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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest Event reported) February 1, 2000
Physicians Resource Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-13778 76-0456864
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
14800 Landmark Blvd., Suite 500, Dallas, TX 75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 892-7200
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Item 2. Acquisition or Disposition of Assets
Since January 1, 1999, the focus of Physicians Resource Group, Inc. (the
"Company") has been on (I) the sale of medical practice assets and certain
interests in surgery centers to the Company's affiliated practices ("Physician
Buyouts") and (ii) the sale by the Company of certain interests in surgery
centers to an unrelated third party. The Company has been successful in
completing Physician Buyouts of over 45 medical practices and certain interests
in over 20 ambulatory surgery centers related to those practices. In connection
with these Physician Buyouts, all litigation and other disputes with the
affiliated medical practices and surgery centers were resolved. Additionally,
approximately $17 million in the principal amount of notes payable by the
Company to the physicians or affiliated medical practices were canceled and the
management services agreements between the Company and the affiliated medical
practices were terminated. These Physician Buyouts and other sales generated
approximately $60 million in cash, allowing the Company to retire approximately
$9.5 million in bank indebtedness, as well as a $3.75 million, short-term loan
the Company received from Resurgence Asset Management, L.L.C. ("Resurgence").
Item 3. Bankruptcy or Receivership
On February 1, 2000, the Company filed for reorganization under Chapter 11
in the United States Bankruptcy Court for the Northern District of Texas (the
"Bankruptcy Court"). The case has been assigned to United States Bankruptcy
Judge Robert C. McGuire. The consolidated caption is in re Physicians Resource
Group, Inc., et al., Case No. 00-30748-RCM-11.
The Company's bankruptcy filings indicate that at the filing date the
Company had approximately $134,769,000 million in assets (excluding the value of
claims the Company has against affiliated practices that have not consummated
Physician Buyouts) and liabilities in excess of $135,762,000. While in
bankruptcy, the Company will file monthly operating statements with the
Bankruptcy Court.
Item 5. Other Events
On January 31, 2000, the Company entered into a definitive Acquisition
Agreement (the "Acquisition Agreement") with AmSurg Corp. ("AmSurg") related to
the sale of the Company's interest in 11 ambulatory surgery centers. In
connection with entry into the Acquisition Agreement, AmSurg and the Company
entered into a Management Agreement under which, effective January 1, 2000,
AmSurg began managing the operations of 15 surgery centers affiliated with PRG,
11 of which are to be purchased pursuant to the terms of the Acquisition
Agreement. The Acquisition Agreement provides that upon completion of
satisfactory due diligence, AmSurg may purchase from the Company interests held
by the Company in additional surgery centers. The Acquisition Agreement and
Management Agreement are subject to bankruptcy court approval. Although these
and a number of other conditions must be satisfied prior to the consummation of
the transaction, the Company anticipates that closing could occur by May 2000.
Proceeds from consummation of this transaction are estimated to be up to
$40,000,000 in cash.
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Since December 1998, PRG has been in discussions with Resurgence, which
owns or manages in excess of $92 million principal amount of the $125 million
principal amount of the Company's 6% Convertible Subordinated Debentures due
2001 (the "Debentures"). The Company elected not to pay interest on the
Debentures that was due June 1 and December 1, 1999 and, as of the date of this
report, the Debentures are in default. The Company expects to finalize and
implement a consensual restructuring agreement with Resurgence.
Lucius E. Burch, III and David M. Dulaney, M.D. have resigned as members of
the Board of Directors of the Company, but have agreed to serve as senior
consultants to the Board of Directors.
Item 7. Financial Statements and Exhibits
(c) Exhibits:
99.1 Acquisition Agreement dated January 31, 2000 between AmSurg
Corp., Physicians Resource Group, Inc. and certain other
signatories
99.2 Press Release dated February 1, 2000
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHYSICIANS RESOURCE GROUP, INC.
DATE: February 11, 2000 By: /s/ David Meyer
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Title: Chairman of the Board
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EXHIBIT 99.1
ACQUISITION AGREEMENT
by and among
PHYSICIANS RESOURCE GROUP, INC.
AND EACH OF THE ENTITIES LISTED ON
THE SIGNATURE PAGES HERETO
as Sellers
and
AMSURG CORP.
as Buyer
January 31, 2000
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TABLE OF CONTENTS
ARTICLE I.DEFINITIONS................................................... 1
ARTICLE II.PURCHASE AND SALE OF ACQUIRED ASSETS......................... 9
2.1 Sale of Acquired Assets...................................... 9
2.2 Assumed Liabilities.......................................... 9
2.3 Purchase Price and Terms of Payment.......................... 10
2.4 Determination of Adjustments to Purchase Price............... 10
2.5 Allocation of Purchase Price................................. 11
2.6 The Closing.................................................. 12
2.7 Deliveries at the Closing.................................... 12
ARTICLE III.REPRESENTATIONS AND WARRANTIES OF PRG....................... 12
3.1 Organization, Qualification, and Power and Authority......... 12
3.2 Authorization, Validity, and Effect of Agreement............. 12
3.3 Noncontravention............................................. 13
3.4 Brokers' Fees................................................ 13
3.5 Title to Assets.............................................. 13
3.6 Acquired Entities............................................ 13
3.7 Financial Statements......................................... 14
3.8 Subsequent Events............................................ 14
3.9 Long-Term Debt and Capital Leases............................ 15
3.10 Legal Compliance............................................. 15
3.11 Tax Matters.................................................. 15
3.12 Real Property................................................ 16
3.13 Intellectual Property........................................ 17
3.14 Tangible Assets.............................................. 17
3.15 Contracts.................................................... 18
3.16 Notes and Accounts Receivable................................ 19
3.17 Powers of Attorney........................................... 19
3.18 Insurance.................................................... 19
3.19 Litigation................................................... 19
3.20 Employees and Physicians..................................... 19
3.21 Employee Benefits............................................ 19
3.22 Guaranties................................................... 20
3.23 Environmental, Health, and Safety Matters.................... 20
3.24 Licenses and Permits......................................... 20
3.25 Inspections and Investigations............................... 22
3.26 Certain Payments............................................. 22
3.27 Disclosure................................................... 22
ARTICLE IV.REPRESENTATIONS AND WARRANTIES OF AMSURG..................... 22
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4.1 Organization................................................. 23
4.2 Authorization, Validity, and Effect of Agreement............. 23
4.3 Noncontravention............................................. 23
4.4 Brokers' Fees................................................ 23
ARTICLE V.PRE-CLOSING COVENANTS......................................... 23
5.1 Method of Sale of Acquired Assets and Confirmation
of Plan of Reorganization.................................... 23
5.2 Covenants of AmSurg and PRG.................................. 25
5.3 Covenants of PRG and the Acquired Entities................... 26
5.4 Covenants of AmSurg.......................................... 28
ARTICLE VI.CONDITIONS................................................... 29
6.1 Conditions to Obligation of AmSurg........................... 29
6.2 Conditions to Obligations of PRG and the Acquired Entities... 31
ARTICLE VII.POST-CLOSING COVENANTS...................................... 32
7.1 General...................................................... 32
7.2 Litigation Support........................................... 32
7.3 Transition................................................... 32
7.4 Confidentiality.............................................. 33
7.5 Development Fees............................................. 33
7.6 Acquired Entity Audits....................................... 33
7.7 Employee Benefits............................................ 33
7.8 Prorations................................................... 34
7.9 Payment of Liabilities of the Acquired Entities.............. 35
ARTICLE VIII............................................................ 36
8.1 Termination of Agreement..................................... 36
8.2 Termination Following a Competing Transaction................ 38
8.3 Effect of Termination........................................ 38
8.4 Extension; Waiver............................................ 39
ARTICLE IX.INDEMNIFICATION.............................................. 39
9.1 Indemnification Obligations of PRG........................... 39
9.2 Indemnification Obligations of AmSurg........................ 40
9.3 Procedure for Matters Involving Third Parties................ 41
9.4 Notice of Claim.............................................. 42
9.5 Limitation on PRG's Indemnification Liability................ 42
9.6 Determination of Adverse Consequences........................ 42
9.7 Right to Escrow Funds........................................ 42
9.8 Survival..................................................... 43
ARTICLE X.MISCELLANEOUS................................................. 43
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10.1 Notices...................................................... 43
10.2 Assignment................................................... 44
10.3 Severability................................................. 44
10.4 Governing Law................................................ 44
10.5 Entire Agreement; Amendment.................................. 44
10.6 Waiver....................................................... 45
10.7 Interpretation; Headings..................................... 45
10.8 Expenses and Fees............................................ 45
10.9 Public Announcements......................................... 45
10.10 Counterparts................................................. 45
10.11 Incorporation of Exhibits.................................... 46
10.12 Enforcement of Agreement..................................... 46
10.13 Jurisdiction................................................. 46
10.14 Additional Surgery Centers................................... 46
10.15 Options...................................................... 47
SCHEDULES AND EXHIBITS.................................................. 53
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ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (the "Agreement") is dated as of January 31,
2000, by and among PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation
("PRG"), AMSURG CORP., a Tennessee corporation ("AmSurg"), and each of the other
entities listed on the signature pages hereto (such entities are referred to
herein individually as an "Acquired Entity" and collectively as the "Acquired
Entities").
RECITALS
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A. PRG, directly or indirectly, owns ownership interests in the Acquired
Entities in the percentages set forth on Schedule 3.6.
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B. As indicated on Schedule 3.6, AmSurg desires to purchase from PRG or
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the Acquired Entities, as applicable, and PRG or the Acquired Entities, as
applicable, desires to sell to AmSurg, on the terms and conditions hereinafter
set forth in this Agreement, either (i) an undivided interest in the assets of
certain Acquired Entities (such Acquired Entities are hereafter referred to as
the "Asset Entities") equal to the percentage set forth on Schedule 2.4, or (ii)
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the percentage of the equity interest of certain Acquired Entities (such
Acquired Entities are hereafter referred to as the "Equity Entities") as set
forth on Schedule 2.4 (the "Transaction").
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NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants, conditions, and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
"Acquired Assets" shall mean the percentage ownership interest in the
Equity Entities set forth on Schedule 2.4 and an undivided interest in the
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assets of each Asset Entity equal to the percentage ownership interest in such
Asset Entity set forth on Schedule 2.4, including its (i) leaseholds and
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subleaseholds in real property, improvements, fixtures, and fittings thereon,
and easements, rights-of-way, and other appurtenants thereto (such as
appurtenant rights in and to public streets), (ii) tangible personal property
(such as machinery, equipment, inventories of supplies, and furniture), (iii)
Intellectual Property, goodwill associated therewith, licenses and sublicenses
granted and obtained with respect thereto, and rights thereunder, remedies
against infringements thereof, and rights to protection of interest therein
under the laws of all jurisdictions, (iv) leases, subleases, and rights
thereunder, (v) written agreements, contracts, instruments, and rights
thereunder, (vi) accounts, notes, and other receivables from persons (in each
case, including credit balances for items such as patient refunds) other than
PRG and its Subsidiaries or physicians affiliated with medical practices managed
by Subsidiaries of PRG, (vii) securities, (viii) claims, deposits, prepayments,
refunds, causes of action, choses in action, rights of recovery, rights of set
off, and rights of recoupment, (ix) franchises, approvals, permits, licenses,
orders, registrations, certificates, variances, and similar
<PAGE>
rights obtained from governments and governmental agencies, and (x) books,
records, ledgers, files, documents, correspondence, lists, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials; provided, however, that the Acquired Assets shall not include
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(a) the corporate charter, articles of organization, certificate of limited
partnership, or other organizational documents (as applicable), qualifications
to conduct business as a foreign entity, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, security transfer books, blank stock certificates, and
other documents relating to the organization, maintenance, and existence of the
Asset Entities, (b) any of the rights of the Acquired Entities under this
Agreement (or under any side agreement between PRG or the Acquired Entities on
the one hand and AmSurg on the other hand entered into on or after the date of
this Agreement), (c) cash, (d) real property owned by PRG or the Acquired
Entities, or (e) rights, if any, of the Acquired Entities pursuant to or arising
out of litigation being funded by PRG asserting violations of patents relating
to surface sculpting lasers.
"Acquired Entities" has the meaning set forth in the introductory
paragraph to this Agreement.
"Acquired Equity Interest" shall mean the membership or partnership
interest held by PRG in the Equity Entities set forth on Schedule 2.4.
------------
"Acquisition Percentages" has the meaning set forth in Section 2.4.
-----------
"Additional Agreements" has the meaning set forth in Section 10.5.
------------
"Additional Transaction" has the meaning set forth in Section 10.14.
-------------
"Adjusted EBITDA" means earnings before interest, taxes, depreciation, and
amortization for the 12 months ended December 31, 1998, as adjusted and mutually
agreed to by AmSurg and PRG.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, Liens, losses, expenses, and
fees, including courts costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Section 1504(a) or any similar group defined under a similar provision of state,
local or foreign law.
"AmSurg Disclosure Letter" has the meaning set forth in Article IV.
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"AmSurg Indemnified Parties" has the meaning set forth in Section 9.1(a).
--------------
"AmSurg's Proration Statement" has the meaning set forth in Section 7.8(a).
--------------
"Applicable Rate" means the prime rate of interest publicly announced from
time to time by SunTrust Bank, Nashville, Tennessee.
"Asset Entities" has the meaning set forth in the recitals to this
Agreement.
"Assumed Liabilities" means, with respect to each Asset Entity, the
percentage equal to the Acquisition Percentage for such Asset Entity of (i) all
obligations of the Asset Entities under the written agreements, contracts,
leases, licenses, and other arrangements referred to in the definition of
Acquired Assets either (A) to furnish goods, services, or other non-cash
benefits to another party after the Closing or (B) to pay for goods, services,
and other non-cash benefits that another party will furnish to it after the
Closing, (ii) the liabilities set forth on Schedule 1 of the PRG Disclosure
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Letter, (iii) the credit balances relating to the receivables included in the
definition of Acquired Assets; and (iv) obligations to honor sick leave,
vacation, and other employee benefits (other than employer contributions to
retirement or pension plans) accrued by employees of the Asset Entities as of
the Closing Date in accordance with the current policies of the Asset Entities;
provided, that Assumed Liabilities shall not include (a) any liability of the
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Asset Entities for Taxes, (b) any Liability of any Asset Entity for the unpaid
Taxes of any person (other than such Asset Entity) under Treas. Reg. (S)1502-6
(or any similar provision of state, local, or foreign law), as a transferee or
successor, by contract or otherwise, (c) any obligation of any Asset Entity to
indemnify any person by reason of the fact that such person was a director,
officer, employee or agent of such Asset Entity or was serving at the request of
such Asset Entity as a partner, trustee, director, officer, employee or agent of
another entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such indemnification is pursuant to any statute, charter,
document, bylaw, agreement, or otherwise), (d) any Liability of the Asset
Entities for costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby, or (e) any Liability or obligation of the
Asset Entities under this Agreement (or under any side agreement between the
Asset Entities or PRG on the one hand and AmSurg on the other hand entered into
on or after the date of this Agreement).
"Bankruptcy Code" means Title 11 of the United States Code.
"Bankruptcy Court" means the United States Bankruptcy Court for the
Northern District of Texas.
"Bid Hearing" means a court hearing in the Bankruptcy Court to consider
this Agreement and any timely filed Qualified Competing Transactions, at the
conclusion of which hearing PRG shall submit its recommendation(s) to the
Bankruptcy Court for its approval of this Agreement or that of a Qualified
Competing Transaction as the Winning Bid.
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"Bid Procedures Motion" means the motion for an order of the Bankruptcy
Court (i) approving the Termination Fee payable pursuant to Section 8.3(b), (ii)
--------------
approving the last date by which any proposed Competing Transaction must be
filed with the Bankruptcy Court and served upon AmSurg and PRG, (iii) providing
that if no Qualified Competing Transaction is filed with the Bankruptcy Court
and delivered to AmSurg and PRG within ten business days of entry of the Bid
Procedures Order that AmSurg shall be determined in a Bankruptcy Court order to
be the Winning Bidder, (iv) providing that following the rejection of a
Qualifying Competing Transaction by PRG pursuant to Section 5.1(e), the
--------------
consideration offered to PRG in any subsequent Competing Transaction must exceed
the consideration offered in the rejected Qualifying Competing Transaction by a
minimum of $100,000, (v) providing that the Bid Hearing shall be held within 20
days following the earlier of (A) ten business days after entry of the Bid
Procedures Order if no Qualified Competing Transaction is submitted within such
ten business day period, (B) PRG's rejection of a Qualified Competing
Transaction pursuant to Section 5.1(e) by reason of the fact that such Qualified
--------------
Competing Transaction was not a Superior Transaction, (C) PRG's rejection of a
Superior Transaction pursuant to Section 5.1(e) by reason of the fact that
--------------
AmSurg has elected to meet or exceed the terms of such Superior Transaction, and
(vi) providing that in the event PRG rejects a Superior Transaction pursuant to
Section 5.1(e) by reason of the fact that AmSurg has elected to meet or exceed
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the terms of such Superior Transaction and, on or prior to two business days
prior to the Bid Hearing, the person submitting the Superior Transaction submits
an additional Qualified Competing Transaction, PRG, AmSurg and such person shall
meet prior to the Bid Hearing to bid on the Acquired Assets to determine the
Winning Bidder and that following such meeting PRG shall not accept any
additional Competing Transactions.
"Bid Procedures Order" has the meaning set forth in Section 5.1(c).
--------------
"Claim Notice" has the meaning set forth in Section 9.4.
-----------
"Closing" has the meaning set forth in Section 2.6.
-----------
"Closing Acquired Entities" has the meaning set forth in Section 7.9(b).
--------------
"Closing Date" has the meaning set forth in Section 2.6.
-----------
"Code" means the Internal Revenue Code of 1986, as amended.
"Competing Transaction" means any offer or proposal made by a person other
than AmSurg relating to any proposed sale, lease, exchange, transfer, or other
disposition of all or any material portion of the Acquired Assets in a single
transaction or series of related transactions. The parties acknowledge and
agree that "Competing Transactions"shall not include offers and proposals
relating only to assets not included in the definition of Acquired Assets.
4
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"Confidential Information" means any information concerning the businesses
and affairs of AmSurg, PRG, the Acquired Entities, and their respective
Affiliates, as the case may be, that is not generally available to the public.
"Disclosure Letters" has the meaning set forth in Section 10.11.
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"Disclosure Statement" means the disclosure statement whereby PRG will seek
approval of the Plan of Reorganization, which disclosure statement, so far as it
relates to this Agreement or the Transaction, shall be reasonably satisfactory
to AmSurg prior to filing.
"Employee Benefit Plan" means (A) all "employee benefit plans", whether
legally binding or not, within the meaning of Section 3(3) of ERISA, including,
but not limited to, multiple employer welfare arrangements (within the meaning
of Section 3(40) of ERISA), plans to which more than one unaffiliated employer
contributes and employee benefit plans (such as foreign or excess benefit plans)
which are not subject to ERISA; and (B) all stock option plans, bonus or
incentive award plans, severance pay policies or agreements, deferred
compensation agreements, supplemental income arrangements, vacation plans, and
all other employee benefit plans, agreements, and arrangements (including any
informal arrangements) not described in (A) above, including without limitation,
any arrangement intended to comply with Section 120, 125, 127 or 129 of the
Code, whether legally binding or not. In the case of an Employee Benefit Plan
funded through a trust described in Section 401(a) of the Code, an organization
described in Section 501(c)(9) of the Code or another mechanism, each reference
to such Employee Benefit Plan shall include a reference to such trust,
organization or mechanism.
"Environmental, Health, and Safety Requirements" shall mean all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to reporting
requirements for, or the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of, any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
"Equity Entities" has the meaning set forth in the recitals to this
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" is any entity that, with respect to an Acquired Entity or
PRG, would ever have been considered a single employer with any Acquired Entity
or PRG under Section 4001(b) of ERISA or Section 414 of the Code or part of the
same "controlled group" as any Acquired Entity or PRG for purposes of Section
302(d)(8)(C) of ERISA. Where appropriate: (a) the terms "PRG",
5
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"Acquired Entities", "Acquired Entity" and "ERISA Affiliate" shall include
without limitation any trustee, administrator or other fiduciary of any Employee
Benefit Plan ever maintained by PRG, such Acquired Entity, Acquired Entities
and/or any ERISA Affiliate thereof or any agent of the foregoing.
"Escrow Agent" means First American National Bank and its successors.
"Escrow Agreements" means the agreements dated as of the Closing Date
between PRG, AmSurg and the Escrow Agent substantially in the form of Exhibits A
----------
and B attached hereto.
-
"Exclusion Notice" has the meaning set forth in Section 2.4(b).
--------------
"Government Programs" has the meaning set forth in Section 3.24.
------------
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnified Party" has the meaning set forth in Section 9.3(a).
--------------
"Indemnifying Party" has the meaning set forth in Section 9.3(a).
--------------
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations in part revisions, extensions, and
reexaminations relating thereto, (b) all trademarks, service marks, trade dress,
logos, trade names, and corporate names, and all goodwill associated therewith,
together with all translations, adaptations, derivations, and combinations,
applications, registrations, and renewals relating thereto, (c) all copyrights,
and all applications, registrations, and renewals relating thereto, (d) all
trade secrets and confidential business information (including ideas, research
and development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (e) all computer software (including data and
related documentation), (f) all other proprietary rights, and (g) all copies and
tangible embodiments of the foregoing (in whatever form or medium).
"Knowledge" means (a) when used in reference to the Knowledge of PRG, the
actual Knowledge of the executive officers of PRG, as identified to AmSurg by
PRG, after reasonable, good faith inquiry of the administrator, medical
director, and nursing administrator of each Acquired Entity (as applicable) and
(b) when used in reference to the Knowledge of AmSurg, the actual Knowledge of
Ken P. McDonald, David L. Manning, Claire M. Gulmi, and Royce D. Harrell.
"Law" means all applicable federal, state, and local laws, including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder, of federal, state, local, and foreign governments (and all
agencies thereof).
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"Liability" means any liability or obligation (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including without limitation any liability or obligation for Taxes.
"Lien" means any mortgage, pledge, lien, encumbrance, charge, or security
interest.
"Management Agreement" means the Management Services Agreement between
AmSurg and PRG, dated January 1, 2000, pursuant to which AmSurg will manage
certain of the Acquired Entities.
"Management Agreement Motion" means the motion for an order of the
Bankruptcy Court approving the post-Petition Date assumption by PRG of the
Management Agreement.
"Management Agreement Order" has the meaning set forth in Section 5.1(c).
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"Material Adverse Effect" means a material adverse effect on the business,
operations, or condition (financial or otherwise) of any Acquired Entity.
"Material Consent" means those consents designated as a "material consent"
on Schedule 3.2 or 3.3 of the PRG Disclosure Letter.
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"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Operating Entities" has the meaning set forth in Section 2.2.
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"Ordinary Course of Business" means the ordinary course of business
consistent with past experience, custom and practice.
"Payables Escrow Agreement" means the Escrow Agreement attached hereto as
Exhibit B.
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"Petition Date" means the date PRG files it bankruptcy petition under
Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.
"Plan of Reorganization" means the plan of reorganization filed by PRG in
the Bankruptcy Court that, inter alia, reflects the terms of this Agreement.
The sections of the Plan of Reorganization relating to this Agreement or the
Transaction shall be reasonably satisfactory to AmSurg prior to filing.
"Pre-Closing Payables" has the meaning set forth in Section 7.9.
"Pre-Closing Payables Statement" has the meaning set forth in Section 7.9.
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"PRG Disclosure Letter" has the meaning set forth in Article III.
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"PRG Financial Data" has the meaning set forth in Section 3.7.
-----------
"PRG Payables" has the meaning set forth in Section 7.9.
-----------
"Prorated Expenses" has the meaning set forth in Section 7.8(a).
--------------
"Purchase Price" has the meaning set forth in Section 2.3.
-----------
"Qualified Competing Transaction" means a Competing Transaction that: (i)
is in the form of this Agreement (marked to show additions, deletions, and other
changes to this Agreement) setting forth the definitive terms and conditions of
such Competing Transaction and executed in full by an authorized representative
of such bidder; (ii) the bidder submitting the Competing Transaction shall
deposit with an escrow agent selected by PRG a cash deposit equal to the
Termination Fee on the same business day as its Competing Transaction is first
filed with the Bankruptcy Court; (iii) the Competing Transaction (including the
definitive agreement, schedules and exhibits) shall be filed with the Bankruptcy
Court and delivered to AmSurg and PRG within ten business days of the entry of
the Bid Procedures Order; and (iv) the Competing Transaction shall provide for
consideration the fair market value of which (as determined in good faith by PRG
or by the Bankruptcy Court) exceeds that of the total consideration offered by
AmSurg (as determined in good faith by PRG or by the Bankruptcy Court) by at
least $100,000 plus the amount of the Termination Fee.
"Sale Order" has the meaning set forth in Section 5.1(h).
--------------
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Subsidiaries" means corporations, partnerships, limited liability
companies, and other entities in which PRG or AmSurg, as applicable, or any of
their respective Affiliates own an equity ownership interest.
"Superior Transaction" has the meaning set forth in Section 5.1(e).
--------------
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
8
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sales, use, transfer, registration, value added, alternative or add-on-minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any taxing authority in connection with its determination,
assessment, collection, administration, or imposition of any Tax.
"Termination Fee" shall mean a fee equal to the product of (i) 3.0% and
(ii) the Purchase Price, as adjusted through the date of payment of the
Termination Fee.
"Third Party Claim" has the meaning set forth in Section 9.3(a).
--------------
"Transaction" has the meaning set forth in the recitals to this Agreement.
"Treas. Reg." means the proposed, temporary and final regulations
promulgated under the Code.
"Winning Bid" means the winning bid to purchase all or any material portion
of the Acquired Assets.
"Winning Bidder" means the person submitting the Winning Bid.
ARTICLE II.
PURCHASE AND SALE OF ACQUIRED ASSETS
II.1 Sale of Acquired Assets. Subject to the terms and conditions of
this Agreement, on the Closing Date, AmSurg shall purchase from the Asset
Entities and PRG and the Asset Entities and PRG shall sell, transfer and assign
to AmSurg, free and clear of any and all Liens, the Acquired Assets.
II.2 Assumed Liabilities. AmSurg hereby agrees to cause the limited
liability companies, limited partnerships, or other entities that will own or
operate the Acquired Assets following the Closing (the "Operating Entities") to
assume the Assumed Liabilities relating to the Acquired Assets assigned by
AmSurg to such Operating Entity. Neither AmSurg nor the Operating Entities will
assume or have any responsibility with respect to any other obligation or
Liability of PRG or the Acquired Entities not included within the definition of
Assumed Liabilities.
III.3 Purchase Price and Terms of Payment.
(a) As consideration for the sale to AmSurg of the Acquired Assets, on
the Closing Date AmSurg agrees to deliver to PRG Forty-One Million, Nine Hundred
Seventy-Eight Thousand, One Hundred Sixty Dollars ($41,978,160) (the "Purchase
Price") in cash via wire transfer of immediately available funds to the account
of PRG. The Purchase Price has been determined taking into account
9
<PAGE>
an adjustment related to the proposed HCFA APC rates. The adjustment has been
agreed upon by AmSurg and PRG. The Purchase Price will not be adjusted in the
event of any changes or final regulations issued by HCFA prior to the Closing
Date or for any other reason; provided, however, that the Purchase Price shall
-------- -------
be subject to adjustment in the manner and to the extent provided in Sections
--------
2.3(b) and 2.4(a) hereof.
- ------ ------
(b) At the Closing, a portion of the Purchase Price shall be paid into
escrow accounts pursuant to the Escrow Agreements attached hereto as Exhibits A
----------
and B. Notwithstanding the foregoing, in the event that as of the Closing Date
-
a period of four months has elapsed from January 1, 2000, the effective date of
the Management Agreement, as further provided in Section 9.8, AmSurg and PRG
-----------
shall not enter in the Escrow Agreement attached hereto as Exhibit A and 3.5% of
---------
the Purchase Price shall be retained by AmSurg to fund contingent liabilities
of the Acquired Entities and shall be deducted from the Purchase Price to be
paid to PRG pursuant to Section 2.3(a).
II.4 Determination of Adjustments to Purchase Price.
(a) The Purchase Price set forth in Section 2.3 is based upon AmSurg's
-----------
purchase of the percentage of the assets of each Asset Entity or the percentage
ownership interest in each Equity Entity as set forth on Schedule 2.4 (the
------------
"Acquisition Percentages"). If the Transaction as consummated involves more or
less than the Acquisition Percentage listed on Schedule 2.4, then the Purchase
------------
Price will be adjusted by substituting for the consideration to be paid with
respect to such Acquired Entity as set forth on Schedule 2.4 the product of (i)
------------
the quotient of (A) the consideration to be paid with respect to such Acquired
Entity and (B) the Acquisition Percentage with respect to such Acquired Entity
as set forth on Schedule 2.4 and (ii) the actual Acquisition Percentage with
------------
respect to such Acquired Entity to be acquired by AmSurg. If an Acquired Entity
is excluded from the Transaction pursuant to Section 2.4(b), the Purchase Price
--------------
will be adjusted by subtracting the portion of the Purchase Price attributable
to that Acquired Entity as set forth on Schedule 2.4.
------------
(b) Until a period of four months has elapsed from January 1, 2000, the
effective date of the Management Agreement, AmSurg shall have the right to
exclude any Acquired Entity from the Transaction if (i) AmSurg is not satisfied,
in its sole discretion, with the results of, and its due diligence
investigations with respect to, the operations, affairs, prospects, properties,
assets, existing and potential liabilities, obligations, profits, or condition
(financial or otherwise) of such Acquired Entity (regardless of whether any
matter is listed on the PRG Disclosure Letter) or (ii) AmSurg concludes in its
sole and absolute judgment that the inclusion of the Acquired Entity in the
Transaction would create operational issues, licensure issues, financial issues,
or other issues that adversely affect the relationship between AmSurg and its
Affiliates and the physician partners of that Acquired Entity. AmSurg shall
give PRG written notice (the "Exclusion Notice") of its decision to exclude an
Acquired Entity, which notice shall specify the issues that have caused AmSurg
to determine to exclude the Acquired Entity. PRG and the Acquired Entity shall
have ten business days from receipt of the Exclusion Notice to cure the issues
specified in the Exclusion Notice; provided, that if the issues specified by
--------
AmSurg in such Exclusion Notice are not capable of being cured within a ten
business day period, but at the expiration of ten business days from the date of
delivery
10
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of such Exclusion Notice PRG and the Acquired Entity are working diligently to
cure the issues set forth in such Exclusion Notice, the foregoing ten business
day cure period shall be extended by an additional 30 calendar days; provided,
--------
however, that any such cure period shall terminate no later than two business
- -------
days prior to the Closing Date.
(c) Following the expiration of four months from January 1, 2000, the
effective date of the Management Agreement, AmSurg shall have the right to
exclude an Acquired Entity from the Transaction by written notice to PRG only if
AmSurg reasonably concludes that an event has occurred or a circumstance has
arisen that has resulted or is reasonably expected to result in a Material
Adverse Effect with respect to such Acquired Entity. In the event AmSurg
determines to exclude an Acquired Entity pursuant to this Section 2.4(c), AmSurg
--------------
shall deliver an Exclusion Notice to PRG. PRG and the Acquired Entity shall
have ten business days from receipt of the Exclusion Notice to cure the issues
specified in the Exclusion Notice; provided, that if the issues specified by
--------
AmSurg in such Exclusion Notice are not capable of being cured within a ten
business day period, but at the expiration of ten business days from the date of
delivery of such Exclusion Notice PRG and the Acquired Entity are working
diligently to cure the issues set forth in such Exclusion Notice, the foregoing
ten business day cure period shall be extended by an additional 30 calendar
days; provided, however, that any such cure period shall terminate no later than
-------- -------
two business days prior to the Closing Date.
II.5 Allocation of Purchase Price. PRG and AmSurg shall use their
commercially reasonable efforts to agree in writing, on or before 90 days
following the Closing Date (or at such earlier date as the allocation may be
needed for approval of the Bid Procedures Motion by the Bankruptcy Court), on an
allocation of the Purchase Price among the Acquired Assets and the Acquired
Equity Interests in accordance with the principles of Section 1060 of the Code.
To the extent that PRG and AmSurg are unable to so agree with respect to one or
more assets, classes of assets, or interests, PRG and AmSurg shall each be free
to determine its own allocation. To the extent that PRG and AmSurg do so agree
with respect to one or more assets, classes of assets, or interests, PRG and
AmSurg shall, for all federal income tax purposes, (i) report the transactions
contemplated by this Agreement consistent with such agreed allocations and (ii)
comply with and furnish all information required by Section 1060 of the Code
(including filing Internal Revenue Service Form 8594 and any amendments thereto
consistent with such agreed allocations).
II.6 The Closing. Subject to the terms and conditions of this Agreement,
the closing of the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of PRG or its counsel in Dallas, Texas, on the
third business day immediately following the day on which the last of the
conditions set forth in Article VI shall be fulfilled or waived in accordance
----------
herewith or at such other time, date, or place as AmSurg and PRG shall agree in
writing. The date on which the Closing occurs is hereinafter referred to as the
"Closing Date."
II.7 Deliveries at the Closing. At the Closing, (a) PRG will deliver to
AmSurg the various certificates, instruments and documents referred to in
Section 6.1, (b) AmSurg will deliver to PRG the various certificates,
- -----------
instruments and documents referred to in Section 6.2, (c) PRG, its
-----------
11
<PAGE>
Affiliates, and the Acquired Entities will deliver to AmSurg assignments
(including Intellectual Property transfer documents) and such other instruments
of sale, transfer, conveyance, and assignment as AmSurg may reasonably request
executed by PRG, its Affiliates, and the Acquired Entities, (d) AmSurg will
deliver to PRG and the Acquired Entities, as applicable, such instruments of
assumption relating to the Assumed Liabilities as PRG may reasonably request
executed by AmSurg, and (e) AmSurg will deliver to PRG the Purchase Price as
specified in Section 2.3.
-----------
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PRG
Except as expressly set forth in the disclosure letter delivered prior to
the execution hereof to AmSurg (the "PRG Disclosure Letter"), PRG represents and
warrants to AmSurg that the statements contained in this Article III are correct
-----------
and complete as of the date hereof and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date hereof throughout this Article III). The inclusion of
-----------
any item on the PRG Disclosure Schedule does not set any standard for
materiality, nor does the inclusion of any item constitute an admission that
such item is material. The PRG Disclosure Letter will be arranged to
correspond to the numbered and lettered sections contained in this Article III,
-----------
and will identify the Acquired Entity with respect to which the exception
relates.
III.1 Organization, Qualification, and Power and Authority. PRG is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware. Each Acquired Entity is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
organization.
III.2 Authorization, Validity, and Effect of Agreement. PRG and each
Acquired Entity has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. PRG and each Acquired
Entity has taken all action required by law, its constituent documents, and
otherwise to authorize the execution, delivery, and performance by it of this
Agreement. This Agreement constitutes the valid and legally binding obligation
of PRG and each Acquired Entity, enforceable in accordance with its terms. PRG
and the Acquired Entities need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated hereby.
III.3 Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of PRG or any Acquired Entity is
subject or any provision of the certificate of incorporation, bylaws, or other
constituent documents of PRG or any of the Acquired Entities, as applicable, or
(b) conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which PRG or any of the Acquired
Entities is a party or by which it is
12
<PAGE>
bound, or to which any of its assets is subject (or result in the imposition of
any Lien upon any of its assets).
III.4 Brokers' Fees. None of PRG or the Acquired Entities has any
Liability or obligation to pay any fees or commissions to any broker, investment
banker, finder, or agent with respect to the transactions contemplated hereby
for which AmSurg could become liable or obligated.
III.5 Title to Assets. The Acquired Entities have good and marketable
title to, or a valid leasehold interest in, the properties and assets shown on
Schedule 3.5 of the PRG Disclosure Schedule, used by them, located on their
- ------------
premises, or required for the operation of their respective businesses, or
acquired after the date thereof, free and clear of all Liens. Without limiting
the generality of the foregoing, the Acquired Entities have good and marketable
title to or a valid leasehold interest in the Acquired Assets, free and clear of
any Lien or restriction on transfer.
III.6 Acquired Entities. Schedule 3.6 of the PRG Disclosure Letter sets
------------
forth for each Acquired Entity (a) its name and jurisdiction of organization,
(b) the amount of its issued and outstanding securities, the names of the
holders thereof, and the amount of securities held by each such holder, and (c)
whether such Acquired Entity is an Asset Entity or an Equity Entity. PRG holds
of record and owns beneficially the outstanding securities of each Acquired
Entity as set forth on Schedule 3.6 of the PRG Disclosure Schedule, free and
------------
clear of any restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), Taxes, Liens, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands.
III.7 Financial Statements. Schedule 3.7 of the PRG Disclosure Letter
------------
contains the following financial statements:
(i) unaudited statements of income as of and for the fiscal years
ended December 31, 1997 and 1998 (the fiscal year ended December 31, 1998 is
referred to hereinafter as the "Most Recent Fiscal Year End") for each Acquired
Entity; and
(ii) unaudited financial information for each of the line items
specified on Schedule 3.7, as well as any other unaudited financial statements
------------
prepared by or on behalf of PRG or its Subsidiaries (the "PRG Financial Data")
as of and for the nine months ended September 30, 1999 for each Acquired Entity.
The unaudited statements of income for the years ended December 31, 1997 and
1998 have been prepared in accordance with accounting principles applied on a
consistent basis throughout the periods covered thereby, are correct and
complete in all material respects, and are consistent with the books and records
of the Acquired Entities (which books and records are correct and complete). The
PRG Financial Data is true and correct in all material respects and is
consistent with the books and records of the Acquired Entities (which books and
records are correct and complete).
13
<PAGE>
III.8 Subsequent Events. Since the Most Recent Fiscal Year End, there
has not been any material adverse change in the business, condition (financial
or otherwise), operations, or results of operations of any of the Acquired
Entities, and no event has occurred or circumstance exists that may result in
such a material adverse change. Without limiting the generality of the
foregoing, since that date:
(a) none of the Acquired Entities has sold, leased, transferred, or
assigned any assets, tangible or intangible involving more than $25,000, other
than in the Ordinary Course of Business;
(b) no party (including any of the Acquired Entities) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) involving more
than $25,000 to which any of the Acquired Entities is a party or by which any of
them is bound;
(c) none of the Equity Entities has delayed or postponed the payment of
any Liabilities outside the Ordinary Course of Business;
(d) there has not been any other material occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of Business
involving more than $25,000 individually or $250,000 in the aggregate involving
any of the Acquired Entities; and
(e) none of the Acquired Entities has committed or agreed to any of the
foregoing.
III.9 Long-Term Debt and Capital Leases. The list of long-term debt and
capital leases of the Acquired Entities set forth on Schedule 1 of the PRG
----------
Disclosure Letter is correct and complete. The outstanding obligations under
such long-term debts and capital leases set forth on Schedule 1 of the PRG
----------
Disclosure Letter is true and accurate.
III.10 Legal Compliance. Except as would not have a Material Adverse
Effect, each of the Acquired Entities has complied in all respects with all
applicable Laws, and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure to so comply. During the time it has been
affiliated with PRG, none of the Acquired Entities has been the subject of any
inspection, investigation, survey, audit, monitoring or other form of review by
any governmental regulatory entity, professional review by any governmental
organization, accrediting organization or certifying agency for the purpose of
identifying any alleged improper activity with respect to the operations of any
Acquired Entity or their businesses that resulted in a formal allegation of
illegal activity or material deficiency or non-compliance. No governmental
authorities are currently conducting proceedings against any of the Acquired
Entities and, to the Knowledge of PRG, no investigation or proceeding is pending
or being threatened. As used in this Section 3.10, "proceedings" means any
------------
litigation, arbitration, hearing or any other formal action by a governmental
authority.
III.11 Tax Matters.
14
<PAGE>
(a) Each of the Acquired Entities has filed all Tax Returns that it is
or was required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by any of the Acquired Entities (whether or
not shown on any Tax Return) have been paid. None of the Acquired Entities
currently is the beneficiary of any extension of time within which to file any
Tax Return. No claim has ever been made by an authority in a jurisdiction where
any of the Acquired Entities does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Liens on any of the
assets of any of the Acquired Entities that arose in connection with any failure
(or alleged failure) to pay any Tax.
(b) Each of the Acquired Entities has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owed
relating to any Acquired Entity employee, independent contractor, creditor,
shareholder, member, partner, or other third party.
(c) There is no dispute or claim concerning any Tax Liability of any of
the Acquired Entities either (i) claimed or raised by any authority in writing
or (ii) as to which PRG has Knowledge based upon personal contact with any agent
of such authority. Schedule 3.11(c) of the PRG Disclosure Letter lists all Tax
----------------
Returns filed with respect to any of the Acquired Entities for taxable periods
ended on or after December 31, 1994, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the subject of
audit. PRG has delivered to AmSurg correct and complete copies of all federal
income Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by any of the Acquired Entities since December 31, 1994.
(d) None of the Acquired Entities has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) None of the Assumed Liabilities is an obligation to make, and none
of the Equity Entities has made or has an obligation to make, any payment that
will not be deductible under Code Section 280G.
(f) None of the Acquired Entities is a party to any Tax allocation or
sharing agreement.
(g) None of the Acquired Entities (i) has been a member of an
Affiliated Group filing a consolidated federal income Tax Return (other than a
group the common parent of which was PRG) or (ii) has any Liability for the
Taxes of any person (other than any of PRG and the Acquired Entities) under
Treas. Reg. Section 1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
III.12 Real Property.
(a) None of the Acquired Entities owns any real property.
15
<PAGE>
(b) Schedule 3.12(b) lists and describes briefly all real property
----------------
leased or subleased to any of the Acquired Entities. PRG has delivered to AmSurg
correct and complete copies of the leases and subleases listed in Schedule
--------
3.12(b) (as amended to date). With respect to each lease and sublease listed in
- -------
Schedule 3.12(b):
- ----------------
(i) the lease or sublease is legal, valid, binding, enforceable,
and in full force and effect;
(ii) the lease or sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms
immediately following the consummation of the transactions contemplated hereby;
(iii) to PRG's Knowledge (solely with respect to parties other
than PRG, PRG's Affiliates, or an Acquired Entity), no party to the lease or
sublease is in breach or default, and no event has occurred that, with notice or
lapse of time, would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) to PRG's Knowledge (solely with respect to parties other
than PRG, PRG's Affiliates, or an Acquired Entity), no party to the lease or
sublease has repudiated any provision thereof;
(v) to PRG's Knowledge (solely with respect to parties other
than PRG, PRG's Affiliates, or an Acquired Entity) there are no disputes, oral
agreements, or forbearances in effect as to the lease or sublease;
(vi) to the Knowledge of PRG, with respect to each sublease, the
representations and warranties set forth in Sections 3.12(b)(i) through (v) are
--------------------------------
true and correct with respect to the underlying lease;
(vii) none of the Acquired Entities has assigned, transferred,
conveyed, mortgaged, deeded in trust, encumbered or granted a Lien in any
interest in the leasehold or subleasehold;
(viii) except as would not have a Material Adverse Effect, all
facilities leased or subleased thereunder have received all approvals of
governmental authorities (including licenses and permits) required in connection
with the operation thereof and have been operated and maintained in accordance
with applicable Laws; and
(ix) all facilities leased or subleased thereunder are supplied
with utilities and waste disposal services necessary for the operation of said
facilities.
III.13 Intellectual Property.
(a) Schedule 3.13 sets forth a list of any Intellectual Property that
-------------
the Acquired Entities own, license, or use that is material to the conduct of
its business, including computer software
16
<PAGE>
programs or software systems, except for computer software programs or software
systems that are available in consumer retail stores.
(b) Except as would not have a Material Adverse Effect, none of PRG or
the Acquired Entities has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual Property rights of third
parties, and none of PRG or the Acquired Entities has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that any of
PRG or the Acquired Entities must license or refrain from using any Intellectual
Property rights of any third party). To the Knowledge of PRG, no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of any of the Acquired Entities.
III.14 Tangible Assets. The Acquired Entities own or lease all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of
their businesses as presently conducted. Each such tangible asset is owned or
leased by the applicable Acquired Entity, has been maintained in accordance with
normal industry practice, is in good operating condition and repair (subject to
normal wear and tear), and is suitable for the purposes for which it presently
is used.
III.15 Contracts. Schedule 3.15 lists the following written contracts and
-------------
other written agreements to which any of the Acquired Entities is a party or
bound:
(a) any agreement (or group of related agreements with the same party)
for the lease of personal property to or from any person providing for lease
payments in excess of $25,000 per annum;
(b) any agreement (or group of related agreements with the same party)
for the purchase or sale of supplies, products, or other personal property, or
for the furnishing or receipt of services, the performance of which will extend
over a period of more than one year or involve consideration in excess of
$25,000 per annum;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements with the same party)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of $25,000
per annum or under which it has imposed a Lien on any of its assets, tangible or
intangible;
(e) any agreement concerning confidentiality, noncompetition or
exclusive dealing;
(f) any agreement with any referral source;
(g) any agreement under which the consequences of a default or
termination would reasonably be expected to have a Material Adverse Effect; or
17
<PAGE>
(h) any other agreement (or group of related agreements with the same
party) the performance of which involves consideration in excess of $25,000 per
annum.
PRG has delivered or made available to AmSurg a correct and complete copy
of each written agreement listed in Schedule 3.15. With respect to each such
-------------
agreement:
(a) the agreement is legal, valid, binding, enforceable, and in full
force and effect;
(b) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms immediately
following the consummation of the transactions contemplated by this Agreement
without the consent of any person or entity;
(c) to the Knowledge of PRG (solely with respect to a party other than
PRG, PRG's Affiliates, or an Acquired Entity), no party is in breach or default,
and no event has occurred that, with notice or lapse of time would constitute a
breach or default, or permit termination, modification, or acceleration, under
the agreement; and
(d) to the Knowledge of PRG (solely with respect to a party other than
PRG, PRG's Affiliates, or an Acquired Entity), no party has repudiated any
provision of the agreement.
III.16 Notes and Accounts Receivable. All notes and accounts receivable
of the Acquired Entities have arisen from bona fide transactions by the Acquired
Entities in the Ordinary Course of Business and are valid as receivables.
III.17 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of the Acquired Entities.
III.18 Insurance. During the period that it has been affiliated with PRG,
each of the Acquired Entities has been covered by insurance in scope and amount
customary and reasonable for the businesses in which it has engaged during the
aforementioned period.
III.19 Litigation. Schedule 3.19 sets forth each instance in which any of
-------------
the Acquired Entities (a) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (b) is a party or, to the Knowledge of PRG,
is threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator or mediator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Schedule 3.19 would reasonably be expected to result
-------------
in a Material Adverse Effect.
III.20 Employees and Physicians. To the Knowledge of PRG, no physician
has any current plans to withdraw or otherwise terminate his or her
participation as an employee, partner, member, or shareholder of any Acquired
Entity. None of the Acquired Entities is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes, grievances,
18
<PAGE>
claims of unfair labor practices, or other collective bargaining disputes. None
of the Acquired Entities has committed any unfair labor practice. To the
Knowledge of PRG, there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of any
of the Acquired Entities.
III.21 Employee Benefits.
(a) Schedule 3.21 identifies (i) every Employee Benefit Plan that is
-------------
presently maintained for employees of an Acquired Entity by PRG or an Acquired
Entity and (ii) the names, titles, and compensation of all employees, officers,
leased employees and directors of the Acquired Entities paid within the last
calendar year (or expected to be paid this calendar year) in excess of
$50,000.00 per annum from an Acquired Entity.
(b) None of PRG, any Acquired Entity or any ERISA Affiliate thereof (i)
has ever maintained any Employee Benefit Plan which has been subject to Title IV
of ERISA or Section 412 of the Code, including, but not limited to, any
Multiemployer Plan (as defined below) or (ii) has ever maintained an Employee
Benefit Plan to provide post-employment benefits (other than as required by part
6 of subtitle B of title I of ERISA) to employees of the Acquired Entities.
(c) No Equity Entity maintains any Employee Benefit Plan, and no
employees of any Equity Entity participate, or have ever participated, in any
Employee Benefit Plan maintained by any Equity Entity.
(d) For the purposes of this Section, an entity "maintains" an Employee
Benefit Plan if such entity sponsors, sponsored, contributes to or has
contributed to, or provides or provided benefits under such Employee Benefit
Plan, or has or has had any obligation (by agreement, under applicable law or
otherwise) to contribute to or provide benefits under such Employee Benefit
Plan, or if such Employee Benefit Plan provides benefits to or otherwise covers
employees of such entity (or their spouses, dependents or beneficiaries).
III.22 Guaranties. None of the Acquired Entities is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other person.
III.23 Environmental, Health, and Safety Matters.
(a) Except as would not have a Material Adverse Effect, each of the
Acquired Entities and their respective predecessors and Affiliates has complied
and is in compliance with all Environmental, Health, and Safety Requirements.
(b) Without limiting the generality of Section 3.23(a), except as would
---------------
not have a Material Adverse Effect, each of the Acquired Entities and their
respective Affiliates has obtained, has complied with, and is in compliance
with, all permits, licenses, and other authorizations that are
19
<PAGE>
required pursuant to Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business.
(c) Except as would not have a Material Adverse Effect, neither the
Acquired Entities nor any of their respective predecessors or Affiliates has
received any written or, to the Knowledge of PRG, oral notice, report or other
information regarding any actual or alleged violation of Environmental, Health,
and Safety Requirements, or any liabilities or potential liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations, relating to any of them or
its facilities arising under Environmental, Health, and Safety Requirements.
III.24 Licenses and Permits.
(a) Except as would not have a Material Adverse Effect, each of the
Acquired Entities (i) is the holder of all valid licenses and other rights and
authorizations required by law, ordinance, regulation or ruling of any
governmental regulatory authority necessary to operate its business and (ii) is
certified for participation and reimbursement under Titles XVIII and XIX of the
Social Security Act (the "Medicare and Medicaid programs") (Medicare and
Medicaid programs and such other similar federal, state or local reimbursement
or governmental programs for which any of the Acquired Entities is eligible are
hereinafter referred to collectively as the "Government Programs") and has
current provider agreements for such Government Programs under which any of the
Acquired Entities directly or indirectly is presently receiving payments. Set
forth on Schedule 3.24 of the PRG Disclosure Letter is a correct and complete
-------------
list of such licenses, permits and other rights and authorizations, and provider
agreements under all Government Programs, complete and correct copies of which
have been provided to AmSurg. True, complete and correct copies of all surveys
of any of the Acquired Entities or their facilities conducted in connection with
any Government Program or licensing or accrediting body during the past three
years have been provided to AmSurg.
(b) No material violation, default, order or deficiency exists with
respect to any of the items listed on Schedule 3.24 of the PRG Disclosure
-------------
Letter. None of the Acquired Entities has received any notice of any action
pending or recommended by any state or federal agencies having jurisdiction over
the items listed on Schedule 3.24 of the PRG Disclosure Letter, either to
-------------
revoke, withdraw or suspend any license, right or authorization, or to terminate
the participation of any of the Acquired Entities in any Government Program. To
the Knowledge of PRG, no event has occurred that, with the giving of notice, the
passage of time, or both, would constitute grounds for a violation, order or
deficiency with respect to any of the items listed on Schedule 3.24 of the PRG
-------------
Disclosure Letter or to revoke, withdraw or suspend any such licenses, or to
terminate or modify the participation of any of the Acquired Entities in any
Government Program. To the Knowledge of PRG, there has been no decision of any
other party not to renew any provider or third-party payor agreement of any
Acquired Entity. Except as listed on Schedule 3.24, no consent or approval of,
-------------
prior filing with or notice to, or any action by, any governmental body or
agency or any other third party is required in connection with any such license,
right or authorization, or Government Program by reason of the consummation of
the transactions contemplated by this Agreement, and the
20
<PAGE>
continued operation of the business of each of the Acquired Entities thereafter
on a basis consistent with past practices.
(c) Each of the Acquired Entities has timely filed all reports required
to be filed prior to the date hereof with respect to the Government Programs,
all fiscal intermediaries and other insurance carriers and all such reports are
complete and accurate in all material respects and have been prepared in
accordance with all applicable laws and regulations governing reimbursement and
payment claims. True and complete copies of such reports filed by each of the
Acquired Entities for the most recent year have heretofore been delivered to
AmSurg. There are no other reports required to be filed by any of the Acquired
Entities in order to be paid under any Government Program for services rendered,
except for reports not yet due.
(d) Except as would not have a Material Adverse Effect, each of the
Acquired Entities has paid or caused to be paid or has properly reflected in the
PRG Financial Data all known and undisputed refunds, overpayments, offsets,
discounts, penalties, or adjustments that have become due pursuant to such
reports and that would constitute a violation of the False Claims Act (31 U.S.C.
(S)3729 et. seq), the civil monetary provisions (42 U.S.C. (S)1320a-7a), or any
other similar federal or state law, rule, or regulation and has no liability
under any Government Program or any private insurance program (known or unknown,
contingent or otherwise) for any refund, overpayment, offset, discount, penalty,
or adjustment other than in the Ordinary Course of Business, and no interest or
penalties accruing with respect thereof, except as has been specifically
included or reserved for in the PRG Financial Data.
III.25 Inspections and Investigations. None of the Acquired Entities'
rights to receive reimbursements pursuant to any Government Program has been
terminated or otherwise adversely affected as a result of any investigation or
action whether by any federal or state governmental regulatory authority or
other third party. There are not currently any outstanding material orders of
any governmental authority having jurisdiction over any of the Acquired
Entities, or other third party, requiring conformity to any applicable
agreement, statute, regulation, or ordinance, including, but not limited to, the
Government Programs. None of the Acquired Entities has received any notice of
any claim, requirement or demand of any licensing or certifying agency or other
third party supervising or having authority over any of the Acquired Entities or
its operations to rework or redesign any part thereof or to provide additional
furniture, fixtures, equipment, appliances, or inventory so as to conform to or
comply with any existing law, code, rule, regulation, or standard.
III.26 Certain Payments. Except as would not have a Material Adverse
Effect, neither the Acquired Entities, any agent or employee of the Acquired
Entities, or any person acting for or on behalf of the Acquired Entities has
directly or indirectly made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, commission or other payment to any person, private
or public, regardless of form, whether in money, property, or services, (i) to
obtain favorable treatment, (ii) to pay for favorable treatment, (iii) to obtain
special concessions or for special concessions already obtained for or in
respect of the Acquired Entities, or (iv) that is illegal under any applicable
law.
21
<PAGE>
III.27 Disclosure. The representations and warranties of PRG contained in
this Article III do not contain any untrue statement of a material fact or omit
-----------
to state any material fact necessary in order to make the statements and
information contained in this Article III not misleading.
-----------
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF AMSURG
AmSurg represents and warrants to PRG that the statements contained in this
Article IV are correct and complete as of the date hereof and will be correct
- ----------
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date hereof throughout this Article IV
----------
except as expressly set forth in the disclosure letter delivered prior to the
execution hereof to PRG (the "AmSurg Disclosure Letter"). The inclusion of any
item on the AmSurg Disclosure Letter does not set any standard for materiality,
nor does the inclusion of any item constitute an admission that such item is
material. The AmSurg Disclosure Letter will be arranged to correspond to the
numbered and lettered sections contained in this Article IV.
----------
IV.1 Organization. AmSurg is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Tennessee.
IV.2 Authorization, Validity, and Effect of Agreement. AmSurg has full
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. AmSurg has taken all action required by law, its charter
and bylaws, or otherwise to authorize the execution and delivery by AmSurg of
this Agreement. This Agreement constitutes the valid and legally binding
obligation of AmSurg, enforceable in accordance with its terms. AmSurg need not
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order to consummate the
transactions contemplated hereby.
IV.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which AmSurg is subject or any provision of its
charter or bylaws or (b) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
AmSurg is a party or by which it is bound or to which any of its assets is
subject.
IV.4 Brokers' Fees. AmSurg has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated hereby for which PRG could become liable or obligated.
ARTICLE V.
PRE-CLOSING COVENANTS
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<PAGE>
V.1 Method of Sale of Acquired Assets and Confirmation of Plan of
Reorganization.
(a) Within fifteen (15) business days of the date hereof, PRG shall
file a bankruptcy petition under Chapter 11 of the Bankruptcy Code in the
Bankruptcy Court. The purchase by AmSurg of the Acquired Assets and the other
transactions contemplated by this Agreement shall be subject to the approval of
the Bankruptcy Court. This sale process is designed to provide assurance to
AmSurg that it shall be adequately compensated for its out-of-pocket expenses
and time and effort spent, and lost opportunity costs incurred in, pursuing this
Agreement if AmSurg is not selected as the Winning Bidder and, if selected as
the Winning Bidder, that it shall be able to consummate timely this Agreement.
This process is also designed to accommodate PRG's desire to confirm a Plan of
Reorganization.
(b) PRG shall (i) file the Plan of Reorganization and the Disclosure
Statement no later than 30 days following the Petition Date; (ii) use all
commercially reasonable efforts to persuade the Bankruptcy Court to set a
hearing within 40 days after the date of such filing for the Bankruptcy Court to
consider approving the adequacy of information contained in the Disclosure
Statement within the meaning of Section 1125 of the Bankruptcy Code; (iii) if
the Disclosure Statement is so approved, promptly distribute and mail a package
of voting solicitation materials to those creditors and other parties-in-
interest as determined by the Bankruptcy Court; and (iv) use all commercially
reasonable efforts to persuade the Bankruptcy Court to set a confirmation
hearing on the Plan of Reorganization within 30 days after the date of
Bankruptcy Court approval of the Disclosure Statement. The Plan of
Reorganization and the Disclosure Statement shall contain appropriate
provisions, in form and substance mutually acceptable to PRG and AmSurg, to
consummate the Transaction. If the Plan of Reorganization is confirmed by the
Bankruptcy Court through entry of a confirmation order in form and substance
mutually acceptable to PRG and AmSurg with respect to this Agreement and the
Acquired Assets then, subject to the fulfillment of the conditions set forth in
Sections 6.1 and 6.2 hereunder, AmSurg and PRG shall set the Closing Date no
- ------------ ---
later than ten days following the date the Bankruptcy Court order confirming the
Plan of Reorganization becomes final and nonappealable.
(c) Upon filing the bankruptcy petition, PRG shall file an expedited
motion and use all commercially reasonable efforts to obtain Bankruptcy Court
orders within 25 days of the Petition Date approving the Bid Procedures Motion
(the "Bid Procedures Order")and approving the Management Agreement Motion (the
"Management Agreement Order").
(d) The Bid Procedures Motion shall provide that if a Qualified
Competing Transaction has not been timely and properly filed with the Bankruptcy
Court and delivered to AmSurg and PRG within ten business days of entry of the
Bid Procedures Order, then (i) the Bid Hearing shall not be conducted, (ii)
AmSurg shall automatically become the Winning Bidder, and (iii) the Bankruptcy
Court shall enter an order mutually acceptable to PRG and AmSurg naming AmSurg
as the Winning Bidder.
(e) PRG agrees to notify AmSurg promptly upon the receipt by PRG or by
any of PRG's representatives of a Competing Transaction. Such notification shall
include the terms and conditions
23
<PAGE>
of any such proposal and the identity of the person(s) making such proposal. If
PRG receives a proposal for a Qualified Competing Transaction, PRG shall have
five business days from the date of receipt of such Qualified Competing
Transaction to determine if such Qualified Competing Transaction is superior to
this Agreement and the Transaction. If PRG determines that such Qualified
Competing Transaction is superior to this Agreement and the Transaction and
determines to enter into such Qualified Competing Transaction (such superior
Qualified Competing Transaction is referred to herein as a "Superior
Transaction"), PRG shall give AmSurg written notice of PRG's intent to enter
into such Superior Transaction. AmSurg shall have five business days from the
date of receipt of such written notice to review such proposal and agree to
amend this Agreement to meet or exceed the terms of the Superior Transaction. If
AmSurg elects to amend this Agreement to meet or exceed the terms of such
Superior Transaction, PRG must accept and agree to such an amendment and must
reject the Superior Transaction. If PRG rejects a Superior Transaction by reason
of the fact that AmSurg elects to meet the terms of a Superior Transaction, the
person submitting such Superior Transaction may, at the Bid Hearing, submit an
additional Qualified Competing Transaction. In such event, PRG, AmSurg and the
person submitting such Qualified Competing Transaction shall appear at the Bid
Hearing, at which AmSurg and such party shall bid on the Acquired Assets to
determine the Winning Bidder. If AmSurg elects not to meet the terms of a
Superior Transaction, or fails to respond to PRG within five business days after
receiving notice of PRG's intent to enter into a Superior Transaction, PRG may
terminate this Agreement pursuant to Section 8.2(b) and enter into the Superior
--------------
Transaction.
(f) If this Agreement is selected as the Winning Bid, PRG shall use all
commercially reasonable efforts to fully support this Agreement and its
implementation and consummation and shall cease (i) all contacts with parties
other than AmSurg with respect to the sale of the Acquired Assets, (ii) all
efforts to market, sell or otherwise restructure the Acquired Entities and the
Acquired Assets (other than as expressly permitted in this Agreement), and (iii)
all attempts, either alone or with parties other than AmSurg, to propose a plan
of reorganization of PRG other than pursuant to the Plan of Reorganization.
(g) Although AmSurg acknowledges that the Plan of Reorganization, the
Disclosure Statement, and all motions and orders before the Bankruptcy Court
required hereunder are ultimately the responsibility of PRG, each of PRG and
AmSurg shall cooperate in good faith to draft the substantive provisions of the
final versions of the Plan of Reorganization, the Disclosure Statement, and all
documents required hereunder relating to this Agreement or the Transaction
before their filing with or submission to the Bankruptcy Court, and each of such
documents so far as it relates to this Agreement or the Transaction shall be in
form and substance mutually acceptable to PRG and AmSurg. In addition, PRG
shall allow AmSurg sufficient time (e.g., at least two business days) to review
and comment upon any document placed before the Bankruptcy Court regarding the
Acquired Assets.
(h) If PRG, after consultation with AmSurg, reasonably determines that
approval and consummation of this Agreement and the Transaction as part of a
plan of reorganization is not likely to occur within 120 days of the Petition
Date, PRG may elect to file a motion under Section 363 of
24
<PAGE>
the Bankruptcy Code seeking an order approving the sale to AmSurg of PRG's
interest in the Acquired Entities (the "Sale Order").
V.2 Covenants of AmSurg and PRG. During the period from the date hereof
and continuing until the Closing Date (except as expressly contemplated or
permitted hereby, or to the extent that the other party shall otherwise
specifically consent in writing) each of AmSurg, PRG, and the Acquired Entities
covenants with the others that, insofar as the obligations relate to it:
(a) Each of AmSurg, PRG and the Acquired Entities will use their
commercially reasonable efforts to take all action and to do all things
necessary in order to consummate and make effective the transactions
contemplated hereby (including satisfaction, but not waiver, of the closing
conditions set forth in Article VI herein).
----------
(b) Each of PRG and the Acquired Entities will give any notices to
third parties and will use its commercially reasonable efforts to obtain any
third party consents that are required in connection with the consummation of
the transactions contemplated hereby, as set forth on Schedule 3.3. Each of
------------
AmSurg, PRG and the Acquired Entities will give any notices to, make any filings
with, and use its commercially reasonably efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies required in
connection with the consummation of the transactions contemplated hereby, as set
forth on Schedule 3.2. Without limiting the generality of the foregoing, each of
------------
AmSurg, PRG and the Acquired Entities will file any Notification and Report
Forms and related material that it may be required to file with the Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice under the Hart-Scott-Rodino Act, will use its commercially reasonable
efforts to obtain an early termination of the applicable waiting period, and
will make any further filings pursuant thereto that may be necessary in
connection therewith.
(c) Except as and to the extent required by law, including federal
securities laws, each of AmSurg, PRG and the Acquired Entities hereby agrees not
to disclose or use, and each shall cause its representatives not to disclose or
use, any Confidential Information with respect to any other party hereto
furnished, or to be furnished, by such other party or its representatives in
connection herewith at any time or in any manner other than in connection with
their respective evaluations of the Transaction. Except as required by law,
neither AmSurg, PRG, nor the Acquired Entities or any of their representatives
shall make any public statements regarding the Transaction or this Agreement
without the prior written approval of each of AmSurg and PRG.
(d) PRG will use its commercially reasonable efforts to obtain the
agreement of each of the physician partners or members in the Asset Entities to
enter into an agreement of limited partnership or operating agreement (as
applicable) with an Affiliate of AmSurg to which all of the Acquired Assets and
the remaining assets owned by the Asset Entities will be contributed effective
upon the Closing Date, although PRG can provide no assurance that it will be
successful in its efforts. The form of the agreement of limited partnership or
operating agreement is attached to this Agreement as Exhibits C and D,
---------- -
respectively.
25
<PAGE>
V.3 Covenants of PRG and the Acquired Entities. PRG and the Acquired
Entities covenant and agree that between the date hereof and continuing until
the Closing Date (except pursuant to an order of the Bankruptcy Court, as
expressly contemplated or permitted hereby, or to the extent that AmSurg shall
otherwise specifically consent in writing):
(a) PRG and the Acquired Entities will (i) carry on the respective
businesses of the Acquired Entities in substantially the same manner as
heretofore conducted and only in the Ordinary Course of Business, (ii) maintain
usual levels of inventories and supplies in the Acquired Entities, (iii) keep
the business and properties of the Acquired Entities substantially intact,
including their respective present operations, physical facilities, working
conditions, insurance policies, and relationships with lessors, licensors,
suppliers, patients, and employees, (iv) confer with AmSurg concerning
operational matters of a material nature relating to the Acquired Entities, and
(v) otherwise report periodically to AmSurg concerning the status of the
businesses and affairs of the Acquired Entities.
(b) Except for (i) distributions made to the partners or members of the
Acquired Entities in the Ordinary Course of Business and (ii) transactions with
physician groups whereby the groups shall have repurchased their practice
assets, terminated their service agreements, and repaid all outstanding amounts
owed to PRG to PRG's satisfaction, PRG and the Acquired Entities will not engage
in any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business; provided, however, that PRG will obtain AmSurg's
-------- -------
prior written consent prior to any transfer of PRG's ownership interest in any
Acquired Entity or the sale or transfer of PRG's or any Acquired Entity's
ownership interest in any surgery center. Without limiting the generality of the
foregoing, PRG and the Acquired Entities will not (x) declare, set aside, or pay
any dividend or make any distribution with respect to its securities or redeem,
purchase, or otherwise acquire any of its securities outside the Ordinary Course
of Business, or (y) otherwise engage in any practice, take any action, or enter
into any transaction of the sort described in Section 3.8.
-----------
(c) PRG and the Acquired Entities will permit representatives of AmSurg
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of PRG and the Acquired Entities,
to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each of the Acquired Entities and
will cooperate with AmSurg and AmSurg's representatives in connection with
AmSurg's due diligence investigation of the Acquired Assets and other aspects of
the business of the Acquired Entities.
(d) Except to the extent of the procedures set forth in the Bid
Procedures Motion regarding notice and competitive bidding to the extent the Bid
Procedures Motion is approved by the Bankruptcy Court, PRG and the Acquired
Entities will not and will use their respective commercially reasonable efforts
to cause their respective officers and directors not to, directly or indirectly,
through any representative or otherwise, solicit or entertain offers from,
negotiate with or in any manner encourage, discuss, accept or consider any
Competing Transaction; provided, that
--------
26
<PAGE>
PRG may sell interests in the assets of medical practices and certain interests
in surgery centers to the physician groups using such centers in accordance with
Section 5.3(b)(ii) hereof. PRG shall immediately notify AmSurg of any such
- ------------------
proposal or any inquiry relating to a proposal, including the identity of the
party making the proposal or inquiry and all of the terms of any such proposal.
(e) PRG and the Acquired Entities will not take any action that would
cause the conditions upon the obligations of the parties hereto to effect the
transactions contemplated hereby not to be fulfilled including, without
limitation, taking, causing to be taken, or permitting or suffering to be taken
or to exist any action or condition, that would cause the representations and
warranties made by PRG herein not to be true, correct, complete, and accurate as
of the Closing Date.
(f) PRG and the Acquired Entities will supplement the PRG Disclosure
Letter and give prompt written notice to AmSurg of any material adverse
development relating to the business, affairs, operations, prospects, or assets
of any Acquired Entity, and of any breach of any of the representations and
warranties of PRG in Article III. Unless AmSurg terminates this Agreement
-----------
pursuant to Section 8.1(c)(iv) within ten business days of receipt of such
------------------
supplement to the PRG Disclosure Letter, such supplement delivered pursuant to
this Section 5.3(f) shall be deemed to have amended and supplemented the PRG
--------------
Disclosure Letter and to have cured any misrepresentation, breach of warranty,
or breach of covenant as a result of such material adverse development or
breach.
(g) Prior to the Closing Date, to the extent AmSurg has not assumed
control over the accounting functions of an Acquired Entity pursuant to the
Management Agreement, PRG shall promptly provide to AmSurg monthly and quarterly
PRG Financial Data as specified in Schedule 3.7, and any financial statements
------------
prepared by or on behalf of PRG or its Subsidiaries for each of such Acquired
Entities for periods from and after September 30, 1999.
(h) As soon as practicable after the date of this Agreement, PRG shall
use its commercially reasonable efforts to cause the Acquired Entities to take
all action, to the extent necessary in accordance with applicable law and their
respective certificate of incorporation, bylaws, or other constituent documents,
to cause their respective shareholders, partners, or members to consider and
vote upon the approval of the Transaction and such other matters as may be
necessary or desirable to consummate the Transaction.
V.4 Covenants of AmSurg.
(a) AmSurg covenants and agrees that between the date hereof and
continuing until the Closing Date (except as expressly contemplated or permitted
hereby, or to the extent that PRG shall otherwise consent in writing) AmSurg
shall not take any action that would cause the conditions to the obligations of
the parties hereto to effect the transactions contemplated hereby not to be
fulfilled including, without limitation, taking, causing to be taken, or
permitting or suffering to be taken or to exist any action or condition, that
would cause the representations and warranties made by it
27
<PAGE>
herein not to be true, correct, complete and accurate as of the Closing Date.
AmSurg will supplement the AmSurg Disclosure Letter and give prompt written
notice to PRG of any development causing a breach of any of the representations
and warranties in Article IV. Unless PRG terminates this Agreement pursuant to
----------
Section 8.1(b)(iv) within ten business days of receipt of such supplement to the
- ------------------
AmSurg Disclosure Letter, such supplement delivered pursuant to this Section
-------
5.4(a) shall be deemed to have amended and supplemented the AmSurg Disclosure
- ------
Letter and to have cured any misrepresentation, breach of warranty, or breach of
covenant as a result of such breach.
(b) In the event that AmSurg has Knowledge at any time prior to the
Closing Date (whether derived through provision of services under the Management
Agreement or otherwise) that any representation or warranty of PRG in Article
III is not true and correct in any material respect on and as of such date and
such fact has not been disclosed by PRG pursuant to Section 5.3(f), AmSurg shall
--------------
give PRG prompt written notice of such fact to PRG. PRG and AmSurg agree that
the disclosure or failure to disclose any matter required to be disclosed under
this Section 5.4(b) shall not affect, modify or limit any representation or
--------------
warranty of PRG or AmSurg's right to rely thereon.
ARTICLE VI.
CONDITIONS
VI.1 Conditions to Obligation of AmSurg. The obligation of AmSurg to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(a) the representations and warranties of PRG set forth in Article III,
-----------
as modified by the PRG Disclosure Letter and any amendment or supplement thereto
pursuant to Section 5.3(f), shall be true and correct when made, and at and as
--------------
of the Closing Date;
(b) PRG shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(c) No material adverse change shall have occurred in the business,
condition (financial or otherwise), operations, or results of operations of the
Acquired Assets or the Acquired Entities taken as a whole;
(d) The Acquired Entities shall have been issued each of the licenses
listed on Schedule 3.2 required to be issued as a result of changes in ownership
------------
of the Acquired Entities prior to the Closing Date and PRG and the Acquired
Entities shall have procured all of the consents specified in Schedule 3.3 that
------------
are designated as Material Consents;
(e) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge could (i)
prevent consummation of any of the transactions contemplated hereby, (ii) cause
any of the
28
<PAGE>
transactions contemplated hereby to be rescinded following consummation, or
(iii) affect adversely the right of any of the Acquired Entities to own the
Acquired Assets and to operate its businesses in substantially the same manner
as heretofore conducted (and no such injunction, judgment, order, decree,
ruling, or charge shall be in effect);
(f) PRG shall have delivered to AmSurg a certificate to the effect that
each of the conditions specified in Section 6.1(a)-(e) is satisfied in all
------------------
respects;
(g) all applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Act shall have expired or otherwise been terminated and
the parties shall have received all other authorizations, consents, and
approvals of governments and governmental agencies referred to in Section 3.2
-----------
that are designated as Material Consents;
(h) AmSurg shall have received from counsel to PRG an opinion in form
and substance as set forth in Exhibit E, addressed to AmSurg, and dated as of
---------
the Closing Date;
(i) AmSurg and PRG shall have entered into Escrow Agreements
substantially in the form attached hereto as Exhibits A (except as otherwise may
----------
be indicated in Section 9.8) and B;
----------- -
(j) all actions to be taken by PRG in connection with consummation of
the transactions contemplated hereby or by this Agreement and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
AmSurg;
(k) PRG shall have reached a definitive settlement with the plaintiffs
in all outstanding lawsuits that directly involve the Acquired Entities (other
than lawsuits based on medical malpractice claims and employment claims) and
shall have settled all claims and disputed liabilities with the members,
partners, shareholders, and employees of the Acquired Entities; provided, that
--------
PRG and AmSurg acknowledge that AmSurg will not require that PRG settle the
stockholder class action litigation currently pending against PRG as a condition
to the Closing;
(l) PRG shall have obtained a final nonappealable order or orders
acceptable to AmSurg from the Bankruptcy Court (i) confirming the Plan of
Reorganization, which Plan of Reorganization includes all terms and conditions
of this Agreement, including, without limitation, the sale of the Acquired
Assets to AmSurg or (ii) approving the sale of the Acquired Assets to AmSurg
under Section 363 of the Bankruptcy Code;
(m) This Agreement and the Transaction shall have been approved by the
requisite vote of the shareholders, partners, or members, as applicable, of each
of the Acquired Entities;
(n) PRG, the Acquired Entities and their respective Affiliates shall
have taken all action necessary for the Operating Entities to assume all
operating leases and contracts to be assumed by such entities that are material
to the ownership and operation of the Acquired Assets by such entities after the
Closing; provided, that AmSurg and PRG acknowledge and agree that any contract
--------
listed
29
<PAGE>
on Schedule 3.2 or 3.3 that is a contract requiring a consent to assignment that
------------ ---
is not designated as a Material Consent shall not be deemed material to the
ownership and operation of the Acquired Assets for purposes of this Section
-------
6.1(n); and
- ------
(o) A period of at least four (4) months shall have elapsed from
January 1, 2000, the effective date of the Management Agreement.
AmSurg may waive any condition specified in this Section 6.1 if it executes a
-----------
writing so stating at or prior to the Closing.
VI.2 Conditions to Obligations of PRG and the Acquired Entities. The
obligations of PRG and the Acquired Entities to consummate the transactions to
be performed by them in connection with the Closing is subject to satisfaction
of the following conditions:
(a) the representations and warranties of AmSurg set forth in Article
-------
IV, as modified by the AmSurg Disclosure Letter and any amendment or supplement
- --
thereto pursuant to Section 5.4(c), shall be true and correct when made and at
--------------
and as of the Closing Date;
(b) AmSurg shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
prevent consummation of any of the transactions contemplated hereby or (ii)
cause any of the transactions contemplated hereby to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(d) AmSurg shall have delivered to PRG a certificate to the effect that
each of the conditions specified in Section 6.2(a)-(c) is satisfied in all
------------------
respects;
(e) all applicable waiting periods (and any extensions thereof) under
the Hart-Scott-Rodino Act shall have expired or otherwise been terminated and
PRG shall have received all other authorizations, consents, and approvals of
governments and governmental agencies referred to in Section 3.2;
-----------
(f) AmSurg or its Affiliates shall have taken all action necessary for
the Operating Entities to assume all operating leases and contracts to be
assumed by such entities necessary for the ownership and operation of the
Acquired Assets by such entities after the Closing;
(g) PRG shall have received from counsel to AmSurg an opinion in form
and substance as set forth in Exhibit F, addressed to PRG, and dated as of the
---------
Closing Date;
30
<PAGE>
(h) The Transaction shall have been approved by the requisite vote of
the shareholders, partners, or members, as applicable, of each of the Acquired
Entities;
(i) PRG shall have obtained a final nonappealable order or orders from
the Bankruptcy Court (i) confirming the Plan of Reorganization, which Plan of
Reorganization includes all terms and conditions of this Agreement, including,
without limitation, the sale of the Acquired Assets to AmSurg or (ii) approving
the sale of the Acquired Assets to AmSurg under Section 363 of the Bankruptcy
Code; and
(j) A period of at least four (4) months shall have elapsed from
January 1, 2000, the effective date of the Management Agreement. PRG may waive
any condition specified in this Section 6.2 if it executes a writing so stating
-----------
at or prior to the Closing.
ARTICLE VII.
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing:
VII.1 General. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other party reasonably may request,
all at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification therefor under Article IX). PRG
acknowledges and agrees that from and after the Closing, AmSurg will be entitled
to possession of all documents, books, records, agreements, and financial data
of any sort relating to the Acquired Assets; provided, that PRG shall have
--------
access to such documents or copies of such documents.
VII.2 Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(a) this Agreement or (b) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act,
or transaction on or prior to the Closing Date involving the Acquired Assets,
each of the other parties will cooperate with such party and such party's
counsel in the contest or defense, use commercially reasonable efforts to make
available their personnel, and provide such testimony and access to their books
and records as shall reasonably be necessary in connection with the contest or
defense, at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefor under Article IX).
VII.3 Transition. PRG and the Acquired Entities will not take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, payor, patient, supplier, or other business associate of any of the
Acquired Entities from maintaining the same business relationships
31
<PAGE>
with AmSurg (and each of the Operating Entities) after the Closing as it
maintained with PRG and the Acquired Entities prior to the Closing.
VII.4 Confidentiality. Each of AmSurg, PRG and the Acquired Entities
will treat and hold as such all of the Confidential Information received
concerning the other parties hereto, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the other parties or destroy, at the request and option of such other party, all
tangible embodiments (and all copies) of the Confidential Information concerning
such other party that are in the possession of AmSurg, PRG, or the Acquired
Entities, as the case may be. In the event that any director, officer, member,
shareholder, partner, or agent of AmSurg, PRG, or the Acquired Entities is
requested or required (by oral question or request for information or documents
in any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information concerning another
party hereto, he or it will notify such other party promptly of the request or
requirement so that such party may seek an appropriate protective order or waive
compliance with the provisions of this Section 7.4. If, in the absence of a
-----------
protective order or the receipt of a waiver hereunder, any director, officer,
member, shareholder, partner, or agent of AmSurg, PRG or the Acquired Entities,
is, on the advice of counsel, compelled to disclose any Confidential Information
to any tribunal or else stand liable for contempt, he or it may disclose the
Confidential Information to the tribunal; provided, however, that he or it shall
-------- -------
use his or its commercially reasonable efforts to obtain, at the request of such
other party, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as such other party shall designate. The foregoing provisions shall
not apply to any Confidential Information that is generally available to the
public immediately prior to the time of disclosure.
VII.5 Development Fees. In the event that (a) physicians in a practice
currently or previously managed by PRG enter into an agreement prior to the
Closing Date granting AmSurg a right of first refusal for AmSurg to develop a
surgery center in the event that such group desires to develop a surgery center
with a corporate partner, (b) within 12 months following the Closing Date, those
physicians execute a limited liability company operating agreement or an
agreement of limited partnership with AmSurg, and (c) the entity formed by
AmSurg and the physicians executes a real estate lease for a new surgery center
(a "Development Transaction"), AmSurg will pay PRG a fee of $200,000 for each
such Development Transaction. Payment will be made within thirty (30) days
after all three (3) conditions are met.
VII.6 Acquired Entity Audits. Following the Closing Date, PRG and its
representatives will cooperate with AmSurg and its representatives (including
providing any representation letters or other instruments required by AmSurg's
independent auditors), make available its personnel, and provide such access to
its books and records as shall be necessary in connection with audits of the
financial statements of the Acquired Entities.
VII.7 Employee Benefits. Following the Closing Date, AmSurg will use
commercially reasonable efforts to cause the Acquired Entities or their
successors to honor sick leave, vacation, and other employee benefits (other
than employer contributions to retirement or pension plans)
32
<PAGE>
accrued by employees of the Acquired Entities as of the Closing Date in
accordance with the current policies of the Acquired Entities.
VII.8 Prorations.
(a) AmSurg, PRG and the Acquired Entities agree that a portion of the
expenses from the operation of each Acquired Entity that is an Acquired Entity
on the Closing Date (i.e., Acquired Entities that on the Closing Date have not
been excluded pursuant to Section 2.4 or by mutual agreement among the parties
-----------
(the "Closing Acquired Entities")) related to salaries, payroll taxes, group
health and life insurance, workmen's compensation insurance, professional
liability insurance, property and casualty insurance, contract and professional
fees (e.g. linen service, transportation service and janitorial service),
utilities, rent and property taxes (collectively the "Prorated Expenses") equal
to the aggregate product of (i) the Prorated Expenses for each Closing Acquired
Entity and (ii) the respective Acquisition Percentage for such Closing Acquired
Entity shall be prorated between AmSurg and PRG as of 12:01 a.m. on the Closing
Date based on the amounts of the Prorated Expenses properly allocable to the
time periods before and after Closing.
(b) On or before the expiration of 60 days from the Closing Date,
AmSurg will present to PRG a statement of prorations ("AmSurg's Proration
Statement") made in accordance with Section 7.8(a) providing information
--------------
sufficient for PRG to make a detailed review of the basis of the prorations set
forth in the statement. PRG shall review AmSurg's Proration Statement and
provide AmSurg written notice stating PRG's objections, if any, and identifying
the reasons for any objection within 30 days after receipt of AmSurg's Proration
Statement. If PRG does not provide AmSurg with a written notice of objections
within such 30-day period, PRG shall be deemed to have agreed with and
acknowledged the correctness of AmSurg's Proration Statement. AmSurg and PRG
agree to cooperate with one another by providing one another, upon request,
information in their possession reasonably requested by the other to assist in
the preparation of AmSurg's Proration Statement or PRG's notice of objection, as
the case may be.
(c) If PRG makes any such objection, PRG and AmSurg shall agree on the
amount, if any, not in dispute within five (5) business days after AmSurg's
receipt of PRG's objections. If any amounts remain in dispute after the
expiration of five (5) business days from delivery to AmSurg of PRG's
objections, AmSurg and PRG shall submit the dispute to the Bankruptcy Court for
resolution.
(d) After the amounts of the Prorated Expenses to be prorated among
AmSurg and PRG is established, whether by agreement among AmSurg and PRG, by
PRG's failure to object as provided in Section 7.8(b), or by the Bankruptcy
-------------
Court, if amounts are owed to PRG, AmSurg promptly shall pay to PRG or to an
account of a Closing Acquired Entity per the direction of PRG, the agreed upon
amount. If the agreed upon amounts are owed to AmSurg, AmSurg shall be entitled
to a distribution from the funds held in escrow under the Payables Escrow
Agreement by executing and delivering to PRG and the Escrow Agent written
instructions instructing the Escrow Agent to release the amounts to be paid to
AmSurg pursuant to this Section 7.8.
-----------
33
<PAGE>
VII.9 Payment of Liabilities of the Acquired Entities.
(a) Following the Closing, AmSurg shall use its commercially reasonable
efforts to cause the Operating Entities to pay the Liabilities of the Closing
Acquired Entities that relate to the operation of the business of the Closing
Acquired Entities prior to the Closing Date (the "Pre-Closing Payables"). On or
before the 45/th/ and 75/th/ days following the Closing Date, AmSurg shall
provide PRG with a written report specifying for each Closing Acquired Entity
the amount of Pre-Closing Payables paid by the Operating Entities and the
portion of such Pre-Closing Payables allocable to PRG's ownership interest in
such Closing Acquired Entities (the "PRG Payables"). The PRG Payables for each
Closing Acquired Entity shall be equal to the product of (i) the Acquisition
Percentage and (ii) the Pre-Closing Payables for that Closing Acquired Entity.
(b) If at any time prior to the expiration of 90 days from the Closing
Date the aggregate of the PRG Payables for all Closing Acquired Entities exceeds
the product of $50,000 and the number of Closing Acquired Entities, AmSurg shall
give PRG written notice of that fact. Upon receipt of any additional invoices
for Pre-Closing Payables following such time as the aggregate amount of PRG
Payables exceeds the product of $50,000 and the number of Closing Acquired
Entities, AmSurg shall promptly deliver copies of such invoices to PRG, together
with notice of the PRG Payables portion of such Pre-Closing Payables. PRG shall
have the right, by delivery to AmSurg within five (5) business days of receipt
of such invoices, to pay AmSurg the PRG Payable portion of such Pre-Closing
Payables. In the event the aggregate amount of PRG Payables (less any amount
paid by PRG to AmSurg as set forth in this Section 7.9(b)) exceeds the product
--------------
of $125,000 and the number of Closing Acquired Entities, AmSurg shall give PRG
written notice of that fact and AmSurg and the Operating Entities shall have no
further obligation to pay or cause to be paid any Pre-Closing Payables.
(c) On or prior to the expiration of 95 days from the Closing Date,
AmSurg will provide PRG with a written report (the "Pre-Closing Payables
Statement") specifying for each Closing Acquired Entity the amount of Pre-
Closing Payables paid by the Operating Entities, the amount of PRG Payables for
each Closing Acquired Entity, and the amount of any PRG Payables paid pursuant
to Section 7.9(b). PRG shall review the Pre-Closing Payables Statement and
--------------
provide AmSurg written notice stating PRG's objections, if any, and identifying
the reasons for the objections within ten business days after receipt of the
Pre-Closing Payables Statement. If PRG does not provide AmSurg with a written
notice of objections within such ten business day period, PRG shall be deemed to
have agreed with and acknowledged the correctness of the Pre-Closing Payables
Statement.
(d) If PRG makes any such objection, PRG and AmSurg shall agree on the
amount, if any, not in dispute within five (5) business days after AmSurg's
receipt of PRG's objections. If any amounts remain in dispute after expiration
of five (5) business days from delivery to AmSurg of PRG's objections, AmSurg
and PRG shall submit the dispute to the Bankruptcy Court for resolution.
34
<PAGE>
(e) After the amount of the PRG Payables is established, whether by
agreement among AmSurg and PRG, by PRG's failure to object as provided in
Section 7.9(c), or by the Bankruptcy Court, if the aggregate amount of PRG
- --------------
Payables (less any amount paid to AmSurg pursuant to Section 7.9(b)) is less
---------------
than the product of $50,000 and the number of Closing Acquired Entities, AmSurg
promptly shall pay to PRG or to an account of a Closing Acquired Entity per the
direction of PRG, the difference between (i) the product of $50,000 and the
number of Closing Acquired Entities and (ii) the aggregate PRG Payables (less
any amount paid to AmSurg pursuant to Section 7.9(b)). If the aggregate PRG
---------------
Payables (less any amount paid to AmSurg pursuant to Section 7.9(b)) is greater
---------------
than the product of $50,000 and the number of Closing Acquired Entities, AmSurg
shall be entitled to a distribution from the funds held in escrow in an amount
equal to the difference between the PRG Payables (less any amount paid to AmSurg
pursuant to Section 7.9(b)) and the product of $50,000 and the number of Closing
--------------
Acquired Entities under the terms of the Payables Escrow Agreement by executing
and delivering to PRG and the Escrow Agent written instructions to the Escrow
Agent instructing the Escrow Agent to release the amounts to be paid to AmSurg
pursuant to this Section 7.9. Following final determination of the amount of
-----------
the PRG Payables and the distribution from the escrow to AmSurg as set forth
above, AmSurg and PRG shall deliver written instructions to the Escrow Agent
directing the Escrow Agent to distribute any funds then remaining in escrow
under the Payables Escrow Agreement to PRG or to an account of a Closing
Acquired Entity specified by PRG.
(f) Notwithstanding anything contained herein to the contrary, in no
event shall AmSurg or any Operating Entity be liable for the payment of any Pre-
Closing Payables of PRG or the Closing Acquired Entities and AmSurg's obligation
to cause the Operating Entities to pay such Pre-Closing Payables shall terminate
upon delivery by AmSurg to PRG of written notice as set forth in Section 7.9(b)
--------------
that the aggregate amount of PRG Payables exceeds the product of $125,000 and
the number of Closing Acquired Entities. In the event the aggregate amount of
PRG Payables exceeds the product of $125,000 and the number of Closing Acquired
Entities, AmSurg, PRG, and the Closing Acquired Entities agree and acknowledge
that AmSurg shall cause the Operating Entities to first pay Pre-Closing Payables
that are accounts payable for items purchased and invoiced and services rendered
in the Ordinary Course of Business.
ARTICLE VIII.
TERMINATION
VIII.1 Termination of Agreement. Certain of the parties may terminate this
Agreement as provided below:
(a) AmSurg and PRG may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) AmSurg may terminate this Agreement by giving written notice to PRG
at any time prior to the Closing:
35
<PAGE>
(i) in the event PRG has breached any representation, warranty,
or covenant contained herein in any material respect, AmSurg has notified
PRG of the breach, the breach has continued without cure for a period of 30
days after the notice of breach, and the aggregate Adverse Consequences
suffered or reasonably expected to be suffered by AmSurg as a result of all
such breaches exceeds 1% of the Purchase Price or are reasonably expected
to result in a Material Adverse Effect;
(ii) if the Closing shall not have occurred on or before
December 31, 2000, by reason of the failure of any condition precedent
under Section 6.1 (unless the failure results primarily from AmSurg itself
-----------
breaching any representation, warranty, or covenant contained herein);
(iii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory, or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated hereby, and such order,
decree, ruling, or other action shall have become final and non-appealable;
provided, that AmSurg shall have used all commercially reasonable efforts
--------
to remove such injunction, order, or decree;
(iv) in the event the Bid Procedures Motion or the Management
Agreement Motion is not approved by the Bankruptcy Court within 25 business
days of the Petition Date, provided that AmSurg must give PRG notice of its
election to terminate this Agreement within 15 days of the Bankruptcy
Court's disapproval or failure to approve within 25 business days, as the
case may be, or AmSurg shall be deemed to have waived its right to
terminate under this Section 8.1(b)(iv);
------------------
(v) in the event PRG has within the previous ten business days
supplemented the PRG Disclosure Letter and given AmSurg notice pursuant to
Section 5.3(f); or
--------------
(vi) in the event the Bankruptcy Court has not entered an order
confirming the Plan of Reorganization or approving the Sale Order within
120 days of the Petition Date, provided that AmSurg must give PRG notice of
its election to terminate this Agreement within 15 days of the Bankruptcy
Court's disapproval or failure to approve within 120 days, as the case may
be, or AmSurg shall be deemed to have waived its right to terminate under
this Section 8.1(b)(vi).
------------------
(c) PRG may terminate this Agreement by giving written notice to
AmSurg at any time prior to the Closing:
(i) in the event AmSurg has breached any material representation,
warranty, or covenant contained herein in any material respect, PRG has
notified AmSurg of the breach, and the breach has continued without cure
for a period of 30 days after the notice of breach;
36
<PAGE>
(ii) if the Closing shall not have occurred on or before December
31, 2000 by reason of the failure of any condition precedent under
Section 6.2 (unless the failure results primarily from PRG itself breaching
-----------
any representation, warranty, or covenant contained herein);
(iii) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory, or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby, and such order,
decree, ruling, or other action shall have become final and non-appealable;
provided, that PRG shall have used all commercially reasonable efforts to
remove such injunction, order, or decree; or
(iv) in the event AmSurg has within the previous ten business days
supplemented the AmSurg Disclosure Letter and given PRG notice pursuant to
Section 5.4(a).
--------------
VIII.2 Termination Following a Competing Transaction.
(a) Termination by AmSurg. This Agreement may be terminated by AmSurg
if following the receipt of a Competing Transaction by PRG, the Board of
Directors of PRG shall have altered its determination to recommend that the
Bankruptcy Court approve this Agreement and the Transaction or the Bankruptcy
Court shall fail to approve this Agreement and the Transaction.
(b) Termination by PRG. This Agreement may be terminated by PRG
following receipt of a Competing Transaction if the Board of Directors of PRG
determines, in good faith, that such Competing Transaction is a Superior
Transaction and that termination is required for the directors to comply with
their fiduciary duties to the shareholders or creditors of PRG.
VIII.3 Effect of Termination.
(a) If any party terminates this Agreement pursuant to Section 8.1,
-----------
except for Sections 3.4, 4.5, 5.2(c), 10.4, 10.8, 10.9, 10.13, and this Section
------------------------- ---- ---- ---- ----- -------
8.3, which shall survive termination of this Agreement, all rights and
- ---
obligations of the parties hereunder shall terminate without any Liability of
any party to any other party (except for any Liability of any party then in
breach.
(b) If (i) PRG terminates this Agreement pursuant to Section 8.2(b),
--------------
(ii) AmSurg terminates this Agreement pursuant to Section 8.2(a), or (iii) PRG
--------------
breaches Section 5.3(d) of this Agreement and within 12 months after such
--------------
termination or breach PRG, the Acquired Entities, or any of their respective
Subsidiaries or Affiliates enters into a definitive agreement or agreements with
persons or entities other than AmSurg or its Affiliates relating to a
transaction involving 25% or more of the Acquired Assets or Acquired Entities
(excluding any Transaction involving an Acquired Entity that AmSurg has excluded
pursuant to Section 2.4(b) or that has been excluded from
--------------
37
<PAGE>
the Transaction by written agreement of AmSurg and PRG), whether through direct
purchase, merger, consolidation, or other business combination, and such
transaction (or transactions) is consummated then, within two business days of
the consummation of such transaction or transactions, PRG (or the successor
thereto) shall pay AmSurg the Termination Fee by wire transfer in immediately
available funds, which fee represents the parties' best estimates of the out-of-
pocket costs incurred by AmSurg and the value of management time, overhead,
opportunity costs, and other unallocated costs of AmSurg incurred by or on
behalf of AmSurg in connection with this Agreement. PRG shall use commercially
reasonable efforts to ensure that payment of the Termination Fee provided by
this Section 8.3(b) shall be treated and paid as an administrative expense of
--------------
PRG's bankruptcy estate, whether in the Bankruptcy Court or in any other United
States Bankruptcy Court, by voluntary or involuntary petition, or under Chapter
7 or Chapter 11 of the Bankruptcy Code. The Termination Fee provided for by this
Section 8.3(b) shall be the sole and exclusive remedy of AmSurg in the event of
- --------------
the termination of this Agreement as described in this Section 8.3(b).
--------------
(c) If each of the conditions in Section 6.1 have been satisfied and
-----------
AmSurg refuses to consummate the Transaction, AmSurg shall pay PRG the
Termination Fee by wire transfer in immediately available funds. The Termination
Fee provided for by this Section 8.3(c) shall be the sole and exclusive remedy
--------------
of PRG in the event of the failure to close the Transaction as described in this
Section 8.3(c).
- --------------
VIII.4 Extension; Waiver. At any time prior to the Closing Date, any
party hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (c)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be voluntary, and shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE IX.
INDEMNIFICATION
IX.1 Indemnification Obligations of PRG.
(a) In the event PRG breaches (or in the event any third party alleges
facts that, if true, would mean PRG has breached) any representations,
warranties, and covenants contained herein, then PRG agrees to indemnify AmSurg
and its shareholders, representatives, and Affiliates (individually and
collectively the "AmSurg Indemnified Parties") from and against the entirety of
any Adverse Consequences that the AmSurg Indemnified Parties may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences suffered after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or
the alleged breach).
38
<PAGE>
(b) PRG agrees to indemnify the AmSurg Indemnified Parties from and
against the entirety of any Adverse Consequences that the AmSurg Indemnified
Parties may suffer resulting from, arising out of, relating to, in the nature
of, or caused by:
(i) any Liability of PRG or any Acquired Entity for any Taxes of
PRG or any Acquired Entity with respect to any Tax year or portion thereof
ending on or before the Closing Date;
(ii) any Liability of PRG or the Asset Entities that is not an
Assumed Liability (including any Liability of PRG or any Asset Entity that
becomes a Liability of AmSurg under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger or successor
liability, under Environmental, Health, and Safety Requirements, or
otherwise by operation of law);
(iii) any claim by any securityholder, partner, or member of PRG or
any Affiliate of PRG (including the Acquired Entities) for breach of
fiduciary duty or other similar claim as a result of the Transaction; and
(iv) any claim by any officer, director, partner, member, or
securityholder of PRG or any Acquired Entity for indemnification against
AmSurg by reason of the fact that such person was a director, officer,
member, partner, employee, or agent of any Acquired Entity or was serving
at the request of PRG or any Acquired Entity as a partner, member, trustee,
director, officer, employee, or agent of another entity (whether such claim
is for judgments, damages, penalties, fines, costs, amounts paid in
settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise)
with respect to any action, suit, proceeding, complaint, claim, or demand
brought against such person (whether such action, suit proceeding,
complaint, claim, or demand is pursuant to this Agreement, applicable law
or otherwise).
(c) PRG Agrees that any indemnity obligation hereunder shall be treated
as an administrative claim under Sections 503 and 507 of the Bankruptcy Code in
its bankruptcy case in the Bankruptcy Court.
IX.2 Indemnification Obligations of AmSurg. AmSurg agrees to indemnify
PRG from and against the entirety of any Adverse Consequences that PRG may
suffer caused proximately by any Liability of the Asset Entities that is an
Assumed Liability.
IX.3 Procedure for Matters Involving Third Parties.
(a) If any third party shall notify an AmSurg Indemnified Party or PRG,
as the case may be (the "Indemnified Party"), with respect to any matter (a
"Third Party Claim") that may give rise to a claim for indemnification against
the other party (the "Indemnifying Party") under this Article IX, then the
----------
Indemnified Party shall promptly issue a Claim Notice (as defined below) to the
39
<PAGE>
Indemnifying Party with respect thereto; provided, however, that no delay on the
-------- -------
part of the Indemnified Party in notifying the Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent)the Indemnifying Party thereby is prejudiced.
(b) The Indemnifying Party will have the right to defend The Indemnified
Party against the Third Party Claim with counsel of its choice reasonably
satisfactory to The Indemnified Party so long as (i)the Indemnifying Party
notifies The Indemnified Party in writing within 15 days following the receipt
of the Claim Notice that the Indemnifying Party will indemnify The Indemnified
Party from and against the entirety of any Adverse Consequences The Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim, (ii) the Indemnifying Party provides The
Indemnified Party with evidence acceptable to The Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not in the good faith judgment of The Indemnified
Party, likely to establish a precedential custom or practice adverse to the
continuing business interests of The Indemnified Party, and (v)the Indemnifying
Party conducts the defense of the Third Party Claim actively, diligently, and in
good faith. If the Indemnifying Party assumes the defense of a Third Party
Claim, (i) it will be conclusively established for purposes of this Agreement
that the claims made in that Third Party Claim are within the scope of and
subject to indemnification pursuant to this Article IX; (ii) no compromise or
----------
settlement of such claim may be effected by the Indemnifying Party without The
Indemnified Party's consent unless (A) there is no finding or admission of any
violation of Law or any violation of the rights of any person and no effect on
any other claims that may be made against the Indemnified Party, and (B) the
sole relief provided is monetary damages that are paid in full by the
Indemnifying Party; and (iii) the Indemnified Party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.3(b), (i) The Indemnified Party
--------------
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (ii) The Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably), and (iii)the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of The
Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 9.3(b) is or becomes
--------------
unsatisfied, The Indemnified Party has notified the Indemnifying Party of the
failure of such condition and such failure has continued without cure for a
period of ten days after such notice, (i) The Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem appropriate
(and The Indemnified Party
40
<PAGE>
need not consult with, or obtain any consent from, the Indemnifying Party in
connection therewith), (ii) the Indemnifying Party will reimburse The
Indemnified Party promptly and periodically for the costs of defending against
the Third Party Claim (including reasonable attorneys' fees and expenses), and
(iii) the Indemnifying Party will remain responsible for any Adverse
Consequences The Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Article IX.
----------
IX.4 Notice of Claim. In the event The Indemnified Party suffers Adverse
Consequences that gives or could give rise to a claim for indemnification under
this Article IX, The Indemnified Party shall promptly notify the Indemnifying
----------
Party in writing (a "Claim Notice") in accordance with Section 9.3 of this
-----------
Agreement. The Claim Notice shall contain a brief description of the nature of
the Adverse Consequences suffered and, if practicable, an aggregate dollar value
estimate of the Adverse Consequence suffered. No delay in the issuance of a
Claim Notice shall relieve the Indemnifying Party from any obligation under this
Article IX, unless and solely to the extent the Indemnifying Party is thereby
- ----------
prejudiced. In the event that the Indemnifying Party in good faith believes
that The Indemnified Party has not suffered any Adverse Consequences that have
given or could give rise to a claim for indemnification, the Indemnifying Party
may submit the Claim Notice to binding arbitration pursuant to Section 10.13 of
-------------
this Agreement.
IX.5 Limitation on PRG's Indemnification Liability. PRG shall have no
liability for indemnification claims under this Article IX unless and only to
----------
the extent that the aggregate Adverse Consequences claimed under this Article IX
----------
exceed $50,000. PRG's aggregate liability for indemnification claims under this
Article IX shall not exceed 7.0% of the Purchase Price.
- ----------
IX.6 Determination of Adverse Consequences. The parties shall take into
account the time cost of money (using the Applicable Rate as the discount rate)
and make appropriate adjustments for insurance coverage and Tax benefits and
consequences in determining Adverse Consequences for purposes of this Article
-------
IX.
- --
IX.7 Right to Escrow Funds. AmSurg or its Affiliates may exercise its
rights under the Escrow Agreement attached hereto as Exhibit A to recover any
---------
amounts to which it may be entitled under this Article IX.
----------
IX.8 Survival. All representations and warranties of PRG contained in this
Agreement shall survive the Closing and shall continue in full force and effect
for one year following the Closing Date; provided, however, in the event that as
-------- -------
of the Closing Date a period of four months has elapsed from January 1, 2000,
the effective date of the Management Agreement, all representations and
warranties of PRG contained in this Agreement shall be deemed to be conditions
to the Transaction and shall not survive the Closing of the Transaction, the
provisions of this Article IX shall have no further force or effect, and the
----------
Escrow Agreement in the form of Exhibit A attached hereto shall not be executed
---------
and delivered at Closing. All representations and warranties of AmSurg
contained in this Agreement shall be deemed to be conditions to the Transaction
and shall not survive the Closing of the Transaction.
41
<PAGE>
ARTICLE X.
MISCELLANEOUS
X.1 Notices. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given, (i)
on the date of delivery if delivered in person; (ii) on the date of receipt if
delivered by fax, provided that the successful transmission of the fax has been
confirmed through a confirmation function sheet provided by the fax machine used
for such transmission; or (iii) on the third business day following the deposit
thereof in the United States Mail, provided it is mailed by certified mail,
return-receipt requested and postage prepaid and properly addressed as set forth
below:
If to AmSurg: AmSurg Corp.
20 Burton Hills Boulevard
5th Floor
Nashville, Tennessee 37215
Attn: Ken P. McDonald
Fax: 615-665-3600
With copies to: Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238
Attn: Cynthia Y. Reisz
Fax: 615-742-2783
If to PRG: Physicians Resource Group, Inc.
5005 Riverway, Suite 400
Houston, Texas 77056
Attn: Michael Yeary
Fax: 713-629-5780
With copies to: Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
Attn: James S. Ryan, III
Fax: 214-953-5822
Any party hereto may from time to time, by written notice to the other parties,
designate a different address, which shall be substituted for the one specified
above.
X.2 Assignment. The parties hereto may not assign this Agreement, or
assign any of their respective rights or delegate any of their respective duties
hereunder, without the prior written consent of the other parties; provided,
--------
however, that AmSurg may assign its rights hereunder to one
- -------
42
<PAGE>
or more of its Affiliates and designate one or more of its Affiliates to perform
its obligations hereunder (in any or all cases AmSurg shall remain responsible
for the performance of all of its obligations hereunder).
X.3 Severability. Any provision of this Agreement that is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
X.4 Governing Law. This Agreement is deemed to have been made in the
State of Tennessee, and its interpretation, its construction and the remedies
for its enforcement or breach are to be applied pursuant to, and in accordance
with, the laws of the State of Tennessee for contracts made and to be performed
in that state.
X.5 Entire Agreement; Amendment. (a) This Agreement (which includes the
Exhibits and Schedules hereto, which are an integral part of this Agreement),
and each additional agreement and document to be executed and delivered pursuant
hereto (the "Additional Agreements"), constitute all of the agreements of the
parties with respect to, and supersede all prior agreements and understandings
relating to the subject matter of, this Agreement and the Additional Agreements
and the transactions contemplated by this Agreement and the Additional
Agreements. This Agreement may not be modified or amended except by a written
instrument specifically referring to this Agreement signed by the parties
hereto.
(b) In the event that a Bankruptcy Court order or orders provide for a fee
different in amount (including no provision for any fee) than that provided for
in Section 8.3(b) or a minimum Purchase Price increase different than the
--------------
minimum Purchase Price increase referred to in Section 5.1(a)(iii), then
-------------------
Sections 8.3(b) and 5.1(a)(iii) shall be automatically modified to reflect those
- --------------- -----------
modified amounts, if any; provided, however, that such modification shall not
-------- -------
affect AmSurg's right to terminate this Agreement pursuant to Section
-------
8.1(b)(iv).
- ----------
X.6 Waiver. No waiver by one party of the other party's obligations, or
of any breach or default by the other party of any representation or warranty or
any covenant hereunder of the other party, shall be valid or effective, unless
such waiver is set forth in writing and is signed by the party giving such
waiver; provided, however, that no such waiver shall be deemed to be a waiver of
-------- -------
either any subsequent breach or default of the same or similar nature or of any
other representation or warranty or covenant of such other party hereunder.
X.7 Interpretation; Headings. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. The parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another
43
<PAGE>
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) that the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant. The section, subsection and
any paragraph headings contained herein are for the purpose of convenience only
and are not intended to define or limit or affect, and shall not be considered
in connection with, the interpretation of any of the terms or provisions of this
Agreement.
X.8 Expenses and Fees. All costs and expenses incurred by the parties
hereto in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
X.9 Public Announcements. AmSurg and PRG shall consult with each other
before issuing any press release or otherwise making any public statements with
respect to this Agreement or the transactions contemplated hereby (other than
statements in response to inquiries received with respect to this Agreement or
the transactions contemplated hereby) and shall not issue any such press release
or make any such public statement (other than statements in response to
inquiries received with respect to this Agreement or the transactions
contemplated hereby) without the prior consent of the other party, which shall
not be unreasonably withheld; provided, however, that a party may, without the
-------- -------
prior consent of the other party, issue such press release or make such public
statement as may be required by Law or any listing agreement with a national
securities exchange to which AmSurg or PRG is a party if it has notified the
other party no later than 24 hours before it intends to make such press release
or public statement and uses commercially reasonable efforts to obtain such
party's consent but has been unable to do so.
X.10 Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
X.11 Incorporation of Exhibits.
(a) The PRG Disclosure Letter, the AmSurg Disclosure Letter, and the
Schedules and Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if fully set
forth herein.
(b) All capitalized terms used in the PRG Disclosure Letter or the
AmSurg Disclosure Letter (together, the "Disclosure Letters") shall have the
meanings set forth in this Agreement. For convenience, some disclosures maybe
cross-referenced to other portions of the Disclosure Letters.
X.12 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any provision of this Agreement was not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled by contract, at
law, or in equity.
44
<PAGE>
X.13 Jurisdiction. Following the Petition Date, AmSurg, PRG and the
Acquired Entities hereby irrevocably submit to the exclusive jurisdiction of the
Bankruptcy Court for the purpose of any action or proceeding arising out of or
relating to this Agreement and AmSurg, PRG and the Acquired Entities hereby
irrevocably agree that all claims in respect to such action or proceeding shall
be heard and determined in such court. AmSurg, PRG and the Acquired Entities
agree that a final judgment in any action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
X.14 Additional Surgery Centers.
(a) In the event PRG or any of its Affiliates intends to sell or
otherwise dispose of its ownership interest in an ambulatory surgery center
other than sales or dispositions to the physician or physicians that utilize the
surgery center, whether involving the disposition of assets or ownership
interests and whether through direct purchase, merger, consolidation, or other
business combination, that is not to be transferred pursuant to the Transaction
(an "Additional Transaction"), PRG shall first offer to sell such assets or
ownership interest to AmSurg. AmSurg shall have five business days from the date
PRG delivers written notice of such Additional Transaction to notify PRG whether
AmSurg has a preliminary interest in pursuing such Additional Transaction. If
AmSurg notifies PRG that AmSurg does have a preliminary interest in pursuing
such Additional Transaction within such five business days, AmSurg shall have a
period of 20 business days from the date of delivery of such notice to PRG to
perform its due diligence investigation and determine whether to proceed with
such Additional Transaction. In the event AmSurg does not elect to proceed with
such Additional Transaction, PRG or its Affiliate, as the case may be, may sell
such assets or ownership interest to a third party. In the event AmSurg does
elect to proceed with such Additional Transaction, AmSurg, PRG, or PRG's
Affiliate, as the case may be, will use their best efforts to close such
Additional Transaction within 15 business days; provided, that if at the
--------
expiration of such 15 business day period such Additional Transaction has not
closed but AmSurg, PRG, or PRG's Affiliate, as the case may be, are working
diligently to close such Additional Transaction, the foregoing 15 business day
period shall be extended by an additional 30 calendar days.
(b) AmSurg and PRG acknowledge and agree that with respect to any
Additional Transaction, the purchase price methodology shall be the same as that
reflected in this Agreement and such Additional Transaction shall be consummated
upon terms substantially similar to those set forth in this Agreement. In the
event PRG and AmSurg enter into a management agreement substantially similar to
the Management Agreement with respect to the surgery center that is the subject
of the Additional Transaction and AmSurg manages such center for a period of
four months prior to the closing of the Additional Transaction, PRG's
representations and warranties and indemnity obligations pursuant to the
agreements executed in connection with the Additional Transaction will not
survive the closing of the Additional Transaction. In the event AmSurg and PRG
mutually agree to proceed with the closing of an Additional Transaction prior to
such time as AmSurg has managed the surgery center that is the subject of the
Additional Transaction for a period of at least four months, AmSurg and PRG
shall enter into an escrow agreement in substantially the
45
<PAGE>
form of the Escrow Agreement attached hereto as Exhibit A that provides that
---------
7.0% of the purchase price paid in the Additional Transaction shall be placed
into escrow for a period of one year.
X.15 Options. AmSurg acknowledges that the interests in PRG Alexandria,
L.L.C. and PRG Dallas ASC, L.P. to be purchased by AmSurg in the Transaction are
subject to the options held by physicians affiliated with such Acquired Entities
as described on Schedule 3.6 of the PRG Disclosure Schedule. Such options are
------------
included in the operating agreements of PRG Alexandria, L.L.C. and PRG Dallas
ASC, L.P., to which AmSurg shall become a party on the Closing Date. AmSurg
agrees to abide by the terms of those operating agreements.
46
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Acquisition Agreement
to be executed by their respective officers thereunto duly authorized, as of the
date first written above.
AMSURG CORP.,
a Tennessee corporation
By: /s/ Ken P. McDonald
-------------------------------
Title: President and CEO
----------------------------
PHYSICIANS RESOURCE GROUP, INC.,
a Delaware corporation
By: /s/ Michael W. Yeary
-------------------------------
Title: President
----------------------------
PRG ALEXANDRIA, L.L.C.,
a Louisiana limited liability company
By: PRG Georgia, Inc.,
a Delaware corporation
By: /s/ Michael W. Yeary
-------------------------------
Title: President
----------------------------
THE DOTHAN OPHTHALMOLOGY ASC,
LLC,
an Alabama limited liability company
47
<PAGE>
By: American Surgery Centers of Alabama,
Inc.,
an Alabama corporation
By: /s/ Michael W. Yeary
----------------------------------
Title: President
-------------------------------
AMERICAN SURGERY CENTERS OF
SOUTH FLORIDA, LTD.,
a Florida partnership
By: American Surgery Centers of South
Florida, Inc.,
a Florida corporation
By: /s/ Michael W. Yeary
----------------------------------
Title: President
-------------------------------
PRG JACKSON ASC, L.L.C.,
a Tennessee limited liability company
By: PRG Tennessee I, Inc.,
a Delaware corporation
By: /s/ Michael W. Yeary
----------------------------------
Title: President
-------------------------------
PRG DALLAS ASC, L.P.,
a Texas limited partnership
48
<PAGE>
By: Texas PRG VII, Inc.,
a Delaware corporation
By: /s/ Michael W. Yeary
---------------------------------
Title: President
------------------------------
AMBULATORY EYE SURGERY CENTER
OF LOUISIANA, L.P.,
a Louisiana limited partnership
By: PRG Georgia, Inc.,
a Delaware corporation
By: /s/ Michael W. Yeary
---------------------------------
Title: President
------------------------------
CENTER FOR ADVANCED EYE SURGERY,
LTD.,
a Florida limited partnership
By: American Surgery Centers of Sarasota,
Inc.,
a Florida corporation
By: /s/ Michael W. Yeary
---------------------------------
Title: President
------------------------------
PRG NEVADA SURGICENTER, L.L.C.,
a Nevada limited liability company
By: PRG Nevada II, Inc.
49
<PAGE>
a Nevada corporation
By: /s/ Michael W. Yeary
--------------------------------
Title: President
-----------------------------
CENTRAL TEXAS DAY SURGERY CENTER
LIMITED PARTNERSHIP,
a Texas limited partnership
By: American Surgery Centers of Temple,
Inc.,
a Texas corporation
By: /s/ Michael W. Yeary
--------------------------------
Title: President
-----------------------------
WASHBURN SURGERY CENTER, L.L.C.,
a Kansas limited liability company
By: PRG Georgia, Inc.,
a Delaware corporation
By: /s/ Michael W. Yeary
--------------------------------
Title: President
-----------------------------
PRG THIBODAUX ASC, L.L.C.,
a Louisiana limited liability company
By: PRG Louisiana, Inc.,
a Louisiana corporation
50
<PAGE>
By: /s/ Michael W. Yeary
--------------------------------
Title: President
-----------------------------
51
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1 Assumed Liabilities
Schedule 2.4 Purchase Price Allocation
Schedule 3.2 Governmental Consents and Approvals
Schedule 3.3 Third Party Consents and Approvals
Schedule 3.5 Schedule of Assets
Schedule 3.6 Acquired Entities and Ownership Interests therein
Schedule 3.7 Financial Statements and Debt
Schedule 3.8 Subsequent Events
Schedule 3.11(c) Tax Returns
Schedule 3.12(b) Leased Real Property
Schedule 3.13 Intellectual Property
Schedule 3.15 Contracts
Schedule 3.17 Powers of Attorney
Schedule 3.19 Litigation
Schedule 3.20 Employees and Physicians
Schedule 3.23 Environmental, Health and Safety Licenses and Permits
Schedule 3.24 Governmental Permits
Exhibit A Form of Escrow Agreement for Indemnity Claims
Exhibit B Form of Escrow Agreement for Agreed Payables
Exhibit C Form of Agreement of Limited Partnership
Exhibit D Form of Operating Agreement
Exhibit E Form of Opinion of Counsel to PRG
Exhibit F Form of Opinion of Counsel to AmSurg
52
<PAGE>
EXHIBIT 99.2
NEWS
================================================================================
PHYSICIANS RESOURCE GROUP, INC.
FILES FOR REORGANIZATION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
DALLAS (February 1, 2000) - The Physicians Resource Group, Inc., ("PRG" or the
"Company") today announced that it filed for reorganization under Chapter 11 of
the United States Bankruptcy Code in the federal bankruptcy court in Dallas,
Texas. Since December 1998, PRG has been in discussions with Resurgence Asset
Management, L.L.C. ("Resurgence"), which owns or manages in excess of $92
million principal amount of the $125 million principal amount of the Company's
6% Convertible Subordinated Debentures due 2001 (the "Debentures"). The Company
elected not to pay interest on the Debentures that was due June 1 and
December 1, 1999 and, as of the filing date, the Debentures are in default. The
Company expects to finalize and implement a consensual restructuring agreement
with Resurgence.
Since January 1, 1999, the Company's focus has been (i) the sale of
medical practice assets and certain interests in surgery centers to the
Company's affiliated practices ("Physician Buyouts") and (ii) the sale by the
Company of certain interests in surgery centers to an unrelated third party.
The Company has been successful in completing Physician Buyouts of over
45 medical practices and certain interests in over 20 ambulatory surgery centers
related to those practices. In connection with these Physician Buyouts, all
litigation and other disputes with the affiliated medical practices and surgery
centers were resolved, approximately $17 million in the principal amount of
notes payable by the Company to the physicians or affiliated medical practices
were canceled and the management services agreements between the Company and the
affiliated medical practices were terminated. These Physician Buyouts and other
sales generated approximately $60 million in cash, allowing the Company to
retire approximately $9.5 million in bank indebtedness, as well as a $3.75
million, short-term loan the Company received from Resurgence. The Company
intends to seek approval from the Bankruptcy Court to continue to pursue
Physician Buyouts with the remaining affiliated medical practices using the
methodology employed by the Company prior to the filing date.
The Company also announced that it has entered into a definitive
Acquisition Agreement with AmSurg Corp. ("AmSurg") related to the sale by the
Company of its interest in eleven ambulatory surgery centers, with estimated
sale proceeds of up to approximately $40,000,000 in cash. Additionally, as part
of this agreement, AmSurg and PRG entered into a Management Agreement under
which, effective January 1, 2000, AmSurg began managing the operations of 15
surgery centers affiliated with PRG, 11 of which are to be purchased pursuant to
the terms of the Acquisition Agreement. The Acquisition Agreement also provides
that AmSurg may purchase additional centers upon completion of satisfactory due
diligence. The Acquisition Agreement and Management Agreement are subject to
approval by the Bankruptcy Court. Although this and a
- MORE -
<PAGE>
Physicians Resource Group Files for Reorganization
Page 2
February 1, 2000
number of other conditions must be satisfied prior to the consummation of this
transaction, the Company anticipates that closing could occur by May 2000.
PRG has applied to the Bankruptcy Court to retain Andrews & Kurth,
L.L.P. as its bankruptcy counsel.
Finally, the Company announced that Lucius E. Burch, III and David
Dulaney, M.D. have resigned as members of the Board of Directors of the Company,
but have agreed to serve as senior advisers to the Board of Directors. David
Meyer, M.D., Chairman of the Board, and John Shepherd, M.D. continue to serve as
members of the Board of Directors. Michael Yeary has been named the Company's
President/Chief Restructuring Officer.
PRG is a provider of physician practice management services that
provides management services to eye care practices and operates ambulatory
surgery centers. Contact: Michael Yeary, President/Chief Restructuring Officer
(972) 892-7324.
Certain statements in this news release consist of forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. As such, they involve risks and uncertainties as
detailed from time to time in the reports filed by the Company with the
Securities and Exchange Commission, including the Company's Annual Report on
Form 10-K, as amended, for the year ended December 31, 1997. When used herein,
the words "intends," "experts," "plans," "estimates," "projects," "believes,"
"anticipates" and similar expressions are intended to identify forward-looking
statements.
-END-
