Document:

Merger Agreement and Plan of Reorganization

 Exhibit 10.2 
  
 MERGER AGREEMENT AND PLAN OF REORGANIZATION 
  
 BY AND AMONG 
  
 PAINCARE HOLDINGS, INC., 
  
 PAINCARE ACQUISITION COMPANY XII, INC., 
  
 GEORGIA SURGERY CENTERS, INC. 
  
 AND 
  
 ROBERT E. WINDSOR, M.D. 
  
 EXECUTION DATE: MAY 25th , 2004. 

 TABLE OF CONTENTS 
  

							
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	1.	 	DEFINITIONS.	  	1
			
	2.	 	TRANSACTION.	  	1
				
	 	 	2.1	 	Transaction.	  	1
				
	 	 	2.2	 	Effect of the Merger.	  	2
				
	 	 	2.3	 	Filing of Articles 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	 	Intentionally Omitted.	  	3
				
	 	 	2.12	 	Conversion of Shares.	  	3
				
	 	 	2.13	 	Shareholder Consent and Release.	  	3
				
	 	 	2.14	 	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.	  	5
			
	3.	 	TRANSACTION CONSIDERATION.	  	6
				
	 	 	3.1	 	Merger Consideration.	  	6
				
	 	 	3.2	 	Payment of Closing Date Consideration.	  	6
				
	 	 	3.3	 	Closing Date Adjustments	  	6
				
	 	 	 	 	 (a)    Transaction Related Adjustment.
	  	6
				
	 	 	 	 	 (b)    Financial Statements.
	  	6
				
	 	 	 	 	 (c)    Closing Date Balance Sheet.
	  	7
				
	 	 	3.4	 	Earnout Payment.	  	8
				
	 	 	 	 	 (a)    General.
	  	8

  

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	 	 	 	 	 (b)    Installment Payment Discount.
	  	8
				
	 	 	 	 	 (c)    Installment Payment Premium.
	  	8
				
	 	 	 	 	 (d)    Manner of Payment.
	  	8
				
	 	 	 	 	 (e)    Earnout Cap.
	  	9
				
	 	 	 	 	 (f)     Definitions for Purposes of Section 3.
	  	9
			
	4.	 	REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.	  	10
				
	 	 	4.1	 	Organization, Qualification, and Corporate Power.	  	10
				
	 	 	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.
	  	13
				
	 	 	 	 	 (n)    Collective Bargaining Agreements.
	  	14
				
	 	 	 	 	 (o)    Compensation Changes.
	  	14

  

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	 	 	 	 	 (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.	  	14
				
	 	 	 	 	 (a)    Tax Returns.
	  	15
				
	 	 	 	 	 (b)    Withholding.
	  	15
				
	 	 	 	 	 (c)    No Disputes of Claims.
	  	15
				
	 	 	 	 	 (d)    No Waivers.
	  	15
				
	 	 	 	 	 (e)    No Special Circumstances.
	  	15
				
	 	 	 	 	 (f)     Intentionally Omitted.
	  	15
				
	 	 	 	 	 (g)    Audits of Tax Returns.
	  	15
				
	 	 	 	 	 (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.
	  	16
				
	 	 	 	 	 (b)    Continued Validity.
	  	16
				
	 	 	 	 	 (c)    No Defaults.
	  	16
				
	 	 	 	 	 (d)    Repudiation.
	  	17
				
	 	 	 	 	 (e)    No Disputes.
	  	17
				
	 	 	 	 	 (f)     Subleases.
	  	17
				
	 	 	 	 	 (g)    Encumbrances.
	  	17

  

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	 	 	 	 	 (h)    Approvals.
	 	17
				
	 	 	 	 	 (i)     Utilities.
	 	17
				
	 	 	4.13	 	Intellectual Property.	 	17
				
	 	 	4.14	 	Condition of Tangible Assets.	 	17
				
	 	 	4.15	 	Contracts.	 	17
				
	 	 	 	 	 (a)    Personal Property Leases.
	 	17
				
	 	 	 	 	 (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.	 	21
				
	 	 	4.24	 	Employees.	 	22
				
	 	 	4.25	 	Employee Benefits.	 	22
				
	 	 	 	 	 (a)    Plans.
	 	22
				
	 	 	 	 	 (b)    Compliance.
	 	22
				
	 	 	 	 	 (c)    Reports and Descriptions.
	 	22
				
	 	 	 	 	 (d)    Contributions.
	 	22

  

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	 	 	 	 	 (e)    Qualified Plan.
	 	22
				
	 	 	 	 	 (f)     Market Value.
	 	22
				
	 	 	 	 	 (g)    Copies.
	 	22
				
	 	 	 	 	 (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.
	 	23
				
	 	 	 	 	 (ii)       Disciplinary Proceedings.
	 	23
				
	 	 	 	 	 (iii)      Criminal Proceedings.
	 	23
				
	 	 	 	 	 (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.
	 	24
				
	 	 	 	 	 (d)    Hazardous Substances.
	 	24
				
	 	 	4.29	 	Certain Business Relationships with the Company and its Affiliates.	 	25
				
	 	 	4.30	 	Third-party Payors.	 	25
				
	 	 	4.31	 	Bank Accounts.	 	25
				
	 	 	4.32	 	Tax Status.	 	25
				
	 	 	4.33	 	Binding Obligation.	 	25
				
	 	 	4.34	 	No Corporate Practice or Fee Splitting.	 	26

  

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	 	 	4.35	 	Intentions.	 	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)    No Registration.
	 	27
				
	 	 	4.37	 	HIPAA	 	27
				
	 	 	4.38	 	Improper and Other Payments	 	27
				
	 	 	4.39	 	Accounts Receivable	 	27
				
	 	 	4.40	 	Medical Waste	 	27
				
	 	 	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.	 	28
				
	 	 	5.3	 	No Conflict or Violation.	 	28
				
	 	 	5.4	 	Consents and Approvals.	 	29
				
	 	 	5.5	 	Disclosure Documents.	 	29
				
	 	 	5.6	 	Capitalization.	 	29
				
	 	 	5.7	 	Litigation.	 	29
				
	 	 	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.	 	30
				
	 	 	7.1	 	Deliveries of the Company and the Shareholder.	 	30
				
	 	 	 	 	 (a)    Consents and Approvals.
	 	30
				
	 	 	 	 	 (b)    Termination of Agreements.
	 	30
				
	 	 	 	 	 (c)    Company Stock.
	 	31

  

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	 	 	 	 	 (d)    Corporate Authorization.
	 	31
				
	 	 	 	 	 (e)    Secretary’s Certificate.
	 	31
				
	 	 	 	 	 (f)     Other documents.
	 	31
				
	 	 	7.2	 	Deliveries of PainCare.	 	31
				
	 	 	 	 	 (a)    Consideration.
	 	31
				
	 	 	 	 	 (b)    Resolutions.
	 	31
				
	 	 	 	 	 (c)    Other Documents.
	 	31
			
	8.	 	CONDITIONS TO THE OBLIGATIONS OF THE PARTIES	 	31
				
	 	 	8.1	 	Conditions for the Benefit of PainCare and the Subsidiary.	 	31
				
	 	 	8.2	 	Conditions for the Benefit of the Shareholder.	 	31
			
	9.	 	COVENANTS.	 	32
				
	 	 	9.1	 	Deliveries.	 	32
				
	 	 	9.2	 	Post-Closing General Covenants.	 	32
				
	 	 	9.3	 	Tax Returns.	 	32
				
	 	 	9.4	 	Transition.	 	32
				
	 	 	9.5	 	Litigation Support.	 	32
				
	 	 	9.6	 	Consents.	 	33
				
	 	 	9.7	 	Capital Adjustments.	 	33
			
	10.	 	SURVIVAL AND INDEMNIFICATION.	 	33
				
	 	 	10.1	 	Survival of Representations and Warranties.	 	33
				
	 	 	10.2	 	Indemnification Provisions for the Benefit of PainCare and Subsidiary.	 	34
				
	 	 	10.3	 	Indemnification Provisions for the Benefit of the Shareholder.	 	34
				
	 	 	10.4	 	Matters Involving Third Parties.	 	34
				
	 	 	 	 	 (a)    Notification.
	 	34
				
	 	 	 	 	 (b)    Defense by Indemnifying Party.
	 	34
				
	 	 	 	 	 (c)    Satisfactory Defense.
	 	35
				
	 	 	 	 	 (d)    Conditions.
	 	35
				
	 	 	10.5	 	Right to Set-Off.	 	35
				
	 	 	10.6	 	Materiality.	 	35
				
	 	 	10.7	 	Limitation.	 	36

  

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	11.	 	RESTRICTIVE COVENANTS; CONFIDENTIALITY.	 	36
				
	 	 	11.1	 	Restrictive Covenants.	 	36
				
	 	 	 	 	 (a)    Restricted Period.
	 	36
				
	 	 	 	 	 (b)    Consideration.
	 	37
				
	 	 	 	 	 (c)    Third-Party Beneficiaries.
	 	37
				
	 	 	11.2	 	Defenses.	 	37
				
	 	 	11.3	 	No Running of Covenant During Breach.	 	37
				
	 	 	11.4	 	Blue Pencil Doctrine.	 	38
				
	 	 	11.5	 	Confidentiality, Press Releases, and Public Announcements.	 	38
				
	 	 	11.6	 	Conduct of Business.	 	38
				
	 	 	11.7	 	No Third-Party Beneficiaries.	 	40
			
	12.	 	MISCELLANEOUS	 	40
				
	 	 	12.1	 	Entire Agreement.	 	40
				
	 	 	12.2	 	Succession and Assignment.	 	41
				
	 	 	12.3	 	Counterparts.	 	41
				
	 	 	12.4	 	Headings.	 	41
				
	 	 	12.5	 	Notices.	 	41
				
	 	 	12.6	 	Governing Law; Jurisdiction; Attorney’s Fees.	 	42
				
	 	 	12.7	 	Amendments and Waivers.	 	42
				
	 	 	12.8	 	Severability.	 	42
				
	 	 	12.9	 	Expenses.	 	42
				
	 	 	12.10	 	Further Assurances.	 	42
				
	 	 	12.11	 	Construction.	 	42
				
	 	 	12.12	 	Survival.	 	43
				
	 	 	12.13	 	Incorporation of Exhibits and Schedules.	 	43
				
	 	 	12.14	 	Submission to Jurisdiction.	 	43

  
  

 viii 

 MERGER AGREEMENT AND PLAN OF REORGANIZATION 
  
 THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the
“Agreement”) is made and entered into effective the 25th day of May, 2004 (the “Execution
Date”) by and among PAINCARE HOLDINGS, INC., a Florida corporation (“PainCare”), PAINCARE ACQUISITION COMPANY XII, INC., a Florida corporation (“Subsidiary”), in which PainCare and the Subsidiary are sometimes
referred to herein as the “Acquiring Companies”, and GEORGIA SURGERY CENTERS, INC., a Georgia corporation (the “Company”), and ROBERT E. WINDSOR, M.D., an individual (“Dr. Windsor” or sometimes
“Shareholder”). 
  
 RECITALS 
  
 A. The Company owns and operates an ambulatory surgery center
(hereinafter sometimes called the “ASC”) at the following locations: (1) Marietta Surgical Center: Georgia Surgical Center, North – 2550 Windy Hill Rd, #215, Marietta, GA 30067; (2) Forest Park Surgical Center: Georgia
Surgical Center, South – 541 Forest Parkway, #14, Forest Park, GA 30297; (3) Calhoun Surgical Center: Georgia Surgical Centers of North Georgia – 1089 Redbud Rd, Calhoun, GA 30701 (hereinafter collectively sometimes called the
“Center”) and Dr. Windsor is a licensed medical provider in the State of Georgia and owns all of the issued and outstanding shares of stock in the Company (the “Company Shares”); 
  
 B. PainCare is in the business of acquiring ASC’s; 
  
 C. PainCare desires to enter into this Agreement in order to acquire
the Company; 
  
 D. Immediately prior to closing, Dr.
Windsor will (i) sell seventy percent (70%) of his company shares to the “Windsor Nongrantor Trust (U/D/T 2004”, an Irrevocable Nongrantor Trust (the “Windsor Trust), and (ii) assign his remaining Company shares to “Windsor
Family Limited Partnership,” a Georgia Family Limited Partnership (the “Windsor Partnership”); 
  
 E. Hereinafter, Dr. Windsor, the Windsor Trust, and the Windsor Partnership, will collectively sometimes be referred to herein as the
“Shareholder”; and sometimes Dr. Windsor, the Windsor Trust, the Windsor Partnership, and the Company will sometimes be referred to collectively as the “Shareholder” or sometimes the “Sellers.” PainCare, the Subsidiary,
and the Sellers are sometimes referred to herein individually as a “Party” and collectively as the “Parties;” 
  
 F. All of the Parties hereto desire to enter into this Agreement to effectuate the Merger, as hereinafter defined, of the Subsidiary with and into
the Company pursuant to the terms and conditions of this Agreement; and 
  
 G. 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. 
  

 1 

 NOW, THEREFORE, in consideration of the premises and the actual promises herein made, and in
consideration of the representations, warranties, and covenants herein 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 
  
 2. 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. 
  
 3. TRANSACTION. 
  
 3.1 Transaction. Upon the terms and subject to the conditions hereof and in accordance with the provisions of the [Georgia Business
Corporation Act] (the “Georgia Act”) and the Florida Business Corporation Act (the “Florida Act”), the Subsidiary shall be merged with and into the Company (the “Merger”) and the separate existence of the Subsidiary
shall thereupon cease, and Company, as the surviving corporation (the “Surviving Corporation”), shall continue to exist under and be governed by the Georgia Act (the “Transaction”). 
  
 3.2 Effect of the Merger. At and after the Statutory Merger
Time, as defined in Section 2.3 below, the effect of the Merger shall, in all legal respects, be as provided in the Georgia Act and the Florida Act. From and after the Statutory Merger Time, the Surviving Corporation shall continue to be a Georgia
corporation. 
  
 3.3 Filing of Certificates of
Merger. The Merger shall be legally effected by the filing at the time of the Closing or as soon as practicable thereafter, of the Articles of Merger (the “Articles of Merger”), substantially in the form of Exhibit 2.3 attached
hereto, with the Secretary of the State of Florida and the Secretary of the State of Georgia in accordance with the provisions of the Florida Act and the Georgia Act, respectively (hereinafter the “Statutory Merger Time”). The Parties
shall take any and all other lawful actions and do any and all other lawful things necessary to cause the Merger to become effective. 
  
 3.4 Articles of Incorporation. As of the Statutory Merger Time, the articles of incorporation of the Company, as in effect immediately prior
to the Statutory Merger Time, shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law. 
  
 3.5 Bylaws. As of the Statutory Merger Time, the bylaws of the Company, as in effect immediately prior to the Statutory Merger Time, shall
be the bylaws of the Surviving Corporation until thereafter amended in accordance with its terms and applicable law. 
  
 3.6 Directors and Officers. As of the Statutory Merger Time, the directors and officers of Subsidiary immediately prior to the Statutory
Merger Time shall be elected the directors and officers of the Surviving Corporation. Each director and officer of the Surviving Corporation shall hold office in accordance with the articles of incorporation and bylaws of the Surviving Corporation.
The Company shall cause to be delivered to PainCare the written resignations of all of the directors and officers of the Company, which resignations shall be unconditional and effective as of the Closing Date (as defined in Section 6 below).

  

 2 

 3.7 Tax Consequences. It is intended by the Parties hereto that the Merger shall constitute
a tax-free reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. 
  
 3.8 Additional Actions. If, at any time after the Closing, PainCare shall consider or be advised that any further acts are necessary or
desirable: (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, title to and possession of any property or right of the Company by reason of, or as a result of, the Merger; or (b) otherwise to carry out the purposes
of this Agreement, then the Shareholder shall be deemed to have granted to PainCare an irrevocable power of attorney to execute and deliver all such deeds, assignments and assurances in law and to do all other acts necessary or proper to vest,
perfect or confirm title to and possession of such property or rights in the Surviving Corporation and otherwise to carry out the purposes of this Agreement; and the officers and directors of the Surviving Corporation are fully authorized in the
name of the Shareholder and the Company to take any and all such actions. 
  
 3.9 No Dissenters’ Rights. As a result of the unanimous approval of the transactions contemplated herein by the Shareholder; neither the Shareholder, nor any other party, is entitled to
dissenters’ rights under the laws of the State of Georgia or the State of Florida. 
  
 3.10 Surrender of Certificates. 
  
 (a) Company’s Shares. At the Closing, the Shareholder shall be required to surrender to PainCare the original stock certificates evidencing one hundred (100) shares of stock issued and outstanding,
which immediately prior to the Closing Date represented all of the Company Shares (the “Certificate”) (together with all stock powers duly endorsed to PainCare). Until so surrendered, each Certificate which immediately prior to the Closing
Date represented the Company Shares (other than Company Shares held in the Company treasury) shall upon and after the Closing Date by virtue of the Merger be deemed for all purposes to represent and evidence only the right to receive the Merger
Consideration, as hereinafter defined, as provided in this Agreement. 
  
 (b) Dividends. No dividends or other distributions declared or made with respect to the PainCare Shares with a record date after the Closing will be paid to the holder of any unsurrendered Certificate with respect to the
PainCare Shares represented thereby until the holder of record of such Certificate shall surrender such Certificate. Subject to applicable law, following surrender of any such Certificate, there shall be paid to the record holder of the Certificate
representing whole PainCare Shares issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Closing payable with respect to such whole PainCare Shares.

  
 3.11 Intentionally Omitted. 
  
 3.12 Conversion of Shares. Each share of capital stock of
Company issued and outstanding immediately prior to the Closing shall continue to represent one (1) validly issued, fully paid and non-assessable share of capital stock of the Surviving Corporation after the Merger. By virtue of the Merger and
without any action on the part of the Shareholder the Company Shares shall be converted into the Merger Consideration. The PainCare Shares to be received by the Shareholder as the Merger Consideration shall be subject to restrictions of the sale,
transfer or distribution thereof as set forth in Section 4.36. 
  

 3 

 3.13 Shareholder Consent and Release. The Shareholder hereby consents to the Transaction
and approves the execution and delivery of this Agreement and the transactions contemplated hereby. Effective on the Closing Date, the Shareholder hereby releases PainCare, the Company and the Surviving Corporation from any and all claims he may,
could or will have, whether arising before or after the Closing Date, against the Company or the Surviving Corporation as a result of the Shareholder having served as a stockholder, director, officer, employee, agent, or in any other capacity of the
Company; provided, however, such release shall not operate to release the Company (or the Surviving Corporation as successor to the Company) from (i) Shareholder’s rights (whether arising under the Company’s By-Laws or by statute)
to indemnification, or (ii) the obligation to make the distributions of pre-Closing Date income as permitted under this Agreement, or (iii) claims, if any, arising from Shareholder serving as a guarantor or joint-obligor with respect to those
certain obligations of the Company as identified in Section 2.13 of the Disclosure Schedule. 
  
 3.14 Registration. 
  
 (a) If within the three (3) year period commencing on the Execution Date PainCare proposes for any reason to register the PainCare Shares under the Securities Act [other than a registration in connection with an exchange offer (Form S-4) or
filed in connection with an employee stock option or other benefit plan (Form S-8, or any substitute form that may be adopted by the Commission)], PainCare shall promptly give written notice to the Shareholder of its intention to so register the
PainCare Shares and, upon written request by the Shareholder, given within twenty (20) days after delivery of any such notice by PainCare, to include in such registration PainCare Shares held by the Shareholder (which request shall specify the
number of PainCare Shares proposed to be included in such registration), PainCare shall attempt to cause all such PainCare Shares to be included in such registration on the same terms and conditions as the securities otherwise being included in such
registration; provided however, that if the managing underwriters advise PainCare that the inclusion of the PainCare Shares proposed to be included in such registration would interfere with the successful marketing (including pricing) of the
PainCare Shares proposed to be registered by PainCare, then if such registration is in part an underwritten primary or secondary registration on behalf of PainCare, PainCare shall include in such registration the PainCare Shares requested to be
included in such registration, pro rata from among the holders of any and all PainCare shares to be registered pursuant to such registration according to the number of shares proposed by each holder to be included. In the event
PainCare determines not to pursue, or to withdraw, a registration as to which it has given notice pursuant to this section, the Shareholder shall have no further rights hereunder with respect to such proposed registration. Notwithstanding any other
provision of this Section to the contrary, PainCare shall not be required to include any of the PainCare Shares in a registration statement relating to an underwritten offering of PainCare’s securities unless the Shareholder accepts the terms
of the underwriting as agreed upon between PainCare and the underwriters selected by it, including, without limitation, any Underwriter’s Cutback and/or Lockup, and the Shareholder agrees to promptly execute and/or deliver such documents in
connection with such registration as PainCare or the managing underwriter may reasonably request. 
  

 4 

 (b) The Shareholder may exercise his rights under Section 2.14(a) above on an unlimited number of
occasions. PainCare shall pay all Registration Expenses (as defined below) of any registration effected under this Section, except that in the event of withdrawal by the Shareholder, the Shareholder shall pay (or reimburse PainCare for) the amount
of registration, filing or listing fees relating to his PainCare Shares included in the registration and shall pay the fees of PainCare’s counsel associated with such withdrawal, unless such withdrawal is due to the Shareholder obtaining
material adverse information that was not known by him at the time he requested inclusion of his PainCare Shares in the registration. 
  
 (c) The Shareholder may not participate in any registration under this Section which is underwritten unless he agrees to sell such PainCare Shares on the
basis provided in any underwriting agreement (with terms not inconsistent herewith and customary in underwriting agreements for secondary distributions) approved by PainCare, provided that the Shareholder shall not be required to make any
representations or warranties to PainCare or the underwriters (other than representations and warranties regarding such Shareholder and such Shareholder’s intended method of distribution). 
  
 3.15 Shareholder’s Obligation to Furnish Information.
PainCare may require Shareholder to furnish PainCare such information regarding the distribution of such securities as PainCare may from time to time reasonably request. If the failure by the Shareholder to furnish such information as expeditiously
as possible would prevent (i) the registration statement relating to such registration from being declared effective by the Securities Exchange Commission, or (ii) members of the National Association of Securities Dealers, Inc. from participating in
the distribution of the PainCare Shares proposed to be registered, PainCare may exclude the Shareholder’s PainCare Shares from such registration. 
  
 3.16 Suspension of Sales Pending Amendment to Prospectus. 
  
 (a) The Shareholder agrees that, upon receipt of any notice from PainCare of the happening of any event of that requires
PainCare not to proceed with the registration, or if PainCare has decided not to proceed with the registration for any reason, the Shareholder shall forego the disposition of any PainCare Shares covered by the registration statement or prospectus
until he is advised in writing by PainCare that the use of the applicable prospectus may be resumed and, if so directed by PainCare, the Shareholder shall deliver to PainCare (at PainCare’s expense, except as hereinafter provided) all copies,
other than permanent file copies, then in Shareholder’s possession of any prospectus covering such PainCare Shares. 
  
 (b) The Shareholder agrees that he shall, as expeditiously as possible, notify PainCare at any time when a prospectus relating to a registration statement
covering such Shareholder’s PainCare Shares is required to be delivered under the Securities Act, of the happening of any event which requires changes to be made in the registration statement or any related prospectus so that such registration
statement or prospectus shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading as a result of any information provided by
the Shareholder for inclusion in such prospectus included in such registration statement and, at the request of PainCare, as expeditiously as possible prepare and furnish to it such information as may be necessary so that, after incorporation into a
supplement or amendment of such prospectus as thereafter delivered to the purchasers of such PainCare Shares, the information 
  

 5 

 provided by such Shareholder shall not include an untrue statement of a material fact or a misstatement of a material
fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading and, in such event the expenses of delivery to PainCare of copies of any prospectus in the
Shareholder’s possession shall be at the expense of the Shareholder. 
  
 3.17 Registration Expenses. 
  
 (a) All expenses incident to PainCare’s performance of or compliance with its obligations under this Section 2, including without limitation all (i) registration and filing fees, (ii) fees and expenses of
compliance with securities laws, (iii) printing expenses, (iv) messenger and delivery expenses, (v) internal expenses, (vi) reasonable fees and disbursements of its counsel and its independent certified public accountants (including
“comfort” letters), (vii) securities act liability insurance, (viii) reasonable fees and expenses of any special experts retained by PainCare in connection with the registration hereunder, and (ix) reasonable fees and expenses of other
persons retained by PainCare (all such expenses being referred to herein as “Registration Expenses”) shall be borne by PainCare. 
  
 (b) Notwithstanding the foregoing, the following costs and expenses shall be excluded from the term “Registration Expenses”: (i) all
underwriting discounts and commissions, (ii) all applicable transfer taxes, (iii) the fees and disbursements of any counsel retained by the Shareholder, and (iv) except as provided in Section 2.17(a), all other costs, fees, and expenses incurred by
the Shareholder in connection with the exercise of his registration rights hereunder. 
  
 4. TRANSACTION CONSIDERATION. 
  
 4.1
Merger Consideration. The aggregate merger consideration (the “Merger Consideration”) shall consist of (i) the Closing Date Consideration (the “Closing Date Consideration”) as hereafter defined, and (ii) the
Contingent Installment Payments as determined under Section 3.4 below. Subject to the provisions set forth in Section 3.2 below and to the adjustment provisions as provided in Section 3.3 below, the Closing Date Consideration that PainCare shall
deliver to the Shareholder upon the satisfaction of the Closing Conditions One Million One Hundred Twenty Five Thousand and 00/100 Dollars ($1,125,000) which shall be comprised of Four Hundred Sixty Two Thousand One Hundred Sixty Four (462,164)
PainCare common shares (the “PainCare Shares”). At least one (1) day prior to the Closing Date, the Shareholder shall notify PainCare in writing as to the location the Closing Date Consideration is to be sent. 
  
 4.2 Payment of Closing Date Consideration. 
  
 The Closing Date Consideration shall be payable as follows:

  
 (a) With respect to One Hundred Fifty Thousand (150,000)
shares of the PainCare Shares due at Closing, such Shares shall be delivered to Arthur A. Graves, III (the “Escrow Agent”) to be held in escrow pursuant to the terms and conditions of that certain Escrow and Security Agreement in the form
attached hereto as Exhibit 3.2(a); and 
  

 6 

 (b) With respect to the remainder of the PainCare Shares due at Closing, such shares shall be delivered
to the Sellers. 
  
 4.3 Closing Date Adjustments.
The Closing Date Consideration shall be subject to adjustment as follows: 
  
 (a) Transaction Related Adjustments. The Closing Date Consideration shall be reduced by the amount of any cash payments made by the Company or the Acquiring Companies with respect to any expenses paid on
behalf of the Shareholder (rather than the Company) expect as otherwise specifically allowed pursuant to this Agreement. 
  
 (b) Financial Statements. Except as set forth on Section 3.3(b) of the Disclosure Schedules, the Company has prepared financial statements
consisting of (i) a balance sheet, statement of operations and cash flow statement in accordance with GAAP as of and for the year ended December 31, 2003 (the “GAAP Financial Statements”); and (ii) a balance sheet, statement of operations
and cash flow statement as of and for the quarters ended March 31, 2003 and 2004; (the “Interim Financial Statements”) all of which are included in Section 3.3(b) of the Disclosure Schedule. The GAAP Financial Statements have been
certified by an independent auditor and have been prepared using accounting principles consistent with the accounting principles utilized by PainCare. The Interim Financial Statements have been prepared in accordance with the cash method of
accounting. The GAAP Financial Statements and the Interim Financial Statements (collectively, the “Financial Statements”) present fairly the financial condition of the Company as of such dates and the results of the operations of the
Company for such periods, are correct and complete, and are consistent with the books and records of the Company (which books and records are correct and complete). 
  
 (c) Closing Date Balance Sheet. Within forty-five (45) days after the Closing Date, PainCare or its Affiliate
will prepare and deliver to Dr. Windsor a balance sheet of the Company as of the close of business on the Closing Date prepared in accordance with GAAP (the “Closing Date Balance Sheet”). Within ten (10) business days after PainCare’s
delivery of the Closing Date Balance Sheet to Dr. Windsor, Dr. Windsor shall, in a written notice to PainCare, either accept or describe in reasonable detail any proposed adjustments to the Closing Date Balance Sheet and the reasons therefore, and
shall include pertinent calculations. If Dr. Windsor fails to deliver notice of acceptance or objection to the Closing Date Balance Sheet within such ten (10) business day period, the Shareholder shall be deemed to have accepted the Closing Date
Balance Sheet. Except in the case of a dispute with respect to the Closing Date Balance Sheet, within ten (10) business days after delivery of the Closing Date Balance Sheet (the “Adjustment Payment Date”), the Shareholder shall pay the
Other Net Equity Adjustment (as defined below) to PainCare. In the event that PainCare and Dr. Windsor are not able to agree on the Closing Date Balance Sheet within thirty (30) days from and after the receipt by PainCare of any objections raised by
Dr. Windsor, then either Party shall each have the right to require that such disputed determinations be submitted to an independent certified public accountant or accounting firm that PainCare shall select, for computation or verification in
accordance with the provisions of this Agreement, and the Net Equity Adjustment shall be paid by the Shareholder to PainCare within ten (10) business days after receipt of the accountant’s computation or verification. The foregoing provisions
for certified public accounting firm review shall be final and binding upon the Parties and there shall be no right of appeal from such decision. Such accounting firm’s fees and expenses for such disputed determination shall be borne by the
Party whose determination has been modified by such accounting firm’s report or by all Parties in proportion to the relative amount each Party’s determination has been modified. Any payments due under this Section 3.3 shall bear interest
at eight percent (8%) per annum from the Adjustment Payment Date. 
  

 7 

 If the final Closing Date Balance Sheet reflects Cash of the Company that is less than Fifty Thousand
Dollars ($50,000) (the “Required Cash”), or Net Shareholder’s Equity (as defined below) of the Company that is less than Two Hundred Fifty Thousand and 00/100 Dollars ($250,000)(“Agreed Net Equity”), then the Closing Date
Consideration shall be reduced and the Shareholder shall be required to immediately return to PainCare dollar for dollar (the “Net Equity Adjustment”) by (i) an Amount equal to the Required Cash less Cash reflected on the Closing Date
Balance Sheet, and (ii) the difference between (x) the Agreed Net Equity; and (y) the Net Shareholder’s Equity set forth in the Closing Date Balance Sheet. “Net Shareholder’s Equity” shall mean the book value of the
Company’s tangible non-medical assets plus its accounts receivable (less the Required Cash) net of all liabilities of the Company. 
  
 4.4 Earnout Payment. 
  
 (a) General. On the last day of each of the three (3) successive twelve (12) month periods (hereinafter at times referred to as the
“First Twelve Month Period”, the “Second Twelve Month Period” and “Third Twelve Month Period,” respectively) which immediately follow the Closing Date, PainCare shall deliver to the Shareholder PainCare stock with a
Fair Market Value (as hereinafter defined) of $375,000 (each a “Contingent Installment Payment”) if, and only if, all of the following conditions are satisfied (each a “Condition” and collectively, the “Conditions”)
throughout the First Twelve Month Period, the Second Twelve Month Period and the Third Twelve Month Period: (I) Shareholder and Practice Operator (as defined in that certain Management Services Agreement dated May 25, 2004 (the “Management
Services Agreement”) by and among PainCare Acquisition Company XII, Inc. Georgia Pain Physicians, P.C., and Robert E. Windsor, M.D.) are in compliance with all of the terms and conditions applicable to Shareholder and Practice Operator in the
Management Services Agreement, including by in no way limited to, timely payment in full of the Management Fee (as defined in the Management Services Agreement) and compliance with the restrictive covenant provisions set forth in Section 10 of the
Management Services Agreement); (ii) Shareholder is in compliance with the restrictive covenant provisions of Section 12 of the Agreement of Purchase and Sale dated May 25, 2004 (“Purchase Agreement) among PainCare Holdings, Inc., Georgia Pain
Physicians, P.C. and Shareholder. To the extent that each of the Conditions are satisfied throughout the First Twelve Month Period, Second Twelve Month Period and Third Twelve Month Period, then PainCare shall pay to the Shareholder PainCare stock
with a Fair Market Value of $375,000 within thirty (30) days of the end of each of the First Twelve Month Period, Second Twelve Month Period and Third Twelve Month Period. To the extent that any of the Conditions are not satisfied during any of the
First Twelve Month Period, Second Twelve Month Period and Third Twelve Month Period, then for the applicable Twelve Month Period where any of the Conditions are not satisfied, and each subsequent Twelve Month Period, PainCare shall not pay, and
shall have no duty or obligation to ever pay, and Shareholder shall not receive, and shall have not right to ever receive, any Contingent Installment Payment. For example, by the way of illustration only, assume that throughout the First Twelve
Month Period the Conditions are satisfied and in the middle of the Second Twelve Month Period the Conditions are no longer satisfied, then, in this example, PainCare shall pay the PainCare stock with a Fair Market Value of $375,000 
  

 8 

 Contingent Installment Payment within thirty (30) days of the First Twelve Month Period; however, PainCare shall not pay,
and shall have no duty or obligation to ever pay, and Shareholder shall not receive, and shall have not right to ever receive, any Contingent Installment Payment with respect to the Second Twelve Month Period and Third Twelve Month Period.

  
 (b) Definitions for Purposes of Section 3. For
purposes of Section 3 of this Agreement: 
  
 (i) “Fair
Market Value” shall mean the value of the PainCare Shares determined as follows: 
  
 (1) if the principal market for the PainCare Shares is a national securities exchange, then the “Fair Market Value” of the PainCare Shares shall equal the thirty (30) day trailing average ending on the last
day of the First Twelve Month Period, Second Twelve Month Period or Third Twelve Month Period, as applicable, of the closing ask prices of the PainCare Shares as reported by such exchange or on a composite tape reflecting transactions on such
exchange; or 
  
 (2) if the principal market for the PainCare
Shares is not a national securities exchange, but the price of the PainCare Shares is quoted on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) Stock Market, and (A) actual closing price information is
available with respect to the PainCare Shares, then the “Fair Market Value of the PainCare Shares shall equal the thirty (30) day trailing average ending on the last day of the First Twelve Month Period, Second Twelve Month Period or Third
Twelve Month Period, as applicable, of the closing ask prices of such stock on the NASDAQ Stock Market; or (B) actual closing price information is not available with respect to the PainCare Shares, then the “Fair Market Value” of
the PainCare Shares shall equal the thirty (30) day trailing average ending on the last day of the First Twelve Month Period, Second Twelve Month Period or Third Twelve Month Period, as applicable, of the bid prices per share of such stock on the
NASDAQ Stock Market; or 
  
 (3) if the principal market for the
PainCare Shares is neither a national securities exchange and such stock is not quoted on NASDAQ, then the “Fair Market Value” of the PainCare Shares shall equal the thirty (30) day trailing average ending on the last day of the First
Twelve Month Period, Second Twelve Month Period or Third Twelve Month Period, as applicable, of the closing ask prices of the PainCare Shares as reported by the OTC Bulletin Board Service or by National Quotation Bureau, Incorporated, or a
comparable service selected by PainCare; or 
  
 (4) if
subsections (b)(i)(1)-(3) above are inapplicable or if no trades have been made or no quotes are available for such day with respect to the PainCare Shares, then the “Fair Market Value” of the PainCare Shares on the last day of the First
Twelve Month Period, Second Twelve Month Period and Third Twelve Month Period, as applicable, shall be determined by an independent third party appraiser selected by PainCare. Within ten (10) days after the effective date of the appraiser’s
appointment, the appraiser shall deliver an appraisal of the Fair Market Value of the PainCare Shares, on the last day of the First Twelve Month Period, Second Twelve Month Period or Third Twelve Month Period, as applicable, which shall be binding
and conclusive on the Parties. The cost of any appraisal hereunder shall be shared equally by the Parties, and each Party shall be responsible and financially liable for its or his own attorneys’ fees; and 
  

 9 

 (5) with the understanding that notwithstanding the Fair Market Value ascribed to the PainCare Shares
pursuant to subsections 3.4(b)(1), (2), (3) or (4) above in no event shall the Fair Market Value of the PainCare Shares ever be less than Two and 50/00 Dollars ($2.50) per share. 
  
 5. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER. The Shareholder represents and warrants to the Acquiring Companies that
the statements contained in this Section 4 are correct and complete as of the date of this Agreement, except as set forth in the disclosure schedule accompanying this Agreement (the “Disclosure Schedule”). The Disclosure Schedule will be
arranged in paragraphs corresponding to the numbered paragraphs contained in this Section 4 to the Agreement. 
  
 5.1 Organization, Qualification, and Corporate Power. The Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Georgia. The Company has full power and authority and all licenses, permits and authorizations necessary to carry on the businesses in which it is currently engaged and to own and use the properties owned and used by
it. Section 4.1 of the Disclosure Schedule lists all of the officers and members of the Board of Directors of the Company, as of the date immediately preceding the Closing Date. The Company has made available to the Acquiring Companies correct and
complete copies of the minute book, articles of incorporation and bylaws of the Company, as amended to date. Copies of the minute book (containing the records of meetings of the stockholders, the board of directors and any committees of the board of
directors), the stock certificate books and stock record books of the Company are correct and complete in all material respects and will have been delivered to PainCare prior to or at the Statutory Merger Time. The Company is not in default under or
in violation of any provision of its articles of incorporation or bylaws. 
  
 5.2 Capitalization. The entire authorized capital stock of the Company consists of One Thousand (1,000) shares of common stock (the “Shares”), of which one thousand (1,000) Shares are issued
and outstanding. All of the issued and outstanding Company Shares have been duly authorized, are validly issued, fully paid, and nonassessable and are held of record by the Shareholder. The Shareholder has good title to the Company Shares free and
clear of any and all liens, claims, security interests or other encumbrances of any Person. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, redemption rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or otherwise cause to become outstanding any of its capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to the Company. There are no stockholders’ agreements, voting trusts, proxies, or other agreements or understandings with respect to the voting of the capital stock of the Company. 
  
 5.3 Authorization. The Company has full power and authority
(including full corporate power and authority) and Dr Windsor has all necessary authority to execute, bind the Company and deliver this Agreement and to perform its obligations hereunder. The execution, 
  

 10 

 delivery and performance of this Agreement by the Company has been duly authorized and approved by its board of directors
and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement and the transactions contemplated hereby. The Company has given the Shareholder any and all notice required to be given to the Shareholder under
applicable law. This Agreement constitutes the valid and legally binding obligation of the Company and the Shareholder, enforceable in accordance with its terms and conditions. 
  
 5.4 Noncontravention. Except as set forth in Section 4.4 of the Disclosure Schedule, neither the execution and
the delivery of this Agreement by the Company or the Shareholder, nor the consummation of the transactions contemplated hereby will: (a) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, or other
restriction of any government, governmental agency or any other third party whatsoever, or court to which the Company or the Shareholder are subject, or any provision of the articles of incorporation or bylaws of the Company; or (b) conflict with,
result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument or other
arrangement to which the Company or the Shareholder are a party or by which either the Company or the Shareholder is bound or to which any of the Company’s assets are subject (or result in the imposition of any Security Interest upon any of its
assets). Except as set forth in Section 4.4 of the Disclosure Schedule, the Shareholder and the Company need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or
any other third party whatsoever in order for the Parties to consummate the transactions contemplated by this Agreement. 
  
 5.5 Broker’s Fees. Except as set forth in the Section 4.5 of the Disclosure Schedules, neither the Shareholder nor the Company has not
entered into any broker or finder’s agreement for which he, the Company or the Acquiring Companies is required to pay any Liability or obligation to pay any fees, expenses, or commissions to any consultant, broker, finder, or agent. 

 
 5.6 Title to Assets. Section 4.6 of the Disclosure Schedule
contains a complete, true and correct list of all of the assets of the Company. Except as to assets disposed of in the ordinary course of business subsequent to the date hereof and as otherwise contemplated by this Agreement, the Company has good
and marketable title to, or a valid leasehold interest in, the properties and assets used by it, located on its premises, or shown on the Closing Date Balance Sheet or acquired after the date thereof, free and clear of all Security Interests. The
assets set forth in Section 4.6, in conjunction with any assets which the Company leases, constitute all of the assets used by the Company in connection with its business as presently conducted and all assets necessary or appropriate for the
continued operation of the Company’s business. 
  
 5.7
No Subsidiaries. The Company has no Subsidiaries and does not control, directly or indirectly, or have any direct or indirect equity participation in any corporation, partnership, limited liability company, trust or other business
association. 
  
 5.8 Financial Statements. Attached
as Section 3.3(b) of the Disclosure Schedule are copies of the GAAP Financial Statements and the Interim Financial Statements. Except as provided in the Interim Financial Statements, or as fully disclosed in Section 4.8 of the Disclosure Schedule,
the Company does not have any Liabilities or obligations (whether accrued, 
  

 11 

 absolute, contingent, whether due or to become due or otherwise i.e., accounts payable, accrued expenses) which might be
or become a charge against the Company since the date of the Interim Financial Statements. The Shareholder acknowledges and agrees that PainCare and Subsidiary relied upon the financial information set forth in the Financial Statements in order to
determine the Transaction Consideration and that except as may otherwise be disclosed in Section 4.8 of the Disclosure Schedules, the revenues reflected in both the GAAP Financial Statements and the Interim Financial Statements will, to the best
knowledge and belief of the Shareholder, continue to approximate for at least the next three (3) years the same or greater levels as reflected in such Statements. Likewise, Dr. Windsor will use his best efforts to maintain and grow such revenue
streams for the benefit of the Acquiring Companies and will take no action or omit to take any action that may otherwise have a material adverse effect on such revenues or otherwise cause such revenue streams to be diverted to any other entity or
individual including the Shareholder. 
  
 5.9 Events
Subsequent to Most Recent Year End. Since December 31, 2003 (the “Most Recent Year End”), there has not been any material adverse change in the business, financial condition, operations, results of operations, or future prospects
of the Company. Without limiting the generality of the foregoing, since the Most Recent Year End: 
  
 (a) Sale or Lease of Assets. The Company has not sold, leased, transferred, or assigned any of its assets, tangible or intangible, other
than for fair market value in the ordinary course of its business; 
  
 (b) Contracts. The Company has not entered into any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) outside the ordinary course of business; 
  
 (c) Change in Contracts. No third party (or the Company) has
accelerated, terminated, modified, or canceled any agreement, contract, lease, or license (or series of related agreements, contracts, leases, and licenses) to which the Company is a party or by which it is bound and neither the Shareholder nor the
Company has any intent to do any of the foregoing or has received a verbal or written indication of any third party’s intent to do any of the foregoing; 
  
 (d) Security Interests. The Company has not had imposed any Security Interest upon any of its assets, tangible or intangible; 
  
 (e) Investments. The Company has not made any capital
investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions); 
  
 (f) Debts. The Company has not issued any note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease obligation; 
  
 (g) Liabilities Unaffected. The Company has not delayed or postponed the payment of accounts payable and other Liabilities or accelerated the collection of accounts, notes or other receivables;

  

 12 

 (h) Claims Unaffected. The Company has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) outside the ordinary course of its business; 
  
 (i) Articles and Bylaws. There has been no change made or authorized in the articles of incorporation or bylaws of the Company; 

 
 (j) Changes in Equity. The Company has not issued, sold, or
otherwise disposed of any of its capital stock, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its capital stock; 
  
 (k) Distribution. The Company has not declared, set aside, or
paid any dividend or made any distribution with respect to its capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its capital stock; 
  
 (l) Property Damage. The Company has not experienced any damage, destruction, or loss (whether or not covered
by insurance) to its property or assets; 
  
 (m)
Transactions with Affiliates. The Company has not made any loan to, or entered into any other transaction with, any of its directors, officers and employees; 
  
 (n) Collective Bargaining Agreements. The Company has not entered into any collective bargaining agreement,
written or oral, or modified the terms of any existing such contract or agreement; 
  
 (o) Compensation Changes. The Company has not granted any increase in the base compensation of any of its directors, officers, and employees; 
  
 (p) Employee Benefit Plans. The Company has not adopted, amended, modified, or terminated any bonus,
profit-sharing, incentive, severance, or other plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan); 
  
 (q) Officers; Directors; Employees. The Company has not made
any change in the employment terms for any of its directors, officers and employees, other than to terminate such agreements as required herein; 
  
 (r) Charitable or Capital Contributions. The Company has not made or pledged to make any charitable or other capital contribution;

  
 (s) Ordinary Course of Business. There has not
been any other occurrence, event, incident, action, failure to act, or transaction outside the ordinary course of business involving the Company; 
  
 (t) Accounting Practices. There has not been any change in any method of accounting or accounting principle, estimate or practice of the
Company; 
  
 (u) Accounts Receivable. The Company
has not accelerated the collection of any Accounts Receivable or any other amounts owed to it; and 
  

 13 

 (v) In General. Neither the Company nor the Shareholder has committed to do any of the
foregoing. 
  
 5.10 Undisclosed Liabilities. The
Company has no Liability and there is no basis for any present or future action, suit, proceeding, hearing, investigation, complaint, claim, or demand against it giving rise to any Liability, except for: (a) Liabilities disclosed in the Disclosures
Schedule; (b) contractual obligations incurred in the ordinary course of business; and (d) Liabilities which have arisen after the Interim Balance Sheet in the ordinary course of business (none of which results from, arises out of, relates to, is in
the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law). As of the Closing, other than the current trade accounts payable, leasehold obligations and accrued payroll and benefit
obligations, the Company shall not have any unpaid liabilities, other than those listed in the Section 4.10 Disclosure Schedule, including, but not limited to, any bank debt, capital leases or any general or professional liability claims, or be
obliged in any other way to provide funds in respect of, or to guarantee or assume, any debt, obligation or dividend of any person, except endorsements in the ordinary course of business in connection with the deposit, in banks or other financial
institutions, of items for collection. 
  
 5.11 Tax
Matters. 
  
 (a) Tax Returns. Except as set
forth in Disclosure Schedule 4.11, the Company has filed all Tax Returns it was required to file. All such Tax Returns were correct and complete in all respects and were filed on a timely basis. All Taxes owed by the Company (whether or not shown on
any Tax Return) have been paid. The Company currently is not the beneficiary of any extension of time within which to file any Tax Return. No claim is currently pending by an authority in a jurisdiction where the Company is or may be subject to
taxation by that jurisdiction. There are no Security Interests on any of the assets of the Company that arose in connection with any failure (or alleged failure) to pay any Tax. 
  
 (b) Withholding. The Company has withheld, and remitted when due, all Taxes required to have been withheld or
paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. 
  
 (c) No Disputes of Claims. No Shareholder or director or officer (or employee responsible for Tax matters) of the Company expects any
authority to assess any additional Taxes for any period for which Tax Returns have been filed. There is no dispute or claim concerning any Tax Liability of the Company either: (a) claimed or raised by any authority in writing; or (b) as to which any
Shareholder, directors and officers (and employees responsible for Tax matters) of the Company has Knowledge based upon personal contact with any agent of such authority. Section 4.11 of the Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to the Company for taxable periods ended on or after December 31, 2003, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit. The
Shareholder has made available to PainCare correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by any of the Company and its Affiliates since December 31,
2000. 
  

 14 

 (d) No Waivers. The Company has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or deficiency. 
  
 (e) No Special Circumstances. The Company has not made any payments, is not obligated to make any payments, nor is a party to any agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Section 280G. The Company has not been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). The Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. 
  
 (f) Intentionally Omitted. 
  
 (g) Audits of Tax Returns. No Tax Return of the Company is
currently under audit or examination by any taxing authority, and the Company has not received a written notice stating the intention of any taxing authority to conduct such an audit or examination. Each deficiency resulting from any audit or
examination relating to Taxes by any taxing authority has been paid, except for deficiencies being contested in good faith. The revenue agents’ reports related to any prior audits and examinations are attached as part of Section 4.11 of the
Disclosure Schedule. 
  
 (h) Period of Assessment.
There is no agreement or other document extending, or having the effect of extending, the period of assessment or collection of any Taxes. 
  
 (i) Tax Agreements. The Company is not a party to or bound by any tax sharing agreement, tax indemnity obligation or similar agreement with
respect to Taxes, including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority. 
  
 (j) Inclusions in Taxable Periods. The Company will be required to include in a taxable period ending after the Closing Date taxable income
attributable to income that accrued in a prior taxable period but was not recognized in any prior taxable period as a result of the installment method of accounting, the completed contract method of accounting, the long-term contract method of
accounting, the cash method of accounting or Code Section 481 with respect to a change in method of accounting occurring before the Closing Date or comparable provisions of state, local or foreign tax law. The Shareholder agrees to pay all such tax
as they become due. 
  
 (k) Consents. The Company
has not filed a consent pursuant to or agreed to the application of Code Section 341(f). 
  
 (l) Personal Holding Company. The Company has not, during the five (5) year period ending on the Closing Date, been a personal holding company within the meaning of Code Section 541. 
  

 15 

 (m) Consolidated Tax Returns. The Company has never filed or been included in any combined
or consolidated Tax Return with any other person or been a member of an Affiliated Group filing a consolidated federal income Tax Return. 
  
 5.12 Real Property. The Company does not own any real property. Section 4.12 of the Disclosure Schedule lists and describes briefly all real
property leased or subleased by the Company. The Shareholder has made available to PainCare and Subsidiary correct and complete copies of the leases and subleases listed in Section 4.12 of the Disclosure Schedule (as amended to date). With respect
to each lease and sublease listed in Section 4.12 of the Disclosure Schedule: 
  
 (a) Binding. The lease or sublease is legal, valid, binding, enforceable, and in full force and effect; 
  
 (b) Continued Validity. The lease or sublease will continue to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated hereby; 
  
 (c) No Defaults. The Company is not in breach or default under the lease or sublease and no third party is in breach or default under the lease or sublease, and no event has occurred which, with notice
or lapse of time, would constitute a breach or default or permit termination, modification or acceleration thereunder; 
  
 (d) Repudiation. Neither the Company nor any other party to the lease has repudiated any provision of the lease or sublease; 
  
 (e) No Disputes. There are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease; 
  
 (f) Subleases. With respect to each sublease, the representations and warranties set forth in subsections 4.12(a) through 4.12(e) above are to Shareholder’s Knowledge true and correct with respect to the underlying lease;

  
 (g) Encumbrances. None of the Company or its
Affiliates has assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the leasehold or subleasehold; 
  
 (h) Approvals. All facilities leased or subleased thereunder have received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been operated and maintained in accordance with applicable laws, rules, and regulations; and 
  

(i) Utilities. All facilities leased or subleased thereunder are supplied with utilities and other services reasonably necessary for the
operation of said facilities. 
  
 5.13 Intellectual
Property. The Company owns or has the right to use pursuant to a valid license, sublicense, agreement, or permission all Intellectual Property necessary or desirable for the operation of the businesses of the Company as presently conducted
and as presently proposed to be conducted. No claim or demand of any Person has been made, nor is 
  

 16 

 there any proceeding that is pending, or to the Shareholder’s Knowledge, threatened, which challenges the rights of
the Company with respect to any Intellectual Property or asserts that the Company is infringing or otherwise in conflict with or is required to pay any royalty or license fee with respect to any Intellectual Property. 
  
 5.14 Condition of Tangible Assets. Each tangible asset of the
Company is free from defects (patent and latent), has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable, designed and intended for the purposes
for which it presently is used by Dr. Windsor and the Company and is not outdated in comparison with the assets used for similar purposes by similar businesses. 
  

5.15 Contracts. Section 4.15 of the Disclosure Schedule lists the following contracts and other agreements, written or oral, to which the
Company was a party immediately preceding the Closing: 
  
 (a)
Personal Property Leases. Any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments; 
  
 (b) Services. Any agreement (or group of related agreements) for the furnishing or receipt of services, the
performance of which will extend over a period of more than one (1) year; 
  
 (c) Partnership; Joint Venture. Any agreement constituting a partnership or joint venture; 
  
 (d) Indebtedness. Any agreement (or group of related agreements) under which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation; 
  
 (e) Confidentiality; Non-Competition. Any agreement concerning confidentiality or non-competition; 
  
 (f) Shareholders’ Agreements. Any agreement by and between the Shareholder and any Affiliate of the Company; 
  
 (g) Plans. Any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other plan or arrangement for the benefit of its current or former directors, officers, and employees; 
  

(h) Employment or Consulting Agreements. Any agreement for the employment of any individual on a full-time or part-time or the engagement
of any individual as a consultant or independent contractor, or otherwise compensating an individual for services rendered or to be rendered to the Company; 
  
 (i) Advances; Loans. Any agreement under which the Company has advanced or loaned any amount to any of its directors, officers and employees
outside the ordinary course of business; 
  

 17 

 (j) Adverse Effects. Except as set forth in Section 4.15(j) of the Disclosure Schedule, any
agreement under which the consequences of a default or termination could have a material adverse effect on the business, financial condition, operations, results of operations or future prospects of the Company; and 
  
 (k) Other Agreements. Any other agreement (or group of related
agreements) the performance or rendering of which involves consideration in excess of Five Thousand and No/100 Dollars ($5,000.00). 
  
 The Shareholder has made available to PainCare and Subsidiary a correct and complete copy of each written agreement listed in Section 4.15 of the
Disclosure Schedule (as amended to date) and a written summary setting forth the terms and conditions of each oral agreement referred to in Section 4.15 of the Disclosure Schedule. With respect to each such agreement: (i) the agreement is
legal, valid, binding, enforceable, and in full force and effect; (ii) there shall be no breach or other violation resulting from the consummation of the transactions contemplated hereby; (iii) the Company is not in default or breach and no other
party is in breach or default, and no event has occurred which with notice or lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under the agreement; and (iv) neither the Company nor any other
party has repudiated any provision of the agreement. None of the agreements listed in Section 4.15 of the Disclosure Schedule requires the consent or approval of any Person, or any compensation or payment to be made to any such Person by
reason of the transactions contemplated by this Agreement, or the merger of the Company with and into another Person. 
  
 5.16 Powers of Attorney. Except as set forth in Section 4.16 of the Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of the Company. 
  
 5.17 Insurance;
Malpractice. Section 4.17 of the Disclosure Schedule contains a list and brief description of all policies or binders of fire, liability, product liability, workers compensation, health and other forms of insurance policies or binders
currently in force insuring against risks to which the Company has been a party, a named insured or otherwise the beneficiary of coverage at any time during the five (5) years immediately preceding the Closing Date. Section 4.17 of the Disclosure
Schedule contains a description of all current malpractice liability insurance policies of Dr. Windsor, the Company and the Company’s professional employees and all predecessor policies in effect. Except as set forth on Section 4.17 of the
Disclosure Schedule: (a) neither the Company, nor its professional employees, nor Dr. Windsor has, during the five (5) years immediately preceding the Closing Date, filed a written application for any insurance coverage relating to the
Company’s business or property which has been denied by an insurance agency or carrier; and (b) the Company, the Company’s professional employees and Dr. Windsor has been continuously insured for professional malpractice claims during the
same period. Section 4.17 of the Disclosure Schedule also sets forth a list of all claims for any insured loss in excess of Five Thousand and 00/100 Dollars ($5,000) per occurrence filed by the Company, the Company’s professional employees or
Dr. Windsor during the five (5) years immediately preceding the Closing Date, including workers compensation, general liability, environmental liability and professional malpractice liability claims. With respect to each insurance policy listed in
Section 4.17 of the Disclosure Schedule: (i) the policy is legal, valid, binding, enforceable, and in full force and effect; (ii) the policy will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms
following the 
  

 18 

 consummation of the transactions contemplated hereby; (iii) neither the Company, Dr. Windsor, other health care
professionals nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the policy; (iv) the Company has not repudiated any provision thereof and no other party to the policy has repudiated any provision thereof; (v) there is no claim pending under
any of such policies as to which coverage has been questioned, denied or disputed by the underwriter(s) of such policies or any notice that a defense will be afforded with reservation of rights; (vi) the Company has not received: (A) any notice that
any issuer of any such policy has filed for protection under applicable bankruptcy laws or is otherwise in the process of liquidating or has been liquidated; or (B) any other indication that such policies are no longer in full force and effect or
that the issuer of any such policy is no longer willing or able to perform its obligations thereunder; and (vii) neither Dr. Windsor nor the Company has received any written notice from or on behalf of any insurance carrier issuing such policies,
that there will hereafter be a cancellation, or an increase in a deductible or non-renewal of existing policies. The Company has been covered during the past five (5) years by insurance in scope and amount customary and reasonable for the business
in which it has engaged during the aforementioned period. 
  
 5.18
Litigation. Except as noted in Section 4.18 of the Disclosure Schedule, there is no litigation, arbitration, governmental claim, investigation or proceeding, pending or, to Shareholder’s Knowledge, threatened, against the Company,
or Dr. Windsor, at law or in equity, before any court, arbitration tribunal or governmental agency. Each of the Sellers has no knowledge of any facts on which claims may hereafter be made against the Company that will have a Material Adverse Effect
on the Company. All medical malpractice claims, general liability incidents and incident reports relating to the ASC have been submitted to Company’s insurer. All claims made or, to Shareholder’s Knowledge, threatened against the Company
or Dr. Windsor in excess of the deductible are covered under Dr. Windsor’s or Company’s current insurance policies. Section 4.18 of the Disclosure Schedule provides a complete list of all general liability incidents, incident reports and
malpractice claims relating to the ASC or the Center that have for the five (5) year period prior to the date hereof. 
  
 5.19 Health Care Compliance. The Company is participating or otherwise authorized to receive reimbursement from Medicare and Medicaid and is
a party to other third-party payor agreements set forth in Section 4.19 of the Disclosure Schedule. All necessary certifications and contracts required for participation in such programs are in full force and effect and have not been amended or
otherwise modified, rescinded, revoked or assigned, and no condition exists or event has occurred which in itself or with the giving of notice or the lapse of time or both would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such third-party payor program. The Company is in compliance in all material respects with the requirements of all such third-party payors applicable thereto. None of the Company, its physician employees, the Shareholder, or
immediate family members of the Shareholder or other physician employees, have any financial relationship (whether investment interest, compensation interest, or otherwise) with any entity to which any of the foregoing refer patients, except for
such financial relationships that qualify for exceptions to state and federal laws restricting physician referrals to entities in which they have a financial interest. 
  

 19 

 5.20 Fraud and Abuse. The Company, Dr. Windsor, and all persons and entities providing
professional services for the Company have not engaged in any activities which are prohibited under 42 U.S.C. § 1320a-7b, or the regulations promulgated thereunder pursuant to such statutes, or related state or local statutes or regulations, or
which are prohibited by rules of professional conduct, including 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) failing to disclose Knowledge by a claimant of the occurrence of any event
affecting the initial or continued right to any benefit or payment on its own behalf or on behalf of another, with intent to fraudulently secure such benefit or payment; and (d) knowingly and willfully soliciting or receiving any remuneration
(including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind or offering to pay or receive such remuneration: (A) 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 (B) 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. The Company has at all times complied with the requirements of Georgia Statutes which prohibit physicians who have an ownership, investment or
beneficial interest in certain health care facilities from referring patients to such facilities for the provisions of designated and other health services, and has at all times complied with the Georgia Statutes. Furthermore, the Company has filed
all reports required to be filed by the State of Georgia and federal law regarding compensation arrangements and financial relationships between a physician and an entity to which the physician refers patients. 
  
 5.21 Legal Compliance. The Company and its predecessors and
Affiliates have complied with all applicable Laws (including rules, regulations, codes, injunctions, judgments, orders, decrees, and rulings of federal, state, local, and foreign governments (and all agencies thereof)), and no action, suit,
proceeding, hearing, complaint, claim, demand, notice or investigation has been filed or commenced, or to the Knowledge of the Shareholder and the Company, threatened against the Company alleging any failure so to comply. The Company and all
physicians and other health care professionals engaged or employed by the Company have all permits and licenses required by applicable Law, have made all required regulatory filings and are not in violation of any such permit or license. The Company
is lawfully operated in accordance with the requirements of all applicable Laws and has in full force and effect all authorizations and permits necessary to operate its business. There are no outstanding notices of deficiencies relating to the
Company issued by any governmental authority or third-party payor requiring conformity or compliance with any applicable law or condition for participation with such governmental authority or third-party condition for participation with such
governmental authority or third-party payor. The Company has not received notice and the Company and Shareholder has no knowledge or reason to believe that, such necessary authorizations may be revoked or not renewed in the ordinary course of
business. 
  
 5.22 Rates and Reimbursement Policies.
The jurisdiction in which the Company is located does not currently impose any restrictions or limitations on rates which may be charged to private pay patients receiving services provided by the Company except for restrictions promulgated by
Georgia law and regulation on charging of excessive fees and limitations on 
  

 20 

 charges for and profits from the sale of medications, goods and devices and free samples. The Company does not have any
rate appeal currently pending before any governmental authority or any administrator of any third-party payor program. The Company and the Shareholder have no Knowledge of any applicable Law, which affects rates or reimbursement procedures which has
been enacted, promulgated or issued within the eighteen (18) months preceding the date of this Agreement or any such legal requirement proposed or currently pending in the State of Georgia which could have a Material Adverse Effect on the Company,
its business or operations, or may result in the imposition of additional Medicaid, Medicare, charity, free care, welfare, or other discounted or government assisted patients at the Company or require the Company to obtain any necessary
authorization which the Company does not currently possess. Neither the Company nor the Shareholder have Knowledge of any impending proposed reduction in reimbursement from third party or other payors nor Knowledge of any threatened termination of
payor contracts. 
  
 5.23 Medical Staff. Except as
set forth on Section 4.23 of the Disclosure Schedule, the Shareholder has no Knowledge of a physician who is providing services on behalf of the Company who plans, or has threatened to terminate his or her employment or other relationship with the
Company. None of the physicians providing services on behalf of the Company currently has plans to retire from the practice of medicine in the next three (3) years. 
  
 5.24 Employees. Except as set forth on Section 4.24 of the Disclosure Schedule: (a) there is no unfair labor
practice charge or complaint pending or threatened relating to the business of the Company; and (b) payment in full to all of the employees of the Company of all wages, salaries, commissions, bonuses, benefits, and other compensation lawfully due
and owing to such employees or otherwise arising under any policy, practice, agreement, plan, program, statute, or other law as of the Closing Date has been made. 
  
 5.25 Employee Benefits. 
  
 (a) Plans. Section 4.25 of the Disclosure Schedule lists each Employee Benefit or health and welfare plan that
the Company maintains or to which the Company contributes. 
  
 (b)
Compliance. Each such Employee Benefit Plan (and each related trust, insurance contract, or fund) complies in form and in operation in all material respects with its terms and with the applicable requirements of ERISA, the Code and
other applicable laws. 
  
 (c) Reports and
Descriptions. All required reports and descriptions (including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1’s, and Summary Plan Descriptions) have been filed or distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA and of Code Section 4980B have been met with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. 
  
 (d) Contributions. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have been paid to each such Employee Benefit Plan which is an Employee Pension Benefit Plan and all contributions for any pay period ending on or before the Closing Date which
are not yet due have been paid to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice 
  

 21 

 of the Company. All premiums or other payments due for all periods ending on or before the Closing Date have been paid
with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. 
  
 (e) Qualified Plan. Each such Employee Benefit Plan which is an Employee Pension Benefit Plan and is intended to meet the requirements of a “qualified plan” under Code Section 401(a) meets such
requirements and has received, within the last two (2) years, a favorable determination letter from the IRS. 
  
 (f) Market Value. The market value of assets under each such Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and nonvested Liabilities thereunder determined in accordance with PBGC methods, factors, and assumptions applicable to an Employee Pension Benefit Plan terminating on the date
for determination. 
  
 (g) Copies. The Shareholder
has delivered to PainCare and Subsidiary correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the IRS, the most recent Form 5500 Annual Report, and all related trust
agreements, insurance contracts, and other funding agreements which implement each such Employee Benefit Plan. 
  
 (h) Maintenance of Plans. With respect to each Employee Benefit Plan that the Company maintains, ever has maintained, or to which it
contributes, ever has contributed, or ever has been required to contribute: 
  
 (i) Reportable Events. No such Employee Benefit Plan which is an Employee Pension Benefit Plan has been completely or partially terminated or been the subject of a Reportable Event as to which notices
would be required to be filed with the PBGC. No proceeding by the PBGC to terminate any such Employee Pension Benefit Plan has been instituted or threatened; and 
  
 (ii) Prohibited Transactions. There have been no Prohibited Transactions with respect to any such Employee
Benefit Plan. No Fiduciary has any Liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any such Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than any Multiemployer Plan), other than routine claims for benefits, is pending or threatened. The Shareholder and
the Company have no Knowledge of any basis for any such action, suit, proceeding, hearing, or investigation. 
  
 5.26 Physicians and Other Providers. During the five (5) years preceding the Closing Date, each physician, and other health care provider
who is or was employed by, or who renders or has rendered services on behalf of, the Company: 
  
 (a) Licenses. Has been duly licensed and registered, and in good standing by the State of Georgia to engage in the practice of medicine, and said license and registration have not been suspended, revoked
or restricted in any manner; 
  

 22 

 (b) Controlled Substances. Has current controlled substances registrations issued by the
State of Georgia and the U.S. Drug Enforcement Administration, which registrations have not been surrendered, suspended, revoked or restricted in any manner; 
  
 (c) Actions. Except as set forth on Section 4.26 of the Disclosure Schedule, has not been a party or subject to: 
  
 (i) Malpractice Actions. Any malpractice suit, claim (whether
or not filed in court), settlement, settlement allocation, judgment, verdict or decree; 
  
 (ii) Disciplinary Proceedings. Any disciplinary, peer review or professional review investigation, proceeding or action instituted by any licensure board, hospital, medical school, physical therapy
school, health care facility or entity, professional society or association, third party payor, peer review or professional review committee or body, or governmental agency; 
  
 (iii) Criminal Proceedings. Any criminal complaint, indictment or criminal proceedings; 
  
 (iv) Investigation. Any investigation or proceedings, whether
administrative, civil or criminal, relating to an allegation of filing false health care claims, violating anti-kickback or fee-splitting laws, or engaging in other billing improprieties; 
  
 (v) Mental Illnesses. Any organic or mental illness or condition that impairs or may impair such
physician’s ability to practice; 
  
 (vi) Substance
Abuse. Any dependency on, habitual use or episodic abuse of alcohol or controlled substances, or any participation in any alcohol or controlled substance detoxification, treatment, recovery, rehabilitation, counseling, screening or
monitoring program; 
  
 (vii) Professional Ethics.
Any allegation, or any investigation or proceeding based on any allegation of violating professional ethics or standards, or engaging in illegal, immoral or other misconduct (of any nature or degree), relating to his or her practice; or 

 
 (viii) Application for Licensure. Any denial or withdrawal
of an application in any state for licensure as a physician or physical therapist, for medical staff privileges at any hospital or other health care entity, for board certification or recertification, for participation in any third party payment
program, for state or federal controlled substances registration, or for malpractice insurance. 
  
 5.27 Guaranties. Saving the guaranties listed in Section 4.27 of the Disclosure Schedule, the Company is not a guarantor or otherwise liable
for any Liability or obligation (including indebtedness) of any other Person. 
  

 23 

 5.28 Environment, Health, and Safety. 
  
 (a) Compliance. Each of the Company and its predecessors and
Affiliates has complied and is in material compliance with all Environmental, Health, and Safety Requirements. 
  
 (b) Permits and Licenses. Without limiting the generality of the foregoing, each of the Company and its Affiliates has obtained and complied
in all material respects with, and is in compliance in all material respects with, all permits, licenses and other authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of its facilities and
the operation of its business; a list of all such permits, licenses and other authorizations is set forth on Section 4.28 of the Disclosure Schedule. 
  
 (c) Notices. None of the Company nor its predecessors or Affiliates has received any written or oral notice, report or other information
regarding any actual or alleged violation of Environmental, Health, and Safety Requirements, or any Liabilities or potential Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its facilities arising under Environmental, Health, and Safety Requirements. 
  
 (d) Hazardous Substances. None of the Company or its predecessors or Affiliates has treated, stored, disposed of, arranged for or permitted
the disposal of, transported, handled, or released any substance, including without limitation any hazardous substance, or owned or operated any property or facility (and no such property or facility is contaminated by any such substance) in a
manner that has given or would give rise to liabilities, including any Liability for response costs, corrective action costs, personal injury, property damage, natural resources damages or attorney fees, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Solid Waste Disposal Act, as amended or any other Environmental, Health, and Safety Requirements. 
  
 (e) The Company has not received any communication (written or oral), whether from a governmental authority, citizens’
group, employee or otherwise, that alleges that the ASC or the Company is not in full compliance with Environmental Laws, or that the Company is otherwise subject to liability under Environmental Laws, and to the Shareholder’s Knowledge, there
are no circumstances that may prevent or interfere with such full compliance in the future. There is no Environmental Claim (as defined below) pending or, to the Shareholder’s Knowledge, threatened against the Company, the ASC or the Center.

  
 (f) The Shareholder has no Knowledge of any actions,
activities, circumstances, conditions, events or incidents, including, but not limited to, the release, emission, discharge, presence or disposal of any Hazardous Substances that could form the basis of any Environmental Claim against the Company,
the ASC or the Center, or Sellers in connection with the ASC or the Center. 
  
 5.29 Certain Business Relationships with the Company and its Affiliates. Except as contemplated hereby with respect to the Company, neither the Shareholder nor any of his Affiliates have been involved in
any business arrangement or relationship with the Company and its Affiliates within the past twelve (12) months, and none of the Shareholder and his Affiliates owns any asset, tangible or intangible, which is material to the business of any of the
Company and its Affiliates. 
  

 24 

 5.30 Third-party Payors. Section 4.30 of the Disclosure Schedule sets forth an accurate,
correct and complete list of the Company’s third-party payors. Neither the Company nor the Shareholder has received any notice nor has any Knowledge that any third-party payor intends to terminate or materially reduce its business with, or
reimbursement to, the Company. The Company has no reason to believe that any third-party payor will cease to do business with the Company after, or as a result of, the consummation of any transactions contemplated hereby. The Company does not know
of any fact, condition or event which would adversely affect its relationship with any third-party payor. 
  
 5.31 Bank Accounts. Section 4.31 of the Disclosure Schedule sets forth all of the bank and security accounts and all safe deposit boxes
maintained by the Company and all lines of credit owned or used by the Company, and the names of all persons with authority to withdraw funds from, or execute drafts or checks on, each such account. 
  
 5.32 Tax Status. The Shareholder is not a “nonresident
alien individual” or “foreign corporation” for purposes of Code Section 897(a)(1). 
  
 5.33 Binding Obligation. This Agreement constitutes the valid and legally binding obligation of the Shareholder, enforceable in accordance
with its terms and conditions. 
  
 5.34 No Corporate
Practice or Fee Splitting. The Shareholder does not have any Knowledge that the actions, transactions or relationships arising from, and contemplated by, the Transaction violate any law, rule or regulation relating to the corporate practice
of medicine or fee splitting. The Shareholder accordingly agrees that he will not and will not cause any other Party, in an attempt to void or nullify this Agreement or any document related to the Transaction or any relationship involving PainCare
or the Company to sue, claim, aver, allege or assert that any such document or any such relationship violates any law, rule or regulation relating to the corporate practice of medicine or fee splitting. 
  
 5.35 Intentions. Dr. Windsor intends to continue managing the
business operations of the Surviving Corporation on an as needed basis for the next five (5) years and does not know of any fact or condition that adversely affects, or in the future may adversely effect, his ability or intention to manage the
business of the Surviving Corporation on an as needed basis for the next five (5) years. 
  
 5.36 Securities Representation. 
  
 (a) No Registration of PainCare Shares; Investment Intent. The Shareholder acknowledges that the PainCare Shares to be delivered pursuant to this Agreement have not been and will not be registered under
the Securities Act and may not be resold without compliance with the Securities Act. The PainCare Shares to be acquired by the Shareholder pursuant to this Agreement are being acquired solely for his own account, for investment purposes only and
with no present intention of distributing, selling or otherwise disposing of them in connection with a distribution other than in compliance with the Securities Act. 
  
 (b) Resale Restrictions. The Shareholder covenants, warrants and represents that none of the PainCare Shares
issued to Shareholder will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except after full compliance with all of the 
  

 25 

 applicable provisions of the Securities Act and the rules of regulations of the Commission and applicable
state securities laws, and the applicable provisions of any PainCare Stockholders’ Agreement and this Agreement. All certificates evidencing PainCare Shares shall bear the legends contained in the PainCare Stockholders’ Agreement.

  
 (c) Ability to Bear Economic Risk. The
Shareholder covenants, warrants and represents that he is able to bear the economic risk of an investment in PainCare Shares acquired pursuant to this Agreement and can afford to sustain a total loss of such investment and has such Knowledge and
experience in financial and business matters that he is capable of evaluating the merits and risks of the proposed investment and therefore has the capacity to protect his own interests in connection with the acquisition of the PainCare Shares. The
Shareholder, and the Shareholder’s purchaser representative, if any, have received copies of PainCare’s most recent 10-K, 10-Q and 8-K filings and have had an adequate opportunity to ask questions and receive answers from the officers of
PainCare concerning any and all matters relating to the background and experience of the officers and directors of PainCare, the plans for the operations of the business of PainCare, and any plans for additional acquisitions and the like. The
Shareholder, and the Shareholder’s purchaser representative, if any, have asked any and all questions in the nature described in the preceding sentence and all questions have been answered to such individual’s satisfaction. 
  
 (d) Accredited Investor. The Shareholder covenants, represents
and warrants that he is an: (a) individual with a net worth (either individually or jointly with his respective spouse) in excess of One Million and No/100 Dollars ($1,000,000.00); or (b) individual who had an income in excess of Two Hundred
Thousand and No/100 Dollars ($200,000.00) in each of 2002 and 2003, or had a joint income with his spouse in excess of Three Hundred Thousand and No/100 Dollars ($300,000.00) in each of 2002 and 2003, and has a reasonable expectation of reaching the
same income level in 2004. 
  
 (e) No Registration.
The Shareholder understands, agrees and acknowledges that the PainCare Shares have not been registered under the Georgia Securities Act or the Securities Act in reliance upon exemption provisions contained therein which PainCare believes are
available. 
  
 5.37 HIPAA. Schedule 4.37 lists and
describes all plans and other efforts of Dr. Windsor with respect to the practice locations to comply with the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), including the final regulations promulgated thereunder,
whether such plans and efforts have been put in place or are in process. Schedule 4.37 includes but is not limited in any manner whatsoever to any privacy compliance plan of Sellers in place or in development, and any plans, analyses or budgets
relating to information systems including but not limited to necessary purchases, upgrades or modifications to effect HIPAA compliance. 
  
 5.38 Improper and Other Payments. (a) Neither the Company, any director, officer, employee thereof, nor any agent or representative of the
Company nor any person acting on behalf of any of them, has made, paid or received any unlawful bribes, kickbacks or other similar payments to or from any person or authority, (b) no contributions have been made, directly or indirectly, by the
Company to a domestic or foreign political party or candidate; and (c) the internal accounting controls of the Company are believed by the Company’s management to be adequate to detect any of the foregoing under current circumstances.

  

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 5.39 Accounts Receivable. Schedule 4.39 sets forth a list, accurate, correct and complete
in all respects, of all outstanding accounts and notes receivable of the Company as of the last day of the month immediately preceding the Closing Date. All outstanding accounts and notes receivable reflected on Schedule 4.39 are due and valid
claims against account debtors for services rendered in accordance with the usual business practices and historical collection experience of the Company and to the best of Shareholder’s knowledge are subject to no counterclaims, and have been
outstanding for the periods indicated in the aging analysis at Schedule 4.39. The Shareholder know of no reason why such accounts receivable would not be collectible by the Company according to approximately the same ratios as accounts receivable
have been historically collectible by the Company. All outstanding accounts and notes receivable included on Schedule 4.39 arose in the ordinary course of business. The Company has not incurred any liabilities to customers for discounts, returns,
promotional allowances or otherwise, except as provided in the Financial Statements 
  
 5.40 Medical Waste. With respect to the generation, transportation, treatment, storage, and disposal, or other handling of Medical Waste, the Company, with respect to the business, has complied with all
Medical Waste Laws (as hereinafter defined). 
  
 “Medical
Waste” includes, but is not limited to, (a) pathological waste, (b) blood, (c) sharps, (d) wastes from surgery or autopsy, (e) dialysis waste, including contaminated disposable equipment and supplies, (f) cultures and stocks of infectious
agents and associated biological agents, (g) contaminated animals, (h) isolation wastes, (i) contaminated equipment, (j) laboratory waste, and (k) various other biological waste and discarded materials contaminated with or exposed to blood,
excretion, or secretions from human beings or animals. “Medical Waste” also includes any substance, pollutant, material, or contaminant listed or regulated under the Medical Waste Tracking Act of 1988, 42 U.S.C. §§6992, et seq.
(“MWTA”). 
  
 “Medical Waste Law” means the
following, including regulations promulgated and orders issued thereunder, all as may be amended from time to time: the MWTA; the U.S. Public Vessel Medical Waste Anti-Dumping Act of 1988, 33 USCA §§2501 et seq.; the Marine Protection,
Research, and Sanctuaries Act of 1972, 33 USCA §§1401 et seq.; the Occupational Safety and Health Act, 29 USCA §§651 et seq.; the United States Department of Health and Human Services, National Institute for Occupational
Self-Safety and Health Infectious Waste Disposal Guidelines, Publication No. 88-119; and any other federal, state, regional, county, municipal, or other local laws, regulations, and ordinances insofar as they purport to regulate Medical Waste, or
impose requirements relating to Medical Waste. 
  
 5.41 No
Untrue or Inaccurate Representation or Warranty. No representation or warranty by Sellers contains or will contain any untrue statement of fact, or omits or will omit to state a fact necessary to make the statements and information contained
in this Section 4 not misleading. 
  

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 5.42 Certain Representations with Respect to the ASC. 
  
 (a) Complete and accurate copies of the Company’s existing provider
contracts for the ASC have been furnished to Purchasers. The Company is presently in compliance with all of the terms, conditions and provisions of such contracts the noncompliance with which would have a material adverse effect on any such
contract. 
  
 (b) The Company is qualified for participation in
the Medicare program. Complete and accurate copies of the Company’s existing Medicare contracts for ASC have been furnished to Acquiring Companies. The Company is presently in compliance with all of the terms, conditions and provisions of such
contracts the noncompliance with which would have a material adverse effect on any such contract. 
  
 (c) The Company is qualified for participation in the Medicaid program. Complete and accurate copies of the Company’s existing Medicaid contracts for
ASC have been furnished to Acquiring Companies. The Company is presently in compliance with all of the terms, conditions and provisions of such contracts the noncompliance with which would have a material adverse effect on any such contract.

  
 (d) The Company participates in the CHAMPUS program. The
Company is presently in compliance with all of the terms and conditions of such participations the noncompliance with which would have a material adverse effect on any such participation. 
  
 (e) The ASC is licensed by the State of Georgia Department of Health as a ambulatory surgery center. The Company is
presently in compliance in all respects with all the terms, conditions and provisions of such licenses for the ASC. The facilities, equipment, and operations of the ASC satisfy, without exception, the applicable ambulatory surgery center licensing
requirements of the State of Georgia. 
  
 6. REPRESENTATIONS AND WARRANTIES
OF THE ACQUIRING COMPANIES. The Acquiring Companies represent and warrant to the Shareholder that the statements contained in this Section 5 are correct and complete as of the Closing Date. 
  
 6.1 Organization of PainCare and Subsidiary. PainCare is a
corporation duly organized, validly existing, and in good standing under the laws of the State of Florida. Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. 
  
 6.2 Authorization of Transaction. PainCare and Subsidiary have
full power and authority (including full corporate power and authority) to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of PainCare, enforceable in
accordance with its terms and conditions. The execution and delivery of this Agreement has been approved and authorized by the Board of Directors of PainCare. 
  

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 6.3 No Conflict or Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will result in (a) a violation of or a conflict with any provision of the Certificate or Articles of Incorporation or bylaws of the PainCare or Subsidiary, (b) a breach of, or a
default under, any term or provision of any contract, agreement, indebtedness, lease, commitment, license, franchise, permit, authorization or concession to which the PainCare or Subsidiary is a party, which breach or default could reasonably be
expected to have a Company material adverse effect on the business or financial condition of the PainCare or Subsidiary or its ability to consummate the transactions contemplated hereby or (c) a violation by the PainCare or Subsidiary of any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction, decree or award, which violation could reasonably be expected to have a material adverse effect on the business or financial condition of the PainCare or Subsidiary, or
their ability to consummate the transactions contemplated hereby. 
  
 6.4 Consents and Approvals. Except as set forth on Disclosure Schedule 5.4, no notice to, declaration, filing or registration with, or authorization, consent or approval of, or permit from, any domestic or
foreign governmental or regulatory body or authority, or any other person or entity, is required to be made or obtained by the PainCare or Subsidiary in connection with the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby. 
  
 6.5 Disclosure
Documents. PainCare has delivered or Stockholder has had the opportunity to obtain and review PainCare’s Form 10-KSB for the year ending December 31, 2003, Form 10-QSB for the quarter ending March 31, 2003, Recent Forms S-3 and S-3/A
and current Forms 8-K (the “PainCare Disclosure Documents”). The PainCare Disclosure Documents are true and correct in all material respects and do not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances under which such statements were made, not misleading. To the knowledge of PainCare nothing has occurred after the date of the documents contained in the Disclosure
Documents that would individually or in the aggregate have a material adverse effect on PainCare. 
  
 6.6 Capitalization. The authorized capital stock of PainCare consists of 75,000,000 shares of Common Stock, $.0001 par value per share,
which as of May 1, 2004, approximately 29,000,000 shares are issued and outstanding, 10,000,000 shares of “blank check” preferred none of which have been issued or are outstanding. All of the PainCare Shares are, and all shares of PainCare
Shares to be issued pursuant to this Agreement will be, validly issued, fully paid and non-assessable. Disclosure Schedule 5.6(a) hereto sets forth a listing of all options, warrants and outstanding PainCare securities which are convertible (with or
without the payment of consideration) into shares of the Common Stock of PainCare, including all contingently issuable shares of such Common Stock issuable pursuant to agreements outstanding as of May 1, 2004. 
  
 6.7 Litigation. Except as set forth in Disclosure Schedule 5.7,
there is no charge, complaint, action, order, writ, injunction, judgment or decree outstanding or claim, suit, litigation, proceeding, labor dispute, arbitrable action or investigation (collectively, “Actions”) pending or, to the knowledge
of the PainCare, threatened against, relating to or affecting (i) the PainCare or its assets or the operation of the business of the PainCare as currently operated and as proposed to be operated, (ii) any Employee Plan of PainCare or any trust or
other funding instrument, fiduciary or administrator thereof or (iii) the transactions contemplated by this 
  

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 Agreement, before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, any of which is reasonably expected to result in a loss not covered by insurance in excess of $100,000 or reasonably expected to have a material adverse effect on PainCare. To the knowledge of the PainCare,
the PainCare is not in default with respect to any judgment, order, writ, injunction or decree of any court or governmental agency, and there are no unsatisfied judgments against the PainCare or the business of the PainCare. Except as set forth in
Disclosure Schedule 5.7, each Action pending or, to the knowledge of the PainCare, threatened (whether or not disclosed in Disclosure Schedule 5.7), is covered by insurance of reputable and solvent insurance companies. 
  
 6.8 No Undisclosed Liabilities. Except as set forth in
Disclosure Schedule 5.8, to the knowledge of PainCare, PainCare has no liabilities or obligations (absolute, accrued, contingent or otherwise) except (i) liabilities that are reflected and reserved against on PainCare’s audited balance sheet
dated December 31, 2003 (the “PainCare Balance Sheet Date”) that have not been paid or discharged since the date thereof and (ii) liabilities incurred by PainCare since the PainCare Balance Sheet Date in the ordinary course of business
consistent with past practice (none of which relates to any breach of contract, breach of warranty, tort, infringement or violation of law or arose out of any complaint, action, suit or proceeding except those which individually or in the aggregate
could not have a material adverse effect on PainCare). 
  
 6.9
No Brokers. There is no obligation on the part of PainCare to pay any finder’s fee, brokerage commission or similar payment in connection with the transactions contemplated hereby. 
  
 6.10 Material Misstatements Or Omissions. To the knowledge of
PainCare, no representations or warranties by PainCare in this Agreement, nor any document, exhibit, statement, certificate or schedule furnished or to be furnished to the Shareholder pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state any material fact necessary to make the statements or facts contained therein not misleading. 
  
 7. CLOSING; TERMINATION. The closing of the Transaction (the
“Closing”) shall be effective between the Parties as of 12:00 p.m. Eastern Daylight Time on May 25, 2004 (the “Closing Date”). However, in the event that the Parties have not satisfied all of the conditions necessary to Close by
the Closing Date including, without limitation, the completion, review and approval of all the disclosure schedules (hereinafter the “Closing Conditions”) then, in such event, either Party may extend the time period for satisfying such
Closing Conditions until 4:00 p.m. Pacific Time, Friday, May 28, 2004. In the event that the Closing Conditions have not been completed to the mutual satisfaction of the parties by the Closing Date, this Agreement may be terminated by either Party.

  
 8. CLOSING DELIVERIES. 
  
 8.1 Deliveries of the Company and the Shareholder. At or prior
to the Closing Date, the Company and the Shareholder shall deliver to the Acquiring Companies the following: 
  
 (a) Consents and Approvals. Copies of all authorizations, consents, and approvals of governments, governmental agencies and third parties
referred to in Section 4.4(a) of the Disclosure Schedule; 
  

 30 

 (b) Termination of Agreements. Copies of documents effectuating the termination of any and
all written employment and independent contractor agreements, compensation agreements, buy-sell agreements and other similar agreements entered into by the Company and which are in effect immediately preceding the Closing, which terminations shall
each include a complete release of the Company from all known or unknown obligations or liabilities; 
  
 (c) Company Stock. The Certificates and stock powers, duly endorsed, transferring the Company Stock to PainCare and the officer and director
resignations required in Section 4.6; 
  
 (d) Corporate
Authorization. A certified copy of resolution(s) of the Shareholder and board of directors of the Company which authorizes the Transaction in accordance with: (a) applicable law; (b) the Company’s articles of incorporation and bylaws;
and (c) all other requirements for proper corporate authorization; 
  
 (e) Secretary’s Certificate. A certificate of the secretary of the Company certifying that the minute books, articles of incorporation and bylaws of the Company, attached as exhibits to such certificate, are true,
correct, and complete; and 
  
 (f) Other documents.
Such other instruments or documents as may be necessary or appropriate to carry out the Transactions. 
  
 8.2 Deliveries of PainCare. At or prior to the Closing Date, PainCare shall deliver to the Shareholder or the Escrow Agent, as the case may
be, the following: 
  
 (a) Consideration. The
Closing Date Consideration; 
  
 (b) Resolutions. A
certified copy of the resolution of the board of directors of PainCare, and the sole shareholder and members of the board of directors of Subsidiary, authorizing the Transaction; and 
  
 (c) Other documents. Such other instruments or documents as may be necessary or appropriate to carry out the
Transactions. 
  
 9. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES.
The obligations of the Parties to Close are subject to the satisfaction of the following respective conditions by the Closing Date unless waived by the Party for whose benefit the condition applies. 
  
 9.1 Conditions for the Benefit of PainCare and the Subsidiary.
(a) The representations and warranties of the Shareholder and the Company in this Agreement and all information contained in any exhibit, certificate, schedule or attachment hereto or in any writing delivered by, or on behalf of the Shareholder or
the Company shall be true and correct when made and shall be true and correct in all material respects on the Closing Date as though then made, except as expressly provided for herein, and (b) both the Shareholder and the Company 
  

 31 

 shall have performed and complied with all agreements, covenants and conditions and shall have made all deliveries
required by this Agreement to be performed, delivered and complied with by them prior to the Closing Date; and (c) that certain Agreement of Purchase and Sale of even date herewith, by and between Georgia Pain Physicians, P.C., a Georgia
professional corporation and Robert E. Windsor, M.D., and PainCare Holdings, Inc., a Florida corporation, shall have closed. 
  
 9.2 Conditions for the Benefit of the Shareholder. (a) The representations and warranties of PainCare in this Agreement and all information
contained in any exhibit, certificate, schedule or attachment hereto or in any writing delivered by, or on behalf of PainCare or the Subsidiary shall be true and correct when made and shall be true and correct in all material respects on the Closing
Date as though then made, except as expressly provided for herein, and (b) both the Shareholder and the Company shall have performed and complied with all agreements, covenants and conditions and shall have made all deliveries required by this
Agreement to be performed, delivered and complied with by them prior to the Closing Date. 
  
 10. COVENANTS. The Parties covenant and agree as follows: 
  
 10.1 Deliveries. PainCare will promptly deliver and make available to Shareholder copies of any filings made by it under the Securities Act
or the Securities Exchange Act, including the exhibits thereto and any correspondence with the Securities Exchange Commission or its staff. 
  
 10.2 Post-Closing General Covenant. In the event that at any time after the Closing any further action is necessary to carry out the
purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as any other Party may reasonably request, all at the sole cost and expense of the
requesting Party; provided, however, that the costs and expenses associated with the taking of any action necessary to execute or deliver to PainCare any stock powers and such other instruments of transfer as may be necessary to transfer ownership
of the Company’s Shares by the Shareholder shall be borne by the Shareholder. 
  
 10.3 Tax Returns. Dr. Windsor shall be responsible for preparing and filing all income or franchise Tax Returns of the Company relating to periods of time prior to the Closing Date. PainCare and the
Subsidiary will provide to Dr. Windsor access to all books and records of the Company necessary to the preparation of such Tax Returns and the Surviving Corporation, as the successor to the Company will execute such Tax Returns. The Shareholder will
take no positions on the Tax Returns of the Company that relate to the tax period prior to the Closing Date that could adversely affect the Company or PainCare after the Closing. The Shareholder will provide PainCare with an opportunity to review
and comment on such Tax Returns (including any amended returns). PainCare will be responsible for preparing and filing all income and franchise Tax Returns of the Surviving Corporation relating to periods after the Closing. The income of the Company
will be apportioned to the period up to the Closing Date and the period from and after the Closing Date in accordance with the provisions of Code Section 1362(e)(6)(D) by closing the books of the Company as of the close of business on the last
calendar day immediately preceding the Closing Date, with recognition that the Company files on that basis of a cash rather than accrual method. 
  

 32 

 10.4 Transition. Neither the Shareholder nor the Company will take any action that is
designed, intended or likely to have the effect of discouraging any lessor, licensor, customer, supplier or other business associate of the Company from maintaining the same business relationships with the Surviving Corporation after the Closing as
he, she or it maintained with the Company prior to the Closing. 
  
 10.5 Litigation Support. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand in connection with: (a)
any transaction contemplated under this Agreement; or (b) any fact, situation, circumstances, status, condition, activity, practice, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the
Company, each of the Parties will cooperate with the contesting or defending Party and its or his counsel in the contest or defense, at the sole cost and expense of the contesting or defending Party except to the extent that the contesting or
defending party is entitled to indemnification therefor under this Agreement. 
  
 10.6 Consents. The Shareholder hereby covenants and agrees that he will use his best efforts to obtain all authorizations, consents, and approvals set forth in Section 4.4(b) of the Disclosure Schedule.
If such consent, approval or agreement is not obtained, or if an attempted assignment thereof would affect the rights of the parties thereunder so that such parties would not in fact receive all such rights, the Parties will cooperate in any
arrangement designed to provide for the Parties to receive the benefits under any such contract, including enforcement for the benefit of PainCare and Surviving Corporation of any and all rights of the Shareholder against a third party thereto
arising out of the breach or cancellation by such third party or otherwise. 
  
 10.7 Capital Adjustments. In the event of a stock dividend, recapitalization, or merger in which PainCare is the surviving corporation, split-up, combination or exchange of shares or the like which
results in a change in the number or kind of shares of common stock which is outstanding immediately prior to such event, the rights of the Shareholder to receive PainCare Shares in respect of this Agreement and the price thereof, shall be
appropriately adjusted in the same manner as the number and kind of shares a shareholder of PainCare who owned the same number and kind of shares immediately prior to such event. Such adjustments shall be made in good faith by the Board of Directors
of PainCare, whose determination shall be conclusive and binding on all parties, subject to manifest error. 
  
 In case of any consolidation or merger of PainCare with or into another party or parties or the conveyance of all or substantially all of the assets of
PainCare to another party or parties or a share exchange transaction involving more than 50% of the issued and outstanding common stock of PainCare, the PainCare Shares and right to receive PainCare Shares shall thereafter be convertible into the
number of shares of stock, options or other securities or property to which a shareholder of the PainCare who owned the same number and kind of shares prior to such event would have been entitled upon such consolidation, merger, conveyance,
conversion or exchange; and, in any such case, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interest thereafter of the Shareholder’s right to receive PainCare Shares,
to the end that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably possible, in relation to any shares of stock or other property thereafter deliverable upon the Shareholder’s entitlement to same.

  

 33 

 11. SURVIVAL AND INDEMNIFICATION. 
  
 11.1 Survival of Representations and Warranties. All of the representations, warranties, covenants, and
agreements including but not limited to the restrictive covenants and the indemnification provisions contained in this Agreement are material and have been relied upon by the Parties hereto and shall survive the Closing for their applicable statute
of limitations. The representations and warranties contained herein shall not be affected by any investigation, verification or examination by any Party or by anyone on behalf of such Party. 
  
 11.2 Indemnification Provisions for the Benefit of PainCare and
Subsidiary. In the event of: (a) a misrepresentation (or in the event any third party alleges facts that, if true, would mean a misrepresentation) of any of the Company’s or the Shareholder’s representations and/or warranties
contained in this Agreement; (b) a breach (or in the event any third party alleges facts that, if true, would mean a breach) of any of the Company’s or the Shareholder’s covenants contained in this Agreement, or; (c) any Liability of the
Company of any nature whatsoever accrued or existing as of the Closing Date or related to actions of the Company or the Shareholder which occurred prior to the Closing Date, which is not reflected on the Financial Statements, the Closing Date
Balance Sheet, or Section 10.2 of the Disclosure Schedule and which PainCare explicitly agrees as documented in Section 10.2 of the Disclosure Schedule to assume or take the assets of the Company subject to, as the case may be, then the Shareholder
agrees to indemnify PainCare and Surviving Corporation from and against any Adverse Consequences PainCare and Subsidiary may suffer through and after the date of the claim for indemnification resulting from, arising out of, relating to, in the
nature of, or caused by the misrepresentation or breach (or alleged breach) or non-disclosed Liability. No provision of this Agreement, including but not in any way limited to, any “Knowledge” qualifiers or materiality standards in the
representations and warranties of the Shareholder, shall have any effect on the Shareholder’s obligation to provide indemnity of any Liability arising prior to the Closing Date which was required but omitted from the Disclosure Schedule.

  
 11.3 Indemnification Provisions for the Benefit of the
Shareholder. In the event of a misrepresentation or breach (or in the event any third party alleges facts that, if true, would mean a misrepresentation or breach) of any of PainCare’s or Subsidiary’s representations, warranties,
and covenants contained in this Agreement, then PainCare and Subsidiary agree to indemnify the Shareholder from and against any Adverse Consequences the Shareholder may suffer through and after the date of the claim for indemnification resulting
from, arising out of, relating to, in the nature of, or caused by the breach (or the alleged breach). 
  
 11.4 Matters Involving Third Parties. 
  
 (a) Notification. If any third party shall notify any Party (the “Indemnified Party”) with respect to any matter (a “Third
Party Claim”) which may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) pursuant to this Section 10, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in
writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless the Indemnifying Party thereby is prejudiced and then only
to the extent that the Indemnifying Party is actually prejudiced. 
  

 34 

 (b) Defense by Indemnifying Party. The Indemnifying Party shall have the right to defend
the Indemnified Party against the Third Party Claim with counsel of its choice satisfactory to the Indemnified Party so long as: (i) the Indemnifying Party notifies the Indemnified Party in writing within ten (10) business days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill the Indemnifying Party’s indemnification obligations hereunder; (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a precedential custom or practice adverse to the continuing business interests of the Indemnified Party; and (e) the
Indemnifying Party conducts the defense of the Third Party Claim actively and diligently. 
  
 (c) Satisfactory Defense. So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 10.4(b) above: (i) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be withheld or delayed unreasonably); and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be withheld or delayed unreasonably) and any such settlement must include a complete release of the Indemnified Party. 
  
 (d) Conditions. In the event any of the conditions in Section 10.4(b) above is or becomes unsatisfied,
however: (i) the Indemnified Party may defend against, and consent to the entry of any judgment or enter into any settlement with respect to, the Third Party Claim in any manner it reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, the Indemnifying Party in connection therewith); (ii) the Indemnifying Party will reimburse the Indemnified Party promptly and periodically for the costs of defending against the Third Party Claim (including
reasonable attorneys’ fees and expenses); and (iii) the Indemnifying Party will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 10. 
  
 11.5 Right to Set-Off. If any such cost, loss, damage, expense, liability, claim, or obligation occurs or is incurred by PainCare or the Surviving Corporation, PainCare shall have the right, after written notice to the
Shareholder, at PainCare’s option and in addition to any other actions permitted by law, to offset the amount of any such cost, loss, damage, expense, liability, obligation or claim against amounts due from PainCare or Subsidiary to the
Shareholder, including the right to offset any post-closing payment due from PainCare or Subsidiary to the Shareholder under this Agreement or any other agreement. 
  

 35 

 11.6 Materiality. Notwithstanding any provision in this Agreement to the contrary, the
indemnifying Party’s obligation to indemnify the Indemnified Party in connection with a breach of any representation, warranty, covenant or other agreement included in this Agreement, and the amount of damages to be indemnified, shall be
determined without regard to any “material”, “materiality” (or correlative meanings”) or “Material Adverse Effect” qualifications, provisions or exceptions set forth in such representation, warranty, covenant or
other agreement, each of which shall be deemed to be given for the purposes of this Section 10 as though there were no such qualifications, provisions or exceptions. 
  
 11.7 Limitation. The indemnification provisions set forth in this Section 10 shall be limited to all claims in
excess of Twenty Five Thousand and 00/100 Dollars ($25,000) (the “Threshold”). Once a claim exceeds the Threshold, if a Party is entitled to indemnification under this Section 10, such party shall recover all appropriate funds from the
first dollar of damages. Further, the indemnitors shall not be liable for any liabilities resulting from claims that are covered by any insurance policy or other indemnity or contribution agreement unless, and only to the extent that, the full limit
of such insurance policy, indemnity or contribution agreement has been exceeded. The Party entitled to indemnification shall have a duty to mitigate its damages. Notwithstanding the foregoing, a Party’s obligation to indemnify under this
Article 10 shall be limited to an amount equal to $1,125,000 plus the amount of any Contingent Installment Payments paid or due pursuant to Section 3.4 of this Agreement prior to any reduction of such Installment Payments permitted under Section
3.4(g); provided however that such cap shall not be applicable to Sections 4.1, 4.2, 4.3, 4.8, 4.10, 4.11, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.25, 4.26, 4.27, 4.36, 4.37 and 4.38. 
  
 12. RESTRICTIVE COVENANTS; CONFIDENTIALITY. 
  
 12.1 Restrictive Covenants. 
  
 (a) Restricted Period. Dr Windsor hereby agrees that during
the time period commencing as of the Closing Date and continuing for a period of three (3) years thereafter (the “Restricted Period”), neither Dr. Windsor nor any of his Affiliates, shall, other than on behalf of PainCare or the Surviving
Corporation, directly or indirectly, for himself, or on behalf of any other corporation, person, firm, partnership, association, or any other entity whatsoever (whether as an individual, agent, servant, employee, employer, officer, director,
shareholder, investor, principal, consultant or in any other capacity whatsoever) take any action or undertake any matter set forth in 11.1(a)(i)-(ii) below; provided, however, that the Restricted Period shall terminate upon the earlier to occur of
(i) any bankruptcy, liquidation or assignment for the benefit of creditors applicable to PainCare, or (ii) upon a default by PainCare in any material covenant or term of this Agreement to be performed after the Closing if Dr. Windsor shall have
given written notice of such default to PainCare and such default shall not have been cured within 30 business days after the giving of such notice. 
  
 (i) Own, manage, operate, control or participate in any manner in the ownership, management, operation or control of, or serve as a partner, employee,
principal, agent, consultant or otherwise with, or have any financial interest in, or aid or assist any other 
  

 36 

 person or entity in the conduct of any ambulatory surgery center or any medical practice that provides any
physician-office surgery services or procedures at such practice’s facilities that could be performed at the ASC, where such ambulatory surgery center or medical practice performs services within a one hundred (100) mile radius of any office of
the Surviving Corporation or PainCare; provided, however, this prohibition does not prevent Shareholder from performing professional medical services only at any ambulatory surgery center or hospital. 
  
 (ii) Solicit or engage in the solicitation of, or serve or accept any
business from patients, insurance companies, managed care plans, employers or other customers of the business conducted by the Surviving Corporation for services competitive with those of the Surviving Corporation, and their successors and assigns;

  
 (iii) Request, induce or advise any patients, insurance
companies, managed care plans, suppliers, vendors, employers or other customers of the business conducted by the Surviving Corporation to withdraw, curtail or cancel their business or other relationships with the Surviving Corporation, or assist,
induce, help or join any other person or entity in doing any of the above activities; or 
  
 (iv) Induce or attempt to influence any employee of the Surviving Corporation, PainCare, and/or its subsidiaries to terminate his or her employment with the Surviving Corporation, PainCare, and/or its subsidiaries, or
to hire, recruit or solicit any such employee, whether or not so induced or influenced. 
  
 (b) Consideration. PainCare, the Subsidiary and Dr. Windsor have carefully considered the nature and extent of the restrictions imposed by this Section 11.1 and the rights and remedies conferred upon
PainCare and Subsidiary hereunder and hereby expressly acknowledge and agree that: (i) the restricted territory, period, and activities are reasonable and are necessary and fully required to protect the legitimate business interests of PainCare and
Subsidiary; (ii) any violation of the terms of these restrictive covenants would have a substantial detrimental effect on PainCare’s and Surviving Corporation’s businesses; (iii) the restrictive covenants do not stifle Dr. Windsor’s
inherent skill and experience; and (iv) would not operate as a bar to any of Dr. Windsor’s means of support. Because of the difficulty of measuring economic losses to PainCare and the Surviving Corporation as a result of the breach of the
foregoing covenants, and because of the immediate and irreparable damage that would be caused to PainCare and the Surviving Corporation for which it would have no other adequate remedy, Dr. Windsor agrees that, in the event of a breach by him of the
foregoing covenants, the covenants set forth in this Section 11.1 may be enforced by PainCare and the Surviving Corporation by injunctions and restraining orders, in addition to all other available legal remedies. 
  
 (c) Third-Party Beneficiaries. All successors and assigns of
PainCare, Subsidiary, all Affiliates of PainCare and Subsidiary, and all successors and assigns of such Affiliates are third-party beneficiaries of the restrictive covenants contained in this Section 11.1 and the provisions of this Section 11.1 are
intended for the benefit of, and may be enforced by, PainCare’s and Subsidiary’s successors and assigns and PainCare’s and Subsidiary’s Affiliates and such Affiliates’ successors and assigns. 
  

 37 

 12.2 Defenses. The existence of any claim or cause of action by the Shareholder against
PainCare or Subsidiary, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement by PainCare, Subsidiary, or any of PainCare’s or Subsidiary’s successors and assigns or Affiliates and such
Affiliates’ successors and assigns, but shall be litigated separately. The provisions of this Section 11 shall survive the termination of this Agreement. 
  

12.3 No Running of Covenant During Breach. The covenants set forth in this Section 11 shall apply for the applicable periods as set forth
above. If Dr. Windsor violates such covenants, and PainCare, the Surviving Corporation or any of their successors and assigns or Affiliates bring a legal action for injunctive or other relief, such party bringing the action shall not, as a result of
the time involved in obtaining the relief, be deprived of the benefit of the full period of the covenant period, unless a court of competent jurisdiction holds that the covenant is not enforceable in whole or in part. Accordingly, for any time
period that Dr. Windsor is in violation of the covenant, such time period shall not be included in calculating the applicable time period of the covenant. 
  
 12.4 Blue Pencil Doctrine. The covenants set forth in this Section 11 are severable and separate, and the unenforceability of any specific
covenant shall not affect the provisions of any other covenant. Moreover, in the event any court of competent jurisdiction shall determine that the scope, time or territorial restrictions set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which the court deems reasonable, and the Agreement shall thereby be reformed. 
  
 12.5 Confidentiality, Press Releases, and Public Announcements. 
  
 (a) No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Parties. 
  
 (b)
The Parties covenant and agree that from and after the Execution Date, neither of the Parties nor their Affiliates (to the extent any such Affiliate has received Confidential Information as defined below or Trade Secrets, as defined below) shall
disclose, divulge, furnish or make accessible to anyone any Confidential Information or Trade Secrets, or in any way use any Confidential Information or Trade Secrets in the conduct of any business; provided, however, that nothing in this Section
11.5 will prohibit the disclosure of any Confidential Information or Trade Secrets which is required to be disclosed by a Party or any of its or his Affiliates in connection with any court action or any proceeding before any authority.
Notwithstanding the foregoing, in the case of a disclosure contemplated by this Section 11.5, no disclosure shall be made until the disclosing Party shall give notice to the non-disclosing Party of the intention to disclose such Confidential
Information or Trade Secrets so that the non-disclosing Party may contest the need for disclosure, and the disclosing Party will cooperate (and will cause its or his Affiliates and their respective representatives to cooperate) with the
non-disclosing in connection with any such proceeding. Notwithstanding any provision of this Agreement which may be to the contrary, the foregoing provisions restricting the use of Confidential Information and Trade Secrets shall survive the Closing
for the time period equal to five (5) years from the Execution Date. For the purpose of this Agreement, the term “Confidential Information” shall mean all records, files, reports, protocols, policies, manuals, 
  

 38 

 databases, processes, procedures, computer systems, materials and other documents pertaining to the operations of a Party
and the term “Trade Secrets” shall mean information, including a formula, pattern, compilation, program, device, method, technique, or process that: (i) derives independent economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

  
 12.6 Conduct of Business. From the date hereof
through the Closing, the Shareholder shall, except as contemplated by this Agreement, or as consented to by PainCare in writing, cause the Company to be operated in the ordinary course and in accordance with past practice and will not take any
action inconsistent with this Agreement or with the consummation of the Closing. Without limiting the generality of the foregoing, the Company shall not, and, with respect to the Company, the Shareholder shall not, except as specifically
contemplated by this Agreement, as set forth in Section 11.6 of the Disclosure Schedule, or as consented to by PainCare in writing: 
  
 (a) change or amend the organizational documents of the Company; 
  

(b) enter into, extend, materially modify, terminate or renew any lease or any contract, except modifications, extensions or renewals of contracts in
the ordinary course of business or as contemplated by this Agreement; 
  
 (c) sell, assign, transfer, convey, lease, mortgage, pledge or otherwise dispose of or encumber any of the assets or any interests therein of the Company except in the ordinary course of business and, without limiting the generality of the
foregoing, the Company will maintain, dispose of, and sell inventory consistent with past practices; 
  
 (d) incur any liability for indebtedness for borrowed money, guarantee the obligations of others, indemnify or agree to indemnify others or, except in the
ordinary course of business, incur any other liability; 
  
 (e)
take any action with respect to the grant of any bonus, severance or termination pay (otherwise than pursuant to policies or agreements of the Company in effect on the date hereof that are described in the Disclosure Schedule) or with respect to any
increase of benefits payable under its severance or termination pay policies or agreements in effect on the date hereof or increase in any manner the compensation or fringe benefits of any employee of the Company or pay, any benefit not required by
any existing Employee Plan or policy; 
  
 (f) make any change in
the key management structure of the Company, including, without limitation, the hiring of additional officers or the termination of existing officers; 
  
 (g) adopt, enter into or amend any Employee Plan, agreement (including, without limitation, any collective bargaining or employment agreement), trust,
fund or other arrangement for the benefit or welfare of any employee, except for any such amendment as may be required to comply with applicable regulations; 
  

 39 

 (h) fail to maintain all Employee Plans in accordance with applicable Regulations; 
  
 (i) acquire by merger or consolidation with, or merge or consolidate with, or
purchase substantially all of the assets of, or otherwise acquire any material assets or business of, any corporation, partnership, association or other business organization or division thereof or acquire any subsidiary; 
  
 (j) willingly allow or permit to be done any act by which any of the
insurance policies of the Company or Dr. Windsor may be suspended, impaired or canceled; 
  
 (k) enter into, renew, modify or revise any agreement or transaction relating to the Company with any of its or their Affiliates except as contemplated by this Agreement; 
  
 (l) fail to maintain the assets of the Company in substantially their current
state of repair, excepting normal wear and tear, or fail to replace (consistent with the Company’s past practice) inoperable, worn-out or obsolete or destroyed assets; 
  
 (m) make any loans or advances relating to the Company to any partnership, firm, individual, or corporation, except for
expenses incurred in the ordinary course of business consistent with past practice; 
  
 (n) fail to comply in all material respects with all laws and regulations applicable to the Company; 
  
 (o) intentionally do any other act which would cause any representation or warranty of the Company or the Shareholder in this Agreement to be or become
untrue, or any covenant in this Agreement to be breached, in any material respect; 
  
 (p) fail to use reasonable efforts consistent with past business practice to (i) maintain the Company so that the services of its officers, employees, consultants and agents will remain available to it on and after
the Closing Date, (ii) maintain existing relationships with suppliers, patients, customers and others having business dealings with the Company and (iii) otherwise preserve the goodwill of the business of the Company so that such relationships and
goodwill will be preserved on and after the Closing Date; 
  
 (q)
enter into any agreement, or otherwise become obligated, to do any action prohibited hereunder; 
  
 (r) except as provided herein, declare, set aside for payment, or pay any dividend or distribution in respect of any capital stock of the Company, redeem,
purchase or otherwise acquire any of the Company’s equity securities; or otherwise transfer any of the assets of the Company to or on behalf of any Shareholder of the Company or any Affiliate of the Company, including, without limitation, any
payment of principal of or interest on any debt owed to any of the foregoing or any payment of a bonus, fee or other payment to any of the foregoing as an employee of the Company; or 
  
 (t) fail to comply with all applicable filing, payment, withholding, collection and record retention obligations under all
applicable federal, state, local or foreign Tax laws. 
  

 40 

 12.7 No Third-Party Beneficiaries. Other than with respect to the restrictive covenants set
forth in Section 11, this Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. 
  
 13. MISCELLANEOUS. 
  
 13.1 Entire Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof. 
  
 13.2 Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties
named herein and their respective successors, assigns, distributees, heirs, and grantors of any revocable trusts of a Party hereto. No Party may assign either this Agreement or any of its or his rights, interests, or obligations hereunder without
the prior written approval of the other Parties; provided, however, PainCare and Subsidiary, may, without the prior consent of the other Party, assign this Agreement to their Affiliates. 
  
 13.3 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed
an original but all of which together will constitute one and the same instrument. 
  
 13.4 Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 
  
 13.5 Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given: (a) upon receipt if it is sent by facsimile, (b) the next business day if sent by reputable overnight
courier, or (c) five (5) days after mailing if by certified mail return receipt requested, postage prepaid, and addressed or otherwise sent to the intended recipient as set forth below: 
  

			
	 If to PainCare
 or Subsidiary:
	 	 PainCare Holdings, Inc.

	 	 	 37 North Orange Avenue

	 	 	 Suite 500

	 	 	 Orlando, Florida 32801

	 	 	 Attention: President

		
	 If to the Shareholder:
	 	 Robert E. Windsor, M.D.

	 	 	 8195 Grogan’s Ferry Rd.

	 	 	 Dunwoody, GA 30350

  

 41 

			
	 If to the Company:
	 	 Georgia Surgery Centers, Inc.

	 	 	 8195 Grogan’s Ferry Rd.

	 	 	 Dunwoody, GA 30350

		
	 With a copy in each case to:
	 	 Arthur A. Graves, III, Esq.

	 	 	 The Oxford Law Firm

	 	 	 P.O. Box 8708 – Dept. #621

	 	 	 Newport Beach, CA 92660

  
 Any Party may send any notice,
request, demand, claim, or other communication hereunder to the intended recipient at the address or facsimile number set forth above using any other means (including personal delivery, messenger service, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address or facsimile number to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth. 
  
 13.6 Governing Law; Jurisdiction; Attorney’s Fees. This Agreement, and all proceedings hereunder, shall be governed by and construed in
accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (either of the State of Georgia or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Florida. In the event of any suit under this Agreement or otherwise between the parties hereto, the prevailing Party shall be entitled to all reasonable attorney’s fees and costs, including allocated costs
of in-house counsel, to be included in any judgment recovered. In addition, the prevailing Party shall be entitled to recover reasonable attorney’s fees and costs, including allocated costs of in-house counsel, incurred in enforcing any
judgment arising from a suit under this Agreement. This post-judgment attorney’s fees and costs provision shall be severable from the other provisions of this Agreement and shall survive any judgment on such suit and is not to be deemed merged
into the judgment. 
  
 13.7 Amendments and Waivers.
No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional
or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence and all waivers must be
in writing, signed by the waiving Party, to be effective. 
  
 13.8
Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in any other jurisdiction. 
  
 13.9 Expenses. Except as set forth herein, Shareholder shall bear and be responsible and shall pay for all costs and expenses (including,
but not limited to, legal and accounting fees and expenses) incurred by Shareholder and the Company in connection with this Agreement and the transactions contemplated hereby. 
  

 42 

 13.10 Further Assurances. Each Party shall, at the reasonable request of any other Party
hereto, execute and deliver to such other Party all such further instruments, assignments, assurances and other documents, and take such actions as such other Party may reasonably request in connection with the carrying out the terms and provisions
of this Agreement. 
  
 13.11 Construction. Any
reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without
limitation. Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, unless the Disclosure Schedule identifies the exception with reasonable particularity. The Parties intend
that each representation, warranty, and covenant contained herein shall have independent significance. If any Party has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which the Party has not breached shall not detract from nor mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant. 
  
 13.12
Survival. All of the representations, warranties, covenants and agreements including but not limited to Articles VI and VII made by the Parties in this Agreement or pursuant hereto in any certificate, instrument or document shall
survive the consummation of the transactions described herein shall survive for all applicable statute of limitations, and may be fully and completely relied upon by Sellers and the Acquiring Companies, as the case may be, notwithstanding any
investigation heretofore or hereafter made by any of them or on behalf of any of them, and shall not be deemed merged into any instruments or agreements delivered at Closing or thereafter. 
  
 13.13 Incorporation of Exhibits and Schedules. The following
are incorporated herein by reference and made a part hereof: (i) all exhibits and schedules (including the Disclosure Schedules) identified in this Agreement; (ii) the recitals first set forth above; and (iii) any other document, memorandum and/or
letter signed by the Parties or their legal counsel with instructions to incorporate such document, memorandum and/or letter into to this Section. 
  
 13.14 Submission to Jurisdiction. With respect to any legal proceeding brought by PainCare which arises out of or relates to this Agreement
or the transactions contemplated hereby, exclusive jurisdiction and venue with respect to such matter shall lie in any state or federal court within Cobb County, GA. With respect to any legal proceeding brought by the Shareholder or the Company
which arises out of or relates to this Agreement or the transactions contemplated hereby, exclusive jurisdiction and venue with respect to such matter shall lie in any state or federal court within Orange County, FL. Each party to this Agreement
hereby irrevocably waives, to the fullest extent permitted by law, any objections which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. 
  

 43 

 [SIGNATURES APPEAR ON NEXT PAGE] 
  

 44 

 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first above
written. 
  

			
	PAINCARE:
	
	PAINCARE HOLDINGS, INC., a Florida corporation
		
	 By:
	 	 /s/ Randy Lubinsky

	 Print:
	 	 Randy Lubinsky

	 Its:
	 	 CEO

	
	ACQUISITION:
	
	 PAINCARE ACQUISITION COMPANY XII, INC.,
 a Florida corporation

		
	 By:
	 	 /s/ Randy Lubinsky

	 Print:
	 	 Randy Lubinsky

	 Its:
	 	 CEO

	
	COMPANY:
	
	GEORGIA SURGERY CENTERS, INC.
		
	 By:
	 	 /s/ Robert E. Windsor

	 	 	 Robert E. Windsor, M.D.

	 	 	 President and Secretary

	
	SHAREHOLDERS:
		
	 	 	 /s/ Robert E. Windsor

	 	 	 Robert E. Windsor, M.D.

  

							
	The Windsor Family Limited Partnership	 	Windsor Nongrantor Trust (U/D/T 2004)
				
	 By:
	 	 /s/ Robert E. Windsor

	 	 By:
	 	 /s/ Arthur A. Graves, III

	 	 	 Robert E. Windsor, M.D.,
	 	 	 	 Arthur A. Graves, III, President

	 	 	 Manager Of R.E. Windsor, LLC, as General Partner
	 	 	 	 First Trustee Fiduciary Services, Inc. As Trustee

  

 45 

			
	EXHIBITS
	Exhibit 1	 	Definitions
	Exhibit 2.3	 	Articles of Merger
	
	DISCLOSURE SCHEDULES
		
	2.13	 	Shareholder Consent and Release
	3.3(b)	 	Financial Statements
	4.1	 	Officers and Directors
	4.2	 	Capitalization
	4.4(a)	 	Consents to be Obtained Prior to Closing
	4.4(b)	 	Consents to be Obtained After Closing
	4.6	 	Assets
	4.8	 	Financial Statements
	4.10	 	Liabilities
	4.11	 	Tax Returns
	4.12	 	Real Property
	4.15	 	Material Contracts
	4.17	 	Insurance
	4.18	 	Litigation
	4.19	 	Third Party Payor Agreements
	4.23	 	Medical Staff
	4.24	 	Employment Matters
	4.25	 	Employment Benefits
	4.26	 	Physician Matters
	4.27	 	Guaranties
	4.28	 	Environmental Permits, Licenses and Approvals
	4.30	 	Third Party Payors
	4.31	 	Bank Accounts
	4.37	 	HIPAA
	4.39	 	Accounts Receivable
	5.4	 	Consents and Approvals
	5.6(a)	 	Capitalization
	5.6(b)	 	Financing proposed to be raised by PainCare in connection with the transactions contemplated by this Agreement
	5.7	 	Litigation
	5.8	 	Undisclosed Liabilities of PainCare
	7.1(e)	 	Payoffs
	10.2	 	Indemnification
	11.1	 	Restricted Period
	11.6	 	Conduct of Business

 EXHIBIT 1 
  

DEFINITIONS 
  
 For purposes of this Agreement, the following terms shall have the meanings set forth below: 
  
 14. “Accounts Receivable” means the accounts receivable of the Company determined
in accordance with GAAP with respect to the operations of the Company prior to the Closing Date arising from the rendering of services to patients through the Closing Date, including, without limitation, those from private pay patients, private
insurance payors, third party payors and governmental programs. 
  
 14.1
“Adjustment Payment Date” has the meaning set forth in Section 3.3(c). 
  
 14.2 “Adverse Consequences” means all actions, suits, proceedings, hearings, investigations, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses. 
  
 14.3 “Affiliate” shall mean, with respect to any Person: (a) any corporation, proprietorship, partnership, limited liability company, or any other business
entity whatsoever that, directly or indirectly, owns or controls, is under common ownership or control with, or is owned or controlled by, such Person; and (b) if the Person is an individual, any other individual who is related to such Person. For
the purposes of this definition, the terms “controls,” “is controlled by” and “is under common control with” shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. Neither PainCare nor Subsidiary is an Affiliate of the Company or the Shareholder for purposes of this Agreement and neither the Shareholder nor
the Company is an Affiliate of PainCare or Subsidiary for purposes of this Agreement. 
  
 14.4 Intentionally Omitted. 
  
 14.5 “Agreement” has the
meaning set forth in the Preamble. 
  
 14.6 “Articles of Merger” has the
meaning set forth in Section 2.3. 
  
 14.7 “Closing Date Consideration”
has the meaning set forth in Section 3.1. 
  
 14.8 “Certificate(s)” has
the meaning set forth in Section 2.10. 
  
 14.9 “Closing” has the
meaning set forth in Section 6. 
  
 14.10 “Closing Date” has the meaning
set forth in Section 6. 
  

 2 

 14.11 “Closing Date Balance Sheet” has the meaning set forth in Section 3.3. 
  
 14.12 “Code” means the Internal Revenue Code of 1986, as amended. 
  
 14.13 “Commission” means the U.S. Securities and Exchange Commission. 

 
 14.14 “Company” has the meaning set forth in the Preamble. 
  
 14.15 “Company Shares” means any share of common stock of the Company. 

 
 14.16 “Disclosure Schedule” has the meaning set forth in Section 4. 

 
 14.17 “ Earnings Threshold” has the meaning set forth in Section 3.4.

  
 14.18 “EBITDA” has the meaning set forth in Section 3.4. 

 
 14.19 Intentionally Omitted. 
  
 14.20 “Employee Benefit Plan” means any: (a) nonqualified deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan; (b) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan); (d) Employee Welfare Benefit Plan; or (e) any bonus, incentive, severance, stock option, stock purchase, short-term disability plan or other material fringe benefit plan, program or arrangement, including policies
concerning holidays, vacations and salary continuation during short absences for illness or otherwise. 
  
 14.21 “Employee Pension Benefit Plan” has the meaning set forth in ERISA Section 3(2). 
  
 14.22 “Employee Welfare Benefit Plan” has the meaning set forth in ERISA Section 3(1). 
  
 14.23 “Environmental, Health, and Safety Requirements” means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976, the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control Act, the Emergency Planning and Community Right-to-Know Act of
1986, the Hazardous Material Transportation Act, and the Occupational Safety and Health Act of 1970, each as amended, together with all other laws (including rules, regulations, codes, injunctions, judgments, orders, decrees, and rulings) of
federal, state, local, and foreign governments (and all agencies thereof) concerning pollution or protection of the environment, public health and safety, or employee health and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials (including petroleum products and asbestos) or wastes into ambient air, surface water, ground water, or lands or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials or wastes. 
  

 3 

 14.24 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 
  
 14.25 “Fair Market Value” has the meaning set forth in Section 3.4. 
  
 14.26 “Fiduciary” has the meaning set forth in ERISA Section 3(21). 
  
 14.27 “Financial Statements” has the meaning set forth in Section 4.8. 

 
 14.28 “Florida Act” and “Georgia Act” have the meanings set forth in
Section 2.1. 
  
 14.29 “Formula Period” has the meaning set forth in
Section 3.4. 
  
 14.30 Intentionally Omitted. 
  
 14.31 “GAAP” means the United States generally accepted accounting principles in
effect from time to time. 
  
 14.32 “HIPAA” has the meaning set forth in
Section 4.37. 
  
 14.33 “Indemnified Party” has the meaning set forth in
Section 10.4. 
  
 14.34 “Indemnifying Party” has the meaning set forth
in Section 10.4. 
  
 14.35 “Intended Installment Payment” has the
meaning set forth in Section 3.4. 
  
 14.36 “Installment Payment” has
the meaning set forth in Section 3.4. 
  
 14.37 “Installment Payment
Discount” has the meaning set forth in Section 3.4. 
  
 14.38
“Installment Payment Premium” has the meaning set forth in Section 3.4. 
  
 14.39 “Intellectual Property” means: (a) all trade secrets and confidential business information (including customer and supplier lists, ideas, research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings, specifications, pricing and cost information, and business and marketing plans and proposals); (b) all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (c) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions,
and reexaminations thereof; (d) all copyrightable works, all copyrights, and all applications, registrations, and renewals in connection therewith; (e) all computer software (including data and related documentation); (f) all other proprietary
rights; and (g) all copies and tangible embodiments thereof (in whatever form or medium). 
  

 4 

 14.40 “IRS” means the U.S. Internal Revenue Service. 
  
 14.41 “Knowledge” An individual will be deemed to have “Knowledge of a
particular fact or other matter if: 
  
 (a) such individual is
actually aware of such fact or other matter; or 
  
 (b) a prudent
individual could be expected to discover or otherwise become aware of such fact or other matter in the course of conducting a reasonably comprehensive investigation concerning the existence of such fact or other matter. 
  
 A Person (other than an individual) will be deemed to have
“Knowledge” of a particular fact or other matter if the Shareholder or any individual who is a serving, or who has at any time served, as a director, officer, partner, executor, or trustee of such Person (or in any similar capacity) has,
or at any time had, Knowledge of such fact or other matter. 
  
 14.42
“Liability” means any liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including, but
not in any way limited to, any liability for Taxes. 
  
 14.43 Intentionally
Omitted. 
  
 14.44 “Medical Assets” has the meaning set forth in Section
2.11. 
  
 14.45 “Medical Waste” has the meaning set forth in Section
4.40 
  
 14.46 “Merger” has the meaning set forth in Section 2.1.

  
 14.47 “Most Recent Year End” has the meaning set forth in Section
4.9. 
  
 14.48 “Multiemployer Plan” has the meaning set forth in ERISA
Section 3(37). 
  
 14.49 “NASDAQ” has the meaning set forth in Section
3.4. 
  
 14.50 Intentionally Omitted. 
  
 14.51 “Other Net Equity Adjustment” has the meaning set forth in Section 3.3.

  
 14.52 “PainCare” has the meaning set forth in the Preamble.

  
 14.53 “PainCare Shares” means any share of common stock, $.0001 par
value per share, of PainCare. 
  

 5 

 14.54 “Party(ies)” has the meaning set forth in the Preamble. 
  
 14.55 “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA. 
  
 14.56
“Person” means an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company or partnership, a trust, a joint venture, an unincorporated organization, any other form of entity whatsoever,
or a governmental entity (or any department, agency, or political subdivision thereof). 
  
 14.57 “Prohibited Transaction” has the meaning set forth in ERISA Section 406 and Code Section 4975. 
  
 14.58 “Reportable Event” has the meaning set forth in ERISA Section 4043. 
  
 14.59 “Securities Act” means the Securities Act of 1933, as amended. 
  
 14.60 “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 14.61 “Security Interest” means any lien, claim, encumbrance, mortgage,
hypothecation, pledge, or other security interest, excluding purchase money security interests arising in the ordinary course of business and liens arising by operation of law for Taxes not yet due and payable. 
  
 14.62 “Shareholder” has the meaning set forth in the recitals, and shall further
include any individual who acquires shares of the Company stock, or the PainCare Shares, pursuant to the terms of this Agreement. 
  
 14.63 “Subsidiary” has the meaning set forth in the Preamble. 
  
 14.64 “Surviving Corporation” has the meaning set forth in Section 2.1. 
  

14.65 “Tax” or “Taxes” means any federal, state, local, or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code Section 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property,
sales, use, production, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including interest, penalty, or additions thereto, whether disputed or not, and whether or not accrued on the
Financial Statements. 
  
 14.66 “Tax Return” means any return,
declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 
  
 14.67 “Third Party Claim” has the meaning set forth in Section 10.4. 
  

 6 

 14.68 “Trade Secrets” has the meaning set forth in Section 11.5. 
  
 14.69 “Transaction” has the meaning set forth in Section 2.1. 
  
 14.70 “Closing Date Consideration” has the meaning set forth in Section 3.1.

  

 7EXHIBIT 4.4

 Exhibit 4.4 
  

2003 STOCK INCENTIVE PLAN 
 OF

 US AIRWAYS GROUP, INC. 
  
 1. PURPOSE. The purpose of this Plan is to advance the interests of the Corporation by encouraging the acquisition of a larger personal proprietary
interest in the Corporation by key employees of the Corporation and of its Subsidiaries upon whose judgment and dedication the Corporation is largely dependent for the successful conduct of its business. It is anticipated that the acquisition of
such proprietary interest in the Corporation will stimulate the efforts of such key employees on behalf of the Corporation and strengthen their desire to remain with the Corporation or its Subsidiaries and that the opportunity to acquire such a
proprietary interest will enable the Corporation and its Subsidiaries to attract and retain desirable personnel. 
  
 2. HISTORY. This Plan is intended to replace the Corporation’s other plans pursuant to which equity securities could be awarded to key employees of
the Corporation and of its Subsidiaries, which other plans were rejected pursuant to the Corporation’s First Amended Joint Plan of Reorganization dated as of January 17, 2003, as modified, and approved by the Bankruptcy Court on March 18, 2003
(the “Joint Plan”). The Plan was amended and restated by the Committee on June 6, 2003. This document amends and restates the Plan effective as of May 19, 2004, pursuant to the authority granted to the Committee under the Plan and action
taken by the Committee at its meeting on March 10, 2004. 
  
 3.
DEFINITIONS. When used in this Plan, unless the context otherwise requires: 
  

	 	(a)	“Board” shall mean the Board of Directors of the Corporation. 

  

	 	(b)	“Cause” shall mean an act or acts of personal dishonesty taken by a Participant and intended to result in substantial personal enrichment at the expense of the Corporation
or any of its Subsidiaries or the conviction of a Participant of a felony. 

  

	 	(c)	“Change of Control” shall mean the occurrence of any of the following events; provided, however, that neither the emergence of the Corporation from Chapter 11
reorganization cases nor any of the transactions contemplated by the Joint Plan shall constitute a Change of Control under this Section 3(d): 

  

	 	(i)	 The acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then outstanding shares of common stock of the Corporation (the “Outstanding Group Common Stock”) or (B) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Group Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of
Control: (v) any acquisition directly from the Corporation, (w) any acquisition by the Corporation or any of its subsidiaries, (x) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any of
its subsidiaries, (y) any acquisition by any corporation with respect to which, following such acquisition, more than 85% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in the election of directors, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were beneficial owners,
respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities in substantially the same proportions as their ownership, immediately prior to such acquisition, of the Outstanding Group Common Stock and 

  

	 	 
Outstanding Group Voting Securities, as the case may be or (z) any acquisition by an individual, entity or group that, pursuant to Rule 13d-1 promulgated
under the Exchange Act, is permitted to, and actually does, report its beneficial ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13G (or any successor Schedule); provided further, that if any such
individual, entity or group subsequently becomes required to or does report its ownership of Outstanding Group Common Stock and Outstanding Group Voting Securities on Schedule 13D (or any successor Schedule) then, for purposes of this Section
3(d)(i), such individual, entity or group shall be deemed to have first acquired, on the first date on which such individual, entity or group becomes required to or does so file, beneficial ownership of all of the Outstanding Group Common Stock and
Outstanding Group Voting Securities beneficially owned by it on such date; or 

  

	 	(ii)	Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents; or 

  

	 	(iii)	There is consummated a reorganization, merger or consolidation, in each case, with respect to which all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities immediately prior to such reorganization, merger or consolidation, beneficially own, directly or indirectly, less than 85% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger or
consolidation (or any parent thereof) in substantially the same proportions as their ownership, immediately prior to such reorganization, merger or consolidation of the Outstanding Group Common Stock and the Outstanding Group Voting Securities, as
the case may be; or 

  

	 	(iv)	Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation or the consummation of the sale or other disposition of all or
substantially all of the assets of the Corporation, other than to a corporation with respect to which, following such sale or other disposition, more than 85% of, respectively, the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Group Common Stock and Outstanding Group Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Group Common Stock and Outstanding Group Voting Securities, as the case may be. 

  

 -Page 2- 

	 	(d)	“Class A Common Stock” shall mean the class A common stock, par value $1.00 per share, of the Corporation. 

  

	 	(e)	“Code” shall mean the Internal Revenue Code of 1986, as amended. 

  

	 	(f)	“Committee” shall mean a committee of Board members appointed by the Board to administer the Plan. 

  

	 	(g)	“Corporation” shall mean US Airways Group, Inc. 

  

	 	(h)	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 

  

	 	(i)	“Fair Market Value” as of a particular date shall mean (1) the average of the high and low sales prices per Share on the national securities exchange on which the Shares
are principally traded on such date, or (2) if the Shares are not listed or admitted to trading on any such exchange, the closing price as reported by the NASDAQ Stock Market for the last preceding date on which there was a sale of Shares, or (3) if
the Shares are not then listed on a national securities exchange or traded in an over-the-counter market or the value of the Shares is not otherwise determinable, such value as determined by the Committee in good faith upon the advice of a qualified
valuation expert. 

  

	 	(j)	“Joint Plan” shall have the meaning provided in Section 2 of the Plan. 

  

	 	(k)	“Options” shall mean the options to purchase Class A Common Stock issued pursuant to Section 8 of the Plan. 

  

	 	(l)	“Performance Measures” means any one or more of the criteria or measurements by which specific performance goals may be established and performance may be measured, as
determined by the Committee in its discretion, pursuant to the provisions of Section 6. 

  

	 	(m)	“Plan” shall mean this 2003 Stock Incentive Plan of US Airways Group, Inc., as such Plan may be amended from time to time. 

  

	 	(n)	“Preferred Stock” shall mean the Class A Preferred Stock, nominal value $.0001 per share, of the Corporation. 

  

	 	(o)	“Restricted Stock” shall mean Class A Common Stock which has been awarded to a grantee subject to the restrictions referred to in Section 9 hereof so long as such
restrictions are in effect. 

  

	 	(p)	“Share” shall mean a share of Class A Common Stock. 

  

	 	(q)	“Subsidiary” shall mean any corporation more than 50% of whose stock having general voting power is owned by the Corporation or by a Subsidiary of the Corporation.

  

	 	(r)	“Unit” shall mean a Warrant and a share of Preferred Stock granted pursuant to Section 10 of the Plan. The term “Unit” is used as a term of convenience to
facilitate administration of the Plan and to describe the fact that the Warrants and Preferred Stock must be granted together; the Company will not issue Units and the Units are not a separate security. 

  

	 	(s)	“Warrant” shall mean a Class A-1 Warrant of the Corporation exercisable for the purchase of one Share. 

  

 -Page 3- 

 4. ADMINISTRATION. The Plan shall be administered by the Committee, which shall consist of not less than
two directors of the Corporation, each of whom shall qualify as a “Non-Employee Director” (within the meaning of Rule 16b-3 promulgated under Section 16(b) of the Exchange Act) and as an “Outside Director” (within the meaning of
Section 162(m)(4)(c) of the Code). The Committee may authorize and establish such rules, regulations and revisions thereof not inconsistent with the provisions of the Plan, as it may determine advisable to make the Plan, the Units, Options, and
Restricted Stock effective or to provide for their administration, and may take such other action with regard to the Plan, the Units, Options, and Restricted Stock as it shall deem desirable to effectuate their purpose. The Committee may require
that any Options or Warrants granted be exercisable in installments and that the restrictions or other limitations on any Restricted Stock or Preferred Stock or Warrants granted lapse in installments. A determination of the Committee as to any
questions which may arise with respect to the interpretation of the provisions of the Plan, Options and Restricted Stock and grants of Units shall be final. The failure of the recipient of an Option, award of Restricted Stock, Warrant or Preferred
Stock to execute the agreement governing such grant prepared by the Committee within 90 days after the date of the receipt of same shall render the agreement and the underlying Option, Restricted Stock, Warrant and/or Preferred Stock grant null and
void ab initio. 
  
 5. SHARES AVAILABLE FOR ISSUANCE.
Except to the extent of adjustments authorized by Section 15 hereof, no more than (a) 4,750,000 shares of Class A Common Stock, plus (b) such additional shares of stock of the Corporation as provided for in the Joint Plan (including, but not limited
to, 2,220,570 of Class A Common Stock which may be issued upon the exercise of 2,220,570 of the Corporation’s Class A-1 Warrants, which Class A-1 Warrants may be issued hereunder together with 2,220,570 shares of the Corporation’s Class A
Preferred Stock), which may be either treasury Shares (or shares of Preferred Stock, as applicable) or authorized but unissued Shares (or shares of Preferred Stock, as applicable). 2,220,570 shares of Class A Common Stock and 2,220,570 shares of
Preferred Stock may be issued pursuant to Unit awards granted under this Plan. 4,750,000 shares of Class A Common Stock may be issued pursuant to Option and Restricted Stock awards granted under this Plan. Any Shares (or shares of Preferred Stock)
subject to Unit, Option or Restricted Stock awards may thereafter be subject to new grants under this Plan if there is a lapse, expiration or termination of any such Unit, Option or Restricted Stock awards prior to issuance of the Shares (or shares
of Preferred Stock) or if Shares (or shares of Preferred Stock) are issued hereunder and thereafter reacquired by the Corporation pursuant to rights reserved by the Corporation in connection with the issuance thereof. 
  
 6. AWARDS OF PERFORMANCE-BASED COMPENSATION. At its discretion, the Committee
may make awards of Options, Restricted Stock or Units intended to comply with the “performance-based” compensation provisions of Code Section 162(m). The number of shares becoming exercisable or transferable with respect to such awards of
Restricted Stock or Units shall be determined based on the attainment of written performance goals approved by the Committee for a performance period. The performance goal shall state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable to the award recipient if the goal is attained. The performance goals must be established by the Committee in writing no more than 90 days after the commencement of the performance period or, if less, the
number of days that is equal to 25% of the relevant performance period. Performance goals will be based on the attainment of one or more Performance Measures. To the degree consistent with Code Section 162(m), the performance goals may be calculated
without regard to extraordinary items. For Options intended to be performance-based compensation under Code Section 162(m), either the purchase price of the Shares subject to the Options must be at least equal to Fair Market Value on the date of
grant, or the exercisability or vesting of the Options must be conditioned upon the satisfaction of performance goals as described in this paragraph. Except with respect to Options granted at Fair Market Value, the Committee must certify in writing
prior to transfer to a recipient of any performance-based compensation that the performance goals and other material terms of the award have been satisfied. Notwithstanding anything in the Plan to the contrary, the Committee shall not have
discretion to increase the amount of compensation payable that would otherwise be applicable upon attainment of the performance goals for an award that is intended to be “performance-based” under Code Section 162(m). 
  
 Performance Measures may include the following: (i) earnings before all or
any taxes (“EBT”); (ii) earnings before all or any of interest expense, taxes, depreciation and amortization (“EBITDA”); (iii) earnings before all or any of interest expense, taxes, depreciation, amortization and rent
(“EBITDAR”); (iv) earnings before all or any of interest expense and taxes (“EBIT”); (v) net earnings; (vi) net income; (vii) operating income or margin; (viii) earnings per share; (ix) growth; (x) return on shareholders’
equity; (xi) capital expenditures; (xii) expenses and expense ratio management; (xiii) return on investment; (xiv) improvements in capital structure; (xv) 

  

 -Page 4- 

 
profitability of an identifiable business unit or product; (xvi) profit margins; (xvii) stock price; (xviii) market share; (xvix) revenues; (xx) costs; (xxi)
cash flow; (xxii) working capital; (xxiii) return on assets; (xxiv) economic value added; (xxv) industry indices; (xxvi) peer group performance; (xxvii) regulatory ratings; (xxviii) asset quality; (xxix) gross or net profit; (xxx) net sales; (xxxi)
total shareholder return; (xxxii) sales (net or gross) measured by product line, territory, customers or other category; (xxxiii) earnings from continuing operations; (xxxiv) net worth; and (xxxv) levels of expense, cost or liability by category,
operating unit or any other delineation. Performance Measures may relate to the Corporation and/or one or more of its Subsidiaries, one or more of its divisions or units or any combination of the foregoing, on a consolidated or nonconsolidated
basis, and may be applied on an absolute basis or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee determines. In addition, to the extent consistent with the requirements of Code Section
162(m), the Performance Measures may be calculated without regard to extraordinary items. 
  
 7. PARTICIPANTS. Options, Restricted Stock and Units may be granted under the Plan to any key employee of, or consultant to, the Corporation or any Subsidiary or to any individual in contemplation of becoming a key
employee of, or consultant to, the Corporation or any Subsidiary. The individuals to whom Options, Restricted Stock and Units are to be offered under the Plan, and the number of Options, Units and shares of Restricted Stock to be issued to each such
individual, shall be determined by the Committee in its sole discretion, subject, however, to the terms and conditions of the Plan. Notwithstanding the foregoing, unless otherwise provided by the Committee and upon adoption of appropriate
resolutions of the Board of Directors of the Corporation, the Chief Executive Officer of the Corporation shall have the authority to grant Options, Restricted Stock and Units to individuals otherwise eligible therefor other than any individual who
is an officer of the Corporation or any Subsidiary, but the terms of such Options, Restricted Stock and Units (although not the number of shares or the recipients) shall have been established by the Committee. 
  
 8. OPTIONS. The number of Shares to be optioned to any eligible person shall
be determined by the Committee in its sole discretion (or, with respect to any individual who is not an officer of the Corporation or any Subsidiary and subject to the limitations on the Chief Executive Officer’s authority in this regard set
forth in Section 7 of this Plan, the Chief Executive Officer of the Corporation); provided, subject to readjustment pursuant to Section 15 of the Plan, unless increased by amendment to the Plan and approved by the shareholders of the Corporation:

  

	 	(a)	except as provided in subsection (b) below, no eligible person shall be granted, in any calendar year, Options to purchase more than 1,500,000 Shares of Class A Common Stock; and

  

	 	(b)	in connection with his or her initial service, an eligible person may be granted Options to purchase up to an additional 1,000,000 Shares of Class A Common Stock, which shall not
count against the limit in subsection (a) above. 

  
 The Committee shall be entitled to issue Options at different times to the same person. Options shall be subject to such terms and conditions and evidenced by agreements in such form as shall be determined from time to time by the
Committee, provided that the terms and conditions of each such agreement are not inconsistent with this Plan. 
  
 The purchase price per Share for the Shares to be purchased pursuant to the exercise of any Option shall be fixed by the Committee within the provisions
of the Plan and applicable law. No Option granted under the Plan shall be exercisable after ten years and one month from the date it was granted, or such earlier date as shall be established by the Committee in granting the Option. 
  
 Except as otherwise provided herein, an Option shall be exercisable by the
holder at such rate and times as may be fixed by the Committee; provided, however, upon a Change of Control, all Options shall become immediately exercisable. The Committee may provide that the Option shall not be exercisable, in whole or in part,
except upon the fulfillment of specific defined conditions. No Option may at any time be exercised in part with respect to fewer than 100 Shares unless fewer than 100 Shares remain in the Option grant being exercised. 
  
 Options shall be exercised by written notice to the Secretary of the
Corporation (or the Secretary’s designated agent) in such form as is from time to time prescribed by the Committee and by the payment in full of the 

  

 -Page 5- 

 
aggregate exercise price of the Options being exercised. Payment of the purchase price upon exercise of any Option shall be made (A) in cash or (B) in whole
or in part, (i) in Shares valued at Fair Market Value on the date of exercise or (ii) with respect to the exercise of Options which are not incentive stock options, as defined in Section 422 of the Code, by electing to have the Corporation withhold
a number of shares of Class A Common Stock otherwise receivable upon exercise, the value of such withheld shares determined by the Fair Market Value on the date of exercise. 
  
 9. RESTRICTED STOCK. Subject to the terms of the Plan, the Committee (or, with respect to any individual who is not an
officer of the Corporation or any Subsidiary and subject to the limitations on the Chief Executive Officer’s authority in this regard set forth in Section 7 of this Plan, the Chief Executive Officer of the Corporation) shall determine and
designate the recipients of Restricted Stock awards, the dates on which such awards are to be granted, the number of Shares subject to such awards, and the restrictions applicable to such awards. Restricted Stock awards shall be subject to such
terms and conditions and evidenced by agreements in such form as shall be determined from time to time by the Committee, provided that the terms and conditions of each such agreement are not inconsistent with this Plan. Such conditions, restrictions
and contingencies may include a requirement of continuous service and/or the satisfaction of specified Performance Measures. When the Committee awards Restricted Stock hereunder, to the extent that such Restricted Stock becomes vested and
nonforfeitable only upon the satisfaction of Performance Measures as specified by the Committee, the Corporation shall establish a bookkeeping account for the recipient that shall accurately reflect the number of shares of Restricted Stock subject
to the award. Subject to the terms of the Plan, upon vesting, such shares of Restricted Stock shall be issued to the recipient. Any fractional share that becomes vested shall be rounded down to the nearest whole share. Subject to readjustment
pursuant to Section 15 of the Plan, unless increased by amendment to the Plan and approved by the shareholders of the Corporation: 
  

	 	(a)	except as provided in subsection (b) below, no individual shall be granted, in any calendar year, more than 1,500,000 shares of Restricted Stock; and 

  

	 	(b)	in connection with his or her initial service, an individual may be granted up to an additional 1,000,000 shares of Restricted Stock, which shall not count against the limit in
subsection (a) above. 

  
 10. UNITS OF WARRANTS AND
PREFERRED STOCK. Warrants and Preferred Stock shall only be awarded in Units. Subject to the terms of the Plan, the Committee (or, with respect to any individual who is not an officer of the Corporation or any Subsidiary and subject to the
limitations on the Chief Executive Officer’s authority in this regard set forth in Section 7 of this Plan, the Chief Executive Officer of the Corporation) shall determine and designate the recipients of awards of Units, the dates on which such
awards are to be granted, the number of Warrants (and Shares upon exercise thereof) and shares of Preferred Stock subject to such awards, and the restrictions and other limitations applicable to such awards. Awards of Units shall be subject to such
terms and conditions and evidenced by agreements in such form as shall be determined from time to time by the Committee, provided that the terms and conditions of each such agreement are not inconsistent with this Plan. Such conditions, restrictions
and contingencies may include a requirement of continuous service and/or the satisfaction of specified Performance Measures. Subject to readjustment pursuant to Section 15 of the Plan, unless increased by amendment to the Plan and approved by the
shareholders of the Corporation: 
  

	 	(a)	except as provided in subsection (b) below, no individual shall be granted, in any calendar year, more than 1,500,000 Units; and 

  

	 	(b)	in connection with his or her initial service, an individual may be granted up to an additional 1,000,000 Units, which shall not count against the limit in subsection (a) above.

  
 11. NONTRANSFERABILITY OF OPTIONS, RESTRICTED
STOCK, WARRANTS AND PREFERRED STOCK. Restricted Stock, Warrants and Preferred Stock as to which all restrictions or other limitations have not lapsed and Options shall not be transferable by the holder thereof otherwise than by will or the laws of
descent and distribution to the extent provided herein. Options may be exercised during the holder’s lifetime only by the holder thereof. 
  

 -Page 6- 

 12. TAX WITHHOLDING. If as a result of: (a) the exercise of any Options or Warrants or the disposition of
any Shares acquired pursuant to such exercise, or (b) the lapse of any restrictions or other limitations on the disposition of Restricted Stock, or as otherwise may apply to any grants under the Plan, the Corporation or any Subsidiary shall be
required to withhold any amounts by reason of any Federal, state or local tax rules or regulations, the Corporation or Subsidiary shall be entitled to deduct and withhold such amounts from any cash payments to be made to the holder. In any event,
the holder shall make available to the Corporation or Subsidiary, promptly when required, sufficient funds to meet the requirement for such withholding; and the Committee shall be entitled to take and authorize such steps as it may deem advisable in
order to have such funds available to the Corporation or Subsidiary when required. Notwithstanding the foregoing, the holder shall have the right to satisfy such withholding, in whole or in part, in Shares (including by having the Corporation
withhold Shares otherwise issuable in respect of such Options or Warrants or by tendering vested shares of Restricted Stock) valued at Fair Market Value on the date of exercise, disposition or lapse of restrictions, as applicable. 
  
 13. TAX LIABILITY. Subject to the Committee’s discretion, agreements
between the Corporation and grantees in connection with awards of Units, Options or Restricted Stock may provide for the payment by the Corporation of a supplemental cash payment to grantees promptly after the exercise of an Option, or promptly
after the date on which the shares of Restricted Stock awarded or the Warrants (or Shares receivable on their exercise) and the Preferred Stock are included in the gross income of the grantee under the Code. Such supplemental cash payments, to the
extent determined by the Committee, shall provide for the payment of such amounts as may be necessary to result in the grantee not having any incremental tax liability as a result of such exercise or inclusion in grantee’s gross income. The
determination of the amount of any supplemental cash payments by the Committee shall be conclusive. 
  
 14. TERMINATION OF EMPLOYMENT OR SERVICE. Except as otherwise provided by the Committee, and notwithstanding any provision of the Plan to the contrary,
(i) upon the termination of employment or other service of an optionee with the Corporation and all Subsidiaries other than for Cause, the optionee (or the optionee’s estate in the event of the optionee’s death) shall have the privilege of
exercising any unexercised Options which the optionee could have exercised at the time of such termination of employment at any time until the end of one year following such termination of employment and (ii) upon the termination of employment or
other service of an optionee with the Corporation and all Subsidiaries for Cause, all unexercised Options of such optionee shall terminate ten days after such termination of employment. The Committee may permit individual exceptions to the
requirements of this section by extending the period in which Options may be exercised, provided, however, that no Options may be extended past their expiration dates. 
  
 15. ADJUSTMENT OF SHARES SUBJECT TO OPTIONS AND RESTRICTED STOCK. If there is declared and paid a stock dividend upon the
Shares of the Corporation or if the Shares shall be split-up, converted, reclassified, or changed into, or exchanged for, a different number or kind of securities of the Corporation or other property, any outstanding grant of Options or unvested
Restricted Stock, shall be adjusted to entitle the holder (upon the future exercise or vesting of such award) to such number and kind of securities or other property subject to the terms of the Option or Restricted Stock to which he would be
entitled had he actually owned the Shares subject to the unexercised or unvested portion of the Option or Restricted Stock, as applicable, at the time of the occurrence of such stock dividend, split-up, conversion, exchange, reclassification or
exchange; and the aggregate purchase price upon the future exercise of the adjusted Option shall be the same as if originally optioned Shares were being purchased thereunder. If any such event should occur, the number of Shares with respect to which
awards under the Plan remain to be issued, or with respect to which awards under the Plan may be reissued, as well as the maximum numbers of Options, shares of Restricted Stock and Units permitted under Sections 8, 9 and 10 of the Plan,
respectively, shall be similarly adjusted. 
  
 In the event the
outstanding Shares shall be changed into or exchanged for any other class or series of capital stock or cash, securities or other property pursuant to a recapitalization, reclassification, merger, consolidation, combination or similar transaction,
then each Option shall thereafter become exercisable for, and each share of Restricted Stock shall be converted into a corresponding award with respect to, the number and/or kind of capital stock, and/or the amount of cash, securities or other
property so distributed, into which the Shares subject to the Option or Restricted Stock would have been changed or exchanged had the Option been exercised in full and the Restricted Stock been fully vested prior to such transaction, provided that,
if the kind or amount of capital stock or cash, securities or other property received in such transaction is not the same for each outstanding Share, then the 

  

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kind or amount of capital stock or cash, securities or other property for which the Option shall thereafter become exercisable shall be the kind and amount
so receivable per Share by a plurality of the Shares, and provided further that, if necessary, the provisions of the Option and/or Restricted Stock award shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any
shares of capital stock, cash, securities or other property thereafter issuable or deliverable upon exercise of the Option or vesting of the Restricted Stock. 
  

16. ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES ACT. The Corporation may postpone the issuance and delivery of shares of Preferred Stock and of
Shares upon any exercise of an Option or Warrant, or upon any lapsing of restrictions on Restricted Stock until (a) the admission of such Shares to listing on any stock exchange on which Shares are then listed and (b) the completion of such
registration or other qualification of such Shares and the Preferred Stock and the Warrant under any state or Federal law, rule or regulation as the Corporation shall determine to be necessary or advisable. Any person exercising an Option or Warrant
and any grantee of Restricted Stock or Units shall make such representations and furnish such information as may, in the opinion of counsel for the Corporation, be appropriate to permit the Corporation, in light of the then existence or nonexistence
with respect to such Shares and Preferred Stock and Warrants of an effective registration statement under the Securities Act of 1933, as from time to time amended, to issue the Shares and the Warrants and Preferred Stock in compliance with the
provisions of that or any comparable Act. 
  
 17. AMENDMENT AND
TERMINATION OF THE PLAN. The Committee may at any time discontinue the Plan or the grant of any additional Options or Restricted Stock or Units under the Plan. Except as hereinafter provided, the Committee may from time to time amend the Plan and
the terms and conditions of any Options or grants of Restricted Stock or Units not theretofore issued, and the Committee, with the consent of the affected holder of an Option or Restricted Stock or Unit, may at any time withdraw or from time to time
amend the Plan and the terms and conditions of such Option or grant of Restricted Stock or Units as have been theretofore granted. 
  
 18. EFFECTIVENESS AND TERM OF THE PLAN. The Plan originally became effective and in full force upon the consummation of the Joint Plan. The effective date
of this restatement of the Plan shall be May 19, 2004. Unless sooner terminated by the Committee pursuant to Section 17 hereof, the Plan shall terminate on the date ten years after March 31, 2003. No Option or Restricted Stock or Warrant and
Preferred Stock may be granted or awarded after termination of the Plan. Termination of the Plan shall not affect the validity of any Option or Restricted Stock or Unit outstanding on the date of such termination. 
  

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