ASSET PURCHASE AGREEMENT
by and among
SNW, INC.,
▇▇▇▇▇ ▇▇▇▇▇▇, O.D.,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇,
SUN VALLEY ACQUISITION CORPORATION
and
PHYSICIANS RESOURCE GROUP, INC.
TABLE OF CONTENTS
Page
Section 1. Terms of the Sale and Purchase of Assets
1.1 Conveyance of Assets . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . 2
1.3 Purchase Price; Assumption of Liabilities . . . . . . . . 2
1.4 Subsequent Actions . . . . . . . . . . . . . . . . . . . 2
Section 2. Representations and Warranties of Seller and the
Shareholders
2.1 Corporate Existence; Good Standing . . . . . . . . . . . 3
2.2 Power and Authority for Transactions . . . . . . . . . . 3
2.3 Permits, Licenses and Governmental Authorizations . . . . 3
2.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Consents . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Seller's Financial Information . . . . . . . . . . . . . 4
2.7 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Title to and Encumbrances on Property . . . . . . . . . . 4
2.10 Inventories . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 Intellectual Property Rights; Names . . . . . . . . . . . 4
2.12 Directors and Officers; Payroll Information; Employees . 4
2.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . 5
2.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Subsequent Events . . . . . . . . . . . . . . . . . . . . 6
2.16 Accounts Receivable/Payable . . . . . . . . . . . . . . . 6
2.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.18 Liabilities; Debt . . . . . . . . . . . . . . . . . . . . 7
2.19 Insurance Policies . . . . . . . . . . . . . . . . . . . 7
2.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . 8
2.21 Adverse Agreements . . . . . . . . . . . . . . . . . . . 8
2.22 Compliance with Laws in General . . . . . . . . . . . . . 8
2.23 Medicare and Medicaid Programs . . . . . . . . . . . . . 8
2.24 Fraud and Abuse . . . . . . . . . . . . . . . . . . . . . 8
2.25 No Untrue Representations . . . . . . . . . . . . . . . . 9
2.26 Accredited Investor Status . . . . . . . . . . . . . . . 9
2.27 Distributions and Repurchases . . . . . . . . . . . . . . 9
2.28 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . 9
2.29 Banking Relations . . . . . . . . . . . . . . . . . . . . 9
2.30 Ownership Interests of Interested Persons; Competitors . 9
2.31 Payors . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3. Representations and Warranties of PRG Sub and PRG
3.1 Corporate Existence: Good Standing . . . . . . . . . . . 9
3.2 Power and Authority . . . . . . . . . . . . . . . . . . . 10
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . 10
3.4 No Untrue Representations . . . . . . . . . . . . . . . . 10
Section 4. Covenants of Seller and the Shareholders
4.1 Consummation of Agreement . . . . . . . . . . . . . . . . 10
4.2 Business Operations . . . . . . . . . . . . . . . . . . . 10
4.3 Access and Notice . . . . . . . . . . . . . . . . . . . . 10
4.4 Approvals of Third Parties and Permits and Consents . . . 11
4.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . 11
4.6 Funding of Accrued Employee Benefits . . . . . . . . . . 11
4.7 Employee Matters . . . . . . . . . . . . . . . . . . . . 11
4.8 Distributions and Repurchases . . . . . . . . . . . . . . 11
4.9 Requirements to Effect Acquisition . . . . . . . . . . . 11
4.10 Voting of Shares; Irrevocable Proxy . . . . . . . . . . . 11
4.11 Accounting and Tax Matters . . . . . . . . . . . . . . . 11
4.12 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.13 Hiring of Employees . . . . . . . . . . . . . . . . . . . 12
Section 5. Covenants of PRG and PRG Sub
5.1 Consummation of Agreement . . . . . . . . . . . . . . . . 12
5.2 Approvals of Third Parties and Permits and Consents . . . 12
5.3 Listing Application . . . . . . . . . . . . . . . . . . . 12
Section 6. PRG Sub and PRG Conditions Precedent
6.1 Representations and Warranties . . . . . . . . . . . . . 12
6.2 Covenants and Conditions . . . . . . . . . . . . . . . . 12
6.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 No Material Adverse Change . . . . . . . . . . . . . . . 12
6.5 Due Diligence Review . . . . . . . . . . . . . . . . . . 12
6.6 Approval by the Board of Directors . . . . . . . . . . . 12
6.7 Consents and Approvals . . . . . . . . . . . . . . . . . 13
6.8 Closing Deliveries . . . . . . . . . . . . . . . . . . . 13
6.9 Debt and Receivables . . . . . . . . . . . . . . . . . . 13
6.10 Leases . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.11 NYSE Listing . . . . . . . . . . . . . . . . . . . . . . 13
Section 7. Seller's and the Shareholder's Conditions Precedent
7.1 Representations and Warranties . . . . . . . . . . . . . 13
7.2 Covenants and Conditions . . . . . . . . . . . . . . . . 13
7.3 Proceedings . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8. Closing Deliveries
8.1 Deliveries of Seller and the Shareholders . . . . . . . . 13
8.2 Deliveries of PRG Sub and PRG . . . . . . . . . . . . . . 14
Section 9. Nature and Survival of Representations and Warranties;
Indemnification
9.1 Nature and Survival . . . . . . . . . . . . . . . . . . . 15
9.2 Indemnification by PRG Sub and PRG . . . . . . . . . . . 15
9.3 Indemnification by Seller and the Shareholders . . . . . 15
9.4 Indemnification Procedure . . . . . . . . . . . . . . . . 16
Section 10. Termination
Section 11. Noncompetition
11.1 Prohibited Activities . . . . . . . . . . . . . . . . . . 17
11.2 Damages . . . . . . . . . . . . . . . . . . . . . . . . 17
11.3 Reasonable Restraint . . . . . . . . . . . . . . . . . . 18
11.4 Severability; Reformation . . . . . . . . . . . . . . . . 18
11.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 12. Nondisclosure of Confidential Information
Section 13.
Economic Risk; Sophistication . . . . . . . . . . . . . . . . 19
Section 14. Miscellaneous
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 19
14.2 Further Assurances . . . . . . . . . . . . . . . . . . . 20
14.3 Each Party to Bear Costs . . . . . . . . . . . . . . . . 20
14.4 Public Disclosures . . . . . . . . . . . . . . . . . . . 20
14.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 20
14.6 Captions . . . . . . . . . . . . . . . . . . . . . . . . 20
14.7 Integration of Exhibits . . . . . . . . . . . . . . . . . 20
14.8 ENTIRE AGREEMENT/AMENDMENT . . . . . . . . . . . . . . . 20
14.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . 20
14.10 Binding Effect/Assignment . . . . . . . . . . . . . 21
14.11 No Rule of Construction . . . . . . . . . . . . . . 21
14.12 Costs of Enforcement . . . . . . . . . . . . . . . . 21
14.13 Prorations . . . . . . . . . . . . . . . . . . . . . 21
14.14 Amendments; Waivers . . . . . . . . . . . . . . . . 21
14.15 Choice of Forum . . . . . . . . . . . . . . . . . . 21
14.16 Service of Process . . . . . . . . . . . . . . . . . 21
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made and
executed as of the 25th day of September, 1996, is by and among SUN
VALLEY ACQUISITION CORPORATION, a Texas corporation ("PRG Sub");
PHYSICIANS RESOURCE GROUP, INC., a Delaware corporation ("PRG"); and
SNW, INC., an Arizona corporation (collectively, "Seller"), and ▇▇▇▇▇
▇▇▇▇▇▇, O.D., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇
(collectively, Shareholders ).
WITNESSETH:
WHEREAS, Seller operates a center of eye care excellence
(optometry, optical and surgi-center practice) in Safford, Arizona
("Business");
WHEREAS, Shareholders are the only shareholders of Seller;
WHEREAS, PRG Sub is engaged in the business of acquiring the
assets of and managing non-medical aspects of ophthalmology practices
and is a wholly-owned subsidiary of PRG; and
WHEREAS, Seller wishes to sell to PRG Sub, and PRG Sub wishes to
acquire from Seller, substantially all of the assets of Seller, all
upon the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, and for other good and valuable
consideration, the sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
Section 1. Terms of the Sale and Purchase of Assets.
The sale of the assets of Seller which are to be sold hereunder
and the acquisition thereof by PRG Sub shall occur on the 30th day of
September, 1996 ("Closing Date"), unless another date is mutually
agreed upon among the parties hereto and shall be based on the
respective representations, warranties and agreements of the parties
hereto, and shall be subject to the terms and conditions herein
stated.
1.1 Conveyance of Assets. Subject to and upon the terms and
conditions contained herein, on the Closing Date, Seller shall sell,
convey, transfer, deliver and assign to PRG Sub all of Seller's right,
title and interest in and to the business, properties and assets of
S e ller (personal, tangible and intangible), including, without
limitation, all items of personal property and other assets used in
connection with the Business (except that the real estate owned by
Seller and Shareholders shall not be purchased and except as otherwise
provided herein) (individually, "Asset", and collectively "Assets"),
free and clear of all obligations, security interests, claims, liens
and encumbrances whatsoever, except as specifically assumed by PRG
pursuant to Section 1.3(b) hereof. Without limiting the foregoing, the
Assets specifically include:
(a) All of the business, personal property, furniture,
fixtures, equipment and goodwill of Seller of every kind and wherever
situated in which Seller has any right or interest, including, but not
limited to, all items owned by Seller identified on Exhibit 1.1(a)
attached hereto;
(b) All inventories maintained by Seller, including, but
not limited to, all items owned by Seller identified on Exhibit 1.1(b)
attached hereto;
(c) All contracts identified on Exhibit 2.7 and Exhibit
2.14 attached hereto (excluding this Agreement and the agreements,
instruments and documents executed and delivered by PRG Sub pursuant
to this Agreement);
(d) All accounts receivable of Seller;
(e) S u bject to applicable laws and regulations, all
accounts receivable records of Seller;
(f) S u bject to applicable laws and regulations, all
transferable licenses and other regulatory approvals necessary for or
incident to the operation of the Assets; and
(g) All clinical and administrative policy and procedure
manuals, trade secrets, trademarks, service marks, marketing and
promotional materials (including audiotapes, videotapes and printed
materials) and all other property rights required for or incident to
the marketing of the products and services of the Business, and all
books and records relating thereto.
1.2 Excluded Assets. There shall be excluded from the Assets to
be transferred and conveyed hereunder, and Seller shall retain all of
its right, title and interest in and to, the following assets:
(a) All cash and cash equivalents of Seller in existence on
the Closing Date;
(b) Those certain assets described on Exhibit 1.2(b);
(c) The Certificate or Articles of Incorporation, Bylaws,
shares of capital stock and minute books of Seller and similar
corporate records of Seller;
(d) The consideration delivered to Seller by PRG Sub on the
Closing Date pursuant to this Agreement;
(e) All patient medical records of Seller (which shall be
convyed to Barnet ▇▇▇▇▇▇▇ Eye Center, L.L.C. on the Closing Date); and
(f) All real estate owned by Seller and Shareholders.
1.3 Purchase Price; Assumption of Liabilities. As consideration
for the sale of the Assets by Seller, PRG Sub shall, on the Closing
Date, provide Seller with the following consideration:
(a) Purchase Price. Seller shall receive the consideration
s p ecified in Annex I attached hereto (the "Acquisition
Consideration"). The Acquisition Consideration shall be allocated
among the Assets as agreed among PRG Sub and Seller on the Closing
Date.
(b) ▇ ▇ ▇▇▇▇▇▇▇▇ of Liabilities. Except as otherwise
provided herein, PRG Sub shall assume on the Closing Date, and shall
perform or discharge on or after the Closing Date, (i) all of Accounts
Payable (as defined in Section 2.16 hereof) and (ii) all of the
contracts, leases, commitments, obligations and liabilities of Seller
which are listed on Exhibit 1.3(b) attached hereto to the extent that
obligations are current and not otherwise in default. Notwithstanding
any contrary provision contained herein, PRG Sub shall not be deemed
to have assumed, nor shall PRG Sub assume: (i) any liability,
commitment or obligation not a trade account payable generated in the
ordinary course of business or indicated on Exhibit 1.3(b), (ii) any
liability set forth on Exhibit 1.3(b) which may be incurred by reason
of any breach of or default under such contracts, leases, commitments
or obligations which occurred prior to the Closing Date; (iii) any
liability for any employee benefits payable to employees of Seller,
including, but not limited to, liabilities arising under any Seller
Plan (as defined in Section 2.21 hereof); (iv) any liability based
upon or arising out of a violation of any antitrust or similar
restraint-of-trade laws by Seller, including, without limiting the
generality of the foregoing, any such antitrust liability which may
arise in connection with agreements, contracts, commitments or orders
for the sale of goods or provision of services by Seller reflected on
the books of Seller at or prior to the Closing Date; (v) any liability
based upon or arising out of any tortious or wrongful actions of
Seller or any Shareholder; (vi) any liability for the payment of any
taxes imposed by law on Seller or any Shareholder arising from or by
reason of the transactions contemplated by this Agreement; (vii) any
mortgages on real property; nor (viii) any liability incurred or to be
incurred pursuant to any malpractice or other suits or actions pending
against Seller or any Shareholder.
1.4 Subsequent Actions. If, at any time after the Closing Date,
PRG Sub or PRG shall consider or be advised that any bills of sale,
assignments, assurances or any other actions or things are necessary
or desirable to vest, perfect or confirm of record or otherwise in PRG
Sub its right, title or interest in, to or under any of the Assets or
otherwise to carry out this Agreement, in return for the consideration
set forth in this Agreement, each Shareholder shall execute such bills
of sale, assignments and assurances and to take and do all such other
actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under the
Assets in PRG Sub or otherwise to carry out this Agreement.
Section 2. Representations and Warranties of Seller and the
Shareholders.
Seller and the Shareholders, jointly and severally, hereby
represent and warrant to PRG Sub and PRG as follows:
2.1 Corporate Existence; Good Standing. Seller is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Arizona. Seller has all necessary corporate powers to
own all of its assets and to carry on its business as such business is
now being conducted. Seller does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is Seller a party to any joint venture or
partnership. Shareholders are the sole shareholders of Seller and own
all outstanding shares of capital stock free of all security
interests, claims, encumbrances and liens in the amounts set forth on
Exhibit 2.1. Each share of Seller's common stock has been legally and
validly issued and fully paid and nonassessable. No shares of capital
stock of Seller are owned by Seller in treasury. There are no
outstanding (a) bonds, debentures, notes or other obligations the
holders of which have the right to vote with the stockholders of
Seller on any matter, (b) securities of Seller convertible into equity
interests in Seller, or (c) commitments, options, rights or warrants
to issue any such equity interests in Seller, to issue securities of
Seller convertible into such equity interests, or to redeem any
securities of Seller. No shares of capital stock of Seller have been
issued or disposed of in violation of the preemptive rights, rights of
first refusal or similar rights of any of Seller's stockholders.
Seller is not required to qualify to do business as a foreign
corporation in any other state or jurisdiction by reason of its
business, properties or activities in or relating to such other state
or jurisdiction. Seller does not have any assets, employees or
offices in any state other than Arizona.
2.2 Power and Authority for Transactions. Seller has the
corporate power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant
to this Agreement or to be executed and delivered on the Closing Date,
and has taken all action required by law, its Articles or Certificate
of Incorporation, its Bylaws or otherwise, to authorize the execution,
delivery and performance of this Agreement and such related documents.
Each Shareholder has the legal capacity to enter into and perform this
Agreement and the other agreements to be executed and delivered in
connection herewith. Seller has obtained the approval of its
stockholders necessary to the consummation of the transactions
contemplated herein. This Agreement and all agreements and documents
executed and delivered in connection herewith have been, or will be as
of the Closing Date, duly executed and delivered by Seller and the
Shareholders, as appropriate, and constitute or will constitute the
legal, valid and binding obligations of Seller and the Shareholders,
enforceable against Seller and the Shareholders in accordance with
their respective terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the availability of equitable remedies. The execution
and delivery of this Agreement, and the agreements executed and
delivered pursuant to this Agreement or to be executed and delivered
on the Closing Date, do not, and, subject to the receipt of consents
described on Exhibit 2.5, the consummation of the actions contemplated
hereby will not, violate any provision of the Articles or Certificate
of Incorporation or Bylaws of Seller or any provisions of, or result
in the acceleration of, any obligation under any lien, lease,
agreement, rent, instrument, order, arbitration award, judgment or
decree to which Seller or any Shareholder is a party or by which
S e ller or any Shareholder is bound, or violate any material
restrictions of any kind to which Seller is subject, or result in any
lien or encumbrance on any of Seller's assets or the Assets.
2.3 Permits, Licenses and Governmental Authorizations. All
building or other permits, certificates of occupancy, concessions,
g r a nts, franchises, licenses, certificates of need and other
governmental authorizations and approvals required for the conduct of
the Business or the use of the Assets, or waivers thereof, have been
duly obtained and are in full force and effect. There are no
p r o ceedings pending or, to the knowledge of Seller and the
S h areholders, threatened, which may result in the revocation,
cancellation or suspension, or any adverse modification, of any
thereof.
2.4 [intentionally blank].
2.5 Consents. Except as set forth on Exhibit 2.5, no consent,
authorization, permit, license or filing with any governmental
authority, any lender, lessor, any manufacturer or supplier or any
other person or entity is required to authorize, or is required in
connection with, the execution, delivery and performance of this
Agreement and the agreements and documents contemplated hereby on the
part of Seller or the Shareholders.
2.6 Seller's Financial Information. Seller has heretofore
furnished PRG Sub with copies of financial information ("Financial
Statements") about Seller, including the unaudited Balance Sheet
("Balance Sheet") as of December 31, 1995 ("Balance Sheet Date"). All
such financial statements have been prepared in accordance with
g e n erally accepted accounting principles consistently followed
throughout the periods indicated, reflect all liabilities of Seller,
including all contingent liabilities of Seller as of their respective
dates, and present fairly the financial position of Seller as of such
dates and the results of operations and cash flows for the period or
periods reflected therein.
2.7 Leases. Exhibit 2.7 attached hereto sets forth a list of
all leases pursuant to which Seller leases, as lessor or lessee, real
or personal property used in operating the Business, related to the
Assets or otherwise. All such leases listed on Exhibit 2.7 are valid
and enforceable in accordance with their respective terms, and there
is not under any such lease any existing default by Seller, as lessor
or lessee, or any condition or event of which Seller or any
Shareholder has knowledge which with notice or lapse of time, or both,
would constitute a default, in respect of which Seller has not taken
adequate steps to cure such default or to prevent a default from
occurring.
2.8 [intentionally blank]
2.9 Title to and Encumbrances on Property. Seller has good,
valid and marketable title to all of the Assets, including but not
limited to, all items of property identified on Exhibit 1.1(a) and
Exhibit 1.1(b) attached hereto, free and clear of any liens, claims,
charges, exceptions or encumbrances, except for those, if any, which
are set forth in Exhibit 2.9 attached hereto. Seller shall cause all
encumbrances set forth on Exhibit 2.9 (other than those encumbrances
indicated on Exhibit 1.3(b)) to be released or terminated prior to the
Closing Date and evidence of such releases of liens and claims shall
be provided to PRG Sub on the Closing Date and the Assets shall not be
used to satisfy such liens, claims or encumbrances.
2.10 Inventories. All inventories of Seller used in the conduct
of the Business are reflected on the Balance Sheet in accordance with
generally accepted accounting principles consistently applied. The
items of Seller's inventory have been acquired in the ordinary course
of its business, are adequate for the reasonable requirements of the
Business, and, to the best knowledge of Seller and the Shareholders,
may be used for their intended purposes. All of the Assets
constituting inventory are owned or used by Seller, is in good,
current, standard and merchantable condition and is not obsolete or
defective.
2.11 Intellectual Property Rights; Names. Except as set forth on
Exhibit 2.11, Seller has no right, title or interest in or to patents,
▇ ▇ ▇ ▇ nt rights, corporate names, assumed names, manufacturing
p r ocesses, trade names, trademarks, service marks, inventions,
specialized treatment protocols, copyrights, formulas and trade
secrets or similar items and such items are the only such items
necessary for the conduct of the Business. Set forth in Exhibit 2.11
is a listing of all names of all predecessor companies of Seller,
including the names of any entities from whom Seller previously
acquired significant assets. Except for off-the-shelf software
licenses and except as set forth on Exhibit 2.11, Seller is not a
licensee in respect of any patents, trademarks, service marks, trade
n a m e s, copyrights or applications therefor, or manufacturing
processes, formulas or trade secrets or similar items and no such
licenses are necessary for the conduct of the Business or the use of
the Assets. No claim is pending or has been made to the effect that
the Assets or the present or past operations of Seller in connection
with the Assets infringe upon or conflict with the asserted rights of
others to any patents, patent rights, manufacturing processes, trade
names, trademarks, service marks, inventions, licenses, specialized
treatment protocols, copyrights, formulas, know-how and trade secrets.
Seller has the sole and exclusive right to use all Assets constituting
proprietary rights without infringing or violating the rights of any
third parties and no consents of any third parties are required for
the use thereof by PRG Sub.
2.12 Directors and Officers; Payroll Information; Employees. Set
forth on Exhibit 2.12 attached hereto is a true and complete list, as
of the date of this Agreement of: (a) the name of each director and
officer of Seller and the offices held by each, (b) the most recent
payroll report of Seller, showing all current employees of Seller and
their current levels of compensation, (c) promised increases in
compensation of employees of Seller that have not yet been effected,
(d) oral or written employment agreements or independent contractor
agreements (and all amendments thereto) to which Seller is a party,
copies of which have been delivered to PRG Sub, and (e) all employee
manuals, materials, policies, procedures and work-related rules,
copies of which have been delivered to PRG Sub. Seller is in
compliance with all applicable laws, rules, regulations and ordinances
respecting employment and employment practices. Seller has not
engaged in any unfair labor practice. There are no unfair labor
practices charges or complaints pending or threatened against Seller,
and Seller has never been a party to any agreement with any union,
labor organization or collective bargaining unit.
2.13 Legal Proceedings. Neither Seller nor any Shareholder nor
any of the Assets is subject to any pending, nor does Seller or any
Shareholder have knowledge of any threatened, litigation, governmental
investigation, condemnation or other proceeding against or relating to
or affecting Seller, any Shareholder, the Business, the Assets or the
transactions contemplated by this Agreement, and, to the knowledge of
Seller and the Shareholders, no basis for any such action exists, nor
is there any legal impediment of which Seller or any Shareholder has
knowledge to the continued operation of its business or the use of the
Assets in the ordinary course, subject to consents set forth on
Exhibit 2.5.
2.14 Contracts. Seller has delivered to PRG Sub true copies of
all written, and disclosed to PRG Sub all oral, outstanding contracts,
obligations and commitments of Seller ("Contracts"), entered into in
connection with and related to the Assets, all of which are listed or
incorporated by reference on Exhibit 2.7 (in the case of leases),
Exhibit 2.12 (in the case of employment agreements) and Exhibit 2.14
(in the case of Contracts other than leases) attached hereto. Except
as otherwise indicated on such Exhibits, all of such Contracts are
valid, binding and enforceable in accordance with their terms and are
in full force and effect, and no defenses, offsets or counterclaims
have been asserted or may be made by any party thereto. Except as
indicated on such Exhibits, there is not under any such Contract any
existing default by Seller, or any condition or event of which Seller
or any Shareholder has knowledge which with notice or lapse of time,
or both, would constitute a default. Seller and the Shareholders
have no knowledge of any default by any other party to such Contracts.
Neither Seller nor the Shareholders have received notice of the
intention of any party to any Contract to cancel or terminate any
Contract and have no reason to believe that any amendment or change to
any Contract is contemplated by any party thereto. Other than those
contracts, obligations and commitments listed on Exhibit 2.7, Exhibit
2.12 and Exhibit 2.14, Seller is not a party to any written or oral
agreement contract, lease or arrangement, including any:
(a) Contract related to the sale of the Assets other than
this Agreement;
(b) Employment, consulting or compensation agreement or
arrangement;
(c) Labor or collective bargaining agreement;
(d) Lease agreement with respect to any property, whether
as lessor or lessee;
(e) ▇▇▇▇ of sale or other document evidencing an interest
in or agreement to purchase or sell personal property;
(f) Contract for the purchase of materials, supplies or
equipment (i) which is in excess of the requirements of the Business
now booked or for normal operating inventories, or (ii) which is not
terminable upon notice of thirty (30) days or less;
(g) Agreement for the purchase from a supplier of all or
substantially all of the requirements of the Business of a particular
product or service;
(h) Loan agreement or other contract for money borrowed or
lent or to be borrowed or lent to another;
(i) Contracts containing non-competition covenants; or
(j) Other contracts or agreements that involve either an
unperformed commitment in excess of $1,000 or that terminate or can
only be terminated by Seller on more than 30 days after the date
hereof.
2.15 Subsequent Events. Seller has not, since the Balance Sheet
Date:
(a) Incurred any material obligation or liability
(absolute, accrued, contingent or otherwise) or entered into any
contract, lease, license or commitment, except in connection with the
performance of this Agreement, other than in the ordinary course of
business or incurred any indebtedness;
(b) D i s c h arged or satisfied any material lien or
encumbrance, or paid or satisfied any material obligation or liability
( a b s olute, accrued, contingent or otherwise) other than (i)
l i abilities shown or reflected on the Balance Sheet or (ii)
liabilities incurred since the Balance Sheet Date in the ordinary
course of business;
(c) Since the Balance Sheet Date and prior to the Closing
Date, formed or acquired or disposed of any interest in any
corporation, partnership, joint venture or other entity;
(d) Made any payments to or loaned any money to any person
or entity other than in the ordinary course of business;
(e) Lost or terminated any employee, patient, customer or
supplier that has, individually or in the aggregate, a material
adverse effect on the Business;
(f) Increased or established any reserve for taxes or any
other liability on its books or otherwise provided therefor, except as
may have been required due to income or operations of Seller since the
Balance Sheet Date;
(g) Mortgaged, pledged or subjected to any lien, charge or
other encumbrance any of the Assets, tangible or intangible;
(h) Sold or contracted to sell or transferred or contracted
to transfer any of the Assets or any other assets used in the conduct
of the Business, cancelled any debts or claims or waived any rights,
except in the ordinary course of business;
(i) Except in the ordinary course of business consistent
with past practices, granted any increase in the rates of pay of
employees, consultants or agents, or by means of any bonus or pension
plan, contract or other commitment, increased the compensation of any
officer, employee, consultant or agent;
(j) Authorized or incurred any capital expenditures in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(k) Except for this Agreement and any other agreement
executed and delivered pursuant to this Agreement, entered into any
material transaction other than in the ordinary course of business or
permitted hereunder;
(l) Redeemed, purchased, sold or issued any stock, bonds or
other securities;
(m) Experienced damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting any of its
properties, assets or business or the Business or the Assets, or
experienced any other material adverse change in its financial
condition, assets, prospects, liabilities or business;
(n) Declared or paid a distribution, payment or dividend of
any kind on the capital stock of Seller;
(o) Repurchased, approved any repurchase or agreed to
repurchase any of Seller's capital stock; or
(p) Suffered any material adverse change in the Business or
to the Assets.
2.16 Accounts Receivable/Payable. The Balance Sheet reflects the
amount, as of the Balance Sheet Date and determined in conformity with
generally accepted accounting principles and the past practices
employed by Seller of the Seller s (i) accounts receivable, net of
allowances for uncollectible and doubtful amounts ( Accounts
Receivable ) and (ii) current accounts payable and current accrued
liabilities (other than the current portion of long-term debt)
( Accounts Payable ). Seller has provided PRG and PRG Sub with a true
and accurate (i) list of all Accounts Receivable, (ii) list of all
Accounts Payable and (iii) statement of the working capital ( Working
Capital ) of the Seller as of the Balance Sheet Date. The Seller
maintains its accounting records in sufficient detail to substantiate
the accounts receivable reflected on the Balance Sheet and has given
and will give to PRG Sub full and complete access to those records,
including the right to make copies therefrom. Since the Balance Sheet
Date, the Seller has not changed any principle or practice with
respect to the recordation of accounts receivable or the calculation
of reserves therefor, or any material collection, discount or write-
off policy or procedure. Accounts Receivable are recorded in amounts
estimated to be net of contractual allowances related to third-party
payor arrangements. The Seller is in substantial compliance with the
terms and conditions of such third-party payor arrangements, and the
reserves established by the Seller are adequate to cover any liability
r e s u lting from lack of compliance. Following Closing, the
administration of the collection of Accounts Receivable and the
payment of Accounts Payable shall be as set forth in Section 7.3(c) of
the Service Agreement.
2.17 Taxes. Seller has filed all tax returns (including tax
reports and other statements) required to be filed by it, and made all
payments of taxes (including any interest, penalty or addition
thereto) required to be made by it, on or before the date of this
Agreement, with respect to income taxes, real and personal property
taxes, sales taxes, use taxes, employment taxes, excise taxes and
other taxes. All such tax returns are complete and accurate in all
respects and properly reflect the relevant taxes for the periods
covered thereby. Seller has no tax liability, except for real and
personal property taxes for the current period not yet due and payable
and sales, use, employment and similar taxes for periods as to which
such taxes have not yet become due and payable. The unpaid taxes of
Seller did not, as of the Balance Sheet Date, exceed the reserve for
taxes (rather than any reserve for deferred taxes established to
reflect timing differences between book and taxable income) set forth
on the face of the Balance Sheet (rather than in any notes thereto),
as adjusted for the passage of time through the Closing Date (in
accordance with the past custom and practice of Seller). Seller and
the Shareholders have not received any notice that any tax deficiency
or delinquency has been asserted against Seller. There are no audits
relating to taxes of Seller threatened, pending or in process. Seller
is not currently the beneficiary of any waiver of any statute of
limitations in respect of taxes nor of any extension of time within
which to file any tax return or to pay any tax assessment or
deficiency. There are no liens or encumbrances relating to taxes on
or threatened against any of the assets of Seller. Seller has
withheld and paid all taxes required by law to have been withheld and
paid by it. Neither Seller nor any predecessor of Seller is or has
been a party to any tax allocation or sharing agreement or a member of
an affiliated group of corporations filing a consolidated federal
income tax return. Seller has delivered to PRG Sub correct and
complete copies of Seller's three most recently filed annual state and
federal income tax returns, together with all examination reports and
statements of deficiencies assessed against or agreed to by Seller
during the three calendar year period preceding the date of this
Agreement. Seller has neither made any payments, is obligated to make
any payments, or is a party to any agreement that under any
circumstance could obligate it to make any payments that will not be
deductible under Code section 280G.
2.18 Liabilities; Debt. Except to the extent reflected or
reserved against on the Balance Sheet, Seller did not have, as of the
Balance Sheet Date, and has not incurred since that date and will not
have occurred as of the Closing Date, any liabilities or obligations
of any nature, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, other than those incurred in the
ordinary course of business. Seller and the Shareholders do not know,
or have reasonable grounds to know, of any basis for the assertion
against Seller as of the Balance Sheet Date, of any claim or liability
of any nature in any amount not fully reflected or reserved against on
the Balance Sheet, or of any claim or liability of any nature arising
since that date other than those incurred in the ordinary course of
business or contemplated by this Agreement. All indebtedness of
Seller (including without limitation, indebtedness for borrowed money,
guaranties and capital lease obligations) is described on Exhibit 2.18
attached hereto.
2.19 Insurance Policies. Seller, each Shareholder and each
physician employee of Seller carries malpractice insurance on a claims
made basis with amounts of at least $1,000,000 for each claim and
$3,000,000 for aggregate claims. Valid and enforceable policies in
such amounts are outstanding and duly in force and will remain duly in
force through the Closing Date. All such policies are described in
Exhibit 2.19 attached hereto and true and correct copies have been
delivered to PRG Sub. Neither Seller nor any Shareholder has received
notice or other communication from the issuer of any such insurance
policy cancelling or amending such policy or threatening to do so.
Neither Seller, nor each Shareholder nor any physician employee of
Seller has any outstanding claims, settlements or premiums owed
against any insurance policy.
2.20 Employee Benefit Plans. Except as set forth on Exhibit 2.20
attached hereto, Seller has neither established, nor maintains, nor is
obligated to make contributions to or under or otherwise participate
in, (a) any bonus or other type of compensation or employment plan,
program, agreement, policy, commitment, contract or arrangement
(whether or not set forth in a written document); (b) any pension,
profit-sharing, retirement or other plan, program or arrangement; or
(c) any other employee benefit plan, fund or program, including, but
not limited to, those described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). All
such plans listed on Exhibit 2.20 (individually "Seller Plan," and
collectively "Seller Plans") have been operated and administered in
all material respects in accordance with all applicable laws, rules
and regulations, including without limitation, ERISA, the Internal
Revenue Code of 1986, as amended, Title VII of the Civil Rights Act of
1964, as amended, the Equal Pay Act of 1967, as amended, the Age
Discrimination in Employment Act of 1967, as amended, and the related
rules and regulations adopted by those federal agencies responsible
for the administration of such laws. No act or failure to act by
Seller has resulted in a "prohibited transaction" (as defined in
ERISA) with respect to the Seller Plans. No "reportable event" (as
defined in ERISA) has occurred with respect to any of the Seller
Plans. Seller has not previously made, is not currently making, and
is not obligated in any way to make, any contributions to any multi-
employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980. With respect to each Seller Plan, either (i)
the value of plan assets (including commitments under insurance
contracts) is at least equal to the value of plan liabilities or (ii)
the value of plan liabilities in excess of plan assets is disclosed on
the Balance Sheet, all as of the Closing Date.
2.21 Adverse Agreements. Seller is not, and will not be as of
the Closing Date, a party to any agreement or instrument or subject to
any charter or other corporate restriction or any judgment, order,
writ, injunction, decree, rule or regulation that materially and
adversely affects the condition (financial or otherwise), operations,
assets, liabilities, business or prospects of Seller, the Business or
the Assets.
2.22 Compliance with Laws in General. Seller, the Shareholders
and Seller's physician and licensed employees, and the conduct of the
Business and use of the Assets, have complied with all applicable
laws, rules, regulations and licensing requirements, including,
without limitation, the Federal Environmental Protection Act, the
Occupational Safety and Health Act, the Americans with Disabilities
Act and any environmental laws and medical waste laws, and there exist
no violations by Seller, any Stockholder or any physician or licensed
employee of Seller of any federal, state or local law or regulation.
Neither Seller nor any Shareholder has received any notice of a
violation of any federal, state and local laws, regulations and
ordinances relating to the operations of the Business and Assets and
no notice of any pending inspection or violation of any such law,
r e g ulation or ordinance has been received by Seller or any
Shareholder.
2.23 Medicare and Medicaid Programs. Seller, each Shareholder
and each physician and licensed employee of Seller is qualified for
participation in the Medicare and Medicaid programs and is party to
provider agreements for such programs which are in full force and
effect with no defaults having occurred thereunder. Seller, each
Shareholder and each physician and licensed employee of Seller has
timely filed all claims or other reports required to be filed with
respect to the purchase of services by third-party payors, and all
such claims or reports are complete and accurate, and has no liability
to any payor with respect thereto. There are no pending appeals,
overpayment determinations, adjustments, challenges, audit, litigation
or notices of intent to open Medicare or Medicaid claim determinations
or other reports required to be filed by Seller, each Shareholder and
e a c h licensed employee of Seller. Neither Seller, nor any
Shareholder, nor any physician or licensed employee of Seller has been
convicted of, or pled guilty or nolo contendere to, patient abuse or
negligence, or any other Medicare or Medicaid program related offense
and none has committed any offense which may serve as the basis for
suspension or exclusion from the Medicare and Medicaid programs.
2.24 Fraud and Abuse. Seller, the Shareholders and all persons
and entities providing professional services for Seller's business,
the Business or relating to the Assets have not, to the knowledge of
Seller and the Shareholders, engaged in any activities which are
prohibited under Section 1320a-7b or Section 1395nn of Title 42 of the United
States Code or the regulations promulgated thereunder, or related
state or local statutes or regulations, or which are prohibited by
rules of professional conduct, including, but not limited to, the
following: (a) knowingly and willfully making or causing to be made a
f a lse statement or representation of a material fact in any
application for any benefit or payment; (b) knowingly and willfully
making or causing to be made any false statement or representation of
a material fact for use in determining rights to any benefit or
payment; (c) any failure by a claimant to disclose knowledge of the
occurrence of any event affecting the initial or continued right to
any benefit or payment on its own behalf or on behalf of another, with
the intent to fraudulently secure such benefit or payment; and (d)
knowingly and willfully soliciting or receiving any remuneration
(including any kickback, bribe or rebate) directly or indirectly,
overtly or covertly, in cash or in kind, or offering to pay or receive
such remuneration (i) in return for referring an individual to a
person for the furnishing or arranging for the furnishing of any item
or service for which payment may be made in whole or in part by
Medicare or Medicaid, or (ii) in return for purchasing, leasing or
ordering or arranging for, or recommending, purchasing, leasing or
ordering any good, facility, service or item for which payment may be
made in whole or in part by Medicare or Medicaid, or (e) referring a
patient for designated health services to or providing designated
health services to a patient upon referral from an entity or person
with which the physician or an immediate family member has a financial
relationship, and to which no exception under Section 1395nn of Title
42 of the United States Code applies.
2.25 No Untrue Representations. No representation or warranty by
Seller or any Shareholder in this Agreement, and no Exhibit or
certificate issued or executed by, or information furnished by,
officers or directors of Seller or any Shareholder and furnished or to
be furnished to PRG Sub or PRG pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained
therein not misleading.
2.26 Accredited Investor Status. Each Shareholder and Seller are
an "accredited investor" (as defined in Rule 501(a) under the
Securities Act of 1933, as amended (the "Securities Act")).
2.27 Distributions and Repurchases. No distribution, payment or
dividend of any kind has been declared or paid by Seller on any of its
capital stock since the Balance Sheet Date. No repurchase of any of
Seller's capital stock has been approved, effected or is pending, or
is contemplated by the Board of Directors of Seller.
2.28 Suppliers. Seller has provided PRG with a complete and
accurate list of the ten (10) largest suppliers of Seller in terms of
dollar volume of transactions for each of the last three fiscal years
and the current fiscal year to date, showing, with respect to each,
the name, address and aggregate dollar volume of purchases from such
supplier.
2.29 Banking Relations. Set forth in Exhibit 2.29 is a complete
and accurate list of all arrangements that Seller has with any bank or
o t h er financial institution, indicating with respect to each
relationship the type of arrangement maintained (such as checking
account, borrowing arrangements, safe deposit box, etc.) and the
person or persons authorized in respect thereof.
2.30 Ownership Interests of Interested Persons; Competitors. No
officer, employee, director or stockholder of Seller, or their
r e s pective spouses, children or affiliates, owns directly or
indirectly, on an individual or joint basis, any interest in, has a
compensation or other financial arrangement with, or serves as an
officer or director of, any customer or supplier or competitor of
Seller or any organization that has a material contract or arrangement
with Seller. Neither Seller, nor any of its directors, officers,
employees, consultants or the Shareholders nor any affiliate of such
person is, or within the last three years was, a party to any
contract, lease, agreement or arrangement, including, but not limited
to, any joint venture or consulting agreement with any physician,
hospital, pharmacy, home health agency or other person or entity which
is in a position to make or influence referrals to, or otherwise
generate business for, Seller or to provide services, lease space,
lease equipment or engage in any other venture or activity with
Seller.
2.31 Payors. Seller has provided PRG with a true, complete and
correct list of the names and addresses of each payor of Seller's
services which accounted for more than 10% of revenues of Seller in
any of the preceding fiscal years. Seller has good relations with all
such payors and other material payors of Seller and none of such
payors has notified Seller that it intends to discontinue its
relationship with Seller or to deny any claims submitted to such payor
for payment.
Section 3. Representations and Warranties of PRG Sub and PRG.
PRG Sub and PRG hereby represent and warrant to Seller and the
Shareholders as follows:
3.1 Corporate Existence: Good Standing. PRG and PRG Sub are
corporations duly organized and existing and in good standing under
the laws of the State of Delaware, and Arizona, respectively.
3.2 Power and Authority. Each of PRG Sub and PRG has corporate
power to execute, deliver and perform this Agreement and all
agreements and other documents executed and delivered by it pursuant
to this Agreement, and has taken all actions required by law, its
Certificate of Incorporation, its Bylaws or otherwise, to authorize
the execution, delivery and performance of this Agreement and such
related documents. The execution and delivery of this Agreement and
the agreements related hereto executed and delivered pursuant to this
Agreement do not and, subject to the receipt of consents to
assignments of leases and other contracts where required and the
receipt of regulatory approvals where required, the consummation of
the transactions contemplated hereby will not, violate any provision
of the Certificate of Incorporation or Bylaws of either PRG Sub or PRG
or any provisions of, or result in the acceleration of, any obligation
u n der any mortgage, lien, lease, agreement instrument, order,
arbitration award, judgment or decree to which PRG Sub or PRG is a
party or by which either of them is bound, or violate any restrictions
of any kind to which PRG Sub or PRG is subject.
3.3 Capital Stock. All of the outstanding shares of the common
stock of PRG Sub are or will be as of the Closing Date validly issued,
fully paid and nonassessable and are or will be as of the Closing Date
owned directly by PRG, free and clear of all liens, claims and
encumbrances. The issuance and delivery by PRG of shares of the
common stock of PRG in connection with the acquisition contemplated
hereby will be as of the Closing Date duly and validly authorized by
all necessary corporate action on the part of PRG. The shares of PRG
common stock to be issued in connection with the acquisition
contemplated hereby, when issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable.
3.4 No Untrue Representations. No representation or warranty by
PRG Sub or PRG in this Agreement, and no Exhibit or certificate issued
by officers or directors of PRG Sub or PRG and furnished or to be
furnished to Seller or the Shareholders pursuant hereto, or in
connection with the transactions contemplated hereby, contains or will
contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements or facts
contained therein not misleading.
Section 4. Covenants of Seller and the Shareholders.
Seller and the Shareholders, jointly and severally, agree that
between the date hereof and the Closing Date:
4.1 Consummation of Agreement. Seller and the Shareholders
shall use their best efforts to cause the consummation of the
transactions contemplated hereby in accordance with their terms and
conditions.
4.2 Business Operations. Seller and the Shareholders shall
operate the Business and use the Assets in the ordinary course.
Seller and Shareholders shall not enter into any lease, contract,
indebtedness, commitment, purchase or sale or acquire or dispose of
any capital asset relating to the Business or the Assets except in the
ordinary course of business. Seller and the Shareholders shall use
their best efforts to preserve the Business and Assets intact and
shall not take any action that would have an adverse effect on the
Business or Assets, including without limitation, any action the
primary purpose or effect of which is to generate or preserve cash;
provided that Seller may continue to operate in the ordinary course.
Seller and the Shareholders shall use their best efforts to preserve
intact the relationships with payors, customers, suppliers, patients
and others having significant business relations with Seller. Seller
shall collect its receivables and pay its trade payables in the
ordinary course of business. Seller shall not introduce any new
method of management, operations or accounting.
4.3 Access and Notice. Seller and the Shareholders shall permit
PRG and PRG Sub and their authorized representatives access to, and
make available for inspection, all of the assets and business of
Seller, the Business and the Assets, including employees, customers
a n d suppliers and permit PRG, PRG Sub and their authorized
representatives to inspect and make copies of all documents, records
and information with respect to the business or assets of Seller, the
Business or the Assets as PRG, PRG Sub or their representatives may
request. Seller and the Shareholders shall promptly notify PRG Sub in
writing of (a) any notice or communication relating to a default or
event that, with notice or lapse of time or both, could become a
default, under any contract, commitment or obligation to which Seller
is a party or relating to the Business or the Assets, and (b) any
adverse change in Seller's or the Business' financial condition or the
Assets.
4.4 Approvals of Third Parties and Permits and Consents. Seller
and the Shareholders shall use their best efforts to secure all
necessary approvals and consents of third parties to the consummation
of the transactions contemplated hereby, including consents described
on Exhibit 2.5.
4.5 Acquisition Proposals. Seller and the Shareholders shall
not, and shall use their best efforts to cause Seller's employees,
agents and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation
of any proposal or offer, including without limitation, any proposal
or offer to the Shareholders, with respect to a merger, acquisition,
consolidation or similar transaction involving, or the purchase of all
or any significant portion of the assets or any equity securities of
Seller or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any
person relating to such proposal or offer, and Seller and the
Shareholders will immediately cease any such activities, discussions
or negotiations heretofore conducted with respect to any of the
foregoing. Seller and the Shareholders shall immediately notify PRG
Sub if any such inquiries or proposals are received.
4.6 Funding of Accrued Employee Benefits. Seller hereby
covenants and agrees that it will take whatever steps are reasonably
necessary to pay or fund completely for any accrued benefits, where
applicable, or vested accrued benefits for which Seller or any entity
might have any liability whatsoever arising from any insurance,
pension plan, employment tax or similar liability of Seller to any
employee or other person or entity (including, without limitation, any
Seller Plan and any liability under employment contracts with Seller)
allocable to services performed prior to the Closing Date. Seller
acknowledges that the purpose and intent of this covenant is to assure
that PRG Sub shall have no liability whatsoever at any time after the
Closing Date with respect to any of Seller's employees or similar
persons or entities, including, without limitation, any Seller Plan.
4.7 Employee Matters. Seller shall not, without the prior
written approval of PRG, except as required by law, increase the cash
compensation of any Shareholder or other employee or an independent
contractor of Seller, adopt, amend or terminate any compensation plan,
employment agreement, independent contractor agreement, employee
policies and procedures or employee benefit plan, take any action that
could deplete the assets of any employee benefit, or fail to pay any
premium or contribution due or file any report with respect to any
employee benefit plan, or take any other actions with respect to its
employees or employee matters which might have an adverse effect upon
Seller, its business, assets or prospects.
4.8 Distributions and Repurchases. No distribution, payment or
dividend of any kind will be declared or paid by Seller, nor will any
repurchase of any of Seller's capital stock be approved or effected.
4.9 Requirements to Effect Acquisition. Seller and each
Shareholder shall use their best efforts to take, or cause to be
taken, all actions necessary to effect the purchase contemplated
hereby under applicable law.
4.10 Voting of Shares; Irrevocable Proxy. Each Shareholder
agrees that until the earlier of the Closing Date or the termination
of this Agreement, each such Shareholder shall vote all shares of
Seller common stock owned by the Shareholders at any meeting of the
stockholders of Seller or take action by written consent for adoption
of this Agreement, as hereby amended, and in favor of the acquisition
and any other transactions contemplated by this Agreement, and against
any action, omission or agreement which would impede or interfere
with, or have the effect of discouraging, the acquisition contemplated
hereby.
4.11 Accounting and Tax Matters. Seller will not change in any
material respect the accounting methods or practices followed by
Seller (including any material change in any assumption underlying, or
any method of calculating, any bad debt, contingency or other
reserve), except as may be required by generally accepted accounting
principles. Seller will not make any material tax election except in
the ordinary course of business consistent with past practice, change
any material tax election already made, adopt any tax accounting
method except in the ordinary course of business consistent with past
practice, change any tax accounting method, enter into any closing
agreement, settle any tax claim or assessment or consent to any tax
claim or assessment or any waiver of the statute of limitations for
any such claim or assessment. Seller will duly, accurately and timely
(without regard to any extensions of time) file all returns,
information statements and other documents relating to taxes of Seller
required to be filed by it, and pay all taxes required to be paid by
it, on or before the Closing Date.
4.12 Lease. PRG shall have entered into a building lease (the
"Lease") with the owner of the property located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ on terms reasonably satisfactory to PRG, PRG Sub and
the owner of the property, on terms that include, as a minimum, a
rental of $6,000 per month, with a term of seven years, commencing
9/1/96, and ending 8/31/2003, with appropriate COL increases.
4.13 H i ring of Employees. Seller and Shareholders shall
cooperate with all requests made by PRG and PRG Sub for the purpose of
allowing PRG or PRG Sub to hire those non-physician employees of
Seller designated by PRG and PRG Sub, such employment to be effective
as of the Closing Date. Notwithstanding the above, Seller and
Shareholders shall remain liable under any Seller Plans for any claims
incurred by any employees or their spouses or dependents, and for all
compensation, bonuses, benefits and other such items and other
liabilities related to Seller's employees incurred by Seller prior to
the Closing Date.
Section 5. Covenants of PRG and PRG Sub.
PRG and PRG Sub, jointly and severally, agree that between the
date hereof and the Closing Date:
5.1 Consummation of Agreement. PRG and PRG Sub shall use their
b e s t efforts to cause the consummation of the transactions
contemplated hereby in accordance with their terms and provisions.
PRG and PRG Sub will use their best efforts to take, or cause to be
taken, all actions necessary to effect the acquisition contemplated
hereby under applicable law.
5.2 Approvals of Third Parties and Permits and Consents. PRG
and PRG Sub shall use their best efforts to secure all necessary
approvals and consents of third parties to the consummation of the
transactions contemplated hereby.
5.3 Listing Application. PRG shall prepare and submit to the
New York Stock Exchange (the NYSE ) a listing application covering
the stock consideration and shall use its best efforts to obtain
approval for the listing of the stock consideration upon official
notice of issuance.
Section 6. PRG Sub and PRG Conditions Precedent.
The obligations of PRG Sub and PRG hereunder are subject to the
fulfillment at or prior to the Closing Date of each of the following
conditions:
6.1 Representations and Warranties. The representations and
warranties of Seller and the Shareholders contained herein shall have
been true and correct in all respects when initially made and shall be
true and correct in all respects as of the Closing Date.
6.2 Covenants and Conditions. Seller and the Shareholders shall
have performed and complied with all covenants and conditions required
by this Agreement to be performed and complied with by Seller and the
Shareholders prior to the Closing Date.
6.3 Proceedings. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
6.4 No Material Adverse Change. No material adverse change in
t h e c ondition (financial or otherwise), operations, assets,
liabilities, business or prospects of Seller shall have occurred since
the Balance Sheet Date.
6.5 Due Diligence Review. By the Closing Date, PRG Sub and PRG
shall have completed a due diligence review of the business,
operations and financial statements of Seller, the Business and the
Assets, the results of which shall be satisfactory to PRG Sub and PRG
in their sole discretion.
6.6 Approval by the Board of Directors. This Agreement and the
transactions contemplated hereby shall have been approved by the Board
of Directors of PRG or a committee thereof.
6.7 Consents and Approvals. Seller and the Shareholders shall
have obtained all necessary government and other third-party approvals
and consents.
6.8 Closing Deliveries. PRG Sub shall have received all
documents, duly executed in form satisfactory to PRG Sub and its
counsel, referred to in Section 8.1.
6.9 Debt and Receivables. There shall be no indebtedness,
receivables or payables between Seller and its shareholders or
affiliates and Seller shall not have any liabilities, including
indebtedness, guaranties and capital leases, that are not approved by
PRG and Seller and Shareholders shall not use any of the Assets to pay
such indebtedness, receivables, payables or liabilities.
6.10 Leases. Seller shall have entered into Leases with
Shareholders in accordance with Section 4.12.
6.11 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
Section 7. Seller's and the Shareholder's Conditions Precedent.
The obligations of Seller and the Shareholders hereunder are
subject to fulfillment at or prior to the Closing Date of each of the
following conditions:
7.1 Representations and Warranties. The representations and
warranties of PRG Sub and PRG contained herein shall have been true
and correct in all respects when initially made and shall be true and
correct in all respects as of the Closing Date.
7.2 Covenants and Conditions. PRG Sub and PRG shall have
performed and complied with all covenants and conditions required by
this Agreement to be performed and complied with by PRG Sub and PRG
prior to the Closing Date.
7.3 Proceedings. No action, proceeding or order by any court or
governmental body shall have been threatened orally or in writing,
asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated hereby.
7.4 ▇ ▇ ▇▇▇▇▇ Deliveries. Seller shall have received all
documents, duly executed in form satisfactory to Seller and its
counsel, referred to in Section 8.2.
7.5 NYSE Listing. The stock consideration shall have been
approved for listing on the NYSE, subject to official notice of
issuance.
7.6 Employment Agreement. ▇▇. ▇▇▇▇▇▇ shall have entered into an
employment agreement with Barnet ▇▇▇▇▇▇▇ Eye Center, P.L.L.C. on terms
and conditions reasonably satisfactory to ▇▇. ▇▇▇▇▇▇ and Barnet
▇▇▇▇▇▇▇ Eye Center, P.L.L.C.
Section 8. Closing Deliveries.
8.1 Deliveries of Seller and the Shareholders. At or prior to
the Closing, Seller and the Shareholders shall deliver to PRG Sub the
following, all of which shall be in a form satisfactory to counsel to
PRG Sub and PRG:
(a) a copy of the resolutions of the Board of Directors of
Seller authorizing the execution, delivery and performance of this
Agreement, the Service Agreement, the Employment Agreements and all
related documents and agreements each certified by the Secretary as
being true and correct copies of the original thereof;
(b) a ▇▇▇▇ of sale conveying the Assets to PRG Sub;
(c) an assignment of each contract, agreement and lease
being assigned to and assumed by PRG Sub;
(d) certificates of the President of Seller and of each
Shareholder, dated as of the Closing Date, (i) as to the truth and
correctness of the representations and warranties of Seller and each
Shareholder contained herein; (ii) as to the performance of and
compliance by Seller and each Shareholder with all covenants contained
herein; and (iii) certifying that all conditions precedent of Seller
and each Shareholder to the Closing have been satisfied;
(e) a certificate of the Secretary of Seller certifying as
to the incumbency of the directors and officers of Seller and as to
the signatures of such directors and officers who have executed
documents delivered at the Closing on behalf of Seller;
(f) a certificate, dated within 10 days of the Closing
Date, of the Secretary of the State of Arizona establishing that
Seller is in existence and is in good standing to transact business in
its state of incorporation;
(g) an opinion of counsel to Seller and the Shareholders
opining as to the execution and delivery of this Agreement and the
other documents and agreements to be executed pursuant hereto, the
good standing and authority of Seller, the enforceability of this
Agreement and the other agreements and documents to be executed in
connection herewith, and other matters reasonably requested by PRG
Sub;
(h) all authorizations, consents, approvals, permits and
licenses referred to in Sections 2.3 and 2.5;
(i) a Stockholder s Agreement (herein so called) in form
attached hereto as Exhibit 8.1(l) executed by Shareholders and their
spouses; and
(j) such other instruments and documents as reasonably
requested by PRG or PRG Sub to carry out and effect the purpose and
intent of this Agreement.
8.2 Deliveries of PRG Sub and PRG. At or prior to the Closing,
PRG Sub and PRG shall deliver to Seller the following, all of which
shall be in a form satisfactory to counsel to Seller and the
Shareholders or the Clinic, as applicable:
(a) the Acquisition Consideration;
(b) a copy of the resolutions of the Board of Directors of
PRG Sub and PRG (or a committee thereof) authorizing the execution,
delivery and performance of this Agreement and all related documents
and agreements each certified by the Secretary as being true and
correct copies of the original thereof;
(c) certificates of the President of PRG Sub and PRG, dated
as of the Closing Date, (i) as to the truth and correctness of the
representations and warranties of PRG Sub and PRG contained herein;
(ii) as to the performance of and compliance by PRG Sub and PRG with
all covenants contained herein; and (iii) certifying that all
conditions precedent of PRG Sub and PRG to the Closing have been
satisfied;
(d) a certificate of the Secretary of PRG Sub and PRG
certifying as to the incumbency of the directors and officers of PRG
Sub and PRG and as to the signatures of such directors and officers
who have executed documents delivered at the Closing on behalf of PRG
Sub and PRG;
(e) certificates, dated within 10 days of the Closing Date,
of the Secretary of the State of Delaware establishing that PRG Sub
and PRG are in existence and are in good standing to transact business
in the State of Delaware and the State of Arizona;
(f) an opinion of counsel to PRG and PRG Sub opining as to
the execution and delivery of this Agreement and the other documents
and agreements to be executed pursuant hereto, the good standing and
authority of PRG and PRG Sub, the enforceability of this Agreement and
the other agreements and documents to be executed in connection
herewith, and other matters reasonably requested by Seller;
(g) the Stockholder s Agreement; and
(h) such other instruments and documents as reasonably
requested by Seller or Shareholders to carry out and effect the
purpose and intent of this Agreement.
Section 9. Nature and Survival of Representations and Warranties;
Indemnification.
9.1 Nature and Survival. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed
pursuant hereto, and any certificate executed and delivered by any
party pursuant to the terms of this Agreement, shall constitute
representations and warranties of Seller and the Shareholders, jointly
and severally, or of PRG Sub and PRG, jointly and severally, as the
case may be. All such representations and warranties, and all
representations and warranties expressly labeled as such in this
Agreement shall survive the date of this Agreement and the Closing
Date for a period of five (5) years following the Closing Date, except
that (i) the representations and warranties set forth in Section 2.23,
2.24 or 2.25 with respect to environmental and medical waste laws that
are enacted as of the date hereof and health care laws enacted on the
date hereof and matters shall survive for a period of fifteen (15)
years and tax representations shall survive until one year after the
expiration of the applicable statute of limitations. Each party
covenants with the other parties not to make any claim with respect to
such representations and warranties, against any party after the date
on which such survival period shall terminate. No party shall be
entitled to claim indemnity from any other party pursuant to Section
9.2 or 9.3 hereof, unless such party has timely given the notice
required in Section 9.2, 9.3 or 9.4 hereof, as the case may be. Each
party hereby releases, acquits and discharges the other party from any
and all claims and demands, actions and causes of action, damages,
costs, expenses and rights of setoff with respect to which the notices
required by Section 9.2, 9.3 or 9.4, as applicable, are not timely
provided.
9.2 Indemnification by PRG Sub and PRG. PRG SUB AND PRG,
JOINTLY AND SEVERALLY (FOR PURPOSES OF THIS SECTION 9.2 AND, TO THE
EXTENT APPLICABLE, SECTION 9.4, "INDEMNITOR"), SHALL INDEMNIFY AND
HOLD SELLER AND THE SHAREHOLDERS, AND THEIR RESPECTIVE AGENTS AND
E M P L OYEES (EACH OF THE FOREGOING, INCLUDING SELLER AND THE
SHAREHOLDERS, FOR PURPOSES OF THIS SECTION 9.2 AND, TO THE EXTENT
APPLICABLE, SECTION 9.4, AN "INDEMNIFIED PERSON"), HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, LOSSES, DAMAGES, ACTIONS, SUITS,
COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT LIMITED TO,
REASONABLE FEES AND DISBURSEMENTS OF COUNSEL THROUGH APPEAL) ARISING
FROM OR BY REASON OF OR RESULTING FROM ANY BREACH BY INDEMNITOR OF ANY
REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT CONTAINED IN THIS
A G R EEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH DOCUMENT,
CERTIFICATE OR OTHER INSTRUMENT FURNISHED OR TO BE FURNISHED BY
INDEMNITOR HEREUNDER, AND, FROM AND AFTER THE CLOSING DATE, ARISING
FROM OR BY REASON OF OR RESULTING FROM INDEMNITOR'S MANAGEMENT AND
OWNERSHIP OF THE ASSETS. IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO
INDEMNIFY FOR EXPENSES, INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED
PERSON FOR ALL SUCH EXPENSES AS THEY ARE INCURRED BY SUCH INDEMNIFIED
PERSON, PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO
REFUND ALL SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS
FINALLY JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT
ENTITLED TO INDEMNIFICATION HEREUNDER.
9.3 Indemnification by Seller and the Shareholders. SELLER AND
THE SHAREHOLDERS (FOR PURPOSES OF THIS SECTION 9.3 AND, TO THE EXTENT
APPLICABLE, SECTION 9.4, "INDEMNITOR"), JOINTLY AND SEVERALLY, SHALL
INDEMNIFY AND HOLD PRG SUB, PRG AND THEIR RESPECTIVE OFFICERS,
DIRECTORS, SHAREHOLDERS, AGENTS AND EMPLOYEES (EACH OF THE FOREGOING,
INCLUDING PRG SUB AND PRG, FOR PURPOSES OF THIS SECTION 9.3 AND, TO
THE EXTENT APPLICABLE, SECTION 9.4, AS "INDEMNIFIED PERSON") HARMLESS
FROM AND AGAINST ANY AND ALL LIABILITIES, LOSSES, CLAIMS, DAMAGES,
ACTIONS, SUITS, COSTS, DEFICIENCIES AND EXPENSES (INCLUDING, BUT NOT
LIMITED TO, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL THROUGH
APPEAL) ARISING FROM OR BY REASON OF OR RESULTING FROM ANY BREACH BY
INDEMNITOR OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT
CONTAINED IN THIS AGREEMENT (INCLUDING THE EXHIBITS HERETO) AND EACH
DOCUMENT, CERTIFICATE, OR OTHER INSTRUMENT FURNISHED OR TO BE
FURNISHED BY INDEMNITOR HEREUNDER, AND, WITH RESPECT TO ALL TIMES
PRIOR TO OR AFTER THE CLOSING DATE, ARISING FROM OR BY REASON OF OR
RESULTING FROM THE INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE
OWNERSHIP OR OPERATION OF THE BUSINESS OR THE ASSETS AND FROM ANY
ALLEGED ACT OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND
INDEPENDENT CONTRACTORS IN OR ABOUT SELLER'S BUSINESS WHETHER ON OR
AFTER THE CLOSING DATE, AND WITH RESPECT TO (I) ANY VIOLATION BY
SELLER OR THE SHAREHOLDERS OR THEIR CONSULTANTS, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS AND AFFILIATES OF STATE OR FEDERAL LAWS GOVERNING
HEALTHCARE FRAUD AND ABUSE, OR ANY OVERPAYMENT OR OBLIGATION ARISING
OUT OF OR RESULTING FROM CLAIMS SUBMITTED TO ANY THIRD PARTY PAYOR,
WHETHER ON OR AFTER THE CLOSING DATE, (II) TAXES OF SELLER OR ANY
OTHER PERSON (INCLUDING ANY SHAREHOLDER) ARISING FROM OR AS A RESULT
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, (III) ANY
LIABILITY OF SELLER OR THE SHAREHOLDERS FOR COSTS AND EXPENSES
( I N C LUDING, WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED IN
CONNECTION WITH THE NEGOTIATION, PREPARATION OF CLOSING OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER DOCUMENTS TO
BE EXECUTED IN CONNECTION HEREWITH WHETHER BEFORE OR AFTER THE CLOSING
D A T E , (IV) ANY ACCRUED UNFUNDED RETIREMENT OR PENSION PLAN
LIABILITIES, (V) THE INDEMNITOR'S MANAGEMENT AND CONDUCT OF THE
OWNERSHIP OR OPERATION OF SELLER'S BUSINESS AND FROM ANY ALLEGED ACT
OR NEGLIGENCE OF INDEMNITOR OR ITS EMPLOYEES, AGENTS AND INDEPENDENT
CONTRACTORS IN OR ABOUT SELLER'S BUSINESS WHETHER ON OR AFTER THE
CLOSING DATE, AND (VI) ANY LIABILITIES THAT ARE EXCLUDED PURSUANT TO
THE TERMS OF THIS AGREEMENT AND ANY LIABILITIES NOT SET FORTH ON
EXHIBIT 1.3(b); PROVIDED,HOWEVER, THAT SHAREHOLDER AND SELLER SHALL
NOT INDEMNIFY PRG AND PRG SUB FOR EMPLOYEE MATTERS ARISING OUT OF
OCCURRENCES OCCURING AFTER THE CLOSING DATE IN CONNECTION WITH
EMPLOYEES THAT WILL BECOME EMPLOYEES OF PRG SUB AS OF THE CLOSING
DATE. IN CONNECTION WITH INDEMNITOR'S OBLIGATION TO INDEMNIFY FOR
EXPENSES, INDEMNITOR SHALL REIMBURSE EACH INDEMNIFIED PERSON FOR ALL
SUCH EXPENSES AS THEY ARE INCURRED BY SUCH INDEMNIFIED PERSON,
PROVIDED THAT SUCH INDEMNIFIED PERSON AGREES IN WRITING TO REFUND ALL
SUCH REIMBURSED EXPENSES IF AND TO THE EXTENT THAT IT IS FINALLY
JUDICIALLY DETERMINED THAT SUCH INDEMNIFIED PERSON IS NOT ENTITLED TO
INDEMNIFICATION HEREUNDER.
9.4 Indemnification Procedure. Within sixty (60) days after
Indemnified Person receives written notice of the commencement of any
action or other proceeding in respect of which indemnification or
reimbursement may be sought hereunder, or within such lesser time as
may be provided by law for the defense of such action or proceeding,
such Indemnified Person shall notify Indemnitor thereof. If any such
action or other proceeding shall be brought against any Indemnified
P e rson, Indemnitor shall, upon written notice given within a
reasonable time following receipt by Indemnitor of such notice from
Indemnified Person, be entitled to assume the defense of such action
or proceeding with counsel chosen by Indemnitor and reasonably
satisfactory to Indemnified Person; provided, however, that any
Indemnified Person may at its own expense retain separate counsel to
p a r ticipate in such defense. Notwithstanding the foregoing,
Indemnified Person shall have the right to employ separate counsel at
Indemnitor's expense and to control its own defense of such action or
p r oceeding if, in the reasonable opinion of counsel to such
Indemnified Person, (a) there are or may be legal defenses available
to such Indemnified Person or to other Indemnified Persons that are
different from or additional to those available to Indemnitor and
w h ich could not be adequately advanced by counsel chosen by
Indemnitor, or (b) a conflict or potential conflict exists between
Indemnitor and such Indemnified Person that would make such separate
representation advisable; provided, however, that in no event shall
Indemnitor be required to pay fees and expenses hereunder for more
than one firm of attorneys of Indemnified Person in any jurisdiction
in any one action or proceeding or group of related actions or
proceedings. Indemnitor shall not, without the prior written consent
of any Indemnified Person, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action or
proceeding to which such Indemnified Person is a party unless such
settlement, compromise or consent includes an unconditional release of
such Indemnified Person from all liability arising or potentially
arising from or by reason of such claim, action or proceeding.
Section 10. Termination. This Agreement may be terminated:
(a) at any time by mutual agreement of all parties;
(b) at any time by PRG or PRG Sub if any representation or
warranty of Seller or any Shareholder contained in this Agreement or
in any certificate or other document executed and delivered by Seller
or any Shareholder pursuant to this Agreement is or becomes untrue or
breached in any material respect or if Seller or any Shareholder fails
to comply in any material respect with any covenant or agreement
contained herein, and any such misrepresentation, noncompliance or
breach is not cured, waived or eliminated within twenty (20) days
after receipt of written notice thereof;
(c) a t any time by Seller or the Shareholders if any
representation or warranty of PRG or PRG Sub contained in this
Agreement or in any certificate or other document executed and
delivered by PRG or PRG Sub pursuant to this Agreement is or becomes
untrue or breached in any material respect or if PRG or PRG Sub fails
to comply in any material respect with any covenant or agreement
contained herein and such misrepresentation, noncompliance or bread is
not cured, waived or eliminated within twenty (20) days after receipt
of written notice thereof;
(d) by PRG, PRG Sub, Seller or the Shareholders if the
transaction contemplated hereby shall not have been consummated by
October 31, 1996; or
(e) by PRG at any time prior to the Closing Date if PRG
determines in its sole discretion as the result of its legal,
financial and operational due diligence with respect to Seller, that
such termination is desirable and in the best interests of PRG.
Section 11. Noncompetition.
11.1 Prohibited Activities. In order to protect PRG, PRG Sub and
each of their affiliates (collectively, the "PRG Group") against the
u n a uthorized use or disclosure of any of their confidential
information presently known or hereinafter acquired by Seller or the
Shareholders and other good and valuable consideration, Seller and
each Shareholder hereby agrees that, subject to adjustment pursuant to
Section 11.5, for a period of five (5) years following the Closing
Date, Seller and each Shareholder and his or her respective affiliates
shall not knowingly, directly or indirectly, for herself or himself or
on or behalf of any other corporation, person, firm, partnership,
association or any other entity (whether as an individual, agent,
employee, offer director or in any other capacity):
(a) establish, operate or provide physician services at any
medical office, clinic or out-patient and/or ambulatory treatment or
diagnostic facility providing services similar to those provided by
Seller or engage or participate in or finance any business which
engages in direct competition with the business being conducted by
PRG, PRG Sub or any practice managed by PRG anywhere within 50 miles
of any location of PRG, PRG Sub or any practice managed by PRG;
provided, however, that this provision shall not prohibit the each
Shareholder or any of his or her affiliates from purchasing or holding
an aggregate equity interest of up to 2%, so long as Seller or such
Shareholder and his or her affiliates combined do not purchase or hold
an aggregate equity interest of more than 5%, in any business in
direct competition with the PRG, PRG Sub or any practice managed by
PRG; or
(b) induce or attempt to influence any employee of PRG, PRG
Sub or any practice managed by PRG to terminate his or her employment,
or to hire any such employee, whether or not so induced or influenced,
except that any such employee may be hired with PRG's prior written
consent.
11.2 Damages.
(a) Because of the difficulty of measuring economic losses
to PRG and PRG Sub as a result of the breach of the foregoing
covenant, and because of the immediate and irreparable damage that
would be caused to PRG and PRG Sub for which it would have no other
adequate remedy, Seller and the Shareholders agree that, in the event
of a breach by them of the foregoing covenant, the covenant may be
enforced by PRG or PRG Sub by injunctions and restraining orders. The
foregoing right is in addition to the right to receive liquidated
damages set forth in subparagraph (b) below.
(b) Because of the difficulty of measuring economic losses
as a result of a breach by Seller or a Shareholder of the foregoing
covenant, Seller and such Shareholder agrees to that in the event of a
breach of the foregoing covenant the breaching Seller or Shareholder
shall be obligated to pay to PRG as liquidated damages an amount set
forth below opposite the year following Closing in which the breach
occurs:
Year Following
Closing in Which
Breach Occurs Damages
1st $50,000.00
2nd $40,000.00
3rd $30,000.00
4th $20,000.00
5th $10,000.00
11.3 Reasonable Restraint. It is agreed by the parties that the
foregoing covenants in this Section 11 impose a reasonable restraint
on Seller and the Shareholders in light of the activities and business
of PRG and PRG Sub on the date of the execution of this Agreement.
11.4 Severability; Reformation. The covenants in this Section 11
are severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant.
Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth
are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
11.5 Term. It is specifically agreed that the period of
five (5) years stated above, shall be computed by excluding from such
computation any time during which Seller or any Shareholder is in
violation of any provision of this Section 11. The covenants
contained in this Section 11 shall have no effect if the transactions
contemplated by this Agreement are not consummated for any reason but
otherwise shall not be affected by any breach of any other provision
hereof by any party hereto.
Section 12. Nondisclosure of Confidential Information. Seller and
the Shareholders recognize and acknowledge that they had in the past,
currently have, and in the future may possibly have, access to certain
confidential information of PRG or PRG Sub that is valuable, special
and unique assets of PRG's or PRG Sub's businesses. Seller and the
Shareholders agree that they will not disclose such confidential
information to any person, firm, corporation, association or other
entity for any purpose or reason whatsoever, unless (i) such
information becomes available to or known by the public generally
through no fault of Seller or the Shareholders, (ii) disclosure is
required by law or the order of any governmental authority under color
of law, provided, that prior to disclosing any information pursuant to
this clause (ii), Seller and the Shareholders shall, if possible, give
prior written notice thereof to the other parties hereto, and provide
such other parties hereto with the opportunity to contest such
disclosure, (iii) Seller and the Shareholders reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) Seller and the
Shareholders are the sole and exclusive owner of such confidential
information as a result of the completion of the transactions
contemplated hereunder or otherwise. In the event of a breach or
threatened breach by Seller or the Shareholders of the provisions of
this Section 12, PRG or PRG Sub shall be entitled to an injunction
restraining Seller and the Shareholders from disclosing, in whole or
in part, such confidential information. Nothing herein shall be
construed as prohibiting PRG or PRG Sub from pursuing any other
available remedy for such breach or threatened breach, including the
recovery of damages. The obligations of the parties under this Section
12 shall survive the termination of this Agreement.. PRG and PRG Sub
recognize and acknowledge that they had in the past, currently have,
and in the future may possibly have, access to certain confidential
information of Seller or Shareholder. PRG and PRG Sub agree that they
will not disclose such confidential information to any person, firm,
corporation, association or other entity for any purpose or reason
whatsoever, unless (i) such information becomes available to or known
by the public generally through no fault of PRG or PRG Sub, (ii)
disclosure is required by law or the order of any governmental
authority under color of law, provided, that prior to disclosing any
information pursuant to this clause (ii), PRG and PRG Sub shall, if
possible, give prior written notice thereof to the other parties
hereto, and provide such other parties hereto with the opportunity to
contest such disclosure, (iii) PRG and PRG Sub reasonably believe that
such disclosure is required in connection with the defense of a
lawsuit against the disclosing party, or (iv) PRG and PRG Sub are the
sole and exclusive owner of such confidential information as a result
of the completion of the transactions contemplated hereunder or
otherwise. In the event of a breach or threatened breach by PRG or
PRG Sub of the provisions of this Section 12, Seller or Shareholders
shall be entitled to an injunction restraining PRG and PRG Sub from
disclosing, in whole or in part, such confidential information.
N o t h ing herein shall be construed as prohibiting Seller or
Shareholders from pursuing any other available remedy for such breach
o r threatened breach, including the recovery of damages. The
obligations of the parties under this Section 12 shall survive the
termination of this Agreement.
Section 13. E c o nomic Risk; Sophistication. Seller and the
Shareholders are able to bear the economic risk of an investment in
PRG common stock acquired pursuant to this Agreement and can afford to
sustain a total loss of such investment and have such knowledge and
experience in financial and business matters that they are capable of
evaluating the merits and risks of the proposed investment and
therefore have the capacity to protect their own interests in
connection with the acquisition of the PRG common stock. Seller and
the Shareholders or their respective purchaser representatives have
had an adequate opportunity to ask questions and receive answers from
the officers of PRG concerning any and all matters relating to the
background and experience of the officers and directors of PRG, the
plans for the operations of the business of PRG, and any plans for
additional acquisitions and the like. Seller, the Shareholders or
their respective purchaser representatives have asked any and all
questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction.
Section 14. Miscellaneous.
14.1 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand
delivery, or by facsimile and overnight courier, to the parties hereto
at the following addresses, or at such other address as either party
may advise the other in writing from time to time:
If to PRG:
Physicians Resource Group, Inc.
Three Lincoln Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to PRG Sub:
Sun Valley Acquisition Corporation
Three Lincoln Centre
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy of each notice directed to PRG Sub or PRG to:
▇▇▇▇▇ ▇. ▇▇▇▇, III, Esquire
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller or the Shareholders:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Facsimile:
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Cruise & Politi, P.L.L.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and:
▇▇▇▇ ▇▇▇▇, C.P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
All such communications shall be deemed to have been delivered on the
date of hand delivery or on the next business day following the
deposit of such communications, properly addressed and postage prepaid
with the overnight courier.
14.2 Further Assurances. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be
reasonably necessary to carry out the provisions of Agreement.
14.3 Each Party to Bear Costs. Each of the parties to this
Agreement shall pay all of the costs and expenses incurred by such
party in connection with the transactions contemplated by this
Agreement, whether or not such transactions are consummated. Without
limiting the generality of the foregoing and whether or not such
liabilities may be deemed to have been incurred in the ordinary course
of business, PRG Sub and PRG shall not be liable to or required to
pay, either directly or indirectly, any (a) fees and expenses of legal
counsel, accountants, auditors or other persons or entities retained
by Seller or the Shareholders for services rendered in connection with
n e gotiating and closing the transactions contemplated by this
Agreement or the documents to be executed in connection herewith,
whether or not such costs or expenses are incurred before or after the
Closing Date, and (b) local, state and federal income taxes or other
similar charges on income or gain incurred by Seller or the
Shareholders as a result of the transactions contemplated hereby.
14.4 Public Disclosures. Except as otherwise required by law, no
party to this Agreement shall make any public or other disclosure of
this Agreement or the transactions contemplated hereby without the
prior consent of the other parties. The parties to this Agreement
shall cooperate with respect to the form and content of any such
disclosures.
14.5 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ARIZONA AND APPLIED WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAWS
PRINCIPLES.
14.6 Captions. The captions or headings in this Agreement are
made for convenience and general reference only and shall not be
construed to describe, define or limit the scope or intent of the
provisions of this Agreement.
14.7 Integration of Exhibits. All Exhibits attached to this
Agreement are integral parts of this Agreement as if fully set forth
herein, and all statements appearing therein shall be deemed disclosed
for all purposes and not only in connection with the specific
representation in which they are explicitly referenced.
14.8 ENTIRE AGREEMENT/AMENDMENT. THIS INSTRUMENT, INCLUDING ALL
EXHIBITS ATTACHED HERETO, CONTAINS THE ENTIRE AGREEMENT OF THE PARTIES
AND SUPERSEDES ANY AND ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS BETWEEN
THE PARTIES, WRITTEN OR ORAL, WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY.
14.9 Counterparts. This Agreement may be executed in several
counterparts, each of which when so executed shall be deemed to be an
original, and such counterparts shall together constitute and be one
and the same instrument
14.10 Binding Effect/Assignment. This Agreement shall be
binding on, and shall inure to the benefit of, the parties hereto, and
their respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No
party may assign any right or obligation hereunder without the prior
written consent of the other parties; provided, however, that PRG Sub
and PRG may assign its rights and obligations hereunder to an
affiliate and to their lender or lenders; and provided, further, that
▇▇. ▇▇▇▇▇▇ may assign his interests hereunder to an entity created by
▇▇. ▇▇▇▇▇▇ prior to the Closing Date provided that the documents
evidencing such assignment and entity organizational/qualification
documents are acceptable to PRG in its reasonable discretion.
14.11 No Rule of Construction. The parties acknowledge that
this Agreement was initially prepared by PRG Sub, and that all parties
have read and negotiated the language used in this Agreement. The
parties agree that, because all parties participated in negotiating
and drafting this Agreement, no rule of construction shall apply to
this Agreement which construes ambiguous language in favor of or
against any party by reason of that party's role in drafting this
Agreement.
14.12 Costs of Enforcement. In the event that PRG Sub or PRG,
on the one hand, or Seller or the Shareholders, on the other hand,
file suit in any court against any other party to enforce the terms of
this Agreement against the other party or to obtain performance by it
hereunder, the prevailing party will be entitled to recover all
reasonable costs, including reasonable attorneys' fees, from the other
party as part of any judgment in such suit. The term "prevailing
party" shall mean the party in whose favor final judgment after appeal
(if any) is rendered with respect to the claims asserted in the
C o mplaint. "Reasonable attorneys' fees" are those reasonable
attorneys' fees reasonably incurred in obtaining a judgment in favor
of the prevailing party.
14.13 Prorations. Seller shall remain responsible for all
taxes levied upon the Assets for the period prior to the Closing Date,
and PRG Sub shall be responsible for all taxes levied against the
Assets for the period following the Closing Date. Each party agrees
to reimburse the other party if necessary to comply with the terms of
the preceding sentence.
14.14 Amendments; Waivers. This Agreement may be amended,
modified or supplemented only by an instrument in writing executed by
all the parties hereto. Any waiver of the terms and conditions hereof
must be in writing, and signed by the parties hereto. The waiver of
any of the terms and conditions of this Agreement shall not be
construed as a waiver of any other terms and conditions hereof.
14.15 Choice of Forum. Each of the parties hereto agree that
should any suit, action or proceeding arising out of this Agreement be
instituted by any party hereto (other than a suit, action or
proceeding to enforce or realize upon any final court judgment arising
out of this Agreement), such suit, action or proceeding shall be
instituted only in a state or federal court in Dallas County, Texas.
Each of the parties hereto consents to the in personam jurisdiction of
any state or federal court in Dallas County, Texas and waives any
objection to the venue of any such suit, action or proceeding. The
parties hereto recognize that courts outside Dallas County, Texas may
also have jurisdiction over suits, actions or proceedings arising out
of this Agreement, and in the event that any party hereto shall
institute a proceeding involving this Agreement in a jurisdiction
outside Dallas County, Texas, the party instituting such proceeding
shall indemnify any other party hereto for any losses and expenses
that may result from the breach of the foregoing covenant to institute
proceedings only in a state or federal court in Dallas County, Texas.
14.16 Service of Process. Service of any and all process
that may be served on any party hereto in any suit, action or
proceeding arising out of this Agreement may be made in the manner and
to the address set forth in Section 16.1 and service thus made shall
be taken and held to be valid personal service upon such party by any
party hereto on whose behalf such service is made.
14.17 Severability. If any provision of this Agreement shall
be found to be illegal, invalid or unenforceable under present or
future laws, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such provision never
comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect. In lieu of such provision, there
shall be added automatically as part of this Agreement, a provision as
similar in its terms to such provision as may be possible and be
legal, valid and enforceable.
[end of page]
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
SUN VALLEY ACQUISITION CORPORATION
By: ____________________________
Its: ____________________________
SNW, Inc.
By: ____________________________
Its: ____________________________
PHYSICIANS RESOURCE GROUP, INC.
By: ____________________________
Its: ____________________________
_________________________________
▇▇▇▇▇ ▇▇▇▇▇▇, O.D.
_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
_________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
INDEX TO EXHIBITS
Exhibit Description
1.1(a) Personal Property
1.1(b) Inventory
1.2(b) Excluded Assets
1.3(b) Assumed Liabilities
2.1 Corporate Existence; Good Standing
2.5 Consents
2.7 Leases
2.9 Real and Personal Property; Encumbrances
2.11 Patents and Trademarks; Names
2.12 Directors and Officers; Payroll Information
2.14 Contracts (other than Leases)
2.18 Debt
2.19 Insurance Policies
2.20 Employee Benefit Plans
2.29 Banking Relations
8.1(l) Stockholder's Agreement
ANNEX I Acquisition Consideration