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Title: |
Merger Agreement and Plan of Reorganization |
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Date: |
2003 |
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Preview shows 33KB of 191KB total |
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$78 |
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#821521 |
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MERGER AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
PAINCARE HOLDINGS, INC.,
PAINCARE ACQUISITION COMPANY V, INC.,
INDUSTRIAL & SPORT REHABILITATION, LTD.,
D/B/A ASSOCIATED PHYSICIANS GROUP
AND
JOHN VICK
EXECUTION DATE: APRIL 25, 2003.
3
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{TABLE}
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1. DEFINITIONS ....................................................................... 1
2. TRANSACTION ....................................................................... 2
2.1 Transaction ................................................................. 2
2.2 Effect of the Merger ........................................................ 2
2.3 Effective Time; Filing of Certificates of Merger ............................ 2
2.4 Articles of Incorporation ................................................... 2
2.5 Bylaws ...................................................................... 2
2.6 Directors and Officers ...................................................... 2
2.7 Tax Consequences ............................................................ 2
2.8 Additional Actions .......................................................... 2
2.9 No Dissenters' Rights ....................................................... 3
2.10 Surrender of Certificates ................................................... 3
(a) Company's Shares ....................................................... 3
(b) Dividends .............................................................. 3
2.11 Medical Assets .............................................................. 3
2.12 Conversion of Shares ........................................................ 3
2.13 Shareholder Consent and Release ............................................. 4
2.14 Piggyback Registration ...................................................... 4
2.15 Shareholder's Obligation to Furnish Information ............................. 5
2.16 Suspension of Sales Pending Amendment to Prospectus ......................... 5
2.17 Registration Expenses ....................................................... 6
3. TRANSACTION CONSIDERATION ......................................................... 6
3.1 Merger Consideration ........................................................ 6
3.2 Bridge Deposit .............................................................. 6
3.3 Closing Date Adjustments .................................................... 7
(a) Transaction Related Adjustment ......................................... 7
(b) Financial Statements ................................................... 7
(c) Closing Date Balance Sheet ............................................. 7
3.4 Earnout Payment ............................................................. 8
(a) General ................................................................ 8
{/TABLE}
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(b) Installment Payment Discount ........................................... 8
(c) Installment Payment Premium ............................................ 9
(d) Manner of Payment ...................................................... 8
(e) Earnout Cap ............................................................ 9
(f) Definitions for Purposes of Section 3.4 ................................ 10
(g) Adjustments to Installment Payments .................................... 10
3.5 Security and Pledge Agreements .............................................. 10
4. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER ................................. 11
4.1 Organization, Qualification, and Corporate Power ............................ 11
4.2 Capitalization .............................................................. 11
4.3 Authorization ............................................................... 11
4.4 Noncontravention ............................................................ 11
4.5 Broker's Fees ............................................................... 12
4.6 Title to Assets ............................................................. 12
4.7 No Subsidiaries ............................................................. 12
4.8 Financial Statements ........................................................ 12
4.9 Events Subsequent to Most Recent Year End ................................... 12
(a) Sale or Lease of Assets ................................................ 13
(b) Contracts .............................................................. 13
(c) Change in Contracts .................................................... 13
(d) Security Interests ..................................................... 13
(e) Investments ............................................................ 13
(f) Debts .................................................................. 13
(g) Liabilities Unaffected ................................................. 13
(h) Claims Unaffected ...................................................... 13
(i) Articles and Bylaws .................................................... 13
(j) Changes in Equity ...................................................... 13
(k) Distribution ........................................................... 13
(l) Property Damage ........................................................ 13
(m) Transactions with Affiliates ........................................... 14
{/TABLE}
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(n) Collective Bargaining Agreements .................................... 14
(o) Compensation Changes ................................................ 14
(p) Employee Benefit Plans .............................................. 14
(q) Officers; Directors; Employees ...................................... 14
(r) Charitable or Capital Contributions ................................. 14
(s) Ordinary Course of Business ......................................... 14
(t) Accounting Practices ................................................ 14
(u) Accounts Receivable ................................................. 14
(v) In General .......................................................... 14
4.10 Undisclosed Liabilities ................................................... 14
4.11 Tax Matters ............................................................... 15
(a) Tax Returns ......................................................... 15
(b) Withholding ......................................................... 15
(c) No Disputes of Claims ............................................... 15
(d) No Waivers .......................................................... 15
(e) No Special Circumstances ............................................ 15
(f) Subchapter "S" ...................................................... 15
(g) Audits of Tax Returns ............................................... 16
(h) Period of Assessment ................................................ 16
(i) Tax Agreements ...................................................... 16
(j) Inclusions in Taxable Periods ....................................... 16
(k) Consents ............................................................ 16
(l) Personal Holding Company ............................................ 16
(m) Consolidated Tax Returns ............................................ 16
4.12 Real Property ............................................................. 16
(a) Binding ............................................................. 17
(b) Continued Validity .................................................. 17
(c) No Defaults ......................................................... 17
(d) Repudiation ......................................................... 17
(e) No Disputes ......................................................... 17
{/TABLE}
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(f) Subleases ............................................................ 17
(g) Encumbrances ......................................................... 17
(h) Approvals ............................................................ 17
(i) Utilities ............................................................ 17
4.13 Intellectual Property ..................................................... 17
4.14 Condition of Tangible Assets .............................................. 17
4.15 Contracts ................................................................. 18
(a) Personal Property Leases ............................................. 18
(b) Services ............................................................. 18
(c) Partnership; Joint Venture ........................................... 18
(d) Indebtedness ......................................................... 18
(e) Confidentiality; Non-Competition ..................................... 18
(f) Shareholders' Agreements ............................................. 18
(g) Plans ................................................................ 18
(h) Employment or Consulting Agreements .................................. 18
(i) Advances; Loans ...................................................... 18
(j) Adverse Effects ...................................................... 18
(k) Other Agreements ..................................................... 18
4.16 Powers of Attorney ........................................................ 19
4.17 Insurance; Malpractice .................................................... 19
4.18 Litigation ................................................................ 20
4.19 Health Care Compliance .................................................... 20
4.20 Fraud and Abuse ........................................................... 20
4.21 Legal Compliance .......................................................... 21
4.22 Rates and Reimbursement Policies .......................................... 21
4.23 Medical Staff ............................................................. 22
4.24 Employees ................................................................. 22
4.25 Employee Benefits ......................................................... 22
(a) Plans ................................................................ 22
(b) Compliance ........................................................... 22
{/TABLE}
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(c) Reports and Descriptions ............................................. 22
(d) Contributions ........................................................ 22
(e) Qualified Plan ....................................................... 22
(f) Market Value ......................................................... 23
(g) Copies ............................................................... 23
(h) Maintenance of Plans ................................................. 23
(i) Reportable Events ............................................. 23
(ii) Prohibited Transactions ....................................... 23
4.26 Physicians and Other Providers ............................................ 23
(a) Licenses ............................................................. 23
(b) Controlled Substances ................................................ 23
(c) Actions .............................................................. 23
(i) Malpractice Actions ........................................... 24
(ii) Disciplinary Proceedings ...................................... 24
(iii) Criminal Proceedings .......................................... 24
(iv) Investigation ................................................. 24
(v) Mental Illnesses .............................................. 24
(vi) Substance Abuse ............................................... 24
(vii) Professional Ethics ........................................... 24
(viii) Application for Licensure ..................................... 24
4.27 Guaranties ................................................................ 24
4.28 Environment, Health, and Safety ........................................... 24
(a) Compliance ........................................................... 24
(b) Permits and Licenses ................................................. 24
(c) Notices .............................................................. 25
(d) Hazardous Substances ................................................. 25
4.29 Certain Business Relationships with the Company and its Affiliates ........ 25
4.30 Third-party Payors ........................................................ 25
4.31 Bank Accounts ............................................................. 26
4.32 Tax Status ................................................................ 26
{/TABLE}
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4.33 Binding Obligation ................................................. 26
4.34 No Corporate Practice or Fee Splitting ............................. 26
4.35 Intentionally Omitted .............................................. 26
4.36 Securities Representation .......................................... 26
(a) No Registration of PainCare Shares; Investment Intent .......... 26
(b) Resale Restrictions ............................................ 26
(c) Ability to Bear Economic Risk .................................. 26
(d) Accredited Investor ............................................ 27
(e) Residency ...................................................... 27
(f) No Registration ................................................ 27
4.37 HIPAA .............................................................. 27
4.38 Improper and Other Payments ........................................ 27
4.39 Accounts Receivable ................................................ 27
4.40 Medical Waste ...................................................... 28
4.41 No Untrue or Inaccurate Representation or Warranty ................. 28
5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIRING COMPANIES ................. 28
5.1 Organization of PainCare and Subsidiary ............................ 28
5.2 Authorization of Transaction ....................................... 29
5.3 No Conflict or Violation ........................................... 29
5.4 Consents and Approvals ............................................. 29
5.5 Disclosure Documents ............................................... 29
5.6 Capitalization ..................................................... 29
5.7 Litigation ......................................................... 30
5.8 No Undisclosed Liabilities ......................................... 30
5.9 No Brokers ......................................................... 30
5.10 Material Misstatements or Omissions ................................ 30
6. CLOSING; TERMINATION ........................................................ 30
7. CLOSING DELIVERIES .......................................................... 31
7.1 Deliveries of the Company and the Shareholder ...................... 31
{/TABLE}
vi
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(a) Consents and Approvals ........................................... 31
(b) Termination of Agreements ........................................ 31
(c) Company Stock .................................................... 31
(d) Corporate Authorization .......................................... 31
(e) Payoffs .......................................................... 31
(f) Good Standing Certificate ........................................ 31
(g) Secretary's Certificate .......................................... 31
(h) Other documents .................................................. 31
7.2 Deliveries of PainCare ............................................... 32
(a) Transaction Consideration ........................................ 32
(b) Resolutions ...................................................... 32
(c) Security Agreement ............................................... 32
(d) Counsel's Opinion ................................................ 32
8. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES ................................ 32
8.1 Conditions for the Benefit of PainCare and the Subsidiary ............ 32
8.2 Conditions for the Benefit of the Shareholder ........................ 32
9. COVENANTS ................................................................... 33
9.1 Operations Pending Closing ........................................... 33
9.2 Deliveries Pending Closings .......................................... 33
9.3 Distribution of Sub-Chapter S Income by the Company .................. 33
9.4 Post-Closing General Covenants ....................................... 33
9.5 Tax Returns .......................................................... 33
9.6 Transitions .......................................................... 34
9.7 Litigation Support ................................................... 34
9.8 Consents ............................................................. 34
9.9 Operational Covenants ................................................ 34
9.10 Capital Adjustments .................................................. 35
10. SURVIVAL AND INDEMNIFICATION ................................................ 36
10.1 Survival of Representations and Warranties ........................... 36
10.2 Indemnification Provisions for the Benefit of PainCare
and Subsidiary ....................................................... 36
{/TABLE}
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10.3 Indemnification Provisions for the Benefit of the Shareholder ........... 36
10.4 Matters Involving Third Parties ......................................... 36
(a) Notification ........................................................ 36
(b) Defense by Indemnifying Party ....................................... 37
(c) Satisfactory Defense ................................................ 37
(d) Conditions .......................................................... 37
10.5 Right to Set-Off ........................................................ 37
10.6 Materiality ............................................................. 38
10.7 Limitation .............................................................. 38
11. RESTRICTIVE COVENANTS; CONFIDENTIALITY ......................................... 38
11.1 Shareholder Restrictive Covenants ....................................... 38
(a) Restricted Period ................................................... 38
(b) Consideration ....................................................... 39
(c) Third-Party Beneficiaries ........................................... 40
11.2 Defenses ................................................................ 40
11.3 No Running of Covenant During Breach .................................... 40
11.4 Blue Pencil Doctrine .................................................... 40
11.5 Confidentiality, Press Releases, and Public Announcements ............... 40
11.6 Conduct of Business ..................................................... 41
11.7 No Third-Party Beneficiaries ............................................ 43
12. MISCELLANEOUS .................................................................. 43
12.1 Entire Agreement ........................................................ 38
12.2 Succession and Assignment ............................................... 38
12.3 Counterparts ............................................................ 38
12.4 Headings ................................................................ 38
12.5 Notices ................................................................. 43
12.6 Governing Law; Jurisdiction; Attorney's Fees ............................ 44
12.7 Amendments and Waivers .................................................. 44
12.8 Severability ............................................................ 45
12.9 Expenses ................................................................ 45
{/TABLE}
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12.10 Further Assurances. ................................................ 45
12.11 Construction. ...................................................... 45
12.12 Survival. .......................................................... 45
12.13 Incorporation of Exhibits and Schedules. ........................... 45
12.14 Submission to Jurisdiction. ........................................ 46
{/TABLE}
ix
{PAGE}
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into as of this 25/th/ day of April, 2003 (the "Execution Date") by
and among PAINCARE HOLDINGS, INC., a Florida corporation ("PainCare"), PAINCARE
ACQUISITION COMPANY V, INC., a Florida corporation ("Subsidiary", and together
with PainCare, the "Acquiring Companies"), INDUSTRIAL & SPORT REHABILITATION,
LTD., an Illinois business corporation, d/b/a ASSOCIATED PHYSICIANS GROUP (the
"Company"), and JOHN VICK, an individual (the "Shareholder"). The Company and
the Shareholder are sometimes referred to herein as the "Sellers." PainCare,
Subsidiary, the Company and the Shareholder are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."
RECITALS
A. PainCare is in the business of acquiring the non-medical assets of
medical practices and entering into management services agreements with
practices entities associated with the acquired practice;
B. PainCare desires to enter into this Agreement in order for the
Subsidiary, which is a wholly-owned subsidiary of PainCare, to acquire the
non-medical assets of the Company;
C. In connection with this acquisition, PainCare desires to have Subsidiary
enter into a management services agreement with the Company, which management
services agreement is the significant inducement for the Subsidiary to acquire
the non-medical assets of the Company;
D. The Company owns and operates a medical practice (hereinafter sometimes
called the "Business") at 916 Talon Drive, O'Fallon, Illinois 62269 (hereinafter
sometimes called the "Center") and the Shareholder is a licensed medical
provider in the State of Illinois and owns all of the issued and outstanding
shares of the Company stock;
E. All of the Parties hereto desire to enter into this Agreement to
effectuate the Merger, as hereinafter defined, of the Company with and into
Subsidiary pursuant to the terms and conditions of this Agreement; and
F. It is the intention of the Parties for the Merger contemplated herein to
qualify as a tax-free reorganization pursuant to Sections 368(a)(1)(A) and
368(a)(2)(D) of the Code.
NOW, THEREFORE, in consideration of the premises and the actual promises
herein made, and in consideration of the representations, warranties, and
covenants herein
{PAGE}
contained, the receipt and adequacy of which are hereby conclusively
acknowledged, the Parties, intending to become legally bound, hereby agree as
follows:
TERMS AND CONDITIONS
1. DEFINITIONS. All capitalized words that are not capitalized for purposes of
grammar and which are not defined in the text of this Agreement are defined
terms with their definitions set forth on Exhibit 1.
2. TRANSACTION.
2.1 Transaction. Upon the terms and subject to the conditions hereof and in
accordance with the provisions of the Illinois Business Corporation Act (the
"Illinois Act") and the Florida Business Corporation Act (the "Florida Act"),
the Company shall be merged with and into Subsidiary (the "Merger") and the
separate existence of the Company shall thereupon cease, and Subsidiary, as the
surviving corporation (the "Surviving Corporation"), shall continue to exist
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