<PAGE> 1
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) June 30, 1996
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Physicians Resource Group, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-13778 76-0456864
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Three Lincoln Centre, Suite 1540, 5430 LBJ Freeway, Dallas, TX 75240
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 982-8200
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
LAKELAND ACQUISITION
Physicians Resource Group, Inc., a Delaware corporation (the
"Company") and wholly-owned corporate or partnership subsidiaries of the
Company (collectively, "Lakeland Merger Subs"), entered into Agreements and
Plans of Merger (the "Lakeland Acquisition Agreements") with the following
ophthalmological practices (the "Lakeland Practices") and physicians: Central
Florida Eye Associates, P.A., Central Florida Eye Associates Partners, G.C.R.
Investors, Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D. and Jay
Mulaney, M.D.
Pursuant to such agreements, on June 30, 1996, Lakeland Merger Subs
acquired (the "Lakeland Acquisitions"), with certain limited exceptions, all of
the assets and properties, real and personal, tangible and intangible, and
certain liabilities of the Lakeland Practices. The respective Lakeland Merger
Subs intend to provide the use of such assets to the respective
ophthalmological practices from which they were acquired pursuant to the terms
of the management services agreements entered into at the time of the Lakeland
Acquisitions.
To the best knowledge of the Company, at the time of the Lakeland
Acquisitions there was no material relationship between (i) the Lakeland
Practices, Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D., and Jay
Mulaney, M.D., 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
Lakeland Acquisitions was 281,832 shares of the common stock, par value $.01
per share, of the Company and the assumption of certain liabilities. The
acquisition consideration for such acquisitions was determined by arms-length
negotiations between the parties to the applicable acquisition agreements.
CAMPBELL ACQUISITION
The Company and a wholly-owned subsidiary of the Company ("Campbell
Merger Sub"), entered into an Agreements and Plan of Merger (the "Campbell
Acquisition Agreement") with the following ophthalmological practices (the
"Campbell Practices") and physician: South Texas Retina Affiliates, Inc.,
South Texas Retina Consultants, L.L.P., Charles H. Campbell, M.D., P.A. and
Charles H. Campbell, M.D.
Pursuant to such agreement, on July 3, 1996, Campbell Merger Sub
acquired (the "Campbell Acquisition"), with certain limited exceptions, all of
the assets and properties, real and personal, tangible and intangible, and
certain liabilities of the Campbell Practices. Campbell Merger Sub intends to
provide the use of such assets to the respective ophthalmological practices
from which they were acquired pursuant to the terms of the management services
agreement entered into at the time of the Campbell Acquisition.
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To the best knowledge of the Company, at the time of the Campbell
Acquisition there was no material relationship between (i) the Campbell
Practices and Charles H. Campbell, M.D. 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
Campbell Acquisition was 160,919 shares of the common stock, par value $.01 per
share, of the Company and the assumption of certain liabilities. The
acquisition consideration for such 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.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 - Agreement and Plan of Merger by and among Central Florida Eye Associates, P.A.,
Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D., Jay Mulaney, M.D., PRG FL
Acquisition Corporation, and Physicians Resource Group, Inc. (1)
2.2 - Agreement and Plan of Merger by and among G.C.R. Investors, Ronald Case, M.D.
Brian Renz, M.D., Jay Mulaney, M.D., PRG FL Partnership I, and Physicians
Resource Group, Inc. (1)
2.3 - Agreement and Plan of Merger by and among Central Florida Eye Associates, Partners,
Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D., Jay Mulaney, M.D., PRG FL
Partnership II, and Physicians Resource Group, Inc. (1)
2.4 - Agreement and Plan of Merger by and among South Texas Retina Affiliates, Inc.,
South Texas Retina Consultants, L.L.P., Charles H. Campbell, M.D., P.A., Charles
H. Campbell, M.D., PRG TX Acquisition Corp. I and Physicians Resource Group, Inc. (1)
4.1 - Restated Certificate of Incorporation of Physicians Resource Group, Inc.(2)
</TABLE>
3
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<TABLE>
<S> <C>
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)
</TABLE>
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(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.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PHYSICIANS RESOURCE GROUP, INC.
Date: July 12, 1996 By:/s/ Richard J. D'Amico
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Richard J. D'Amico
Senior Vice President and
General Counsel
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Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 - Agreement and Plan of Merger by and among Central Florida Eye Associates, P.A.,
Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D., Jay Mulaney, M.D., PRG FL
Acquisition Corporation, and Physicians Resource Group, Inc. (1)
2.2 - Agreement and Plan of Merger by and among G.C.R. Investors, Ronald Case, M.D.
Brian Renz, M.D., Jay Mulaney, M.D., PRG FL Partnership I, and Physicians
Resource Group, Inc. (1)
2.3 - Agreement and Plan of Merger by and among Central Florida Eye Associates, Partners,
Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D., Jay Mulaney, M.D., PRG FL
Partnership II, and Physicians Resource Group, Inc. (1)
2.4 - Agreement and Plan of Merger by and among South Texas Retina Affiliates, Inc.,
South Texas Retina Consultants, L.L.P., Charles H. Campbell, M.D., P.A., Charles
H. Campbell, M.D., PRG TX Acquisition Corp. I 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)
</TABLE>
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(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.
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CENTRAL FLORIDA EYE ASSOCIATES, P.A.,
RONALD CASE, M.D.,
BRIAN RENZ, M.D.,
TEO KULYK, M.D.,
JAY MULANEY, M.D.,
PRG FL ACQUISITION CORPORATION,
AND
PHYSICIANS RESOURCE GROUP, INC.
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 6th day
of June, 1996, is by and among PRG FL ACUISITION CORPORATION, a Florida
corporation ("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); CENTRAL FLORIDA EYE ASSOCIATES, P.A., a Florida
professional association (the Company"), and RONALD CASE, M.D., BRIAN RENZ,
M.D., TEO KULYK, M.D. AND JAY MULANEY, M.D., all individual residents of the
State of Florida (individually "Shareholder," and collectively "Shareholders").
WITNESSETH:
WHEREAS, the Company operates an ophthalmology practice in Lakeland,
Florida;
WHEREAS, Shareholders are the only shareholders of the Company;
WHEREAS, PRG Sub is engaged in the business of acquiring the assets of
and operating ophthalmology practices and is a wholly-owned subsidiary of PRG;
and
WHEREAS, the Boards of Directors of each of the Company, PRG and PRG
Sub have determined that a business combination between the parties is in the
best interests of their respective companies and stockholders and accordingly
have agreed to effect the Merger (hereinafter defined) upon the terms and
conditions set forth herein;
WHEREAS, it is intended that for federal income tax purposes the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and for
financial accounting purposes shall be accounted for as a "pooling of
interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER; REAL ESTATE PURCHASE.
The Merger of PRG Sub with and into the Company shall occur on the27th
day of June, 1996 ("Closing Date"), unless another date is mutually agreed upon
among the parties hereto, shall be based on the respective representations,
warranties and agreements of the parties hereto, and shall be subject to the
terms and conditions herein stated.
1.1 MERGER OF PRG SUB INTO THE COMPANY. On the Closing Date, PRG
Sub shall be merged with and into the Company in accordance with this Agreement
and the separate corporate existence of PRG Sub shall thereupon cease (the
"Merger"). The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Florida and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have
the effects specified in the Delaware General Corporation Law ("DGCL") and the
Florida 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 Section 252 of the
DGCL and Articles of Merger meeting the requirements of the Florida Business
Corporation Law. The Merger shall become effective on the Closing Date.
1.3 CERTIFICATE OF INCORPORATION OF SURVIVING CORPORATION.
Effective on the Closing Date, the Certificate of Incorporation of PRG Sub
shall be the Articles of Incorporation of the Surviving Corporation.
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1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with their terms.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles or Certificate of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF COMPANY COMMON STOCK. The manner of converting
shares of the Company in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, all shares of Company common stock issued and
outstanding on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of shares of PRG common stock set forth on Annex I attached
hereto less the Escrowed Shares (in the aggregate, the "Merger Consideration").
As a result of the Merger and without any action on the part of the holder
thereof, all shares of the Company shall cease to be outstanding and shall be
cancelled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company common stock shall
thereafter cease to have any rights with respect to such shares of Company
common stock, except the right to receive, without interest, the Merger
Consideration.
(b) Each share of Company common stock held in the
Company's treasury, if any, on the Closing Date, by virtue of the Merger, shall
cease to be outstanding and shall be cancelled and retired without payment of
any consideration therefor and shall cease to exist.
(c) On the Closing Date, each share of PRG Sub common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of Surviving Corporation.
1.8 EXCHANGE OF CERTIFICATES REPRESENTING SHARES OF COMPANY COMMON
STOCK.
(a) At or after the Closing Date, (i) the Shareholders,
as the holders of all outstanding certificates representing shares of Company
common stock, shall, upon surrender of such certificates or lost stock
affidavits in form acceptable to PRG, be entitled to receive the Merger
Consideration and (ii) until the certificates or the lost stock affidavits
representing Company common stock have been surrendered by Shareholders and
replaced by certificates representing PRG common stock, the certificates for
Company common stock shall, for all purposes, be deemed to evidence ownership
of PRG common stock.
(b) The Shareholders shall deliver to PRG on the Closing
Date the certificates, or lost stock affidavits, representing Company common
stock owned by them, duly endorsed in blank by the Shareholders, or accompanied
by blank stock powers, and with all necessary transfer tax and other revenue
stamps, acquired at the Shareholders' expense, affixed and cancelled. The
Shareholders agree to cure any deficiencies with respect to the endorsement of
the certificates or other documents of conveyance with respect to such Company
common stock or with respect to the stock powers accompanying any Company
Common Stock. Upon such delivery, the Shareholder shall be entitled to receive
in exchange therefor a certificate representing that number of shares of PRG
common stock Shareholder is entitled to receive pursuant to Section 1.7.
(c) Notwithstanding Section 1.7 or any other provision of
this Section 1.8, no fractional shares of PRG common stock will be issued.
1.9 ESCROW. In addition to the shares issuable to the
Shareholders at Closing, PRG shall deposit in escrow 21,390 shares of PRG
Common Stock (the "Escrowed Shares") pursuant to the terms of an Escrow
Agreement (the
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"Escrow Agreement") in substantially the form attached hereto as Exhibit 1.9
and with such changes to be agreed upon between the parties, to be entered into
among Shareholders, the Company, PRG Sub, PRG and the person named therein as
escrow agent ("Escrow Agent"). The Escrowed Shares shall be issued in the name
of the Escrow Agent, as escrow agent. The Escrowed Shares shall be released
from escrow, after provision for any Damages for which PRG or PRG Sub may be
entitled to indemnification pursuant to Article XI in accordance with the terms
of the Escrow Agreement.
1.10 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or PRG Sub acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, and to effect the cancellation of all
outstanding shares of Company common stock in return for the consideration set
forth in this Agreement, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company, each Shareholder and PRG Sub or otherwise, to carry out
all such deeds, bills of sale, assignments and assurances and to take and do,
in the name and on behalf of the Company and PRG Sub or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
1.11 PURCHASE OF REAL ESTATE. PRG hereby agrees to, or cause one
of its subsidiaries, to, purchase the real estate owned by G.C.R. Investors and
Central Florida Eye Associates Partners (as described on Exhibits IIA and IIB
attached hereto and made a part hereof) and assume or prepay all indebtedness
owing by G.C.R Investors and Central Florida Eye Associates Partners secured by
such real estate for the consideration set forth on Annex II attached hereto
and made a part hereof. Such purchase shall be evidencecd by agreements,
deeds, assignments and other documents and instruments to be agreed upon
between such parties prior to the Closing Date.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS.
The Company and the Shareholders, jointly (with respect to
representations and warranties by such Shareholder or the Company) and
severally (with respect to representations and warranties by such Shareholder),
hereby represent and warrant as of the Closing Date and thereafter in
accordance with Section 11.1, to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
professional association duly organized, validly existing and in good standing
under the laws of the State of Florida. The Company has all necessary corporate
powers to own all of its assets and to carry on its business as such business
is now being conducted. The Company does not own stock in or control, directly
or indirectly, any other corporation, association or business organization, nor
is the Company a party to any joint venture or partnership. The shareholders
are the sole shareholders of the Company and own all outstanding shares of
capital stock free of all security interests, claims, encumbrances and liens in
the amounts set forth on Exhibit 2.1. The Shareholders have owned the equity
interests set forth on Exhibit 2.1 since January 1, 1994 in the amounts set
forth on such Exhibit. Each share of Company common stock has been legally and
validly issued and fully paid and nonassessable. No change will be made in the
equity ownership of the Company between the date hereof and the Closing Date.
No shares of capital stock of the Company are owned by the Company in treasury.
The Company has not acquired any of its shares or treasury shares since January
1, 1994. There are no outstanding (a) bonds, debentures, notes or other
obligations the holders of which have the right to vote with the stockholders
of the Company on any matter, (b) securities of the Company convertible into
equity interests in the Company, or (c) commitments, options, rights or
warrants to issue any such equity interests in the Company, to issue securities
of the Company convertible into such equity interests, or to redeem any
securities of the Company. No shares of capital stock of the Company have been
issued or disposed of in violation of the preemptive rights, rights of first
refusal or similar rights of any of the Company's stockholders. The Company is
not required to qualify to do business as a foreign corporation in any other
state or jurisdiction by reason of its business, properties or activities in or
relating to such other state or jurisdiction. The Company does not have any
assets, employees or offices in any state other than Florida. The Company has
not been a division or subsidiary of PRG or any of its subsidiaries since
January 1, 1994. The Company and each Shareholder do not own any stock of PRG.
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2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant to this
Agreement or to be executed and delivered on the Closing Date, and has taken
all action required by law, its Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. Each Shareholder has the legal capacity
to enter into and perform this Agreement and the other agreements to be
executed and delivered in connection herewith. The Company has obtained the
approval of its stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents executed
and delivered in connection herewith have been, or will be as of the Closing
Date, duly executed and delivered by the Company and the Shareholders, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of the Company and the Shareholders, enforceable against the
Company and the Shareholders in accordance with their respective terms, except
as may be limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement, and the agreements
executed and delivered pursuant to this Agreement or to be executed and
delivered on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated hereby
will not, violate any provision of the Articles of Incorporation or Bylaws of
the Company or any provisions of, or result in the acceleration of, any
obligation under any mortgage, lien, lease, agreement, rent, instrument, order,
arbitration award, judgment or decree to which the Company or any Shareholder
is a party or by which the Company or any Shareholder is bound, or violate any
material restrictions of any kind to which the Company is subject, or result in
any lien or encumbrance on any of the Company's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Company, the
Shareholders and each physician or licensed employee of the Company have been
duly obtained and are in full force and effect and are described on Exhibit
2.3. There are no proceedings pending or, to the knowledge of the Company and
the Shareholders, threatened, which may result in the revocation, cancellation
or suspension, or any adverse modification, of any thereof.
2.4 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Company and all amendments thereto of
the Company have been delivered to PRG Sub. The minute books of the Company
contain all accurate minutes of the meetings of and consents to actions taken
without meetings of the Board of Directors and stockholders of the Company
since its formation.
2.5 CONSENTS. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental authority, any
lender, lessor, any manufacturer or supplier or any other person or entity is
required to authorize, or is required in connection with, the execution,
delivery and performance of this Agreement and the agreements and documents
contemplated hereby on the part of the Company or the Shareholders.
2.6 THE COMPANY'S FINANCIAL INFORMATION. The Company has
heretofore furnished PRG Sub with copies of financial statements as of and for
the year ended December 31, 1995 as set forth on Exhibit 2.6 attached hereto
("Financial Statements"), including the unaudited Balance Sheet ("Balance
Sheet") as of December 31, 1995 ("Balance Sheet Date"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles consistently followed throughout the periods indicated, reflect all
liabilities of the Company required to be reported in accordance with GAAP,
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
material default by the Company, as lessor or lessee, or any condition or event
of which the Company or any Shareholder has knowledge which with notice or
lapse of time, or both, would constitute a material default, in respect of
which the Company has not taken adequate steps to cure such default or to
prevent a default from occurring.
2.8 CONDITION OF ASSETS. All of the plants, structures and
equipment used by the Company in its business are in good condition and repair
subject to normal wear and tear and conform with all applicable ordinances,
regulations
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<PAGE> 6
and other laws, and the Company and the Shareholders have no knowledge of any
latent defects therein. The Company and Shareholders have not, since January
1, 1994, disposed of, sold or transferred any part of the Company's assets in
contemplation of the transactions contemplated hereby.
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. Except as set forth on Exhibit 2.9,
no sales of significant assets and no spinoffs of assets have occurred since
January 1, 1994.
2.10 INVENTORIES. All inventories of the Company used in the
conduct of its business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The items of
the Company's inventory have been acquired in the ordinary course of its
business, are adequate for the reasonable requirements of its business, and, to
the best knowledge of the Company and the Shareholders, may be used for their
intended purposes. To the knowledge of the Company and Shareholders, all of
the inventory owned or used by the Company is in good, current, standard and
merchantable condition and is not obsolete or defective.
2.11 INTELLECTUAL PROPERTY RIGHTS; NAMES. Except as set forth on
Exhibit 2.11, the Company has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all names of all predecessor companies of the Company,
including the names of any entities from whom the Company previously acquired
significant assets. Except for off-the-shelf software licenses and except as
set forth on Exhibit 2.11, the Company is not a licensee in respect of any
patents, trademarks, service marks, trade names, copyrights or applications
therefor, or manufacturing processes, formulas or trade secrets or similar
items and no such licenses are necessary for the conduct of its business. No
claim is pending or has been made to the effect that the present or past
operations of the Company infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade names,
trademarks, service marks, inventions, licenses, specialized treatment
protocols, copyrights, formulas, know-how and trade secrets. The Company has
the sole and exclusive right to use all such proprietary rights without
infringing or violating the rights of any third parties and no consents of any
third parties are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the offices held by each, (b) the most recent payroll report of the
Company, showing all current employees of the Company and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company that have not yet been effected, (d) oral or written employment
agreements or independent contractor agreements (and all amendments thereto) to
which the Company is a party, copies of which have been delivered to PRG Sub,
and (e) all employee manuals, copies of which have been delivered to PRG Sub.
The Company is in compliance with all applicable laws, rules, regulations and
ordinances respecting employment and employment practices. The Company has not
engaged in any unfair labor practice. There are no unfair labor practices
charges or complaints pending or threatened against the Company, and the
Company has never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company nor any Shareholder
nor outstanding shares of the Company's stock nor any of the Company's assets
is subject to any pending, nor does the Company or any Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, any Shareholder, the outstanding shares of the Company's stock, any of
the assets of the Company, the operations, business or prospects of the Company
or the transactions contemplated by this Agreement, and, to the knowledge of
the Company and the Shareholders, no basis for any such action exists, nor is
there
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any legal impediment of which the Company or any Shareholder has knowledge to
the continued operation of its business in the ordinary course, subject to
consents set forth on Exhibit 2.5.
2.14 CONTRACTS. The Company has delivered to PRG Sub true copies
of all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of the Company that meet the requirements set forth
in subsection (j) below ("Contracts"), all of which are listed or incorporated
by reference on Exhibit 2.7 (in the case of leases) 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 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 $5,000 or that terminate or can only be
terminated by the Company on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Company has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
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(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company, tangible or intangible;
(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the Company's
business or cancelled any debts or claims or waived any rights, except in the
ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any stock, bonds or other securities;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company except in the ordinary course
of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or to the assets of the Company.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices employed by the
Company, of the Company's (i) accounts receivable, net of allowances for
uncollectible and doubtful amounts ("Accounts Receivable") and (ii) current
accounts payable and current accrued liabilities (other than the current
portion of long-term debt) ("Accounts Payable"). Exhibit 2.16 contains a true
and accurate (i) list of all Accounts Receivable, (ii) list of all Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The Company maintains its accounting
records in sufficient detail to substantiate the accounts receivable reflected
on the Balance Sheet and has given and will give to PRG Sub full and complete
access to those records, including the right to make copies therefrom. Since
the Balance Sheet Date, the Company has not changed any
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principle or practice with respect to the recordation of accounts receivable or
the calculation of reserves therefor, or any material collection, discount or
write-off policy or procedure. Accounts Receivable are recorded in amounts
estimated to be net of contractual allowances related to third-party payor
arrangements. The Company is in substantial compliance with the terms and
conditions of such third-party payor arrangements, and the reserves established
by the Company are adequate to cover any liability resulting from lack of
compliance.
2.17 TAXES. The Company has filed all tax returns required to be
filed by it, and made all payments of taxes, including any interest, penalty or
addition thereto, required to be made by it, with respect to income taxes, real
and personal property taxes, sales taxes, use taxes, employment taxes, excise
taxes and other taxes due and payable on or before the date of this Agreement.
All such tax returns are complete and accurate in all respects and properly
reflect the relevant taxes for the periods covered thereby. The Company has no
tax liability, except for real and personal property taxes for the current
period not yet due and payable and sales, use, employment and similar taxes for
periods as to which such taxes have not yet become due and payable. The
unpaid taxes of the Company did not, as of the Balance Sheet Date, exceed the
reserve for taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and income tax income) set forth on the
face of the Balance Sheet (rather than in any notes thereto), as adjusted for
the passage of time through the Closing Date (in accordance with the past
custom and practice of the Company). The Company and the Shareholders have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company. There are no audits relating to taxes of the Company
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 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Sub, the Company or the Shareholders resulting from any action taken
by the Company or the Shareholders or their respective agents or employees, or
any of them.
2.19 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, indebtedness for borrowed money, guaranties and capital
lease obligations) is described on Exhibit 2.19 attached hereto.
2.20 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 2.20 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.
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2.21 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.21
attached hereto, the Company has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate in, (a)
any bonus or other type of compensation or employment plan, program, agreement,
policy, commitment, contract or arrangement (whether or not set forth in a
written document); (b) any pension, profit-sharing, retirement or other plan,
program or arrangement; or (c) any other employee benefit plan, fund or
program, including, but not limited to, those described in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.21 (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.
2.22 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.
2.23 COMPLIANCE WITH LAWS IN GENERAL. The Company, the
Shareholders and Company's physician and licensed employees have complied with
all applicable laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the Occupational
Safety and Health Act, the Americans with Disabilities Act and any
environmental laws and medical waste laws, and there exist no violations by the
Company, any Shareholder or any physician or licensed employee of the Company
of any federal, state or local law or regulation. Neither the Company nor any
Shareholder has received any notice of a violation of any federal, state and
local laws, regulations and ordinances relating to the operations of the
business and assets of the Company and no notice of any pending inspection or
violation of any such law, regulation or ordinance has been received by the
Company or any Shareholder.
2.24 MEDICARE AND MEDICAID PROGRAMS. The Company, each Shareholder
and each physician and licensed employee of the Company is qualified for
participation in the Medicare and Medicaid programs and is party to provider
agreements for such programs which are in full force and effect with no
defaults having occurred thereunder. The Company, each Shareholder and each
physician and licensed employee of the Company has timely filed all claims or
other reports required to be filed with respect to the purchase of services by
third-party payors, and all such claims or reports are complete and accurate,
and has no liability to any payor with respect thereto. There are no pending
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.
2.25 FRAUD AND ABUSE. The Company, the Shareholders and all
persons and entities providing professional services for the Company's business
have not, to the knowledge of the Company and the Shareholders, engaged in any
activities which are prohibited under Section 1320a-7b or Section 1395nn of
Title 42 of the United States Code or the regulations promulgated thereunder,
or related state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the following:
(a) knowingly and willfully making or causing to be made a false statement or
representation of a material fact in any application for any benefit or
payment; (b) knowingly and willfully making or causing to be made any false
statement or representation of a material fact for use in determining rights to
any benefit or payment; (c) any failure by a claimant to disclose knowledge of
the occurrence
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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.
2.26 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company or any Shareholder in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, officers or directors of
the Company or any Shareholder and furnished or to be furnished to PRG Sub or
PRG pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained therein not misleading.
2.27 ACCREDITED 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").
2.28 DISTRIBUTIONS AND REPURCHASES; COMPENSATION. No distribution,
payment or dividend of any kind has been declared or paid by the Company on any
of its capital stock since January 1994. No repurchase of any of the Company's
capital stock has been approved, effected or is pending, or is contemplated by
the Board of Directors of the Company. No distributions of cash or other
assets have been made to any Shareholder (other than distributions made in the
ordinary course of business) since January 1, 1994. Other than in the ordinary
course of business, there have been, and will be, no payments to the Company or
the Shareholders made in contemplation of the transactions contemplated hereby
(other than as set forth on Annex I hereof), including without limitation,
compensation adjustments and bonuses, contractual buyouts, both for services
and proeprty.
2.29 [INTENTIONALLY DELETED]
2.30 BANKING RELATIONS. Set forth in Exhibit 2.30 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.
2.31 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.31, no officer, employee, director or
stockholder of the Company, or their respective spouses, children or
affiliates, owns directly or indirectly, on an individual or joint basis, any
interest in, has a compensation or other financial arrangement with, or serves
as an officer or director of, any customer or supplier or competitor of the
Company or any organization that has a material contract or arrangement with
the Company. Neither the Company, nor any of its directors, officers,
employees, consultants or the Shareholders nor any affiliate of such person is,
or within the last three years was, a party to any contract, lease, agreement
or arrangement, including, but not limited to, any joint venture or consulting
agreement with any physician, hospital, pharmacy, home health agency or other
person or entity which is in a position to make or influence referrals to, or
otherwise generate business for, the Company or to provide services, lease
space, lease equipment or engage in any other venture or activity with the
Company.
2.32 PAYORS. Exhibit 2.32 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's services which
accounted for more than 10% of revenues of the Company in the preceding fiscal
year. The Company has good relations with all such payors and other material
payors of the Company and none of such payors has notified the Company that it
intends to discontinue its relationship with the Company or to deny any claims
submitted to such payor for payment.
2.33 ACCOUNTING MATTERS. The Company and the Shareholders have not
taken, failed to take or agreed to take any action that would prevent PRG Sub
or PRG from accounting for the business combination to be effected by
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the Merger as a "pooling of interests" in accordance with Accounting Principles
Board Opinion No. 16, the interpretative releases issued pursuant thereto and
the pronouncements of the Securities and Exchange Commission ("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG SUB AND PRG.
PRG Sub and PRG hereby represent and warrant, as of the Closing Date,
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 States of Delaware and Florida, respectively, and PRG is qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, its Bylaws or
otherwise, to authorize the execution, delivery and performance of this
Agreement and such related documents. PRG and PRG Sub have all necessary
corporate powers to own all of its assets and to carry on their business as
such business is now being conducted This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be
as of the Closing Date, duly executed and delivered by PRG and PRG Sub, as
appropriate, and constitute or will constitute the legal, valid and binding
obligations of PRG and PRG Sub, enforceable against PRG and PRG Sub in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the availability of equitable remedies. The execution and delivery of this
Agreement and the agreements related hereto executed and delivered pursuant to
this Agreement do not and, subject to the receipt of consents to assignments of
leases and other contracts where required and the receipt of regulatory
approvals where required, the consummation of the transactions contemplated
hereby will not, violate any provision of the Certificate or Articles of
Incorporation or Bylaws of either PRG Sub or PRG or any provisions of, or
result in the acceleration of, any obligation under any mortgage, lien, lease,
agreement instrument, order, arbitration award, judgment or decree to which PRG
Sub or PRG is a party or by which either of them is bound, or violate any
restrictions of any kind to which PRG Sub or PRG is subject.
3.3 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Sub, the Company or the Shareholders resulting from any action taken
by PRG or PRG Sub or their respective agents or employees, or any of them.
3.4 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.
3.5 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued by
officers or directors of PRG Sub or PRG and furnished or to be furnished to the
Company or the Shareholders pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained therein not misleading.
3.6 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Corporation to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
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corporations controlled by PRG. Following the consummation of the
transactions contemplated by this Agreement, the Surviving Corporation will use
a significant portion of its historic business assets in a business. PRG has no
plan or intention to liquidate the Surviving Corporation, to merge the
Surviving Corporation with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Corporation, except for transfers of
stock to corporations controlled by PRG. PRG has no plan or intention to
reacquire any of its stock issued in the transactions contemplated by this
Agreement. PRG holds stock representing not less than 80% of the voting power
of PRG Sub and not less than 80% of all other classes of outstanding stock of
PRG Sub.
3.7 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG Sub.
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SECTION 4. CLOSING DATE REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS.
The Shareholders, jointly (with respect to representations and
warranties by such Shareholder or the Company) and severally (with respect to
representations and warranties by such Shareholder), 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. A
professional association organized in Florida (the "Clinic") will be duly
organized, validly existing and in good standing under the laws of the State of
Florida as of the Closing Date. The Clinic has all necessary corporate power to
own all of its assets and to carry on its business as such business is now
being conducted. The Shareholders are the sole shareholders of the Clinic and
own such interests free of all security interests, claims, encumbrances and
liens in the amounts set forth on Exhibit 4.1. Each interest of the Clinic has
been legally and validly issued and fully paid and nonassessable. There are no
outstanding (a) bonds, debentures, notes or other obligations the holders of
which have the right to vote with the shareholders of the Clinic on any matter,
(b) securities of the Clinic convertible into equity interests in the Clinic,
or (c) commitments, options, rights or warrants to issue any such equity
interests in the Clinic, to issue securities of the Clinic convertible into
such equity interests, or to redeem any securities of the Clinic. No interests
of the Clinic have been issued or disposed of in violation of the preemptive
rights, rights of first refusal or similar rights of any of the Clinic's
shareholders. The Clinic is not required to qualify to do business as a foreign
entity in any other state or jurisdiction by reason of its business, properties
or activities in or relating to such other state or jurisdiction. The Clinic
does not have any assets, employees or offices in any state other than Florida.
4.2 CORPORATE RECORDS. True and correct copies of the Articles of
Incorporation, Bylaws and minutes of the Clinic and all amendments thereto of
the Clinic have been delivered to PRG and are in form and substance
satisfactory to PRG and PRG Sub. The minute books of the Clinic contain all
accurate minutes of the meetings of and consents to actions taken without
meetings of the shareholders of the Clinic since its formation. The books of
account of the Clinic have been kept accurately in the ordinary course of
business and the revenues, expenses, assets and liabilities of the Clinic have
been properly recorded in such books.
4.3 POWER AND AUTHORITY FOR TRANSACTIONS. The Clinic has the
corporate power to execute, deliver and perform its obligations under all
agreements and other documents to be executed and delivered by it pursuant to
this Agreement, including without limitation, the Service Agreement and each
Physician Employment Agreement or to be executed and delivered on the Closing
Date, and has taken all action required by law, its Articles of Incorporation,
Bylaws or otherwise, to authorize the execution, delivery and performance of
such documents. The Service Agreement, the Physician Employment Agreement and
the other agreements contemplated hereby have been duly executed and delivered
by the Clinic and constitute or will constitute the legal, valid and binding
obligations of the Clinic enforceable against the Clinic in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
availability of equitable remedies. The execution and delivery of the Service
Agreement, the Physician Employment Agreements and the other agreements
contemplated hereby will not violate any provision of the organizational
documents of the Clinic or any provisions of, or result in the acceleration of,
any obligation under any mortgage, lien, lease, agreement, rent, instrument,
order, arbitration award, judgment or decree to which the Clinic is a party or
by which the Clinic is bound, or violate any material restrictions of any kind
to which the Clinic is subject, or result in any lien or encumbrance on any of
the Clinic's assets.
4.4 NO BUSINESS. The Clinic has not commenced business since its
organization. Other than its Articles of Incorporation, Bylaws and as of the
Closing Date, the Service Agreement and the Physician Employment Agreements,
the Clinic is not a party to or subject to any agreement, indenture or other
instrument. The Clinic does not own any assets (tangible or intangible) other
than (i) the assets described on Exhibit 4.4 attached hereto, and (ii) the
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.
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The Company and the Shareholders, jointly (with respect to covenants
of the Company or such Shareholder) and severally (with respect to covenants of
such Shareholder), agree that between the date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. The Company and the Shareholders
shall use their best efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and conditions.
5.2 BUSINESS OPERATIONS. The Company and the Shareholders shall
operate the Company's business in the ordinary course. The Company shall not
enter into any lease, contract, indebtedness, commitment, purchase or sale or
acquire or dispose of any capital asset except in the ordinary course of
business. The Company and the Shareholders shall use their best efforts to
preserve the business and assets of the Company intact and shall not take any
action that would have an adverse effect on the business or assets of the
Company, including without limitation, any action the primary purpose or effect
of which is to generate or preserve cash; provided that the Company may
continue to operate in the ordinary course of business. The Company and the
Shareholders shall use their best efforts to preserve intact the relationships
with payors, customers, suppliers, patients and others having significant
business relations with the Company. The Company shall collect its receivables
and pay its trade payables in the ordinary course of business. The Company
shall not introduce any new method of management, operations or accounting.
5.3 ACCESS AND NOTICE. The Company and the Shareholders shall
permit PRG and PRG Sub and their authorized representatives reasonably access
to, and make available for inspection, all of the assets and business of the
Company and all of its assets, including employees, customers and suppliers and
permit PRG, PRG Sub and their authorized representatives to inspect and make
copies of all documents, records and information with respect to the business
or assets of the Company as PRG, PRG Sub or their representatives may
reasonably request. The Company and the Shareholders shall promptly notify PRG
Sub in writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a default, under
any contract, commitment or obligation to which the Company is a party, and (b)
any adverse change in the Company's business, financial condition or the
conditions of its assets.
5.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation of the
transactions contemplated hereby, including consents described on Exhibit 2.5.
The Company and the Shareholders shall use their best efforts to obtain all
licenses, permits, approvals or other authorizations required under any law,
rule, regulation, or otherwise to conduct the intended business of the Company.
5.5 ACQUISITION PROPOSALS The Company and the Shareholders shall
not, and shall use their best efforts to cause the Company's employees, agents
and representatives not to, initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer, including without limitation, any proposal or offer to the Shareholders,
with respect to a merger, acquisition, consolidation or similar transaction
involving, or the purchase of all or any significant portion of the assets or
any equity securities of the Company or engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to such proposal or offer, and the Company and the
Shareholders will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company and the Shareholders shall immediately notify PRG Sub if any such
inquiries or proposals are received.
5.6 FUNDING OF ACCRUED EMPLOYEE BENEFITS. The Company hereby
covenants and agrees that it will take whatever steps are necessary to pay or
fund completely for any accrued benefits, where applicable, or vested accrued
benefits for which the Company or any entity might have any liability
whatsoever arising from any insurance, pension plan, employment tax or similar
liability of the Company to any employee or other person or entity (including,
without limitation, any Company Plan and any liability under employment
contracts with the Company) allocable to services performed prior to the
Closing Date. The Company acknowledges that the purpose and intent of this
covenant is to assure that PRG Sub shall have no liability whatsoever at any
time after the Closing Date with respect to any of the Company's employees or
similar persons or entities, including, without limitation, any Company Plan.
5.7 EMPLOYEE MATTERS. The Company shall not, without the prior
written approval of PRG or PRG Sub, except as required by law, increase the
cash compensation of any Shareholder or other employee or an independent
contractor of the Company other than in the ordinary course of business, adopt,
amend or terminate any compensation
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plan, employment agreement, independent contractor agreement, employee policies
and procedures or employee benefit plan, take any action that could deplete the
assets of any employee benefit, or fail to pay any premium or contribution due
or file any report with respect to any employee benefit plan, or take any other
actions with respect to its employees or employee matters which might have an
adverse effect upon the Company, its business, assets or prospects.
5.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company except in the
ordinary course of business or with the consent of PRG, nor will any repurchase
of any of the Company's capital stock be approved or effected.
5.9 REQUIREMENTS TO EFFECT MERGER. The Company and each
Shareholder shall use their best efforts to take, or cause to be taken, all
actions necessary to effect the Merger under applicable law, including without
limitation the filing with the appropriate government officials of all
necessary documents in form approved by counsel for the parties to this
Agreement.
5.10 VOTING OF SHARES; IRREVOCABLE PROXY. Each Shareholder agrees
that until the earlier of the Closing Date or the termination of this
Agreement, each such Shareholder shall vote all shares of Company common stock
owned by the Shareholders at any meeting of the stockholders of the Company or
take action by written consent for adoption of this Agreement, as hereby
amended, and in favor of the Merger and any other transactions contemplated by
this Agreement, and against any action, omission or agreement which would
impede or interfere with, or have the effect of discouraging, the Merger.
5.11 ACCOUNTING AND TAX MATTERS. The Company will not change in
any material respect the accounting methods or practices followed by the
Company (including any material change in any assumption underlying, or any
method of calculating, any bad debt, contingency or other reserve), except as
may be required by generally accepted accounting principles. The Company will
not make any material tax election except in the ordinary course of business
consistent with past practice, change any material tax election already made,
adopt any tax accounting method except in the ordinary course of business
consistent with past practice, change any tax accounting method, enter into any
closing agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for any such
claim or assessment. The Company will duly, accurately and timely (without
regard to any extensions of time) file all returns, information statements and
other documents relating to taxes of the Company required to be filed by it,
and pay all taxes required to be paid by it, on or before the Closing Date.
5.12 CONVERSION TRANSACTION. Prior to the Merger, the Shareholders
and the Company shall file with the Secretary of State of Florida an amendment
to and/or a restatement of the Company's Articles of Incorporation and shall
take such other action as may be necessary to convert itself into a general
business corporation in accordance with all applicable laws, rules and
regulations.
5.13 ACCOUNTING MATTERS. The Company and Shareholders shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
5.14 EXHIBITS. The Company and Shareholders shall provide each of
the Exhibits hereto on or before June 24, 1996, which exhibits shall be in form
and substance satisfactory to PRG and PRG Sub.
SECTION 6. COVENANTS OF PRG AND PRG SUB.
PRG and PRG Sub, jointly and severally, agree that between the date
hereof and the Closing Date:
6.1 CONSUMMATION OF AGREEMENT. PRG and PRG Sub shall use their
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law, including without limitation the filing with the
appropriate government officials all necessary documents in form approved by
counsel for the parties to this Agreement.
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6.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS; RELEASE
OF GUARANTIES. 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. In connection with its assumption of the
indebtedness described in Section 1.11 hereof and Section 2.19 hereof, PRG and
PRG Sub shall cause the guaranty of such indebtedness by the Shareholders to be
released or shall unconditionally indemnify the Shareholders with respect to
the full amount of such guaranties from and after the Closing Date.
6.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
SECTION 7. COVENANTS OF THE SHAREHOLDERS.
The Shareholders, jointly (with respect to covenants of such
Shareholder or the Company) and severally (with respect to covenants made by
such Shareholder), agree that between the date hereof and the Closing Date:
7.1 FORMATION OF THE CLINIC. The Shareholders shall form the
Clinic, in the form of entity approved by PRG and PRG Sub in the State of
Florida and the organizational documents of the Clinic shall be in form and
substance satisfactory to PRG and PRG Sub.
7.2 ACCESS. The Shareholders shall permit PRG, PRG Sub and their
authorized representatives full access to, and make available for inspection,
all of the assets and records of the Clinic, and permit PRG, PRG Sub and their
authorized representatives to inspect and make copies of all documents, records
and information with respect to the affairs of the Clinic as PRG, PRG Sub and
their representatives may request.
7.3 LICENSES AND PERMITS. The Shareholders shall use their best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements,
and to conduct the intended business of the Clinic.
7.4 CORPORATE GOVERNANCE. The Clinic shall establish governance
provisions that are reasonably acceptable to PRG providing for (i) a maximum
length of employment for non-owner physicians prior to their admission to
ownership in the Clinic, (ii) terms of ownership admission to the Clinic, (iii)
a compensation structure for ongoing owner physicians, (iv) retirement of
physicians from the ownership of the Clinic and (v) buy-out provisions for
retiring or inactive owner physicians.
7.5 AFFILIATES. The Company and Shareholders shall deliver to PRG
and PRG Sub a list of names and addresses of persons who were "affiliates" of
the Company within the meaning of Rule 145 (each such person, together with the
persons identified below, an "Affiliate") of the rules and regulations
promulgated under the Securities Act. There shall be added to such list the
names and addresses of any other person (within the meaning of Rule 145) which
PRG and PRG Sub reasonably identifies as being a person who may be deemed to be
an Affiliate of the Company within the meaning of Rule 145.
SECTION 8. PRG SUB AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company and the Shareholders contained herein shall be true
and correct in all respects as of the Closing Date.
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8.2 COVENANTS AND CONDITIONS. The Company and the Shareholders
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Company and the
Shareholders prior to the Closing Date.
8.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
8.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company shall have occurred since the Balance Sheet Date.
8.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business, operations and
financial statements of the Company, the results of which shall be satisfactory
to PRG Sub and PRG in their sole discretion.
8.6 APPROVAL BY THE BOARD OF DIRECTORS This Agreement and the
transactions contemplated hereby shall have been approved by the Board of
Directors of PRG or a committee thereof.
8.7 SERVICE AGREEMENT. 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 and with such changes as are agreed upon between the Clinic, the
Shareholders, PRG and Surviving Corporation, pursuant to which the Clinic and
Shareholders will provide services to PRG and Surviving Corporation.
8.8 EMPLOYMENT ARRANGEMENTS. Prior to the Closing Date, the
Company will terminate, and will cause each physician employee of the Company
and other licensed employees that have existing employment agreements with the
Company to terminate his or her employment agreement with the Company, execute
a separation and release agreement ("Separation and Release Agreement"), and
each such employee who is not a shareholder of the Company will execute an
employment agreement ("Employment Agreements") with the Clinic or a
Shareholder, each in form and substance satisfactory to the Clinic and PRG.
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 CORPORATE GOVERNANCE. PRG shall have approved the governance
provisions of the Clinic, if applicable, adopted in accordance with Section
7.4.
8.12 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Company and its shareholders or affiliates
and, other than the indebtedness described on Exhibit 2.19, 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 Florida Business Corporation Act.
8.14 MERGER CONSIDERATION. The Merger 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.
8.16 ACCOUNTING OPINION. PRG and PRG Sub shall have received an
opinion concerning the qualification of the Merger as a pooling of interests
under applicable accounting standards from Arthur Anderson, L.L.P.
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8.17 REAL ESTATE. The transactions described in Section 1.11
above shall be closed simultaneously with the transactions contemplated hereby
on or before June 28, 1996.
SECTION 9. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Sub and PRG contained herein shall be true and correct in all
respects as of the Closing Date.
9.2 COVENANTS AND CONDITIONS. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Sub and PRG prior to the
Closing Date.
9.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
9.4 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 10.2.
9.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 10. CLOSING DELIVERIES.
10.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDERS. At or prior
to the Closing, the Company and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to PRG Sub
and PRG:
(a) an executed original Service Agreement and executed
originals of all documents required by that agreement, including but not
limited to security agreements and powers of attorneys referred to therein;
(b) executed Separation and Release Agreements and
Employment Agreements;
(c) a copy of the resolutions of the Board of Directors
of the Company authorizing the execution, delivery and performance of this
Agreement and all related documents and agreements each certified by the
Secretary as being true and correct copies of the original thereof;
(d) a copy of the resolutions of the Board of Directors
of the Clinic authorizing the execution, delivery and performance of the
Service Agreement and the Employment Agreements, each certified by the
Secretary of the Clinic as being true and correct copies of the original
thereof;
(e) certificates of the President of the Company and of
each Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of the Company and each
Shareholder contained herein; (ii) as to the performance of and compliance by
the Company and each Shareholder with all covenants contained herein; and (iii)
certifying that all conditions precedent of the Company and each Shareholder to
the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
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(g) a certificate of the Secretary of the Clinic
certifying as to the incumbency of the directors and officers of the Clinic and
as to the signatures of such directors and officers who have executed documents
delivered at the Closing on behalf of the Clinic;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Florida establishing that Clinic is in
existence and is in good standing to transact business in its state of
incorporation;
(j) an opinion of counsel to the Company and the
Shareholders opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the good
standing and authority of the Company, 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) non-foreign affidavits executed by the Company and
each Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5; and
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form to be agreed upon;
(o) Affiliates Letters from each Affiliate in the form to
be agreed upon;
(p) a Registration Rights Agreement in substantially the
form attached hereto as Exhibit 10.1(p) and with such changes to be agreed upon
between the parties, executed by each Shareholder and spouse of such
Shareholder;
(q) an executed Escrow Agreement; and
(r) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
10.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholders or the
Clinic, as applicable:
(a) the Merger Consideration;
(b) an executed Service Agreement;
(c) a copy of the resolutions of the Board of Directors
of PRG Sub and PRG (or a committee thereof) authorizing the execution, delivery
and performance of this Agreement and all related documents and agreements each
certified by the Secretary as being true and correct copies of the original
thereof;
(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;
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(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 the Company;
(h) Affiliates Letters from each affiliate of PRG in the
form to be agreed upon;
(i) a Registration Rights Agreement in substantially the
form attached hereto as Exhibit 10.1(p) and with such other changes as agreed
upon;
(j) an executed Escrow Agreement;
(k) release of guaranties or unconditional
indemnification agreement as required pursuant to Section 6.2 hereof; and
(l) such other instruments and documents as reasonably
requested by the Company or Shareholders to carry out and effect the purpose
and intent of this Agreement.
SECTION 11. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
11.1 NATURE AND SURVIVAL. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of the
Company and the Shareholders, jointly (with respect to the representations and
warranties of the Company or such Shareholder) and severally (with respect to
representations and warranties of such Shareholder), or of PRG Sub and PRG,
jointly and severally, as the case may be. Except as provided herein, all such
representations and warranties, and all representations and warranties
expressly labeled as such in this Agreement shall survive the date of this
Agreement and the Closing Date for a period of one (1) year following the
Closing Date. Each party covenants with the other parties not to make any claim
with respect to such representations and warranties, against any party after
the date on which such survival period shall terminate. No party shall be
entitled to claim indemnity from any other party pursuant to Section 11.2 or
11.3 hereof, unless such party has timely given the notice required in Sections
11.2, 11.3 or 11.4 hereof, as the case may be. Each party hereby releases,
acquits and discharges the other party from any and all claims and demands,
actions and causes of action, damages, costs, expenses and rights of setoff
with respect to which the notices required by Section 11.2, 11.3 or 11.4, as
applicable, are not timely provided.
11.2 INDEMNIFICATION BY PRG AND PRG SUB. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDERS (AND
SOLELY WITH RESPECT TO SUBPARAGRAPH (III) BELOW, CENTRAL FLORIDA EYE ASSOCIATES
PARTNERS), AND THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING,
INCLUDING THE COMPANY AND THE SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 11.2
AND, TO THE EXTENT APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON"), HARMLESS
FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS,
COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF
OR RESULTING FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
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(II) FROM AND AFTER THE CLOSING DATE, INDEMNITOR'S MANAGEMENT AND
THE OWNERSHIP OF THE COMPANY, OR
(III) FROM ANY CLAIMS MADE BY SURGICARE OF CENTRAL FLORIDA, LTD. OR
ANY INDIVIDUAL PARTNERS THEREOF IN CONNECTION WITH THE ALLEGED BREACH OF
CENTRAL FLORIDA EYE ASSOCIATES PARTNERS AND SHAREHOLDERS (IN THEIR INDIVIDUAL
CAPACITY AS PARTNERS OF CENTRAL FLORIDA EYE ASSOCIATES PARTNERS OR AS LIMITED
PARTNERS IN SURGICARE OF CENTRAL FLORIDA, LTD.) OF SECTION 32 OF THAT CERTAIN
DEVELOPMENT AND LEASE AGREEMENT DATED FEBRUARY 17, 1995, BETWEEN THE CENTRAL
FLORIDA EYE ASSOCIATES PARTNERS AND SURGICARE OF CENTRAL FLORIDA, LTD.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.3 INDEMNIFICATION BY THE COMPANY AND THE SHAREHOLDERS. THE
COMPANY AND THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE
EXTENT APPLICABLE, SECTION 11.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
COMPANY OR SUCH SHAREHOLDER) AND SEVERALLY (WITH RESPECT TO SUCH SHAREHOLDER),
SHALL INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG SUB
AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT APPLICABLE,
SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS, DEFICIENCIES AND
EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF
COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON OF OR RESULTING
FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER, 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,
(II) ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES,
AGENTS AND INDEPENDENT CONTRACTORS IN OR ABOUT THE COMPANY'S BUSINESS,
(III) ANY VIOLATION BY THE COMPANY OR THE SHAREHOLDERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(IV) ANY OVERPAYMENT OR OBLIGATION ARISING OUT OF OR RESULTING
FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR AND ATTRIBUTABLE TO THE PERIOD
PRIOR TO THE CLOSING DATE,
(V) TAXES OF THE COMPANY OR ANY OTHER PERSON (INCLUDING ANY
SHAREHOLDER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT,
(V) ANY LIABILITY OF THE COMPANY OR THE SHAREHOLDERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH,
OR.
21
<PAGE> 23
(VI) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN LIABILITIES.
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
11.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
11.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Company and
Shareholders in favor of PRG or PRG Sub shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Sub in favor of the
Company and Shareholders shall not exceed in all cases (other than as set forth
in Section 11.2(III), $612,300.00. Furthermore, other than claims pursuant to
Section 11.2(III) which shall survive for the statute of limitations period, no
claim for Damages shall be made by any party more than one (1) year after the
Closing Date.
11.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Corporation covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Shareholders shall, jointly
and severally, within fifteen (15) days after payment thereof and receipt of
notice of such payment, reimburse, indemnify and hold harmless PRG and the
Surviving Corporation for all taxes, 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
22
<PAGE> 24
Date. For such purposes, the portion of any Tax attributable to the portions
of a Straddle Period ending on the Closing Date and beginning after the Closing
Date shall be determined by apportioning the Tax for the entire Straddle Period
among such periods based on the number of days in each such period, provided
that, in the case of Taxes based upon or related to income or receipts, such
portion shall be the amount of Tax which would have been due if the relevant
Straddle Period ended on the Closing Date. Any credits relating to a Straddle
Period shall be taken into account as though the relevant Straddle Period ended
on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practices
of the Company.
(c) The Company, Shareholders, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 12. TERMINATION. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of the Company or any Shareholder contained in this Agreement or in
any certificate or other document executed and delivered by the Company or any
Shareholder pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Company or any Shareholders fails to comply in any
material respect with any covenant or agreement contained herein, and any such
misrepresentation, noncompliance or breach is not cured, waived or eliminated
within twenty (20) days after receipt of written notice thereof;
(c) at any time by the Company or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this Agreement or in
any certificate or other document executed and delivered by PRG or PRG Sub
pursuant to this Agreement is or becomes untrue or breached in any material
respect or if PRG or PRG Sub fails to comply in any material respect with any
covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days after receipt of written notice thereof;
(d) by PRG, PRG Sub, the Company or the Shareholders if the merger
contemplated hereby shall not have been consummated by June 28, 1996;
(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; or
(f) by the Shareholders if counsel for the Shareholders shall
determine, in its reasonable good faith judgment, that the provisions of
Section 11.3(III) shall not be satisfactory to protect the Shareholders with
respect to the claims discussed therein.
SECTION 13. NONCOMPETITION.
13.1 PROHIBITED ACTIVITIES. In order to protect PRG, PRG Sub, the
Surviving Corporation and each of their affiliates (collectively, the "PRG
Group") against the unauthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by the Shareholders and
other good and valuable consideration, each Shareholder hereby agrees that,
subject to adjustment pursuant to Section 13.5, for a period of five (5) years
following the Closing Date, each Shareholder and his or her respective
affiliates shall not knowingly, directly or indirectly, for herself or himself
or on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent, employee,
offer director or in any other capacity):
(a) establish, operate or provide 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
23
<PAGE> 25
by PRG, PRG Sub, Surviving Corporation or any practice managed by PRG or any
subsidiary of PRG anywhere within 50 miles of any location of PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG;
provided, however, that this provision shall not prohibit each Shareholder 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 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:
<TABLE>
<CAPTION>
Year Following
Closing in Which
Breach Occurs Damages
- ---------------- -------
<S> <C>
1st $1,500,000.00
2nd $1,200,000.00
3rd $900,000.00
4th $600,000.00
5th $300,000.00
</TABLE>
13.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 13 impose a reasonable restraint on the
Shareholders in light of the activities and business of PRG and PRG Sub on the
date of the execution of this Agreement and the future plans of PRG and
Surviving Corporation.
13.4 SEVERABILITY; REFORMATION. The covenants in this Section 13
are severable and separate, and the unenforceability of any specific covenant
shall not affect the provisions of any other covenant. Moreover, in the event
any court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which
the court deems reasonable, and the Agreement shall thereby be reformed.
13.5 TERM. It is specifically agreed that the period of five (5)
years stated above, shall be computed by excluding from such computation any
time during which any Shareholder is in violation of any provision of this
Section 13. The covenants contained in this Section 13 shall have no effect if
the transactions contemplated by this Agreement
24
<PAGE> 26
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. The Shareholders
recognize and acknowledge that they had in the past, currently have, and in the
future may possibly have, access to certain confidential information of PRG,
Surviving Corporation or PRG Sub that is valuable, special and unique assets of
PRG's, Surviving Corporation's or PRG Sub's businesses. The Shareholders agree
that they will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason whatsoever,
unless (i) such information becomes available to or known by the public
generally through no fault of the Shareholders, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholders shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholders reasonably believe that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholders are the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholders of the provisions of this Section 14, PRG, Surviving Corporation
or PRG Sub shall be entitled to an injunction restraining the Shareholders from
disclosing, in whole or in part, such confidential information. Nothing herein
shall be construed as prohibiting PRG, Surviving Corporation or PRG Sub from
pursuing any other available remedy for such breach or threatened breach,
including the recovery of damages. The obligations of the parties under this
Section 14 shall survive the termination of this Agreement.
SECTION 15. INVESTMENT REPRESENTATIONS.
15.1 INVESTMENTS; COMPLIANCE WITH LAW. The Shareholders
acknowledge that the shares of PRG common stock to be delivered to the
Shareholders pursuant to this Agreement have not been and other than as set
forth in the Registration Rights Agreement, will not be registered under the
Securities Act and may not be resold without compliance with the Securities
Act. The PRG common stock to be acquired by the Shareholders pursuant to this
Agreement is being acquired solely for their own account, for investment
purposes only and with no present intention of distributing, selling or
otherwise disposing of it in connection with a distribution. The Shareholders
covenant, warrant and represent that none of the shares of PRG common stock
issued to them will be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of
the applicable provisions of the Securities Act, as amended, and the rules and
regulations of the Securities Exchange Commission and applicable state
securities laws and regulations. All certificates evidencing shares of PRG
common stock shall bear the following legend in addition to the legend
referenced in Section 15.1.
The shares represented hereby have not been registered under
the Securities Act of 1933 (the "Act") and may only be sold or
otherwise transferred if the holder hereof complies with the
Act and applicable securities law or complies with the terms
and provisions of that certain Registration Rights Agreement
executed among the holder hereof, the Company and certain
other persons dated [Closing Date], a copy of which will be
provided by the Company upon written request.
In addition, certificates evidencing shares of PRG common stock shall bear any
legend required by the securities or blue sky laws of any state where a
Shareholder resides.
15.2 ECONOMIC RISK; SOPHISTICATION. The Shareholders are able to
bear the economic risk of an investment in PRG common stock acquired pursuant
to this Agreement and can afford to sustain a total loss of such investment and
have such knowledge and experience in financial and business matters that they
are capable of evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in connection with
the acquisition of the PRG common stock. The Shareholders or their respective
purchaser representatives have had an adequate opportunity to ask questions and
receive answers from the officers of PRG concerning any and all matters
relating to the background and experience of the officers and directors of PRG,
the plans for the operations of the business of PRG, and any plans for
additional acquisitions and the like. The Shareholders or
25
<PAGE> 27
their respective purchaser representatives have asked any and all questions in
the nature described in the preceding sentence and all questions have been
answered to their satisfaction.
15.3 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 16. MISCELLANEOUS.
16.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. PRG Fl Acquisition Corporation
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
If to the Company or the Shareholders: 814 Griffin Road
Lakeland, FL 33805
Facsimile:
with a copy to: Thomas Driscoll, Esquire
Foley, Lardner, Weissburg & Aronson
One Maritime Plaza, 6th Floor
San Francisco, CA 94111
Telecopy: (415) 434-4507
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications, properly addressed and postage prepaid with the overnight
courier.
16.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholders shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that any Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
16.3 EACH PARTY TO BEAR COSTS. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such party in
connection with the transactions contemplated by this Agreement, whether or not
such transactions are consummated. Without limiting the generality of the
foregoing and whether or not such liabilities
26
<PAGE> 28
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 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 (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. As of the Closing Date, the
Company shall not have any liability for any fees or expenses of legal counsel,
accountants, auditors or other persons or entities for services rendered in
connection with negotiating and closing the transactions contemplated by this
Agreement or the documents to be executed in connection herewith.
16.4 PUBLIC DISCLOSURES. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties. The parties to this Agreement shall cooperate with respect
to the form and content of any such disclosures.
16.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA AND APPLIED
WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS PRINCIPLES.
16.6 CAPTIONS. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
16.7 INTEGRATION OF EXHIBITS. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth herein,
and all statements appearing therein shall be deemed disclosed for all purposes
and not only in connection with the specific representation in which they are
explicitly referenced.
16.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES AND
SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN THE PARTIES,
WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY.
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.
27
<PAGE> 29
16.13 AMENDMENTS; WAIVERS. This Agreement may be amended, modified
or supplemented only by an instrument in writing executed by all the parties
hereto. Any waiver of the terms and conditions hereof must be in writing, and
signed by the parties hereto. The waiver of any of the terms and conditions of
this Agreement shall not be construed as a waiver of any other terms and
conditions hereof.
16.14 CHOICE OF FORUM. Each of the parties hereto agree that should
any suit, action or proceeding arising out of this Agreement be instituted by
any party hereto (other than a suit, action or proceeding to enforce or realize
upon any final court judgment arising out of this Agreement), such suit, action
or proceeding shall be instituted only in a state or federal court in Dallas
County, Texas. Each of the parties hereto consents to the in personam
jurisdiction of any state or federal court in Dallas County, Texas and waives
any objection to the venue of any such suit, action or proceeding. The parties
hereto recognize that courts outside Dallas County, Texas may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement,
and in the event that any party hereto shall institute a proceeding involving
this Agreement in a jurisdiction outside Dallas County, Texas, the party
instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant
to institute proceedings only in a state or federal court in Dallas County,
Texas.
16.15 SERVICE OF PROCESS. Service of any and all process that may
be served on any party hereto in any suit, action or proceeding arising out of
this Agreement may be made in the manner and to the address set forth in
Section 16.1 and service thus made shall be taken and held to be valid personal
service upon such party by any party hereto on whose behalf such service is
made.
16.16 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
16.17 EXECUTION BY PARTNERS. Ronald Case, M.D., Brian Renz, M.D.,
Ted Kulyk, M.D. and Jay Mulaney, M.D. hereby executed this Agreement in their
individual capacity, as shareholders of Central Florida Eye Partners, P.A. and
as partners of Central Florida Eye Associates Partners and G.C.R. Investors.
[End of Page _____]
28
<PAGE> 30
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG FL ACQUISITION CORPORATION CENTRAL FLORIDA EYE ASSOCIATES, P.A.
By: /s/ RICHARD J. D'AMICO By: /s/ RONALD CASE
--------------------------- -------------------------------
Its: Its:
--------------------------- -------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ RICHARD J. D'AMICO /s/ RONALD CASE
--------------------------- ----------------------------------
Ronald Case, M.D.
Its:
---------------------------
/s/ BRIAN RENZ
----------------------------------
Brian Renz, M.D.
/s/ TEO KULYK
----------------------------------
Teo Kulyk, M.D.
/s/ JAY MULANEY
----------------------------------
Jay Mulaney, M.D.
Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D. and Jay Mulaney, M.D.
hereby executed this Agreement in their individual capacity, as shareholders of
Central Florida Eye Partners, P.A. and as partners of Central Florida Eye
Associates Partners and G.C.R. Investors.
29
<PAGE> 31
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Company
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Statements
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.19 Debt
2.20 Insurance Policies
2.21 Employee Benefit Plans
2.29 Suppliers
2.30 Banking Relations
2.31 Ownership Interests of Interested Persons
2.32 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(p) Registration Rights Agreement
ANNEX I Merger Consideration
ANNEX II Real Estate Consideration
EXHBIIT IIA G.C.R. Investors Real Estate
EXHIBIT IIB Central Florida Eye Associates Partners Real Estate
</TABLE>
30
<PAGE> 1
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
G.C.R. INVESTORS
RONALD CASE, M.D.,
BRIAN RENZ, M.D.,
JAY MULANEY, M.D.,
PRG FL PARTNERSHIP I,
AND
PHYSICIANS RESOURCE GROUP, INC.
-i-
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 28th
day of June, 1996, is by and among PRG FL PARTNERSHIP I, a Florida general
partnership ("PRG Partnership"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); G.C.R. INVESTORS, a Florida general partnership (the
"Partnership"), and RONALD CASE, M.D., BRIAN RENZ, M.D. AND JAY MULANEY, M.D.,
all individual residents of the State of Florida (individually "Partner," and
collectively "Partners").
WITNESSETH:
WHEREAS, the Partnership engaged in the business of acquiring, owning,
developing, leasing, marketing and operating real and personal property for an
ophthalmology practice and related businesses in Lakeland, Florida;
WHEREAS, Partners are the only partners of the Partnership;
WHEREAS, PRG Partnership is engaged in the business of acquiring the
assets of and operating real and personal property relating to ophthalmology
practices;
WHEREAS, Physicians Resource Group Realty, Inc. and PRG Realty II,
Inc. each own a 50% interest in PRG Partnership; and
WHEREAS, PRG owns a 100% interest in both Physicians Resource Group
Realty, Inc. and PRG Realty II, Inc.
WHEREAS, the parties have determined that a business combination
between the parties is in the best interests of their respective partnerships
and partners and accordingly have agreed to effect the Merger (hereinafter
defined) upon the terms and conditions set forth herein;
WHEREAS, it is intended that for financial accounting purposes the
Merger shall be accounted for as a "pooling of interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Partnership with and into the Partnership shall
occur on the 28th day of June, 1996, to be effective as of 11:59 p.m. on June
30, 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 PARTNERSHIP INTO THE PARTNERSHIP. On the
Closing Date, PRG Partnership shall be merged with and into the Partnership in
accordance with this Agreement and the separate legal existence of PRG
Partnership shall thereupon cease (the "Merger"). The Partnership shall be the
surviving entity in the Merger (in such capacity, hereinafter referred to as
the "Surviving Partnership") and shall continue to be governed by the laws of
the State of Florida and the separate legal existence of Surviving Partnership
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 Chapter 620 of the Florida Statutes
for partnerships which elect to be governed by the Revised Uniform Partnership
Act.
1.2 MERGER STATEMENT. 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
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shall cause to be properly executed and filed on the Closing Date a Statement
of Merger meeting the requirements of Section 620.8907 of the Florida Statutes.
The Merger shall become effective on the Closing Date.
1.3 CONVERSION OF PARTNERSHIP INTERESTS. The manner of converting
the partnership interests of the Partners 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 of the Partners' interest in the
Partnership on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of shares of PRG common stock set forth on Annex I attached
hereto less the Escrowed Shares (in the aggregate, the "Merger Consideration").
As a result of the Merger and without any action on the part of the holder
thereof, all of the Partners' interest in the Partnership shall be purchased
and shall cease to exist, and each Partner shall be deemed to be dissociated
from the Partnership as of the Closing Date (as provided in Section 620.8906 of
the Florida Statutes) and such Partner shall thereafter cease to have any
rights with respect to his interest in the Partnership, except the right to
receive, without interest, the Merger Consideration.
(b) On the Closing Date, all of the PRG Partnership
interests outstanding as of the Closing Date shall be surrendered in exchange
for an equal interest in the Surviving Partnership.
1.4 [INTENTIONALLY DELETED].
1.5 ESCROW. In addition to the shares issuable to the Partners at
Closing, PRG shall deposit in escrow 4,870 shares of PRG Common Stock (the
"Escrowed Shares") pursuant to the terms of an Escrow Agreement (the "Escrow
Agreement") in substantially the form attached hereto as Exhibit 1.5 and with
such changes to be agreed upon between the parties, to be entered into among
Partners, the Partnership, PRG Partnership, PRG and the person named therein as
escrow agent ("Escrow Agent"). The Escrowed Shares shall be issued in the name
of the Escrow Agent, as escrow agent. The Escrowed Shares shall be released
from escrow, after provision for any Damages for which PRG or PRG Partnership
may be entitled to indemnification pursuant to Article XI in accordance with
the terms of the Escrow Agreement.
1.6 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Partnership 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
Partnership its right, title or interest in, to or under any of the rights,
properties or assets of the Partnership or PRG Partnership acquired or to be
acquired by the Surviving Partnership as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, and to effect the purchase
and cancellation of the Partners' interest in the Partnership in return for the
consideration set forth in this Agreement, the partners of the Surviving
Partnership or their duly authorized officers, directors and agents, shall be
authorized to execute and deliver, in the name and on behalf of the
Partnership, each Partner and PRG Partnership 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 Partnership and PRG Partnership 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 Partnership or otherwise to carry out
this Agreement.
1.7 ASSUMPTIONS OF OR PREPAYMENT OF DEBT. In connection with the
Merger, PRG shall assume or prepay all indebtedness of the Partnership and
shall take such actions as may be necessary, desirable or appropriate to
absolve and release the Partners from any further personal liability with
respect to such indebtedness.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP AND THE
PARTNERS.
The Partnership and the Partners, jointly (with respect to
representations and warranties by such Partner or the Partnership) and
severally (with respect to representations and warranties by each such
Partner), hereby represent and warrant as of the Closing Date and thereafter in
accordance with Section 11.1, to PRG Partnership and PRG as follows:
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2.1 EXISTENCE AND GOOD STANDING. The Partnership is a general
partnership duly organized, validly existing and in good standing under the
laws of the State of Florida. The Partnership has all necessary powers to own
all of its assets and to carry on its business as such business is now being
conducted. The Partnership does not own stock in or control, directly or
indirectly, any other corporation, association or business organization, nor is
the Partnership a party to any other joint venture or partnership. The
Partners are the sole owners of the Partnership and own all interests in the
Partnership free of all security interests, claims, encumbrances and liens in
the amounts set forth on Exhibit 2.1. The Partners have owned the equity
interests set forth on Exhibit 2.1 since January 1, 1994 in the amounts set
forth on such Exhibit. No change will be made in the equity ownership of the
Partnership between the date hereof and the Closing Date. The Partnership has
not acquired the interest of any Partner in the Partnership since January 1,
1994. There are no outstanding (a) bonds, debentures, notes or other
obligations the holders of which have the right to vote with the Partners of
the Partnership on any matter, or (b) commitments, options, rights or warrants
to issue any additional equity or ownership interests in the Partnership, to
issue rights to or interests in the Partnership convertible into such equity
interests, or to redeem any Partner's interest in the Partnership. No ownership
or equity interests in the Partnership have been issued or disposed of in
violation of the preemptive rights, rights of first refusal or similar rights
of any of the Partners or the Partnership. The Partnership is not required to
qualify to do business as a foreign partnership in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Partnership does not have any assets,
employees or offices in any state other than Florida. The Partnership has not
been a division or subsidiary of PRG or any of its subsidiaries since January
1,1994. The Partnership and each Partner do not own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Partnership has the
power and authority 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, the Partnership Agreement or otherwise, to
authorize the execution, delivery and performance of this Agreement and such
related documents. Each Partner has the legal capacity to enter into and
perform this Agreement and the other agreements to be executed and delivered in
connection herewith. The Partnership has obtained the approval of the Partners
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 Partnership and the Partners, as appropriate, and constitute
or will constitute the legal, valid and binding obligations of the Partnership
and the Partners, enforceable against the Partnership and the Partners 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 Partnership
Agreement of the Partnership 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
Partnership or any Partner is a party or by which the Partnership or any
Partner is bound, or violate any material restrictions of any kind to which the
Partnership is subject, or result in any lien or encumbrance on any of the
Partnership's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Partnership or
the Partners 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 Partnership and the Partners, threatened, which may result in
the revocation, cancellation or suspension, or any adverse modification, of any
thereof.
The Partnership possesses all necessary licenses, permits (including
building and occupancy permits), easements, rights-of-way and authorizations
from all governmental authorities and private persons for the normal use,
maintenance and occupancy and operation of the Real Property, and to ensure the
unimpeded access, ingress and egress to and from the Real Property as required
to permit the normal useage of the Real Property and improvements thereon, all
of which are listed on Exhibit 2.3. Present land use laws and ordinances
permit the use of the Real Property and the improvements thereon as an office
and medical clinic. The Real Property complies with all applicable parking
regulations and there are no governmental or private regulations, orders,
agreements or instruments restricting the current use and operation of the Real
Property and improvements thereon.
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2.4 RECORDS. True and correct copies of the Partnership Agreement
and all amendments thereto of the Partnership and the minutes of any meeting of
the Partners or actions by unanimous written consent have been delivered to PRG
Partnership. The minutes and written consents contain all accurate minutes of
the meetings of and consents to actions taken without meetings of the Partners
since formation of the Partnership.
True and correct copies of all title policies, surveys, environmental
reports, deeds, bills of sale and other agreements and other instruments
relating to the Real Property have been delivered to PRG and PRG Partnership.
There are no easements, restrictions or such other agreements or instruments
affecting the Real Property that are not filed of record in Polk County,
Florida. True and correct copies of all leases between the Partnership and
lessees of the Real Property have been delivered to PRG Partnership.
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 Partnership or the Partners.
2.6 THE PARTNERSHIP'S FINANCIAL INFORMATION. The Partnership has
heretofore furnished PRG Partnership with copies of financial information (tax
returns) as of and for the year ended December 31, 1995 as set forth on Exhibit
2.6 attached hereto ("Financial Information"), including the unaudited Balance
Sheet ("Balance Sheet") as of December 31, 1995 ("Balance Sheet Date"). The
Financial Information has been prepared in accordance with GAAP consistently
followed throughout the periods indicated, reflect all liabilities of the
Partnership required to be reported in accordance with GAAP, including all
contingent liabilities of the Partnership, as of their respective dates, and
present fairly the financial position of the Partnership 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 Partnership leases, as lessor or lessee, real or
personal property used in operating the business of the Partnership or
otherwise. All such leases listed on Exhibit 2.7 are valid and enforceable in
accordance with their respective terms, except to the extent noted on Exhibit
2.7 and there is not under any such lease any existing material default by the
Partnership, as lessor or lessee, or any condition or event of which the
Partnership or any Partner has knowledge which with notice or lapse of time, or
both, would constitute a material default, in respect of which the Partnership
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 Partnership in its business are in good condition and
repair subject to normal wear and tear and, to the best knowledge of the
Partnership and Partners, conform with all applicable ordinances, regulations
and other laws, and the Partnership and the Partners have no knowledge of any
latent defects therein. The Partnership and Partners have not, since January
1, 1994, disposed of, sold or transferred any part of the Partnership's assets
in contemplation of the transactions contemplated hereby.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Partnership is set forth
on Exhibit 2.9(a). The Partnership 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(b) attached hereto. The real property described on
Exhibit 2.9(a) (the "Real Property") constitutes the only real property owned
by the Partnership and used in the conduct of the Partnership's business. Upon
consummation of the transactions contemplated hereby, such interest in the Real
Property shall be free and clear of all liens, security interests, claims and
encumbrances except for those encumbrances disclosed on Exhibit 2.9(b) which
shall be assumed by PRG Partnership in connection with the Merger or released
and satisfied by PRG Partnership in connection with the Merger. Except as set
forth on Exhibit 2.9(c), no sales of significant assets and no spinoffs of
assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Partnership 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 Partnership'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 Partnership and the Partners, may be used for their
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intended purposes. To the knowledge of the Partnership and Partners, all of
the inventory owned or used by the Partnership 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 Partnership has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all predecessor names of the Partnership, including the
names of any entities from whom the Partnership previously acquired significant
assets. Except for off-the-shelf software licenses, the Partnership is not a
licensee in respect of any patents, trademarks, service marks, trade names,
copyrights or applications therefor, or manufacturing processes, formulas or
trade secrets or similar items and no such licenses are necessary for the
conduct of its business. No claim is pending or has been made to the effect
that the present or past operations of the Partnership infringe upon or
conflict with the asserted rights of others to any patents, patent rights,
manufacturing processes, trade names, trademarks, service marks, inventions,
licenses, specialized treatment protocols, copyrights, formulas, know-how and
trade secrets. The Partnership 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 Partnership.
2.12 EMPLOYEES. The Partnership has no employees or related
employee benefit plans or employee manuals. The Partnership is in compliance
with all applicable laws, rules, regulations and ordinances respecting
employment and employment practices. The Partnership has not engaged in any
unfair labor practice. There are no unfair labor practices charges or
complaints pending or threatened against the Partnership, and the Partnership
has never been a party to any agreement with any union, labor organization or
collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Partnership nor any Partner
nor outstanding Partnership interest nor any of the Partnership's assets is
subject to any pending, nor does the Partnership or any Partner have knowledge
of any threatened, litigation, governmental investigation, condemnation or
other proceeding against or relating to or affecting the Partnership, any
Partner, the outstanding Partnership interests, any of the assets of the
Partnership, the operations, business or prospects of the Partnership or the
transactions contemplated by this Agreement, and, to the knowledge of the
Partnership and the Partners, no basis for any such action exists, nor is there
any legal impediment of which the Partnership or any Partner 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 Partnership has delivered to PRG Partnership
true copies of all written, and disclosed to PRG Partnership all oral,
outstanding contracts, obligations and commitments of the Partnership that meet
the requirements set forth in subsection (j) below ("Contracts"), all of which
are listed or incorporated by reference on Exhibit 2.7 (in the case of leases),
Exhibit 2.19 (in the case of debt) 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 Partnership, or any condition or event of
which the Partnership or any Partner has knowledge which with notice or lapse
of time, or both, would constitute a default. The Partnership and the
Partners have no knowledge of any default by any other party to such Contracts.
Neither the Partnership nor the Partners 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 Partnership listed on Exhibit 2.7, Exhibit 2.9 and Exhibit 2.14, the
Partnership is not a party to any material written or oral agreement contract,
lease or arrangement, including any:
(a) Contract related to the assets of the Partnership 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;
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(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Partnership 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 $5,000 or that terminate or can only be
terminated by the Partnership on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Partnership has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, 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 Partnership since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Partnership, 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
Partnership's business or cancelled any debts or claims or waived any rights,
except in the ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
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(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any equity or ownership interest in the
Partnership;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Partnership except in the ordinary
course of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Partnership's capital stock; or
(p) Suffered any material adverse change in the business
of the Partnership or to the assets of the Partnership.
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
Partnership, of the Partnership's (i) accounts receivable, net of allowances
for uncollectible and doubtful amounts ("Accounts Receivable") and (ii)
accounts payable and accrued liabilities (other than the current portion of
long-term debt) ("Accounts Payable"). Exhibit 2.16 contains a true and
accurate (i) list of all Accounts Receivable, (ii) list of all Accounts Payable
and (iii) statement of the working capital ("Working Capital") of the
Partnership as of the Balance Sheet Date. The Partnership 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 Partnership
full and complete access to those records, including the right to make copies
therefrom. Since the Balance Sheet Date, the Partnership 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.
2.17 TAXES. The Partnership has filed all tax returns required to
be filed by it, and made all payments of taxes, including any interest, penalty
or addition thereto, required to be made by it, with respect to income taxes,
real and personal property taxes, sales taxes, use taxes, employment taxes,
excise taxes and other taxes due and payable on or before the date of this
Agreement. All such tax returns are complete and accurate in all respects and
properly reflect the relevant taxes for the periods covered thereby. The
Partnership 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 Partnership did not, as of the Balance Sheet
Date, exceed the reserve for taxes (rather than any reserve for deferred taxes
established to reflect timing differences between book and income tax income)
set forth on the face of the Balance Sheet (rather than in any notes thereto),
as adjusted for the passage of time through the Closing Date (in accordance
with the past custom and practice of the Partnership). The Partnership and the
Partners have not received any notice that any tax deficiency or delinquency
has been asserted against the Partnership. There are no audits relating to
taxes of the Partnership threatened, pending or in process. The Partnership 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 Partnership. The Partnership has withheld and paid all taxes required by
law to have been withheld and paid by it. Neither the Partnership nor any
predecessor of the Partnership 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 Partnership has delivered to PRG
Partnership correct and complete copies of the Partnership'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 Partnership during the three calendar year period preceding the date
of this Agreement. The
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Partnership 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 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Partnership, the Partnership or the Partners resulting from any action
taken by the Partnership or the Partners or their respective agents or
employees, or any of them.
2.19 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Partnership 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 required to
be disclosed in accordance with GAAP, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, other than those incurred in the
ordinary course of business. The Partnership and the Partners do not know, or
have reasonable grounds to know, of any basis for the assertion against the
Partnership as of the Balance Sheet Date, of any claim or liability of any
nature in any amount not fully reflected or reserved against on the Balance
Sheet which is required to be disclosed in accordance with GAAP, 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 Partnership (including without limitation, indebtedness
for borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.19 attached hereto.
2.20 INSURANCE POLICIES. The Partnership carries property,
liability, casualty and such other types of insurance as is customary in the
industry with respect to the ownership and operation of real property. 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 2.20 attached hereto and true and correct copies have been
delivered to PRG Partnership. Neither the Partnership nor any Partner has
received notice or other communication from the issuer of any such insurance
policy cancelling or amending such policy or threatening to do so. The
Partnership has no outstanding claims, settlements or premiums owed against any
insurance policy.
2.21 EMPLOYEE BENEFIT PLANS. The Partnership has no employees and
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"). The Partnership 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.
2.22 ADVERSE AGREEMENTS. The Partnership is not, and will not be
as of the Closing Date, a party to any agreement or instrument or subject to
any other 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
Partnership.
2.23 COMPLIANCE WITH LAWS IN GENERAL. The Partnership and the
Partners 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 Partnership or any Partner of any
federal, state or local law or regulation. Neither the Partnership nor any
Partner 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 Partnership and no notice of any pending inspection or violation
of any such law, regulation or ordinance has been received by the Partnership
or any Partner.
Neither the Partnership, any Partner, the Assets or the Real Property
are currently in violation of, or subject to any existing, pending or, to the
knowledge of the Partners, threatened, investigation or inquiry by any
governmental authority or to any remedial obligations under, any Environmental
Laws. Other than those that have been obtained, the Partnership is not
required to obtain, any permits, licenses or similar authorizations to occupy
or use the Real Propery by reason of any Environmental Laws or other laws,
rules or regulations. None of the assets owned or leased by the
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Partnership nor the Real Property or improvements located therein are on any
fedreal or state "Superfund" list or subject to any environmentally related
liens.
2.24 FRAUD AND ABUSE. The Partnership and the Partners have not,
to the knowledge of the Partnership and the Partners, 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, as such laws relate to the business conducted by the
Partnership.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Partnership or any Partner in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, the Partnership or any
Partner and furnished or to be furnished to PRG Partnership 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 Partner 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; COMPENSATION. No distribution
or payment of any kind has been declared or paid by the Partnership with
respect to any Partnership interest since January 1994 (other than in the
ordinary course of business). No repurchase of any Partnership interest has
been approved, effected or is pending, or is contemplated by the Partnership.
No distributions of cash or other assets have been made to any Partner (other
than distributions made in the ordinary course of business) since January 1,
1994. Other than in the ordinary course of business, there have been, and will
be, no payments to the Partnership or the Partners made in contemplation of the
transactions contemplated hereby (other than as set forth on Annex I hereof),
including without limitation, compensation adjustments and bonuses, contractual
buyouts, both for services and property.
2.28 [INTENTIONALLY DELETED]
2.29 BANKING RELATIONS. Set forth in Exhibit 2.30 is a complete
and accurate list of all arrangements that the Partnership has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.30 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.31, no partner of the Partnership, 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 Partnership or any organization that
has a material contract or arrangement with the Partnership. Except for
certain lease agreements disclosed on Exhibit 2.7, neither the Partnership, nor
any of its partners 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 Partnership or to provide services, lease space, lease
equipment or engage in any other venture or activity with the Partnership.
2.31 PAYORS. Exhibit 2.32 sets forth a true, complete and correct
list of the names and addresses of each payor of the Partnership's services
which accounted for more than 10% of revenues of the Partnership in the
preceding fiscal year. The Partnership has good relations with all such payors
and other material payors of the Partnership and none of such payors has
notified the Partnership that it intends to discontinue its relationship with
the Partnership or to deny any claims submitted to such payor for payment.
2.32 ACCOUNTING MATTERS. The Partnership and the Partners have not
taken, failed to take or agreed to take any action that would prevent PRG
Partnership or PRG from accounting for the business combination to be effected
by the Merger as a "pooling of interests" in accordance with Accounting
Principles Board Opinion No. 16, the interpretative releases issued pursuant
thereto and the pronouncements of the Securities and Exchange Commission
("SEC").
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG PARTNERSHIP AND PRG.
PRG Partnership and PRG hereby represent and warrant, as of the
Closing Date, to the Partnership and the Partners as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG is a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware, and PRG is qualified to do business in the State of Florida. PRG
Partnership is a general partnership duly organized, validly existing and in
good standing under the laws of the State of Florida, and the corporate
partners of PRG Partnership are duly organized and existing and in good
standing under the laws of the State of Delaware and have qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Partnership and PRG has
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, Bylaws,
Partnership Agreement or otherwise, to authorize the execution, delivery and
performance of this Agreement and such related documents. PRG and PRG
Partnership have all necessary powers to own all of their respective assets and
to carry on their business as such business is now being conducted This
Agreement and all agreements and documents executed and delivered in connection
herewith have been, or will be as of the Closing Date, duly executed and
delivered by PRG and PRG Partnership, as appropriate, and constitute or will
constitute the legal, valid and binding obligations of PRG and PRG Partnership,
enforceable against PRG and PRG Partnership in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement and the agreements
related hereto executed and delivered pursuant to this Agreement do not and,
subject to the receipt of consents to assignments of leases and other contracts
where required and the receipt of regulatory approvals where required, the
consummation of the transactions contemplated hereby will not, violate any
provision of the Certificate or Articles of Incorporation, Bylaws or
Partnership Agreement of either PRG Partnership 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
Partnership or PRG is a party or by which either of them is bound, or violate
any restrictions of any kind to which PRG Partnership or PRG is subject.
3.3 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Partnership, the Partnership or the Partners resulting from any action
taken by PRG or PRG Partnership or their respective agents or employees, or any
of them.
3.4 CAPITAL STOCK. All of the outstanding partnership interests
of PRG Partnership 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.
3.5 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Partnership or PRG in this Agreement, and no Exhibit or certificate issued
by officers or directors of PRG Partnership or PRG and furnished or to be
furnished to the Partnership or the Partners pursuant hereto, or in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained therein not misleading.
3.6 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Partnership to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummantion of the
transactions contemplated by this Agreement, the Surviving Partnership will use
a significant portion of its historic business assets in a business. PRG has
no plan or intention to liquidate the Surviving Partnership, to merge the
Surviving Partnership with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Partnership, except for transfers of
stock to corporations or other entities controlled by PRG. PRG has no plan
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or intention to reaquire any of its stock issued in the transactions
contemplated by this Agreement. PRG holds a partnership interest representing
not less than 80% of the voting power of PRG Partnership and not less than 80%
of all other ownership or equity interests of PRG Partnership.
3.7 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG
Partnership.
SECTION 4. COVENANTS OF THE PARTNERSHIP AND THE PARTNERS.
The Partnership and the Partners, jointly (with respect to covenants
of the Partnership or such Partner) and severally (with respect to covenants of
such Partner), agree that between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT. The Partnership and the Partners
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. The Partnership and the Partners shall
operate the Partnership's business in the ordinary course. The Partnership
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 Partnership and the Partners shall use their best efforts to
preserve the business and assets of the Partnership intact and shall not take
any action that would have an adverse effect on the business or assets of the
Partnership, including without limitation, any action the primary purpose or
effect of which is to generate or preserve cash; provided that the Partnership
may continue to operate in the ordinary course of business. The Partnership
and the Partners shall use their best efforts to preserve intact the
relationships with payors, customers, suppliers and others having significant
business relations with the Partnership. The Partnership shall collect its
receivables and pay its trade payables in the ordinary course of business. The
Partnership shall not introduce any new method of management, operations or
accounting.
4.3 ACCESS AND NOTICE. The Partnership and the Partners shall
permit PRG and PRG Partnership and their authorized representatives reasonable
access to, and make available for inspection, all of the assets and business of
the Partnership and all of its assets, including employees, customers and
suppliers and permit PRG, PRG Partnership and their authorized representatives
to inspect and make copies of all documents, records and information with
respect to the business or assets of the Partnership as PRG, PRG Partnership or
their representatives may reasonably request. The Partnership and the Partners
shall promptly notify PRG Partnership 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 Partnership is a party, and (b) any adverse change in
the Partnership's business, financial condition or the conditions of its
assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Partnership and the Partners shall use their best efforts to secure all
necessary approvals and consents of third parties (or shall assist PRG in such
efforts) to the consummation of the transactions contemplated hereby, including
consents described on Exhibit 2.5. The Partnership and the Partners shall use
their best efforts to obtain all licenses, permits, approvals or other
authorizations required under any law, rule, regulation, or otherwise to
conduct the intended business of the Partnership.
4.5 ACQUISITION PROPOSALS The Partnership and the Partners shall
not, and shall use their best efforts to cause the Partnership'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 Partners,
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 Partnership 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
Partnership and the Partners will immediately cease any such activities,
discussions or negotiations heretofore conducted with respect to any of the
foregoing. The Partnership and the Partners shall immediately notify PRG
Partnership if any such inquiries or proposals are received.
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4.6 DISTRIBUTIONS AND REPURCHASES. No distribution or payment of
any kind will be declared or paid by the Partnership except in the ordinary
course of business or with the consent of PRG, nor will any repurchase of any
interests in the Partnership be approved or effected.
4.7 REQUIREMENTS TO EFFECT MERGER. The Partnership and each
Partner 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.
4.8 VOTING OF SHARES; IRREVOCABLE PROXY. Each Partner agrees that
until the earlier of the Closing Date or the termination of this Agreement,
each such Partner shall vote at any meeting of the Partners 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.
4.9 ACCOUNTING AND TAX MATTERS. The Partnership will not change
in any material respect the accounting methods or practices followed by the
Partnership (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 Partnership
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 Partnership 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 Partnership required to
be filed by it, and pay all taxes required to be paid by it, on or before the
Closing Date.
4.10 ACCOUNTING MATTERS. The Partnership and Partners shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
4.11 EXHIBITS. The Partnership and Partners shall provide each of
the Exhibits hereto on or before the Closing Date, which exhibits shall be in
form and substance satisfactory to PRG and PRG Partnership.
SECTION 5. COVENANTS OF PRG AND PRG PARTNERSHIP.
PRG and PRG Partnership, jointly and severally, agree that between the
date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. PRG and PRG Partnership shall use
their best efforts to cause the consummation of the transactions contemplated
hereby in accordance with their terms and provisions. PRG and PRG Partnership
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.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS; RELEASE
OF GUARANTIES. PRG and PRG Partnership shall use their best efforts to secure
all necessary approvals and consents of third parties to the consummation of
the transactions contemplated hereby. In connection with its assumption of
the indebtedness described on Exhibit 2.19 attached hereto, PRG and PRG
Partnership shall cause the guaranty of such indebtedness by the Partners to be
released or shall unconditionally indemnify the Partners with respect to the
full amount of such guaranties from and after the Closing Date.
5.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
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SECTION 6. PRG PARTNERSHIP AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Partnership 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 the Partnership and the Partners contained herein shall be true
and correct in all material respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. The Partnership and the Partners
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Partnership and the
Partners prior to the Closing Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
6.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Partnership shall have occurred since the Balance Sheet
Date.
6.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Partnership
and PRG shall have completed a due diligence review of the business, operations
and Financial Information of the Partnership, the results of which shall be
satisfactory to PRG Partnership 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. The Partnership and the Partners
shall have obtained all necessary government and other third-party approvals
and consents.
6.8 CLOSING DELIVERIES. PRG Partnership shall have received all
documents, duly executed in form satisfactory to PRG Partnership and its
counsel, referred to in Section 10.1.
6.9 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Partnership and its partners or affiliates
and, other than the indebtedness described on Exhibit 2.19, the Partnership
shall not have any liabilities, including indebtedness, guaranties and capital
leases, that are not approved by PRG.
6.10 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
6.11 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
6.12 ACCOUNTING OPINION. PRG and PRG Partnership shall have
received an opinion concerning the qualification of the Merger as a pooling of
interests under applicable accounting standards from Arthur Anderson, L.L.P.
6.13 REAL ESTATE. The transactions described in that certain
Agreement and Plan of Merger dated June 6, 1996 by and among Central Florida
Eye Associates, P.A., the Partners, PRG FL Acquisition Corporation and PRG
above shall be closed simultaneously with the transactions contemplated hereby
on or before June 28, 1996 (with an effective date of 11:59 p.m. on June 30,
1996).
SECTION 7. THE PARTNERSHIP'S AND THE PARTNERS' CONDITIONS PRECEDENT.
The obligations of the Partnership and the Partners hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
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7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of PRG Partnership and PRG contained herein shall be true and
correct in all respects as of the Closing Date.
7.2 COVENANTS AND CONDITIONS. PRG Partnership and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Partnership 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. The Partnership shall have received all
documents, duly executed in form satisfactory to the Partnership and its
counsel, referred to in Section 5.2.
7.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 8. CLOSING DELIVERIES.
8.1 DELIVERIES OF THE PARTNERSHIP AND THE PARTNERS. At or prior
to the Closing, the Partnership and the Partners shall deliver to PRG
Partnership the following, all of which shall be in a form satisfactory to
counsel to PRG Partnership and PRG:
(a) a copy of the agreements or resolutions of the
Partners of the Partnership authorizing the execution, delivery and performance
of this Agreement and all related documents and agreements each notarized as
being true and correct copies of the original thereof;
(b) certificates of each Partner, dated as of the Closing
Date, (i) as to the truth and correctness of the representations and warranties
of the Partnership and each Partner contained herein; (ii) as to the
performance of and compliance by the Partnership and each Partner with all
covenants contained herein; and (iii) certifying that all conditions precedent
of the Partnership and each Partner to the Closing have been satisfied;
(c) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5 (to the extent not provided by PRG
or PRG Partnership at Closing); and
(d) an executed Escrow Agreement;
(e) such other instruments and documents as reasonably
requested by PRG or PRG Partnership to carry out and effect the purpose and
intent of this Agreement; and
(f) all documentation related to the Real Property as
reasonably required by PRG Partnership.
8.2 DELIVERIES OF PRG PARTNERSHIP AND PRG. At or prior to the
Closing, PRG Partnership and PRG shall deliver to the Partnership the
following, all of which shall be in a form satisfactory to counsel to the
Partnership and the Partners or the Clinic, as applicable:
(a) the Merger Consideration;
(b) a copy of the agreements or resolutions of the
Partners of PRG Partnership and PRG (or a committee thereof) authorizing the
execution, delivery and performance of this Agreement and all related documents
and agreements each notarized or certified by the Secretary as being true and
correct copies of the original thereof;
(c) certificates of the President of PRG, dated as of the
Closing Date, (i) as to the truth and correctness of the representations and
warranties of PRG Partnership and PRG contained herein; (ii) as to the
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performance of and compliance by PRG Partnership and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG
Partnership and PRG to the Closing have been satisfied;
(d) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware establishing that PRG is in
existence and are in good standing to transact business in the State of
Delaware and the State of Florida;
(e) an executed Escrow Agreement;
(f) satisfaction of mortgages and evidence of payoff of
all indebtedness necessary to satisfy title requirements with respect to the
Real Property acquired by the Surviving Partnership pursuant to the Merger and
release of guaranties or unconditional indemnification agreement as required
pursuant to Section 5.2 hereof to be provided within 10 days of Closing; and
(g) such other instruments and documents as reasonably
requested by the Partnership or Partners 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 the
Partnership and the Partners, jointly (with respect to the representations and
warranties of the Partnership or such Partner) and severally (with respect to
representations and warranties of such Partner), or of PRG Partnership and PRG,
jointly and severally, as the case may be. Except as provided herein, all such
representations and warranties, and all representations and warranties
expressly labeled as such in this Agreement shall survive the date of this
Agreement and the Closing Date for a period of one (1) year following the
Closing Date. Each party covenants with the other parties not to make any claim
with respect to such representations and warranties, against any party after
the date on which such survival period shall terminate. No party shall be
entitled to claim indemnity from any other party pursuant to Section 9.2 or 9.3
hereof, unless such party has timely given the notice required in Sections 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 AND PRG PARTNERSHIP. PRG PARTNERSHIP
AND PRG, JOINTLY AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE
PARTNERS AND THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING,
INCLUDING THE PARTNERSHIP AND THE PARTNERS, FOR PURPOSES OF THIS SECTION 9.2
AND, TO THE EXTENT APPLICABLE, SECTION 9.4, AS "INDEMNIFIED PERSON"), HARMLESS
FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS,
COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF
OR RESULTING FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) FROM AND AFTER THE CLOSING DATE, INDEMNITOR'S MANAGEMENT,
OPERATION AND THE OWNERSHIP OF THE PARTNERSHIP, OR
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(III) FROM ANY CLAIMS MADE BY SURGICARE OF CENTRAL FLORIDA, LTD. OR
ANY INDIVIDUAL PARTNERS THEREOF IN CONNECTION WITH ANY ALLEGED BREACH BY THE
PARTNERSHIP OR PARTNERS (IN THEIR INDIVIDUAL CAPACITY AS PARTNERS OR AS LIMITED
PARTNERS IN SURGICARE OF CENTRAL FLORIDA, LTD.) OF SECTION 32 OF THAT CERTAIN
DEVELOPMENT AND LEASE AGREEMENT DATED FEBRUARY 17, 1995, BETWEEN THE
PARTNERSHIP AND SURGICARE OF CENTRAL FLORIDA, LTD.
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 PARTNERSHIP AND THE PARTNERS. THE
PARTNERSHIP AND THE PARTNERS (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE
EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
PARTNERSHIP OR SUCH PARTNER) AND SEVERALLY (WITH RESPECT TO SUCH PARTNER),
SHALL INDEMNIFY AND HOLD PRG PARTNERSHIP, PRG AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, PARTNERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG
PARTNERSHIP AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT
APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST
ANY AND ALL LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON
OF OR RESULTING FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER, 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 PARTNERSHIP,
(II) ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES,
AGENTS AND INDEPENDENT CONTRACTORS IN OR ABOUT THE PARTNERSHIP'S BUSINESS,
(III) ANY VIOLATION BY THE PARTNERSHIP OR THE PARTNERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(IV) TAXES OF THE PARTNERSHIP OR ANY OTHER PERSON (INCLUDING ANY
PARTNER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, OR
(V) ANY LIABILITY OF THE PARTNERSHIP OR THE PARTNERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH.
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.
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<PAGE> 18
9.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
9.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Partnership and
Partners in favor of PRG or PRG Partnership shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Partnership in favor of
the Partnership and Partners shall not exceed in all cases (other than as set
forth in Section 11.2(III) $55,055. Furthermore, other than claims pursuant to
Section 11.2(III) which shall survive for the statute of limitations period, no
claim for Damages shall be made by any party more than one (1) year after the
Closing Date.
9.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Partnership covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Partners shall, jointly and
severally, within fifteen (15) days after payment thereof and receipt of notice
of such payment, reimburse, indemnify and hold harmless PRG and the Surviving
Partnership for all taxes, and all related interest, penalties and additions to
tax ("Taxes"), with respect to taxable periods of the Partnership 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 Partnership covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Partners 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 Partnership 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 Partnership.
(c) The Partnership, Partners, PRG, Surviving Partnership
and PRG Partnership 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
17
<PAGE> 19
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
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 Partnership if any representation or
warranty of the Partnership or any Partner contained in this Agreement or in
any certificate or other document executed and delivered by the Partnership or
any Partner pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Partnership or any Partners 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 Partnership or the Partners if any
representation or warranty of PRG or PRG Partnership contained in this
Agreement or in any certificate or other document executed and delivered by PRG
or PRG Partnership pursuant to this Agreement is or becomes untrue or breached
in any material respect or if PRG or PRG Partnership 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 Partnership, the Partnership or the Partners if
the merger contemplated hereby shall not have been consummated by June 28,
1996;
(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 Partnership, that such termination is
desirable and in the best interests of PRG; or
(f) by the Partners if counsel for the Partners shall determine,
in its reasonable good faith judgment, that the provisions of Section 11.3(III)
shall not be satisfactory to protect the Partners with respect to the claims
discussed therein.
SECTION 11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Partners
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 Partnership or PRG Partnership that is valuable, special and unique
assets of PRG's, Surviving Partnership's or PRG Partnership's businesses. The
Partners 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 Partners, (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 Partners 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 Partners reasonably believe
that such disclosure is required in connection with the defense of a lawsuit
against the disclosing party, or (iv) the Partners 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 Partners of the provisions of this Section 14, PRG, Surviving
Partnership or PRG Partnership shall be entitled to an injunction restraining
the Partners from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting PRG, Surviving
Partnership or PRG Partnership 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.
18
<PAGE> 20
SECTION 12. INVESTMENT REPRESENTATIONS.
12.1 ECONOMIC RISK; SOPHISTICATION. The Partners 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 Partners 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 Partners 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.
12.2 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 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: If to PRG Partnership:
Physicians Resource Group, Inc. PRG FL Partnership I
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Partnership 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 Partnership or the Partners: 814 Griffin Road
Lakeland, FL 33805
Facsimile:
with a copy to: Thomas Driscoll, Esquire
Foley, Lardner, Weissburg &
Aronson
One Maritime Plaza, 6th Floor
San Francisco, CA 94111
Telecopy: (415) 434-4507
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.
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<PAGE> 21
13.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Partners shall assist PRG and Surviving Partnership in collecting the accounts
receivable of the Partnership acquired by PRG and PRG Partnership in connection
with this transaction and in the event that any Partner shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Partnership.
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 Partnership, Surviving
Partnership 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 Partners 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 Partners shall be liable for all such costs, and (b)
local, state and federal income taxes or other similar charges on income or
gain incurred by the Partnership or the Partners as a result of the
transactions contemplated hereby. As of the Closing Date, the Partnership
shall not have any liability for any fees or expenses of legal counsel,
accountants, auditors or other persons or entities for services rendered in
connection with negotiating and closing the transactions contemplated by this
Agreement or the documents to be executed in connection herewith.
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. 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 Partnership, Surviving Partnership 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 Partnership, 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.
20
<PAGE> 22
13.12 COSTS OF ENFORCEMENT. In the event that PRG Partnership,
Surviving Partnership or PRG, on the one hand, or the Partnership or the
Partners, 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.
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.
13.17 EXECUTION BY PARTNERS. Ronald Case, M.D., Brian Renz, M.D.,
Teo Kulyk, M.D. and Jay Mulaney, M.D. hereby executed this Agreement in their
individual capacity, and as Partners of the Partnership.
[End of Page _____]
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<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG FL PARTNERSHIP I G.C.R. INVESTORS
By: /s/ RICHARD J. D'AMICO By: /s/ BRIAN RENZ
------------------------------- ------------------------------------
Its: Its: Partner
------------------------------ -----------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ RICHARD J. D'AMICO /s/ RONALD CASE
------------------------------- ------------------------------------
Ronald Case, M.D.
Its:
------------------------------
/s/ BRIAN RENZ
------------------------------------
Brian Renz, M.D.
/s/ JAY MULANEY
------------------------------------
Jay Mulaney, M.D.
Ronald Case, M.D., Brian Renz, M.D., and Jay Mulaney, M.D. hereby executed this
Agreement in their individual capacity, and as partners of GCR Partnership.
22
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Partnership
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Information
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.19 Debt
2.20 Insurance Policies
2.21 Employee Benefit Plans
2.29 Suppliers
2.30 Banking Relations
2.31 Ownership Interests of Interested Persons
2.32 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(p) Registration Rights Agreement
ANNEX I Merger Consideration
EXHIBIT IIA G.C.R. Investors Real Estate
EXHIBIT IIB Central Florida Eye Associates Partners Real Estate
</TABLE>
23
<PAGE> 1
EXHIBIT 2.3
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CENTRAL FLORIDA EYE ASSOCIATES PARTNERS
RONALD CASE, M.D.,
BRIAN RENZ, M.D.,
TEO KULYK, M.D.,
JAY MULANEY, M.D.,
PRG FL PARTNERSHIP II,
AND
PHYSICIANS RESOURCE GROUP, INC.
-i-
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, made and executed as of the 28th
day of June, 1996, is by and among PRG FL PARTNERSHIP II, a Florida general
partnership ("PRG Partnership"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); CENTRAL FLORIDA EYE ASSOCIATES PARTNERS, a Florida general
partnership (the "Partnership"), and RONALD CASE, M.D., BRIAN RENZ, M.D., TEO
KULYK, M.D. AND JAY MULANEY, M.D., all individual residents of the State of
Florida (individually "Partner," and collectively "Partners").
WITNESSETH:
WHEREAS, the Partnership engaged in the business of acquiring, owning,
developing, leasing, marketing and operating real and personal property for an
ophthalmology practice and related businesses in Lakeland, Florida;
WHEREAS, Partners are the only partners of the Partnership;
WHEREAS, PRG Partnership is engaged in the business of acquiring the
assets of and operating real and personal property relating to ophthalmology
practices;
WHEREAS, Physicians Resource Group Realty, Inc. and PRG Realty II,
Inc. each own a 50% interest in PRG Partnership; and
WHEREAS, PRG owns a 100% interest in both Physicians Resource Group
Realty, Inc. and PRG Realty II, Inc.
WHEREAS, the parties have determined that a business combination
between the parties is in the best interests of their respective partnerships
and partners and accordingly have agreed to effect the Merger (hereinafter
defined) upon the terms and conditions set forth herein;
WHEREAS, it is intended that for financial accounting purposes the
Merger shall be accounted for as a "pooling of interests."
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. THE MERGER.
The Merger of PRG Partnership with and into the Partnership shall
occur on the 28th day of June, 1996, to be effective as of 11:59 p.m. on June
30, 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 PARTNERSHIP INTO THE PARTNERSHIP. On the
Closing Date, PRG Partnership shall be merged with and into the Partnership in
accordance with this Agreement and the separate legal existence of PRG
Partnership shall thereupon cease (the "Merger"). The Partnership shall be the
surviving entity in the Merger (in such capacity, hereinafter referred to as
the "Surviving Partnership") and shall continue to be governed by the laws of
the State of Florida and the separate legal existence of Surviving Partnership
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 Chapter 620 of the Florida Statutes
for partnerships which elect to be governed by the Revised Uniform Partnership
Act.
1
<PAGE> 3
1.2 MERGER STATEMENT. 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 Statement
of Merger meeting the requirements of Section 620.8907 of the Florida Statutes.
The Merger shall become effective on the Closing Date.
1.3 CONVERSION OF PARTNERSHIP INTERESTS. The manner of converting
the partnership interests of the Partners 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 of the Partners' interest in the
Partnership on the Closing Date shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive the number of shares of PRG common stock set forth on Annex I attached
hereto less the Escrowed Shares (in the aggregate, the "Merger Consideration").
As a result of the Merger and without any action on the part of the holder
thereof, all of the Partners' interest in the Partnership shall be purchased
and shall cease to exist, and each Partner shall be deemed to be dissociated
from the Partnership as of the Closing Date (as provided in Section 620.8906 of
the Florida Statutes) and such Partner shall thereafter cease to have any
rights with respect to his interest in the Partnership, except the right to
receive, without interest, the Merger Consideration.
(b) On the Closing Date, all of the PRG Partnership
interests outstanding as of the Closing Date shall be surrendered in exchange
for an equal interest in the Surviving Partnership.
1.4 [INTENTIONALLY DELETED].
1.5 ESCROW. In addition to the shares issuable to the Partners at
Closing, PRG shall deposit in escrow 4,870 shares of PRG Common Stock (the
"Escrowed Shares") pursuant to the terms of an Escrow Agreement (the "Escrow
Agreement") in substantially the form attached hereto as Exhibit 1.5 and with
such changes to be agreed upon between the parties, to be entered into among
Partners, the Partnership, PRG Partnership, PRG and the person named therein as
escrow agent ("Escrow Agent"). The Escrowed Shares shall be issued in the name
of the Escrow Agent, as escrow agent. The Escrowed Shares shall be released
from escrow, after provision for any Damages for which PRG or PRG Partnership
may be entitled to indemnification pursuant to Article XI in accordance with
the terms of the Escrow Agreement.
1.6 SUBSEQUENT ACTIONS. If, at any time after the Closing Date,
the Surviving Partnership 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
Partnership its right, title or interest in, to or under any of the rights,
properties or assets of the Partnership or PRG Partnership acquired or to be
acquired by the Surviving Partnership as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, and to effect the purchase
and cancellation of the Partners' interest in the Partnership in return for the
consideration set forth in this Agreement, the partners of the Surviving
Partnership or their duly authorized officers, directors and agents, shall be
authorized to execute and deliver, in the name and on behalf of the
Partnership, each Partner and PRG Partnership 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 Partnership and PRG Partnership 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 Partnership or otherwise to carry out
this Agreement.
1.7 ASSUMPTIONS OF OR PREPAYMENT OF DEBT. In connection with the
Merger, PRG shall assume or prepay all indebtedness of the Partnership and
shall take such actions as may be necessary, desirable or appropriate to
absolve and release the Partners from any further personal liability with
respect to such indebtedness.
2
<PAGE> 4
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP AND THE
PARTNERS.
The Partnership and the Partners, jointly (with respect to
representations and warranties by such Partner or the Partnership) and
severally (with respect to representations and warranties by each such
Partner), hereby represent and warrant as of the Closing Date and thereafter in
accordance with Section 11.1, to PRG Partnership and PRG as follows:
2.1 EXISTENCE AND GOOD STANDING. The Partnership is a general
partnership duly organized, validly existing and in good standing under the
laws of the State of Florida. The Partnership has all necessary powers to own
all of its assets and to carry on its business as such business is now being
conducted. The Partnership does not own stock in or control, directly or
indirectly, any other corporation, association or business organization, nor is
the Partnership a party to any other joint venture or partnership. The
Partners are the sole owners of the Partnership and own all interests in the
Partnership free of all security interests, claims, encumbrances and liens in
the amounts set forth on Exhibit 2.1. The Partners have owned the equity
interests set forth on Exhibit 2.1 since January 1, 1994 in the amounts set
forth on such Exhibit. No change will be made in the equity ownership of the
Partnership between the date hereof and the Closing Date. The Partnership has
not acquired the interest of any Partner in the Partnership since January 1,
1994. There are no outstanding (a) bonds, debentures, notes or other
obligations the holders of which have the right to vote with the Partners of
the Partnership on any matter, or (b) commitments, options, rights or warrants
to issue any additional equity or ownership interests in the Partnership, to
issue rights to or interests in the Partnership convertible into such equity
interests, or to redeem any Partner's interest in the Partnership. No ownership
or equity interests in the Partnership have been issued or disposed of in
violation of the preemptive rights, rights of first refusal or similar rights
of any of the Partners or the Partnership. The Partnership is not required to
qualify to do business as a foreign partnership in any other state or
jurisdiction by reason of its business, properties or activities in or relating
to such other state or jurisdiction. The Partnership does not have any assets,
employees or offices in any state other than Florida. The Partnership has not
been a division or subsidiary of PRG or any of its subsidiaries since January
1,1994. The Partnership and each Partner do not own any stock of PRG.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Partnership has the
power and authority 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, the Partnership Agreement or otherwise, to
authorize the execution, delivery and performance of this Agreement and such
related documents. Each Partner has the legal capacity to enter into and
perform this Agreement and the other agreements to be executed and delivered in
connection herewith. The Partnership has obtained the approval of the Partners
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 Partnership and the Partners, as appropriate, and constitute
or will constitute the legal, valid and binding obligations of the Partnership
and the Partners, enforceable against the Partnership and the Partners 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 Partnership
Agreement of the Partnership 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
Partnership or any Partner is a party or by which the Partnership or any
Partner is bound, or violate any material restrictions of any kind to which the
Partnership is subject, or result in any lien or encumbrance on any of the
Partnership's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. All
building or other permits, certificates of occupancy, concessions, grants,
franchises, licenses, certificates of need and other governmental
authorizations and approvals required to be maintained by the Partnership or
the Partners 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 Partnership and the Partners, threatened, which may result in
the revocation, cancellation or suspension, or any adverse modification, of any
thereof.
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The Partnership possesses all necessary licenses, permits (including
building and occupancy permits), easements, rights-of-way and authorizations
from all governmental authorities and private persons for the normal use,
maintenance and occupancy and operation of the Real Property, and to ensure the
unimpeded access, ingress and egress to and from the Real Property as required
to permit the normal useage of the Real Property and improvements thereon, all
of which are listed on Exhibit 2.3. Present land use laws and ordinances
permit the use of the Real Property and the improvements thereon as an office
and medical clinic. The Real Property complies with all applicable parking
regulations and there are no governmental or private regulations, orders,
agreements or instruments restricting the current use and operation of the Real
Property and improvements thereon.
2.4 RECORDS. True and correct copies of the Partnership Agreement
and all amendments thereto of the Partnership and the minutes of any meeting of
the Partners or actions by unanimous written consent have been delivered to PRG
Partnership. The minutes and written consents contain all accurate minutes of
the meetings of and consents to actions taken without meetings of the Partners
since formation of the Partnership.
True and correct copies of all title policies, surveys, environmental
reports, deeds, bills of sale and other agreements and other instruments
relating to the Real Property have been delivered to PRG and PRG Partnership.
There are no easements, restrictions or such other agreements or instruments
affecting the Real Property that are not filed of record in Polk County,
Florida. True and correct copies of all leases between the Partnership and
lessees of the Real Property have been delivered to PRG Partnership.
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 Partnership or the Partners.
2.6 THE PARTNERSHIP'S FINANCIAL INFORMATION. The Partnership has
heretofore furnished PRG Partnership with copies of financial information (tax
returns) as of and for the year ended December 31, 1995 as set forth on Exhibit
2.6 attached hereto ("Financial Information"), including the unaudited Balance
Sheet ("Balance Sheet") as of December 31, 1995 ("Balance Sheet Date"). The
Financial Information has been prepared in accordance with GAAP consistently
followed throughout the periods indicated, reflect all liabilities of the
Partnership required to be reported in accordance with GAAP, including all
contingent liabilities of the Partnership, as of their respective dates, and
present fairly the financial position of the Partnership 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 Partnership leases, as lessor or lessee, real or
personal property used in operating the business of the Partnership or
otherwise. All such leases listed on Exhibit 2.7 are valid and enforceable in
accordance with their respective terms, except to the extent noted on Exhibit
2.7 and there is not under any such lease any existing material default by the
Partnership, as lessor or lessee, or any condition or event of which the
Partnership or any Partner has knowledge which with notice or lapse of time, or
both, would constitute a material default, in respect of which the Partnership
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 Partnership in its business are in good condition and
repair subject to normal wear and tear and, to the best knowledge of the
Partnership and Partners, conform with all applicable ordinances, regulations
and other laws, and the Partnership and the Partners have no knowledge of any
latent defects therein. The Partnership and Partners have not, since January
1, 1994, disposed of, sold or transferred any part of the Partnership's assets
in contemplation of the transactions contemplated hereby.
2.9 TITLE TO AND ENCUMBRANCES ON PROPERTY. A description of all
interests in real and personal property owned by the Partnership is set forth
on Exhibit 2.9(a). The Partnership 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(b) attached hereto. The real property described on
Exhibit 2.9(a) (the "Real Property") constitutes the only real property owned
by the Partnership and used in the conduct of the Partnership's business. Upon
consummation of the transactions contemplated hereby, such interest in the Real
Property shall be free and clear of all liens, security interests, claims and
encumbrances except for those encumbrances disclosed on Exhibit
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2.9(b) which shall be assumed by PRG Partnership in connection with the Merger
or released and satisfied by PRG Partnership in connection with the Merger.
Except as set forth on Exhibit 2.9(c), no sales of significant assets and no
spinoffs of assets have occurred since January 1, 1994.
2.10 INVENTORIES. All inventories of the Partnership 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 Partnership'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 Partnership and the Partners, may be used for their
intended purposes. To the knowledge of the Partnership and Partners, all of
the inventory owned or used by the Partnership 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 Partnership has no right, title or interest in or to patents,
patent rights, corporate names, assumed names, manufacturing processes, trade
names, trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Set forth in Exhibit
2.11 is a listing of all predecessor names of the Partnership, including the
names of any entities from whom the Partnership previously acquired significant
assets. Except for off-the-shelf software licenses, the Partnership is not a
licensee in respect of any patents, trademarks, service marks, trade names,
copyrights or applications therefor, or manufacturing processes, formulas or
trade secrets or similar items and no such licenses are necessary for the
conduct of its business. No claim is pending or has been made to the effect
that the present or past operations of the Partnership infringe upon or
conflict with the asserted rights of others to any patents, patent rights,
manufacturing processes, trade names, trademarks, service marks, inventions,
licenses, specialized treatment protocols, copyrights, formulas, know-how and
trade secrets. The Partnership 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 Partnership.
2.12 EMPLOYEES. The Partnership has no employees or related
employee benefit plans or employee manuals. The Partnership is in compliance
with all applicable laws, rules, regulations and ordinances respecting
employment and employment practices. The Partnership has not engaged in any
unfair labor practice. There are no unfair labor practices charges or
complaints pending or threatened against the Partnership, and the Partnership
has never been a party to any agreement with any union, labor organization or
collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Partnership nor any Partner
nor outstanding Partnership interest nor any of the Partnership's assets is
subject to any pending, nor does the Partnership or any Partner have knowledge
of any threatened, litigation, governmental investigation, condemnation or
other proceeding against or relating to or affecting the Partnership, any
Partner, the outstanding Partnership interests, any of the assets of the
Partnership, the operations, business or prospects of the Partnership or the
transactions contemplated by this Agreement, and, to the knowledge of the
Partnership and the Partners, no basis for any such action exists, nor is there
any legal impediment of which the Partnership or any Partner 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 Partnership has delivered to PRG Partnership
true copies of all written, and disclosed to PRG Partnership all oral,
outstanding contracts, obligations and commitments of the Partnership that meet
the requirements set forth in subsection (j) below ("Contracts"), all of which
are listed or incorporated by reference on Exhibit 2.7 (in the case of leases),
Exhibit 2.19 (in the case of debt) 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 Partnership, or any condition or event of
which the Partnership or any Partner has knowledge which with notice or lapse
of time, or both, would constitute a default. The Partnership and the
Partners have no knowledge of any default by any other party to such Contracts.
Neither the Partnership nor the Partners 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 Partnership listed on Exhibit 2.7, Exhibit 2.9 and Exhibit 2.14, the
Partnership is not a party to any material written or oral agreement contract,
lease or arrangement, including any:
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(a) Contract related to the assets of the Partnership not
made in the ordinary course of business other than this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) Deed, bill of sale or other document evidencing an
interest in or agreement to purchase or sell real or personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of its business now booked
or for normal operating inventories, or (ii) which is not terminable upon
notice of sixty (60) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Partnership 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 $5,000 or that terminate or can only be
terminated by the Partnership on more than 60 days after the date hereof.
2.15 SUBSEQUENT EVENTS. The Partnership has not, since the Balance
Sheet Date (or the date set forth below):
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any contract,
lease, license or commitment, except in connection with the performance of this
Agreement, other than in the ordinary course of business or incurred any
indebtedness;
(b) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, 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 Partnership since the Balance
Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Partnership, tangible or
intangible;
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(h) Sold or contracted to sell or transferred or
contracted to transfer any of the assets used in the conduct of the
Partnership's business or cancelled any debts or claims or waived any rights,
except in the ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of employees,
consultants or agents, or by means of any bonus or pension plan, contract or
other commitment, increased the compensation of any officer, employee,
consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any material
transaction other than in the ordinary course of business or permitted
hereunder;
(l) Within the two years preceding the Closing Date,
redeemed, purchased, sold or issued any equity or ownership interest in the
Partnership;
(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Partnership except in the ordinary
course of business;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Partnership's capital stock; or
(p) Suffered any material adverse change in the business
of the Partnership or to the assets of the Partnership.
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
Partnership, of the Partnership's (i) accounts receivable, net of allowances
for uncollectible and doubtful amounts ("Accounts Receivable") and (ii)
accounts payable and accrued liabilities (other than the current portion of
long-term debt) ("Accounts Payable"). Exhibit 2.16 contains a true and
accurate (i) list of all Accounts Receivable, (ii) list of all Accounts Payable
and (iii) statement of the working capital ("Working Capital") of the
Partnership as of the Balance Sheet Date. The Partnership 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 Partnership
full and complete access to those records, including the right to make copies
therefrom. Since the Balance Sheet Date, the Partnership 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.
2.17 TAXES. The Partnership has filed all tax returns required to
be filed by it, and made all payments of taxes, including any interest, penalty
or addition thereto, required to be made by it, with respect to income taxes,
real and personal property taxes, sales taxes, use taxes, employment taxes,
excise taxes and other taxes due and payable on or before the date of this
Agreement. All such tax returns are complete and accurate in all respects and
properly reflect the relevant taxes for the periods covered thereby. The
Partnership 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 Partnership did not, as of the Balance Sheet
Date, exceed the reserve for taxes (rather than any reserve for deferred taxes
established to reflect timing differences between book and income tax income)
set forth on the face of the Balance Sheet (rather than in any notes thereto),
as adjusted for the passage of time through the Closing Date (in accordance
with the past custom and practice of the Partnership). The Partnership and the
Partners have not received any notice that any tax deficiency or delinquency
has been asserted against the Partnership. There are no audits relating to
taxes of the Partnership threatened, pending or in process. The Partnership is
not currently the beneficiary of any waiver of any statute of
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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 Partnership. The Partnership has withheld and paid all taxes
required by law to have been withheld and paid by it. Neither the Partnership
nor any predecessor of the Partnership 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 Partnership
has delivered to PRG Partnership correct and complete copies of the
Partnership'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 Partnership during the three calendar year
period preceding the date of this Agreement. The Partnership 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 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Partnership, the Partnership or the Partners resulting from any action
taken by the Partnership or the Partners or their respective agents or
employees, or any of them.
2.19 LIABILITIES; DEBT. Except to the extent reflected or reserved
against on the Balance Sheet, the Partnership 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 required to
be disclosed in accordance with GAAP, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, other than those incurred in the
ordinary course of business. The Partnership and the Partners do not know, or
have reasonable grounds to know, of any basis for the assertion against the
Partnership as of the Balance Sheet Date, of any claim or liability of any
nature in any amount not fully reflected or reserved against on the Balance
Sheet which is required to be disclosed in accordance with GAAP, 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 Partnership (including without limitation, indebtedness
for borrowed money, guaranties and capital lease obligations) is described on
Exhibit 2.19 attached hereto.
2.20 INSURANCE POLICIES. The Partnership carries property,
liability, casualty and such other types of insurance as is customary in the
industry with respect to the ownership and operation of real property. 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 2.20 attached hereto and true and correct copies have been
delivered to PRG Partnership. Neither the Partnership nor any Partner has
received notice or other communication from the issuer of any such insurance
policy cancelling or amending such policy or threatening to do so. The
Partnership has no outstanding claims, settlements or premiums owed against any
insurance policy.
2.21 EMPLOYEE BENEFIT PLANS. The Partnership has no employees and
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"). The Partnership 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.
2.22 ADVERSE AGREEMENTS. The Partnership is not, and will not be
as of the Closing Date, a party to any agreement or instrument or subject to
any other 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
Partnership.
2.23 COMPLIANCE WITH LAWS IN GENERAL. The Partnership and the
Partners 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 Partnership or any Partner of any
federal, state or local law or regulation. Neither the Partnership nor any
Partner 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 Partnership and no
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notice of any pending inspection or violation of any such law, regulation or
ordinance has been received by the Partnership or any Partner.
Neither the Partnership, any Partner, the Assets or the Real Property
are currently in violation of, or subject to any existing, pending or, to the
knowledge of the Partners, threatened, investigation or inquiry by any
governmental authority or to any remedial obligations under, any Environmental
Laws. Other than those that have been obtained, the Partnership is not
required to obtain, any permits, licenses or similar authorizations to occupy
or use the Real Propery by reason of any Environmental Laws or other laws,
rules or regulations. None of the assets owned or leased by the Partnership
nor the Real Property or improvements located therein are on any fedreal or
state "Superfund" list or subject to any environmentally related liens.
2.24 FRAUD AND ABUSE. The Partnership and the Partners have not,
to the knowledge of the Partnership and the Partners, 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, as such laws relate to the business conducted by the
Partnership.
2.25 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Partnership or any Partner in this Agreement, and no Exhibit or certificate
issued or executed by, or information furnished by, the Partnership or any
Partner and furnished or to be furnished to PRG Partnership 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 Partner 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; COMPENSATION. No distribution
or payment of any kind has been declared or paid by the Partnership with
respect to any Partnership interest since January 1994 (other than in the
ordinary course of business). No repurchase of any Partnership interest has
been approved, effected or is pending, or is contemplated by the Partnership.
No distributions of cash or other assets have been made to any Partner (other
than distributions made in the ordinary course of business) since January 1,
1994. Other than in the ordinary course of business, there have been, and will
be, no payments to the Partnership or the Partners made in contemplation of the
transactions contemplated hereby (other than as set forth on Annex I hereof),
including without limitation, compensation adjustments and bonuses, contractual
buyouts, both for services and property.
2.28 [INTENTIONALLY DELETED]
2.29 BANKING RELATIONS. Set forth in Exhibit 2.30 is a complete
and accurate list of all arrangements that the Partnership has with any bank or
other financial institution, indicating with respect to each relationship the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
2.30 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS.
Except as set forth on Exhibit 2.31, no partner of the Partnership, 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 Partnership or any organization that
has a material contract or arrangement with the Partnership. Except for
certain lease agreements disclosed on Exhibit 2.7, neither the Partnership, nor
any of its partners 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 Partnership or to provide services, lease space, lease
equipment or engage in any other venture or activity with the Partnership.
2.31 PAYORS. Exhibit 2.32 sets forth a true, complete and correct
list of the names and addresses of each payor of the Partnership's services
which accounted for more than 10% of revenues of the Partnership in the
preceding fiscal year. The Partnership has good relations with all such payors
and other material payors of the Partnership and
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none of such payors has notified the Partnership that it intends to discontinue
its relationship with the Partnership or to deny any claims submitted to such
payor for payment.
2.32 ACCOUNTING MATTERS. The Partnership and the Partners have not
taken, failed to take or agreed to take any action that would prevent PRG
Partnership or PRG from accounting for the business combination to be effected
by the Merger as a "pooling of interests" in accordance with Accounting
Principles Board Opinion No. 16, the interpretative releases issued pursuant
thereto and the pronouncements of the Securities and Exchange Commission
("SEC").
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PRG PARTNERSHIP AND PRG.
PRG Partnership and PRG hereby represent and warrant, as of the
Closing Date, to the Partnership and the Partners as follows:
3.1 CORPORATE EXISTENCE: GOOD STANDING. PRG is a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware, and PRG is qualified to do business in the State of Florida. PRG
Partnership is a general partnership duly organized, validly existing and in
good standing under the laws of the State of Florida, and the corporate
partners of PRG Partnership are duly organized and existing and in good
standing under the laws of the State of Delaware and have qualified to do
business in the State of Florida.
3.2 POWER AND AUTHORITY. Each of PRG Partnership and PRG has
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement or to
be executed and delivered on the Closing Date, and has taken all actions
required by law, its Certificate or Articles of Incorporation, Bylaws,
Partnership Agreement or otherwise, to authorize the execution, delivery and
performance of this Agreement and such related documents. PRG and PRG
Partnership have all necessary powers to own all of their respective assets and
to carry on their business as such business is now being conducted This
Agreement and all agreements and documents executed and delivered in connection
herewith have been, or will be as of the Closing Date, duly executed and
delivered by PRG and PRG Partnership, as appropriate, and constitute or will
constitute the legal, valid and binding obligations of PRG and PRG Partnership,
enforceable against PRG and PRG Partnership in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally or the availability of equitable
remedies. The execution and delivery of this Agreement and the agreements
related hereto executed and delivered pursuant to this Agreement do not and,
subject to the receipt of consents to assignments of leases and other contracts
where required and the receipt of regulatory approvals where required, the
consummation of the transactions contemplated hereby will not, violate any
provision of the Certificate or Articles of Incorporation, Bylaws or
Partnership Agreement of either PRG Partnership 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
Partnership or PRG is a party or by which either of them is bound, or violate
any restrictions of any kind to which PRG Partnership or PRG is subject.
3.3 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Partnership, the Partnership or the Partners resulting from any action
taken by PRG or PRG Partnership or their respective agents or employees, or any
of them.
3.4 CAPITAL STOCK. All of the outstanding partnership interests
of PRG Partnership 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.
3.5 NO UNTRUE REPRESENTATIONS. No representation or warranty by
PRG Partnership or PRG in this Agreement, and no Exhibit or certificate issued
by officers or directors of PRG Partnership or PRG and furnished or
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to be furnished to the Partnership or the Partners pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained therein not
misleading.
3.6 OTHER REPRESENTATIONS. PRG has no plan or intention to cause
the Surviving Partnership to sell or otherwise dispose of any of its assets
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by PRG. Following the consummantion of the
transactions contemplated by this Agreement, the Surviving Partnership will use
a significant portion of its historic business assets in a business. PRG has
no plan or intention to liquidate the Surviving Partnership, to merge the
Surviving Partnership with or into another corporation, or to sell or otherwise
dispose of the stock of the Surviving Partnership, except for transfers of
stock to corporations or other entities controlled by PRG. PRG has no plan or
intention to reaquire any of its stock issued in the transactions contemplated
by this Agreement. PRG holds a partnership interest representing not less than
80% of the voting power of PRG Partnership and not less than 80% of all other
ownership or equity interests of PRG Partnership.
3.7 CONSENTS. Except as have been obtained prior to the Closing
Date, no consent, authorization, permit, license or filing with any
governmental authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in connection
with, the execution, delivery and performance of this Agreement and the
agreements and documents contemplated hereby on the part of PRG or PRG
Partnership.
SECTION 4. COVENANTS OF THE PARTNERSHIP AND THE PARTNERS.
The Partnership and the Partners, jointly (with respect to covenants
of the Partnership or such Partner) and severally (with respect to covenants of
such Partner), agree that between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT. The Partnership and the Partners
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. The Partnership and the Partners shall
operate the Partnership's business in the ordinary course. The Partnership
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 Partnership and the Partners shall use their best efforts to
preserve the business and assets of the Partnership intact and shall not take
any action that would have an adverse effect on the business or assets of the
Partnership, including without limitation, any action the primary purpose or
effect of which is to generate or preserve cash; provided that the Partnership
may continue to operate in the ordinary course of business. The Partnership
and the Partners shall use their best efforts to preserve intact the
relationships with payors, customers, suppliers and others having significant
business relations with the Partnership. The Partnership shall collect its
receivables and pay its trade payables in the ordinary course of business. The
Partnership shall not introduce any new method of management, operations or
accounting.
4.3 ACCESS AND NOTICE. The Partnership and the Partners shall
permit PRG and PRG Partnership and their authorized representatives reasonable
access to, and make available for inspection, all of the assets and business of
the Partnership and all of its assets, including employees, customers and
suppliers and permit PRG, PRG Partnership and their authorized representatives
to inspect and make copies of all documents, records and information with
respect to the business or assets of the Partnership as PRG, PRG Partnership or
their representatives may reasonably request. The Partnership and the Partners
shall promptly notify PRG Partnership 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 Partnership is a party, and (b) any adverse change in
the Partnership's business, financial condition or the conditions of its
assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Partnership and the Partners shall use their best efforts to secure all
necessary approvals and consents of third parties (or shall assist PRG in such
efforts) to the consummation of the transactions contemplated hereby, including
consents described on Exhibit 2.5. The Partnership and the Partners shall use
their best efforts to obtain all licenses, permits, approvals or other
authorizations required under any law, rule, regulation, or otherwise to
conduct the intended business of the Partnership.
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4.5 ACQUISITION PROPOSALS The Partnership and the Partners shall
not, and shall use their best efforts to cause the Partnership'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 Partners,
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 Partnership 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
Partnership and the Partners will immediately cease any such activities,
discussions or negotiations heretofore conducted with respect to any of the
foregoing. The Partnership and the Partners shall immediately notify PRG
Partnership if any such inquiries or proposals are received.
4.6 DISTRIBUTIONS AND REPURCHASES. No distribution or payment of
any kind will be declared or paid by the Partnership except in the ordinary
course of business or with the consent of PRG, nor will any repurchase of any
interests in the Partnership be approved or effected.
4.7 REQUIREMENTS TO EFFECT MERGER. The Partnership and each
Partner 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.
4.8 VOTING OF SHARES; IRREVOCABLE PROXY. Each Partner agrees that
until the earlier of the Closing Date or the termination of this Agreement,
each such Partner shall vote at any meeting of the Partners 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.
4.9 ACCOUNTING AND TAX MATTERS. The Partnership will not change
in any material respect the accounting methods or practices followed by the
Partnership (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 Partnership
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 Partnership 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 Partnership required to
be filed by it, and pay all taxes required to be paid by it, on or before the
Closing Date.
4.10 ACCOUNTING MATTERS. The Partnership and Partners shall not
take or cause to be taken any action that would disqualify the Merger as a
"pooling of interests" for accounting purposes.
4.11 EXHIBITS. The Partnership and Partners shall provide each of
the Exhibits hereto on or before the Closing Date, which exhibits shall be in
form and substance satisfactory to PRG and PRG Partnership.
SECTION 5. COVENANTS OF PRG AND PRG PARTNERSHIP.
PRG and PRG Partnership, jointly and severally, agree that between the
date hereof and the Closing Date:
5.1 CONSUMMATION OF AGREEMENT. PRG and PRG Partnership shall use
their best efforts to cause the consummation of the transactions contemplated
hereby in accordance with their terms and provisions. PRG and PRG Partnership
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.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS; RELEASE
OF GUARANTIES. PRG and PRG Partnership shall use their best efforts to secure
all necessary approvals and consents of third parties to the consummation of
the transactions contemplated hereby. In connection with its assumption of
the indebtedness
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described on Exhibit 2.19 attached hereto, PRG and PRG Partnership shall cause
the guaranty of such indebtedness by the Partners to be released or shall
unconditionally indemnify the Partners with respect to the full amount of such
guaranties from and after the Closing Date.
5.3 LISTING APPLICATION. PRG shall prepare and submit to the New
York Stock Exchange (the "NYSE") a listing application covering the Merger
Consideration and shall use its best efforts to obtain approval for the listing
of the Merger Consideration upon official notice of issuance.
SECTION 6. PRG PARTNERSHIP AND PRG CONDITIONS PRECEDENT.
The obligations of PRG Partnership 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 the Partnership and the Partners contained herein shall be true
and correct in all material respects as of the Closing Date.
6.2 COVENANTS AND CONDITIONS. The Partnership and the Partners
shall have performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by the Partnership and the
Partners prior to the Closing Date.
6.3 PROCEEDINGS. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated hereby.
6.4 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Partnership shall have occurred since the Balance Sheet
Date.
6.5 DUE DILIGENCE REVIEW. By the Closing Date, PRG Partnership
and PRG shall have completed a due diligence review of the business, operations
and Financial Information of the Partnership, the results of which shall be
satisfactory to PRG Partnership 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. The Partnership and the Partners
shall have obtained all necessary government and other third-party approvals
and consents.
6.8 CLOSING DELIVERIES. PRG Partnership shall have received all
documents, duly executed in form satisfactory to PRG Partnership and its
counsel, referred to in Section 10.1.
6.9 DEBT AND RECEIVABLES. There shall be no indebtedness,
receivables or payables between the Partnership and its partners or affiliates
and, other than the indebtedness described on Exhibit 2.19, the Partnership
shall not have any liabilities, including indebtedness, guaranties and capital
leases, that are not approved by PRG.
6.10 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
6.11 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
6.12 ACCOUNTING OPINION. PRG and PRG Partnership shall have
received an opinion concerning the qualification of the Merger as a pooling of
interests under applicable accounting standards from Arthur Anderson, L.L.P.
6.13 REAL ESTATE. The transactions described in that certain
Agreement and Plan of Merger dated June 6, 1996 by and among Central Florida
Eye Associates, P.A., the Partners, PRG FL Acquisition Corporation and PRG
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above shall be closed simultaneously with the transactions contemplated hereby
on or before June 28, 1996 (with an effective date of 11:59 p.m. on June 30,
1996).
SECTION 7. THE PARTNERSHIP'S AND THE PARTNERS' CONDITIONS PRECEDENT.
The obligations of the Partnership and the Partners 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 Partnership and PRG contained herein shall be true and
correct in all respects as of the Closing Date.
7.2 COVENANTS AND CONDITIONS. PRG Partnership and PRG shall have
performed and complied with all covenants and conditions required by this
Agreement to be performed and complied with by PRG Partnership 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. The Partnership shall have received all
documents, duly executed in form satisfactory to the Partnership and its
counsel, referred to in Section 5.2.
7.5 MERGER CONSIDERATION. The Merger Consideration shall have
been approved for listing on the NYSE, subject to official notice of issuance.
SECTION 8. CLOSING DELIVERIES.
8.1 DELIVERIES OF THE PARTNERSHIP AND THE PARTNERS. At or prior
to the Closing, the Partnership and the Partners shall deliver to PRG
Partnership the following, all of which shall be in a form satisfactory to
counsel to PRG Partnership and PRG:
(a) a copy of the agreements or resolutions of the
Partners of the Partnership authorizing the execution, delivery and performance
of this Agreement and all related documents and agreements each notarized as
being true and correct copies of the original thereof;
(b) certificates of each Partner, dated as of the Closing
Date, (i) as to the truth and correctness of the representations and warranties
of the Partnership and each Partner contained herein; (ii) as to the
performance of and compliance by the Partnership and each Partner with all
covenants contained herein; and (iii) certifying that all conditions precedent
of the Partnership and each Partner to the Closing have been satisfied;
(c) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5 (to the extent not provided by PRG
or PRG Partnership at Closing); and
(d) an executed Escrow Agreement;
(e) such other instruments and documents as reasonably
requested by PRG or PRG Partnership to carry out and effect the purpose and
intent of this Agreement; and
(f) all documentation related to the Real Property as
reasonably required by PRG Partnership.
8.2 DELIVERIES OF PRG PARTNERSHIP AND PRG. At or prior to the
Closing, PRG Partnership and PRG shall deliver to the Partnership the
following, all of which shall be in a form satisfactory to counsel to the
Partnership and the Partners or the Clinic, as applicable:
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(a) the Merger Consideration;
(b) a copy of the agreements or resolutions of the
Partners of PRG Partnership and PRG (or a committee thereof) authorizing the
execution, delivery and performance of this Agreement and all related documents
and agreements each notarized or certified by the Secretary as being true and
correct copies of the original thereof;
(c) certificates of the President of PRG, dated as of the
Closing Date, (i) as to the truth and correctness of the representations and
warranties of PRG Partnership and PRG contained herein; (ii) as to the
performance of and compliance by PRG Partnership and PRG with all covenants
contained herein; and (iii) certifying that all conditions precedent of PRG
Partnership and PRG to the Closing have been satisfied;
(d) certificates, dated within 10 days of the Closing
Date, of the Secretary of the State of Delaware establishing that PRG is in
existence and are in good standing to transact business in the State of
Delaware and the State of Florida;
(e) an executed Escrow Agreement;
(f) satisfaction of mortgages and evidence of payoff of
all indebtedness necessary to satisfy title requirements with respect to the
Real Property acquired by the Surviving Partnership pursuant to the Merger and
release of guaranties or unconditional indemnification agreement as required
pursuant to Section 5.2 hereof to be provided within 10 days of Closing; and
(g) such other instruments and documents as reasonably
requested by the Partnership or Partners 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 the
Partnership and the Partners, jointly (with respect to the representations and
warranties of the Partnership or such Partner) and severally (with respect to
representations and warranties of such Partner), or of PRG Partnership and PRG,
jointly and severally, as the case may be. Except as provided herein, all such
representations and warranties, and all representations and warranties
expressly labeled as such in this Agreement shall survive the date of this
Agreement and the Closing Date for a period of one (1) year following the
Closing Date. Each party covenants with the other parties not to make any claim
with respect to such representations and warranties, against any party after
the date on which such survival period shall terminate. No party shall be
entitled to claim indemnity from any other party pursuant to Section 9.2 or 9.3
hereof, unless such party has timely given the notice required in Sections 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 AND PRG PARTNERSHIP. PRG PARTNERSHIP
AND PRG, JOINTLY AND SEVERALLY (FOR PURPOSES OF THIS SECTION 11.2 AND, TO THE
EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE
PARTNERS AND THEIR RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING,
INCLUDING THE PARTNERSHIP AND THE PARTNERS, FOR PURPOSES OF THIS SECTION 9.2
AND, TO THE EXTENT APPLICABLE, SECTION 9.4, AS "INDEMNIFIED PERSON"), HARMLESS
FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS,
COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE
FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING FROM OR BY REASON OF
OR RESULTING FROM:
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(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER,
(II) FROM AND AFTER THE CLOSING DATE, INDEMNITOR'S MANAGEMENT,
OPERATION AND THE OWNERSHIP OF THE PARTNERSHIP, OR
(III) FROM ANY CLAIMS MADE BY SURGICARE OF CENTRAL FLORIDA, LTD. OR
ANY INDIVIDUAL PARTNERS THEREOF IN CONNECTION WITH ANY ALLEGED BREACH BY THE
PARTNERSHIP OR PARTNERS (IN THEIR INDIVIDUAL CAPACITY AS PARTNERS OR AS LIMITED
PARTNERS IN SURGICARE OF CENTRAL FLORIDA, LTD.) OF SECTION 32 OF THAT CERTAIN
DEVELOPMENT AND LEASE AGREEMENT DATED FEBRUARY 17, 1995, BETWEEN THE
PARTNERSHIP AND SURGICARE OF CENTRAL FLORIDA, LTD.
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 PARTNERSHIP AND THE PARTNERS. THE
PARTNERSHIP AND THE PARTNERS (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE
EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY (WITH RESPECT TO THE
PARTNERSHIP OR SUCH PARTNER) AND SEVERALLY (WITH RESPECT TO SUCH PARTNER),
SHALL INDEMNIFY AND HOLD PRG PARTNERSHIP, PRG AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, PARTNERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING PRG
PARTNERSHIP AND PRG, FOR PURPOSES OF THIS SECTION 11.3 AND, TO THE EXTENT
APPLICABLE, SECTION 11.4, AS "INDEMNIFIED PERSON") HARMLESS FROM AND AGAINST
ANY AND ALL LIABILITIES, LOSSES, CLAIMS, DAMAGES, ACTIONS, SUITS, COSTS,
DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO, REASONABLE FEES AND
DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ("DAMAGES") ARISING FROM OR BY REASON
OF OR RESULTING FROM:
(I) ANY BREACH BY INDEMNITOR OF ANY REPRESENTATION, WARRANTY,
AGREEMENT OR COVENANT CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS
HERETO) AND EACH DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER, 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 PARTNERSHIP,
(II) ANY ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES,
AGENTS AND INDEPENDENT CONTRACTORS IN OR ABOUT THE PARTNERSHIP'S BUSINESS,
(III) ANY VIOLATION BY THE PARTNERSHIP OR THE PARTNERS OR THEIR
CONSULTANTS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR
FEDERAL LAWS GOVERNING HEALTHCARE FRAUD AND ABUSE, WHETHER ON OR AFTER THE
CLOSING DATE,
(IV) TAXES OF THE PARTNERSHIP OR ANY OTHER PERSON (INCLUDING ANY
PARTNER) ARISING FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, OR
(V) ANY LIABILITY OF THE PARTNERSHIP OR THE PARTNERS FOR COSTS AND
EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS FEES) INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH.
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IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON, PROVIDED THAT SUCH INDEMNIFIED
PERSON AGREES IN WRITING TO REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE
EXTENT THAT IT IS FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS
NOT ENTITLED TO INDEMNIFICATION HEREUNDER.
9.4 INDEMNIFICATION PROCEDURE. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any action or
other proceeding in respect of which indemnification or reimbursement may be
sought hereunder, or within such lesser time as may be provided by law for the
defense of such action or proceeding, such Indemnified Person shall notify
Indemnitor thereof. If any such action or other proceeding shall be brought
against any Indemnified Person, Indemnitor shall, upon written notice given
within a reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action or
proceeding with counsel chosen by Indemnitor and reasonably satisfactory to
Indemnified Person; provided, however, that any Indemnified Person may at its
own expense retain separate counsel to participate in such defense.
Notwithstanding the foregoing, Indemnified Person shall have the right to
employ separate counsel at Indemnitor's expense and to control its own defense
of such action or proceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available to such
Indemnified Person or to other Indemnified Persons that are different from or
additional to those available to Indemnitor and which could not be adequately
advanced by counsel chosen by Indemnitor, or (b) a conflict or potential
conflict exists between Indemnitor and such Indemnified Person that would make
such separate representation advisable; provided, however, that in no event
shall Indemnitor be required to pay fees and expenses hereunder for more than
one firm of attorneys of Indemnified Person in any jurisdiction in any one
action or proceeding or group of related actions or proceedings. Indemnitor
shall not, without the prior written consent of any Indemnified Person, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action or proceeding to which such Indemnified Person is a
party unless such settlement, compromise or consent includes an unconditional
release of such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
9.5 LIMITATION ON INDEMNIFICATION. Notwithstanding anything
contained herein to the contrary, any indemnification by the Partnership and
Partners in favor of PRG or PRG Partnership shall not exceed in all cases the
Escrowed Shares, and any indemnification by PRG and PRG Partnership in favor of
the Partnership and Partners shall not exceed in all cases (other than as set
forth in Section 11.2(III) $139,392. Furthermore, other than claims pursuant
to Section 11.2(III) which shall survive for the statute of limitations period,
no claim for Damages shall be made by any party more than one (1) year after
the Closing Date.
9.6 CERTAIN TAX MATTERS.
(a) PRG shall prepare and file or cause to be prepared
and filed any tax returns, statements and reports ("Tax Returns") of Surviving
Partnership covering taxable periods ending on or before the Closing Date which
have not been filed on or before the Closing Date. Partners shall, jointly and
severally, within fifteen (15) days after payment thereof and receipt of notice
of such payment, reimburse, indemnify and hold harmless PRG and the Surviving
Partnership for all taxes, and all related interest, penalties and additions to
tax ("Taxes"), with respect to taxable periods of the Partnership 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 Partnership covering taxable periods
which begin before the Closing Date and end after the Closing Date ("Straddle
Periods"). Partners 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 Partnership 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
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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 Partnership.
(c) The Partnership, Partners, PRG, Surviving Partnership
and PRG Partnership shall reasonably cooperate with each other in connection
with the filing of Tax Returns pursuant to this Section 11.5(c) and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the provision of copies, at the requesting party's expense, of records
and information relevant to any such Tax Return or proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
SECTION 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 Partnership if any representation or
warranty of the Partnership or any Partner contained in this Agreement or in
any certificate or other document executed and delivered by the Partnership or
any Partner pursuant to this Agreement is or becomes untrue or breached in any
material respect or if the Partnership or any Partners 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 Partnership or the Partners if any
representation or warranty of PRG or PRG Partnership contained in this
Agreement or in any certificate or other document executed and delivered by PRG
or PRG Partnership pursuant to this Agreement is or becomes untrue or breached
in any material respect or if PRG or PRG Partnership 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 Partnership, the Partnership or the Partners if
the merger contemplated hereby shall not have been consummated by June 28,
1996;
(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 Partnership, that such termination is
desirable and in the best interests of PRG; or
(f) by the Partners if counsel for the Partners shall determine,
in its reasonable good faith judgment, that the provisions of Section 11.3(III)
shall not be satisfactory to protect the Partners with respect to the claims
discussed therein.
SECTION 11. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Partners
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 Partnership or PRG Partnership that is valuable, special and unique
assets of PRG's, Surviving Partnership's or PRG Partnership's businesses. The
Partners 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 Partners, (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 Partners 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 Partners reasonably believe
that such disclosure is required in connection with the defense of a lawsuit
against the disclosing party, or (iv) the Partners 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 Partners of the provisions of this Section 14, PRG, Surviving
Partnership or PRG Partnership shall be entitled to an injunction restraining
the Partners from disclosing, in whole or in part, such confidential
information. Nothing herein shall be construed as prohibiting PRG,
18
<PAGE> 20
Surviving Partnership or PRG Partnership 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 12. INVESTMENT REPRESENTATIONS.
12.1 ECONOMIC RISK; SOPHISTICATION. The Partners 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 Partners 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 Partners 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.
12.2 AFFILIATES. PRG shall be entitled to place legends as
specified in the Affiliates Letters on the certificate(s) evidencing any common
stock to be received by such Affiliates pursuant to the terms of this Agreement
and to issue appropriate stock transfer instructions to the transfer agent for
common stock of PRG, consistent with the terms of such Affiliate Letters.
SECTION 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: If to PRG Partnership:
Physicians Resource Group, Inc. PRG FL Partnership II
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Partnership 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 Partnership or the Partners: 814 Griffin Road
Lakeland, FL 33805
Facsimile:
19
<PAGE> 21
with a copy to: Thomas Driscoll, Esquire
Foley, Lardner, Weissburg & Aronson
One Maritime Plaza, 6th Floor
San Francisco, CA 94111
Telecopy: (415) 434-4507
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; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Partners shall assist PRG and Surviving Partnership in collecting the accounts
receivable of the Partnership acquired by PRG and PRG Partnership in connection
with this transaction and in the event that any Partner shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Partnership.
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 Partnership, Surviving
Partnership 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 Partners 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 Partners shall be liable for all such costs, and (b)
local, state and federal income taxes or other similar charges on income or
gain incurred by the Partnership or the Partners as a result of the
transactions contemplated hereby. As of the Closing Date, the Partnership
shall not have any liability for any fees or expenses of legal counsel,
accountants, auditors or other persons or entities for services rendered in
connection with negotiating and closing the transactions contemplated by this
Agreement or the documents to be executed in connection herewith.
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. 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
20
<PAGE> 22
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 Partnership, Surviving Partnership 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 Partnership, 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 Partnership,
Surviving Partnership or PRG, on the one hand, or the Partnership or the
Partners, 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.
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.
13.17 EXECUTION BY PARTNERS. Ronald Case, M.D., Brian Renz, M.D.,
Teo Kulyk, M.D. and Jay Mulaney, M.D. hereby executed this Agreement in their
individual capacity, and as Partners of the Partnership.
[End of Page _____]
21
<PAGE> 23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG FL PARTNERSHIP II CENTRAL FLORIDA EYE ASSOCIATES
PARTNERS
By: /s/ RICHARD J. D'AMICO By: /s/ BRIAN RENZ
------------------------------- --------------------------------
Its: Its: Partner
------------------------------ -------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ RICHARD J. D'AMICO /s/ RONALD CASE, M.D.
------------------------------- -----------------------------------
Ronald Case, M.D.
Its:
------------------------------
/s/ BRIAN RENZ, M.D.
-----------------------------------
Brian Renz, M.D.
/s/ TEO KULYK, M.D.
-----------------------------------
Teo Kulyk, M.D.
/s/ JAY MULANEY, M.D.
-----------------------------------
Jay Mulaney, M.D.
Ronald Case, M.D., Brian Renz, M.D., Teo Kulyk, M.D. and Jay Mulaney, M.D.
hereby executed this Agreement in their individual capacity, and as partners of
Central Florida Eye Associates Partners.
22
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1.9 Escrow Agreement
2.1 Capitalization of the Partnership
2.3 Permits and Licenses
2.5 Consents
2.6 Financial Information
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.16 Accounts Receivable/Payables/Working Capital
2.19 Debt
2.20 Insurance Policies
2.21 Employee Benefit Plans
2.29 Suppliers
2.30 Banking Relations
2.31 Ownership Interests of Interested Persons
2.32 Payors
4.1 Capitalization of Clinic
4.4 Clinic Assets
8.7 Form of Service Agreement
10.1(p) Registration Rights Agreement
ANNEX I Merger Consideration
ANNEX II Real Estate Consideration
EXHIBIT IIA G.C.R. Investors Real Estate
EXHIBIT IIB Central Florida Eye Associates Partners Real Estate
</TABLE>
23
<PAGE> 1
EXHIBIT 2.4
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
SOUTH TEXAS RETINA AFFILIATES, INC.,
SOUTH TEXAS RETINA CONSULTANTS, L.L.P.,
CHARLES H. CAMPBELL, M.D., P.A.,
CHARLES H. CAMPBELL, M.D.,
PRG TX ACQUISITION CORP. I
AND
PHYSICIANS RESOURCE GROUP, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. The Merger
1.1 Merger of PRG Sub into the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Merger Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Articles of Incorporation of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Bylaws of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Directors of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Officers of the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Conversion of 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, the Practice and the Shareholder
2.1 Corporate Existence; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Power and Authority for Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Permits, Licenses and Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.8 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 Title to and Encumbrances on Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Intellectual Property Rights; Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Directors and Officers; Payroll Information; Employees . . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.15 Subsequent Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.16 Accounts Receivable/Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.18 Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.19 Liabilities; Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.20 Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.21 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.22 Adverse Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.23 Compliance with Laws in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.24 Medicare and Medicaid Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.25 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.26 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.27 Accredited Investor Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.28 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.29 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.30 Banking Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.31 Ownership Interests of Interested Persons; Competitors . . . . . . . . . . . . . . . . . . . . . . . 11
2.32 Payors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3. Representations and Warranties of PRG Sub and PRG
3.1 Corporate Existence: Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.2 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Commissions and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
3.5 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.6 No Untrue Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4. Covenants of the Company, the Practice and the Shareholder
4.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Business Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Funding of Accrued Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Distributions and Repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.9 Requirements to Effect Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.10 Voting of Shares; Irrevocable Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.12 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5. Covenants of PRG and PRG Sub
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Approvals of Third Parties and Permits and Consents . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6. Covenants of the Shareholder
6.1 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7. PRG Sub and PRG Conditions Precedent
7.1 Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Covenants and Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.4 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.5 Due Diligence Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.6 Approval by the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.7 Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.8 Employment Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.9 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.10 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.11 Debt and Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.12 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.13 Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.14 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.15 No Change in Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8. The Company's and the Shareholder's Conditions Precedent
8.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.2 Covenants and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.4 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.5 Stock Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9. Closing Deliveries
9.1 Deliveries of the Company and the Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
Section 10. Nature and Survival of Representations and Warranties; Indemnification
10.1 Nature and Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
10.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
10.3 Indemnification by the Company, the Practice and the Shareholder . . . . . . . . . . . . . . . . . . 19
10.4 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.5 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.6 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 11. Termination
Section 12. Noncompetition
12.1 Prohibited Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Severability; Reformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 13. Nondisclosure of Confidential Information
Section 14. Investment Representations
Section 15. Miscellaneous
15.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.2 Further Assurances; Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
15.4 Public Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.7 Integration of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.10 Binding Effect/Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.11 No Rule of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.12 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.13 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.14 Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
15.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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<PAGE> 5
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION, made and executed as of the
30th day of June, 1996, is by and among PRG TX ACQUISITION CORP. I, a Texas
corporation ("PRG Sub"); PHYSICIANS RESOURCE GROUP, INC., a Delaware
corporation ("PRG"); SOUTH TEXAS RETINA AFFILIATES, INC., a Texas corporation
(the Company"), SOUTH TEXAS RETINA CONSULTANTS, L.L.P., a Texas limited
liability partnership ("LLP") and CHARLES H. CAMPBELL, M.D., P.A., a Texas
professional association ("PA") (collectively, the LLP and the PA are referred
to herein as the "Practice") and CHARLES H. CAMPBELL, M.D., an individual
resident of the State of Texas ("Shareholder").
WITNESSETH:
WHEREAS, the Practice operates an ophthalmology practice in Corpus
Christi, Texas;
WHEREAS, the Company owns all of the assets (other than the
physicians) used in the business of LLP and has a service arrangement with the
LLP whereby the Company performs all non-medical services for LLP; and
WHEREAS, Shareholder is the only Shareholder of the Company, and the
Shareholder and PA are the only partners of LLP;
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
date that the conditions precedent to the transaction referred to herein are
satisifed ("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 parties hereto shall not report the
transaction in a manner inconsistent therewith or otherwise take any action
that would prevent the Merger from qualifying as such; 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, warranty 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 Texas and the separate corporate existence of Surviving
Corporation with all its rights, privileges, powers, immunities, purposes and
franchises shall continue unaffected by the Merger, except as set forth herein.
The Merger shall have the effects specified in the Texas Business Corporation
Act ("TBCA").
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<PAGE> 6
1.2 MERGER CERTIFICATES. If all conditions to the Merger set
forth herein have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated pursuant to the terms hereof, the
parties hereto shall cause to be properly executed and filed on the Closing
Date Articles of Merger meeting the requirements of the Texas Business
Corporation Act. The Merger shall become effective on the Closing Date.
1.3 ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. Effective
on the Closing Date, the Articles of Incorporation of PRG Sub shall be the
Articles of Incorporation of the Surviving Corporation.
1.4 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of PRG Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation.
1.5 DIRECTORS OF THE SURVIVING CORPORATION. The persons who are
directors of PRG Sub immediately prior to the Closing Date shall, from and
after the Closing Date, be the directors of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
1.6 OFFICERS OF THE SURVIVING CORPORATION. The persons who are
officers of PRG Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
1.7 CONVERSION OF 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, the Shareholder, as the
holder of all outstanding certificates representing shares of Company common
stock, shall, upon surrender of such certificates, be entitled to receive the
Merger Consideration.
(b) The Shareholder shall deliver to PRG on the Closing
Date the certificates representing Company common stock owned by him, duly
endorsed in blank by the Shareholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps, acquired at the
Shareholders' expense, affixed and cancelled. The Shareholder agrees 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 Shareholder is entitled to receive pursuant to Sections 1.7
and 1.8(c) 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.
2
<PAGE> 7
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, 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, THE PRACTICE
AND THE SHAREHOLDER.
The Company, the Practice and the Shareholder, jointly and severally,
hereby represent and warrant to PRG Sub and PRG as follows:
2.1 CORPORATE EXISTENCE; GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. The Company has all necessary corporate powers to
own all of its assets and to carry on its business as such business is now
being conducted. 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 Shareholder is
the sole shareholder of the Company and owns all outstanding shares of capital
stock of the Company free of all security interests, claims, encumbrances and
liens. Each share of Company common stock has been legally and validly issued
and fully paid and nonassessable. No shares of capital stock of the Company
are owned by the Company in treasury. There are no outstanding (a) bonds,
debentures, notes or other obligations the holders of which have the right to
vote with the stockholders of the Company on any matter, (b) securities of the
Company convertible into equity interests in the Company, or (c) commitments,
options, rights or warrants to issue any such equity interests in the Company,
to issue securities of the Company convertible into such equity interests, or
to redeem any securities of the Company. No shares of capital stock of the
Company have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of the Company's stockholders.
The Company is not required to qualify to do business as a foreign corporation
in any other state or jurisdiction by reason of its business, properties or
activities in or relating to such other state or jurisdiction. The Company
does not have any assets, employees or offices in any state other than Texas.
LLP is a limited liability partnership duly organized, validly
existing and in good standing under the laws of the State of Texas. LLP has all
necessary partnership power to own all of its assets and to carry on its
business as such business is now being conducted. LLP does not own stock in or
control, directly or indirectly, any other corporation, association or business
organization, nor is LLP a party to any joint venture or partnership. The
Shareholder and PA are the sole partners of LLP and own all partnership
interests free of all security interests, claims, encumbrances and liens. Each
partnership interest of LLP 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 partners
of LLP on any matter, (b) securities of LLP convertible into equity interests
in LLP, or (c) commitments, options, rights or warrants to issue any such
equity interests in LLP, to issue securities of LLP convertible into such
equity interests, or to redeem any securities of LLP. No partnership interests
of LLP have been issued or disposed of in violation of the preemptive rights,
rights of first refusal or similar rights of any of LLP's partners. LLP 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. LLP does not have any assets, employees
or offices in any state other than Texas.
PA is a professional association duly organized, validly existing and
in good standing under the laws of the State of Texas. PA has all necessary
corporate powers to own all of its assets and to carry on its business as such
business is now being conducted. PA does not own stock in or control, directly
or indirectly, any other corporation, association or business organization, nor
is PA a party to any joint venture or partnership other than ownership by the
PA of an interest in LLP. The Shareholder is the sole shareholder of PA and
owns all outstanding shares of capital stock of PA free of all security
interests, claims, encumbrances and liens. Each share of PA common stock has
been legally and validly issued and fully paid and nonassessable. No shares of
3
<PAGE> 8
capital stock of PA are owned by PA 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 PA on any matter, (b) securities of PA
convertible into equity interests in PA, or (c) commitments, options, rights or
warrants to issue any such equity interests in PA, to issue securities of PA
convertible into such equity interests, or to redeem any securities of PA. No
shares of capital stock of PA have been issued or disposed of in violation of
the preemptive rights, rights of first refusal or similar rights of any of PA's
stockholders. PA 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.
PA does not have any assets, employees or offices in any state other than
Texas.
2.2 POWER AND AUTHORITY FOR TRANSACTIONS. The Company and the
Practice have the corporate, partnership or association power, as applicable,
to execute, deliver and perform this Agreement and all agreements and other
documents executed and delivered by it pursuant to this Agreement or to be
executed and delivered on the Closing Date, and has taken all action required
by law, its Articles of Incorporation, Partnership Agreement, Articles of
Association, its Bylaws or otherwise, to authorize the execution, delivery and
performance of this Agreement and such related documents. The 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
and PA have obtained the approval of their stockholders necessary to the
consummation of the transactions contemplated herein. The LLP has obtained the
approval of its partners 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, the Practice and the
Shareholder, as appropriate, and assuming due execution and delivery of each
such agreement by the other parties thereto, and constitute or will constitute
the legal, valid and binding obligations of the Company, the Practice and the
Shareholder, enforceable against the Company, the Practice 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 of Incorporation, Articles of Association, Partnership
Agreement or Bylaws of the Company or the Practice 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, the Practice or Shareholder is a party or by which the
Company, the Practice or Shareholder is bound, or violate any material
restrictions of any kind to which the Company, the Practice or Shareholder is
subject, or result in any lien or encumbrance on any of the Company's or the
Practice's assets.
2.3 PERMITS, LICENSES AND GOVERNMENTAL AUTHORIZATIONS. Other than
as would not have a material adverse effect on the Company, the Practice or the
Shareholder, all building or other permits, certificates of occupancy,
concessions, grants, franchises, licenses, certificates of need and other
governmental authorizations and approvals required to be maintained by the
Company, the Practice the Shareholder and each physician or licensed employee
of the Company and the Practice 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, the Practice 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 of
Incorporation, Articles of Association, Partnership Agreement, Bylaws and
minutes of the Company and the Practice and all amendments thereto of the
Company and the Practice have been delivered to PRG Sub. The minute books of
the Company and the Practice contain all accurate minutes of the meetings for
which minutes were prepared of and consents to actions taken without meetings
of the Board of Directors and stockholders and partners, as applicable, of the
Company and the Practice since their formation. To the best knowledge of the
Company, the Practice and the Shareholder, the books of account of the Company
and the Practice have been kept accurately in the ordinary course of business
and the revenues, expenses, assets and liabilities of the Company and the
Practice have been properly recorded in such books on a tax basis.
2.5 CONSENTS. Except as set forth on Exhibit 2.5 and except as
would not have a material adverse effect on the Company, the Practice or the
Shareholder, 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, the
Practice or the Shareholder.
4
<PAGE> 9
2.6 FINANCIAL INFORMATION. South Texas Retina Consultants, P.A.
("Old PA") has heretofore furnished PRG Sub with copies of financial
information ("Financial Statements") about Old PA as set forth on Exhibit 2.6
attached hereto, including the unaudited Balance Sheet ("Balance Sheet") as of
December 31, 1995 and April 30, 1996 ("Balance Sheet Date"). All such
financial statements have been prepared in conformity with past practices of
Old PA on a tax basis consistently followed throughout the periods indicated.
Prior to the date hereof, Old PA merged with and into the Company and the
Shareholder formed the Practice. Upon the request of PRG or PRG Sub, the
Shareholder will provide PRG and PRG Sub with copies of all financial
information of the Company and the Practice. The preceding sentence shall
survive the termination of this Agreement.
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, the Practice
or otherwise. The Practice is not a party to any leases other than the
equipment lease with the Company as described on Exhibit 2.7 (which lease will
be terminated on the Closing Date). 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, the Practice or
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. To the best knowledge of the
Shareholder, the Practice and the Company, all of the plants, structures and
equipment used by the Company or the Practice 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, except to the extent such
failure to so conform would not have a material adverse effect on the Company,
the Practice or the Shareholder, and the Company, the Practice and the
Shareholder 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. The Practice has no real or tangible
personal property. 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. 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. The Company and the
Practice have no right, title or interest in or to patents, patent rights,
corporate names, assumed names, manufacturing processes, trade names,
trademarks, service marks, inventions, specialized treatment protocols,
copyrights, formulas and trade secrets or similar items and such items are the
only such items necessary for the conduct of its business. Exhibit 2.11 is a
listing of all names of all predecessor companies of the Company and the
Practice, including the names of any entities from whom the Company or the
Practice previously acquired any significant assets from any predecessor
company. Except for off-the-shelf software licenses, the Company and the
Practice are not a licensee in respect of any patents, trademarks, service
marks, trade names, copyrights or applications therefor, or manufacturing
processes, formulas or trade secrets or similar items and no such licenses are
necessary for the conduct of its business. No claim is pending or has been
made to the effect that the present or past operations of the Company or the
Practice infringe upon or conflict with the asserted rights of others to any
patents, patent rights, manufacturing processes, trade names, trademarks,
service marks, inventions, licenses, specialized treatment protocols,
copyrights, formulas, know-how and trade secrets. The Company has the sole and
exclusive right to use all such proprietary rights without infringing or
violating the rights of any third parties and no consents of any third parties
are required for the use thereof by the Surviving Corporation.
2.12 DIRECTORS AND OFFICERS; PAYROLL INFORMATION; EMPLOYEES. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as of the
date of this Agreement of: (a) the name of each director and officer of the
Company and the Practice and the offices held by each, (b) the most recent
payroll report of the Company and the Practice, showing
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all current employees of the Company and the Practice and their current levels
of compensation, (c) promised increases in compensation of employees of the
Company and the Practice that have not yet been effected, (d) oral or written
employment agreements or independent contractor agreements (and all amendments
thereto) to which the Company or the Practice 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 and the Practice are in compliance with all applicable laws,
rules, regulations and ordinances respecting employment and employment
practices. The Company and the Practice have not engaged in any unfair labor
practice. There are no unfair labor practices charges or complaints pending or
threatened against the Company or the Practice, and the Company and the
Practice have never been a party to any agreement with any union, labor
organization or collective bargaining unit.
2.13 LEGAL PROCEEDINGS. Neither the Company, the Practice nor
Shareholder nor outstanding shares of the Company's or Practice's stock or
partnership interests nor any of the Company's or Practice's assets is subject
to any pending, nor does the Company, the Practice or Shareholder have
knowledge of any threatened, litigation, governmental investigation,
condemnation or other proceeding against or relating to or affecting the
Company, Shareholder, the Practice, the outstanding shares of the Company's or
the Practice's stock or partnership interests, any of the assets of the
Company or the Practice, the operations, business or prospects of the Company
or the Practice or the transactions contemplated by this Agreement, and, to the
knowledge of the Company, the Practice and the Shareholder, no basis for any
such action exists, nor is there any legal impediment of which the Company, the
Practice or 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) and
Exhibit 2.14 (in the case of Contracts other than leases) attached hereto. The
Practice is not a party to any Contracts other than set forth on Exhibit 2.14.
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 to the best knowledge of the Company or Shareholder, 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 the Practice, or any
condition or event of which the Company, the Practice or Shareholder has
knowledge which with notice or lapse of time, or both, would constitute a
default. The Company, the Practice and the Shareholder have no knowledge of
any default by any other party to such Contracts. Neither the Company, the
Practice nor the Shareholder have received notice of the intention of any other
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 and Exhibit 2.14, the Company and the Practice
are not a party to any material written or oral agreement contract, lease or
arrangement, including any:
(a) Contract related to the assets of the Company or the
Practice 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 to be
performed after the date hereof;
(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 or the Practice of a
particular product or service;
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(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 or the Practice on more than 30 days after the date
hereof.
2.15 SUBSEQUENT EVENTS. Except as set forth on Exhibit 2.15, and
except for the purchase by Shareholder of certain personal property owned by
the Company, the merger of Old PA with and into the Company and the formation
of the PA and LLP by the Shareholder, the Company and the Practice have 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) Discharged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
(absolute, accrued, contingent or otherwise) other than (i) liabilities shown
or reflected on the Balance Sheet or (ii) liabilities incurred since the
Balance Sheet Date in the ordinary course of business;
(c) Formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any
person or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material adverse effect
on its business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as may have
been required due to income or operations of the Company or the Practice since
the Balance Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge
or other encumbrance any of the assets of the Company or the Practice, 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
or the Practice'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) (other than capital
expenditures related to computer equipment, the purchase of which has been
disclosed to PRG and PRG Sub);
(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;
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(m) Experienced damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting any of its
properties, assets or business, or experienced any other material adverse
change in its financial condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend
of any kind on the capital stock of the Company or the Practice;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of the Company's or the Practice's capital stock; or
(p) Suffered any material adverse change in the business
of the Company or the Practice or to the assets of the Company or the Practice.
2.16 ACCOUNTS RECEIVABLE/PAYABLE. Exhibit 2.16 contains a true and
accurate (i) statement of Accounts Receivable, (ii) statement of Accounts
Payable and (iii) statement of the working capital ("Working Capital") of the
Company as of the Balance Sheet Date. The information provided to PRG and PRG
Sub by the Shareholder pertaining to the receivables and payables of Old PA,
the Company and the Practice was true and correct and continues to be true and
correct; provided, however, that the Shareholder makes no representation as to
the collectibility of the Accounts Receivable. Since the Balance Sheet Date,
the Company and PA have 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. The
Company and the Practice are 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 and the Practice have filed all tax
returns required to be filed by it, and made all payments of taxes, including
any interest, penalty or addition thereto, reflected thereon with respect to
income taxes, real and personal property taxes, sales taxes, use taxes,
employment taxes, excise taxes and other taxes due and payable on or before the
date of this Agreement. To the best knowledge of the Company, the Practice and
Shareholder, all such tax returns are complete and accurate in all material
respects and properly reflect the relevant taxes for the periods covered
thereby. To the best knowledge of the Company, the Practice and the
Shareholder, the Company and Practice have no tax liability, except for taxes
attributable to the portion of the tax year preceeding the Closing Date not yet
due and payable. The Company, the Practice and the Shareholder have not
received any notice that any tax deficiency or delinquency has been asserted
against the Company or the Practice. There are no audits relating to taxes of
the Company or the Practice pending or in process, or to the best knowledge of
the Company, the Practice and Shareholder, threatened. The Company and the
Practice are 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 or the Practice. The Company and the Practice have
withheld and paid all taxes required by law to have been withheld and paid by
it. Neither the Company, the Practice nor any predecessor of the Company or
the Practice 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. Old PA has delivered to PRG Sub correct and
complete copies of Old PA's, to the extent available, three most recently filed
annual federal income tax returns and state franchise tax returns, together
with all examination reports and statements of deficiencies assessed against or
agreed to by Old PA during the three calendar year period preceding the date of
this Agreement. The Company and the Practice have 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 COMMISSIONS AND FEES. There are no claims for brokerage
commissions or finder's or similar fees in connection with the transactions
contemplated by this Agreement which may be now or hereafter asserted against
PRG, PRG Sub, the Company, the Practice or the Shareholder resulting from any
action taken by the Company, the Practice or the Shareholder or their
respective agents or employees, or any of them.
2.19 LIABILITIES; DEBT. The Company and the Practice have no
indebtedness or obligations of any nature, whether accrued, absolute,
contingent or otherwise, whether for borrowed money, guaranties or capital
lease obligations
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or otherwise, and whether due or to become due, other than pursuant to the
Contracts as set forth on Exhibits 2.7, 2.14 and 2.12 and other than trade
payables incurred in the ordinary course of business.
2.20 INSURANCE POLICIES. The Company, the Practice, Shareholder
and each physician employee of the Company or the Practice 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 2.20 attached
hereto and true and correct copies have been delivered to PRG Sub. Other than
health insurance claims in the ordinary course of business, neither the
Company, the Practice 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 the Company, the
Practice nor Shareholder nor any physician employee of the Company or the
Practice has any outstanding claims, settlements or premiums owed against any
insurance policy.
2.21 EMPLOYEE BENEFIT PLANS. Except as set forth on Exhibit 2.21
attached hereto, the Company and the Practice have 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 2.21 (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 or the Practice 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 and the Practice have 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.
2.22 ADVERSE AGREEMENTS. The Company and the Practice are 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 or the Practice.
2.23 COMPLIANCE WITH LAWS IN GENERAL. The Company, the Practice,
the Shareholder and Company's and the Practice'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, the Practice, the
Shareholder or any physician or licensed employee of the Company of any
federal, state or local law or regulation. Neither the Company, the Practice
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 of the Company or the Practice and no notice of any pending
inspection or violation of any such law, regulation or ordinance has been
received by the Company, the Practice or Shareholder. Medical Waste Laws shall
have the meaning set forth in the Service Agreement.
2.24 MEDICARE AND MEDICAID PROGRAMS. The Company, the Practice,
the Shareholder and each physician and licensed employee of the Company and the
Practice 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, the
Practice, the Shareholder and each physician and licensed employee of the
Company and the Practice 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
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by the Company, the Practice, the Shareholder and each licensed employee of the
Company and the Practice. Neither the Company, the Practice nor Shareholder,
nor any physician or licensed employee of the Company or the Practice 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.
2.25 FRAUD AND ABUSE. The Company, the Practice, the Shareholder
and all persons and entities providing professional services for the Company's
or the Practice's business have not, to the knowledge of the Company, the
Practice 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 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
material 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.
2.26 NO UNTRUE REPRESENTATIONS. No representation or warranty by
the Company, the Practice or Shareholder in this Agreement, and no Exhibit or
certificate issued or executed by, or information furnished by, officers or
directors of the Company, the Practice 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.
2.27 ACCREDITED INVESTOR STATUS. Shareholder is an "accredited
investor" as defined in Rule 501(a) under the Securities Act of 1933, as
amended (the "Securities Act").
2.28 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind has been declared or paid by the Company or the Practice
on any of its capital stock or partnership interests since the formation of the
Company or Practice. No repurchase of any of the Company's or the Practice's
capital stock or partnership interests has been approved, effected or is
pending, or is contemplated by the Board of Directors of the Company or the
Practice.
2.29 SUPPLIERS. Set forth in Exhibit 2.29 is a complete and
accurate list of the ten (10) largest suppliers of the Company and the Practice
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.
2.30 BANKING RELATIONS. Set forth in Exhibit 2.30 is a complete
and accurate list of all arrangements that the Company or the Practice 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.
2.31 OWNERSHIP INTERESTS OF INTERESTED PERSONS; COMPETITORS. No
officer, employee, director or stockholder of the Company or the Practice, 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 the Practice or any
organization that has a material contract or arrangement with the Company or
the Practice. Other than as set forth on Schedule 2.31,
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neither the Company, the Practice nor any of their 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, the Company or the Practice or to provide
services, lease space, lease equipment or engage in any other venture or
activity with the Company or the Practice.
2.32 PAYORS. Exhibit 2.32 sets forth a true, complete and correct
list of the names and addresses of each payor of the Company's and the
Practice's services which accounted for more than 10% of revenues of the
Company or the Practice in any of the preceding three fiscal years. The
Company or the Practice has good relations with all such payors and other
material payors of the Company and the Practice and none of such payors has
notified the Company or the Practice that it intends to discontinue its
relationship with the Company or the Practice 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, the
Practice 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 Texas, respectively. True and correct copies of the
Articles of Incorporation and Bylaws of PRG and PRG Sub have been delivered to
the Company. PRG Sub has not commenced business since its organization. Other
than its Articles of Incorporation, Bylaws and as of the Closing Date, the
Service Agreement, PRG Sub is not a party to or subject to any agreement,
indenture or other instrument. As of the date hereof, PRG Sub does not own any
assets (tangible or intangible) and PRG Sub does not have any liabilities,
accrued, contingent or otherwise (known or unknown and asserted or unasserted).
3.2 COMPLIANCE WITH LAWS; LITIGATION. PRG Sub and PRG have
complied with all applicable laws, regulations and licensing requirements and
has filed with the proper authorities all necessary statements and reports,
except to the extent that such noncompliance or failure to file would not have
a material adverse effect on PRG or PRG Sub taken as a whole. Neither PRG Sub
nor PRG is subject to any pending or 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, other than as
would not have a material adverse effect on PRG or PRG Sub.
3.3 POWER AND AUTHORITY. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all agreements and
other documents executed and delivered by it pursuant to this Agreement, and
has taken all actions required by law, its Certificate or Articles of
Incorporation, as applicable, its Bylaws or otherwise, to authorize the
execution, delivery and performance of this Agreement and such related
documents. The 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 deliveredy by PRG and PRG Sub, as appropriate, and, assuming
due execution and delivery of each such agreement by the other parties thereto,
constitute or will constitute the legal, valid and binding obligations of PRG
and PRG Sub, enforceable against PRG and PRG Sub in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or the availability of
equitable remedies. The execution and delivery of this Agreement and the
agreements related hereto executed and delivered pursuant to this Agreement do
not and, subject to the receipt of consents to assignments of leases and other
contracts where required and the receipt of regulatory approvals where
required, the consummation of the transactions contemplated hereby will not,
violate any provision of the Certificate or Articles of Incorporation or Bylaws
of either PRG Sub or PRG or any provisions of, or result in the acceleration
of, any obligation under any mortgage, lien, lease, agreement instrument,
order, arbitration award, judgment or decree to which PRG Sub or PRG is a party
or by which either of them is bound, or violate any restrictions of any kind to
which PRG Sub or PRG is subject.
3.4 COMMISSIONS AND FEES. PRG Sub and PRG have not incurred any
obligation for any finder's, broker's or agent's fees in connection with the
transactions contemplated hereby.
3.5 CAPITAL STOCK. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued, fully
paid and nonassessable and are or will be as of the Closing Date owned directly
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by PRG, free and clear of all liens, claims and encumbrances. The issuance and
delivery by PRG of shares of the common stock of PRG in connection with the
Merger will be as of the Closing Date duly and validly authorized by all
necessary corporate action on the part of PRG. The shares of PRG common stock
to be issued in connection with the Merger, when issued in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable,
and the Unrestricted Shares (as defined on Annex I hereto) to be issued in
connection with the Merger will be freely tradeable and without restriction.
3.6 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, the Practice 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 THE COMPANY, THE PRACTICE AND THE SHAREHOLDER.
The Company, the Practice and the Shareholder, jointly and severally,
agree that between the date hereof and the Closing Date:
4.1 CONSUMMATION OF AGREEMENT. The Company, the Practice and the
Shareholder shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and conditions
and qualify the transaction under Code Section 368(a).
4.2 BUSINESS OPERATIONS. The Company, the Practice and the
Shareholder shall operate the Company's and the Practice's business in the
ordinary course. The Company and the Practice 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, the
Practice and the Shareholder shall use their best efforts to preserve the
business and assets of the Company and the Practice intact and shall not take
any action that would have an adverse effect on the business or assets of the
Company or the Practice, including without limitation, any action the primary
purpose or effect of which is to generate or preserve cash; provided that the
Company and the Practice may continue to operate in the ordinary course of
business. The Company, the Practice 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 the Company or
the Practice. The Company and the Practice shall collect its receivables and
pay its trade payables in the ordinary course of business. The Company and the
Practice 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.
4.3 ACCESS AND NOTICE. The Company, the Practice 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
the Company and the Practice 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 or the
Practice as PRG, PRG Sub or their representatives may request. The Company,
the Practice 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 the Company or the Practice is a party, and
(b) any adverse change in the Company's or the Practice's business, financial
condition or the conditions of its assets.
4.4 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. The
Company, the Practice 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. The Company, the Practice and the Shareholder 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 Practice contemplated by the Service Agreement and
to conduct the intended business of the Practice.
4.5 ACQUISITION PROPOSALS The Company, the Practice and the
Shareholder shall not, and shall use their best efforts to cause the Company's
or the Practice's employees, agents and representatives not to, initiate,
solicit or
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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 the Company or
the Practice 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, the Practice and the
Shareholder will immediately cease any such activities, discussions or
negotiations heretofore conducted with respect to any of the foregoing. The
Company, the Practice and the Shareholder shall immediately notify PRG Sub if
any such inquiries or proposals are received.
4.6 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 salary, wage, benefit, bonus, insurance, 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.
4.7 EMPLOYEE MATTERS. The Company and the Practice shall not,
without the prior written approval of PRG or PRG Sub, except as required by
law, increase the cash compensation of Shareholder or other employee or an
independent contractor of the Company or the Practice, 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, the
Practice, its business, assets or prospects.
4.8 DISTRIBUTIONS AND REPURCHASES. No distribution, payment or
dividend of any kind will be declared or paid by the Company or the Practice,
nor will any repurchase of any of the Company's or the Practice's capital
stock be approved or effected.
4.9 REQUIREMENTS TO EFFECT MERGER. The Company, the Practice and
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.
4.10 VOTING OF SHARES; IRREVOCABLE PROXY. Shareholder agrees that
until the earlier of the Closing Date or the termination of this Agreement,
Shareholder shall vote all shares of Company and the Practice common stock
owned by the Shareholder at any meeting of the stockholders of the Company or
the Practice 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.
4.11 ACCOUNTING AND TAX MATTERS. The Company and the Practice will
not change in any material respect the accounting methods or practices followed
by the Company and the Practice (including any material change in any
assumption underlying, or any method of calculating, any bad debt, contingency
or other reserve), except as may be consistent with past practices of the
Company and Practice. The Company and the Practice 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 and the Practice will duly, accurately and timely
file, on or before the Closing Date, all returns, information statements and
other documents relating to taxes of the Company and the Practice required to
be filed by it on or before the Closing Date, and pay on or before the Closing
Date, all taxes required to be paid by it, on or before the Closing Date.
4.12 LEASES. PRG shall have entered into an amendment to the
leases (the "Building Lease") with Shareholder or affiliates or related parties
of Shareholder with respect to any locations of the Company and Practice on
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terms and conditions satisfactory to PRG, the terms and conditions of which
shall include, without limitation, (i) a five year initial term, (ii) a lease
rate equal to the lesser of the lease rate as set forth in the initial lease
for such property and 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, and (iv) such other provisions to be acceptable to PRG.
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
best efforts to cause the consummation of the transactions contemplated hereby
in accordance with their terms and provisions. PRG and PRG Sub will use their
best efforts to take, or cause to be taken, all actions necessary to effect the
Merger under applicable law and to qualify the transaction under Code Section
368(a), including without limitation the filing with the appropriate
government officials all necessary documents in form approved by counsel for
the parties to this Agreement.
5.2 APPROVALS OF THIRD PARTIES AND PERMITS AND CONSENTS. PRG and
PRG Sub shall use their best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
hereby. PRG Sub and PRG shall promptly notify the Company and Shareholder of
receipt by PRG or PRG Sub of any stop order, injunction, or similar proceeding
that would prohibit the issuance of the Merger Consideration.
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. COVENANTS OF THE SHAREHOLDER.
The Shareholder agrees that between the date hereof and the Closing
Date:
6.1 ACCESS. The Shareholder 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 Company and the Practice, 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 Company
and the Practice as PRG, PRG Sub and their representatives may request.
6.2 LICENSES AND PERMITS. The Shareholder shall use his best
efforts to obtain all licenses, permits, approvals or other authorizations
required under any law, statute, rule, regulation or ordinance, or otherwise
necessary or desirable to consummate the transactions or provide the services
contemplated by the Service Agreement and the Physician Employment Agreements
and to conduct the intended business of the Company and the Clinic.
6.3 GOVERNANCE. Within three (3) months following the Closing
Date, the Practice, if any, shall establish reasonable governance provisions
providing for (i) a maximum length of employment for non-owner physicians prior
to their admission to ownership in the Practice, (ii) terms of ownership
admission to the Practice, (iii) a compensation structure for ongoing owner
physicians, (iv) retirement of physicians from the ownership of the Practice
and (v) buy-out provisions for retiring or inactive owner physicians. The
Practice shall provide thirty (30) days notice to PRG prior to any change in
the governance provisions of the Practice.
6.4 EXHIBITS. On or before July 3, 1996, Shareholder, the
Company and the Practice shall provide to PRG and PRG Sub the exhibits noted
with an * on the list of exhibits attached hereto. Such exhibits shall be in
form and substance satisfactory to PRG and PRG Sub in their discretion.
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SECTION 7. 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:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company, the Practice 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.
7.2 COVENANTS AND CONDITIONS. The Company, the Practice and the
Shareholder shall have performed and complied with all covenants and conditions
required by this Agreement to be performed and complied with by the Company,
the Practice and the Shareholder 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 NO MATERIAL ADVERSE CHANGE. No material adverse change in the
condition (financial or otherwise), operations, assets, liabilities, business
or prospects of the Company or the Practice shall have occurred since the
Balance Sheet Date.
7.5 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 and the Practice, the results of which
shall be satisfactory to PRG Sub and PRG in their sole discretion.
7.6 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.
7.7 SERVICE AGREEMENT. On or prior to the Closing Date, the
Company and LLP shall have amended the service agreement existing between such
entities to be in form and substance set forth on Exhibit 8.7 attached hereto
(the "Service Agreement").
7.8 EMPLOYMENT ARRANGEMENTS. PRG and PRG Sub shall have approved
all employment agreements between the Company or the Practice and any
employees, including, without limitation, any agreements with Shareholder or
other physician employees. All employees of the Company shall have entered
into a separation and release agreement ("Separation and Release Agreement") in
form and substance satisfactory to PRG and PRG Sub.
7.9 CONSENTS AND APPROVALS. The Company, the Practice and the
Shareholder shall have obtained all necessary government and other third-party
approvals and consents.
7.10 CLOSING DELIVERIES. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its counsel,
referred to in Section 9.1.
7.11 DEBT AND RECEIVABLES. Other than management service and lease
arrangements between the Company and LLP, there shall be no indebtedness,
receivables or payables between the Company or the Practice and the Shareholder
or affiliates and the Company and the Practice shall not have any liabilities,
including indebtedness, guaranties and capital leases, that are not approved by
PRG.
7.12 DISSENTING SHARES. No holder of the Company's common stock
shall have demanded appraisal for the shares of Company common stock held by
such holder in accordance with the Texas Business Corporation Act.
7.13 STOCK CONSIDERATION. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
7.14 LEASE. PRG shall have entered into the Building Lease.
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7.15 NO CHANGE IN WORKING CAPITAL. There shall have been no change
in the Working Capital.
SECTION 8. THE COMPANY'S AND THE SHAREHOLDER'S CONDITIONS PRECEDENT.
The obligations of the Company and the Shareholder hereunder are
subject to fulfillment at or prior to the Closing Date of each of the following
conditions:
8.1 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.
8.2 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.
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 CLOSING DELIVERIES. The Company shall have received all
documents, duly executed in form satisfactory to the Company and its counsel,
referred to in Section 9.2.
8.5 STOCK CONSIDERATION. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of issuance.
SECTION 9. CLOSING DELIVERIES.
9.1 DELIVERIES OF THE COMPANY AND THE SHAREHOLDER. At or prior to
the Closing, the Company 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) the 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) if applicable, a copy of the resolutions of the Board
of Directors of the Practice authorizing the execution, delivery and
performance of the Service Agreement, each certified by the Secretary of the
Practice as being true and correct copies of the original thereof;
(e) certificates of the President of the Company and the
Practice and of Shareholder, dated as of the Closing Date, (i) as to the truth
and correctness of the representations and warranties of the Company, the
Practice and Shareholder contained herein; (ii) as to the performance of and
compliance by the Company, the Practice and Shareholder with all covenants
contained herein; and (iii) certifying that all conditions precedent of the
Company, the Practice and Shareholder to the Closing have been satisfied;
(f) a certificate of the Secretary of the Company
certifying as to the incumbency of the directors and officers of the Company
and as to the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of the Company;
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(g) if applicable, a certificate of the Secretary of the
Practice certifying as to the incumbency of the directors and officers or
partners of the Practice and as to the signatures of such directors and
officers or partners who have executed documents delivered at the Closing on
behalf of the Practice;
(h) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Texas establishing that the Company is
in existence and is in good standing to transact business in its state of
incorporation;
(i) if applicable, a certificate, dated within 10 days of
the Closing Date, of the Secretary of the State of Texas establishing that
Practice is in existence and is in good standing to transact business in its
state of incorporation;
(j) an opinion of counsel to the Company, the Practice
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 the Company and the Practice, 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) non-foreign affidavits executed by the Company and
Shareholder;
(l) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(m) the resignations of the directors and officers of the
Company as requested by PRG Sub;
(n) a Shareholder Release in form attached hereto as
Exhibit 9.1(n) executed by Shareholder;
(o) a Stockholder's Agreement (herein so called) in form
attached hereto as Exhibit 9.1(o) executed by Shareholder and Shareholder's
spouse;
(p) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and intent of
this Agreement.
9.2 DELIVERIES OF PRG SUB AND PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to the Company the following, all of which shall
be in a form satisfactory to counsel to the Company and the Shareholder 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 and Texas establishing that PRG
Sub and PRG are in existence and are in good standing to transact business in
the State of Delaware and the State of Texas, as applicable;
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(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; and
(i) such other instruments and documents as reasonably
requested by the Company or Shareholder to carry out and effect the purpose and
intent of this Agreement.
SECTION 10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION.
10.1 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, the Practice 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 Sections 2.23, 2.24 or 2.25
with respect to environmental and Medical Waste aws and health care laws and
matters 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 10.2 or 10.3 hereof, unless such party has timely
given the notice required in Sections 10.2, 10.3 or 10.4 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 10.2, 10.3 or 10.4, as applicable, are not timely provided.
10.2 INDEMNIFICATION BY PRG SUB AND PRG. PRG SUB AND PRG, JOINTLY
AND SEVERALLY (FOR PURPOSES OF THIS SECTION 10.2 AND, TO THE EXTENT APPLICABLE,
SECTION 10.4, "INDEMNITOR"), SHALL INDEMNIFY AND HOLD THE SHAREHOLDER, AND HIS
RESPECTIVE AGENTS AND EMPLOYEES (EACH OF THE FOREGOING, INCLUDING THE COMPANY
AND THE SHAREHOLDER, FOR PURPOSES OF THIS SECTION 10.2 AND, TO THE EXTENT
APPLICABLE, SECTION 10.4, 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):
(i) 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,
(ii) FROM AND AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF
OR RESULTING FROM INDEMNITOR'S MANAGEMENT AND THE OWNERSHIP OF
THE COMPANY.
(iii) ANY LIABILITY OF PRG OR PRG SUB FOR COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION) ATTORNEYS' FEES) INCURRED IN
CONNECTION WITH THIS NEGOTIATION, PREPARATION OR CLOSING OF
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER
DOCUMENTS TO BE EXECUTED IN CONNECTION HEREWITH.
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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.
10.3 INDEMNIFICATION BY THE COMPANY, THE PRACTICE AND THE
SHAREHOLDER. THE COMPANY, THE PRACTICE AND THE SHAREHOLDER (FOR PURPOSES OF
THIS SECTION 10.3 AND, TO THE EXTENT APPLICABLE, SECTION 10.4, "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 10.3 AND, TO
THE EXTENT APPLICABLE, SECTION 10.4, AN "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):
(i) 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,
(ii) 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
(iii) WITH RESPECT TO (I) ANY VIOLATION BY THE COMPANY 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,
(iv) WITH RESPECT TO TAXES OF THE COMPANY OR ANY OTHER PERSON
(INCLUDING ANY SHAREHOLDER), OF ANY NATURE WHATSOEVER ARISING
FROM OR AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT,
(v) WITH RESPECT TO ANY LIABILITY OF THE COMPANY OR THE
SHAREHOLDER FOR COSTS AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES) INCURRED IN CONNECTION WITH THE
NEGOTIATION, PREPARATION OR CLOSING OF TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE OTHER DOCUMENTS TO BE
EXECUTED IN CONNECTION HEREWITH.
(vi) WITH RESPECT TO ANY ACCRUED UNFUNDED RETIREMENT OR PENSION
PLAN LIABILITIES.
(vii) WITH RESPECT TO ANY TAXES, TAX LIABILITY OR UNPAID TAXES OF
THE COMPANY FOR THE PERIOD PRIOR TO THE CLOSING DATE (WHETHER
OR NOT SUCH TAXES WERE DUE AND PAYABLE BY THE COMPANY PRIOR TO
THE CLOSING DATE OR WERE KNOWN OR UNKNOWN).
IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR EXPENSES,
INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL SUCH EXPENSES AS
THEY ARE
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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.
10.4 INDEMNIFICATION PROCEDURE. (a) 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. Notwithstanding the foregoing, failure of Indemnified
Person to give such notice shall not affect the right of Indemnified Party to
be indemnified pursuant to the terms hereof. If any such action or other
proceeding shall be brought against any Indemnified Person, Indemnitor shall,
upon written notice given within a reasonable time following receipt by
Indemnitor of such notice from Indemnified Person, be entitled to assume the
defense of such action or proceeding with counsel chosen by Indemnitor and
reasonably satisfactory to Indemnified Person; provided, however, that any
Indemnified Person may at its own expense retain separate counsel to
participate in such defense. Notwithstanding the foregoing, Indemnified Person
shall have the right to employ separate counsel at Indemnitor's expense and to
control its own defense of such action or proceeding if, in the reasonable
opinion of counsel to such Indemnified Person, (a) there are or may be legal
defenses available to such Indemnified Person or to other Indemnified Persons
that are different from or additional to those available to Indemnitor and
which could not be adequately advanced by counsel chosen by Indemnitor, or (b)
a conflict or potential conflict exists between Indemnitor and such Indemnified
Person that would make such separate representation advisable; provided,
however, that in no event shall Indemnitor be required to pay fees and expenses
hereunder for more than one firm of attorneys of Indemnified Person in any
jurisdiction in any one action or proceeding or group of related actions or
proceedings. Indemnitor shall not, without the prior written consent of any
Indemnified Person, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding to which such
Indemnified Person is a party unless such settlement, compromise or consent
includes an unconditional release of such Indemnified Person from all liability
arising or potentially arising from or by reason of such claim, action or
proceeding.
(b) Notwithstanding the provisions of Section 10.3, the
Shareholder, the Company and the Practice shall not be required to indemnify
PRG unless, and to the extent that, the aggregate amount of damages, losses,
liabilities, costs and other sums ("Damages") incurred by PRG and PRG Sub
unless, and to the extent that, the aggregate amount of Damages incurred by PRG
and PRG Sub shall exceed an amount equal to $49,000. Notwithstanding the
provisions of Section 10.2, PRG and PRG Sub shall not be required to indemnify
the Company, the Practice and the Shareholder unless, and to the extent that
the aggregate amount of Damages incurred by the Shareholder shall exceed an
amount equal to $49,000.
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10.5 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. Shareholder shall, within
fifteen (15) days after payment thereof and receipt of notice of such payment,
reimburse, indemnify and hold harmless PRG and the Surviving Corporation for
all taxes, and all related interest, penalties and additions to tax ("Taxes"),
with respect to taxable periods of the Company ending on or before the Closing
Date.
(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"). Shareholder shall, 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, Shareholder, PRG, Surviving Corporation
and PRG Sub shall reasonably cooperate with each other in connection with the
filing of Tax Returns pursuant to this Section 10.5(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.
10.6 RIGHT OF SETOFF. In the event of any breach of warranty,
representation, covenant or agreement by the Company or the Shareholder giving
rise to indemnification under Section 10.3 or Section 10.5 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 11. 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, the Practice or Shareholder contained in this
Agreement or in any certificate or other document executed and delivered by the
Company, the Practice or Shareholder pursuant to this Agreement is or becomes
untrue or breached in any material respect or if the Company, the Practice 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) at any time by the Company, the Practice 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 in any
material respect or PRG or PRG Sub fails to comply in any material respect with
any covenant or agreement contained herein and such misrepresentation,
noncompliance or bread is not cured, waived or eliminated within twenty (20)
days of written notice thereof;
(d) by PRG, PRG Sub, the Company, the Practice or the
Shareholder if the merger contemplated hereby shall not have been consummated
by July 4, 1996; or
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<PAGE> 26
(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 or the Practice, that
such termination is desirable and in the best interests of PRG.
SECTION 12. NONCOMPETITION.
12.1 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 Shareholder and
other good and valuable consideration, Shareholder hereby agrees that, subject
to adjustment pursuant to Section 12.5, for a period of five (5) years
following the Closing Date, 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, officer, director or
in any other capacity)(other than through the provision of services by Practice
in accordance with the Service Agreement):
(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
Practice or engage or participate in or finance any business which engages in
direct competition with the heathcare business being conducted by PRG, PRG Sub,
Surviving Corporation or any practice managed by PRG or any subsidiary of PRG
anywhere within 50 miles of any location of PRG, PRG Sub, Surviving Corporation
or any practice managed by PRG or any subsidiary of PRG; provided, however,
that this provision shall not prohibit the 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, which consent shall not be unreasonable
withheld.
12.2 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 Shareholder agrees that, in the event
of a breach by them of the foregoing covenant, the covenant may be enforced by
PRG, Surviving Corporation or PRG Sub by injunctions and restraining orders.
The foregoing right is in addition to the right to receive liquidated damages
set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic
losses as a result of a breach by Shareholder of the foregoing covenant,
Shareholder agrees that in the event of a breach of the foregoing covenant the
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:
<TABLE>
<CAPTION>
Year Following
Closing in Which
Breach Occurs Damages
---------------- -------
<S> <C>
1st $3,675,000
2nd $2,940,000
3rd $2,205,000
</TABLE>
22
<PAGE> 27
<TABLE>
<S> <C>
4th $1,470,000
5th $ 735,000
</TABLE>
PRG and PRG Sub agree that, prior to the imposition of the liquidated
damages set forth above, PRG or PRG Sub shall give the Shareholder notice of
the breach of Section 12.1 above and for a period of twenty (20) days from such
notice, the opportunity to cure such breach; provided, however, that PRG and
PRG Sub shall not be required to give such notice and opportunity to cure if
PRG or PRG Sub believes, in its reasonable discretion, that such breach was
willful.
12.3 REASONABLE RESTRAINT. It is agreed by the parties that the
foregoing covenants in this Section 12 impose a reasonable restraint on 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
Surviving Corporation.
12.4 SEVERABILITY; REFORMATION. The covenants in this Section 12
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.
12.5 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 Shareholder is in violation of any provision of this Section
12. The covenants contained in this Section 12 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 13. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Shareholder
recognizes and acknowledges that he 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 Shareholder agrees
that he 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 Shareholder, (ii) disclosure is required by
law or the order of any governmental authority under color of law, provided,
that prior to disclosing any information pursuant to this clause (ii), the
Shareholder shall, if possible, give prior written notice thereof to the other
parties hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) the Shareholder reasonably believes that such
disclosure is required in connection with the defense of a lawsuit against the
disclosing party, or (iv) the Shareholder is the sole and exclusive owner of
such confidential information as a result of the transactions contemplated
hereunder or otherwise. In the event of a breach or threatened breach by the
Shareholder of the provisions of this Section 13, PRG, Surviving Corporation or
PRG Sub shall be entitled to an injunction restraining the Shareholder 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 13 shall survive the termination of this Agreement.
SECTION 14. INVESTMENT REPRESENTATIONS. The Shareholder is able to bear
the economic risk of an investment in PRG common stock acquired pursuant to
this Agreement and can afford to sustain a total loss of such investment and
has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the proposed investment and
therefore has the capacity to protect his own interests in connection with the
acquisition of the PRG common stock. The Shareholder or his respective
purchaser
23
<PAGE> 28
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 Shareholder or his 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 15. MISCELLANEOUS.
15.1 NOTICES. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery,
or by facsimile AND overnight courier, to the parties hereto at the following
addresses, or at such other address as either party may advise the other in
writing from time to time:
If to PRG: If to PRG Sub:
Physicians Resource Group, Inc. PRG TX Acquisition Corp. I
Three Lincoln Centre Three Lincoln Centre
5430 LBJ Freeway, Suite 1540 5430 LBJ Freeway, Suite 1540
Dallas, Texas 75240 Dallas, Texas 75240
Attn: Richard J. D' Amico Attn: Richard J. D' Amico
Facsimile: (214) 982-8299 Facsimile: (214) 982-8299
with a copy of each notice directed to PRG Sub or PRG to:
James S. Ryan, III, Esquire
Jackson & Walker, L.L.P.
901 Main Street
Dallas, Texas 75202
Facsimile: (214) 953-5822
If to the Company, the Practice or the Shareholder:
Charles H. Campbell, M.D.
5540 Saratoga, Suite 200
Corpus Christi, Texas 78413
Facsimile: (512) 993-9184
with a copy to:
Merton B. Goldman
Mounce & Galatzan, P.C.
7th Floor, Texas Commerce Bank Bldg.
El Paso, TX 79901
Facsimile: (915) 541-1598
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.
15.2 FURTHER ASSURANCES; ACCOUNTS RECEIVABLE. Each party hereby
agrees to perform any further acts and to execute and deliver any documents
which may be reasonably necessary to carry out the provisions of Agreement.
Shareholder shall assist PRG and Surviving Corporation in collecting the
accounts receivable of the Company acquired by PRG and PRG Sub in connection
with this transaction and in the event that Shareholder shall receive the
proceeds of any such accounts receivable, shall immediately forward such
amounts to Surviving Corporation.
15.3 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
24
<PAGE> 29
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 Shareholder 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 Shareholder
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 Shareholder as a result of the
transactions contemplated hereby.
15.4 PUBLIC DISCLOSURES. Prior to the Closing, except as otherwise
required by law, no party to this Agreement shall make any public or other
disclosure (other than to such parties' lawyers, accountants and advisors) 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.
15.5 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.
15.6 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.
15.7 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.
15.8 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.
15.9 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
15.10 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.
15.11 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.
15.12 COSTS OF ENFORCEMENT. In the event that PRG Sub, Surviving
Corporation or PRG, on the one hand, or the Company 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 Complaint. "Reasonable attorneys' fees" are those
reasonable attorneys' fees actually incurred in obtaining a judgment in favor
of the prevailing party.
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<PAGE> 30
15.13 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.
15.14 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.
15.15 SEVERABILITY. If any provision of this Agreement shall be
found to be illegal, invalid or unenforceable under present or future laws,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such provision never comprised a part hereof; and the
remaining provisions hereof shall remain in full force and effect. In lieu of
such provision, there shall be added automatically as part of this Agreement, a
provision as similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
[End of Page _____]
26
<PAGE> 31
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PRG TX ACQUISITION CORP. I SOUTH TEXAS RETINA AFFILIATES, INC.
By: /s/ RICHARD J. D'AMICO By: /s/ CHARLES H. CAMPBELL
------------------------------ -------------------------------------
Its: Its: PRESIDENT
------------------------------ ------------------------------------
SOUTH TEXAS RETINA CONSULTANTS,
L.L.P.
By: /s/ CHARLES H. CAMPBELL
-------------------------------------
Its: PARTNER
------------------------------------
PHYSICIANS RESOURCE GROUP, INC.
By: /s/ RICHARD J. D'AMICO /s/ CHARLES H. CAMPBELL
------------------------------ ----------------------------------------
Its: Charles H. Campbell, M.D.
------------------------------
CHARLES H. CAMPBELL, M.D., P.A.
By: /s/ CHARLES H. CAMPBELL
-------------------------------------
Its: PRESIDENT
------------------------------------
27
<PAGE> 32
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
*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, Trademarks; Names
*2.12 Directors and Officers; Payroll Information
*2.14 Contracts (other than Leases)
*2.15 Subsequent Events
*2.16 Accounts Receivable
*2.20 Insurance Policies
*2.21 Employee Benefit Plans
*2.29 Suppliers
*2.30 Banking Relations
*2.31 Related Interests
*2.32 Payors
8.7 Form of Service Agreement
9.1(n) Shareholder Release
9.1(o) Stockholder's Agreement
ANNEX I Merger Consideration
</TABLE>
28
