
capital stock since January 1994. No repurchase of any of the Company's capital
stock has been approved, effected or is pending, or is contemplated by the
Board of Directors of the Company. No distributions of cash or other assets
have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994.
2.27 SUPPLIERS. Set forth in Exhibit 2.28 is a complete and
accurate list of the ten (10) largest suppliers of the Company in terms of
dollar volume of transactions for each of the last three fiscal years and the
current fiscal year to date, showing, with respect to each, the name, address
and aggregate dollar volume of purchases from such supplier.
2.28 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that the Company has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.29 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company, or their respective
spouses, children or affiliates, owns directly or indirectly, on an individual
or joint basis, any interest in, has a compensation or other financial
arrangement with, or serves as an officer or director of, any customer or
supplier or competitor of the Company or any organization that has a material
contract or arrangement with the Company. Neither the Company, nor any of its
directors, officers, employees, consultants or the Shareholders nor any
affiliate of such person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, pharmacy,
home health agency or other person or entity which is in a position to make or
influence referrals to, or otherwise generate business for, the Company or to
provide services, lease space, lease equipment or engage in any other venture
or activity with the Company.
2.30 PAYORS. Exhibit 2.31 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.31 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by the
Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to the Company and the
Shareholders as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.5 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.6 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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3.7 SEC Documents. As of the date hereof, PRG has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been required
to file with the Securities and Exchange Commission (the "SEC") under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "SEC Documents"). As of the respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder applicable to the respective SEC Documents , and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of the respective dates therein, the consolidated financial
statements of PRG included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of PRG
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (except,
in the case of interim period financial information, for normal year-end
adjustments).
3.8 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect, all building or other permits,
certificates of occupancy, concessions, grants, franchises, licenses,
certificates of need and other governmental authorizations and approvals
required to be maintained by PRG and PRG Sub have been duly obtained and are in
full force and effect. There are no proceedings pending or, to the knowledge
of PRG and PRG Sub, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
3.9 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.10 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.11 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) 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
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may be made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated health
services to a patient upon referral from an entity or person with which the
physician or an immediate family member has a financial relationship, and to
which no exception under Section 1395nn of Title 42 of the United States Code
applies.
SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly and severally, represent and warrant that
the following will be true and correct as of the Closing Date as if made on
such date:
4.1 CORPORATE EXISTENCE AND GOOD STANDING OF THE CLINIC. On or
prior to the Closing Date, the Shareholders shall form a Florida professional
service corporation (the "Clinic") which shall be duly organized, validly
existing and in good standing under the laws of the State of Florida. The
Clinic has all necessary corporate power to own all of its assets and to carry
on its business as such business is now being conducted. The Shareholders are
the sole shareholders of the Clinic and own such interests free of all security
interests, claims, encumbrances and liens in the amounts set forth on Exhibit
4.1. Each interest of the Clinic has been legally and validly issued and fully
paid and nonassessable. There are no outstanding (a) bonds, debentures, notes
or other obligations the holders of which have the right to vote with the
shareholders of the Clinic on any matter, (b) securities of the Clinic
convertible into equity interests in the Clinic, or (c) commitments, options,
rights or warrants to issue any such equity interests in the Clinic, to issue
securities of the Clinic convertible into such equity interests, or to redeem
any securities of the Clinic. No interests of the Clinic have been issued or
disposed of in violation of the preemptive rights, rights of first refusal or
similar rights of any of the Clinic's shareholders. The Clinic is not required
to qualify to do business as a foreign entity in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Clinic does not have any assets,
employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
its Bylaws or otherwise, to authorize the execution, delivery and performance
of such documents. The Service Agreement, the Physician Employment Agreement
and the other agreements contemplated hereby have been duly executed and
delivered by the Clinic and constitute or will constitute the legal, valid and
binding obligations of the Clinic enforceable against the Clinic in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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consideration received upon the issuance of shares of its capital stock, and
the Clinic does not have any liabilities, accrued, contingent or otherwise
(known or unknown and asserted or unasserted).
4.5 COMPLIANCE WITH LAWS. The Clinic has complied with all
applicable laws, regulations and licensing requirements and has filed with the
proper authorities all necessary statements and reports.
SECTION 5. COVENANTS OF THE COMPANY AND THE SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonable access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any material adverse change in the Company's business, financial condition or
the conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take
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whatever steps are necessary to pay or fund completely for any accrued
benefits, where applicable, or vested accrued benefits for which the Company or
any entity might have any liability whatsoever arising from any, insurance,
pension plan, employment tax or similar liability of the Company to any
employee or other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with the Company) allocable
to services performed prior to the Closing Date. The Company acknowledges that
the purpose and intent of this covenant is to assure that PRG Sub shall have no
liability whatsoever at any time after the Closing Date with respect to any of
the Company's employees or similar persons or entities, including, without
limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation plan, employment agreement, independent
contractor agreement, employee policies and procedures or employee benefit
plan, take any action that could deplete the assets of any employee benefit, or
fail to pay any premium or contribution due or file any report with respect to
any employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon the
Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
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SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
6.4 LEASES. On the Closing Date, Administrator shall enter into
long term leases of not less than fifteen (15) years with respect to the real
property used in operating the business of the Company as set forth on Exhibit
2.7 attached hereto. The leases shall provide for annual rental rates, and
other expenses, in the amounts provided for in the Financial Statements for
such properties with annual adjustments of the rental rates tied to the
increase or decrease in the regional Consumer Price Index. The remaining terms
of the leases shall be mutually agreed to between Administrator and the
landlord.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida, and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
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SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. Prior to the Closing Date, the Clinic, the
Shareholders, PRG and the Company shall execute and deliver a Service Agreement
(the "Service Agreement"), in substantially the form attached hereto as Exhibit
8.7, pursuant to which the Clinic and Shareholders will provide professional
services to patients and the Company will providemanagement services to the
Clinic and Shareholders.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company cause each physician employee of the Company and other licensed
employees that have existing employment agreements with the Company to assign
his or her employment agreement with the Company to the Clinic, and the Clinic
shall thereafter assume their rights and obligations of the Company thereunder
and each such employee shall execute a separation and release agreement
("Separation and Release Agreement") with the Company.
8.9 CONSENTS AND APPROVALS. The Company and the Shareholders
shall have obtained all necessary government and other third-party approvals
and consents.
8.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 10.1.
8.11 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and the Company shall not have any liabilities, including indebtedness,
guaranties and capital leases, that are not approved or assumed by PRG.
8.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Florida Business Corporation Law.
8.13 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
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8.14 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
8.15 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
8.16 OTHER AGREEMENTS. The acquisition by PRG or its affiliates
of four of the five practices set forth on Exhibit 13.1(a) shall be closed on
or before the Closing Date.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
assignment of physician employment agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
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(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company and the enforceability of this Agreement
and the other agreements and documents to be executed in connection herewith;
(k) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder;
(o) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 10.1(o);
(p) an executed Escrow Agreement; and
(q) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and
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agreements each certified by the Secretary as being true and correct copies of
the original thereof;
(d) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(e) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(f) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware and Florida, respectively,
establishing that PRG and PRG Sub are in existence and are in good standing to
transact business in the State of Delaware and the State of Florida, as
applicable;
(g) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by the Company;
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company and such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. All such representations and
warranties, and all representations and warranties expressly labeled as such in
this Agreement shall survive the date of this Agreement and the Closing Date
for a period of one (1) year following the Closing Date. Each party covenants
with the other parties not to make any claim with respect to such
representations and warranties, against any party after the date on which such
survival period shall terminate. No party shall be entitled to claim indemnity
from any other party pursuant to Section 11.2 or 11.3 hereof, unless such party
has timely given the notice required in Sections 11.2, 11.3 or 11.4 hereof, as
the case may be, within a period of one (1) year following the Closing Date.
Each party hereby releases, acquits and discharges the other party from any and
all claims and demands, actions and causes of action, damages, costs, expenses
and rights of setoff with respect to which the notices required by Section
11.2, 11.3 or 11.4, as applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS, AND
THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE
COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) (I) ARISING FROM OR BY REASON OF OR
RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
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REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND (II) FROM
AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF THE COMPANY.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) EVENTS OCCURRING PRIOR TO THE CLOSING DATE WITH RESPECT TO THE
INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE OWNERSHIP OR OPERATION OF THE
COMPANY,
(III) ANY ACT OF NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS
AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS WHICH OCCURS
PRIOR TO THE CLOSING DATE,
(IV) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(V) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(VI) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT (NOT INCLUDING INCOME TAXES OF THE COMPANY),
(VII) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT
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OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH, OR.
(VIII) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases the Escrowed Shares.
Furthermore, no claim for Damages shall be made by any party more than one (1)
year after the Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes (excluding, however, income taxes of the
Company and the tax liabilities, if any, disclosed on the Financial
Statements), and all related interest, penalties and additions to tax
("Taxes"), with respect to taxable periods of the Company ending on or before
the Closing Date.
(b) PRG shall prepare and file or cause to be prepared
and filed any Tax Returns of Surviving Corporation covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Shareholders shall, jointly and severally, within fifteen (15) days
after payment thereof and notice of such payment, reimburse, indemnify and hold
harmless PRG and the Surviving Corporation for all Taxes for any Straddle
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Period, to the extent related to the portion of the Straddle Period ending on
the Closing Date. For such purposes, the portion of any Tax attributable to
the portions of a Straddle Period ending on the Closing Date and beginning
after the Closing Date shall be determined by apportioning the Tax for the
entire Straddle Period among such periods based on the number of days in each
such period, provided that, in the case of Taxes based upon or related to
income or receipts, such portion shall be the amount of Tax which would have
been due if the relevant Straddle Period ended on the Closing Date. Any
credits relating to a Straddle Period shall be taken into account as though the
relevant Straddle Period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a manner
consistent with prior practices of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to the Company, that such termination is desirable
and in the best interests of PRG.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
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(a) except as set forth on Exhibit 13.1(a), attached
hereto, establish, operate or provide physician services at any medical office,
clinic or out-patient and/or ambulatory treatment or diagnostic facility
providing services similar to those provided by the Company or engage or
participate in or finance any business which engages in direct competition with
the business being conducted by PRG, PRG Sub, Surviving Corporation or any
practice managed by PRG or any subsidiary of PRG anywhere within, as of the
Closing Date, (i) 25 miles of any location of the Clinic, the practices set
forth on Exhibit 13.1(a), and any ophthalmology practice managed by PRG or any
subsidiary of PRG located outside of a Standard Statistical Metropolitan Area
having a population of greater than 1,000,000, or (ii) 10 miles of any location
of any ophthalmology practice managed by PRG or any subsidiary of PRG located
within a Standard Statistical Metropolitan Area having a population of greater
than 1,000,000; provided, however, that this provision shall not prohibit (a)
each Shareholder or any of his or her affiliates from purchasing or holding an
aggregate equity interest of up to 2%, so long as such Shareholder and his or
her affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business in direct competition with the PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
or (b) a Shareholder from performing surgery at any hospital or outpatient
surgical facility which provides services similar to those provided by the
Clinic, PRG or any of its Affiliates; or
(b) induce or attempt to influence any employee of PRG,
PRG Sub, Surviving Corporation or any practice managed by PRG or any subsidiary
of PRG to terminate his or her employment, or to hire any such employee,
whether or not so induced or influenced, except that any such employee may be
hired with PRG's prior written consent.
13.2 DAMAGES.
(a) Because of the difficulty of measuring economic
losses to PRG, Surviving Corporation and PRG Sub as a result of the breach of
the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to PRG, Surviving Corporation and PRG Sub for which it
would have no other adequate remedy, the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by a Shareholder of the foregoing covenant, such
Shareholder agrees to that in the event of a breach of the foregoing covenant
the breaching Shareholder shall be obligated to pay to PRG as liquidated
damages an amount set forth on Schedule 13.2.
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement are not consummated for any
reason but otherwise shall not be affected by any breach of any other provision
hereof by any party hereto. The covenants contained in this Section 13 shall
terminate in the event the Service Agreement is terminated pursuant to Section
3.11 or Section 9.3 thereto.
25
<PAGE> 27
SECTION 14. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. Three Lincoln Centre
Three Lincoln Centre 5430 LBJ Freeway, Suite 1540
5430 LBJ Freeway, Suite 1540 Dallas, Texas 75240
Dallas, Texas 75240 Attn: Richard J. D'Amico
Attn: Richard J. D'Amico Facsimile: (214) 982-8299
Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
26
<PAGE> 28
If to the Company or the Shareholders:
See Exhibit 16.1
with a copy to:
Foley, Lardner, Weissburg & Aronson
111 North Orange Avenue
Suite 1800
Orlando, FL 32801
Attention: Jennifer Brown
Facsimile: (407) 648-1743
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub, Surviving Corporation and
PRG shall not be liable to or required to pay, either directly or indirectly,
any fees and expenses of legal counsel, accountants, auditors or other persons
or entities retained by the Company, the Clinic or the Shareholders for
services rendered in connection with negotiating and closing the transactions
contemplated by this Agreement or the documents to be executed in connection
herewith, whether or not such costs or expenses are incurred before or after
the Closing Date and the Shareholders shall be liable for all such costs and
expenses of the Company.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
27
<PAGE> 29
16.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
16.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub, Surviving Corporation and PRG may assign its
rights and obligations hereunder to an affiliate and to their lender or
lenders.
16.11 NO RULE OF CONSTRUCTION. The parties acknowledge that this
Agreement was initially prepared by PRG Sub, and that all parties have read and
negotiated the language used in this Agreement. The parties agree that,
because all parties participated in negotiating and drafting this Agreement, no
rule of construction shall apply to this Agreement which construes ambiguous
language in favor of or against any party by reason of that party's role in
drafting this Agreement.
16.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company or the Shareholders, on the
other hand, file suit in any court against any other party to enforce the terms
of this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all reasonable
costs, including reasonable attorneys' fees, from the other party as part of
any judgment in such suit. The term "prevailing party" shall mean the party in
whose favor final judgment after appeal (if any) is rendered with respect to
the claims asserted in the Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 ARBITRATION. Except for matters for which an injunction,
restraining order, writ of mandamus, specific
28
<PAGE> 30
performance or other equitable relief may be sought by a party hereunder, any
disputes between the parties arising out of or otherwise relating to this
Agreement (whether based in contract, tort, or other legal theory), shall be
resolved by and through an arbitration proceeding to be conducted under the
auspices of the American Arbitration Association (or any like organization
successor thereto) in Dallas, Texas. Such arbitration proceeding shall be
conducted in as expedited a manner as is then permitted by the commercial
arbitration rules (formal or informal) of the American Arbitration Association,
and the arbitrator or arbitrators in any such arbitration shall be persons who
are expert in the subject matter of the dispute. Both the foregoing agreement
of the parties to arbitrate any and all such claims, and the results,
determination, finding, judgment and/or award rendered through such
Arbitration, shall be final and binding on the parties hereto and may be
specifically enforced by legal proceedings, and the parties agree that a
judgment of any court of competent jurisdiction may be rendered upon any
arbitration rendered pursuant to this Section. Such arbitration may be
initiated by written notice from any party to the others which shall be a
compulsory and binding proceeding on each party. The arbitration shall be
conducted before a panel of arbitrators selected in accordance with the rules
of the American Arbitration Association. The costs of the arbitrators and the
arbitration, including the cost of their respective attorneys, witnesses and
experts in connection with such arbitration, incurred by the prevailing party
in the arbitration shall be paid by the other parties thereto. Time is of the
essence of this arbitration procedure, and the arbitrators shall be instructed
and required to render their decision within ten (10) days following completion
of the arbitration. Any and all legal proceedings to enforce this Agreement
(including any action to compel arbitration hereunder or to enforce any award
or judgment rendered thereby) shall be governed in accordance with this
Section.
16.18 GOOD FAITH. The parties agree to act in good faith and
reasonably with respect to the exercise of their respective rights, duties and
obligations .
[End of Page _____]
29
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG VIII ACQ. CORP. LEWIS LAURING, M.D., P.A..
By: [ILLEGIBLE] By:
------------------------------- -----------------------------
Its: Its:
------------------------------ ----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
------------------------------- --------------------------------
Its: Lewis Lauring, M.D.
------------------------------
30
<PAGE> 32
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LEWIS M. LAURING, M.D., P.A.
By: /s/ LEWIS LAURING, M.D.,
-----------------------------------
Name: Lewis M. Lauring, M.D.
Title: President 8/12/96
SHAREHOLDERS
/s/ LEWIS LAURING, M.D.
--------------------------------
Lewis M. Lauring, M.D.
31
<PAGE> 33
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.28 Suppliers
2.29 Banking Relations
2.31 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(n) Shareholder Release
10.1(o) Affiliates Letter
13.1 Exceptions to Non-Compete
13.1(a) Sunshine Vision Network Practices
</TABLE>
32
<PAGE> 34
<TABLE>
<S> <C>
13.2 Liquidated Damages
16.1 Notice
ANNEX I Merger Consideration
</TABLE>
33
<PAGE> 1
EXHIBIT 2.12
ASSET PURCHASE AGREEMENT
BY AND AMONG
PRG OHIO, L.P.,
CEI REALTY ASSOCIATES, LTD.,
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
<TABLE>
<S> <C> <C>
Section 1. Terms of the Sale and Purchase of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
----------------------------------------
1.1 Conveyance of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
--------------------
1.2 Purchase Price; Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
-----------------------------------------
1.3 Subsequent Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------
Section 2. Representations and Warranties of Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . 2
-------------------------------------------------------------
2.1 Existence; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------------
2.2 Power and Authority for Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------------------------
2.3 Permits, Licenses and Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------------------------------------
2.4 Partnership Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-------------------
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
--------
2.6 Seller's Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------------------
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------
2.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------
2.9 Title to and Encumbrances on Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------------------------------
2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
2.11 Intellectual Property Rights; Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------------------------------
2.12 Directors and Officers; Payroll Information; Employees . . . . . . . . . . . . . . . . . . . . . . . . 4
------------------------------------------------------
2.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-----------------
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
---------
2.15 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-----------------
2.16 Accounts Receivable/Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
---------------------------
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----
2.18 Liabilities; Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------
2.19 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
------------------
2.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------------------
2.21 Adverse Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------
2.22 Compliance with Laws in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------------
2.23 Medicare and Medicaid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------------------
2.24 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------
2.25 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------------------------
2.26 Accredited Investor Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------------
2.27 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------------------
2.28 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------
2.29 Banking Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------------
2.30 Ownership Interests of Interested Persons; Competitors . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------------------------------------
2.31 Payors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------
2.32 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------
Section 3. Representations and Warranties of PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------------------------------------
3.1 Corporate Existence: Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------------
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------
3.4 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
Section 4. Covenants of Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------------------------
4.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------------
4.2 Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-------------------
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
-----------------
4.4 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------------------------------------
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.6 Funding of Accrued Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------------------------
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------
4.8 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------
4.9 Requirements to Effect Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------------------------
4.10 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
--------------------------
4.12 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------
4.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------
4.14 Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------
Section 5. Covenants of PRG and PRG Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------
5.2 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 13
---------------------------------------------------
5.3 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------
Section 6. PRG Sub and PRG Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------------------
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------------
6.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------------
6.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------
6.4 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------
6.5 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------
6.6 Approval by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------------
6.7 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------
6.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
------------------
6.9 Debt and Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------
6.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------
6.11 No Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------------
6.12 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------
6.13 Accounting Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
6.14 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------
Section 7. Seller's and the Shareholder's Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------------------------------------
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------------
7.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------
Section 8. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
8.1 Deliveries of Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------------------------------
8.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------------------------
Section 9. Nature and Survival of Representations and Warranties; Indemnification . . . . . . . . . . . . . . . 16
----------------------------------------------------------------------
9.1 Nature and Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------
9.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------------------------
9.3 Indemnification by Seller and the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------------------------------
9.4 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------------
9.5 Limitation on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------------------
Section 10. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------
Section 11. Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------
11.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------
11.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
11.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
11.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------
11.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----
Section 12. Nondisclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-----------------------------------------
Section 13. Investment Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------------
13.1 Economic Risk; Sophistication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------------------
13.2 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------
Section 14. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------
14.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
14.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------
14.4 Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------
14.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------
14.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------
14.7 Integration of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------
14.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------------
14.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------
14.10 Binding Effect/Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------------
14.11 No Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------
14.12 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------
14.13 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------
14.14 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
-------------------
14.15 Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---------------
14.16 Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------
14.17 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------
</TABLE>
<PAGE> 5
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made and executed as
of the 13th day of August, 1996, is by and among PRG OHIO, L.P., an Ohio
limited partnership ("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); and CEI REALTY ASSOCIATES, LTD., an Ohio limited liability
company ("Seller").
WITNESSETH:
WHEREAS, Seller owns certain real estate and other assets used in the
operation of an ophthalmology practice in Cincinnati, Ohio;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
WHEREAS, Seller wishes to sell to PRG Sub, and PRG Sub wishes to
acquire from Seller, certain of the assets of Seller, all upon the terms and
subject to the conditions set forth herein; and
WHEREAS, it is intended that this transaction shall be accounting for
as a "pooling of interest" for financial accounting purposes.
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. TERMS OF THE SALE AND PURCHASE OF ASSETS.
The sale of the assets of Seller which are to be sold hereunder and
the acquisition thereof by PRG Sub shall occur on the 31st day of August, 1996
("Closing Date"), unless another date is mutually agreed upon among the parties
hereto and shall be based on the respective representations, warranties and
agreements of the parties hereto, and shall be subject to the terms and
conditions herein stated.
1.1 CONVEYANCE OF ASSETS. Subject to and upon the terms and
conditions contained herein, on the Closing Date, Seller shall sell, convey,
transfer, deliver and assign to PRG Sub Seller's right, title and interest in
and to its properties and assets described on Exhibit 1.1 (individually,
"Asset", and collectively "Assets").
1.2 PURCHASE PRICE; ASSUMPTION OF LIABILITIES. As consideration
for the sale of the Assets by Seller, PRG Sub shall, on the Closing Date,
provide Seller with the following consideration:
(a) Purchase Price. Seller shall receive the
consideration specified in Annex I attached hereto, less the Escrowed Shares
(the "Acquisition Consideration"). The Acquisition Consideration shall be
allocated among the Assets as agreed among PRG Sub and Seller on the Closing
Date.
(b) Assumption of Liabilities. PRG Sub shall not assume
any liabilities of Seller hereunder.
(c) Escrowed Shares. In addition to the shares issuable
to the Seller at Closing, PRG shall deposit in escrow a number of shares of PRG
Common Stock equal to ten percent (10%) of the amount of shares of PRG common
stock set forth on Annex I hereto (the "Escrowed Shares") pursuant to the terms
of an Escrow Agreement (the "Escrow Agreement") in the form attached hereto as
Exhibit 1.2(c), to be entered into among Seller, PRG Sub, PRG and Jackson &
Walker, L.L.P., as escrow agent ("Escrow Agent"). The Escrowed Shares shall be
issued in the name of the Escrow Agent, as escrow agent. The Escrowed Shares
shall be released from escrow, after
1
<PAGE> 6
provision for any Damages for which PRG or PRG Sub may be entitled to
indemnification pursuant to Article XI in accordance with the terms of the
Escrow Agreement.
1.3 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
PRG Sub or PRG shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in PRG Sub its
right, title or interest in, to or under any of the Assets or otherwise to
carry out this Agreement, in return for the consideration set forth in this
Agreement, the officers and directors of PRG Sub shall be authorized to execute
and deliver, in the name and on behalf of Seller or otherwise, to carry out all
such deeds, bills of sale, assignments and assurances and to take and do, in
the name and on behalf of PRG Sub or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under the Assets in PRG Sub or otherwise
to carry out this Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to PRG Sub and PRG as follows:
2.1 EXISTENCE; GOOD STANDING. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Ohio. Seller has all necessary limited liability company power to
own all of its assets and to carry on its business as such business is now
being conducted. Seller does not own stock in or control, directly or
indirectly, any other corporation, association or business organization, nor is
Seller a party to any joint venture or partnership. The members ("Members")
set forth on Exhibit 2.1 are the sole members of Seller and own all outstanding
equity interests free of all security interests, claims, encumbrances and liens
in the amounts set forth on Exhibit 2.1. The Members own the equity interests
set forth in Exhibit 2.1 as of the dates set forth on Exhibit 2.1 in the
amounts set forth on such Exhibit. Each equity interest in Seller has been
legally and validly issued and fully paid and nonassessable. No units of
equity interests of the Seller are owned by the Seller in treasury. Seller has
not acquired any treasury shares since January 1, 1994. There are no
outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the members of Seller on any matter, (b)
securities of Seller convertible into equity interests in Seller, or (c)
commitments, options, rights or warrants to issue any such equity interests in
Seller, to issue securities of Seller convertible into such equity interests,
or to redeem any securities of Seller. No equity interests of Seller have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of Seller's members. Seller is not required
to qualify to do business as a foreign limited liability company in any other
state or jurisdiction other than the State of Kentucky by reason of its
business, properties or activities in or relating to such other state or
jurisdiction. Seller does not have any assets, employees or offices in any
state other than Ohio. Seller has not been a division or subsidiary of PRG or
any of its subsidiaries since January 1, 1994. On the date hereof and prior to
thirty days prior to the date hereof, neither the Seller nor any Member owned
or owns any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. Seller has the limited
liability company power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Organization, Operating Agreement
or otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Member has the legal capacity to
enter into and perform the agreements to be executed and delivered in
connection herewith. Seller has obtained the unanimous approval of its members
to the consummation of the transactions contemplated herein. This Agreement
and all agreements and documents executed and delivered in connection herewith
have been, or will be as of the Closing Date, duly executed and delivered by
Seller and the Members, as appropriate, and constitute or will constitute the
legal, valid and binding obligations of Seller and the Members, enforceable
against Seller and the Members in accordance with their respective terms,
except as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of theArticles of Organization or Operating
Agreement of Seller or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, instrument, order, arbitration
award,
2
<PAGE> 7
judgment or decree to which Seller or any Member is a party or by which Seller
or any Member is bound, or violate any material restrictions of any kind to
which Seller is subject, or result in any lien or encumbrance on any of
Seller's assets or the Assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required for the conduct of the use of the Assets,
or waivers thereof, have been duly obtained and are in full force and effect
and are described on Exhibit 2.3. There are no proceedings pending or, to the
knowledge of Seller, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any thereof.
2.4 LIMITED LIABILITY COMPANY RECORDS. True and correct copies of
the Articles of Organization, Operating Agreement and minutes of Seller and all
amendments thereto of Seller have been delivered to PRG Sub. The minute books
of Seller contain all accurate minutes of the meetings of and consents to
actions taken without meetings of the members of Seller since its formation.
The books of account of Seller have been kept accurately in all material
respects the ordinary course of business and the revenues, expenses, assets
and liabilities of Seller have been properly recorded in such books.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of Seller.
2.6 SELLER'S ASSET INFORMATION. Seller has heretofore furnished
PRG Sub with a true and correct copy of a schedule of its assets and
liabilities, including contingent liabilities.
2.7 LEASES. Exhibit 2.7 attached hereto sets forth a list of all
leases pursuant to which Seller leases, as lessor or lessee, real or personal
property related to the Assets or otherwise. All such leases listed on Exhibit
2.7 are valid and enforceable in accordance with their respective terms, and
there is not under any such lease any existing default by Seller, as lessor or
lessee, or any condition or event of which Seller has knowledge which with
notice or lapse of time, or both, would constitute a default, in respect of
which Seller has not taken adequate steps to cure such default or to prevent a
default from occurring.
2.8 CONDITION OF ASSETS. All of the Assets are to be transferred
to PRG Sub free of liens, claims, judgments, tax liens and "as is" where is and
with all faults.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by Seller is set forth on Exhibit
2.9. Seller has good, valid and marketable title to all of the Assets and its
property, including but not limited to, all items of property identified on
Exhibit 1.1 attached hereto, free and clear of any liens, claims, charges,
exceptions or encumbrances, except for those, if any, which are set forth in
Exhibit 2.9 attached hereto. The real and personal property described on
Exhibits 2.7 and 2.9 constitute the only real and personal property used in the
conduct of the Seller's business.. Upon consummation of the transactions
contemplated hereby, such interest in personal property shall be free and clear
of all liens, security interests, claims and encumbrances; provided, however,
that if the transactions contemplated by that certain Asset Purchase Agreement
("Building Asset Purchase Agreement") dated the date hereof among PRG,
Physicians Resource Group Realty, Inc. and Seller are consummated, such
interest in personal property shall be subject to the liens, security
interests, claims and encumbrances set forth on Exhibit 1.2 of the Building
Asset Purchase Agreement. No sales of significant assets and no spinoffs of
assets have occurred since January 1, 1994.
2.10 [INTENTIONALLY LEFT BLANK]
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, Seller has no right, title or interest in or to patents, patent
rights, corporate names, assumed names, manufacturing processes, trade names,
trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of the Business. Set forth in
Exhibit
3
<PAGE> 8
2.11 is a listing of all names of all predecessor companies of Seller,
including the names of any entities from whom Seller previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, Seller is not a licensee in respect of any patents,
trademarks, service marks, trade names, copyrights or applications therefor, or
manufacturing processes, formulas or trade secrets or similar items and no such
licenses are necessary for the conduct of the Business or the use of the
Assets. No claim is pending or has been made to the effect that the Assets or
the present or past operations of Seller in connection with the Assets infringe
upon or conflict with the asserted rights of others to any patents, patent
rights, manufacturing processes, trade names, trademarks, service marks,
inventions, licenses, specialized treatment protocols, copyrights, formulas,
know-how and trade secrets. Seller has the sole and exclusive right to use all
Assets constituting proprietary rights without infringing or violating the
rights of any third parties and no consents of any third parties are required
for the use thereof by PRG Sub.
2.12 MEMBERS; EMPLOYEES. Set forth on Exhibit 2.12 attached hereto
is a true and complete list, as of the date of this Agreement of the name of
each member and officer of Seller. Seller has never had, and current has, no
employees and no employment agreements.
2.13 LEGAL PROCEEDINGS. Except as set forth on Exhibit 2.13,
neither Seller nor any Member nor any of the Assets is subject to any pending,
nor does Seller have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to or
affecting Seller, any Member, the Business, the Assets or the transactions
contemplated by this Agreement, and, to the knowledge of Seller, no basis for
any such action exists, nor is there any legal impediment of which Seller has
knowledge to the continued operation of its business or the use of the Assets
in the ordinary course, subject to consents set forth on Exhibit 2.5.
2.14 CONTRACTS. Seller has delivered to PRG Sub true copies of all
written, and disclosed to PRG Sub all oral, outstanding contracts, obligations
and commitments of Seller ("Contracts"), entered into in connection with and
related to the Assets, all of which are listed or incorporated by reference on
Exhibit 2.7 (in the case of leases), Exhibit 2.12 (in the case of employment
agreements) and Exhibit 2.14 (in the case of Contracts other than leases)
attached hereto. Except as otherwise indicated on such Exhibits, all of such
Contracts are valid, binding and enforceable in accordance with their terms and
are in full force and effect, and no defenses, offsets or counterclaims have
been asserted or may be made by any party thereto. Except as indicated on such
Exhibits, there is not under any such Contract any existing default by Seller,
or any condition or event of which Seller has knowledge which with notice or
lapse of time, or both, would constitute a default. Seller has no knowledge
of any default by any other party to such Contracts. Neither Seller nor the
Members have received notice of the intention of any party to any Contract to
cancel or terminate any Contract and have no reason to believe that any
amendment or change to any Contract is contemplated by any party thereto.
Other than those contracts, obligations and commitments listed on Exhibit 2.7,
Exhibit 2.12 and Exhibit 2.14, Seller is not a party to any written or oral
agreement contract, lease or arrangement, including any:
(a) Contract related to the sale of the Assets not made
in the ordinary course other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of the Business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of thirty (30) days or less;
4
<PAGE> 9
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Business of a particular product
or service;
(h) Loan agreement or other contract for money borrowed
or lent or to be borrowed or lent to another;
(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $1,000 or that terminate or can only be
terminated by Seller on more than 30 days after the date hereof.
2.15 SUBSEQUENT EVENTS. Except as set forth on Exhibit 2.15,
Seller has not, since June 30, 1996 (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on the Business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of Seller since the Balance Sheet
Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the Assets, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the Assets or any other assets used in the
conduct of the Business, cancelled any debts or claims or waived any rights,
except in the ordinary course of business;
(i) Except in the ordinary course or business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Twenty Five Thousand and No/100 Dollars ($25,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Except as set forth on Exhibit 2.1, within the two
years preceding the Closing Date, redeemed, purchased, sold or issued any
equity interests, bonds or other securities;
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<PAGE> 10
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business or the Business or the Assets, or experienced
any other material adverse change in its financial condition, assets,
prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the equity interests of Seller;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Seller's equity interests; or
(p) Suffered any material adverse change in the Business
or to the Assets.
2.16 [INTENTIONALLY LEFT BLANK]
2.17 TAXES. Seller has filed all tax returns required to be filed
by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. Seller has not
received any notice that any tax deficiency or delinquency has been asserted
against Seller. There are no audits relating to taxes of Seller pending or in
process, or to the knowledge of Seller, threatened. Seller is not currently
the beneficiary of any waiver of any statute of limitations in respect of taxes
nor of any extension of time within which to file any tax return or to pay any
tax assessment or deficiency. There are no liens or encumbrances relating to
taxes on or threatened against any of the assets of Seller. Seller has
withheld and paid all taxes required by law to have been withheld and paid by
it. Neither Seller nor any predecessor of Seller is or has been a party to any
tax allocation or sharing agreement or a member of an affiliated group of
corporations filing a consolidated federal income tax return. Notwithstanding
the foregoing, the Seller shall not be required to indemnify PRG or PRG Sub or
any disclosed pre-closing tax liabilities of the Seller.
2.18 LIABILITIES; DEBT. All indebtedness of Seller (including
without limitation, indebtedness for borrowed money, guaranties and capital
lease obligations) is described on Exhibit 2.18 attached hereto.
2.19 INSURANCE POLICIES. Seller carries property and liability and
such other types of insurance as is customary in the industry. Valid and
enforceable policies in such amounts are outstanding and duly in force and will
remain duly in force through the Closing Date. All such policies are described
in Exhibit 2.19 attached hereto and true and correct copies have been delivered
to PRG Sub. Seller has not received notice or other communication from the
issuer of any such insurance policy cancelling or amending such policy or
threatening to do so. Seller has no outstanding claims, settlements or
premiums owed and past due against any insurance policy.
2.20 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.20
attached hereto, Seller has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Seller Plan," and collectively
"Seller Plans") have been operated and administered in all material respects in
accordance with all applicable laws, rules and regulations, including without
limitation, ERISA, the Internal Revenue Code of 1986, as amended, Title VII of
the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as
amended, the Age Discrimination in Employment Act of 1967, as amended, and the
related rules and regulations adopted by those federal agencies responsible for
the administration of such laws. No act or failure to act by Seller has
resulted in a "prohibited transaction" (as defined in ERISA) with respect to
the Seller Plans. No "reportable event" (as defined in ERISA) has occurred
with respect to any of the Seller Plans. Seller has not previously made, is
not currently making, and is not obligated in any way to make, any
contributions to any multiemployer plan within the meaning of the
Multi-Employer Pension Plan Amendments Act of 1980. With respect to each
Seller Plan, either (i) the value of plan assets (including commitments under
insurance contracts) is at least
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equal to the value of plan liabilities or (ii) the value of plan liabilities in
excess of plan assets is disclosed on the Balance Sheet, all as of the Closing
Date.
2.21 [INTENTIONALLY LEFT BLANK]
2.22 COMPLIANCE WITH LAWS IN GENERAL. Seller, the Members, the
conduct of the Business and use of the Assets, have complied with all
applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by
Seller or any Member of any federal, state or local law or regulation. Seller
has not received any notice of a violation of any federal, state and local
laws, regulations and ordinances relating to the operations of the Business and
Assets and no notice of any pending inspection or violation of any such law,
regulation or ordinance has been received by Seller.
2.23 [INTENTIONALLY LEFT BLANK]
2.24 FRAUD AND ABUSE. Seller, the Members and all persons and
entities providing professional services for Seller's business, the Business or
relating to the Assets have not, to the knowledge of Seller and the Members,
engaged in any activities which are prohibited under Section 1320a-7b or
Section 1395nn of Title 42 of the United States Code or the regulations
promulgated thereunder, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct, including, but not
limited to, the following: (a) knowingly and willfully making or causing to be
made a false statement or representation of a material fact in any application
for any benefit or payment; (b) knowingly and willfully making or causing to be
made any false statement or representation of a material fact for use in
determining rights to any benefit or payment; (c) any failure by a claimant to
disclose knowledge of the occurrence of any event affecting the initial or
continued right to any benefit or payment on its own behalf or on behalf of
another, with the intent to fraudulently secure such benefit or payment; and
(d) knowingly and willfully soliciting or receiving any remuneration (including
any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in
cash or in kind, or offering to pay or receive such remuneration (i) 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 (ii) in return for purchasing, leasing or
ordering or arranging for, or recommending, purchasing, leasing or ordering any
good, facility, service or item for which payment may be made in whole or in
part by Medicare or Medicaid, or (e) referring a patient for designated health
services to or providing designated health services to a patient upon referral
from an entity or person with which the physician or an immediate family member
has a financial relationship, and to which no exception under Section 1395nn of
Title 42 of the United States Code applies.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
Seller or any Member in this Agreement, and no Exhibit or certificate issued or
executed by, or information furnished by, officers or directors of Seller or
any Member and furnished or to be furnished to PRG Sub or PRG pursuant hereto,
or in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
a material fact necessary to make the statements or facts contained therein not
misleading.
2.26 [INTENTIONALLY LEFT BLANK]
2.27 DISTRIBUTIONS AND REPURCHASES. Except as set forth on Exhibit
2.15, no distribution, payment or dividend of any kind has been declared or
paid by Seller on any of its equity interests since January 1, 1994, other than
distributions, payments or dividends in the ordinary course of business. No
repurchase of any of Seller's equity interests has been approved, effected or
is pending, or is contemplated by the Board of Directors of Seller. Except as
set forth on Exhibit 2.15, no distributions of cash or other assets have been
made to any Member (other than distributions made in the ordinary course of
business) since January 1, 1994.
2.28 [INTENTIONALLY LEFT BLANK]
2.29 BANKING RELATIONS. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that Seller has with any bank or other
financial institution, indicating with respect to each relationship the type of
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<PAGE> 12
arrangement maintained (such as checking account, borrowing arrangements, safe
deposit box, etc.) and the person or persons authorized in respect thereof.
2.30 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.30, no officer, employee, director or
stockholder of Seller, or their respective spouses, children or affiliates,
owns directly or indirectly, on an individual or joint basis, any interest in,
has a compensation or other financial arrangement with, or serves as an officer
or director of, any customer or supplier or competitor of Seller or any
organization that has a material contract or arrangement with Seller. Neither
Seller, nor any of its directors, officers, employees, consultants or the
Members nor any affiliate of such person is, or within the last three years
was, a party to any contract, lease, agreement or arrangement, including, but
not limited to, any joint venture or consulting agreement with any physician,
hospital, pharmacy, home health agency or other person or entity which is in a
position to make or influence referrals to, or otherwise generate business for,
Seller or to provide services, lease space, lease equipment or engage in any
other venture or activity with Seller.
2.31 [INTENTIONALLY LEFT BLANK]
2.32 ACCOUNTING MATTERS. The Company and the Members have not
taken, failed to take or agreed to take any of the following actions that would
prevent PRG Sub or PRG from accounting for the business combination to be
effected by the Merger as a "pooling of interests" in accordance with
Accounting Principles Board Opinion No. 16, the interpretative releases issued
pursuant thereto and the pronouncements of the Securities and Exchange
Commission ("SEC"): (i) alteration of equity interests in contemplation of the
combination within the two years preceding the date hereof, (ii) abnormal
distributions to Members within the two years preceding the date hereof, (iii)
unusual distributions of cash or other assets to Members within the two years
preceding the date hereof, (iv) sales of significant assets or spinoffs of
assets within the two years preceding the date hereof, (v) conveyance of the
Merger Consideration other than in accordance with the pro rata ownership of
the Members of the Company, (vi) hedge or sale of any PRG common stock owned by
the Members within the thirty days prior to the date hereof and within thirty
days prior to the Closing
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant to Seller as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG and PRG Sub are a
corporation and partnership, respectively, duly organized and existing and in
good standing under the laws of the State of Delaware and Ohio, respectively.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate or
partnership power, as applicable, to execute, deliver and perform this
Agreement and all agreements and other documents executed and delivered by it
pursuant to this Agreement, and has taken all actions required by law, its
Certificate of Incorporation, Partnership Agreement, its Bylaws or otherwise,
to authorize the execution, delivery and performance of this Agreement and such
related documents. The execution and delivery of this Agreement and the
agreements related hereto executed and delivered pursuant to this Agreement do
not and, subject to the receipt of consents to assignments of leases and other
contracts where required and the receipt of regulatory approvals where
required, the consummation of the transactions contemplated hereby will not,
violate any provision of the Certificate of Incorporation, Partnership
Agreement or Bylaws of either PRG Sub or PRG or any provisions of, or result in
the acceleration of, any obligation under any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree to which PRG Sub or
PRG is a party or by which either of them is bound, or violate any restrictions
of any kind to which PRG Sub or PRG is subject.
3.3 PARTNERSHIP INTERESTS; PRG COMMON STOCK. All of the
partnership interests of PRG Sub are or will be as of the Closing Date validly
issued, fully paid and nonassessable and are or will be as of the Closing Date
owned directly by PRG, free and clear of all liens, claims and encumbrances.
The issuance and delivery by PRG of shares of the common stock of PRG in
connection with the acquisition contemplated hereby will be as of the Closing
Date duly and validly authorized by all necessary corporate action on the part
of PRG. The shares of PRG common
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<PAGE> 13
stock to be issued in connection with the acquisition contemplated hereby, when
issued in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable.
3.4 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to
Seller pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
3.5 SECURITIES AND EXCHANGE FILINGS. As of the date hereof, PRG
has made all filings required to be made by it under the Securities and
Exchange Act and all such filings are true and complete in all material
respects.
3.6 LEGAL PROCEEDINGS. Other than as would not have a material
adverse effect on PRG or PRG Sub, neither PRG nor PRG Sub is subject to any
pending, nor does PRG or PRG Sub have knowledge of any threatened, litigation,
governmental investigation, condemnation or other proceeding against or
relating to or affecting PRG or PRG Sub or the transactions contemplated by
this Agreement.
3.7 COMPLIANCE WITH LAWS IN GENERAL. PRG and PRG Sub have
complied with all applicable laws, rules, regulations and licensing
requirements, including, without limitation, the Federal Environmental
Protection Act, the Occupational Safety and Health Act, the Americans with
Disabilities Act and any environmental laws and medical waste laws, and there
exist no violations by PRG or PRG Sub of any federal, state or local law or
regulation, other than if such noncompliance or violation would not have a
material adverse effect on PRG or PRG Sub. Neither PRG nor PRG Sub has
received any notice of a violation of any federal, state and local laws,
regulations and ordinances relating to the operations of the business and
assets of PRG and PRG Sub and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by PRG or PRG Sub,
other than if such violation or inspection would not have a material adverse on
PRG or PRG Sub.
3.8 FRAUD AND ABUSE. Other than as would not have a material
adverse effect on PRG or PRG Sub, PRG and PRG Sub have not, to the knowledge of
PRG and PRG Sub, engaged in any activities which are prohibited under Section
1320a- 7b or Section 1395nn of Title 42 of the United States Code or the
regulations promulgated thereunder, or related state or local statutes or
regulations, or which are prohibited by rules of professional conduct,
including, but not limited to, the following: (a) knowingly and willfully
making or causing to be made a false statement or representation of a material
fact in any application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of a
material fact for use in determining rights to any benefit or payment; (c) any
failure by a claimant to disclose knowledge of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own
behalf or on behalf of another, with the intent to fraudulently secure such
benefit or payment; and (d) knowingly and willfully soliciting or receiving any
remuneration (including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive such
remuneration (i) 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 (ii) in
return for purchasing, leasing or ordering or arranging for, or recommending,
purchasing, leasing or ordering any good, facility, service or item for which
payment may be made in whole or in part by Medicare or Medicaid, or (e)
referring a patient for designated health services to or providing designated
health services to a patient upon referral from an entity or person with which
the physician or an immediate family member has a financial relationship, and
to which no exception under Section 1395nn of Title 42 of the United States
Code applies.
SECTION 4. COVENANTS OF SELLER..
Seller agrees that between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT. Seller shall use its best efforts
to cause the consummation of the transactions contemplated hereby in accordance
with their terms and conditions.
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4.2 BUSINESS OPERATIONS. Seller and the Members shall operate the
Business and use the Assets in the ordinary course. Seller and Members shall
not enter into any lease, contract, indebtedness, commitment, purchase or sale
or acquire or dispose of any capital asset relating to the Business or the
Assets except in the ordinary course of business. Seller and the Members shall
use their best efforts to preserve the Business and Assets intact and shall not
take any action that would have a material adverse effect on the Business or
Assets, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash other than to operate in the ordinary
course of business consistent with past practices. Seller and the Members
shall use their best efforts to preserve intact the relationships with payors,
customers, suppliers, patients and others having significant business relations
with Seller. Seller shall collect its receivables and pay its trade payables
in the ordinary course of business. Seller shall not introduce any new method
of management, operations or accounting.
4.3 ACCESS AND NOTICE. Seller and the Members shall permit PRG
and PRG Sub and their authorized representatives access to, and make available
for inspection, all of the assets and business of Seller, the Business and the
Assets, including employees, customers and suppliers and permit PRG, PRG Sub
and their authorized representatives to inspect and make copies of all
documents, records and information with respect to the business or assets of
Seller, the Business or the Assets as PRG, PRG Sub or their representatives may
request. Seller and the Members shall promptly notify PRG Sub in writing of
(a) any notice or communication relating to a default or event that, with
notice or lapse of time or both, could become a default, under any contract,
commitment or obligation to which Seller is a party or relating to the Business
or the Assets, and (b) any material adverse change in Seller's or the Business'
financial condition or the Assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. Seller
and the Members shall use their best efforts to secure all necessary approvals
and consents of third parties to the consummation of the transactions
contemplated hereby, including consents described on Exhibit 2.5. Seller and
the Members shall use their best efforts to obtain all licenses, permits,
approvals or other authorizations required under any law, rule, regulation, or
otherwise to conduct the intended business of Seller and operate the Business
and use the Assets.
4.5 ACQUISITION PROPOSALS. Seller and the Members shall not, and
shall use their best efforts to cause Seller's employees, agents and
representatives not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer,
including without limitation, any proposal or offer to the Members, with
respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of Seller or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to such proposal or offer, and Seller and the Members will
immediately cease any such activities, discussions or negotiations heretofore
conducted with respect to any of the foregoing. Seller and the Members shall
immediately notify PRG Sub if any such inquiries or proposals are received.
4.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. Seller hereby covenants
and agrees that it will take whatever steps are necessary to pay or fund any
accrued pension benefits, where applicable, or vested accrued benefits for
which Seller or any entity might have any liability whatsoever arising from any
pension plan allocable to services performed prior to the Closing Date.
4.7 [INTENTIONALLY LEFT BLANK]
4.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by Seller, nor will any
repurchase of any of Seller's equity interests be approved or effected.
4.9 REQUIREMENTS TO EFFECT ACQUISITION. Seller shall use its best
efforts to take, or cause to be taken, all actions necessary to effect the
acquisition contemplated hereby under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
4.10 VOTING OF UNITS. Seller shall cause each Member to vote all
equity interests of Seller owned by the Members at any meeting of the members
of Seller or take action by written consent for adoption of this Agreement, as
hereby amended, and in favor of the acquisition and any other transactions
contemplated by this Agreement, and
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against any action, omission or agreement which would impede or interfere with,
or have the effect of discouraging, the acquisition contemplated hereby.
4.11 ACCOUNTING AND TAX MATTERS. Seller will not change in any
material respect the accounting methods or practices followed by Seller
(including any material change in any assumption underlying, or any method of
calculating, any bad debt, contingency or other reserve), except as may be
required by generally accepted accounting principles. Seller will not make any
material tax election except in the ordinary course of business consistent with
past practice, change any material tax election already made, adopt any tax
accounting method except in the ordinary course of business consistent with
past practice, change any tax accounting method, enter into any closing
agreement, settle any tax claim or assessment or consent to any tax claim or
assessment or any waiver of the statute of limitations for any such claim or
assessment. Seller will duly, accurately and timely (without regard to any
extensions of time) file all returns, information statements and other
documents relating to taxes of Seller required to be filed by it, and pay all
taxes required to be paid by it, on or before the Closing Date.
4.12 ACCOUNTING MATTERS. Seller and Members shall not take or
cause to be taken any action described in Section 2.30.
4.13 AFFILIATES. Seller and Members shall deliver to PRG and PRG
Sub a list of names and addresses of persons who were "affiliates" of Seller
within the meaning of Rule 145 (each such person, together with the persons
identified below, an "Affiliate") of the rules and regulations promulgated
under the Securities Act. There shall be added to such list the names and
addresses of any other person (within the meaning of Rule 145) which PRG and
PRG Sub reasonably identifies as being a person who may be deemed to be an
Affiliate of Seller within the meaning of Rule 145.
4.14 PENSION AND RETIREMENT PLANS. Simultaneously with the
Closing, Seller agrees, with respect to all qualified retirement plans, to
change the plan sponsor, the plan administrator and the employer from the
Seller to the Clinic.
SECTION 5. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date and with respect to Section 5.4, between the date
hereof and the time required for performance under such Section:
5.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
acquisition contemplated hereby under applicable law, including without
limitation the filing with the appropriate government officials all necessary
documents in form approved by counsel for the parties to this Agreement.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby.
5.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Acquisition
Consideration and shall use its best efforts to obtain approval for the listing
of the stock consideration upon official notice of issuance.
5.4 REGISTRATION AGREEMENT. The shares of PRG common stock issued
in connection with the Merger shall be registered under an S-4 registration
statement dated July 25, 1996, as amended from time to time. PRG undertakes to
continue to file all necessary reports on a timely basis with the appropriate
securities authorities to permit the Seller or the Members to use Rule 145 of
the Securities and Exchange Act in connection with the resale of such shares by
the Seller or the Members.
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SECTION 6. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained herein shall have been true and correct in all
material respects when initially made and shall be true and correct in all
material respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. Seller shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed and complied with by Seller prior to the Closing
Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
6.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of Seller shall have occurred since the Balance Sheet Date.
6.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of Seller, the Business and the Assets, the results of
which shall be satisfactory to PRG Sub and PRG in their sole discretion.
6.6 APPROVAL BY THE BOARD OF DIRECTORS. This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
6.7 CONSENTS AND APPROVALS. Seller shall have used its best
efforts as requested by PRG or PRG Sub to obtain all necessary government and
other third-party approvals and consents.
6.8 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 8.1.
6.9 NYSE LISTING. The Acquisition Consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
6.10 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the transactions contemplated hereby as
a pooling of interests under applicable accounting standards from Arthur
Andersen, L.L.P.
6.11 OTHER AGREEMENTS. The transactions contemplated by those
certain (i) Asset Purchase Agreements dated the date hereof between
subsidiaries or affiliates of PRG and CEI Realty Associates, Ltd. shall be
closed simultaneously with the transactions contemplated hereby; provided, that
the transaction evidenced by that certain Asset Purchase Agreement dated the
date hereof between Physicians Resource Group Realty, Inc. and CEI Realty
Associates, Ltd. with respect to the purchase of the building need not be
consummated if such Agreement is terminated in accordance with its terms or
delayed due to existing consent or right of first refusal, (ii) Agreement and
Plan of Mergers dated the date hereof between PRG Sub and Eye Consultants of
Cincinnati, Inc., Middletown Ophthalmology, Inc. And Cincinnati Eye Institute,
Inc., respectively.
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SECTION 7. SELLER'S CONDITIONS PRECEDENT.
The obligations of Seller hereunder are subject to fulfillment at or
prior to the Closing Date of each of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall have been true and correct
in all material respects when initially made and shall be true and correct in
all material respects as of the Closing Date.
7.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed and complied with by PRG
Sub and PRG prior to the Closing Date.
7.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
7.4 CLOSING DELIVERIES. Seller shall have received all documents,
duly executed in form satisfactory to Seller and its counsel, referred to in
Section 8.2.
7.5 NYSE LISTING. The Acquisition Consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
7.6 ACQUISITION CONSIDERATION. The Acquisition Consideration
shall be registered under the S-4 dated July 25, 1996, as amended, or another
registration statement filed with the Securities and Exchange Commission.
7.7 CONSENTS AND APPROVALS. PRG and PRG Sub shall have used its
best efforts as requested by Seller to obtain all necessary government and
other third-party approvals and consents.
SECTION 8. CLOSING DELIVERIES.
8.1 DELIVERIES OF SELLER. At or prior to the Closing, Seller
shall deliver to PRG Sub the following, all of which shall be in a form
satisfactory to counsel to PRG Sub and PRG:
(a) a copy of the resolutions of the members of Seller
authorizing the execution, delivery and performance of this Agreement and all
related documents and agreements each certified by the Secretary as being true
and correct copies of the original thereof;
(b) a bill of sale conveying the Assets to PRG Sub;
(c) an assignment of each contract, agreement and lease
being assigned to and assumed by PRG Sub;
(d) certificates of the President of Seller, dated as of
the Closing Date, (i) as to the truth and correctness of the representations
and warranties of Seller contained herein; (ii) as to the performance of and
compliance by Seller with all covenants contained herein; and (iii) certifying
that all conditions precedent of Seller to the Closing have been satisfied;
(e) a certificate of the Secretary of Seller certifying
as to the incumbency of the directors and officers of Seller and as to the
signatures of such directors and officers who have executed documents delivered
at the Closing on behalf of Seller;
(f) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Ohio establishing that Seller is in
existence and is in good standing to transact business in its state of
incorporation and a certificate establishing that the Seller is authorized to
do business in Kentucky;
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<PAGE> 18
(g) an opinion of counsel to Seller opining as to the
execution and delivery of this Agreement and the other documents and agreements
to be executed pursuant hereto, the good standing and authority of Seller, the
enforceability of this Agreement and the other agreements and documents to be
executed in connection herewith, and other matters reasonably requested by PRG
Sub;
(h) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(i) a survey of the Real Property in form and substance
satisfactory to PRG Sub; and all other documentation related to the Real
Property as reasonably required by PRG Sub;
(j) Affiliates Letters from each Affiliate in the form
attached hereto as Exhibit 8.1(k);
(k) an executed Escrow Agreement;
(l) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
8.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to Seller the following, all of which shall be in
a form satisfactory to counsel to Seller or the Clinic, as applicable:
(a) the Acquisition Consideration;
(b) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and agreements each
certified by the Secretary as being true and correct copies of the original
thereof;
(c) certificates of the President of PRG Sub and PRG,
dated as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein; (ii) as to
the performance of and compliance by PRG Sub and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG Sub
and PRG to the Closing have been satisfied;
(d) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG Sub and
PRG and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of PRG Sub and PRG;
(e) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware establishing that PRG Sub and
PRG are in existence and are in good standing to transact business in the State
of Delaware and the State of Ohio, respectively, and authorized to do business
in the State of Kentucky;
(f) an opinion of counsel to PRG and PRG Sub opining as
to the execution and delivery of this Agreement and the other documents and
agreements to be executed pursuant hereto, the good standing and authority of
PRG and PRG Sub, the enforceability of this Agreement and the other agreements
and documents to be executed in connection herewith, and other matters
reasonably requested by Seller;
(g) Affiliates Letters from each affiliate of PRG in the
form attached hereto as Exhibit 8.1(k);
(h) an executed Escrow Agreement; and
(i) such other instruments and documents as reasonably
requested by Seller to carry out and effect the purpose and intent of this
Agreement.
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SECTION 9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
9.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of
Seller, or of PRG Sub and PRG, jointly and severally, as the case may be. All
such representations and warranties, and all representations and warranties
expressly labeled as such in this Agreement shall survive the date of this
Agreement and the Closing Date for a period of one (1) year following the
Closing Date. Each party covenants with the other parties not to make any claim
with respect to such representations and warranties, against any party after
the date on which such survival period shall terminate. No party shall be
entitled to claim indemnity from any other party pursuant to Section 9.2 or 9.3
hereof, unless such party has timely given the notice required in Section 9.2,
9.3 or 9.4 hereof, as the case may be. Each party hereby releases, acquits and
discharges the other party from any and all claims and demands, actions and
causes of action, damages, costs, expenses and rights of setoff with respect to
which the notices required by Section 9.2, 9.3 or 9.4, as applicable, are not
timely provided.
9.2 INDEMNIFICATION BY PRG SUB AND PRG. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 9.2 AND, TO THE EXTENT APPLICABLE,
SECTION 9.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD SELLER, AND ITS AGENTS AND
EMPLOYEES (EACH OF THE FOREGOING, INCLUDING SELLER, FOR PURPOSES OF THIS
SECTION 9.2 AND, TO THE EXTENT APPLICABLE, SECTION 9.4, AN "INDEMNIFIED
PERSON"), HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES,
ACTIONS, SUITS, COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED
TO, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM
OR BY REASON OF OR RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT
(INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER
INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR HEREUNDER, AND, FROM AND
AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR RESULTING FROM
INDEMNITOR'S MANAGEMENT AND OWNERSHIP OF THE ASSETS. IN CONNECTION WITH
INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE
EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH
INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO
REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS FINALLY
JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER.
9.3 INDEMNIFICATION BY SELLER. SELLER (FOR PURPOSES OF THIS
SECTION 9.3 AND, TO THE EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"),, SHALL
INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT APPLICABLE,
SECTION 9.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF OR RESULTING FROM ANY
BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT
CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT,
CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED BY INDEMNITOR
HEREUNDER, AND, WITH RESPECT TO ALL TIMES PRIOR TO OR AFTER THE CLOSING DATE,
ARISING FROM OR BY REASON OF OR RESULTING FROM THE INDEMNITOR'S MANAGEMENT AND
CONDUCT OF THE OWNERSHIP OR OPERATION OF THE BUSINESS OR THE ASSETS AND FROM
ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND
INDEPENDENT CONTRACTORS IN OR ABOUT SELLER'S BUSINESS WHETHER ON OR AFTER THE
CLOSING DATE, AND WITH RESPECT TO (I) ANY VIOLATION BY SELLER OR THE MEMBERS OR
THEIR CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF
STATE OR FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT
OR OBLIGATION ARISING OUT OF OR RESULTING FROM CLAIMS SUBMITTED TO
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<PAGE> 20
ANY THIRD PARTY PAYOR, WHETHER ON OR AFTER THE CLOSING DATE, (II) TAXES OF
SELLER OR ANY OTHER PERSON (INCLUDING ANY MEMBER) ARISING FROM OR AS A RESULT
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (NOT INCLUDING INCOME TAXES
OF SELLER), (III) ANY LIABILITY OF SELLER OR THE MEMBERS FOR COSTS AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED IN CONNECTION WITH
THE NEGOTIATION, PREPARATION OF CLOSING OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH
WHETHER BEFORE OR AFTER THE CLOSING DATE, (IV) ANY ACCRUED UNFUNDED RETIREMENT
OR PENSION PLAN LIABILITIES, (V) THE INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE
OWNERSHIP OR OPERATION OF SELLER'S BUSINESS AND FROM ANY ALLEGED ACT OR
NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND INDEPENDENT CONTRACTORS
IN OR ABOUT SELLER'S BUSINESS WHETHER ON OR AFTER THE CLOSING DATE. IN
CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES, INDEMNITOR
SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS THEY ARE
INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON
AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT
THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT
ENTITLED TO INDEMNIFICATION HEREUNDER.
9.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
9.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by Seller in favor of PRG
or PRG Sub shall not exceed in all cases the Escrowed Shares, and such
indemnification shall be limited to recourse against the Escrowed Shares only,
and any indemnification by PRG and PRG Sub in favor of Seller shall not exceed
in all cases $529,723.60. Furthermore, no claim for Damages shall be made by
any party more than one (1) year after the Closing Date. Notwithstanding the
provisions hereof, Seller shall not be required to indemnify PRG or PRG Sub
unless, and to the extent that, the aggregate amount of damages, losses,
liabilities, costs and other sums ("Damages") incurred by PRG and PRG Sub shall
exceed an amount equal to $105,944.72. Notwithstanding the provisions hereof,
PRG and PRG Sub shall not be required to indemnify Seller unless, and to the
extent that, the aggregate amount of Damages incurred by the Seller shall
exceed an amount equal to $105,944.72.
SECTION 10. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
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(b) at any time by PRG or PRG Sub if any representation or
warranty of Seller contained in this Agreement or in any certificate or other
document executed and delivered by Seller pursuant to this Agreement is or
becomes untrue or breached in any material respect or if Seller fails to comply
in any material respect with any covenant or agreement contained herein, and
any such misrepresentation, noncompliance or breach is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
(c) at any time by Seller if any representation or warranty of PRG
or PRG Sub contained in this Agreement or in any certificate or other document
executed and delivered by PRG or PRG Sub pursuant to this Agreement is or
becomes untrue or breached in any material respect or PRG or PRG Sub fails to
comply in any material respect with any covenant or agreement contained herein
and such misrepresentation, noncompliance or bread is not cured, waived or
eliminated within twenty (20) days after receipt of written notice thereof;
(d) by PRG, PRG Sub or by Seller if the merger contemplated hereby
shall not have been consummated by August 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG determines
in its sole discretion as the result of its legal, financial and operational
due diligence with respect to Seller, that such termination is desirable and in
the best interests of PRG.
SECTION 11. [INTENTIONALLY LEFT BLANK].
SECTION 12. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Seller recognizes
and acknowledges that it had in the past, currently have, and in the future may
possibly have, access to certain confidential information of PRG or PRG Sub
that is valuable, special and unique assets of PRG's or PRG Sub's businesses.
Seller agrees that it will not disclose such confidential information to any
person, firm, corporation, association or other entity for any purpose or
reason whatsoever, unless (i) such information becomes available to or known by
the public generally through no fault of Seller, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), Seller
shall, if possible, give prior written notice thereof to the other parties
hereto, and provide such other parties hereto with the opportunity to contest
such disclosure, (iii) Seller reasonably believes that such disclosure is
required in connection with the defense of a lawsuit against the disclosing
party, or (iv) Seller is the sole and exclusive owner of such confidential
information as a result of the transactions contemplated hereunder or
otherwise. In the event of a breach or threatened breach by Seller of the
provisions of this Section 12, PRG or PRG Sub shall be entitled to an
injunction restraining Seller and from disclosing, in whole or in part, such
confidential information. Nothing herein shall be construed as prohibiting PRG
or PRG Sub from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages. The obligations of the
parties under this Section 12 shall survive the termination of this Agreement.
SECTION 13. INVESTMENT REPRESENTATIONS.
13.1 ECONOMIC RISK; SOPHISTICATION. Seller is able to bear the
economic risk of an investment in PRG common stock acquired pursuant to this
Agreement and can afford to sustain a total loss of such investment and have
such knowledge and experience in financial and business matters that they are
capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the PRG common stock. Seller or its purchaser
representatives have had an adequate opportunity to ask questions and receive
answers from the officers of PRG concerning any and all matters relating to the
background and experience of the officers and directors of PRG, the plans for
the operations of the business of PRG, and any plans for additional
acquisitions and the like. Seller or its purchaser representatives has asked
any and all questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction.
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13.2 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 14. MISCELLANEOUS.
14.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. PRG Ohio,L.P.
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
If to Seller:
10494 Montgomery Road
Cincinnati, OH 45242
Facsimile: (513) 984-4240
Attn: Robert H. Osher, M.D.
with a copy to:
Robert E. Brant
Katz, Teller, Brant & Hild
255 E. Fifth Street
2400 Chemed Center
Cincinnati, OH 45202
Facsimile: (513) 721-7120
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
14.2 FURTHER ASSURANCES. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of Agreement.
14.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities may be deemed to have been
incurred in the ordinary course of business, PRG Sub and PRG shall not be
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liable to or required to pay, either directly or indirectly, any (a) fees and
expenses of legal counsel, accountants, auditors or other persons or entities
retained by Seller for services rendered in connection with negotiating and
closing the transactions contemplated by this Agreement or the documents to be
executed in connection herewith, whether or not such costs or expenses are
incurred before or after the Closing Date, and (b) local, state and federal
income taxes or other similar charges on income or gain incurred by Seller as a
result of the transactions contemplated hereby (other than income taxes of the
Seller).
14.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
14.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
14.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
14.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
14.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
14.9 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall together constitute and be one and the same
instrument
14.10 BINDING EFFECT/ASSIGNMENT. This Agreement shall be binding
on, and shall inure to the benefit of, the parties hereto, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No party may assign any right or
obligation hereunder without the prior written consent of the other parties;
provided, however, that PRG Sub and PRG may assign its rights and obligations
hereunder to an affiliate and to their lender or lenders.
14.11 COSTS OF ENFORCEMENT. In the event that PRG Sub or PRG, on the
one hand, or Seller, on the other hand, file suit in any court against any
other party to enforce the terms of this Agreement against the other party or
to obtain performance by it hereunder, the prevailing party will be entitled to
recover all reasonable costs, including reasonable attorneys' fees, from the
other party as part of any judgment in such suit. The term "prevailing party"
shall mean the party in whose favor final judgment after appeal (if any) is
rendered with respect to the claims asserted in the Complaint. "Reasonable
attorneys' fees" are those reasonable attorneys' fees actually incurred in
obtaining a judgment in favor of the prevailing party.
14.12 PRORATIONS. Seller agrees to reimburse PRG Sub at Closing a
pro rata portion of all taxes levied upon the Assets for the calendar year in
which the Closing occurs. Such taxes shall be estimated, apportioned and
pro-rated among Seller and PRG Sub as of the Closing Date, and the prorated
amount due PRG Sub shall be credited to the Acquisition Consideration. Upon
payment by PRG Sub of such taxes actually assessed and paid on the Assets, PRG
Sub shall calculate the apportionment of such taxes and shall pay Seller or may
demand from Seller, and Seller agrees to pay, the amount necessary to correct
the estimate and proration made at Closing.
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14.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
14.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
14.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
14.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
[End of Page _____]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG OHIO, L.P. CEI REALTY ASSOCIATES, LTD.
By: PRG OHIO IV, INC., General Partner
By: [ILLEGIBLE] By: [ILLEGIBLE]
---------------------------------- -----------------------------
Its: Vice President Its:
---------------------------------- -----------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: [ILLEGIBLE]
----------------------------------
Its: Senior Vice President
----------------------------------
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<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Exhibit Description
------- -----------
<S> <C>
1.1 Assets to be Conveyed
1.2(c) Escrow Agreement
2.1 Corporate Existence; Good Standing; Capitalization and Dates Thereof
2.3 Permits and Licenses
2.5 Consents
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.13 Legal Proceedings
2.14 Contracts (other than Leases)
2.15 Subsequent Events
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.29 Banking Relations
2.30 Ownership Interests
8.1(k) Affiliates Letter
ANNEX I Acquisition Consideration
</TABLE>
22
