EX. 10.6
AGREEMENT AND PLAN OF MERGER
by and among
PHYSICIAN HEALTH CORPORATION
a Delaware corporation,
PHC-ORLANDO ACQUISITION SUBSIDIARY II, INC.
a Georgia corporation,
INTERNAL MEDICINE SPECIALISTS, INC.
a Florida corporation
and
THE SHAREHOLDERS OF INTERNAL MEDICINE SPECIALISTS, INC.
Dated October 29, 1997
TABLE OF CONTENTS
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ARTICLE I MERGER, EFFECT OF MERGER........................................................1
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1.1 Effect of Merger................................................................1
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1.2 Surviving Corporation...........................................................2
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1.3 Name............................................................................2
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1.4 Articles of Incorporation.......................................................2
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1.5 Bylaws..........................................................................2
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1.6 Directors and Officers..........................................................2
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1.7 Conversion of Shares............................................................2
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1.8 Procedure for Exchange..........................................................4
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1.9 Status of Target Shares After Effective Date....................................4
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1.10 Closing.........................................................................4
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1.11 Risk of Loss....................................................................4
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1.12 Tax and Accounting Treatment....................................................4
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ARTICLE II REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER AND
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TARGET..........................................................................5
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2.1 Organization, Standing and Authority of Target..................................5
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2.2 Absence of Conflicting Agreements or Required Consents Relating to Each
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Shareholder's and Target's Respective Obligations...............................5
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2.3 Licenses and Authorizations.....................................................6
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2.4 Lease Agreements................................................................6
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2.5 Financial Statements............................................................6
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2.6 Absence of Changes..............................................................6
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2.7 Litigation and Claims...........................................................8
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2.8 No Undisclosed Liabilities......................................................8
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2.9 No Violation of Law, Generally..................................................8
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2.10 Properties......................................................................9
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2.11 Indebtedness...................................................................10
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2.12 Employee Contracts, Union Agreements and Benefit Plans.........................11
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2.13 Labor Relations................................................................11
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2.14 Contracts and Commitments......................................................12
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2.15 Environmental Protection.......................................................13
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2.16 Filing of Reports..............................................................13
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2.17 Insurance Policies.............................................................13
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2.18 Accounts Receivable............................................................14
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2.19 Accounts Payable...............................................................14
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2.20 Inventory......................................................................14
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2.21 Inspections and Investigations.................................................14
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2.22 Ownership of Medical Service Practice(s).......................................15
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2.23 Agreements in Full Force and Effect............................................15
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2.24 Taxes..........................................................................15
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1
2.25 Capitalization; Title to Shares................................................15
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2.26 Corporate Documents............................................................16
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2.27 Statements True and Correct....................................................16
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2.28 Delivery and Acceptance of Schedules...........................................16
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2.29 Investment Intent..............................................................16
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PHC AND ACQUISITION
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SUBSIDIARY.....................................................................17
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3.1 Organization, Standing and Authority of PHC....................................17
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3.2 Absence of Conflicting Agreements or Required Consents Relating to PHC's
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Obligations....................................................................17
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3.3 Financial Statements...........................................................18
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3.4 Litigation and Claims..........................................................18
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3.5 No Undisclosed Liabilities.....................................................18
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3.6 No Violation of Law............................................................18
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3.7 Filing of Reports..............................................................19
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3.8 Capitalization; Title to Shares................................................19
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3.9 Statements True and Correct....................................................19
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3.10 Acquisition Subsidiary.........................................................19
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3.11 Organization, Standing and Authority of Acquisition Subsidiary.................20
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3.12 Common Stock of Acquisition Subsidiary.........................................20
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3.13 PPM............................................................................20
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ARTICLE IV ADDITIONAL AGREEMENTS..........................................................20
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4.1 Access and Inspection..........................................................20
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4.2 Cooperation in Meeting Filing Requirements.....................................20
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4.3 Post Closing Audit of Target...................................................21
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4.4 Further Assurances.............................................................21
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4.5 Appointment of Attorney-in-Fact................................................21
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4.6 Acceptance of Appointment......................................................21
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4.7 Power of Attorney Irrevocable, Etc.............................................22
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4.8 Successor Attorney-in-Fact.....................................................22
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4.9 Limitation of Liability and Indemnity..........................................22
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4.10 PHC Disclosure; Limited Right of Termination...................................23
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4.12 Formation and Operation of Compliance Committee................................24
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4.13 ASC Purchase Option............................................................24
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4.14 Delivery and Acceptance of Schedules...........................................24
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ARTICLE V CONDUCT OF BUSINESS OF TARGET AND EACH SHAREHOLDER
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PENDING CLOSING................................................................24
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5.1 Disposition of Assets..........................................................25
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5.2 Sale of Shares.................................................................25
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5.3 Contracts......................................................................25
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5.4 Condition of Assets............................................................25
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2
5.5 Liens; Encumbrances............................................................25
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5.6 Access and Inspection..........................................................25
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ARTICLE VI CONDITIONS TO OBLIGATIONS OF PHC AND ACQUISITION
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SUBSIDIARY.....................................................................25
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6.1 Necessary Approvals............................................................26
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6.2 Representations and Warranties.................................................26
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6.3 Performance; Covenants.........................................................26
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6.4 PHC Due Diligence..............................................................27
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ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND
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TARGET.........................................................................27
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7.1 Representations and Warranties.................................................27
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7.2 Performance; Covenants.........................................................28
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7.3 Target Due Diligence...........................................................28
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ARTICLE VIII INDEMNIFICATION................................................................29
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8.1 Indemnification by Each Shareholder and Target.................................29
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8.2 Indemnification by PHC.........................................................30
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8.3 Definition of Losses...........................................................30
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8.4 Offset.........................................................................30
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8.5 Notice and Opportunity to Defend...............................................31
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8.6 Effect of Investigation by PHC.................................................32
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8.7 Effect of Investigation by Target and Shareholders.............................32
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8.8 Dispute Resolution.............................................................32
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ARTICLE IX MISCELLANEOUS PROVISIONS.......................................................33
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9.1 Notices........................................................................33
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9.2 Successors and Assigns.........................................................34
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9.3 Entire Agreement...............................................................34
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9.4 Governing Law; Severability....................................................34
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9.5 No Brokers.....................................................................34
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9.6 Schedules and Exhibits.........................................................35
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9.7 Waivers........................................................................35
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9.8 Headings.......................................................................35
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9.9 Counterparts...................................................................35
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9.10 Confidentiality................................................................35
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9.11 Expenses.......................................................................35
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9.12 No Third Party Beneficiaries...................................................36
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9.13 Survival.......................................................................36
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9.14 Attorney Fees..................................................................36
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3
LIST OF EXHIBITS
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Exhibit A List of Shareholders
Exhibit B [Reserved]
Exhibit C Insert to Bylaws
Exhibit D Disclosure Documents
Exhibit E ASC Purchase Option Agreements
Exhibit F Form of Employment Agreement
Exhibit G Opinion of Counsel of Target
Exhibit H Investment Agreement
Exhibit I Registration Rights Agreement
Exhibit J Practice Repurchase Agreement
Exhibit K Opinion of Counsel of PHC
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LIST OF SCHEDULES
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Schedule 2.2 Required Consents Relating to Each Shareholder's and Target's Obligations
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Schedule 2.3 Licenses and Authorizations
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Schedule 2.4 Lease and License Agreements
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Schedule 2.5 Financial Statements of Target
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Schedule 2.6 Absence of Changes
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Schedule 2.7 Litigation and Claims
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Schedule 2.8 Undisclosed Liabilities
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Schedule 2.9 Violations of Law
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Schedule 2.10(a) Properties
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Schedule 2.10(b) Leased/Licensed Equipment
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Schedule 2.10(c) Equipment, Utility and Other Deposits
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Schedule 2.10(d) Exceptions to Title to Assets
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Schedule 2.11 Indebtedness
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Schedule 2.12(a) Employment Contracts, Union Agreements and Benefit Plans
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Schedule 2.13 Exceptions to Compliance with Employment and Labor Laws
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Schedule 2.14 Contracts and Commitments
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Schedule 2.15 Environmental Protection
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Schedule 2.17 Insurance Policies
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Schedule 2.18 Accounts Receivable
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Schedule 2.19 Accounts Payable
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Schedule 2.21 Inspections and Investigations
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Schedule 2.22 Ownership of Medical Service Practice(s)
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Schedule 2.24 Taxes
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Schedule 2.25 Capitalization of Target
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Schedule 3.1 Organization, Standing and Authority of PHC
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Schedule 3.2 Absence of Conflicting Agreements or Required Consents Relating to PHC's
------------ Obligations
Schedule 3.5 Financial Statements
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Schedule 3.6 Absence of Changes
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Schedule 3.7 Litigation and Claims
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Schedule 3.9 No Violation of Law
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7
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 29/th/ day of October, 1997, by and among Physician Health
Corporation, a Delaware corporation ("PHC"), PHC-Orlando Acquisition Subsidiary
II, Inc., a Georgia corporation ("Acquisition Subsidiary"), Internal Medicine
Specialists, Inc., a Florida corporation ("Target") and each of the Shareholders
of Target listed on Exhibit A attached hereto (each a "Shareholder" and
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collectively the "Shareholders"). (The parties hereto agree that Xxxxxxx X.
Xxxxx, M.D. may be included as an additional party to this Agreement, and within
the definition of "Shareholders" as used herein, as provided in Section 4.10.)
R E C I T A L S:
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PHC desires to acquire Target in a reverse triangular merger qualifying
as a tax-free reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"). As
consideration for the acquisition of Target, Shareholders shall acquire stock of
PHC in the merger.
A G R E E M E N T S:
-------------------
For and in consideration of the premises and the mutual covenants,
agreements, representations and warranties contained herein, the parties hereto,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
MERGER, EFFECT OF MERGER
------------------------
On the Effective Date (as defined in Section 1.1 hereof), Acquisition
Subsidiary shall merge with and into Target, and Target shall survive the Merger
as the surviving corporation (Target shall sometimes be referred to herein as
the "Surviving Corporation").
I.1 Effect of Merger.
----------------
The Merger shall become effective the date (the "Effective Date") on
which the duly executed Articles of Merger are filed with the Secretary of State
of Georgia and the Department of State of Florida in accordance with the
applicable legal requirements of the State of Georgia and the State of Florida.
On the Effective Date, and as a result of the Merger: (a) the separate existence
of Acquisition Subsidiary will cease; (b) title to all assets and properties, or
any interest therein, owned by Acquisition Subsidiary will be vested in the
Surviving Corporation without reversion or impairment; (c) the Surviving
Corporation will thenceforth be responsible and liable for all the liabilities
and obligations of Acquisition Subsidiary and (d) neither the rights of
creditors nor any liens upon the property of Acquisition Subsidiary will be
impaired by the Merger.
I.2 Surviving Corporation.
---------------------
Following the Merger, the existence of the Surviving Corporation shall
continue unaffected and unimpaired by the Merger, with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the laws of the State of Florida.
I.3 Name.
----
As a result of the Merger, the Surviving Corporation's corporate name
shall be unchanged.
I.4 Articles of Incorporation.
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The Articles of Incorporation of Surviving Corporation, as in effect on
the Effective Date, shall remain the Articles of Incorporation of Surviving
Corporation thereafter from and after the Effective Date, subject to the right
of Surviving Corporation thereafter to amend its Articles of Incorporation in
accordance with Florida law.
I.5 Bylaws.
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The Bylaws of Surviving Corporation, as in effect on the Effective
Date, shall be amended to include the provision set forth in Exhibit C, to the
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extent permitted under Florida law, and such Bylaws, as amended, shall remain
the Bylaws of Surviving Corporation from and after the Effective Date, subject
to the right of Surviving Corporation thereafter to amend its Bylaws in
accordance with its Articles of Incorporation and with Florida law.
I.6 Directors and Officers.
----------------------
Until the proper election and qualification of their successors, the
members of the Board of Directors and the officers of Acquisition Subsidiary in
office on the Effective Date shall be the Board of Directors and officers of
Surviving Corporation.
I.7 Conversion of Shares.
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(a) On the Effective Date, all of the then outstanding shares
of capital stock of Target (the "Target Shares") shall be converted into a total
of four hundred thousand eight hundred and sixty eight dollars ($429,865) in
cash and 786,098 shares of the Voting Common Stock of PHC (the "PHC Shares"),
and all outstanding certificates evidencing shares of capital stock of Target
shall be canceled.
Page 2
(b) In addition to the shares to be issued by PHC to the
Shareholders pursuant to Section 1.7(a) above, PHC shall issue and deliver to
the Shareholders additional shares of its Voting Common Stock (the "Contingent
Shares") pursuant to the terms and conditions set forth in Section 1.7(c) below;
provided, however, in no event shall the number of Contingent Shares to be
issued to the Shareholders under this Section 1.7(b) exceed the number of PHC
Shares initially issued to the Shareholders pursuant to Section 1.7(a) above.
(c) The determination of the amount, if any, of the Contingent
Shares that shall be issued to the Shareholders, shall be made pursuant to the
terms and conditions set forth in this Section 1.7(c) as follows:
(i) The parties hereby acknowledge and agree that a
portion of the PHC Shares to be issued to the Shareholders pursuant to Section
1.7(a) hereof was determined by reference to an amount equal to one hundred
percent (100%) of the "Adjusted Accounts Receivable" (as defined below) of
Target as of the Closing Date. The "Adjusted Accounts Receivable" of Target
shall be determined by taking the actual amount of accounts receivable on
Target's books and records as of the Closing Date, less any of Target's accounts
receivable that, in the aggregate (1) are more than one (1) year old with no
payments having been made to Target during the twelve (12) consecutive months
ending on the Closing Date, or (2) were turned over to a collection agency, an
attorney or a third party for collection prior to such date, and multiplying
such remainder by Target's accounts receivable collection ratio (as determined
by dividing Target's total collections by Target's total charges) for the twelve
(12) consecutive month period preceding the Closing Date.
(ii) On the one hundred eightieth (180th) day following
the Closing Date, the Adjusted Accounts Receivable shall be compared to the
actual collections during said one hundred eighty (180) day period of those
accounts receivable on the books and records of Target on the Closing Date. In
the event that the actual collections during said one hundred eighty (180) day
period exceeds the Adjusted Accounts Receivable, PHC shall issue to the
Shareholders (on a pro rata basis) that number of Contingent Shares under this
Section 1.7(c) (based on a value of Four Dollars ($4.00) per share) necessary to
equal such excess amount. In the event that the Adjusted Accounts Receivable
exceeds the actual collections during said one hundred eighty (180) day period
of those accounts receivable on the books and records of Target on the Closing
Date, the Shareholders, on a pro rata basis, shall return to PHC that number of
PHC Shares (based on a value of Four Dollars ($4.00) per share) necessary to
equal such excess amount.
(d) The parties hereby acknowledge and agree that the
Contingent Shares shall not be issued by PHC, and shall not be considered
outstanding stock, until such time as the certificates for any Contingent Shares
hereunder are actually delivered to the Shareholders in accordance with this
Section 1.7, that no party shall have any voting rights with respect to the
Contingent Shares until actually issued to the Shareholders in accordance with
this Section 1.7, and that the Shareholders' rights to receive the Contingent
Shares shall be nontransferable and nonassignable.
Page 3
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 29th day of October, 1997, by and among Physician Health
Corporation, a Delaware corporation ("PHC"), PHC-Orlando Acquisition Subsidiary
II, Inc., a Georgia corporation ("Acquisition Subsidiary"), Internal Medicine
Specialists, Inc., a Florida corporation ("Target") and each of the Shareholders
of Target listed on Exhibit A attached hereto (each a "Shareholder" and
---------
collectively the "Shareholders"). (The parties hereto agree that Xxxxxxx X.
Xxxxx, M.D. may be included as an additional party to this Agreement, and within
the definition of "Shareholders" as used herein, as provided in Section 4.10.)
R E C I T A L S:
---------------
PHC desires to acquire Target in a reverse triangular merger qualifying as
a tax-free reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"). As
consideration for the acquisition of Target, Shareholders shall acquire stock of
PHC in the merger.
A G R E E M E N T S:
-------------------
For and in consideration of the premises and the mutual covenants,
agreements, representations and warranties contained herein, the parties hereto,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
MERGER, EFFECT OF MERGER
------------------------
On the Effective Date (as defined in Section 1.1 hereof), Acquisition
Subsidiary shall merge with and into Target, and Target shall survive the Merger
as the surviving corporation (Target shall sometimes be referred to herein as
the "Surviving Corporation").
1.1 Effect of Merger.
----------------
The Merger shall become effective the date (the "Effective Date') on which
the duly executed Articles of Merger are filed with the Secretary of State of
Georgia and the Department of State of Florida in accordance with the applicable
legal requirements of the State of Georgia and the State of Florida. On the
Effective Date, and as a result of the Merger: (a) the separate existence of
Acquisition Subsidiary will cease; (b) title to all assets and properties, or
any interest therein, owned by Acquisition Subsidiary will be vested in the
Surviving Corporation without reversion or impairment; (c) the Surviving
Corporation will thenceforth be responsible and liable for all the liabilities
and obligations of Acquisition Subsidiary and (d) neither the rights of
creditors nor any liens upon the property of Acquisition Subsidiary will be
impaired by the Merger.
Page 1
1.2 Surviving Corporation.
---------------------
Following the Merger, the existence of the Surviving Corporation shall
continue unaffected and unimpaired by the Merger, with all the rights,
privileges, immunities and powers, and subject to all the duties and
liabilities, of a corporation organized under the laws of the State of Florida.
1.3 Name.
----
As a result of the Merger, the Surviving Corporation's corporate name shall
be unchanged.
1.4 Articles of Incorporation.
-------------------------
The Articles of Incorporation of Surviving Corporation, as in effect on the
Effective Date, shall remain the Articles of Incorporation of Surviving
Corporation thereafter from and after the Effective Date, subject to the right
of Surviving Corporation thereafter to amend its Articles of Incorporation in
accordance with Florida law.
1.5 Bylaws.
------
The Bylaws of Surviving Corporation, as in effect on the Effective Date,
shall be amended to include the provision set forth in Exhibit C, to the extent
---------
permitted under Florida law, and such Bylaws, as amended, shall remain the
Bylaws of Surviving Corporation from and after the Effective Date, subject to
the right of Surviving Corporation thereafter to amend its Bylaws in accordance
with its Articles of Incorporation and with Florida law.
1.6 Directors and Officers.
----------------------
Until the proper election and qualification of their successors, the
members of the Board of Directors and the officers of Acquisition Subsidiary in
office on the Effective Date shall be the Board of Directors and officers of
Surviving Corporation.
1.7 Conversion of Shares.
--------------------
(a) On the Effective Date, all of the then outstanding shares of
capital stock of Target (the "Target Shares") shall be converted into a total of
four hundred thousand eight hundred and sixty eight dollars ($429,865) in cash
and 786,098 shares of the Voting Common Stock of PHC (the "PHC Shares"), and all
outstanding certificates evidencing shares of capital stock of Target shall be
canceled.
Page 2
(b) In addition to the shares to be issued by PHC to the Shareholders
pursuant to Section 1.7(a) above, PHC shall issue and deliver to the
Shareholders additional shares of its Voting Common Stock (the "Contingent
Shares") pursuant to the terms and conditions set forth in Section 1.7(c) below;
provided, however, in no event shall the number of Contingent Shares to be
issued to the Shareholders under this Section 1.7(b) exceed the number of PHC
Shares initially issued to the Shareholders pursuant to Section 1.7(a) above.
(c) The determination of the amount, if any, of the Contingent Shares
that shall be issued to the Shareholders, shall be made pursuant to the terms
and conditions set forth in this Section 1.7(c) as follows:
(i) The parties hereby acknowledge and agree that a portion of the
PHC Shares to be issued to the Shareholders pursuant to Section 1.7(a) hereof
was determined by reference to an amount equal to one hundred percent (100%) of
the "Adjusted Accounts Receivable" (as defined below) of Target as of the
Closing Date. The "Adjusted Accounts Receivable" of Target shall be determined
by taking the actual amount of accounts receivable on Target's books and records
as of the Closing Date, less any of Target's accounts receivable that, in the
aggregate (1) are more than one (1) year old with no payments having been made
to Target during the twelve (12) consecutive months ending on the Closing Date,
or (2) were turned over to a collection agency, an attorney or a third party for
collection prior to such date, and multiplying such remainder by Target's
accounts receivable collection ratio (as determined by dividing Target's total
collections by Target's total charges) for the twelve (12) consecutive month
period preceding the Closing Date.
(ii) On the one hundred eightieth (180th) day following the
Closing Date, the Adjusted Accounts Receivable shall be compared to the actual
collections during said one hundred eighty (180) day period of those accounts
receivable on the books and records of Target on the Closing Date. In the event
that the actual collections during said one hundred eighty (180) day period
exceeds the Adjusted Accounts Receivable, PHC shall issue to the Shareholders
(on a pro rata basis) that number of Contingent Shares under this Section 1.7(c)
(based on a value of Four Dollars ($4.00) per share) necessary to equal such
excess amount. In the event that the Adjusted Accounts Receivable exceeds the
actual collections during said one hundred eighty (180) day period of those
accounts receivable on the books and records of Target on the Closing Date, the
Shareholders, on a pro rata basis, shall return to PHC that number of PHC Shares
(based on a value of Four Dollars ($4.00) per share) necessary to equal such
excess amount.
(d) The parties hereby acknowledge and agree that the Contingent
Shares shall not be issued by PHC, and shall not be considered outstanding
stock, until such time as the certificates for any Contingent Shares hereunder
are actually delivered to the Shareholders in accordance with this Section 1.7,
that no party shall have any voting rights with respect to the Contingent Shares
until actually issued to the Shareholders in accordance with this Section 1.7,
and that the Shareholders' rights to receive the Contingent Shares shall be
nontransferable and nonassignable.
Page 3
(e) On the Effective Date, PHC shall pay the cash consideration set
forth in Section 1.7 to the Shareholders (the "Cash Consideration"). The Cash
Consideration and the PHC Shares are referred to herein as the " Merger
Consideration."
I.8 Procedure for Exchange.
----------------------
At the Closing, each Shareholder shall surrender to PHC his or her
respective certificates representing the Target Shares owned or held by each
said Shareholder, and each said Shareholder shall receive a certificate
evidencing the PHC Shares owned by such Shareholder.
I.9 Status of Target Shares After Effective Date.
--------------------------------------------
From and after the Effective Date and until surrendered and exchanged,
each outstanding certificate formerly representing Target Shares shall be deemed
for all purposes to represent only the right to receive the PHC Shares specified
in Section 1.7 hereof. From and after the Effective Date, the stock transfer
books of Target shall be closed, and no transfer of shares on the books of
Target shall be made or recorded.
I.10 Closing.
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The Closing shall occur at such time as all the conditions precedent to
Closing as set forth in this Agreement and the Signing Agreement of even date
herewith are satisfied, but in no event later than November 15, 1997 (the
"Closing Date"), at 10:00 a.m. local time, at the offices of Xxxxxxx, Xxxxxxx &
Xxxxx, P.A., Orlando, Florida, or at such other place and time as the parties
hereto shall mutually agree.
I.11 Risk of Loss.
------------
Risk of loss to the assets of Target, however caused (other than by
Acquisition Subsidiary or those duly authorized to act on behalf of Acquisition
Subsidiary) shall shift to Surviving Corporation at the beginning (viz.,
12:00:01 a.m.) of the day immediately following the Closing Date.
I.12 Tax and Accounting Treatment.
----------------------------
The merger of Acquisition Subsidiary with and into Target is intended
to qualify as a tax-free reorganization within the meaning of (S)(S)
368(a)(1)(A) and 368(a)(2)(E) of the Code. Immediately following the Merger
contemplated hereunder, Target will hold substantially all of its properties and
substantially all of Acquisition Subsidiary's properties (except for any assets
of Acquisition Subsidiary distributed to the Shareholders pursuant to the Merger
and any cash of Acquisition Subsidiary used to pay Target's reorganization
expenses as set forth in Section 9.11 hereof). Notwithstanding any other
provision contained in this Agreement to the contrary, the PHC Shares to be
issued to the Shareholders pursuant to the Merger shall in no event constitute
less than eighty percent (80%) of the total consideration to be exchanged
pursuant to the Merger for the Target Shares owned by the Shareholders. Any
adjustment required to be made by this Section 1.12 to the amount of PHC Shares
Page 4
and other consideration to be issued in the Merger or otherwise pursuant to this
Agreement shall be effected through an amendment to this Agreement, which shall
be prepared by counsel to PHC, agreed to by all the parties and, after agreed to
by all the parties, executed by the parties hereto prior to Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER AND TARGET
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As a material inducement to PHC and Acquisition Subsidiary to enter
into this Agreement, the Shareholders and Target hereby, jointly, severally and
unconditionally, represent and warrant to each of PHC and Acquisition Subsidiary
as follows:
II.1 Organization, Standing and Authority of Target.
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Target is a corporation duly organized and validly existing under the
laws of the State of Florida and qualified to do business in all locations where
the nature of its business or the ownership of its assets or properties requires
such qualification. Target has the full requisite power and authority to (a) own
all its assets and properties and to operate its business of operating a medical
practice in the specialties of gastroenterology and nephrology care in the
greater metropolitan Orlando, Florida area (the "Practice") as conducted on the
date hereof, (b) execute and deliver this Agreement and each other document or
instrument contemplated hereby (collectively, the "Transaction Agreements") and
perform its obligations hereunder and thereunder according to their respective
terms, and (c) carry on and operate the Practice as now being conducted. Target
is not a participant in any joint venture, partnership, association or similar
business arrangement with any other person or party. The Attorney-in-Fact (as
defined in Section 4.5 hereof) has the requisite power and authority to execute
and deliver each of the Transaction Agreements and perform his obligations
hereunder and thereunder according to their respective terms.
II.2 Absence of Conflicting Agreements or Required Consents
------------------------------------------------------
Relating to Each Shareholder's and Target's Respective Obligations.
------------------------------------------------------------------
The execution, delivery and performance by each Shareholder and Target
respectively, of the Transaction Agreements (with or without the giving of
notice, the lapse of time, or both): (a) except as expressly set forth on
Schedule 2.2, do not require the consent of any governmental or regulatory
------------
authority or any other third party; (b) will not conflict with any provision of
Target's Articles of Incorporation, Bylaws or other organizational documents;
(c) will not conflict with, result in a breach of, or constitute a default under
any law, ordinance, regulation, ruling, judgment, order or injunction of any
court or governmental instrumentality to which any Shareholder or Target is a
party or by which any Shareholder or Target or their respective properties are
bound; (d) will not conflict with, constitute grounds for termination of, result
in a breach of, constitute a default under, or accelerate or permit the
acceleration of any performance required by the terms of any agreement,
instrument, license or permit, material to this transaction, to which any
Shareholder or Target is a party or by
Page 5
which any Shareholder or Target or their respective properties are bound; and
(e) will not create any claim, lien, charge or encumbrance upon any of the
assets or properties of Target.
II.3 Licenses and Authorizations.
---------------------------
Each Shareholder and Target hold all valid licenses, permits and other
rights and authorizations required by any federal, state or local law,
ordinance, regulation or ruling of any governmental regulatory authority
necessary to operate the Practice at each of its current locations as it is
currently being operated including, without limitation, the right to receive
Medicare and Medicaid reimbursements. A correct and complete list of all such
licenses, permits and other authorizations is set forth in Schedule 2.3 hereto.
------------
None of such licenses has been revoked or suspended or is the subject of any
proceeding or action for revocation or suspension.
II.4 Lease Agreements.
----------------
Schedule 2.4 hereto contains a current list of all the lease agreements
------------
and license and sublicense agreements to which Target is a party and pursuant to
which Target leases (whether as lessor or lessee) or licenses (whether as
licensor or licensee) any real or personal property related to the operation of
the Practice (the "Lease Agreements"). Target has delivered to PHC true and
complete copies of all of the Lease Agreements. Each of the Lease Agreements is
valid and effective in accordance with its terms, and there is not under any of
such Lease Agreements (a) any existing or claimed material default by Target or
event of default or event which with notice or lapse of time, or both, would
constitute a default by Target, or (b) any existing material default by any
other party under any of the Lease Agreements or any event of material default
or event which with notice or lapse of time, or both, would constitute a
material default by any such party.
II.5 Financial Statements.
--------------------
Attached hereto as Schedule 2.5 are Target's unaudited financial
------------
statements for the fiscal years ending December 31, 1995 and 1996 and unaudited
interim financial statements for the period ending September 30, 1997 the
("Interim Financials Date") (collectively, the "Interim Financial Statements"),
reflecting the results of the operations and financial condition of Target and
the Practice at such dates which have been prepared in accordance with the
federal income tax basis of accounting (cash method) consistently applied
(collectively, the "Financial Statements"). The Financial Statements: (i)
present fairly the financial position of Target and the Practice as of the dates
indicated and present fairly the results of Target's operations for the periods
then ended; and (ii) are in accordance with the books and records of Target, as
the case may be, which have been properly maintained and are complete and
correct. To Target's and each of the Shareholder's knowledge, each of the
Financial Statements is auditable for purposes of determining its conformity to
generally accepted accounting principles.
Page 6
II.6 Absence of Changes.
------------------
Except as expressly set forth in Schedule 2.6 hereto and as permitted
------------
or contemplated by this Agreement, since the Interim Financials Date, Target has
conducted the Practice only in the ordinary course of business consistent with
past practices, and has not:
(a) Suffered any material adverse change in its working
capital, condition (financial or otherwise), assets, liabilities, reserves,
business or operations (such change being referred to herein as a "Material
Adverse Effect");
(b) Paid, discharged or satisfied any material liability other
than the payments, discharge or satisfaction of liabilities in the ordinary
course of business;
(c) Written off as uncollectible any receivable, except for
write-offs in the ordinary course of business;
(d) Except in the ordinary course of business and consistent
with past practices, canceled or compromised any debts or waived or permitted to
lapse any claims or rights or sold, transferred or otherwise disposed of any of
its properties or assets;
(e) Entered into any commitment or transaction not in the
ordinary course of business or made any capital expenditure or commitment in
excess of Five Thousand and No/100 Dollars ($5,000.00);
(f) Made any change in any method of accounting or accounting
practice for financial or income tax purposes;
(g) Incurred any liabilities or obligations (absolute, accrued
or contingent) in excess of Five Thousand and No/100 Dollars ($5,000.00), except
for trade payables incurred in the ordinary course of business;
(h) Mortgaged, pledged, subjected or agreed to subject, any of
its assets, tangible or intangible, to any lien, claim or encumbrance, except
for liens of current personal property taxes not yet due and payable;
(i) Sold or otherwise transferred any ownership interest in
Target;
(j) Increased any salaries, wages or any employee benefits for
any employee except in the ordinary course of business;
(k) Hired, committed to hire or terminated any employee except
in the ordinary course of business; or
Page 7
(l) Agreed, whether in writing or otherwise, to take any
action particularly described in this Section 2.6.
II.7 Litigation and Claims.
---------------------
Except as expressly set forth in Schedule 2.7 hereto, there are no
------------
claims, lawsuits, counterclaims, proceedings, or investigations pending, and to
each Shareholder's and Target's knowledge (which for purposes of this Agreement
shall mean the conscious awareness of facts or other information) threatened,
against or affecting any Shareholder, Target, the Practice or any licensed
professional or other individual employed by or under contract with the Practice
in any court or before any arbitrator or governmental authority or agency, and
to each Shareholder's and Target's knowledge, there is no basis for any such
action or any state of facts or occurrence of any event which is reasonably
expected to give rise to the foregoing, which has or is reasonably expected to
have an adverse effect on the financial condition of assets or properties of
Target, on any Shareholder's or Target's performance hereunder, or on the
continued operation of the Practice by Surviving Corporation. There are no
unsatisfied judgments against any Shareholder, Target, the Practice, or any
licensed professional or other individual affiliated with the Practice, or any
consent decrees to which any of the foregoing are subject which would have a
Material Adverse Effect on the financial condition of assets or properties of
Target, on Target's or any Shareholder's performance hereunder, or on the
continued operation of the Practice by Surviving Corporation.
II.8 No Undisclosed Liabilities.
--------------------------
To the best knowledge of each of Shareholder and Target, except as and
to the extent reflected in the Financial Statements or as expressly shown in
Schedule 2.8 hereto, Target has no liability or obligation whatsoever, whether
------------
matured, unmatured, absolute, contingent or otherwise, except for liabilities
and obligations incurred in the ordinary course of its business since the
Interim Financials Date, which in the aggregate have a Material Adverse Effect
on the operations, assets or financial condition of Target or the Practice.
II.9 No Violation of Law, Generally.
------------------------------
(a) Except as expressly set forth in Schedule 2.9 hereto, to
------------
the best knowledge of each of Shareholder and Target, neither Target nor any
Shareholder has been or shall be as of the Closing Date (by virtue of any
action, omission to act, contract to which it is a party or any occurrence or
state of facts whatsoever) in violation of any applicable local, state or
federal law, ordinance, regulation, order, injunction or decree, or any other
requirement of any governmental body, agency or authority or court binding on
it, or relating to its property or business or its advertising, sales, referral
or pricing practices (including, without limitation, Titles 18 and 19 of the
Social Security Act and all applicable zoning and use laws), which in the
aggregate have or might have a Material Adverse Effect on the business, assets
or financial position of Target.
Page 8
(b) Billing Practices/Regulatory Compliance.
---------------------------------------
(i) Billing Practices Generally. To the best
---------------------------
knowledge of each of Shareholder and Target, all billing practices by Target to
all third party payors, including, but not limited to, the federal Medicare
program, state Medicaid programs and private insurance companies, have been
true, fair and correct and in compliance with all applicable laws, regulations
and policies of all such third party payors, and Target has not billed for or
received any payment or reimbursement in excess of amounts allowed by law.
(ii) Fraud and Abuse. Target, its officers and
---------------
directors, and persons and entities providing professional services for Target,
have not engaged in any activities which are prohibited under the Fraud and
Abuse Statute, or the regulations promulgated thereunder pursuant to such
statute, or related state or local statutes or regulations, or which are
prohibited by rules of professional conduct, including, but not limited, to the
following: (a) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in any application for any
benefit or payment; (b) knowingly and willfully making or causing to be made any
false statement or representation of a material fact for use in determining
rights to any benefit or payment; (c) 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 (1) 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 (2) 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; and (d) knowingly and willfully offering or paying
any remuneration (including any kickback, bribe, or rebate), directly or
indirectly, overtly or covertly, in cash or in kind to any person to induce such
person (1) to refer 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 under Medicare or Medicaid or (2) to purchase, lease, order, or
arrange for or recommend purchasing, leasing, or ordering any good, facility,
service, or item for which payment may be made in whole or in part under
Medicare or Medicaid.
(c) Transactions with Referral Sources. Except as expressly
----------------------------------
set forth in Schedule 2.9, neither any Shareholder nor Target nor any affiliate
------------
of Target, nor any director, officer or employee thereof, is a party to any
contract, lease, agreement or arrangement, including, but not limited to, any
joint venture or consulting agreement with any physician, hospital, nursing
facility, home health agency or other person who is in a position to make or
influence referrals to or otherwise generate business for Target to provide
services, lease space, lease equipment or engage in any other venture or
activity.
II.10 Properties.
----------
(a) Schedule 2.10(a) hereto sets forth a current and complete
----------------
list and description of all of the assets owned by Target as of the Interim
Financials Date, the book value (net of
Page 9
depreciation or amortization) of which, as properly reflected in Target's books
and records, on an individual item-by-item basis, exceeds Five Thousand and
No/100 Dollars ($5,000.00).
(b) Schedule 2.10(b) hereto sets forth a current and complete
----------------
list of all property, equipment and other assets leased, subleased, or licensed
or sublicensed by Target including, without limitation, all computer hardware
and software (collectively, the "Leased Equipment").
(c) To the extent not expressly itemized in the Financial
Statements, Schedule 2.10(c) hereto sets forth a current and complete list and
----------------
description of all equipment, utility and other deposits owned by Target.
(d) Except as expressly set forth and described on
Schedule 2.10(d), Target: (i) has good, valid and indefeasible title to all of
----------------
the personal and mixed, tangible and intangible property, rights and assets
which it purports to own, including all the personal property and assets
reflected, but not shown as leased or encumbered, in the Interim Financial
Statements (except for inventory and assets sold in the ordinary course of
business consistent with past practice and supplies consumed in the ordinary
course of business consistent with past practice since the Interim Financials
Date); and (ii) owns such rights, assets and personal property free and clear of
all title defects or objections, liens, restrictions, claims, charges, security
interest, or other encumbrances of any nature whatsoever, including any
mortgages, leases, chattel mortgages, conditional sales contracts, collateral
security arrangements and other title or interest retention arrangements.
(e) All of the Leased Equipment and tangible assets owned by
Target are in good operating condition and repair and will be in such condition
on the Closing Date, except for ordinary wear and tear.
(f) All of the durable and nondurable supplies owned by Target
are of a quality and quantity usable in the ordinary and usual course of the
business of Target.
(g) The tangible assets, Leased Equipment, rights and
interests retained in the Surviving Corporation pursuant to this Agreement are
sufficient to enable the Practice and/or business of the Surviving Corporation
to continue to be managed or operated as it is currently being managed and
operated by Target.
II.11 Indebtedness.
------------
Schedule 2.11 sets forth a current and complete list and description of
-------------
all instruments or other documents relating to any direct or indirect
indebtedness for borrowed funds of Target in excess of Five Thousand and No/100
Dollars ($5,000.00), as well as indebtedness by way of lease purchase
arrangements, guarantees, undertakings on which others rely in extending credit
and all conditional sales contracts, chattel mortgages and other security
arrangements with respect to personal property used or owned by Target. Except
as set forth on Schedule 2.11, Target has not loaned funds to or guaranteed a
-------------
loan to any employee or Shareholder of Target or other investor in
Page 10
Target that is in a position, directly or indirectly, to make or influence
referrals of patients to, furnish items or services to, or otherwise generate
business for the Practice.
II.12 Employee Contracts, Union Agreements and Benefit Plans.
------------------------------------------------------
(a) Except as set forth on Schedule 2.12(a) hereto, Target is
----------------
not a party to any employment contract (except for oral employment agreements
which are terminable by Target at will), consulting or collective bargaining
contracts, deferred compensation, pension (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended, and all rules and
regulations from time to time promulgated thereunder ("ERISA")), profit sharing,
bonus or other nonqualified benefit or compensation commitments, benefit plans,
arrangements or plans (whether written or oral), including all welfare plans, as
defined in Section 3(l) of ERISA, of or pertaining to any present or former
employee of Target, or its predecessors in interest, that have been in effect at
any time within the past five (5) years.
(b) Surviving Corporation shall employ, as employees at will,
all persons (other than physician Shareholders and employees who perform
clinical/medical services incident to the services of said physician
Shareholders) who are employees of Target in good standing on the Closing Date.
II.13 Labor Relations.
---------------
Except as expressly set forth in Schedule 2.13 hereto:
-------------
(a) Target is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, wages and hours, occupational safety and health, and is not engaged
in any unfair labor practice within the meaning of Section 8 of the National
Labor Relations Act;
(b) There is no unfair labor practice, charge or complaint or
any other matter against or involving Target pending or, to Target's and each
Shareholder's knowledge threatened before the National Labor Relations Board or
any court of law;
(c) There are no charges, investigations, administrative
proceedings or formal complaints of discrimination (including discrimination
based upon sex, age, marital status, race, national origin, the making of
workers' compensation claims, sexual preference, handicap or veteran status)
pending or, to the knowledge of Target or any Shareholder, threatened before the
Equal Employment Opportunity Commission or any federal, state or local agency or
court against Target. There have been no governmental audits of the equal
employment opportunity practices of Target and to each Shareholder's and
Target's knowledge, no basis for any such audit exists;
(d) Target is in compliance with the Immigration Reform and
Control Act of 1986, as amended, and all applicable regulations promulgated
thereunder; and
Page 11
(e) There are no inquiries, investigations or monitoring
activities of any licensed, registered, or certified professional personnel
employed by, credentialed or privileged, or under contract with Target or the
Practice pending or, to each Shareholder's and Target's knowledge, threatened by
any state professional board or agency charged with regulating the professional
activities of health care practitioners or providers.
II.14 Contracts and Commitments.
-------------------------
Except as expressly set forth in Schedule 2.14:
-------------
(a) No contract or commitment of Target continues for a period
of more than six (6) months from the date hereof or requires payments by Target
after the Closing Date, in the aggregate, in excess of Five Thousand and No/100
Dollars ($5,000.00);
(b) There are no contracts or agreements:
(i) With any of the directors, officers or
Shareholders of Target, or
(ii) With any person related by blood or marriage to
any director, officer or Shareholder of Target or with any company or other
organization in which anyone related by blood or marriage to any director,
officer or shareholder of Target has a direct or indirect financial interest;
(c) Neither Target nor any Shareholder is subject to any
contracts or agreements containing covenants prohibiting or limiting the freedom
of any Shareholder and/or Target to compete in any line of business or to
subject the employees or patients of any business in any geographic area or
requiring any Shareholder and/or Target to share any profits;
(d) Neither Target nor any Shareholder is a party to any
existing agreement for the management or administration of the Practice, and
neither Target nor any Shareholder is obligated to become a party to any such
management or administration agreement;
(e) Neither Target nor any Shareholder is a party to or bound
by any contract, agreement or other arrangement that has had or may be
reasonably expected in the future to have a Material Adverse Effect upon the
business, earnings or financial condition of Target; and
(f) To their respective knowledge, neither Target nor any
Shareholder is a party to or bound by any contract, agreement or other
arrangement, requiring the personal services of another person or entity which
does not comply with the safe harbor provisions of the Fraud and Abuse Statute
applicable to Target or any Shareholder.
Page 12
II.15 Environmental Protection.
------------------------
Except as would not be expected to have a Material Adverse Effect,
Target has obtained all permits, licenses and other authorizations and filed all
notices which are required to be obtained or filed by any Shareholder and/or
Target for the operation of the Practice under federal, state and local laws
relating to pollution, protection of the environment or the generation or
disposal of waste. Except as would not be expected to have a Material Adverse
Effect, Target is in compliance in all material respects with all terms and
conditions of such required permits, licenses and authorizations. Except as
would not be expected to have a Material Adverse Effect, Target is in compliance
with all other applicable limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
those laws or contained in any law, regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder. Except as would not be expected to have a Material Adverse Effect,
and except as expressly disclosed on Schedule 2.15 hereto, there are no past or
-------------
present events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued compliance, or
which may give rise to any common law or statutory liability or, otherwise form
the basis of any claim, action, suit, proceeding, hearing or investigation,
based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any pollutant,
contaminant, or hazardous or toxic material or waste (including medical waste)
with respect to Target or the Practice.
II.16 Filing of Reports.
-----------------
All returns, reports, plans and filings of any kind or nature necessary
to be filed by Target with any governmental authority have been properly
completed and timely filed in compliance with all applicable requirements where
failure to so file would have a Material Adverse Effect on the conduct of the
Practice by Surviving Corporation after the Closing.
II.17 Insurance Policies.
------------------
Schedule 2.17 hereto sets forth a complete and accurate list and
-------------
description of all insurance policies in force naming Target, any Shareholder or
any director, officer or employee thereof, as an insured or beneficiary or as a
loss payee or for which Target has paid or is obligated to pay all or any part
of the premiums including, without limitation, all general liability,
malpractice, fire, health, disability and life insurance policies. Target has
not received notice of any pending or threatened termination or premium increase
(retroactive or otherwise) with respect thereto, and Target and each Shareholder
is in compliance with all conditions contained therein. Except as expressly set
forth on Schedule 2.17 hereto, there are no pending claims against such
-------------
insurance by Target as to which insurers are defending under reservation of
rights or have denied liability, and except as set forth on Schedule 2.17
-------------
hereto, there exists no claim under such insurance that has not been properly
filed or reported by Target.
Page 13
II.18 Accounts Receivable.
-------------------
Attached hereto as Schedule 2.18 is a true, complete and accurate list
-------------
and aging of all accounts receivable of Target as of September 30, 1997. All
such accounts receivable arose in the ordinary course of the business of Target
for the provision of professional services, have not been previously written off
as bad debts and, to Target's knowledge, are collectible in the ordinary course
of business.
II.19 Accounts Payable.
----------------
Attached hereto as Schedule 2.19 is a current and complete list of all
-------------
accounts payable of Target as of September 30, 1997, including each individual
indebtedness of Five Hundred and No/100 Dollars ($500.00) or more and setting
forth the payee, the amount of indebtedness and such additional information as
may be material with respect to any such account payable.
II.20 Inventory.
---------
All items of inventory of the Practice reflected on the Interim
Financial Statements consisted, all such items on hand on the date of this
Agreement consist, and all such items on hand on the Closing Date will consist,
of items of a quality and a quantity usable in the ordinary course of Target's
business and conform to generally accepted standards for physician medical
practices. The purchase commitments of Target for inventory are not materially
in excess of normal requirements, and none of such purchase commitments were
made at prices in excess of prevailing market prices at the time of purchase.
II.21 Inspections and Investigations.
------------------------------
Neither any Shareholder's nor Target's right nor the right of any
licensed professional or other individual employed by or under contract with the
Practice to receive Medicare and Medicaid reimbursements has been terminated or
otherwise adversely affected as a result of any investigation or action by any
federal or state governmental regulatory authority. Except as expressly set
forth and described on Schedule 2.21, to each Shareholder's and Target's
-------------
knowledge, neither Target nor any Shareholder nor any licensed professional or
other individual affiliated with the Practice has, during the past three (3)
years, been the subject of any inspection, investigation, survey, audit or
monitoring by any governmental regulatory entity, trade association,
professional review organization, accrediting organization or certifying agency,
nor has Target, any Shareholder or the Practice received from any such entity
any notice of deficiency in connection with the operation of the Practice. No
Shareholder has been the subject of a "medical malpractice action or claim" or a
"professional review action" within the last three (3) years as those terms are
defined in the Health Care Quality Improvement Act of 1986. Attached as part of
Schedule 2.21 hereto are copies of all reports, correspondence, notices and
-------------
other documents relating to any such inspection, investigation, survey, audit,
monitoring or other form of review to which any of the foregoing has been
subject.
II.22 Ownership of Medical Service Practice(s).
----------------------------------------
Page 14
Except as expressly set forth in Schedule 2.22 hereto, no Shareholder
-------------
nor any member of any Shareholder's family owns any interest in nor has a
financial relationship with any health care facility or practice other than
Target (including, without limitation, any physician or physician practice,
allied professional services such as chiropracty, physical therapy or podiatry,
or any physician management services organization, or any provider of ancillary
or specialty services including, but not limited to, laboratory and radiology
services).
II.23 Agreements in Full Force and Effect.
-----------------------------------
Except as expressly set forth in the Schedules to this Agreement, all
contracts, agreements, plans, leases, policies and licenses referred to, or
required to be referred to, in any Schedule delivered hereunder are valid and
binding and are in full force and effect and are enforceable in accordance with
their terms, except to the extent that the validity or enforceability thereof
may be limited by bankruptcy, insolvency, reorganization and other similar laws
affecting creditors' rights generally. There is no pending or, to the knowledge
of any Shareholder and Target, threatened bankruptcy, insolvency or similar
proceeding with respect to any party to such agreements, and no event has
occurred which (whether with or without notice, lapse of time or the happening
or occurrence of any other event) would constitute a default thereunder by
Target, any Shareholder or any other party thereto.
II.24 Taxes.
-----
Except as expressly set forth in Schedule 2.24 hereto, or as expressly
-------------
reflected in the Financial Statements, Target has not received notice of any tax
claim being asserted or any proposed assessment by any taxing authority and
Target has not received notice of any contemplated investigation or audit by the
Internal Revenue Service or any state agency. As of the date hereof, Target has
filed, or as of the Closing Date will have filed, all federal, state and local
tax returns required to be filed on or prior to the Closing Date, all of which
are or will be true, correct and complete, and Target has paid, or by the
Closing Date will have paid, all taxes (including penalties and interest in
respect thereof, if any) that have become due or are due with respect to any
period ending on or prior to the Closing Date. Target has withheld or collected
from each payment made to each of its employees the amount of all taxes required
to be withheld or collected therefrom and Target has paid the same to the proper
tax depositories or collecting authorities.
II.25 Capitalization; Title to Shares.
-------------------------------
Schedule 2.25 hereto sets forth a list of all Shareholders of Target
-------------
and the number and type of shares of capital stock of Target owned by such
Shareholder. Each Shareholder has, and on the Closing Date will have, good title
to those Target Shares owned by said Shareholder, free and clear of all claims,
liens, charges, encumbrances, options, and rights of any third parties
whatsoever. Target has a total of five hundred (500) shares of its common stock
authorized of which two hundred forty (240) are issued and outstanding.
Page 15
II.26 Corporate Documents.
-------------------
(a) The corporate minute books of Target, made available by
Target to PHC and Acquisition Subsidiary prior to the date hereof, accurately
reflect all corporate actions taken by the directors and Shareholders of Target
or any committee of the Board of Directors of Target, and contain true and
accurate copies of or originals of the respective minutes of all meetings or
consent actions of the directors and Shareholders of Target and any committee of
the Board of Directors of Target.
(b) The stock record books of Target, made available by Target
to PHC and Acquisition Subsidiary prior to the date hereof, accurately reflect
the stock ownership of Target, and contain complete and accurate records with
respect to the transfer of all securities issued by Target since its inception.
II.27 Statements True and Correct.
---------------------------
No representation or warranty made by any Shareholder or Target herein,
nor any statement, certificate or instrument furnished or to be furnished by any
Shareholder or Target to PHC or Acquisition Subsidiary pursuant to this
Agreement or any other document, agreement or instrument referred to herein or
therein, contains or will contain any untrue statement of material fact or omits
or will omit any material fact necessary to make the statements contained
therein not misleading.
II.28 Delivery and Acceptance of Schedules.
------------------------------------
All Schedules required by this Agreement shall be delivered by Target
to PHC and Acquisition Subsidiary in acceptable form no later than the date
hereof. The last such Schedule shall be accompanied by a certificate from Target
stating that all Schedules have been delivered to PHC and Acquisition
Subsidiary. PHC and Acquisition Subsidiary shall have the right to terminate
this Agreement at any time within ten (10) business days following the receipt
of such certificate if the substance of the matters reflected in the Schedules
are unacceptable to PHC and Acquisition Subsidiary. In the event of such
termination, this Agreement shall be of no further force and effect and each
party shall pay all expenses incurred by it in connection with the proposed
transaction. No party shall be entitled to any damages as the result of the
termination of this Agreement under this Section 2.28. In the event of such
termination, PHC and Acquisition Subsidiary shall return to Target all documents
received by PHC and Acquisition Subsidiary hereunder and vice versa.
II.29 Investment Intent.
-----------------
Page 16
Each Shareholder represents that he or she is acquiring his or her
respective PHC Shares for his or her own direct account or investment and not
with a view, directly or indirectly, to or in connection with a distribution
thereof and will not sell or transfer his or her respective PHC Shares in
violation of any federal or state securities laws and the rules and regulations
promulgated pursuant thereto. Except for Xxxxxxx X. Xxxxx, each Shareholder
represents that he is an "Accredited Investor" within the meaning of Rule 501
under Regulation D of the Securities Act of 1933 (the "Securities Act"), and
capable of evaluating, either alone or with said Shareholder's representatives
and advisors, the merits and risks of the investment in the PHC Shares to be
made hereunder by such Shareholder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PHC AND ACQUISITION SUBSIDIARY
----------------------------------------------------------------
As an inducement to the Shareholders and Target to enter into this
Agreement, PHC and Acquisition Subsidiary hereby jointly and severally represent
and warrant to each of the Shareholders and to Target as follows:
III.1 Organization, Standing and Authority of PHC.
-------------------------------------------
PHC is a corporation duly organized and validly existing under the laws
of the State of Delaware and will, on the Closing Date, be qualified to do
business in all locations where the nature of its business or the ownership of
its assets or properties requires such qualification. The parties hereto hereby
agree that the term "Business" as used in this Article III shall refer solely to
the business conducted by PHC itself, and not as conducted by any PHC affiliate,
and the ownership of equity securities of PHC affiliates by PHC. PHC has the
full requisite power and authority to (a) own all its assets and properties and
to operate its Business as conducted on the date hereof, (b) execute and deliver
this Agreement and each other document or instrument contemplated hereby
(collectively, the "PHC Transaction Agreements") and perform its obligations
hereunder and thereunder according to their respective terms, and (c) to carry
on and operate the Business as now being conducted. Except as set forth in
Schedule 3.1, PHC is not a participant in any joint venture, partnership,
------------
association or similar business arrangement with any other person or party.
III.2 Absence of Conflicting Agreements or Required Consents Relating to
------------------------------------------------------------------
PHC's Obligations.
-----------------
Except as set forth in Section 6.1 or elsewhere in this Agreement, the
execution, delivery and performance by PHC, of the PHC Transaction Agreements
(with or without the giving of notice, the lapse of time, or both): (a) except
as expressly set forth on Schedule 3.2, has been consented to, where such
------------
consent is required by any governmental or regulatory authority or any other
third party; (b) will not conflict with any provision of PHC's Articles of
Incorporation, Bylaws or other organizational documents; (c) will not conflict
with, result in a breach of, or constitute a default under any law, ordinance,
regulation, ruling, judgment, order or injunction of any court or governmental
instrumentality to which PHC is a party or by which PHC or its respective
properties are bound; (d) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default
Page 17
under, or accelerate or permit the acceleration of any performance required by
the terms of any agreement, instrument, license or permit, material to this
transaction, to which PHC or its respective properties are bound; and (e) will
not create any claim, lien, charge or encumbrance upon any of the assets or
properties of PHC.
III.3 Financial Statements.
--------------------
Attached hereto as Schedule 3.3 are PHC's consolidated financial
------------
statements for the period from inception through December 31, 1996 and audited
interim financial statements for the period ending June 30, 1997 (the "PHC
Interim Financials Date"), reflecting the results of the operations and
financial condition of PHC and the Business at such dates which have been
prepared in accordance with generally accepted accounting principles
consistently applied (collectively, the "PHC Financial Statements").
III.4 Litigation and Claims.
---------------------
Except as expressly set forth in Schedule 3.4 hereto, there are no
------------
claims, lawsuits, counterclaims, proceedings, or investigations pending, and to
PHC's knowledge (which for purposes of this Agreement shall mean the conscious
awareness of facts or other information) threatened, against or affecting PHC,
the Business or any other individual employed by or under contract with PHC in
any court or before any arbitrator or governmental authority or agency, and to
PHC's knowledge, there is no basis for any such action or any state of facts or
occurrence of any event, which is reasonably expected to give rise to the
foregoing, which has or is reasonably expected to have an adverse effect on the
financial condition of assets or properties of PHC, on PHC's performance
hereunder, or on the continued operation of the Business by PHC. There are no
unsatisfied judgments against PHC, the Business, or any other individual
affiliated with the Business, or any consent decrees to which any of the
foregoing are subject which would have an adverse effect on the financial
condition of assets or properties of PHC, on PHC's performance hereunder, or on
the continued operation of the Business by PHC.
III.5 No Undisclosed Liabilities.
--------------------------
Except as and to the extent reflected in the PHC Financial Statements
or as set forth in the PPM, PHC has no liability or obligation whatsoever,
whether matured, unmatured, absolute, contingent or otherwise, except for
liabilities and obligations incurred in the ordinary course of its business
since the PHC Interim Financials Date, which in the aggregate have an adverse
effect on the operations, assets or financial condition of PHC or the Business.
The PHC Financial Statements: (i) present fairly in all material respects the
financial position of PHC as of the dates indicated and present fairly in all
material respects the results of PHC's operations for the period then ended in
accordance with GAAP; and (ii) are in accordance with the books and records of
PHC which have been properly maintained and are complete and correct in all
material respects.
III.6 No Violation of Law.
-------------------
Page 18
Except as expressly set forth in Schedule 3.6 hereto, PHC has not been
------------
nor shall be as of the Closing Date (by virtue of any action, omission to act,
contract to which it is a party or any occurrence or state of facts whatsoever)
in violation of any applicable local, state or federal law, ordinance,
regulation, order, injunction or decree, or any other requirement of any
governmental body, agency or authority or court binding on it, or relating to
its property or business or its advertising, sales, referral or pricing practice
(including, without limitation, Titles 18 and 19 of the Social Security Act and
all applicable zoning and use laws).
III.7 Filing of Reports.
-----------------
All returns, reports, plans and filings of any kind or nature necessary
to be filed by PHC with any governmental authority have been properly completed
and timely filed in compliance with all applicable requirements where failure to
so file would have a Material Adverse Effect on the conduct of the Business by
PHC after the Closing.
III.8 Capitalization; Title to Shares.
-------------------------------
The authorized capital stock of PHC consists of 20,000,000 shares of
Voting Common Stock, 20,000,000 shares of Non-Voting Common Stock, 20,000,000
shares of Prime Common Stock, 500,000 shares of Class A Stock and 15,000,000
shares of Preferred Stock. As of October 8, 1997, approximately (a) 9,400,000
shares of Common Stock, (b) 3,825,000 shares of Preferred Stock and (c) 200,000
shares of Class A Stock were issued and outstanding. All shares of PHC stock
presently outstanding are validly authorized and issued and fully paid and
nonassessable. Since the PHC Interim Financials Date, except as set forth in the
PPM, PHC has not directly or indirectly redeemed, purchased or otherwise
acquired any shares of PHC stock, or declared, set aside, or paid any dividend
or other distribution in respect of PHC stock.
III.9 Statements True and Correct.
---------------------------
No representation or warranty made by PHC or Acquisition Subsidiary
herein, nor any statement, certificate or instrument furnished or to be
furnished by PHC or Acquisition Subsidiary to each Shareholder or Target
pursuant to this Agreement or any other document, agreement or instrument
referred to herein or therein, contains or will contain any untrue statement of
material fact or omits or will omit any material fact necessary to make the
statements contained therein not misleading.
III.10 Acquisition Subsidiary.
----------------------
Acquisition Subsidiary has been recently formed and has no material
assets, liabilities or contracts. PHC is, directly or indirectly, the record and
beneficial owner of all of the outstanding shares of capital stock of
Acquisition Subsidiary (the "Acquisition Subsidiary Shares"). PHC has,and on the
Closing Date will have, good title to the Acquisition Subsidiary Shares, free
and clear of all claims, liens, charges, encumbrances, options and rights of any
third parties whatsoever.
Page 19
III.11 Organization, Standing and Authority of Acquisition Subsidiary.
--------------------------------------------------------------
Acquisition Subsidiary is a corporation duly organized and validly
existing under the laws of the State of Georgia and will, on the Closing Date,
be qualified to do business in all locations where the nature of its business or
the ownership of its assets or properties require such qualification.
Acquisition Subsidiary has the full requisite power and authority to execute,
deliver and perform this Agreement and all of the documents contemplated hereby
according to their respective terms.
III.12 Common Stock of Acquisition Subsidiary.
--------------------------------------
Acquisition Subsidiary has a total of one thousand (1,000) shares of
its common stock authorized, all of which shares are issued and outstanding.
III.13 PPM.
---
Notwithstanding anything to the contrary contained in this Article III,
all representations and warranties of PHC and Acquisition Subsidiary are further
qualified by such information contained in the PPM to be delivered by PHC to the
Target, Target's counsel and the Shareholders prior to Closing.
III.14 No Violation of Law, Generally.
------------------------------
(a) Billing Practices Generally. To PHC's knowledge, all
---------------------------
billing practices by PHC to all third party payors,
including, but not limited to, the federal Medicare
program, state Medicaid programs and private
insurance companies, have been true, fair and correct
and in compliance with all applicable laws,
regulations and policies of all such third party
payors, and PHC has not billed for or received any
payment or reimbursement in excess of amounts allowed
by law.
(b) Fraud and Abuse. PHC has not engaged in any
---------------
activities which are prohibited under the federal
Fraud and Abuse Statutes, or which are prohibited by
rules of professional conduct, including, but not
limited, to the following: (a) knowingly and
willfully making or causing to be made a false
statement or representation of a material fact in any
application for any benefit or payment; (b) knowingly
and willfully making or causing to be made any false
statement or representation of a material fact for
use in determining rights to any benefit or payment;
(c) 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 (1) in return referring an
individual to a person fo 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 (2) in return for purchasing, leasing,
or ordering or arranging for
Page 20
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; and (d) knowingly and willfully
offering or paying any remuneration (including any
kickback, bribe, or rebate), directly or indirectly,
overtly or covertly, in cash or in kind to any person
to induce such person (1) to refer 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 under Medicare or
Medicaid or (2) to purchase, lease, order, or arrange
for or recommend purchasing, leasing, or ordering any
good, facility, service, or item for which payment
may be made in whole or in part under Medicare or
Medicaid.
ARTICLE IV
ADDITIONAL AGREEMENTS
---------------------
IV.1 Access and Inspection.
---------------------
From and after the date of this Agreement, PHC and its representatives
and agents shall have the right to enter Target's premises during regular
business hours to review, inspect and copy any and all books, records, documents
or other information concerning the operation of the Practice or such other
matters as PHC or its representatives or agents may reasonably request (the "Due
Diligence Inspection").
IV.2 Cooperation in Meeting Filing Requirements.
------------------------------------------
Each Shareholder, Target, PHC and Acquisition Subsidiary shall
cooperate in preparing, executing and filing such requests, applications,
information and other submittals as may be required by any federal or state
governmental agency or authority having jurisdiction over the assets or
properties of Target or the Practice, for the purpose of consummating the
transactions contemplated herein and Surviving Corporation's operation of the
Practice in substantially the same manner as currently operated by Target.
IV.3 Post Closing Audit of Target.
----------------------------
Each Shareholder and Target shall cooperate with and assist PHC and its
accountants and other representatives in preparing audited financial statements
of Target for any fiscal year of Target ending prior to the Closing Date. The
cost of any such audit shall be borne by PHC.
Page 21
IV.4 Further Assurances.
------------------
Each party covenants that it will, in connection with the Closing and
from time to time after the Closing Date, execute such additional instruments
and take such actions as may be reasonably requested by the other party to
confirm or perfect or otherwise to carry out the intent and purposes of this
Agreement.
IV.5 Appointment of Attorney-in-Fact.
-------------------------------
The Shareholders hereby each make, constitute and appoint C. Xxxxxxx
Xxxxxxxx, M.D. (the "Attorney-in-Fact") as their true and lawful
Attorney-in-Fact with full power and authority to do and perform the following:
(a To deliver to PHC at Closing the Transaction Agreements;
(b To make, execute and deliver all agreements, schedules,
exhibits and certificates required to be executed by the Shareholders and
delivered to PHC in accordance with the terms and conditions of the Transaction
Agreements;
(c To commence, prosecute, defend, dismiss and compromise
all legal demands, actions or proceedings regarding the interest of the
Shareholders in the Transaction Agreements; and the Shareholders agree that no
such demand, action or proceeding shall be instituted by them except through the
Attorney-in-Fact, and then only in the event the Attorney-in-Fact has received
from Shareholders representing both a majority of the Shareholders and a
majority of shares of common stock of Target owned immediately prior to the
Effective Date ("Majority Vote"), written instructions demanding said Attorney-
in-Fact to commence, prosecute, defend, dismiss or compromise such legal
demands, actions or proceedings, and the Shareholders further agree that the
Attorney-in-Fact shall have the exclusive right to exercise all legal remedies
available to Shareholders for any breach or default by PHC under the Transaction
Agreements.
IV.6 Acceptance of Appointment.
-------------------------
C. Xxxxxxx Xxxxxxxx, M.D. hereby accepts his appointment as
Attorney-in-Fact and agrees to carry out in good faith the responsibilities
undertaken hereby and to receive, hold and distribute all funds payable under
the Transaction Agreements and to disburse the same in accordance with the terms
and conditions of the Transaction Agreements. The Attorney-in-Fact agrees to
maintain his appointment hereunder until his death, such earlier date as he may
be declared legally incompetent by a court of law or until the appointment of a
successor attorney-in-fact pursuant to this Article IV.
IV.7 Power of Attorney Irrevocable, Etc.
----------------------------------
The Shareholders do hereby ratify and confirm all that said Attorney-in-
Fact shall do or cause to be done by virtue of this Agreement. For the
consideration specified in this Agreement the Shareholders agree that the power
of attorney granted hereby to the Attorney-in-Fact is a special
Page 22
power of attorney coupled with an interest, is irrevocable, shall not terminate
upon the death of any Shareholder and shall be effective from the date hereof
until or upon termination of this Agreement. The Shareholders hereby renounce
all right to revoke the power of attorney granted herein and to appoint another
person to perform the acts of the Attorney-in-Fact, except for successors
hereunder. After termination of the power of attorney hereby granted, the
Attorney-in-Fact shall have authority only to return any property, real or
personal, to the Shareholder who delivered the same to the Attorney-in-Fact.
IV.8 Successor Attorney-in-Fact.
--------------------------
The Shareholders agree that in the event C. Xxxxxxx Xxxxxxxx, M.D.
ceases to act as Attorney-in-Fact then Xxxxxx X. Xxxxxx, M.D. ("Successor")
shall, if he so accepts, succeed as Attorney-in-Fact hereunder. If Successor
fails to succeed as Attorney-in-Fact or if Successor resigns his appointment
hereunder, then the Shareholders by Majority Vote shall select a successor. Any
successor Attorney-in-Fact shall have all the rights, powers and obligations of
the Attorney-in-Fact. All charges, fees or other expenses or costs of any
successor Attorney-in-Fact shall be borne and paid by the Shareholders.
IV.9 Limitation of Liability and Indemnity.
-------------------------------------
Each of the Shareholders agrees that in performing any of his duties,
the Attorney-in-Fact shall not incur any liability to anyone for damages, losses
or expenses for any reason except for willful negligence or intentional
misconduct. Without limiting the foregoing, the Shareholders specifically agree
that the Attorney-in-Fact shall be entitled to act upon advice of his counsel
given with respect to any questions relating to his duties and responsibilities
as Attorney-in-Fact hereunder without incurring any liability to the
Shareholders or to any other person. The Shareholders agree to indemnify and
hold harmless the Attorney-in-Fact against and in respect of any and all losses,
claims, damages, liabilities and expenses including reasonable costs of
investigation, counsel fees and disbursements, which may be imposed upon or
incurred by the Attorney-in-Fact in connection with the performance of his
duties hereunder.
IV.10 PHC Disclosure; Limited Right of Termination.
--------------------------------------------
(a Accredited Investors.
--------------------
Each of the Shareholders other than Xxxxxxx X. Xxxxx, M.D.
("Xx. Xxxxx") (the "Accredited Investors") has represented and warranted to PHC
that he is an "accredited investor" as such term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended. Each Accredited
Investor acknowledges and agrees that he has received, and has had an
opportunity to review, those certain disclosure documents of PHC described on
Exhibit D hereto, including that certain draft "Transaction Summary" prepared by
---------
PHC and delivered to each Accredited Investor before closing. PHC shall provide
to each Accredited Investor a copy of the PPM prior to Closing. The parties
hereto agree that each Accredited Investor shall have the right to terminate
this Agreement prior to Closing.
Page 23
(b Unaccredited Investor.
----------------------
On the date hereof, Xx. Xxxxx is not a party to this
Agreement, and PHC has not, directly or indirectly, made an offer to sell to Xx.
Xxxxx or solicited an offer from Xx. Xxxxx to purchase PHC securities. PHC
intends to deliver to Xx. Xxxxx a PPM prepared by PHC to offer PHC securities to
him pursuant to the terms of this Agreement. Within five (5) days of his receipt
of the PPM, the parties hereto agree that Xx. Xxxxx may execute and deliver to
PHC a counterpart signature page to this Agreement and become a party to this
Agreement on the same terms as the other Shareholders.
(c Limited Right of Termination.
----------------------------
In the event Xx. Xxxxx does not become a party to this
Agreement, PHC shall have the right, but not the obligation, to terminate this
Agreement prior to Closing pursuant to this Section 4.10(c). If PHC terminates
this Agreement pursuant to this Section 4.10(c) or any Accredited Investor
terminates this Agreement pursuant to Section 4.10(a), (i) this Agreement shall
be of no further force and effect, (ii) each party shall pay all expenses
incurred by him/it in connection with the proposed transactions, (iii) no party
shall be entitled to recover any damages as the result of such termination, and
(iv) PHC shall return to Target all documents received by PHC hereunder and
Target and Shareholders shall return to PHC all documents received by Target or
any Shareholder hereunder.
(d Voting on Merger; PHC Termination.
---------------------------------
The Shareholders and Target shall properly call a special
meeting of Shareholders to be held within five (5) days after Xx. Xxxxx has been
provided a copy of the Private Placement Memorandum. All Shareholders shall vote
in favor of Target entering into the merger and the transactions contemplated by
this Agreement.
IV.11 [This Section intentionally reserved].
IV.12 Formation and Operation of Compliance Committee.
-----------------------------------------------
The Shareholders shall reasonably cooperate with the Surviving
Corporation in the establishment of a Compliance Committee (herein so called)
which shall be responsible for advising the Practice and the Surviving
Corporation in connection with the development and administration of procedures
designed to detect and deter potential violations of the Ethics Referrals Act,
Medicare and Medicaid anti-kickback laws an other healthcare and federal laws
applicable to the conduct of the Practice. The Surviving Corporation and the
Shareholders shall have equal representation on the Compliance Committee. The
Surviving Corporation shall designate, in its sole discretion, two (2) members
of the Compliance Committee. The Shareholders shall designate, in their sole
discretion, two (2) members of the Compliance Committee. The act of a majority
of the total number of members of the Compliance Committee shall be the act of
the Compliance Committee.
Page 24
IV.13 ASC Purchase Option.
-------------------
On the Closing Date, PHC and the shareholders of Central Florida Surgical
Centers, Inc. and Oakwater Surgical Center, Inc. (the "ASC Shareholders") will
enter into the ASC Purchase Option Agreements in the form attached hereto as
Exhibit E.
---------
IV.14 Delivery and Acceptance of Schedules.
------------------------------------
All Schedules required by this Agreement shall be delivered by PHC and
Acquisition Subsidiary to Target in acceptable form no later than the date
hereof. The last such Schedule shall be accompanied by a certificate from PHC
and Acquisition Subsidiary stating that all Schedules have been delivered to
Target. Target shall have the right to terminate this Agreement at any time
before Closing following the receipt of such certificate if the substance of the
matters reflected in the Schedules are unacceptable to Target. In the event of
such termination, this Agreement shall be of no further force and effect and
each party shall pay all expenses incurred by it in connection with the proposed
transaction. No party shall be entitled to any damages as the result of the
termination of this Agreement under this Section 4.14. In the event of such
termination, PHC and Acquisition Subsidiary shall return to Target all documents
received by PHC and Acquisition Subsidiary hereunder and vice versa.
ARTICLE V
CONDUCT OF BUSINESS OF TARGET
-----------------------------
AND EACH SHAREHOLDER PENDING CLOSING
------------------------------------
Each Shareholder covenants and agrees that, without the prior written
consent of PHC, between the date of this Agreement and the Closing:
V.1 Disposition of Assets.
---------------------
The operation of the Practice shall be conducted only in the ordinary
course, and Target shall not dispose of any interest of any kind in the assets
or properties of Target nor incur nor guarantee any obligations for borrowed
money, except as otherwise permitted by this Agreement.
V.2 Sale of Shares.
--------------
The Shareholders shall not sell or transfer, or consent to the sale or
transfer of, any shares of capital stock in Target or any option, warrant or
other right to acquire an equity interest in Target.
V.3 Contracts.
---------
Target will not enter into any contract or other arrangement except in
the ordinary course of business and then only if such contract or arrangement
would not have a Material Adverse Effect on the operation of the Practice.
Page 25
V.4 Condition of Assets.
-------------------
Target will maintain its assets in substantially the same condition as
they are in on the date of this Agreement, ordinary wear and tear excepted.
V.5 Liens; Encumbrances.
-------------------
Target will not sell, transfer or otherwise dispose of, nor mortgage,
pledge or subject to any lien, charge or other encumbrance, any of the assets or
any interest in the rights, except in the ordinary course of business and as
otherwise permitted by this Agreement.
V.6 Access and Inspection.
---------------------
From and after the date of this Agreement until the Closing, the
Shareholders, Target and their representatives and agents shall have the right
to enter PHC's premises during regular business hours to review, inspect and
copy any and all books, records, documents or other information concerning the
business and operations of PHC or such matters as its representatives or agents
may reasonably request.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PHC AND ACQUISITION SUBSIDIARY
-----------------------------------------------------------
The obligations of PHC and Acquisition Subsidiary to close the Merger
are subject to the satisfaction, at or prior to Closing, of each of the
following conditions:
VI.1 Necessary Approvals.
-------------------
PHC shall have received all licenses, consents, permits and approvals
necessary in order for PHC to operate the Practice in substantially the same
manner as Target. Within ten (10) business days following the date hereof, PHC's
officers shall submit this Agreement and Plan of Merger to the following parties
for approval, and attempt to obtain such approvals, but PHC shall not be
obligated to close the Merger unless each of the following parties approves this
Agreement and the transactions contemplated hereby: (i) PHC's Board of
Directors, (ii) Banque Paribas and (iii) PHC's venture capital investors.
VI.2 Representations and Warranties.
------------------------------
The representations and warranties of the Shareholders and Target set
forth in this Agreement, or any document or instrument delivered to PHC or
Acquisition Subsidiary hereunder, shall be true and correct on the Closing Date
with the same force and effect as if such representations and warranties had
been made on the Closing Date.
Page 26
VI.3 Performance; Covenants.
----------------------
All of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Shareholders or Target at or prior to Closing
shall have been complied with and performed in all material respects including,
but not limited to, the delivery of the following documents:
(a) An Employment Agreement executed by each Shareholder in
substantially the form of Exhibit F;
---------
(b) A certificate dated the Closing Date signed by a duly
authorized officer of Target and by the Attorney-in-Fact certifying that the
representations and warranties are true and correct as of the date of such
certificate and that each Shareholder and Target have fulfilled the conditions
of this Section 6.3;
(c) Consent Resolutions of the Board of Directors and
Shareholders of Target in form and substance satisfactory to PHC approving the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, certified by a duly authorized
representative of Target;
(d) Written consents of all third parties necessary for the
consummation of the transactions contemplated by this Agreement and the
operation of the Practice as currently being operated;
(e) All of the books and records of Target related to the
operation of the Practice including, but not limited to: (i) the books of
accounts, contracts and agreements to which either Target or the Practice is a
party and (ii) such other documents or certificates as shall be reasonably
requested by PHC;
(f) An opinion of counsel of Target in substantially the
form of Exhibit G attached hereto;
---------
(g) The Investment Agreement in the form of Exhibit H
---------
attached hereto executed by each Shareholder pursuant to this Agreement (the
"Investment Agreement");
(h) The Practice Repurchase Agreement in substantially the
form of Exhibit I attached hereto (the "Practice Repurchase Agreement") executed
---------
by each Shareholder pursuant to this Agreement;
(i) The executed Note Purchase Agreement and Amendment to
Promissory Note in substantially the forms approved by the parties hereto on the
date hereof; and
Page 27
(j) Such other documents as counsel for PHC shall reasonably
request, including, without limitation, any documents required to be filed with
any governmental body.
VI.4 PHC Due Diligence.
-----------------
Closing shall only occur upon the complete and sole satisfaction of PHC
as to the Due Diligence Inspection pursuant to Section 4.1; provided, however,
-------- -------
nothing herein is intended to extend the date by which the Closing is to occur.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS AND TARGET
--------------------------------------------------------
The obligations of the Shareholders and Target to close the Merger are
subject to the satisfaction, at or prior to Closing, of each of the following
conditions:
VII.1 Representations and Warranties.
------------------------------
The representations and warranties of PHC and Acquisition Subsidiary
set forth in this Agreement, or any other document or instrument delivered to
Target or the Shareholders hereunder, shall be true and correct on the Closing
Date with the same force and effect as if such representations and warranties
had been made on the Closing Date.
VII.2 Performance; Covenants.
----------------------
All of the terms, covenants and conditions of this Agreement to be
complied with or performed by PHC or Acquisition Subsidiary at or prior to
Closing shall have been complied with and performed in all material respects
including, but not limited to, the delivery of the following:
(a) The PHC Shares;
(b) Any Cash Consideration to be paid to the Shareholders in
connection with the Merger;
(c) PHC's payment of the expenses set forth in Section 9.11
below;
(d) A certificate dated the Closing Date signed by duly
authorized representatives of PHC and Acquisition Subsidiary certifying that the
representations and warranties are true and correct on the date of such
certificate and that PHC and Acquisition Subsidiary have fulfilled all of the
conditions of this Section 7.2;
(e) Consent Resolutions of the Board of Directors of PHC and
the Board of Directors and Shareholders of Acquisition Subsidiary in form and
substance satisfactory to Target and the Shareholders approving the execution,
delivery and performance of this Agreement and the
Page 28
consummation of the transactions contemplated hereby, certified by a duly
authorized representative of PHC and Acquisition Subsidiary, respectively.
(f) An opinion of counsel of PHC in substantially the form
of Exhibit J attached hereto;
---------
(g) The Investment Agreement;
(h) The Practice Repurchase Agreement;
(i) The executed Note Purchase Agreement and Amendment to
Promissory Note in substantially the forms approved by the parties hereto on the
date hereof; and
(j) Such other documents necessary for the consummation of
the transactions contemplated herein as counsel for Target and the Shareholders
shall reasonably request, including, without limitation, any documents required
to be filed with any governmental body.
VII.3 Target Due Diligence.
--------------------
The Closing shall only occur upon the complete and sole satisfaction of
Target and the Shareholders as to the due diligence inspection pursuant to
Section 5.6 hereof; provided, however, nothing herein is intended to extend the
date by which the Closing is to occur.
ARTICLE VIII
INDEMNIFICATION
---------------
VIII.1 Indemnification by Each Shareholder and Target.
----------------------------------------------
Subject to the terms and conditions of this Article VIII, each
Shareholder and Target, jointly and severally, agree to indemnify, defend, and
hold harmless PHC, Surviving Corporation and Acquisition Subsidiary from,
against, for, and in respect of any and all Losses (as defined below) asserted
against, relating to, imposed upon, or incurred by PHC and/or Acquisition
Subsidiary or Surviving Corporation by reason of, resulting from, based upon, or
arising out of:
(a) Any misrepresentation, breach of warranty or breach or
non-fulfillment of any agreement of Target or any Shareholder contained in this
Agreement or in any document executed and delivered by Target or any Shareholder
in connection with this Agreement;
(b) Any liability or claim arising out of the obligations or
liabilities or commitments of Target, or its employees or agents not expressly
assumed by PHC or Acquisition Subsidiary pursuant to the terms of this
Agreement, including but not limited to personal injury and professional
liability claims;
Page 29
(c) Any liability or claim arising out of actions taken in
connection with the hiring (or failing to hire) firing, disciplining, and
supervising of, and otherwise with respect to, any employees of Target prior to
the Closing Date;
(d) Any liability or claim arising out of any audit,
recoupment, or contractual settlement retroactively or otherwise adjusting the
amounts payable for reimbursement purposes, with respect to services rendered by
or on behalf of Target or billed for, by or on behalf of Target prior to the
Closing Date;
(e) Any liability, claim, loss or expense of any nature
whatsoever relating to the provision of fringe benefits of any kind to the
employees of Target and their dependents including, without limitation, those
arising out of COBRA continuation coverage, including but not limited to those
applicable or claimed to be applicable to PHC, Acquisition Subsidiary or
Surviving Corporation as the result of being determined to be a "successor
employer" of Target;
(f) Any claim(s) made against PHC arising out of Target's
ownership, operation, use or sale of the assets of Target or the operations of
the business of Target, including, but not limited to, any suit, claim or
proceeding of any nature seeking to recover damages for personal injury, death
or property damage due to occurrences in connection with the business of Target
or the assets of Target arising on or before the Closing Date and any suit,
claim or proceeding by any person currently an employee of Target which arises
as a result of acts or omissions prior to the Closing Date or in connection with
any communications between or arrangements with the employees and Target.
VIII.2 Indemnification by PHC.
----------------------
Subject to the terms and conditions of this Article VIII, PHC agrees to
indemnify, defend and hold harmless Target and each Shareholder from, against,
for, and in respect of any and all Losses (as defined below) asserted against,
relating to, imposed upon, or incurred by Target and/or any Shareholder by
reason of, resulting from, based upon, or arising out of any misrepresentation,
breach of warranty or breach of non-fulfillment of any agreement of PHC or the
Acquisition Subsidiary contained in this Agreement or in any document executed
and delivered by PHC or Acquisition Subsidiary in connection with this
Agreement.
VIII.3 Definition of Losses.
--------------------
For the purposes of this Article VIII, "Losses" shall mean any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, and expenses, including, without limitation, taxes,
interest, penalties, and reasonable attorneys' and other professional fees and
expenses incurred in the investigation, preparation, defense, and settlement of
any claim, loss, damage, or liability as to which a party is entitled to
indemnification hereunder. The obligation of each Shareholder to indemnify PHC
and/or Acquisition Subsidiary shall be limited to the value of the consideration
received by the Shareholder pursuant to this Agreement as of the Closing Date.
The obligation of Target to indemnify PHC and/or Acquisition Subsidiary shall be
limited to the value of the consideration received by Target pursuant to this
Agreement on the Closing Date.
Page 30
VIII.4 Offset.
------
The foregoing rights of indemnification are cumulative and without
prejudice to any other remedies which a party hereto may have against another
party hereto under applicable law or otherwise. Each Shareholder, Target,
Acquisition Subsidiary and PHC expressly agree that PHC shall have the right to
offset any amounts owed by any Shareholder and/or Target to PHC under this
Article VIII against any amounts payable by PHC to such Shareholder and/or
Target; provided, however, if any such offset amount is disputed in good faith
by Target or any Shareholder, such party shall provide written notice of the
facts in dispute in accordance with the procedures set forth in Section 8.8
hereof and PHC shall only be entitled to offset an amount determined by mutual
agreement of the parties or as awarded in the final decision of the arbitrator.
Each Shareholder, Target, Acquisition Subsidiary and PHC expressly agree that
Target and each Shareholder shall have the right to offset any amounts owed by
PHC and/or Acquisition Subsidiary to Target or the Shareholders under this
Article VIII against any amounts payable by any Shareholder and/or Target to
PHC; provided, however, if any such offset amount is disputed in good faith by
PHC, PHC shall provide written notice of the facts in dispute in accordance with
the procedures set forth in Section 8.8 hereof and Target and/or the
Shareholders shall only be entitled to offset an amount determined by the mutual
agreement of the parties or as awarded in the final decision of the arbitrator.
VIII.5 Notice and Opportunity to Defend.
--------------------------------
(a) Attorney-in-Fact is hereby designated the representative
of each Shareholder pursuant to the terms and conditions of Section 4.5 above,
to the extent necessary to give effect to the provisions of this Article VIII,
and in that representative capacity, Attorney-in-Fact is referred to as
Indemnified Party or Indemnifying Party, as appropriate.
(b) The party indemnified hereunder (the "Indemnified Party")
shall notify in writing the indemnifying party (the "Indemnifying Party") within
thirty (30) days after a claim is presented to the Indemnified Party, and the
Indemnifying Party shall defend such claim at its expense. If the Indemnifying
Party does not defend or settle such claim, the Indemnified Party may do so
without the Indemnifying Party's participation, in which case the Indemnifying
Party shall pay the expenses of such defense; provided, however, that the
Indemnified Party may not settle or compromise such claim without the consent of
the Indemnifying Party or a majority of the Indemnifying Parties, as the case
may be, which consent shall not be unreasonably withheld. An Indemnifying
Party's failure to object to the settlement of any claim within fifteen (15)
days of receiving written notice thereof shall be deemed to constitute the
Indemnifying Party's consent to such settlement. If the Indemnified Party fails
to notify the Indemnifying Party, and if the Indemnifying Party is thereby
materially prejudiced by such failure of notice in its defense of the claim, the
Indemnifying Party's obligation of indemnity hereunder shall be extinguished
with respect to such claim to the extent that the Indemnifying Party has been
prejudiced by the failure to give such notice.
Page 31
(c) Anything herein to the contrary notwithstanding, PHC
shall not make any claim against Target or any Shareholder pursuant to this
Article VIII unless the dollar amount of all Losses suffered or incurred by PHC
shall exceed, in the aggregate, the amount of One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00), but, if such amount is exceeded, the Indemnifying
Party shall be required to pay the full amount of such aggregate Losses (with a
deduction for such One Hundred Fifty Thousand and No/100 Dollars ($150,000.00)
threshold amount) for which indemnification rights and obligations are provided
under this Article VIII.
(d) Anything herein to the contrary notwithstanding, neither
Target nor any Shareholder shall make any claim against PHC pursuant to this
Article VIII unless the dollar amount of all Losses suffered or incurred by the
party seeking indemnification shall exceed, in the aggregate, the amount of
Fifty Thousand and No/100 Dollars ($50,000.00), but, if such amount is exceeded,
PHC shall be required to pay the full amount of such aggregate Losses (without
deduction for such Fifty Thousand and No/100 Dollars ($50,000.00) threshold
amount) for which indemnification rights and obligations are provided under this
Article VIII.
(e) Anything herein to the contrary notwithstanding, no party
shall be liable to any other party under this Article VIII for punitive or
consequential damages, including lost profits, except to the extent contained in
a settlement, award or judgment obtained by a third party.
VIII.6 Effect of Investigation by PHC.
------------------------------
No investigation or inquiry made by PHC or Acquisition Subsidiary of
any Shareholder or Target or its books and records and financial condition
shall, regardless of the Closing of the transactions contemplated hereby, affect
or limit any representation or warranty made by any of the Shareholders or
Target to PHC or Acquisition Subsidiary in this Agreement or in any Schedule
delivered by any of them pursuant hereto or any right of indemnification of PHC
or Acquisition Subsidiary under Section 8.1 hereof.
VIII.7 Effect of Investigation by Target and Shareholders.
--------------------------------------------------
No investigation or inquiry made by the Shareholders or Target of PHC
or Acquisition Subsidiary or their respective books and financial condition
shall, regardless of the Closing of the transactions contemplated hereby, affect
or limit any representation or warranty made by PHC or Acquisition Subsidiary to
Target or the Shareholders in this Agreement or in any Schedule delivered by any
of them pursuant hereto or any right of indemnification of Target or the
Shareholders under Section 8.1 hereof.
Page 32
VIII.8 Dispute Resolution.
------------------
Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach hereof which cannot be settled by mutual agreement shall
be settled by binding arbitration as follows: Any party who is aggrieved shall
deliver written notice to the other party or parties setting forth the specific
points in dispute. Any points remaining in dispute twenty (20) days after the
giving of such notice shall be submitted to binding arbitration in Atlanta,
Georgia, to the American Arbitration Association, before a single arbitrator
appointed from the members of the National Panel of Arbitrators in accordance
with the rules of the American Arbitration Association, modified only as
expressly provided herein. After such twenty (20) day period, any party, upon
ten (10) days written notice to the other parties, may so submit the points in
dispute to arbitration. The arbitrator may enter a default decision against any
party who fails to participate in the arbitration proceedings. The decision of
the arbitrator on the points in dispute will be final, unappealable and binding,
and judgment on the award may be entered in any court having jurisdiction
thereof. The arbitrator will be authorized to apportion its fees and expenses
and the reasonable attorney fees and expenses of the parties as the arbitrator
deems appropriate. In the absence of any such apportionment, the fees and
expenses of the arbitrator will be borne equally by each party, and each party
will bear the fees and expenses of its own attorney. The parties agree that this
paragraph has been included to rapidly and inexpensively resolve any disputes
between them with respect to this Agreement, that it contains the sole and
exclusive remedy (other than equitable remedies) of the parties with respect to
any disputes arising under this Agreement, and that this paragraph shall be
grounds for dismissal of any court action commenced by either party with respect
to this Agreement, other than post-arbitration actions seeking to enforce an
arbitration award or any court action seeking equitable relief. The parties
shall keep confidential, and shall not disclose to any person, except as may be
required by law, the existence of any controversy hereunder, the referral of any
such controversy to arbitration or the status or resolutions thereof.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
IX.1 Notices.
-------
Any notice required or permitted by this Agreement or any agreement or
document executed and delivered in connection with this Agreement shall be
deemed to have been served properly if transmitted by certified mail, return
receipt requested, with proper postage prepaid or sent by
Page 33
overnight carrier or by personal delivery, addressed to the respective party to
whom such notice relates at the following addresses:
If to PHC: Physician Health Corporation
000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, M.D., Esq.
With a Copy to: Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, III
If to Acquisition
Subsidiary: PHC-Orlando Acquisition Subsidiary II, Inc.
000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, M.D., Esq.
If to Target: Internal Medicine Specialists, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxxxx, M.D.
If to a Shareholder: Attorney-in-Fact
Internal Medicine Specialists, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: C. Xxxxxxx Xxxxxxxx, M.D.
With a Copy to: Xxxxxxx, Xxxxxxx & Xxxxx, P.A.
000 Xxxxx Xxxxxx Xxxxxx
SunTrust Center
Suite 3000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
or such other address as shall be furnished in writing by any party to the other
party. All such notices shall be considered received: (a) if transmitted by
certified mail, return receipt requested, with proper postage prepaid, upon the
fifth business day after mailing; (b) if transmitted by overnight carrier, on
the next business day; and (c) if transmitted by personal delivery, upon
receipt.
Page 34
IX.2 Successors and Assigns.
----------------------
This Agreement shall not be assignable, by operation of law or
otherwise, without the prior written consent of all parties. Subject to the
foregoing, this Agreement shall inure to the benefit of, be enforceable by and
be binding upon the parties, their successors and permitted assigns.
IX.3 Entire Agreement.
----------------
This Agreement and the Exhibits, Schedules, certificates and other
documents delivered pursuant hereto or incorporated herein by reference, contain
and constitute the entire agreement among the parties and supersede and cancel
any prior agreements, representations, warranties, or communications, whether
oral or written, among the parties relating to the transactions contemplated by
this Agreement. Neither this Agreement nor any provision hereof may be changed,
waived, discharged or terminated orally, but only by an agreement in writing
signed by the party against whom or which the enforcement of such change,
waiver, discharge or termination is sought.
IX.4 Governing Law; Severability.
---------------------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia, but excluding the conflicts laws of the State
of Georgia. The parties hereto agree to be subject to the exclusive venue in
Xxxxxx County, Georgia or the Federal Court located in the Northern District of
Georgia which courts shall have jurisdiction of any case or controversy arising
under or in connection with this Agreement. The parties consent to the
jurisdiction of such courts. The provisions of this Agreement are severable and
the invalidity of one or more of the provisions herein shall not have any effect
upon the validity or enforceability of any other provision.
IX.5 No Brokers.
----------
The Shareholders, Target, PHC and Acquisition Subsidiary each represent
to the others that no broker or finder has been employed in connection with the
transactions hereunder.
IX.6 Schedules and Exhibits.
----------------------
All Schedules and Exhibits attached to this Agreement are by reference
made a part hereof.
IX.7 Waivers.
-------
No failure on the part of any party hereto to exercise, and no delay in
exercising, any right, power or remedy created hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
remedy by any such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. No waiver by any party hereto of
any breach of or default in any term or condition of this Agreement shall
constitute a waiver of or assent to any succeeding breach of or default in the
same or any other term or condition hereof.
Page 35
IX.8 Headings.
--------
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
IX.9 Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
IX.10 Confidentiality.
---------------
The parties agree that they will not make any disclosure about the
existence or contents of this Agreement or activities relating to the
consummation of the transactions contemplated herein without prior approval of
the other party, except as may be required by law, as may be necessary to obtain
the required consents, licenses, permits or approvals pursuant to Section 6.1
herein, or as may be necessary in the ordinary course of business of PHC.
IX.11 Expenses.
--------
Provided that the transactions contemplated hereby are consummated, PHC
agrees to pay directly to the respective payees: (i) one hundred percent (100%)
of all actual accounting fees and expenses up to Thirty Five Thousand and No/100
Dollars ($35,000.00), (ii) fifty percent (50%) of all actual accounting fees and
expenses in excess of Thirty Five Thousand and No/100 Dollars ($35,000.00), and
(iii) all documented legal fees and expenses (the "Legal Fees") which are
incurred by Target and directly attributable to the consummation of the Merger
contemplated hereunder. PHC hereby agrees to pay seventy-five percent (75%) of
Legal Fees at Closing and the remaining twenty-five percent (25%) within thirty
(30) days after Closing. If the transactions contemplated hereby are not
consummated, each party hereto shall bear its own costs and expenses (including
attorneys' fees and expenses).
IX.12 No Third Party Beneficiaries.
----------------------------
Nothing contained in this Agreement (express or implied) is intended or
shall be construed to confer upon or give to any person, corporation or other
entity, other than the parties hereto and their permitted successors or assigns,
any rights or remedies under or by reason of this Agreement.
IX.13 Survival.
--------
Except as provided herein, the provisions of Articles II and III of
this Agreement shall survive the Closing for a period of twenty-four (24) months
following the Closing Date, provided that the provisions of Section 2.24 shall
continue for six (6) months after the expiration of the applicable statute of
limitations for assessment of the additional taxes. The provisions of Section
9.10 of this Agreement shall survive the Closing.
Page 36
IX.14 Attorney Fees.
-------------
Except as provided in Section 8.8 hereof, in connection with any
litigation, including appellate proceedings, arising under this Agreement or any
related Agreement contemplated herein, the prevailing party or parties in such
litigation shall be entitled to recover reasonable attorney fees, paralegal
fees, law clerk fees and other costs and expenses related to such litigation
from the nonprevailing party or parties.
Page 37
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first written above; provided, however, that Xxxxxxx X. Xxxxx,
M.D. may be included as an additional party hereto for all purposes by executing
this Agreement below pursuant to Section 4.10 hereof.
PHC: TARGET:
PHYSICIAN HEALTH CORPORATION INTERNAL MEDICINE SPECIALISTS, INC.
By: By:
-------------------------------- --------------------------------
Xxxxx X. Xxxxxx, President M.D, President
-----------------,
ACQUISITION SUBSIDIARY: THE SHAREHOLDERS:
PHC-ORLANDO ACQUISITION ----------------------------------
SUBSIDIARY II, INC. Xxxx Xxxxxxxx, M.D.
By:
-------------------------------- -----------------------------------
Xxxxx X. Xxxxxx, President Xxxxxxx X. Xxxxx, M.D.
----------------------------------
Xxxxxxx X. Xxxxxx, M.D.
----------------------------------
Xxxxxx X. Xxxxxxxxx, Xx., M.D.
----------------------------------
Xxxxxx X. Xxxxxxx, M.D.
----------------------------------
C. Xxxxxxx Xxxxxxxx, M.D.
----------------------------------
Xxxxxx X. Xxxxxx, M.D.
----------------------------------
Antonio Caos, M.D.
Page 38
THE SHAREHOLDERS (continued from previous page):
-----------------------------------
Xxxxxx X. Xxxxx, M.D.
-----------------------------------
Xxxx Xxxxxxxx, M.D.
Page 39
I hereby agree to be included as a party hereto for all purposes and as a
"Shareholder" as defined herein pursuant to Section 4.10 hereof.
-----------------------------------
Xxxxxxx X. Xxxxx, M.D.
Date:
------------------------------
Page 40
EXHIBIT A
---------
List of Shareholders
Xxxx Xxxxxxxx, M.D.
Xxxxxxx X. Xxxxx, M.D.
Xxxxxx X. Xxxxx, M.D.
Xxxxxx X. Xxxxxxxxx, Xx., M.D.
Xxxxxx X. Xxxxxxx, M.D.
C. Xxxxxxx Xxxxxxxx, M.D.
Xxxxxx X. Xxxxxx, M.D.
Antonio Caos, M.D.
Xxxxxxx X. Xxxxxx, M.D.
Xxxx Xxxxxxxx, M.D.
Page 41
EXHIBIT B
---------
[Reserved]
Page 42
EXHIBIT C
---------
Insert to Bylaws
Page 43
EXHIBIT D
---------
Description of Disclosure Documents
1. Those certain due diligence materials of PHC delivered to each Shareholder
on or about November ___, 1996, as updated by those certain materials
delivered on the date hereof.
2. That certain Transaction Summary dated as of September 12, 1997 delivered
to each Shareholder.
3. Memorandum from Xxx Xxxx dated July 3, 1997 regarding Securities and
Exchange Commission issues.
4. Memorandum from Xxxxx Xxxxxx dated July 11, 1997 regarding Securities and
Exchange Commission and PHC lender issues.
5. The Private Placement Memorandum.
Page 44
EXHIBIT E
---------
ASC Purchase Option Agreements
Page 45
EXHIBIT F
---------
Form of Employment Agreement
Page 46
EXHIBIT G
---------
Opinion of Counsel of Target
Page 47
EXHIBIT H
---------
Investment Agreement
Page 48
EXHIBIT I
---------
Practice Repurchase Agreement
Page 49
EXHIBIT J
---------
Opinion of Counsel of PHC
Page 50
