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) October 9, 1996
Physicians Resource Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-13778 76-0456864
(State or other jurisdiction Commission IRS Employer
of incorporation) File Number) Identification No.)
Three Lincoln Centre, Suite 1540, 5430 LBJ Freeway, Dallas, TX 75240
(Address of principal executive offices) (Zip Code)
Registrant s telephone number, including area code (972)982-8200
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Item 2. Acquisition or Disposition of Assets.
Melbourne Acquisition
On October 9, 1996, Physicians Resource Group, Inc., a Delaware
corporation (the Company ) acquired (the Stock Purchase ) all of the
stock of Melbourne Eye Associates of Brevard, Inc., a Florida
corporation and Melbourne Eye Associates, P.A., a Florida professional
association (collectively, the Practice ) pursuant to the terms of a
Share Exchange Agreement dated October 4, 1996 by and among PRG
F l orida XII, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company ( PRG Sub ), the Practice, William J.
Broussard, M.D., Trustee U.T.D. March 24, 1980, Michael F. Corcoran,
M.D., Trustee U.T.D. September 26, 1988, Andrew Zorbis, M.D., Ralph
R. Paylor, M.D., L. Neal Freeman, M.D., Kaukwok Frederick Ho, M.D.,
Trustee U.T.D. November 24, 1989 (collectively, the Stockholders )
and the Company.
As a result of the Stock Purchase, the Company became the
indirect holder (through PRG Sub) of, with certain limitations, all of
the assets and properties, real and personal, tangible and intangible,
and certain liabilities of the Practice. PRG Sub intends to provide
the use of such assets to the Practice pursuant to the terms of the
management services agreement entered into at the time of the Stock
Purchase.
To the best knowledge of the Company, at the time of the Merger
there was no material relationship between (i) the Practice and the
Stockholders 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 Merger was 441,876 shares of the common stock, par value $.01 per
share, of the Company. The acquisition consideration for the Stock
Purchase was determined by arms-length negotiations between the
parties to the Share Exchange Agreement.
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 and optometric practices (the Additional
Practices ) and physicians (the Additional Physicians ):
(i) Richard D. Levin, M.D., P.S.C., Inc., and Richard D.
Levin, M.D.
(ii) Safford Surgi-Center, Southwest Eye Associates, Ltd.,
SNW, Inc. and James Holder, O.D.
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(iii) Ophthalmological Associates, Ltd., Morton R. Green,
M.D., Kenneth O. Green, M.D., and Stephen R. Waltman,
M.D.
Pursuant to the Additional Acquisition Agreements, the respective
Additional Acquisition Subs acquired (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.
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 management services agreements.
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, 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 124,891 shares of the common stock,
par value $.01 per share, of the Company and $722,450 cash. The
a c q uisition consideration for the Additional Acquisitions was
determined by arms-length negotiations between the parties to the
applicable acquisition agreements.
Item 7. Financial Statements and Exhibits.
It is impractical for the registrant to file the otherwise
required financial statements 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.
(c) Exhibits.
2.1 Share Exchange Agreement by and among PRG Florida XII, Inc.,
M e lbourne Eye Associates of Brevard, Inc., Melbourne Eye
Associates, P.A., William Broussard, Trustee U.T.D. March 24,
1980, Michael F. Corcoran, M.D., Trustee U.T.D. September 26,
1988, Andrew Zorbis, M.D., Ralph Paylor, M.D., L. Neal Freeman,
M.D., and Kaukwok Frederick Ho, M.D., Trustee U.T.D. November 24,
1989 and Physicians Resource Group, Inc. (1)
2.2 A g reement and Plan of Reorganization by and among
Ophthalmological Associates, Ltd., Morton R. Green, M.D., Kenneth
O. Green, M.D., Stephen R. Waltman, M.D., PRG Gr Acq. Corp., and
Physicians Resource Group, Inc. (1)
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2.3 Asset Purchase Agreement by and among Safford Surgi-Center,
Southwest Eye Associates, Ltd., James Holder, O.D., Sun Valley
Acquisition Corporation and Physicians Resource Group, Inc. (1)
2.4 Asset Purchase Agreement by and among SNW, Inc., James Holder,
O.D., Clarice Holder, Jeffrey Woodward, Suzy Woodward, Sun Valley
Acquisition Corporation and Physicians Resource Group, Inc. (1)
2.5 Asset Purchase Agreement by and among Richard D. Levin, M.D.,
P.S.C., Inc., Richard D. Levin, M.D., PRG Ohio, Inc. 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*
_____________________________
(1) Filed herewith.
(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
<PAGE>
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: October 15, 1996 By:/s/ Richard J. D'Amico
Richard J. D'Amico
Senior Vice President
SHARE EXCHANGE AGREEMENT
by and among
PRG FLORIDA XII, INC.,
MELBOURNE EYE ASSOCIATES OF BREVARD, INC.,
MELBOURNE EYE ASSOCIATES, P.A.,
WILLIAM BROUSSARD, M.D., Trustee U.T.D. March 24, 1980
MICHAEL CORCORAN, M.D., Trustee U.T.D. September 26, 1988
ANDREW ZORBIS, M.D.,
RALPH PAYLOR, M.D.,
L. NEAL FREEMAN, M.D.,
K. FREDRICK HO, M.D., Trustee U.T.D. November 24, 1989
and
PHYSICIANS RESOURCE GROUP, INC.
<PAGE>
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT (this "Agreement"), made and
executed as of the 4th day of October, 1996, is by and among PRG
FLORIDA XII, INC., a Delaware corporation ("PRG Sub"); PHYSICIANS
RESOURCE GROUP, INC., a Delaware corporation ("PRG"); and MELBOURNE
EYE ASSOCIATES OF BREVARD, INC., a Florida corporation and MELBOURNE
E Y E ASSOCIATES, P.A., a Florida professional association
(collectively, the "Company"); and WILLIAM BROUSSARD, M.D., Trustee
U.T.D. March 24, 1980, MICHAEL CORCORAN, M.D., Trustee U.T.D.
September 26, 1988, ANDREW ZORBIS, M.D., RALPH PAYLOR, M.D., L. NEAL
FREEMAN, M.D. and K. FREDRICK HO, M.D., Trustee U.T.D. November 24,
1989 all individual residents of the State of Florida (individually
"Shareholder," and collectively "Shareholders").
WITNESSETH:
WHEREAS, Company operates an ophthalmology practice in Melbourne,
Florida ("Business");
WHEREAS, Shareholders are the only shareholders of 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 Shareholders desire to convey to PRG Sub, and PRG
Sub desires to acquire from the Shareholders, one hundred percent of
the issued and outstanding capital stock Company (the Stock ) in
consideration for PRG Sub conveying to the Shareholders the PRG stock
identified in Annex I (hereinafter the PRG Stock ), all upon the
terms and subject to the conditions set forth herein, in accordance
a n d subject to the terms of Internal Revenue Code Section
368(a)(1)(B).
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 Exchange of Stock.
The exchange of the outstanding capital stock of PRG and the
Company which is to be exchanged hereunder shall occur on the 9th day
of October, 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 Stock. Subject to and upon the terms and
conditions contained herein, on the Closing Date, Shareholders shall
convey, transfer, deliver and assign to PRG Sub all of the Stock, free
and clear of all obligations, security interests, claims, liens and
encumbrances whatsoever. Subject to and upon the terms and
conditions contained herein, on the Closing Date, PRG shall convey,
transfer, deliver and assign to the Shareholders the PRG Stock free
and clear of all obligations, security interests, claims, liens and
encumbrances other than the terms and provisions of the Stockholders
Agreement.
1.2 Conveyance of PRG Stock. As consideration for the sale of
t h e Stock, PRG Sub shall, on the Closing Date, provide the
Shareholders with the consideration specified in Annex I attached
hereto (the Consideration").
1.3 Subsequent Actions. If, at any time after the Closing Date,
PRG Sub or PRG shall consider or be advised that any stock powers,
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 Stock 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 Company and each Shareholder 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 Stock in PRG Sub or otherwise to carry out this
Agreement. If, at any time after the Closing Date, the Shareholders
shall consider or be advised that any stock powers, 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 Shareholders its right, title or interest in, to or under
any of the PRG Stock or otherwise to carry out this Agreement, in
return for the consideration set forth in this Agreement, the officers
and directors of Shareholders shall be authorized to execute and
deliver, in the name and on behalf of PRG 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 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 PRG Stock in PRG Sub or otherwise to carry out this
Agreement.
Section 2. Representations and Warranties of 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 C o r p orate Existence; Good Standing. Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida. 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. Company does not own stock
in or control, directly or indirectly, any other corporation,
association or business organization, nor is Company a party to any
joint venture or partnership. Shareholders are the sole shareholders
of 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. Each share of Company's common stock has been
legally and validly issued and fully paid and nonassessable. No
shares of capital stock of Company are owned by 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 Company on any matter, (b) securities of Company
convertible into equity interests in Company, or (c) commitments,
options, rights or warrants to issue any such equity interests in
Company, to issue securities of Company convertible into such equity
interests, or to redeem any securities of Company. No shares of
capital stock of Company have been issued or disposed of in violation
of the preemptive rights, rights of first refusal or similar rights of
any of Company's stockholders. 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. Company does not have
any assets, employees or offices in any state other than Florida.
2.2 Power and Authority for Transactions. 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 or Certificate
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. 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 Company and the
Shareholders, as appropriate, and constitute or will constitute the
legal, valid and binding obligations of Company and the Shareholders,
enforceable against 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 or Certificate
of Incorporation or Bylaws of 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 Company or any Shareholder is a party or by which
Company or any Shareholder is bound, or violate any material
restrictions of any kind to which Company is subject, or result in any
lien or encumbrance on any of Company's assets or the Stock.
2.3 Permits, Licenses and Governmental Authorizations. All
building or other permits, certificates of occupancy, concessions,
g r a nts, franchises, licenses, certificates of need and other
governmental authorizations and approvals required for the conduct of
the Business, or waivers thereof, have been duly obtained and are in
full force and effect and are described on Exhibit 2.3. There are no
p r oceedings pending or, to the knowledge of Company and the
S h areholders, 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
or Certificate of Incorporation, Bylaws and minutes of Company and all
amendments thereto of Company have been delivered to PRG Sub. The
minute books of Company contain all accurate minutes of the meetings
of and consents to actions taken without meetings of the Board of
Directors and stockholders of Company since its formation. The books
of account of Company have been kept accurately in the ordinary course
of business and the revenues, expenses, assets and liabilities of
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 Company or the Shareholders.
2.6 Company's Financial Information. 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 Company required to be reported
i n a c cordance with generally accepted accounting principles
consistently applied ( GAAP ), reflect all contingent liabilities of
Company required to be reported in accordance with GAAP as of their
respective dates, and present fairly the financial position of 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 Company leases, as lessor or lessee, real
or personal property used in operating the Business 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 Company, as lessor or lessee, or
any condition or event of which Company or any Shareholder has
knowledge which with notice or lapse of time, or both, would
constitute a default, in respect of which Company has not taken
adequate steps to cure such default or to prevent a default from
occurring.
2.8 Condition of Assets. The assets owned by the Company
constitute the only assets necessary for the conduct of the Business.
All of the assets of the Company are in good condition and repair
subject to normal wear and tear and conform with all applicable
o r d inances, regulations and other laws, and 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.
2.10 Inventories. All inventories of the Company used in the
conduct of the Business are reflected on the Balance Sheet in
accordance with generally accepted accounting principles consistently
applied. The items of Company's inventory have been acquired in the
ordinary course of its business, are adequate for the reasonable
requirements of the Business, and, to the best knowledge of the
Company and the Shareholders, may be used for their intended purposes.
All of the assets of the Company constituting inventory are owned or
used by 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, Company has no right, title or interest in or to
patents, patent rights, corporate names, assumed names, manufacturing
p r ocesses, 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 2.11
is a listing of all names of all predecessor companies of Company,
including the names of any entities from whom Company previously
acquired significant assets. Except for off-the-shelf software
licenses and except as set forth on Exhibit 2.11, Company is not a
licensee in respect of any patents, trademarks, service marks, trade
n a m e s, 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. No claim is
pending or has been made to the effect that the present or past
operations of Company infringe upon or conflict with the asserted
rights of others to any patents, patent rights, manufacturing
p r ocesses, trade names, trademarks, service marks, inventions,
licenses, specialized treatment protocols, copyrights, formulas, know-
how and trade secrets. Company has the sole and exclusive right to
use all of its 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 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 Company and the offices held by each, (b) the most recent
payroll report of Company, showing all current employees of Company
and their current levels of compensation, (c) promised increases in
compensation of employees of Company that have not yet been effected,
(d) oral or written employment agreements or independent contractor
agreements (and all amendments thereto) to which 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. Company is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. Company has not
engaged in any unfair labor practice. There are no unfair labor
practices charges or complaints pending or threatened against Company,
and 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 Company nor any Shareholder nor any of the assets of the
Company is subject to any pending, nor does Company or any
Shareholder have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to
o r a ffecting Company, any Shareholder, the Business or the
transactions contemplated by this Agreement, and, to the knowledge of
Company and the Shareholders, no basis for any such action exists, nor
is there any legal impediment of which 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. Company has delivered to PRG Sub true copies of
all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of 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 Company, or any condition or event of
which Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a default. Company and the
Shareholders have no knowledge of any default by any other party to
such Contracts. Neither 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
listed on Exhibit 2.7, Exhibit 2.12 and Exhibit 2.14, 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 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;
(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 Company on more than 30 days after the date
hereof.
2.15 Subsequent Events. Company has not, since the Balance Sheet
Date:
(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) D i s c h arged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
( a b s olute, accrued, contingent or otherwise) other than (i)
l i abilities 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 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 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) Other than capital expenditures in an amount of
approximately $18,000, 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) 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 the 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 Company;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Company's capital stock; or
(p) Suffered any material adverse change in the Business or
to 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 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)
statement of all Accounts Receivable, (ii) statement 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. Following Closing, the
administration of the collection of Accounts Receivable and the
payment of Accounts Payable shall be as set forth in the Service
Agreement.
2.17 Taxes. Company has filed all tax returns (including tax
reports and other statements) 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, 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
respects and properly reflect the relevant taxes for the periods
covered thereby. 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
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 Company). Company and
the Shareholders have not received any notice that any tax deficiency
or delinquency has been asserted against Company. There are no audits
relating to taxes of Company threatened, pending or in process.
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 Company. Company has
withheld and paid all taxes required by law to have been withheld and
paid by it. Neither Company nor any predecessor of 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. Company has delivered to PRG Sub correct and
complete copies of 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
Company during the three calendar year period preceding the date of
this Agreement. 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, 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. Company and the Shareholders do not
know, or have reasonable grounds to know, of any basis for the
assertion against 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 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. Company, each Shareholder and each
physician employee of 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 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 Company, nor each Shareholder nor any physician
employee of 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, Company has neither established, nor maintains, nor
i s 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
p e nsion, 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
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. Company has not previously made, is not currently making, and
is not obligated in any way to make, any contributions to any multi-
employer 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. 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 Company or the Business.
2.22 Compliance with Laws in General. Company, the Shareholders
and Company's physician and licensed employees, and the conduct of the
Business, 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 Company, any
Stockholder or any physician or licensed employee of Company of any
federal, state or local law or regulation. Neither 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 the Company and no notice of any
pending inspection or violation of any such law, regulation or
ordinance has been received by Company or any Shareholder.
2.23 Medicare and Medicaid Programs. Company, each Shareholder
and each physician and licensed employee of 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. Company, each
Shareholder and each physician and licensed employee of 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 Company, each Shareholder and
each licensed employee of Company. Neither Company, nor any
Shareholder, nor any physician or licensed employee of 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. Company, the Shareholders and all persons
and entities providing professional services for Company's business,
the Business or relating to the assets have not, to the knowledge of
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
f a lse 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
Company or any Shareholder in this Agreement, and no Exhibit or
certificate issued or executed by, or information furnished by,
officers or directors of 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 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 has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of the proposed investment and therefore has the capacity to protect
its own interests in connection with the acquisition of the PRG common
stock. The Shareholders or their 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 representatives
have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their
satisfaction
2.27 Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by Company on any of
its capital stock since the Balance Sheet Date other than in the
ordinary course of business. No repurchase of any of Company's
capital stock has been approved, effected or is pending, or is
contemplated by the Board of Directors of Company.
2.28 Suppliers. Company has provided to PRG a complete and
accurate list of the ten (10) largest suppliers of 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 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 pursuant to ownership of an optical shop and real estate
investment entities, no officer, employee, director or stockholder of
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 Company or any organization that has a material contract or
arrangement with Company. Neither 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, Company or to provide services, lease space,
lease equipment or engage in any other venture or activity with
Company.
2.31 Payors. Company has provided to PRG a true, complete and
correct list of the names and addresses of each payor of Company's
services which accounted for more than 10% of revenues of Company in
the preceding fiscal year. Company has good relations with all such
payors and other material payors of Company and none of such payors
has notified Company that it intends to discontinue its relationship
with Company or to deny any claims submitted to such payor for
payment.
Section 3. Representations and Warranties of PRG Sub and PRG.
PRG Sub and PRG hereby represent and warrant to Company and the
Shareholders as follows:
3.1 Corporate Existence: Good Standing. PRG and PRG Sub are each
a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of PRG and PRG Sub has
all necessary corporate powers to own all of its assets and to carry
on its business as such business is now being conducted.
3.2 Power and Authority for Transactions. Each of PRG and PRG
Sub 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 Certificate of Incorporation, its Bylaws or otherwise, to
authorize the execution, delivery and performance of this Agreement
and such related documents. 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 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 that have or will be obtained as of the
Closing Date, the consummation of the actions contemplated hereby will
not, violate any provision of the Certificate of Incorporation or
Bylaws of PRG or PRG Sub 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 PRG or PRG Sub is a party or by which PRG or PRG Sub
is bound, or violate any material restrictions of any kind to which
Company is subject, or result in any lien or encumbrance on any of
PRG s or PRG Sub s assets or the PRG Stock.
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.
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 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.
Section 4. Covenants of Company and the Shareholders.
Company and the Shareholders, jointly and severally, agree that
between the date hereof and the Closing Date (unless expressly
otherwise provided herein):
4.1 Consummation of Agreement. 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.
4.2 Business Operations. Company and the Shareholders shall
operate the Business and use the assets of the Company in the ordinary
course. Company and Shareholders 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 of
the Company except in the ordinary course of business. 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 Company may
continue to operate in the ordinary course of business. 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 Company. Company shall
collect its receivables and pay its trade payables in the ordinary
course of business. Company shall not introduce any new method of
management, operations or accounting. The parties hereto acknowledge
and agree that the Company may enter into a Service Agreement with
Brevard Eye Care of Florida, Inc., which agreement shall be in form
and substance satisfactory to PRG and PRG Sub.
4.3 Access and Notice. Company and the Shareholders shall
permit PRG and PRG Sub and PRG and its authorized representatives have
had access to, and inspected all of the assets and business of
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 Company as PRG, PRG Sub or their representatives
may request. 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 Company is a party or relating to the Business or the assets of
the Company, and (b) any adverse change in Company's or the Business'
financial condition or the assets of the Company.
4.4 Approvals of Third Parties and Permits and Consents.
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. 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 provide the services of Company contemplated by the
Service Agreement and to conduct the intended business of Company and
operate the Business and use the assets of the Company.
4.5 Acquisition Proposals. Company and the Shareholders shall
not, and shall use their best efforts to cause 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
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 Company and the
Shareholders will immediately cease any such activities, discussions
or negotiations heretofore conducted with respect to any of the
foregoing. Company and the Shareholders shall immediately notify PRG
Sub if any such inquiries or proposals are received.
4.6 Funding of Accrued Employee Benefits. 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 Company or any entity might have any
liability whatsoever arising from any insurance, pension plan,
employment tax or similar liability of Company to any employee or
other person or entity (including, without limitation, any Company
Plan and any liability under employment contracts with Company)
allocable to services performed prior to the Closing Date. 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 Company's employees or similar
persons or entities, including, without limitation, any Company Plan.
4.7 Employee Matters. 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 Company, adopt, amend or terminate any
c o mpensation 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 Company, its business, assets or prospects.
4.8 Distributions and Repurchases. Except as set forth on
Exhibit 4.8, no distribution, payment or dividend of any kind will be
declared or paid by Company, nor will any repurchase of any of
Company's capital stock be approved or effected. PRG acknowledges
that the Company on the Closing Date will have no cash and/or cash
balances or cash equivalents.
4.9 Requirements to Effect Acquisition. Company and each
Shareholder shall 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 of all necessary documents
in form approved by counsel for the parties to this Agreement.
4.10 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 Company 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.
4.11 Accounting and Tax Matters. Company will not change in any
material respect the accounting methods or practices followed by
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. 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. 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
Company required to be filed by it, and pay all taxes required to be
paid by it, on or before the Closing Date.
4.12 Conversion Transaction. Prior to the Closing, the Company
shall file with the Secretary of State of Florida an amendment to
and/or 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.
4.13 Leases. PRG Sub shall have entered into a building lease
(collectively, the "Building Lease") with the owners of the properties
located at 21 Suntree Place, Melbourne, Florida; 1260 Malabar Road,
Palm Bay, Florida; and 502 E. New Haven Avenue, Melbourne, Florida on
terms and conditions satisfactory to PRG, the terms and conditions of
which shall include, without limitation, (i) a five year initial term
plus three five-year renewal options, (ii) a lease rate equal to the
fair market value lease rate, as agreed to by PRG, (iii) a right of
first refusal to acquire such property upon any proposed sale thereof
to any Shareholder of any family member or affiliate of any
Shareholder, and (iv) such other provisions to be acceptable to PRG.
PRG shall guarantee the rental payments to be made pursuant to the
Building Lease.
4.14 The Clinic.
(a) Good Standing/Existence. Florida Eye Associates, Inc., a
Florida corporation (the "Clinic") is a Florida corporation duly
organized, validly existing and in good standing under the laws of the
State of Florida. The Clinic has all necessary 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 2.1. 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 shareholder 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.
(b) 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.
(c) Corporate Power. The Clinic has the 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 Employment Agreement or to be executed and delivered on the
Closing Date, and has taken all action required by law, its Articles
of Incorporation, Bylaws 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.
(d) 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 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 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).
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:
5.1 Consummation of Agreement. PRG and PRG Sub shall use their
b e s t 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 of 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 stock consideration and shall use its best efforts to obtain
approval for the listing of the stock consideration upon official
notice of issuance.
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 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.
6.2 Covenants and Conditions. 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
Company and the Shareholders 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
t h e c ondition (financial or otherwise), operations, assets,
liabilities, business or prospects of Company 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 Company, the Business and the
assets of the Company, 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 Employment Arrangements. Prior to the Closing Date, the
Company will cause each physician employee of the Company and other
employees that have existing employment agreements with the Company to
assign his or her employment agreement with the Company to the Clinic
and execute a separation and release agreement ("Separation and
Release Agreement") in form and substance satisfactory to PRG and PRG
Sub.
6.8 Service Agreement. On the Closing Date, Clinic, the
Shareholders, PRG and PRG Sub shall execute and deliver a Service
Agreement (the "Service Agreement"), in substantially the form
attached hereto as Exhibit 6.7, pursuant to which PRG Sub will provide
management services to the Shareholders and Clinic.
6.9 Consents and Approvals. Company and the Shareholders shall
have obtained all necessary government and other third-party approvals
and consents.
6.10 Closing Deliveries. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its
counsel, referred to in Section 8.1.
6.11 Debt and Receivables. There shall be no indebtedness,
receivables or payables between Company and its shareholders or
affiliates and Company shall not have any liabilities, including
indebtedness, guaranties and capital leases, that are not set forth on
the Exhibits attached hereto, including without limitation, Exhibit
2.18. On or before the Closing Date, the Company and Shareholders
shall deliver copies of UCC releases and other documentation
satisfactory to PRG and PRG Sub indicating that the Company shall not
liable for any indebtedness to First Union National Bank and
NationsBank as of the Closing Date, and such releases shall be filed
with the appropriate authorities within two business days following
the Closing Date.
6.12 No Change in Working Capital. As of the Closing Date, there
shall be no material change in the Working Capital.
6.13 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
Section 7. Company's and the Shareholder's Conditions Precedent.
The obligations of Company and the Shareholders 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 respects when initially made and shall be true and
correct in all respects as of the Closing Date.
7.2 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.
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. Company shall have received all
documents, duly executed in form satisfactory to Company and its
counsel, referred to in Section 8.2.
7.5 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
7.6 Service Agreement. On the Closing Date, Clinic, the
Shareholders, PRG and PRG Sub shall execute and deliver a Service
Agreement (the "Service Agreement"), in substantially the form
attached hereto as Exhibit 6.7, pursuant to which PRG Sub will provide
management services to the Shareholders and Clinic.
Section 8. Closing Deliveries.
8.1 Deliveries of Company and the Shareholders. At or prior to
the Closing, 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) a copy of the resolutions of the Board of Directors of
Company authorizing the execution, delivery and performance of this
Agreement, the Service Agreement and all related documents and
agreements each certified by the Secretary as being true and correct
copies of the original thereof;
(c) 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;
(d) certificates of the President of Company and of each
Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of Company and each
Shareholder contained herein; (ii) as to the performance of and
compliance by Company and each Shareholder with all covenants
contained herein; and (iii) certifying that all conditions precedent
of Company and each Shareholder to the Closing have been satisfied;
(e) a certificate of the Secretary of Company certifying as
to the incumbency of the directors and officers of Company and as to
the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of Company;
(f) 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;
(g) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that
Company is in existence and is in good standing to transact business
in its state of incorporation;
(h) 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;
(i) an opinion of counsel to 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 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;
(j) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(k) a Stockholder s Agreement (herein so called) in form
attached hereto as Exhibit 8.1(k) executed by Shareholders and their
spouses;
(l) stock certificates evidencing all shares of the Stock
together with blank stock powers executed by each Shareholder;
(m) resignations of officers and directors of the Company
as requested by PRG Sub; and
(n) 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 Company the following, all of which
shall be in a form satisfactory to counsel to Company and the
Shareholders or the Clinic, as applicable:
(a) the Consideration (being stock certificates evidencing
the PRG Stock);<PAGE>
(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 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 Florida;
(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 Company;
(h) the Stockholder s Agreement; and
(i) such other instruments and documents as reasonably
requested by Company or Shareholders to carry out and effect the
purpose and intent of this Agreement.
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 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 five (5) years following the Closing Date, except
that (i) the representations and warranties set forth in Section 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 fifteen
(15) years and tax representations shall survive until one year 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
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 THE SHAREHOLDERS, AND THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH
OF THE FOREGOING, INCLUDING THE SHAREHOLDERS, FOR PURPOSES OF THIS
S E C TION 9.2 AND, TO THE EXTENT APPLICABLE, SECTION 9.4, AS
" I NDEMNIFIED PERSON"), HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
E X PENSES (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
T H E 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.
9.3 Indemnification by the Shareholders. THE SHAREHOLDERS (FOR
PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT APPLICABLE, SECTION
9.4, "INDEMNITOR"), JOINTLY AND SEVERALLY, 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
A G R EEMENT (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,
WHETHER ON OR AFTER 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
( I N C LUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED IN
C O N N E CTION 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 LIABILITIES THAT
ARE PAST DUE AS OF THE CLOSING DATE, THAT ARE NOT REFLECTED ON THE
BALANCE SHEET, THAT ARE NOT INCURRED IN THE ORDINARY COURSE OF
BUSINESS AND THAT ARE OTHERWISE EXCLUDED PURSUANT TO THE TERMS OF THIS
AGREEMENT. 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
P e rson, 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
p a r ticipate 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
p r oceeding 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
w h ich 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 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 the
Company 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 Company 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.
(b) PRG shall prepare and file or cause to be prepared and
filed any Tax Returns of the Company 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 Company
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 and PRG Sub shall
reasonably cooperate with each other in connection with the filing of
Tax Returns pursuant to this Section 9.5(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.
9.6 Right of Setoff. In the event of any breach of warranty,
representation, covenant or agreement by any party hereto giving rise
to indemnification hereunder, the other party shall be entitled to
offset the amount of damages incurred by it as a result of such breach
of warranty, representation, covenant or agreement against any amounts
payable under the Service Agreement.
9.7 L i m i tation on Indemnification. Notwithstanding the
provisions hereof, the Shareholders 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 $100,000.
Notwithstanding the provisions hereof, PRG and PRG Sub shall not be
required to indemnify the Shareholders unless, and to the extent that,
the aggregate amount of Damages incurred by the Shareholder shall
exceed an amount equal to $100,000.
Section 10. 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 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 Company or any
Shareholder 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, Company or the Shareholders if the
transaction contemplated hereby shall not have been consummated by
October 15, 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 Company, that
such termination is desirable and in the best interests of PRG.
Section 11. Noncompetition.
11.1 Prohibited Activities. In order to protect PRG, PRG Sub and
each of their affiliates (collectively, the "PRG Group") against the
u n a uthorized use or disclosure of any of their confidential
i n f o r mation presently known or hereinafter acquired by the
S h a reholders and other good and valuable consideration, each
Shareholder hereby agrees that, subject to adjustment pursuant to
Section 11.5, 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
b e h a lf 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) directly or indirectly 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 PRG Clinic Group or engage or participate in or finance any
business which engages in direct competition with the business being
conducted by PRG Clinic Group anywhere within 25 miles of any location
of PRG Clinic Group ( PRG Clinic Group shall mean all professional
associations or corporations or other entities for which PRG, or its
subsidiaries or affiliates provide management services within twenty-
five (25) miles of any location of the Clinic and its affiliates or
successors in interest; or
(b) a c t an officer, director, employee, consultant,
shareholder, lender, guarantor or agent of, or otherwise assist any
entity which is engaged in any business of the same nature as, or in
direct competition with the physician practice management business in
which PRG and its affiliates are now engaged or other business in
which such entities become engaged.
Nothing contained in this Agreement shall be construed to provide
that any Shareholder shall be in breach of this Section 11.1 or any
other provision of this Agreement by virtue of his provision of
medical services to and on behalf of Brevard Eye Care of Florida, P.A.
or by virtue of his ownership of interests in Physicians Optical Lab,
Inc., Ambulatory Surgery Center Support Services, Eye Docs of Suntree,
Eye Docs, Inc. of Palm Bay, Eye Docs, Inc. of Melbourne or ASC of
Brevard, Inc.
11.2 Damages.
(a) Because of the difficulty of measuring economic losses
to PRG 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 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
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 below opposite the
year following Closing in which the breach occurs times such
Shareholder s ownership of the Company on the date hereof:
Year Following
Closing in Which
Breach Occurs Damages
1st $ 8,000,000.00
2nd $ 6,400,000.00
3rd $ 4,800,000.00
4th $ 3,200,000.00
5th $ 1,600,000.00
11.3 Reasonable Restraint. It is agreed by the parties that the
foregoing covenants in this Section 11 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 PRG Sub.
11.4 Severability; Reformation. The covenants in this Section 11
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.
11.5 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 11. The covenants contained in this
Section 11 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 12. N o n disclosure 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 or PRG Sub that is valuable, special
and unique assets of PRG'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 12, PRG 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 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. Miscellaneous.
13.1 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:
Physicians Resource Group, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
Facsimile: (214) 982-8299
If to PRG Sub:
PRG Florida XII, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
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 Company or the Shareholders:
502 East New Haven Avenue
Melbourne, FL 32901
Telecopy: (407) 984-9547
with a copy to:
James H. Fallace, P.A.
1900 S. Hickory St.
Melbourne, FL 32901
Telecopy: (407) 724-6002
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.
13.2 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.
13.3 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 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 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 (b) local, state and federal income taxes
or other similar charges on income or gain incurred by Company, the
C l i nic or the Shareholders as a result of the transactions
contemplated hereby.
13.4 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.
13.5 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.
13.6 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.
13.7 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.
13.8 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.
13.9 Counterparts; Telefax. 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. A telefax copy of this Agreement and
all signatures thereon shall constitute an original for all purposes.
13.10 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.
13.11 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.
13.12 Costs of Enforcement. In the event that PRG Sub or PRG,
on the one hand, or 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
C o mplaint. "Reasonable attorneys' fees" are those reasonable
attorneys' fees actually incurred in obtaining a judgment in favor of
the prevailing party.
13.13 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.
13.14 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.
13.15 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.
13.16 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]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
PRG FLORIDA XII INC.
By: _________________________
Its: _________________________
MELBOURNE EYE ASSOCIATES OF BREVARD, INC.
By: _________________________
Its: _________________________
MELBOURNE EYE ASSOCIATES, P.A.
By: _________________________
Its: _________________________
PHYSICIANS RESOURCE GROUP, INC.
By: _________________________
Its: _________________________
______________________________
William Broussard, M.D., Trustee U.T.D.
March 24, 1980
______________________________
Michael Corcoran, M.D., Trustee U.T.D.
September 26, 1988
______________________________
Andrew Zorbis, M.D.
______________________________
Ralph Paylor, M.D.
<PAGE>
______________________________
K. Fredrick Ho, M.D., Trustee U.T.D.
November 24, 1989
______________________________
L. Neal Freeman, M.D.
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
2.1 Corporate Existence; Good Standing
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 Litigation
2.14 Contracts (other than Leases)
2.16 Accounts Receivable
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.29 Banking Relations
4.4 Clinic Assets
4.8 Distributions
6.7 Form of Service Agreement
8.1(k) Stockholder's Agreement
ANNEX I Consideration
AGREEMENT AND PLAN OF REORGANIZATION
by and among
OPHTHALMOLOGICAL ASSOCIATES, LTD.,
MORTON R. GREEN, M.D.,
KENNETH O. GREEN, M.D.,
STEPHEN R. WALTMAN, M.D.,
PRG GR ACQ. CORP.,
and
PHYSICIANS RESOURCE GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Page
Section 1. The Merger
1.1 Merger of PRG Sub into the Company . . . . . . . . . . . 1
1.2 Merger Certificates . . . . . . . . . . . . . . . . . . . 1
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 Company Common Stock . . . . . . . . . . . 2
1.8 Exchange of Certificates Representing Shares of
Company 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 The Company's Financial Information . . . . . . . . . . . 4
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 4
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 . . . . . . . . . . . 5
2.12 Directors and Officers; Payroll Information; Employees . 5
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 . . . . . . . . . . . . . . . . . . . . 8
2.19 Insurance Policies . . . . . . . . . . . . . . . . . . . 8
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 . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . 10
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . 10
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . 10
3.4 No Untrue Representations . . . . . . . . . . . . . . . . 10
3.5 Legal Proceedings . . . . . . . . . . . . . . . . . . . . 11
3.6 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . 11
3.7 Absence of Litigation . . . . . . . . . . . . . . . . . . 11
Section 4. Closing Date Representations and Warranties of the
Shareholders
4.1 Corporate Existence and Good Standing of the Clinic . . . 11
4.2 Corporate Records . . . . . . . . . . . . . . . . . . . . 12
4.3 Power and Authority for Transactions . . . . . . . . . . 12
4.5 Compliance with Laws . . . . . . . . . . . . . . . . . . 12
Section 5. Covenants of the Company and the Shareholders
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . 12
5.2 Business Operations . . . . . . . . . . . . . . . . . . . 12
5.3 Access and Notice . . . . . . . . . . . . . . . . . . . . 12
5.4 Approvals of Third Parties and Permits and Consents . . . 13
5.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . 13
5.6 Funding of Accrued Employee Benefits . . . . . . . . . . 13
5.7 Employee Matters . . . . . . . . . . . . . . . . . . . . 13
5.8 Distributions and Repurchases . . . . . . . . . . . . . . 13
5.9 Requirements to Effect Merger . . . . . . . . . . . . . . 13
5.10 Voting of Shares. . . . . . . . . . . . . . . . . . . . . 13
5.11 Accounting and Tax Matters . . . . . . . . . . . . . . . 13
5.12 Conversion Transaction . . . . . . . . . . . . . . . . . 14
5.13 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6. Covenants of PRG and PRG Sub
6.1 Consummation of Agreement . . . . . . . . . . . . . . . . 14
6.2 Approvals of Third Parties and Permits and Consents . . . 14
6.3 Listing Application . . . . . . . . . . . . . . . . . . . 14
Section 7. Covenants of the Shareholders
7.1 Formation of the Clinic . . . . . . . . . . . . . . . . . 14
7.2 Access . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.3 Licenses and Permits . . . . . . . . . . . . . . . . . . 14
7.4 Corporate Governance. . . . . . . . . . . . . . . . . . . 14
Section 8. PRG Sub and PRG Conditions Precedent
8.1 Representations and Warranties. . . . . . . . . . . . . . 15
8.2 Covenants and Conditions. . . . . . . . . . . . . . . . . 15
8.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 No Material Adverse Change. . . . . . . . . . . . . . . . 15
8.5 Due Diligence Review. . . . . . . . . . . . . . . . . . . 15
8.6 Approval by the Board of Directors . . . . . . . . . . . 15
8.7 Service Agreement . . . . . . . . . . . . . . . . . . . . 15
8.8 Employment Arrangements . . . . . . . . . . . . . . . . . 15
8.9 Consents and Approvals . . . . . . . . . . . . . . . . . 15
8.10 Closing Deliveries. . . . . . . . . . . . . . . . . . . . 15
8.11 Corporate Governance. . . . . . . . . . . . . . . . . . . 15
8.12 Debt and Receivables. . . . . . . . . . . . . . . . . . . 15
8.13 Dissenting Shares . . . . . . . . . . . . . . . . . . . . 16
8.14 Stock Consideration . . . . . . . . . . . . . . . . . . . 16
8.15 No Change in Working Capital . . . . . . . . . . . . . . 16
Section 9. T h e Company's and the Shareholder's Conditions
Precedent
9.1 Representations and Warranties . . . . . . . . . . . . . 16
9.2 Covenants and Conditions . . . . . . . . . . . . . . . . 16
9.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . 16
9.4 Closing Deliveries. . . . . . . . . . . . . . . . . . . . 16
9.5 Stock Consideration . . . . . . . . . . . . . . . . . . . 16
Section 10. Closing Deliveries
10.1 Deliveries of the Company and the Shareholders . . . . . 16
10.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . 17
Section 11. Nature and Survival of Representations and Warranties;
Indemnification
11.1 Nature and Survival . . . . . . . . . . . . . . . . . . . 18
11.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . 18
11.3 Indemnification by the Company and the Shareholders . . . 19
11.4 Indemnification Procedure . . . . . . . . . . . . . . . . 19
11.5 Certain Tax Matters . . . . . . . . . . . . . . . . . . . 20
11.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . 20
Section 12. Termination
Section 13. Noncompetition
13.1 Prohibited Activities . . . . . . . . . . . . . . . . . . 21
13.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . 21
13.3 [Intentionally Blank] . . . . . . . . . . . . . . . . . . 22
13.4 Severability; Reformation . . . . . . . . . . . . . . . . 22
13.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 14. Nondisclosure of Confidential Information
Section 15. Investment Representations. . . . . . . . . . . . . . . . 23
Section 16. Miscellaneous
16.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 23
16.2 Further Assurances . . . . . . . . . . . . . . . . . . . 24
16.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . 24
16.4 Public Disclosures . . . . . . . . . . . . . . . . . . . 24
16.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 24
16.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . 24
16.7 Integration of Exhibits . . . . . . . . . . . . . . . . . 24
16.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . 24
16.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 24
16.10 Binding Effect/Assignment . . . . . . . . . . . . . . . 24
16.11 No Rule of Construction . . . . . . . . . . . . . . . . 24
16.12 Costs of Enforcement . . . . . . . . . . . . . . . . . . 24
16.13 Amendments; Waivers . . . . . . . . . . . . . . . . . . 25
16.14 Choice of Forum . . . . . . . . . . . . . . . . . . . . 25
16.15 Service of Process . . . . . . . . . . . . . . . . . . . 25
16.16 Severability . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, made and executed as
of the 30th day of October, 1996, is by and among PRG GR ACQ. CORP.,
an Illinois corporation ("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC.,
a Delaware corporation ("PRG"); OPHTHALMOLOGICAL ASSOCIATES, LTD., an
Illinois medical corporation (the Company"), and MORTON R. GREEN,
M.D., KENNETH O. GREEN, M.D. and STEPHEN R. WALTMAN, M.D., all
i n d i vidual residents of the State of Illinois (individually
"Shareholder," and collectively "Shareholders").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in
Belleville, Illinois;
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, 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").
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 30th day of October, 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 Merger is intended to be a "tax-
free reorganization" pursuant to Section 368(a) of the Code and the
p a rties 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; provided, however, that the actual
tax effect of the transactions contemplated by this Agreement is not a
condition precedent to the closing of the transactions contemplated
hereby and no party hereto makes or has made any representation,
w a r ranty or covenant to any other party hereto as to such
qualification. 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 Illinois 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 Illinois Business Corporation Law.
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 Illinois Business Corporation Law. The Merger
shall be effective on the Closing Date notwithstanding the date of the
filing of the Certificate of Merger.
1.3 A r t i cles of Incorporation of Surviving Corporation.
Effective on the Closing Date, the Certificate of Incorporation of PRG
S u b 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 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 C o nversion 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 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 consideration specified in Annex I attached hereto (in
the aggregate, 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, or until the certificates of PRG common stock are received by
Shareholders, whichever is first, 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 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 and the amount of any cash
such Shareholder is entitled to receive pursuant to Sections 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 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 Illinois. 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. 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. 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 Illinois.
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,
a n d 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,
g r a nts, 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. The
books of account of the Company have been kept accurately 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 May 31, 1996 ( Balance Sheet Date ). All such financial
statements have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods
indicated, reflect all liabilities of the Company, including all
contingent liabilities of the Company, 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 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.
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
p r ocesses, 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
n a m e s, 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
p r ocesses, 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.
2.13 Legal Proceedings. Other than as would not have a material
a d v erse effect, 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 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 the Company on more than 30 days after the date
hereof.
2.15 Subsequent Events. 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
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) D i s c h arged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
( a b s olute, accrued, contingent or otherwise) other than (i)
l i abilities 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 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) 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
a d verse 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) 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)
statement of Accounts Receivable, (ii) statement 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. 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 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
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 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. 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. 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,
i n debtedness 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
p e nsion, 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 C o mpliance 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 M e d icare 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 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. Other than as would not have a material
adverse effect, 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 known to be untrue by the
Company or any Shareholder, or omits or will omit to state a material
fact necessary to make the statements or facts contained therein not
misleading.
2.26 A c credited Investor Status. Each Shareholder is an
"accredited investor" as defined in Rule 501(a) under the Securities
Act of 1933, as amended (the "Securities Act").
2.27 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 the Balance Sheet Date. 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.
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 in 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. 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 except as set forth
on Exhibit 2.30.
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 that it intends to discontinue its
relationship with the Company or to deny any claims submitted to such
payor for payment.
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 Illinois, 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, 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
a n d 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 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 known to be untrue by
PRG or PRG Sub, or omits or will omit to state a material fact
necessary to make the statements or facts contained therein not
misleading.
3.5 Legal Proceedings. Other than as would not have a material
adverse effect, neither PRG or PRG Sub nor any of said companies
assets are 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 any of the assets of either, the operations,
business or prospects of either, or the transactions contemplated by
this agreement, and, to the knowledge of PRG and PRG Sub, no basis for
any such action exists, nor is there any legal impediment to which PRG
or PRG Sub had knowledge to the continued operation of their business
in the ordinary course.
3.6 Fraud and Abuse. Other than as would not have a material
adverse effect, PRG and PRG Sub have not, to their knowledge, 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, 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 the 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 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.
3.7 Absence of Litigation. No action or proceeding by or before
any court or other governmental body has been instituted or is, to the
best of PRG and PRG Sub s knowledge, threatened with respect to the
transactions contemplated by this agreement, or which would materially
and adversely affect the value of the shares of PRG stock.
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. Green
W a ltman Eye Institute, Ltd. of Illinois, an Illinois medical
corporation (the "Clinic") is a medical corporation duly organized,
validly existing and in good standing under the laws of the State of
Illinois. 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 Illinois.
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 directors 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 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 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 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 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 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 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.
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. 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 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
o r 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.
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 provide the services of the Company
contemplated by the Service Agreement and 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 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, 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, 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. 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
t h e 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 C o n v ersion Transaction. Prior to the Merger, the
Shareholders and the Company shall file with the Secretary of State of
Illinois 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 Leases. PRG shall have entered into a building lease (the
"Building Lease") with the owner of the property located at 111 West
Lincoln Street, Belleville, Illinois, in substantially the form
attached hereto as Exhibit 5.13.
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
b e s t 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 Stock Consideration and shall use its best efforts to obtain
approval for the listing of the Stock Consideration upon official
notice of issuance.
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 Illinois, 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
e f f orts 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 Employment Agreements, and to conduct the intended
business of the Clinic.
7.4 Corporate Governance. Within three (3) months following the
C l osing 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.
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
t h e c ondition (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 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 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, execute a separation and release agreement
("Separation and Release Agreement").
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 C o r porate 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, 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 Illinois Business
Corporation Law.
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
change in the Working Capital.
Section 9. T h e 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 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;
(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;
(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 c ertificate 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 Illinois 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 Illinois establishing that
Clinic is in existence and is in good standing to transact business in
its state of incorporation;
(j) a n 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) a Stockholder s Agreement in form attached hereto as
Exhibit 10.1(n) executed by each Shareholder and their spouses; and
(o) 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 and/or Shareholders 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 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 Illinois, 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) reimbursement for the cost incurred by the Company for
the medical record audit performed by Corcoran Consulting Group; 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 five (5) 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
fifteen (15) years and tax representations shall survive until one
year 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 Section 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, AS
" I NDEMNIFIED PERSON"), HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
E X PENSES (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
T H E 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 AND FROM ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS
EMPLOYEES, AGENTS AND INDEPENDENT CONTRACTORS IN OR ABOUT THE
COMPANY S BUSINESS 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.
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, 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, WHETHER ON OR AFTER 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
( I N C LUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED IN
C O N N E CTION 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
R E T IREMENT 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
P e rson, 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
p a r ticipate 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
p r oceeding 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
w h ich 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 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,
r e imburse, 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.
(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.
11.6 Right of Setoff. In the event of any breach of warranty,
r e p resentation, covenant or agreement by the Company or the
Shareholders giving rise to indemnification under Section 11.3 or
Section 11.5 hereof, PRG, Surviving Corporation or PRG Sub shall be
entitled to offset the amount of damages incurred by it as a result of
such breach of warranty, representation, covenant or agreement against
any amounts payable by PRG, PRG Sub or Surviving Corporation,
including the amounts payable under the Service Agreement.
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 October
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
b e h a lf 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 25 miles of any location of the
Clinic; provided, however, that this provision shall not prohibit the
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) 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 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 below opposite the
year following Closing in which the breach occurs:
Year Following
Closing in Which
Breach Occurs Damages
1st $2,000,000.00
2nd $1,600,000.00
3rd $1,200,000.00
4th $800,000.00
5th $400,000.00
13.3 [Intentionally Blank]
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. Nondisclosure of Confidential Information.
(a) 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
e n t i tled 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.
(b) 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 Company and Shareholders that
is valuable, special and unique assets of Company and Shareholders
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 and PRG Sub reasonably believe that such disclosure is required in
connection with the defense of a lawsuit against the disclosing party,
or (iv) PRG and PRG Sub are the sole and exclusive owners of such
confidential information as a result of the transaction contemplated
hereunder or otherwise. In the event of breach or threatened breach
by PRG or PRG Sub of the provisions of this Section 14, Shareholders
and Company shall be entitled to an injunction restraining PRG and PRG
S u b from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting
Shareholders and Company 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. 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:
If to PRG:
Physicians Resource Group, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D Amico
Facsimile: (214) 982-8299
If to PRG Sub:
PRG Gr Acq. Corp.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D Amico
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:
Ophthalmological Associates, Ltd.
111 West Lincoln Street
Belleville, Illinois 62220
Facsimile: (618) 234-7979
with a copy to:
Jerry Raskas
1010 Market Street, Suite 1300
St. Louis, Missouri 63101-2000
Facsimile: (314) 241-6162
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.
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 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.
[End of Page]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
PRG GR ACQ. CORP.
By: __________________________________
Richard J. D'Amico, Vice President
OPHTHALMOLOGICAL ASSOCIATES, LTD.
By: ___________________________________
Its: ___________________________________
PHYSICIANS RESOURCE GROUP, INC.
By: _________________________________________
Richard J. D'Amico, Senior Vice President
________________________
Morton R. Green, M.D.
________________________
Kenneth O. Green, M.D.
________________________
Stephen R. Waltman, M.D.
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
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 D i rectors and Officers; Payroll Information;
Employment Agreements
2.14 Contracts (other than Leases)
2.16 Accounts Receivable
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
4.1 Capitalization of Clinic
4.4 Clinic Assets
5.13 Form of Lease
8.7 Form of Service Agreement
10.1(m) Shareholder Release
10.1(n) Stockholder's Agreement
ANNEX I Merger Consideration
ASSET PURCHASE AGREEMENT
by and among
SAFFORD SURGI-CENTER,
SOUTHWEST EYE ASSOCIATES, LTD.,
JAMES HOLDER, O.D.,
SUN VALLEY ACQUISITION CORPORATION
and
PHYSICIANS RESOURCE GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Terms of the Sale and Purchase of Assets
1.1 Conveyance of Assets . . . . . . . . . . . . . . . . . .1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . .2
1.3 Purchase Price; Assumption of Liabilities . . . . . . . .2
1.4 Subsequent Actions . . . . . . . . . . . . . . . . . . .2
Section 2. Representations and Warranties of Seller 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 . . . .3
2.4 Corporate Records . . . . . . . . . . . . . . . . . . . .4
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . .4
2.6 Seller's Financial Information . . . . . . . . . . . . .4
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . .4
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 .5
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 . . . . . . . . . . . . . . . . . . .8
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 . . . . . . . . . . . . .8
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 .9
2.31 Payors . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3. Representations and Warranties of PRG Sub and PRG
3.1 Corporate Existence: Good Standing . . . . . . . . . . .10
3.2 Power and Authority . . . . . . . . . . . . . . . . . . .10
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . .10
3.4 No Untrue Representations . . . . . . . . . . . . . . . .10
Section 4. Covenants of Seller and the Shareholders
4.1 Consummation of Agreement . . . . . . . . . . . . . . . .10
4.2 Business Operations . . . . . . . . . . . . . . . . . . .10
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . .10
4.4 Approvals of Third Parties and Permits and Consents . . .11
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . .11
4.6 Funding of Accrued Employee Benefits . . . . . . . . . .11
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . .11
4.8 Distributions and Repurchases . . . . . . . . . . . . . .11
4.9 Requirements to Effect Acquisition . . . . . . . . . . .11
4.10 Voting of Shares; Irrevocable Proxy . . . . . . . . . . .11
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . .11
4.12 Corporate Governance . . . . . . . . . . . . . . . . . .12
4.13 Lease . . . . . . . . . . . . . . . . . . . . . . . . . .12
4.15 Employee Benefit Plans . . . . . . . . . . . . . . . . .12
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . .12
Section 5. Covenants of PRG and PRG Sub
5.1 Consummation of Agreement . . . . . . . . . . . . . . . .12
5.2 Approvals of Third Parties and Permits and Consents . . .12
5.3 Listing Application . . . . . . . . . . . . . . . . . . .12
Section 6. PRG Sub and PRG Conditions Precedent
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 Corporate Governance . . . . . . . . . . . . . . . . . .13
6.10 Debt and Receivables . . . . . . . . . . . . . . . . . .13
6.11 Leases . . . . . . . . . . . . . . . . . . . . . . . . .13
6.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . .13
6.13 NYSE Listing . . . . . . . . . . . . . . . . . . . . . .13
Section 7. Seller's and the Shareholder's Conditions Precedent
7.1 Representations and Warranties . . . . . . . . . . . . .13
7.2 Covenants and Conditions . . . . . . . . . . . . . . . .14
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . .14
Section 8. Closing Deliveries
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
9.1 Nature and Survival . . . . . . . . . . . . . . . . . . .15
9.2 Indemnification by PRG Sub and PRG . . . . . . . . . . .15
9.3 Indemnification by Seller and the Shareholders . . . . .16
9.4 Indemnification Procedure . . . . . . . . . . . . . . . .17
9.5 Right of Setoff . . . . . . . . . . . . . . . . . . . . .17
Section 10. Termination
Section 11. Noncompetition
11.1 Prohibited Activities . . . . . . . . . . . . . . . . . .17
11.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . 18
11.3 Reasonable Restraint . . . . . . . . . . . . . . . . . .18
11.4 Severability; Reformation . . . . . . . . . . . . . . . .18
11.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 12. Nondisclosure of Confidential Information
Section 13.
Economic Risk; Sophistication . . . . . . . . . . . . . . . .19
Section 14. Miscellaneous
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . .19
14.2 Further Assurances . . . . . . . . . . . . . . . . . . .20
14.3 Each Party to Bear Costs . . . . . . . . . . . . . . . .20
14.4 Public Disclosures . . . . . . . . . . . . . . . . . . .20
14.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .20
14.6 Captions . . . . . . . . . . . . . . . . . . . . . . . .20
14.7 Integration of Exhibits . . . . . . . . . . . . . . . . .20
14.9 Counterparts . . . . . . . . . . . . . . . . . . . . . .21
14.10 Binding Effect/Assignment . . . . . . . . . . . . .21
14.11 No Rule of Construction . . . . . . . . . . . . . .21
14.12 Costs of Enforcement . . . . . . . . . . . . . . . .21
14.13 Prorations . . . . . . . . . . . . . . . . . . . . .21
14.14 Amendments; Waivers . . . . . . . . . . . . . . . .21
14.15 Choice of Forum . . . . . . . . . . . . . . . . . .21
14.16 Service of Process . . . . . . . . . . . . . . . . .21
14.17 Severability . . . . . . . . . . . . . . . . . . . .21
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made and
executed as of the 25th day of September, 1996, is by and among SUN
VALLEY ACQUISITION CORPORATION, a Texas corporation ("PRG Sub");
PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG"); and
S A FFORD SURGI-CENTER, a sole proprietorship and SOUTHWEST EYE
ASSOCIATES, LTD., an Arizona corporation (collectively, "Seller"),
and JAMES HOLDER, O.D. ( Shareholder ).
WITNESSETH:
WHEREAS, Seller operates a center of eye care excellence
(optometry, optical and surgi-center practice) in Safford, Arizona
("Business");
WHEREAS, Shareholder is the only Shareholder of Seller;
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, Seller wishes to sell to PRG Sub, and PRG Sub wishes to
acquire from Seller, substantially all of the assets of Seller, all
upon the terms and subject to the conditions set forth herein.
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 30th day of
September, 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 all of Seller's right,
title and interest in and to the business, properties and assets of
S e ller (personal, tangible and intangible), including, without
limitation, all items of personal property and other assets used in
connection with the Business (except that the real estate owned by
Seller and Shareholder shall not be purchased and except as otherwise
provided herein) (individually, "Asset", and collectively "Assets"),
free and clear of all obligations, security interests, claims, liens
and encumbrances whatsoever, except as specifically assumed by PRG
pursuant to Section 1.3(b) hereof. Without limiting the foregoing, the
Assets specifically include:
(a) All of the business, personal property, furniture,
fixtures, equipment and goodwill of Seller of every kind and wherever
situated in which Seller has any right or interest, including, but not
limited to, all items owned by Seller identified on Exhibit 1.1(a)
attached hereto;
(b) All inventories maintained by Seller, including, but
not limited to, all items owned by Seller identified on Exhibit 1.1(b)
attached hereto;
(c) All contracts identified on Exhibit 2.7 and Exhibit
2.14 attached hereto (excluding this Agreement and the agreements,
instruments and documents executed and delivered by PRG Sub pursuant
to this Agreement);
(d) All accounts receivable of Seller;
(e) S u bject to applicable laws and regulations, all
accounts receivable records of Seller;
(f) S u bject to applicable laws and regulations, all
transferable licenses and other regulatory approvals necessary for or
incident to the operation of the Assets; and
(g) All clinical and administrative policy and procedure
manuals, trade secrets, trademarks, service marks, marketing and
promotional materials (including audiotapes, videotapes and printed
materials) and all other property rights required for or incident to
the marketing of the products and services of the Business, and all
books and records relating thereto.
1.2 Excluded Assets. There shall be excluded from the Assets to
be transferred and conveyed hereunder, and Seller shall retain all of
its right, title and interest in and to, the following assets:
(a) All cash and cash equivalents of Seller in existence on
the Closing Date;
(b) Those certain assets described on Exhibit 1.2(b);
(c) If any, the Certificate or Articles of Incorporation,
Bylaws, shares of capital stock and minute books of Seller and similar
corporate records of Seller;
(d) The consideration delivered to Seller by PRG Sub on the
Closing Date pursuant to this Agreement;
(e) All patient medical records of Seller (which shall be
convyed to Barnet Dulaney Eye Center, L.L.C. on the Closing Date); and
(f) All real estate owned by Seller and Shareholder.
1.3 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
s p ecified in Annex I attached hereto (the "Acquisition
Consideration"). The Acquisition Consideration shall be allocated
among the Assets as agreed among PRG Sub and Seller on the Closing
Date.
(b) A s sumption of Liabilities. Except as otherwise
provided herein, PRG Sub shall assume on the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) all of Accounts
Payable (as defined in Section 2.16 hereof) and (ii) all of the
contracts, leases, commitments, obligations and liabilities of Seller
which are listed on Exhibit 1.3(b) attached hereto to the extent that
obligations are current and not otherwise in default. Notwithstanding
any contrary provision contained herein, PRG Sub shall not be deemed
to have assumed, nor shall PRG Sub assume: (i) any liability,
commitment or obligation not a trade account payable generated in the
ordinary course of business or indicated on Exhibit 1.3(b), (ii) any
liability set forth on Exhibit 1.3(b) which may be incurred by reason
of any breach of or default under such contracts, leases, commitments
or obligations which occurred prior to the Closing Date; (iii) any
liability for any employee benefits payable to employees of Seller,
including, but not limited to, liabilities arising under any Seller
Plan (as defined in Section 2.21 hereof); (iv) any liability based
upon or arising out of a violation of any antitrust or similar
restraint-of-trade laws by Seller, including, without limiting the
generality of the foregoing, any such antitrust liability which may
arise in connection with agreements, contracts, commitments or orders
for the sale of goods or provision of services by Seller reflected on
the books of Seller at or prior to the Closing Date; (v) any liability
based upon or arising out of any tortious or wrongful actions of
Seller or Shareholder; (vi) any liability for the payment of any taxes
imposed by law on Seller or Shareholder arising from or by reason of
the transactions contemplated by this Agreement; (vii) any mortgages
on real property; nor (viii) any liability incurred or to be incurred
pursuant to any malpractice or other suits or actions pending against
Seller or Shareholder.
1.4 Subsequent Actions. If, at any time after the Closing Date,
PRG Sub or PRG shall consider or be advised that any 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, Shareholder shall execute such bills of
sale, assignments and assurances and to take and do 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 and the
Shareholder.
Seller and the Shareholder, jointly and severally, hereby
represent and warrant to PRG Sub and PRG as follows:
2.1 Existence. Safford Surgi-Center is a sole proprietorship
under the laws of the State of Arizona. Southwest Eye Associates,
Ltd. is a corporation duly organized, validly existing and in good
standing under the laws of the State of Arizona. Seller has all
necessary powers 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. Shareholder is the sole proprietor of Safford Surgi-
Center and the sole shareholder of Southwest Eye Associates, Ltd. and
owns all interests free and clear of all security interests, claims,
e n cumbrances and liens There are no outstanding (a) bonds,
debentures, notes or other obligations the holders of which have the
right to vote with the stockholders 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
shares of capital stock of Seller have been issued or disposed of in
violation of the preemptive rights, rights of first refudal or similar
rights of any of Seller s stockholders. Seller 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. Seller does not
have any assets, employees or offices in any state other than Arizona.
2.2 Power and Authority for Transactions. Seller has the 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 or Certificate of
Incorporation, if any, its Bylaws, if any, or otherwise, to authorize
the execution, delivery and performance of this Agreement and such
related documents. Shareholder has the legal capacity to enter into
and perform this Agreement and the other agreements to be executed and
delivered in connection herewith. Southwest Eye Associates, Ltd. has
o b t a ined 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 Seller and the Shareholder, as appropriate, and
constitute or will constitute the legal, valid and binding obligations
of Seller and the Shareholder, enforceable against Seller and the
Shareholder 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 provisions of,
or result in the acceleration of, any obligation under any lien,
lease, agreement, rent, instrument, order, arbitration award, judgment
or decree to which Seller or Shareholder is a party or by which Seller
or Shareholder 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,
g r a nts, franchises, licenses, certificates of need and other
governmental authorizations and approvals required for the conduct of
the Business or the use of the Assets, or waivers thereof, have been
duly obtained and are in full force and effect. There are no
p r o ceedings pending or, to the knowledge of Seller and the
S h a reholder, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any
thereof.
2.4 [intentionally blank].
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 or the Shareholder.
2.6 Seller's Financial Information. Seller has heretofore
furnished PRG Sub with copies of financial information ("Financial
Statements") about Seller, including the unaudited Balance Sheet
("Balance Sheet") as of December 31, 1995 ("Balance Sheet Date"). All
such financial statements have been prepared in accordance with
g e n erally accepted accounting principles consistently followed
throughout the periods indicated, reflect all liabilities of Seller,
including all contingent liabilities of Seller as of their respective
dates, and present fairly the financial position of Seller 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 Seller leases, as lessor or lessee, real
or personal property used in operating the Business, 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 or Shareholder
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 [intentionally blank]
2.9 Title to and Encumbrances on Property. Seller has good,
valid and marketable title to all of the Assets, including but not
limited to, all items of property identified on Exhibit 1.1(a) and
Exhibit 1.1(b) 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. Seller shall cause all
encumbrances set forth on Exhibit 2.9 (other than those encumbrances
indicated on Exhibit 1.3(b)) to be released or terminated prior to the
Closing Date and evidence of such releases of liens and claims shall
be provided to PRG Sub on the Closing Date and the Assets shall not be
used to satisfy such liens, claims or encumbrances.
2.10 Inventories. All inventories of Seller used in the conduct
of the Business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The
items of Seller's inventory have been acquired in the ordinary course
of its business, are adequate for the reasonable requirements of the
Business, and, to the best knowledge of Seller and the Shareholder,
may be used for their intended purposes. All of the Assets
constituting inventory are owned or used by Seller, 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, Seller has no right, title or interest in or to patents,
p a t e nt rights, corporate names, assumed names, manufacturing
p r ocesses, 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 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
n a m e s, 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 Directors; Officers; Payrroll 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 Seller and the offices held by each, (b) the most recent
payroll report of Seller, showing all current employees of Seller and
their current levels of compensation, (c) promised increases in
compensation of employees of Seller that have not yet been effected,
(d) oral or written employment agreements or independent contractor
agreements (and all amendments thereto) to which Seller 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. Seller is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. Seller has not
engaged in any unfair labor practice. There are no unfair labor
practices charges or complaints pending or threatened against Seller,
and Seller has never been a party to any agreement with any union,
labor organization or collective bargaining unit.
2.13 Legal Proceedings. Neither Seller nor Shareholder nor any
of the Assets is subject to any pending, nor does Seller or
Shareholder have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to
or affecting Seller, Shareholder, the Business, the Assets or the
transactions contemplated by this Agreement, and, to the knowledge of
Seller and the Shareholder, no basis for any such action exists, nor
is there any legal impediment of which Seller or Shareholder 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
or Shareholder has knowledge which with notice or lapse of time, or
both, would constitute a default. Seller and the Shareholder have no
knowledge of any default by any other party to such Contracts.
Neither Seller nor the Shareholder 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 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) Bill of sale or other document evidencing an interest
in or agreement to purchase or sell 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;
(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. Seller has not, since the Balance Sheet
Date:
(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) D i s c h arged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
( a b s olute, accrued, contingent or otherwise) other than (i)
l i abilities shown or reflected on the Balance Sheet or (ii)
liabilities incurred since the Balance Sheet Date in the ordinary
course of business;
(c) Since the Balance Sheet Date and prior to the Closing
Date, 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 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) 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 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 capital stock of Seller;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Seller's capital stock; or
(p) Suffered any material adverse change in the Business or
to the Assets.
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 Seller of the Seller 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 ). Seller has provided PRG and PRG Sub with 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 Seller as of the Balance Sheet Date. The Seller
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 Seller 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 Seller is in substantial compliance with the
terms and conditions of such third-party payor arrangements, and the
reserves established by the Seller are adequate to cover any liability
r e s u lting 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. Seller has filed all tax returns (including tax
reports and other statements) 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, 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
respects and properly reflect the relevant taxes for the periods
covered thereby. Seller 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
Seller 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 Seller). Seller and
the Shareholder have not received any notice that any tax deficiency
or delinquency has been asserted against Seller. There are no audits
relating to taxes of Seller threatened, pending or in process. 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. Seller has delivered to PRG Sub correct and
complete copies of Seller'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 Seller
during the three calendar year period preceding the date of this
Agreement. Seller 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, Seller 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. Seller and the Shareholder do not know,
or have reasonable grounds to know, of any basis for the assertion
against Seller 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
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, Shareholder and each physician
employee of Seller carries malpractice insurance on a claims made
basis with amounts of at least $1,000,000 for each claim and
$3,000,000 for aggregate claims. 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 Seller nor 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 Seller, nor Shareholder nor any physician employee of Seller
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, 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 multi-
employer 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 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. Seller 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 Seller, the Business or
the Assets.
2.22 Compliance with Laws in General. Seller, the Shareholder
and Seller's physician and licensed employees, and 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, any Stockholder or any physician or licensed
employee of Seller of any federal, state or local law or regulation.
Neither Seller nor 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 and no notice of
any pending inspection or violation of any such law, regulation or
ordinance has been received by Seller or Shareholder.
2.23 Medicare and Medicaid Programs. Seller, Shareholder and
each physician and licensed employee of Seller 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
e f fect with no defaults having occurred thereunder. Seller,
Shareholder and each physician and licensed employee of Seller 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 Seller, Shareholder and each
licensed employee of Seller. Neither Seller, nor Shareholder, nor any
physician or licensed employee of Seller 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. Seller, the Shareholder 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 Shareholder, 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
f a lse 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 Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or
directors of Seller or 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 Accredited Investor Status. Shareholder and Seller are an
"accredited investor" (as defined in Rule 501(a) under the Securities
Act of 1933, as amended (the "Securities Act")).
2.27 Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by Seller on any of its
capital stock since the Balance Sheet Date. No repurchase of any of
Seller's capital stock has been approved, effected or is pending, or
is contemplated by the Board of Directors of Seller.
2.28 Suppliers. Seller has provided PRG with a complete and
accurate list of the ten (10) largest suppliers of Seller 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.
2.29 Banking Relations. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that Seller has with any bank or
o t h er 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. No
officer, employee, director or stockholder of Seller, or their
r e s pective 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 Shareholder 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 Payors. Seller has provided PRG with a true, complete and
correct list of the names and addresses of each payor of Seller's
services which accounted for more than 10% of revenues of Seller in
any of the preceding fiscal years. Seller has good relations with all
such payors and other material payors of Seller and none of such
payors has notified Seller that it intends to discontinue its
relationship with Seller or to deny any claims submitted to such payor
for payment.
Section 3. Representations and Warranties of PRG Sub and PRG.
PRG Sub and PRG hereby represent and warrant to Seller and the
Shareholder 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 Arizona, 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
u n der 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.
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 or the Shareholder 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.
Section 4. Covenants of Seller and the Shareholder.
Seller and the Shareholder, jointly and severally, agree that
between the date hereof and the Closing Date:
4.1 Consummation of Agreement. Seller and the Shareholder shall
use their 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 Shareholder shall
operate the Business and use the Assets in the ordinary course.
Seller and Shareholder 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 Shareholder shall use
their best efforts to preserve the Business and Assets intact and
shall not take any action that would have an 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;
provided that Seller may continue to operate in the ordinary course.
Seller and the Shareholder 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 Shareholder 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
a n d 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 Shareholder 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
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 Shareholder 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.
4.5 Acquisition Proposals. Seller and the Shareholder 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 Shareholder, 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
Shareholder will immediately cease any such activities, discussions or
n e gotiations heretofore conducted with respect to any of the
foregoing. Seller and the Shareholder 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 reasonably
necessary to pay or fund completely for any accrued benefits, where
applicable, or vested accrued benefits for which Seller or any entity
might have any liability whatsoever arising from any insurance,
pension plan, employment tax or similar liability of Seller to any
employee or other person or entity (including, without limitation, any
Seller Plan and any liability under employment contracts with Seller)
allocable to services performed prior to the Closing Date. Seller
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 Seller's employees or similar
persons or entities, including, without limitation, any Seller Plan.
4.7 Employee Matters. Seller shall not, without the prior
written approval of PRG, except as required by law, increase the cash
compensation of Shareholder or other employee or an independent
contractor of Seller, 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
Seller, its business, assets or prospects.
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 capital stock be approved or effected.
4.9 Requirements to Effect Acquisition. Seller and Shareholder
shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the purchase contemplated hereby under
applicable law.
4.10 Voting of Shares; Irrevocable Proxy. Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Seller
common stock owned by the Shareholder at any meeting of the
stockholders 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.
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 Lease. PRG shall have entered into a building lease (the
"Lease") with the owner of the property located at 825 20th Avenue,
Safford, Arizona on terms reasonably satisfactory to PRG, PRG Sub and
the owner of the property, on terms that include, as a minimum, a
rental of $6,000 per month, with a term of seven years, commencing
9/1/96, and ending 8/31/2003, with appropriate COL increases.
4.13 Hiring of Employees. Seller and Shareholder shall cooperate
with all requests made by PRG and PRG Sub for the purpose of allowing
PRG or PRG Sub to hire those non-physician employees of Seller
designated by PRG and PRG Sub, such employment to be effective as of
the Closing Date. Notwithstanding the above, Seller and Shareholder
shall remain liable under any Seller Plans for any claims incurred by
a n y employees or their spouses or dependents, and for all
compensation, bonuses, benefits and other such items and other
liabilities related to Seller's employees incurred by Seller prior to
the Closing Date.
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:
5.1 Consummation of Agreement. PRG and PRG Sub shall use their
b e s t 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.
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 stock consideration and shall use its best efforts to obtain
approval for the listing of the stock consideration upon official
notice of issuance.
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 and the Shareholder 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.
6.2 Covenants and Conditions. Seller and the Shareholder shall
have performed and complied with all covenants and conditions required
by this Agreement to be performed and complied with by Seller and the
Shareholder 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
t h e c ondition (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 and the Shareholder shall
have obtained 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 Debt and Receivables. There shall be no indebtedness,
receivables or payables between Seller and its Shareholder or
affiliates and Seller shall not have any liabilities, including
indebtedness, guaranties and capital leases, that are not approved by
PRG and Seller and Shareholder shall not use any of the Assets to pay
such indebtedness, receivables, payables or liabilities.
6.10 Leases. Seller shall have entered into Leases with
Shareholder in accordance with Section 4.12.
6.11 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
Section 7. Seller's and the Shareholder's Conditions Precedent.
The obligations of Seller and the Shareholder 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 respects when initially made and shall be true and
correct in all respects as of the Closing Date.
7.2 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.
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 C l osing Deliveries. Seller shall have received all
documents, duly executed in form satisfactory to Seller and its
counsel, referred to in Sec tion 8.2.
7.5 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
7.6 Employment Agreement. Dr. Holder shall have entered into an
employment agreement with Barnet Dulaney Eye Center, P.L.L.C. on terms
and conditions reasonably satisfactory to Dr. Holder and Barnet
Dulaney Eye Center, P.L.L.C.<PAGE>
Section 8. Closing Deliveries.
8.1 Deliveries of Seller and the Shareholder. At or prior to
the Closing, Seller and the Shareholder 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 Board of Directors of
Seller authorizing the execution, delivery and performance of this
Agreement, the Service Agreement, the Employment Agreements 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 and
Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of Seller and
Shareholder contained herein; (ii) as to the performance of and
compliance by Seller and Shareholder with all covenants contained
herein; and (iii) certifying that all conditions precedent of Seller
and Shareholder 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 Arizona establishing that
Seller is in existence and is in good standing to transact business in
its state of incorporation;
(g) an opinion of counsel to Seller and the
Shareholder 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 Stockholder s Agreement (herein so called) in form
attached hereto as Exhibit 8.1(l) executed by Shareholder and his
spouse; and
(j) 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 and the
Shareholder 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 Arizona;
(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) the Stockholder's Agreement; and
(h) such other instruments and documents as reasonably
requested by Seller or Shareholder to carry out and effect the purpose
and intent of this Agreement.
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 and the Shareholder, 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 five (5) years following the Closing Date, except
that (i) the representations and warranties set forth in Section 2.23,
2.24 or 2.25 with respect to environmental and medical waste laws that
are enacted as of the date hereof and health care laws enacted on the
date hereof and matters shall survive for a period of fifteen (15)
years and tax representations shall survive until one year 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
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 THE SHAREHOLDER, AND THEIR RESPECTIVE AGENTS AND
E M P L OYEES (EACH OF THE FOREGOING, INCLUDING SELLER AND THE
SHAREHOLDER, 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
A G R EEMENT (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 and the Shareholder. SELLER AND
THE SHAREHOLDER (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT
APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY AND SEVERALLY, SHALL
INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDER, 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 Shareholder 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,
WHETHER ON OR AFTER THE CLOSING DATE, (II) TAXES OF SELLER OR ANY
OTHER PERSON (INCLUDING SHAREHOLDER) ARISING FROM OR AS A RESULT OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (III) ANY LIABILITY
OF SELLER OR THE SHAREHOLDER 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, AND (VI) ANY
LIABILITIES THAT ARE EXCLUDED PURSUANT TO THE TERMS OF THIS AGREEMENT
AND ANY LIABILITIES NOT SET FORTH ON EXHIBIT 1.3(b); PROVIDED,HOWEVER,
THAT SHAREHOLDER AND SELLER SHALL NOT INDEMNIFY PRG AND PRG SUB FOR
EMPLOYEE MATTERS ARISING OUT OF OCCURRENCES OCCURING AFTER THE CLOSING
DATE IN CONNECTION WITH EMPLOYEES THAT WILL BECOME EMPLOYEES OF PRG
SUB AS OF 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
P e rson, 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
p a r ticipate 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
p r oceeding 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
w h ich 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.
Section 10. 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 Seller or Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by Seller or
Shareholder pursuant to this Agreement is or becomes untrue or
breached in any material respect or if Seller or Shareholder 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) a t a ny time by Seller or the Shareholder 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) b y PRG, PRG Sub, Seller or the Shareholder if the
transaction contemplated hereby shall not have been consummated by
October 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. Noncompetition.
11.1 Prohibited Activities. In order to protect PRG, PRG Sub and
each of their affiliates (collectively, the "PRG Group") against the
u n a uthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by Seller or the
Shareholder and other good and valuable consideration, Seller and
Shareholder hereby agrees that, subject to adjustment pursuant to
Section 11.5, for a period of five (5) years following the Closing
Date, Seller and 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 physician services at any
medical office, clinic or out-patient and/or ambulatory treatment or
diagnostic facility providing services similar to those provided by
Seller or engage or participate in or finance any business which
engages in direct competition with the business being conducted by
PRG, PRG Sub or any practice managed by PRG anywhere within 50 miles
of any location of PRG, PRG Sub or any practice managed by PRG;
provided, however, that this provision shall not prohibit the
Shareholder or any of his or her affiliates from purchasing or holding
an aggregate equity interest of up to 2%, so long as Seller or 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 or any practice managed by
PRG; or
(b) induce or attempt to influence any employee of PRG, PRG
Sub or any practice managed by 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.
11.2 Damages.
(a) Because of the difficulty of measuring economic losses
to PRG 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 and PRG Sub for which it would have no other
adequate remedy, Seller and the Shareholder agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be
enforced by PRG 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 Seller or a Shareholder of the foregoing
covenant, Seller and such Shareholder agrees to that in the event of a
breach of the foregoing covenant the breaching Seller or 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:
Year Following
Closing in Which
Breach Occurs Damages
1st $260,000.00
2nd $208,000.00
3rd $160,000.00
4th $104,000.00
5th $52,000.00
11.3 Reasonable Restraint. It is agreed by the parties that the
foregoing covenants in this Section 11 impose a reasonable restraint
on Seller and the Shareholder in light of the activities and business
of PRG and PRG Sub on the date of the execution of this Agreement.
11.4 Severability; Reformation. The covenants in this Section 11
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.
11.5 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 Seller or Shareholder is in
violation of any provision of this Section 11. The covenants
contained in this Section 11 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 12. Nondisclosure of Confidential Information. Seller and
the Shareholder 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 or PRG Sub that is valuable, special
and unique assets of PRG's or PRG Sub's businesses. Seller and the
Shareholder 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 Seller or the 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), Seller and 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) Seller and the Shareholder reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) Seller and the
Shareholder are the sole and exclusive owner of such confidential
information as a result of the completionof the transactions
contemplated hereunder or otherwise. In the event of a breach or
threatened breach by Seller or the Shareholder of the provisions of
this Section 12, PRG or PRG Sub shall be entitled to an injunction
restraining Seller and the Shareholder 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.. 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 Seller or Shareholder. 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 and PRG Sub reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) PRG and PRG Sub are the
sole and exclusive owner of such confidential information as a result
of the completion of the transactions contemplated hereunder or
otherwise. In the event of a breach or threatened breach by PRG or
PRG Sub of the provisions of this Section 12, Seller or Shareholder
shall be entitled to an injunction restraining PRG and PRG Sub from
disclosing, in whole or in part, such confidential information.
Nothing herein shall be construed as prohibiting Seller or Shareholder
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. E c o nomic Risk; Sophistication. Seller and the
Shareholder 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. Seller and
the Shareholder 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. Seller, the Shareholder 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 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:
Physicians Resource Group, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
Facsimile: (214) 982-8299
If to PRG Sub:
Sun Valley Acquisition Corporation
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
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 or the Shareholder:
825 20th Avenue
Safford, Arizona
Facsimile:
with a copy to:
Charles E. Cruise, Esq.
Cruise & Politi, P.L.L.C.
1301 Joshua Avenue, Suite C
Parker, Arizona 85344
Facsimile: (520) 669-5218
and:
Kirk Gray, C.P.A.
801 20th Avenue
Safford, Arizona 85546
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 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 or the Shareholder for services rendered in connection with
n e gotiating 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 or the
Shareholder as a result of the transactions contemplated hereby.
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
ARIZONA 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; and provided, further, that
Dr. Holder may assign his interests hereunder to an entity created by
Dr. Holder prior to the Closing Date provided that the documents
evidencing such assignment and entity organizational/qualification
documents are acceptable to PRG in its reasonable discretion.
14.11 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.
14.12 Costs of Enforcement. In the event that PRG Sub or PRG,
on the one hand, or Seller or the Shareholder, 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
C o mplaint. "Reasonable attorneys' fees" are those reasonable
attorneys' fees reasonably incurred in obtaining a judgment in favor
of the prevailing party.
14.13 Prorations. Seller shall remain responsible for all
taxes levied upon the Assets for the period prior to the Closing Date,
and PRG Sub shall be responsible for all taxes levied against the
Assets for the period following the Closing Date. Each party agrees
to reimburse the other party if necessary to comply with the terms of
the preceding sentence.
14.14 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.
14.15 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.
14.16 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.
14.17 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]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
SUN VALLEY ACQUISITION CORPORATION
By: _________________________
Its: _________________________
SAFFORD SURGI-CENTER
By: _________________________
James F. Holder, O.D.,
Sole Proprietor
PHYSICIANS RESOURCE GROUP, INC.
By: _________________________
Its: _________________________
SOUTHWEST EYE ASSOCIATES, LTD.
By: _________________________
Its: _________________________
______________________________
James Holder, O.D.
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
1.1(a) Personal Property
1.1(b) Inventory
1.2(b) Excluded Assets
1.3(b) Assumed Liabilities
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
2.14 Contracts (other than Leases)
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.29 Banking Relations
8.1(l) Stockholder's Agreement
ANNEX I Acquisition Consideration
ASSET PURCHASE AGREEMENT
by and among
SNW, INC.,
JAMES HOLDER, O.D.,
CLARICE HOLDER,
JEFFREY WOODWARD,
SUZY WOODWARD,
SUN VALLEY ACQUISITION CORPORATION
and
PHYSICIANS RESOURCE GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Terms of the Sale and Purchase of Assets
1.1 Conveyance of Assets . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . 2
1.3 Purchase Price; Assumption of Liabilities . . . . . . . . 2
1.4 Subsequent Actions . . . . . . . . . . . . . . . . . . . 2
Section 2. Representations and Warranties of Seller 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 . . . . 3
2.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Seller's Financial Information . . . . . . . . . . . . . 4
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . 6
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 . . . . . . . . . . . . . 8
2.24 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . 8
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 . 9
2.31 Payors . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3. Representations and Warranties of PRG Sub and PRG
3.1 Corporate Existence: Good Standing . . . . . . . . . . . 9
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . 10
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . 10
3.4 No Untrue Representations . . . . . . . . . . . . . . . . 10
Section 4. Covenants of Seller and the Shareholders
4.1 Consummation of Agreement . . . . . . . . . . . . . . . . 10
4.2 Business Operations . . . . . . . . . . . . . . . . . . . 10
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . . 10
4.4 Approvals of Third Parties and Permits and Consents . . . 11
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . 11
4.6 Funding of Accrued Employee Benefits . . . . . . . . . . 11
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . . 11
4.8 Distributions and Repurchases . . . . . . . . . . . . . . 11
4.9 Requirements to Effect Acquisition . . . . . . . . . . . 11
4.10 Voting of Shares; Irrevocable Proxy . . . . . . . . . . . 11
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . . 11
4.12 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.13 Hiring of Employees . . . . . . . . . . . . . . . . . . . 12
Section 5. Covenants of PRG and PRG Sub
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . 12
5.2 Approvals of Third Parties and Permits and Consents . . . 12
5.3 Listing Application . . . . . . . . . . . . . . . . . . . 12
Section 6. PRG Sub and PRG Conditions Precedent
6.1 Representations and Warranties . . . . . . . . . . . . . 12
6.2 Covenants and Conditions . . . . . . . . . . . . . . . . 12
6.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 No Material Adverse Change . . . . . . . . . . . . . . . 12
6.5 Due Diligence Review . . . . . . . . . . . . . . . . . . 12
6.6 Approval by the Board of Directors . . . . . . . . . . . 12
6.7 Consents and Approvals . . . . . . . . . . . . . . . . . 13
6.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . 13
6.9 Debt and Receivables . . . . . . . . . . . . . . . . . . 13
6.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.11 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . 13
Section 7. Seller's and the Shareholder's Conditions Precedent
7.1 Representations and Warranties . . . . . . . . . . . . . 13
7.2 Covenants and Conditions . . . . . . . . . . . . . . . . 13
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8. Closing Deliveries
8.1 Deliveries of Seller and the Shareholders . . . . . . . . 13
8.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . 14
Section 9. Nature and Survival of Representations and Warranties;
Indemnification
9.1 Nature and Survival . . . . . . . . . . . . . . . . . . . 15
9.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . 15
9.3 Indemnification by Seller and the Shareholders . . . . . 15
9.4 Indemnification Procedure . . . . . . . . . . . . . . . . 16
Section 10. Termination
Section 11. Noncompetition
11.1 Prohibited Activities . . . . . . . . . . . . . . . . . . 17
11.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . 17
11.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . 18
11.4 Severability; Reformation . . . . . . . . . . . . . . . . 18
11.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 12. Nondisclosure of Confidential Information
Section 13.
Economic Risk; Sophistication . . . . . . . . . . . . . . . . 19
Section 14. Miscellaneous
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.2 Further Assurances . . . . . . . . . . . . . . . . . . . 20
14.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . 20
14.4 Public Disclosures . . . . . . . . . . . . . . . . . . . 20
14.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 20
14.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . 20
14.7 Integration of Exhibits . . . . . . . . . . . . . . . . . 20
14.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . 20
14.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 20
14.10 Binding Effect/Assignment . . . . . . . . . . . . . 21
14.11 No Rule of Construction . . . . . . . . . . . . . . 21
14.12 Costs of Enforcement . . . . . . . . . . . . . . . . 21
14.13 Prorations . . . . . . . . . . . . . . . . . . . . . 21
14.14 Amendments; Waivers . . . . . . . . . . . . . . . . 21
14.15 Choice of Forum . . . . . . . . . . . . . . . . . . 21
14.16 Service of Process . . . . . . . . . . . . . . . . . 21
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made and
executed as of the 25th day of September, 1996, is by and among SUN
VALLEY ACQUISITION CORPORATION, a Texas corporation ("PRG Sub");
PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG"); and
SNW, INC., an Arizona corporation (collectively, "Seller"), and JAMES
HOLDER, O.D., CLARICE HOLDER, JEFFREY WOODWARD and SUZY WOODWARD
(collectively, Shareholders ).
WITNESSETH:
WHEREAS, Seller operates a center of eye care excellence
(optometry, optical and surgi-center practice) in Safford, Arizona
("Business");
WHEREAS, Shareholders are the only shareholders of Seller;
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, Seller wishes to sell to PRG Sub, and PRG Sub wishes to
acquire from Seller, substantially all of the assets of Seller, all
upon the terms and subject to the conditions set forth herein.
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 30th day of
September, 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 all of Seller's right,
title and interest in and to the business, properties and assets of
S e ller (personal, tangible and intangible), including, without
limitation, all items of personal property and other assets used in
connection with the Business (except that the real estate owned by
Seller and Shareholders shall not be purchased and except as otherwise
provided herein) (individually, "Asset", and collectively "Assets"),
free and clear of all obligations, security interests, claims, liens
and encumbrances whatsoever, except as specifically assumed by PRG
pursuant to Section 1.3(b) hereof. Without limiting the foregoing, the
Assets specifically include:
(a) All of the business, personal property, furniture,
fixtures, equipment and goodwill of Seller of every kind and wherever
situated in which Seller has any right or interest, including, but not
limited to, all items owned by Seller identified on Exhibit 1.1(a)
attached hereto;
(b) All inventories maintained by Seller, including, but
not limited to, all items owned by Seller identified on Exhibit 1.1(b)
attached hereto;
(c) All contracts identified on Exhibit 2.7 and Exhibit
2.14 attached hereto (excluding this Agreement and the agreements,
instruments and documents executed and delivered by PRG Sub pursuant
to this Agreement);
(d) All accounts receivable of Seller;
(e) S u bject to applicable laws and regulations, all
accounts receivable records of Seller;
(f) S u bject to applicable laws and regulations, all
transferable licenses and other regulatory approvals necessary for or
incident to the operation of the Assets; and
(g) All clinical and administrative policy and procedure
manuals, trade secrets, trademarks, service marks, marketing and
promotional materials (including audiotapes, videotapes and printed
materials) and all other property rights required for or incident to
the marketing of the products and services of the Business, and all
books and records relating thereto.
1.2 Excluded Assets. There shall be excluded from the Assets to
be transferred and conveyed hereunder, and Seller shall retain all of
its right, title and interest in and to, the following assets:
(a) All cash and cash equivalents of Seller in existence on
the Closing Date;
(b) Those certain assets described on Exhibit 1.2(b);
(c) The Certificate or Articles of Incorporation, Bylaws,
shares of capital stock and minute books of Seller and similar
corporate records of Seller;
(d) The consideration delivered to Seller by PRG Sub on the
Closing Date pursuant to this Agreement;
(e) All patient medical records of Seller (which shall be
convyed to Barnet Dulaney Eye Center, L.L.C. on the Closing Date); and
(f) All real estate owned by Seller and Shareholders.
1.3 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
s p ecified in Annex I attached hereto (the "Acquisition
Consideration"). The Acquisition Consideration shall be allocated
among the Assets as agreed among PRG Sub and Seller on the Closing
Date.
(b) A s sumption of Liabilities. Except as otherwise
provided herein, PRG Sub shall assume on the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) all of Accounts
Payable (as defined in Section 2.16 hereof) and (ii) all of the
contracts, leases, commitments, obligations and liabilities of Seller
which are listed on Exhibit 1.3(b) attached hereto to the extent that
obligations are current and not otherwise in default. Notwithstanding
any contrary provision contained herein, PRG Sub shall not be deemed
to have assumed, nor shall PRG Sub assume: (i) any liability,
commitment or obligation not a trade account payable generated in the
ordinary course of business or indicated on Exhibit 1.3(b), (ii) any
liability set forth on Exhibit 1.3(b) which may be incurred by reason
of any breach of or default under such contracts, leases, commitments
or obligations which occurred prior to the Closing Date; (iii) any
liability for any employee benefits payable to employees of Seller,
including, but not limited to, liabilities arising under any Seller
Plan (as defined in Section 2.21 hereof); (iv) any liability based
upon or arising out of a violation of any antitrust or similar
restraint-of-trade laws by Seller, including, without limiting the
generality of the foregoing, any such antitrust liability which may
arise in connection with agreements, contracts, commitments or orders
for the sale of goods or provision of services by Seller reflected on
the books of Seller at or prior to the Closing Date; (v) any liability
based upon or arising out of any tortious or wrongful actions of
Seller or any Shareholder; (vi) any liability for the payment of any
taxes imposed by law on Seller or any Shareholder arising from or by
reason of the transactions contemplated by this Agreement; (vii) any
mortgages on real property; nor (viii) any liability incurred or to be
incurred pursuant to any malpractice or other suits or actions pending
against Seller or any Shareholder.
1.4 Subsequent Actions. If, at any time after the Closing Date,
PRG Sub or PRG shall consider or be advised that any 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, each Shareholder shall execute such bills
of sale, assignments and assurances and to take and do 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 and the
Shareholders.
Seller and the Shareholders, jointly and severally, hereby
represent and warrant to PRG Sub and PRG as follows:
2.1 Corporate Existence; Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Arizona. Seller has all necessary corporate powers 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. Shareholders are the sole shareholders of Seller 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. Each share of Seller's common stock has been legally and
validly issued and fully paid and nonassessable. No shares of capital
stock of Seller are owned by Seller 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
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 shares of capital stock 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 stockholders.
Seller 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. Seller does not have any assets, employees or
offices in any state other than Arizona.
2.2 Power and Authority for Transactions. Seller 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 or Certificate
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. Seller 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 Seller and the
Shareholders, as appropriate, and constitute or will constitute the
legal, valid and binding obligations of Seller and the Shareholders,
enforceable against Seller 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 or Certificate
of Incorporation or Bylaws of Seller or any provisions of, or result
in the acceleration of, any obligation under any lien, lease,
agreement, rent, instrument, order, arbitration award, judgment or
decree to which Seller or any Shareholder is a party or by which
S e ller or any Shareholder 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,
g r a nts, franchises, licenses, certificates of need and other
governmental authorizations and approvals required for the conduct of
the Business or the use of the Assets, or waivers thereof, have been
duly obtained and are in full force and effect. There are no
p r o ceedings pending or, to the knowledge of Seller and the
S h areholders, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any
thereof.
2.4 [intentionally blank].
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 or the Shareholders.
2.6 Seller's Financial Information. Seller has heretofore
furnished PRG Sub with copies of financial information ("Financial
Statements") about Seller, including the unaudited Balance Sheet
("Balance Sheet") as of December 31, 1995 ("Balance Sheet Date"). All
such financial statements have been prepared in accordance with
g e n erally accepted accounting principles consistently followed
throughout the periods indicated, reflect all liabilities of Seller,
including all contingent liabilities of Seller as of their respective
dates, and present fairly the financial position of Seller 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 Seller leases, as lessor or lessee, real
or personal property used in operating the Business, 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 or any
Shareholder 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 [intentionally blank]
2.9 Title to and Encumbrances on Property. Seller has good,
valid and marketable title to all of the Assets, including but not
limited to, all items of property identified on Exhibit 1.1(a) and
Exhibit 1.1(b) 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. Seller shall cause all
encumbrances set forth on Exhibit 2.9 (other than those encumbrances
indicated on Exhibit 1.3(b)) to be released or terminated prior to the
Closing Date and evidence of such releases of liens and claims shall
be provided to PRG Sub on the Closing Date and the Assets shall not be
used to satisfy such liens, claims or encumbrances.
2.10 Inventories. All inventories of Seller used in the conduct
of the Business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The
items of Seller's inventory have been acquired in the ordinary course
of its business, are adequate for the reasonable requirements of the
Business, and, to the best knowledge of Seller and the Shareholders,
may be used for their intended purposes. All of the Assets
constituting inventory are owned or used by Seller, 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, Seller has no right, title or interest in or to patents,
p a t e nt rights, corporate names, assumed names, manufacturing
p r ocesses, 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 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
n a m e s, 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 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 Seller and the offices held by each, (b) the most recent
payroll report of Seller, showing all current employees of Seller and
their current levels of compensation, (c) promised increases in
compensation of employees of Seller that have not yet been effected,
(d) oral or written employment agreements or independent contractor
agreements (and all amendments thereto) to which Seller 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. Seller is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. Seller has not
engaged in any unfair labor practice. There are no unfair labor
practices charges or complaints pending or threatened against Seller,
and Seller has never been a party to any agreement with any union,
labor organization or collective bargaining unit.
2.13 Legal Proceedings. Neither Seller nor any Shareholder nor
any of the Assets is subject to any pending, nor does Seller or any
Shareholder have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to
or affecting Seller, any Shareholder, the Business, the Assets or the
transactions contemplated by this Agreement, and, to the knowledge of
Seller and the Shareholders, no basis for any such action exists, nor
is there any legal impediment of which Seller or any Shareholder 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
or any Shareholder has knowledge which with notice or lapse of time,
or both, would constitute a default. Seller and the Shareholders
have no knowledge of any default by any other party to such Contracts.
Neither Seller 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 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 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) Bill of sale or other document evidencing an interest
in or agreement to purchase or sell 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;
(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. Seller has not, since the Balance Sheet
Date:
(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) D i s c h arged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
( a b s olute, accrued, contingent or otherwise) other than (i)
l i abilities shown or reflected on the Balance Sheet or (ii)
liabilities incurred since the Balance Sheet Date in the ordinary
course of business;
(c) Since the Balance Sheet Date and prior to the Closing
Date, 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 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) 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 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 capital stock of Seller;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Seller's capital stock; or
(p) Suffered any material adverse change in the Business or
to the Assets.
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 Seller of the Seller 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 ). Seller has provided PRG and PRG Sub with 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 Seller as of the Balance Sheet Date. The Seller
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 Seller 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 Seller is in substantial compliance with the
terms and conditions of such third-party payor arrangements, and the
reserves established by the Seller are adequate to cover any liability
r e s u lting 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. Seller has filed all tax returns (including tax
reports and other statements) 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, 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
respects and properly reflect the relevant taxes for the periods
covered thereby. Seller 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
Seller 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 Seller). Seller and
the Shareholders have not received any notice that any tax deficiency
or delinquency has been asserted against Seller. There are no audits
relating to taxes of Seller threatened, pending or in process. 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. Seller has delivered to PRG Sub correct and
complete copies of Seller'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 Seller
during the three calendar year period preceding the date of this
Agreement. Seller 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, Seller 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. Seller and the Shareholders do not know,
or have reasonable grounds to know, of any basis for the assertion
against Seller 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
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, each Shareholder and each
physician employee of Seller carries malpractice insurance on a claims
made basis with amounts of at least $1,000,000 for each claim and
$3,000,000 for aggregate claims. 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 Seller 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 Seller, nor each Shareholder nor any physician employee of
Seller 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, 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 multi-
employer 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 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. Seller 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 Seller, the Business or
the Assets.
2.22 Compliance with Laws in General. Seller, the Shareholders
and Seller's physician and licensed employees, and 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, any Stockholder or any physician or licensed
employee of Seller of any federal, state or local law or regulation.
Neither Seller 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 and
no notice of any pending inspection or violation of any such law,
r e g ulation or ordinance has been received by Seller or any
Shareholder.
2.23 Medicare and Medicaid Programs. Seller, each Shareholder
and each physician and licensed employee of Seller 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. Seller, each
Shareholder and each physician and licensed employee of Seller 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 Seller, each Shareholder and
e a c h licensed employee of Seller. Neither Seller, nor any
Shareholder, nor any physician or licensed employee of Seller 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. Seller, the Shareholders 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 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
f a lse 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 Shareholder in this Agreement, and no Exhibit or
certificate issued or executed by, or information furnished by,
officers or directors of Seller 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 Accredited Investor Status. Each Shareholder and Seller are
an "accredited investor" (as defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act")).
2.27 Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by Seller on any of its
capital stock since the Balance Sheet Date. No repurchase of any of
Seller's capital stock has been approved, effected or is pending, or
is contemplated by the Board of Directors of Seller.
2.28 Suppliers. Seller has provided PRG with a complete and
accurate list of the ten (10) largest suppliers of Seller 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.
2.29 Banking Relations. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that Seller has with any bank or
o t h er 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. No
officer, employee, director or stockholder of Seller, or their
r e s pective 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 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, Seller or to provide services, lease space,
lease equipment or engage in any other venture or activity with
Seller.
2.31 Payors. Seller has provided PRG with a true, complete and
correct list of the names and addresses of each payor of Seller's
services which accounted for more than 10% of revenues of Seller in
any of the preceding fiscal years. Seller has good relations with all
such payors and other material payors of Seller and none of such
payors has notified Seller that it intends to discontinue its
relationship with Seller or to deny any claims submitted to such payor
for payment.
Section 3. Representations and Warranties of PRG Sub and PRG.
PRG Sub and PRG hereby represent and warrant to Seller 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 Arizona, 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
u n der 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.
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 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.
Section 4. Covenants of Seller and the Shareholders.
Seller and the Shareholders, jointly and severally, agree that
between the date hereof and the Closing Date:
4.1 Consummation of Agreement. Seller and the Shareholders
shall use their 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 Shareholders shall
operate the Business and use the Assets in the ordinary course.
Seller and Shareholders 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 Shareholders shall use
their best efforts to preserve the Business and Assets intact and
shall not take any action that would have an 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;
provided that Seller may continue to operate in the ordinary course.
Seller 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 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 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
Seller, the Business and the Assets, including employees, customers
a n d 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 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 Seller
is a party or relating to the Business or the Assets, and (b) any
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 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.
4.5 Acquisition Proposals. Seller and the Shareholders 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 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
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
Shareholders will immediately cease any such activities, discussions
or negotiations heretofore conducted with respect to any of the
foregoing. Seller and the Shareholders 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 reasonably
necessary to pay or fund completely for any accrued benefits, where
applicable, or vested accrued benefits for which Seller or any entity
might have any liability whatsoever arising from any insurance,
pension plan, employment tax or similar liability of Seller to any
employee or other person or entity (including, without limitation, any
Seller Plan and any liability under employment contracts with Seller)
allocable to services performed prior to the Closing Date. Seller
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 Seller's employees or similar
persons or entities, including, without limitation, any Seller Plan.
4.7 Employee Matters. Seller shall not, without the prior
written approval of PRG, except as required by law, increase the cash
compensation of any Shareholder or other employee or an independent
contractor of Seller, 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
Seller, its business, assets or prospects.
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 capital stock be approved or effected.
4.9 Requirements to Effect Acquisition. Seller and each
Shareholder shall use their best efforts to take, or cause to be
taken, all actions necessary to effect the purchase contemplated
hereby under applicable law.
4.10 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
Seller common stock owned by the Shareholders at any meeting of the
stockholders 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.
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 Lease. PRG shall have entered into a building lease (the
"Lease") with the owner of the property located at 825 20th Avenue,
Safford, Arizona on terms reasonably satisfactory to PRG, PRG Sub and
the owner of the property, on terms that include, as a minimum, a
rental of $6,000 per month, with a term of seven years, commencing
9/1/96, and ending 8/31/2003, with appropriate COL increases.
4.13 H i ring of Employees. Seller and Shareholders shall
cooperate with all requests made by PRG and PRG Sub for the purpose of
allowing PRG or PRG Sub to hire those non-physician employees of
Seller designated by PRG and PRG Sub, such employment to be effective
as of the Closing Date. Notwithstanding the above, Seller and
Shareholders shall remain liable under any Seller Plans for any claims
incurred by any employees or their spouses or dependents, and for all
compensation, bonuses, benefits and other such items and other
liabilities related to Seller's employees incurred by Seller prior to
the Closing Date.
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:
5.1 Consummation of Agreement. PRG and PRG Sub shall use their
b e s t 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.
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 stock consideration and shall use its best efforts to obtain
approval for the listing of the stock consideration upon official
notice of issuance.
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 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.
6.2 Covenants and Conditions. Seller and the Shareholders shall
have performed and complied with all covenants and conditions required
by this Agreement to be performed and complied with by Seller and the
Shareholders 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
t h e c ondition (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 and the Shareholders shall
have obtained 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 Debt and Receivables. There shall be no indebtedness,
receivables or payables between Seller and its shareholders or
affiliates and Seller shall not have any liabilities, including
indebtedness, guaranties and capital leases, that are not approved by
PRG and Seller and Shareholders shall not use any of the Assets to pay
such indebtedness, receivables, payables or liabilities.
6.10 Leases. Seller shall have entered into Leases with
Shareholders in accordance with Section 4.12.
6.11 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
Section 7. Seller's and the Shareholder's Conditions Precedent.
The obligations of Seller and the Shareholders 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 respects when initially made and shall be true and
correct in all respects as of the Closing Date.
7.2 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.
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 C l osing 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 stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
7.6 Employment Agreement. Dr. Holder shall have entered into an
employment agreement with Barnet Dulaney Eye Center, P.L.L.C. on terms
and conditions reasonably satisfactory to Dr. Holder and Barnet
Dulaney Eye Center, P.L.L.C.
Section 8. Closing Deliveries.
8.1 Deliveries of Seller and the Shareholders. At or prior to
the Closing, Seller 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) a copy of the resolutions of the Board of Directors of
Seller authorizing the execution, delivery and performance of this
Agreement, the Service Agreement, the Employment Agreements 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 and of each
Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of Seller and each
Shareholder contained herein; (ii) as to the performance of and
compliance by Seller and each Shareholder with all covenants contained
herein; and (iii) certifying that all conditions precedent of Seller
and each Shareholder 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 Arizona establishing that
Seller is in existence and is in good standing to transact business in
its state of incorporation;
(g) an opinion of counsel to Seller 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 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 Stockholder s Agreement (herein so called) in form
attached hereto as Exhibit 8.1(l) executed by Shareholders and their
spouses; and
(j) 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 and the
Shareholders 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 Arizona;
(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) the Stockholder s Agreement; and
(h) such other instruments and documents as reasonably
requested by Seller or Shareholders to carry out and effect the
purpose and intent of this Agreement.
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 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 five (5) years following the Closing Date, except
that (i) the representations and warranties set forth in Section 2.23,
2.24 or 2.25 with respect to environmental and medical waste laws that
are enacted as of the date hereof and health care laws enacted on the
date hereof and matters shall survive for a period of fifteen (15)
years and tax representations shall survive until one year 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
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 THE SHAREHOLDERS, AND THEIR RESPECTIVE AGENTS AND
E M P L OYEES (EACH OF THE FOREGOING, INCLUDING SELLER AND THE
SHAREHOLDERS, 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
A G R EEMENT (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 and the Shareholders. SELLER AND
THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT
APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY AND SEVERALLY, 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 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,
WHETHER ON OR AFTER THE CLOSING DATE, (II) TAXES OF SELLER OR ANY
OTHER PERSON (INCLUDING ANY SHAREHOLDER) ARISING FROM OR AS A RESULT
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (III) ANY
LIABILITY OF SELLER OR THE SHAREHOLDERS FOR COSTS AND EXPENSES
( I N C LUDING, 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
D A T E , (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, AND (VI) ANY LIABILITIES THAT ARE EXCLUDED PURSUANT TO
THE TERMS OF THIS AGREEMENT AND ANY LIABILITIES NOT SET FORTH ON
EXHIBIT 1.3(b); PROVIDED,HOWEVER, THAT SHAREHOLDER AND SELLER SHALL
NOT INDEMNIFY PRG AND PRG SUB FOR EMPLOYEE MATTERS ARISING OUT OF
OCCURRENCES OCCURING AFTER THE CLOSING DATE IN CONNECTION WITH
EMPLOYEES THAT WILL BECOME EMPLOYEES OF PRG SUB AS OF 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
P e rson, 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
p a r ticipate 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
p r oceeding 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
w h ich 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.
Section 10. 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 Seller or any Shareholder contained in this Agreement or
in any certificate or other document executed and delivered by Seller
or any Shareholder pursuant to this Agreement is or becomes untrue or
breached in any material respect or if Seller or any Shareholder 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) a t any time by Seller 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, Seller or the Shareholders if the
transaction contemplated hereby shall not have been consummated by
October 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. Noncompetition.
11.1 Prohibited Activities. In order to protect PRG, PRG Sub and
each of their affiliates (collectively, the "PRG Group") against the
u n a uthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by Seller or the
Shareholders and other good and valuable consideration, Seller and
each Shareholder hereby agrees that, subject to adjustment pursuant to
Section 11.5, for a period of five (5) years following the Closing
Date, Seller and 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 physician services at any
medical office, clinic or out-patient and/or ambulatory treatment or
diagnostic facility providing services similar to those provided by
Seller or engage or participate in or finance any business which
engages in direct competition with the business being conducted by
PRG, PRG Sub or any practice managed by PRG anywhere within 50 miles
of any location of PRG, PRG Sub or any practice managed by PRG;
provided, however, that this provision shall not prohibit the each
Shareholder or any of his or her affiliates from purchasing or holding
an aggregate equity interest of up to 2%, so long as Seller or 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 or any practice managed by
PRG; or
(b) induce or attempt to influence any employee of PRG, PRG
Sub or any practice managed by 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.
11.2 Damages.
(a) Because of the difficulty of measuring economic losses
to PRG 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 and PRG Sub for which it would have no other
adequate remedy, Seller and the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be
enforced by PRG 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 Seller or a Shareholder of the foregoing
covenant, Seller and such Shareholder agrees to that in the event of a
breach of the foregoing covenant the breaching Seller or 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:
Year Following
Closing in Which
Breach Occurs Damages
1st $50,000.00
2nd $40,000.00
3rd $30,000.00
4th $20,000.00
5th $10,000.00
11.3 Reasonable Restraint. It is agreed by the parties that the
foregoing covenants in this Section 11 impose a reasonable restraint
on Seller and the Shareholders in light of the activities and business
of PRG and PRG Sub on the date of the execution of this Agreement.
11.4 Severability; Reformation. The covenants in this Section 11
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.
11.5 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 Seller or any Shareholder is in
violation of any provision of this Section 11. The covenants
contained in this Section 11 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 12. Nondisclosure of Confidential Information. Seller and
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 or PRG Sub that is valuable, special
and unique assets of PRG's or PRG Sub's businesses. Seller and 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 Seller or 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), Seller and 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) Seller and the Shareholders reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) Seller and the
Shareholders are the sole and exclusive owner of such confidential
information as a result of the completion of the transactions
contemplated hereunder or otherwise. In the event of a breach or
threatened breach by Seller or the Shareholders of the provisions of
this Section 12, PRG or PRG Sub shall be entitled to an injunction
restraining Seller and the Shareholders 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.. 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 Seller or Shareholder. 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 and PRG Sub reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) PRG and PRG Sub are the
sole and exclusive owner of such confidential information as a result
of the completion of the transactions contemplated hereunder or
otherwise. In the event of a breach or threatened breach by PRG or
PRG Sub of the provisions of this Section 12, Seller or Shareholders
shall be entitled to an injunction restraining PRG and PRG Sub from
disclosing, in whole or in part, such confidential information.
N o t h ing herein shall be construed as prohibiting Seller or
Shareholders from pursuing any other available remedy for such breach
o r 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. E c o nomic Risk; Sophistication. Seller and 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. Seller and
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. Seller, 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 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:
Physicians Resource Group, Inc.
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
Facsimile: (214) 982-8299
If to PRG Sub:
Sun Valley Acquisition Corporation
Three Lincoln Centre
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
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 or the Shareholders:
825 20th Avenue
Safford, Arizona
Facsimile:
with a copy to:
Charles E. Cruise, Esq.
Cruise & Politi, P.L.L.C.
1301 Joshua Avenue, Suite C
Parker, Arizona 85344
Facsimile: (520) 669-5218
and:
Kirk Gray, C.P.A.
801 20th Avenue
Safford, Arizona 85546
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 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 or the Shareholders for services rendered in connection with
n e gotiating 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 or the
Shareholders as a result of the transactions contemplated hereby.
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
ARIZONA 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; and provided, further, that
Dr. Holder may assign his interests hereunder to an entity created by
Dr. Holder prior to the Closing Date provided that the documents
evidencing such assignment and entity organizational/qualification
documents are acceptable to PRG in its reasonable discretion.
14.11 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.
14.12 Costs of Enforcement. In the event that PRG Sub or PRG,
on the one hand, or Seller 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
C o mplaint. "Reasonable attorneys' fees" are those reasonable
attorneys' fees reasonably incurred in obtaining a judgment in favor
of the prevailing party.
14.13 Prorations. Seller shall remain responsible for all
taxes levied upon the Assets for the period prior to the Closing Date,
and PRG Sub shall be responsible for all taxes levied against the
Assets for the period following the Closing Date. Each party agrees
to reimburse the other party if necessary to comply with the terms of
the preceding sentence.
14.14 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.
14.15 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.
14.16 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.
14.17 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]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
SUN VALLEY ACQUISITION CORPORATION
By: ____________________________
Its: ____________________________
SNW, Inc.
By: ____________________________
Its: ____________________________
PHYSICIANS RESOURCE GROUP, INC.
By: ____________________________
Its: ____________________________
_________________________________
James Holder, O.D.
_________________________________
Clarice Holder
_________________________________
Jeffrey Woodward
_________________________________
Suzy Woodward
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
1.1(a) Personal Property
1.1(b) Inventory
1.2(b) Excluded Assets
1.3(b) Assumed Liabilities
2.1 Corporate Existence; Good Standing
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
2.14 Contracts (other than Leases)
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.29 Banking Relations
8.1(l) Stockholder's Agreement
ANNEX I Acquisition Consideration
ASSET PURCHASE AGREEMENT
by and among
Richard D. Levin M.D., P.S.C., Inc.,
Richard D. Levin, M.D.,
PRG Ohio, Inc.
and
Physicians Resource Group, Inc.
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Terms of the Sale and Purchase of Assets
1.1 Conveyance of Assets . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . .2
1.3 Purchase Price; Assumption of Liabilities . . . . . . . .2
1.4 Subsequent Actions . . . . . . . . . . . . . . . . . . .2
Section 2. Representations and Warranties of Seller 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 Seller's Financial Information . . . . . . . . . . . . .4
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . .4
2.8 Condition of Assets . . . . . . . . . . . . . . . . . . .4
2.9 Title to and Encumbrances on Property . . . . . . . . . .4
2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . .5
2.11 Intellectual Property Rights; Names . . . . . . . . . . .5
2.12 Directors and Officers; Payroll Information; Employees .5
2.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . .5
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . .5
2.15 Subsequent Events . . . . . . . . . . . . . . . . . . . .6
2.16 Intentionally Deleted. . . . . . . . . . . . . . . . . .7
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.18 Liabilities; Debt . . . . . . . . . . . . . . . . . . . .7
2.19 Insurance Policies . . . . . . . . . . . . . . . . . . .8
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 . . . . . . . . . . . . .8
2.24 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . .9
2.25 No Untrue Representations . . . . . . . . . . . . . . . .9
2.26 Distributions and Repurchases . . . . . . . . . . . . . .9
2.27 Suppliers . . . . . . . . . . . . . . . . . . . . . . . .9
2.28 Banking Relations . . . . . . . . . . . . . . . . . . . .9
2.29 Ownership Interests of Interested Persons; Competitors .9
2.30 Payors . . . . . . . . . . . . . . . . . . . . . . . . .9
Section 3. Representations and Warranties of PRG Sub and PRG
3.1 Corporate Existence: Good Standing . . . . . . . . . . .10
3.2 Power and Authority . . . . . . . . . . . . . . . . . . .10
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . .10
3.4 No Untrue Representations . . . . . . . . . . . . . . . .10
Section 4. Covenants of Seller and the Shareholders
4.1 Consummation of Agreement . . . . . . . . . . . . . . . .10
4.2 Business Operations . . . . . . . . . . . . . . . . . . .10
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . .11
4.4 Approvals of Third Parties and Permits and Consents . . .11
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . .11
4.6 Funding of Accrued Employee Benefits . . . . . . . . . .11
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . .11
4.8 Distributions and Repurchases . . . . . . . . . . . . . .11
4.9 Requirements to Effect Acquisition . . . . . . . . . . .11
4.10 Voting of Shares; Irrevocable Proxy . . . . . . . . . . .11
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . .12
4.13 Lease . . . . . . . . . . . . . . . . . . . . . . . . . .12
4.14 Hiring of Employees . . . . . . . . . . . . . . . . . . .12
4.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . .12
Section 5. Covenants of PRG and PRG Sub
5.1 Consummation of Agreement . . . . . . . . . . . . . . . .12
5.2 Approvals of Third Parties and Permits and Consents . . .12
5.3 Listing Application . . . . . . . . . . . . . . . . . . .12
Section 6. PRG Sub and PRG Conditions Precedent
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 Service Agreement . . . . . . . . . . . . . . . . . . . .13
6.8 Consents and Approvals . . . . . . . . . . . . . . . . .13
6.9 Closing Deliveries . . . . . . . . . . . . . . . . . . .13
6.10 Intentionally Deleted. . . . . . . . . . . . . . . . . .13
6.11 Debt and Receivables . . . . . . . . . . . . . . . . . .13
6.12 Intentionally Deleted . . . . . . . . . . . . . . . . . .13
6.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . .13
6.14 Intentionally Deleted.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.15 NYSE Listing . . . . . . . . . . . . . . . . . . . . . .13
Section 7. Seller's and the Shareholder's Conditions Precedent
7.1 Representations and Warranties . . . . . . . . . . . . .14
7.2 Covenants and Conditions . . . . . . . . . . . . . . . .14
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . .14
Section 8. Closing Deliveries
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
9.1 Nature and Survival . . . . . . . . . . . . . . . . . . .15
9.2 Indemnification by PRG Sub and PRG . . . . . . . . . . .15
9.3 Indemnification by Seller and the Shareholders . . . . .16
9.4 Indemnification Procedure . . . . . . . . . . . . . . . .17
Section 10. Termination
Section 11. Noncompetition
11.1 Prohibited Activities . . . . . . . . . . . . . . . . . .17
11.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . 18
11.3 Reasonable Restraint . . . . . . . . . . . . . . . . . .18
11.4 Severability; Reformation . . . . . . . . . . . . . . . .18
11.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 12. Nondisclosure of Confidential Information
Section 13. Miscellaneous
13.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . .19
13.2 Further Assurances . . . . . . . . . . . . . . . . . . .20
13.3 Each Party to Bear Costs . . . . . . . . . . . . . . . .20
13.4 Public Disclosures . . . . . . . . . . . . . . . . . . .20
13.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . .20
13.6 Captions . . . . . . . . . . . . . . . . . . . . . . . .20
13.7 Integration of Exhibits . . . . . . . . . . . . . . . . .20
13.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . .20
13.9 Counterparts . . . . . . . . . . . . . . . . . . . . . .20
13.10 Binding Effect/Assignment . . . . . . . . . . . . .20
13.11 No Rule of Construction . . . . . . . . . . . . . .20
13.12 Costs of Enforcement . . . . . . . . . . . . . . . .21
13.13 Prorations . . . . . . . . . . . . . . . . . . . . .21
13.14 Amendments; Waivers . . . . . . . . . . . . . . . .21
13.16 Service of Process . . . . . . . . . . . . . . . . .21
13.17 Severability . . . . . . . . . . . . . . . . . . . .21
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made and
executed as of the _______ day of September, 1996, is by and among PRG
OHIO, INC., a Delaware corporation ("PRG Sub"); PHYSICIANS RESOURCE
GROUP, INC., a Delaware corporation ("PRG"); and RICHARD D. LEVIN,
M.D., P.S.C, INC., an Ohio professional corporation ( Seller ),and
Richard D. Levin, M.D., an individual resident of the State of Ohio
("Shareholder").
WITNESSETH:
WHEREAS, Seller operates an ophthalmology practice in Cincinnati,
Ohio and in Florence, Kentucky ("Business");
WHEREAS, Shareholder is the only shareholder of Seller;
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, Seller wishes to sell to PRG Sub, and PRG Sub wishes to
acquire from Seller, substantially all of the assets of Seller, all
upon the terms and subject to the conditions set forth herein.
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 ___ day of
October, 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 all of Seller's right,
title and interest in and to the business, properties and assets of
S e ller (personal, tangible and intangible), including, without
limitation, all items of personal property and other assets used in
connection with the Business (except as otherwise provided herein)
(individually, "Asset", and collectively "Assets"), free and clear of
all obligations, security interests, claims, liens and encumbrances
whatsoever, except as specifically assumed by PRG pursuant to Section
1.3(b) hereof. Without limiting the foregoing, the Assets specifically
include:
(a) A l l of the business, personal property, plant,
furniture, fixtures, equipment and goodwill of Seller of every kind
and wherever situated in which Seller has any right or interest,
including, but not limited to, all items owned by Seller identified on
Exhibit 1.1(a) attached hereto;
(b) All inventories maintained by Seller, including, but
not limited to, all items owned by Seller identified on Exhibit 1.1(b)
attached hereto;
(c) All contracts identified on Exhibit 2.7 and Exhibit
2.14 attached hereto (excluding this Agreement and the agreements,
instruments and documents executed and delivered by PRG Sub pursuant
to this Agreement);
(d) All accounts receivable of Seller;
(e) S u bject to applicable laws and regulations, all
accounts receivable records of Seller;
(f) The books and records of Seller relating to the Assets,
all of which shall be delivered to PRG Sub;
(g) S u bject to applicable laws and regulations, all
transferable licenses and other regulatory approvals necessary for or
incident to the operation of the Assets; and
(h) All clinical and administrative policy and procedure
manuals, trade secrets, trademarks, service marks, marketing and
promotional materials (including audiotapes, videotapes and printed
materials) and all other property rights required for or incident to
the marketing of the products and services of the Business, and all
books and records relating thereto.
1.2 Excluded Assets. There shall be excluded from the Assets to
be transferred and conveyed hereunder, and Seller shall retain all of
its right, title and interest in and to, the following assets:
(a) All cash and cash equivalents of Seller in existence on
the Closing Date;
(b) Those certain assets described on Exhibit 1.2(b);
(c) The Certificate or Articles of Incorporation, Bylaws,
shares of capital stock and minute books of Seller and similar
corporate records of Seller; and
(d) The consideration delivered to Seller by PRG Sub on the
Closing Date pursuant to this Agreement.
1.3 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
s p ecified in Annex I attached hereto (the "Acquisition
Consideration"). The Acquisition Consideration shall be allocated
among the Assets as agreed among PRG Sub and Seller on the Closing
Date.
(b) A s sumption of Liabilities. Except as otherwise
provided herein, PRG Sub shall assume on the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) all of Accounts
Payable (as defined in Section 2.16 hereof) and (ii) all of the
contracts, leases, commitments, obligations and liabilities of Seller
which are listed on Exhibit 1.3(b) attached hereto to the extent that
obligations are current and not otherwise in default. Notwithstanding
any contrary provision contained herein, PRG Sub shall not be deemed
to have assumed, nor shall PRG Sub assume: (i) any liability,
commitment or obligation not a trade account payable generated in the
ordinary course of business or indicated on Exhibit 1.3(b), (ii) any
liability set forth on Exhibit 1.3(b) which may be incurred by reason
of any breach of or default under such contracts, leases, commitments
or obligations which occurred prior to the Closing Date; (iii) any
liability for any employee benefits payable to employees of Seller,
including, but not limited to, liabilities arising under any Seller
Plan (as defined in Section 2.21 hereof); (iv) any liability based
upon or arising out of a violation of any antitrust or similar
restraint-of-trade laws by Seller, including, without limiting the
generality of the foregoing, any such antitrust liability which may
arise in connection with agreements, contracts, commitments or orders
for the sale of goods or provision of services by Seller reflected on
the books of Seller at or prior to the Closing Date; (v) any liability
based upon or arising out of any tortious or wrongful actions of
Seller or Shareholder; (vi) any liability for the payment of any
taxes imposed by law on Seller or Shareholder arising from or by
reason of the transactions contemplated by this Agreement; (vii) any
mortgages on real property; or (viii) any liability incurred or to be
incurred pursuant to any malpractice or other suits or actions pending
against Seller or Shareholder.
1.4 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 and Shareholder 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 and the
Shareholders.
Seller and Shareholder, jointly and severally, hereby represent
and warrant to PRG Sub and PRG as follows:
2.1 C o r p o rate Existence; Good Standing. Seller is a
professional corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio. Seller has all
necessary corporate powers to own all of its assets and to carry on
its business as such business is now being conducted. Seller does not
o w n 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. Richard D. Levin is the
sole shareholder of Seller and owns all outstanding shares of capital
stock free of all security interests, claims, encumbrances and liens
in the amount set forth on Exhibit 2.1(a). Each share of Seller's
common stock has been legally and validly issued and is fully paid and
nonassessable. No shares of capital stock of Seller are owned by
Seller in treasury. There are no outstanding (a) bonds, debentures,
notes or other obligations the holders of which have the right to vote
with the stockholder 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 shares of
capital stock of Seller have been issued or disposed of in violation
of the preemptive rights, rights of first refusal or similar rights of
Seller's stockholder. Seller is not required to qualify to do
business as a foreign corporation in any state or jurisdiction other
than 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 and
Kentucky.
2.2 Power and Authority for Transactions. Seller 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 or Certificate
of Incorporation, its Bylaws or otherwise, to authorize the execution,
delivery and performance of this Agreement and such related documents.
Shareholder has the legal capacity to enter into and perform this
Agreement and the other agreements to be executed and delivered in
connection herewith. Seller and 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 Seller and the
Shareholder, as appropriate, and constitute or will constitute the
legal, valid and binding obligations of Seller and the Shareholder,
enforceable against Seller and the Shareholder 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 or Certificate
of Incorporation or Bylaws of Seller 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 Seller or Shareholder is a party or by which
Seller or Shareholder 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,
g r a nts, franchises, licenses, certificates of need and other
governmental authorizations and approvals required for the conduct of
the Business or 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 and the Shareholder, 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
or Certificate of Incorporation, Bylaws and minutes of Seller and all
amendments thereto 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 Board of Directors
and stockholders of Seller since its formation. The books of account
of Seller have been kept accurately in the ordinary course of business
and the revenues, expenses, assets and liabilities of Seller have been
properly recorded in such books.
2.5 Consents. To the best of Seller s knowledge, 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 or the Shareholder.
2.6 Seller's Financial Information. Seller has heretofore
furnished PRG Sub with copies of financial information ("Financial
Statements") about Seller including the unaudited Balance Sheet
( Balance Sheet ) as of December 31, 1995 ( Balance Sheet Date ). All
such financial statements have been prepared on a cash basis
consistently followed throughout the periods indicated, reflect all
liabilities of Seller, including all contingent liabilities of Seller
as of their respective dates, and present fairly the financial
position of Seller 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 Seller leases, as lessor or lessee, real
or personal property used in operating the Business, 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 or Shareholder
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. The Assets constitute the only assets
necessary for the conduct of the Business. To the best knowledge of
Seller, all of the Assets are in good condition and repair subject to
normal wear and tear and conform with all applicable ordinances,
regulations and other laws, and Seller and the Shareholder have no
knowledge of any latent defects therein.
2.9 Title to and Encumbrances on Property. Seller has good,
valid and marketable title to all of the Assets, including but not
limited to, all items of property identified on Exhibit 1.1(a) and
Exhibit 1.1(b) 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. Seller shall cause all
encumbrances set forth on Exhibit 2.9 (other than those encumbrances
indicated on Exhibit 1.3(b)) to be released or terminated prior to the
Closing Date and evidence of such releases of liens and claims shall
be provided to PRG Sub on the Closing Date and the Assets shall not be
used to satisfy such liens, claims or encumbrances.
2.10 Inventories. All inventories of Seller used in the conduct
of the Business are reflected on the Balance Sheet. The items of
Seller's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of the
Business, and, to the best knowledge of Seller and the Shareholder,
may be used for their intended purposes. All of the Assets
constituting inventory are owned or used by Seller, 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, Seller has no right, title or interest in or to patents,
p a t e nt rights, corporate names, assumed names, manufacturing
p r ocesses, 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 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
n a m e s, 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 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 Seller and the offices held by each, (b) the most recent
payroll report of Seller, showing all current employees of Seller and
their current levels of compensation, (c) promised increases in
compensation of employees of Seller that have not yet been effected,
(d) oral or written employment agreements or independent contractor
agreements (and all amendments thereto) to which Seller 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. Seller is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. Seller has not
engaged in any unfair labor practice. There are no unfair labor
practices charges or complaints pending or threatened against Seller,
and Seller has never been a party to any agreement with any union,
labor organization or collective bargaining unit.
2.13 Legal Proceedings. Neither Seller nor Shareholder nor any
of the Assets is subject to any pending, nor does Seller or
Shareholder have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to
or affecting Seller, Shareholder, the Business, the Assets or the
transactions contemplated by this Agreement, and, to the knowledge of
Seller and the Shareholder, no basis for any such action exists, nor
is there any legal impediment of which Seller or Shareholder 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
or Shareholder has knowledge which with notice or lapse of time, or
both, would constitute a default. Seller and the Shareholder have no
knowledge of any default by any other party to such Contracts.
Neither Seller nor the Shareholder 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 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;
(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. Seller has not, since the Balance Sheet
Date:
(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) D i s c h arged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
( a b s olute, accrued, contingent or otherwise) other than (i)
l i abilities 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 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) 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 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 capital stock of Seller;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Seller's capital stock; or
(p) Suffered any material adverse change in the Business or
to the Assets.
2.16 Intentionally Deleted.
2.17 Taxes. Seller has filed all tax returns (including tax
reports and other statements) 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, 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
respects and properly reflect the relevant taxes for the periods
covered thereby. Seller 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
Seller 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 Seller). Seller and
the Shareholder have not received any notice that any tax deficiency
or delinquency has been asserted against Seller. There are no audits
relating to taxes of Seller threatened, pending or in process. 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. Seller has delivered to PRG Sub correct and
complete copies of Seller'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 Seller
during the three calendar year period preceding the date of this
Agreement. Seller 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, Seller 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. Seller and the Shareholder do not know,
or have reasonable grounds to know, of any basis for the assertion
against Seller 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
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, Richard D. Levin, M.D. and each
physician employee of Seller 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 Seller nor Dr. Levin 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 Seller, nor Dr. Levin nor any physician employee of Seller 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, 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 multi
employer 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 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. Seller 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 Seller, the Business or
the Assets.
2.22 Compliance with Laws in General. Seller, the Shareholder
and Seller's physician and licensed employees, and 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, Shareholder or any physician or licensed
employee of Seller of any federal, state or local law or regulation.
Neither Seller nor 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 and no notice of
any pending inspection or violation of any such law, regulation or
ordinance has been received by Seller or Shareholder.
2.23 Medicare and Medicaid Programs. Seller, Shareholder and
each physician and licensed employee of Seller 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
e f fect with no defaults having occurred thereunder. Seller,
Shareholder and each physician and licensed employee of Seller 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 Seller, Shareholder and each
licensed employee of Seller. Neither Seller, nor Shareholder, nor any
physician or licensed employee of Seller 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. Seller, the Shareholder 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 Shareholder, 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
f a lse 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 Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or
directors of Seller or 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 Seller on any of its
capital stock since the Balance Sheet Date. No repurchase of any of
Seller's capital stock has been approved, effected or is pending, or
is contemplated by the Board of Directors of Seller.
2.27 Suppliers. Set forth in Exhibit 2.27 is a good faith
estimate of the ten (10) largest suppliers of Seller.
2.28 Banking Relations. Set forth in Exhibit 2.28 is a complete
and accurate list of all arrangements that Seller has with any bank or
o t h er 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.
2.29 Ownership Interests of Interested Persons; Competitors.
Except for non-material ownership interests in publicly traded
entities, 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 Shareholder 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.
2.30 Payors. Exhibit 2.30 sets forth a true, complete and
correct list of the names and addresses of each payor of Seller's
services which accounted for more than 10% of revenues of Seller in
any of the preceding fiscal years. Seller has good relations with all
such payors and other material payors of Seller and none of such
payors has notified Seller that it intends to discontinue its
relationship with Seller or to deny any claims submitted to such payor
for payment.
Section 3. Representations and Warranties of PRG Sub and PRG.
PRG Sub and PRG hereby represent and warrant to Seller and the
Shareholder 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.
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
u n der 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.
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 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.
Section 4. Covenants of Seller and the Shareholder.
Seller and the Shareholder, jointly and severally, agree that
between the date hereof and the Closing Date:
4.1 Consummation of Agreement. Seller and the Shareholder shall
use their 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 Shareholder shall
operate the Business and use the Assets in the ordinary course.
Seller and Shareholder 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 Shareholder shall use
their best efforts to preserve the Business and Assets intact and
shall not take any action that would have an 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;
provided that Seller may continue to operate in the ordinary course.
Seller and the Shareholder 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. On and after the
Closing Date, Seller shall not be engaged in the practice of medicine
and shall not provide medical services.
4.3 Access and Notice. Seller and the Shareholder 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
a n d 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 Shareholder 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
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 Shareholder 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 Shareholder shall use their best
e f f orts to obtain all licenses, permits, approvals or other
authorizations required under any law, rule, regulation, or otherwise
to provide the services of Seller contemplated by the Service
Agreement and to conduct the intended business of Seller and operate
the Business and use the Assets.
4.5 Acquisition Proposals. Seller and the Shareholder 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 Shareholder, 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
Shareholder will immediately cease any such activities, discussions or
n e gotiations heretofore conducted with respect to any of the
foregoing. Seller and the Shareholder 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 completely for any accrued benefits, where applicable, or
vested accrued benefits for which Seller or any entity might have any
liability whatsoever arising from any insurance, pension plan,
employment tax or similar liability of Seller to any employee or other
person or entity (including, without limitation, any Seller Plan and
any liability under employment contracts with Seller) allocable to
services performed prior to the Closing Date. Seller 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 Seller's employees or similar persons or
entities, including, without limitation, any Seller Plan.
4.7 Employee Matters. Seller shall not, without the prior
written approval of PRG, except as required by law, increase the cash
compensation of any Shareholder or other employee or an independent
contractor of Seller, 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
Seller, its business, assets or prospects.
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 capital stock be approved or effected.
4.9 Requirements to Effect Acquisition. Seller and each
Shareholder shall use their best efforts to take, or cause to be
taken, all actions necessary to effect the acquisition contemplated
hereby under applicable law.
4.10 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
Seller common stock owned by the Shareholder at any meeting of the
stockholders 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.
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). 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
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 Waiver of Bulk Transfer Compliance. PRG Sub, PRG, Seller
and Shareholder hereby waive any compliance with the Ohio Bulk
Transfers Act. Seller and Shareholder covenant and agree that all of
the creditors with respect to the Business and the Assets will be paid
in full by Seller prior to the Closing Date, except to extent that any
liability to such creditors is assumed by PRG Sub pursuant to this
Agreement. If required by PRG Sub, Seller and Shareholder shall
furnish PRG Sub with proof of payment of all creditors with respect to
the Business and the Assets. Notwithstanding the foregoing, Seller
may dispute the validity or amount of any such creditor's claim
without being deemed to be in violation of this Section 4.12, provided
that such dispute is in good faith and does not unreasonably delay the
resolution of the claim and provided, further that Seller agrees to
indemnify and bond PRG Sub for such amounts as is satisfactory to PRG
Sub.
4.13 Leases. Seller shall have used its best efforts to obtain
from the owners of the property leased by Seller and used in
connection with the Business consents to assignment of such leases to
PRG Sub.
4.14 Hiring of Employees. Seller and Shareholder shall cooperate
with all requests made by PRG and PRG Sub for the purpose of allowing
PRG or PRG Sub to hire those non-physician employees of Seller
designated by PRG and PRG Sub, such employment to be effective as of
the Closing Date. Notwithstanding the above, Seller and Shareholder
shall remain liable under any Seller Plans for any claims incurred by
a n y employees or their spouses or dependents, and for all
compensation, bonuses, benefits and other such items and other
liabilities related to Seller's employees incurred by Seller prior to
the Closing Date.
4.15 Intentionally Deleted.
4.16 Insurance. Seller and Shareholder shall agree to have PRG
and PRG Sub named as an additional insured on their liability
insurance program.
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:
5.1 Consummation of Agreement. PRG and PRG Sub shall use their
b e s t 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.
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 stock consideration and shall use its best efforts to obtain
approval for the listing of the stock consideration upon official
notice of issuance.
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 and the Shareholder 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.
6.2 Covenants and Conditions. Seller and the Shareholder shall
have performed and complied with all covenants and conditions required
by this Agreement to be performed and complied with by Seller and the
Shareholder 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
t h e c ondition (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 Service Agreement. By the Closing Date, PRG, PRG Sub and
David M. Schneider, M.D., Inc. shall have entered into an amendment to
that certain Service Agreement dated June 28, 1995, upon such terms
satisfactory to PRG and PRG Sub.
6.8 Consents and Approvals. Seller and the Shareholder shall
have obtained all necessary government and other third-party approvals
and consents.
6.9 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.
6.10 Intentionally Deleted.
6.11 Debt and Receivables. There shall be no indebtedness,
receivables or payables between Seller and its Shareholder or
affiliates and Seller shall not have any liabilities, including
indebtedness, guaranties and capital leases, that are not approved by
PRG and Seller and Shareholder shall not use any of the Assets to pay
such indebtedness, receivables, payables or liabilities.
6.12 Intentionally Deleted.
6.13 Insurance. Seller and Shareholder shall have named PRG and
PRG Sub as an additional insured on their liability insurance program
in accordance with Section 4.16.
6.14 Intentionally Deleted.
6.15 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
Section 7. Seller's and the Shareholder's Conditions Precedent.
The obligations of Seller and the Shareholder 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 respects when initially made and shall be true and
correct in all respects as of the Closing Date.
7.2 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.
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 C l osing 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 stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
Section 8. Closing Deliveries.
8.1 Deliveries of Seller and the Shareholder. At or prior to
the Closing, Seller and the Shareholder 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 Board of Directors of
each of Seller and Levin Equipment 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) a certificate of the President of each of Seller and
Levin Equipment and of each Shareholder, dated as of the Closing Date,
(i) as to the truth and correctness of the representations and
warranties of Seller and each Shareholder contained herein; (ii) as to
the performance of and compliance by Seller and each Shareholder with
all covenants contained herein; and (iii) certifying that all
conditions precedent of Seller and each Shareholder to the Closing
have been satisfied;
(e) a certificate of the Secretary of each of Seller and
Levin Equipment 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;
(g) an opinion of counsel to Seller and the Shareholder
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) 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 and the
Shareholder 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;
(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; and
(g) such other instruments and documents as reasonably
requested by Seller or Shareholder to carry out and effect the purpose
and intent of this Agreement.
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 and the Shareholder, 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 two (2) years following the Closing Date, except
that (i) the representations and warranties set forth in Section 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 five (5)
years and tax representations shall survive until the expiration of
the applicable statute of limitations. Each party covenants with the
o t h e r 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 THE Shareholder, AND THEIR RESPECTIVE AGENTS AND
E M P L OYEES (EACH OF THE FOREGOING, INCLUDING SELLER AND THE
Shareholder, 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
A G R EEMENT (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 and the Shareholder. SELLER AND
THE Shareholder (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT
APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY AND SEVERALLY, SHALL
INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, Shareholder, 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 Shareholder 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,
WHETHER ON OR AFTER THE CLOSING DATE, (II) TAXES OF SELLER OR ANY
OTHER PERSON (INCLUDING ANY SHAREHOLDER) ARISING FROM OR AS A RESULT
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (III) ANY
LIABILITY OF SELLER OR THE Shareholder FOR COSTS AND EXPENSES
( I N C LUDING, 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
D A T E , (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, AND (VI) ANY LIABILITIES THAT ARE EXCLUDED PURSUANT TO
THE TERMS OF THIS AGREEMENT AND ANY LIABILITIES NOT SET FORTH ON
EXHIBIT 1.3(b). 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
P e rson, 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
p a r ticipate 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
p r oceeding 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
w h ich 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.
Notwithstanding the provisions hereof, Seller and the Shareholder
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 $4,000. Notwithstanding the provisions
hereof, PRG and PRG Sub shall not be required to indemnify Seller and
the Shareholder unless, and to the extent that, the aggregate amount
of Damages incurred by Seller and Shareholder shall exceed an amount
equal to $4,000.
Section 10. 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 Seller or any Shareholder contained in this Agreement or
in any certificate or other document executed and delivered by Seller
or any Shareholder pursuant to this Agreement is or becomes untrue or
breached in any material respect or if Seller or any Shareholder 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) a t a ny time by Seller or the Shareholder 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) b y PRG, PRG Sub, Seller or the Shareholder if the
transaction contemplated hereby shall not have been consummated by
October 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. Noncompetition.
11.1 Prohibited Activities. In order to protect PRG, PRG Sub and
each of their affiliates (collectively, the "PRG Group") against the
u n a uthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by Seller or the
Shareholder and other good and valuable consideration, Seller and Dr.
Richard D. Levin hereby agree that, subject to adjustment pursuant to
Section 11.5, for a period of five (5) years following the Closing
Date, Seller and Dr. Richard D. Levin and his respective affiliates
shall not knowingly, directly or indirectly, for himself or on or
b e h a lf 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
Seller or engage or participate in or finance any business which
engages in direct competition with the business being conducted by
PRG, PRG Sub or any practice managed by PRG anywhere within 50 miles
of any location of PRG, PRG Sub or any practice managed by PRG;
provided, however, that this provision shall not prohibit Dr. Levin or
any of his affiliates from purchasing or holding an aggregate equity
interest of up to 2%, so long as Seller or Dr. Levin and his
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 or any practice managed by PRG; or
(b) induce or attempt to influence any employee of PRG, PRG
Sub or any practice managed by 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.
11.2 Damages.
(a) Because of the difficulty of measuring economic losses
to PRG 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 and PRG Sub for which it would have no other
adequate remedy, Seller and the Shareholder agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be
enforced by PRG 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 Seller or a Shareholder of the foregoing
covenant, Seller and such Shareholder agrees to that in the event of a
breach of the foregoing covenant the breaching Seller or 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:
Year Following
Closing in Which
Breach Occurs Damages
1st $300,000
2nd $240,000
3rd $180,000
4th $120,000
5th $ 60,000
11.3 Reasonable Restraint. It is agreed by the parties that the
foregoing covenants in this Section 11 impose a reasonable restraint
on Seller and the Shareholder 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 PRG Sub.
11.4 Severability; Reformation. The covenants in this Section 11
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.
11.5 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 Seller or any Shareholder is in
violation of any provision of this Section 11. The covenants
contained in this Section 11 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 12. Nondisclosure of Confidential Information. Seller and
the Shareholder 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 or PRG Sub that is valuable, special
and unique assets of PRG's or PRG Sub's businesses. Seller and the
Shareholder 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 Seller or the 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), Seller and 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) Seller and the Shareholder reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) Seller and the
Shareholder 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 Seller or
the Shareholder of the provisions of this Section 12, PRG or PRG Sub
shall be entitled to an injunction restraining Seller and the
Shareholder 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. Miscellaneous.
13.1 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:
Physicians Resource Group, Inc.
Three Lincoln Center
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
Facsimile: (214) 982-8299
If to PRG Sub:
PRG Ohio, Inc.
Three Lincoln Center
5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attn: Richard J. D'Amico
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 or the Shareholder:
Richard D. Levin, M.D., P.S.C., Inc.
Levin Equipment Corporation
119 West Kemper Road
Cincinnati, Ohio 45246
Attention: Richard D. Levin
Facsimile:
with a copy to:
Robert W. Buechner
105 E. Fourth Street, Suite 1405
Cincinnati, Ohio 45202
Facsimile:
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.
13.2 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.
13.3 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 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 or the Shareholder for services rendered in connection with
n e gotiating 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 or the
Shareholder as a result of the transactions contemplated hereby.
13.4 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.
13.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
OHIO AND APPLIED WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS
PRINCIPLES.
13.6 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.
13.7 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.
13.8 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.
13.9 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.
13.10 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.
13.11 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.
13.12 Costs of Enforcement. In the event that PRG Sub or PRG,
on the one hand, or Seller or the Shareholder, 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
C o mplaint. "Reasonable attorneys' fees" are those reasonable
attorneys' fees actually incurred in obtaining a judgment in favor of
the prevailing party.
13.13 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 cash portion of the Purchase 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 Shareholder, and Seller
and Shareholder agree to pay, the amount necessary to correct the
estimate and proration made at Closing.
13.14 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.
13.15 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.
13.16 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.
13.17 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 _____]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
RICHARD D. LEVIN, M.D., P.S.C., INC.
By: _______________________________
Its: _______________________________
____________________________________
Richard D. Levin, M.D.
PRG OHIO, INC.
By: _______________________________
Richard J. D'Amico, Vice President
PHYSICIANS RESOURCE GROUP, INC.
By: _______________________________
Richard J. D'Amico, Senior Vice
President
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
1.1(a) Personal Property
1.1(b) Inventory
1.2(b) Excluded Assets
1.3(b) Assumed Liabilities
2.1(a) Corporate Existence; Good Standing (Seller)
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
2.14 Contracts (other than Leases)
2.16 Accounts Receivable
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.27 Suppliers
2.28 Banking Relations
2.30 Payors
ANNEX I Acquisition Consideration
